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Integer Holdings (ITGR) Q2 Earnings Beat, Revenues Miss

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Integer Holdings Corporation (ITGR - Free Report) reported second-quarter 2019 adjusted earnings of $1.23 per share, which surpassed the Zacks Consensus Estimate of $1.06. The bottom line also advanced 16% on a year-over-year basis.

Revenues improved 0.1% year over year to $314.2 million on a reported basis. However, the top line missed the Zacks Consensus Estimate by 1.7%.

Segmental Analysis

Integer Holdings operates through two segments — Medical Sales and Non-Medical Sales.

Medical Sales

At the segment, reported revenues were $297.5 million, down 0.6% year over year. Revenues remained flat year over year on an organic basis.

Medical Sales has three sub-segments — Advanced Surgical, Orthopedics and Portable Medical (AS&O); Cardio and Vascular; and Cardiac/Neuromodulation.

Advanced Surgical, Orthopedics and Portable Medical

Integer Holdings’ Advanced Surgical, Orthopedics & Portable Medical segment has been divested to Viant. Consequently, revenues at the segment include net sales from the acquirer Viant under supply agreements associated with the divestiture.

Revenues amounted to $32.6 million, down 6.1% from the prior-year quarter. Further, the metric deteriorated 2.3% on an organic basis. Per management, growth in Portable Medical was offset by a decline in advanced surgical and orthopedics products.

Cardio and Vascular

Revenues at the segment totaled $150.4 million, up 1.1% from the prior-year quarter and 1.6% organically. Per management, revenues increased on the back of solid peripheral vascular and structural heart growth. However, the estimated impact of an electrophysiology program maturing life cycle and supplier quality related delay offset the upside.
 
Cardiac/Neuromodulation
 
Revenues at this segment totaled $114.5 million, down 1.3% from the prior-year quarter and also on an organic basis due to soft performance at neuromodulation.

Non-Medical Sales

Reported revenues at the segment totaled $16.7 million, up 11% on both year over year and organic basis.

Integer Holdings Corporation Price, Consensus and EPS Surprise

 

Integer Holdings Corporation Price, Consensus and EPS Surprise

Integer Holdings Corporation price-consensus-eps-surprise-chart | Integer Holdings Corporation Quote

Margin Analysis

Integer Holdings generated a gross profit of $96.9 million in the second quarter, down 1.8% year over year. As a percentage of revenues, gross margin in quarter contracted 50 bps to 30.9%.

Selling, general and administrative expenses (SG&A) were $33.1 million, down 9.9% year over year.
 
Research, development and engineering costs grossed $11.4 million in the quarter, down 11.9% year over year.

Total operating income amounted to $49.3 million, up 11.2% year over year. Adjusted income from operations totaled $40.6 million, improving 16.9% year over year.

Operating margin in the quarter under review was 15.7%, up 160 bps year over year.

Guidance Revised

For 2019, adjusted earnings are expected in the range of $4.25-$4.45 (up from the previously guided range of $4.15-$4.35 per share), indicating an improvement of 12-17% from the previous year. The mid-point of the latest guidance range of $4.35 is lower than the Zacks Consensus Estimate of $4.40.

On a reported basis, Integer Holdings expects 2019 earnings to range between $2.89 and $3.09 (up from the prior band of $2.87-$3.07 per share), suggesting a whopping growth of 101-115% year over year.

For 2019, Integer Holdings expects reported revenues between $1.27 billion and $1.28 billion, reflecting year-over-year growth of 4-5%. On an adjusted basis, the company expects revenues in the same band, indicating an improvement of 4-6% from the previous year. Notably, the mid-point of the guidance is in line with the Zacks Consensus Estimate of $1.28 billion.

Adjusted income from operations is anticipated between $140 million and $147 million (up from the previously guided range of $137-$144 million), indicating year-over-year improvement of 13-18%.

Summing Up

Integer Holdings exited the second quarter on a mixed note, wherein the bottom line beat the Zacks Consensus Estimate, while the top line missed the same.

The company continues to gain from its Cardio & Vascular product line. Strong demand across key areas like structural heart and peripheral vascular is an added positive. Management is optimistic about the divestiture of its AS&O product line. An upbeat outlook for 2019 and expansion in operating margin buoy optimism on the stock. Integer Holdings also paid portion of its debt in the quarter under review.

Meanwhile, Integer Holdings’ Advanced Surgical, Orthopedics and Portable Medical exhibited a dismal performance in the quarter under review. Gross margin contraction added to woes.

Zacks Rank

Currently, Integer Holdings sports a Zacks Rank #1 (Strong Buy).

Earnings of Other MedTech Majors at a Glance

Some other top-ranked stocks which reported solid results this earning season are Stryker Corporation (SYK - Free Report) , Baxter International Inc. (BAX - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .

Stryker delivered second-quarter 2019 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by 2.6%. Revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Baxter delivered second-quarter 2019 adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company carries a Zacks Rank #2.

Intuitive Surgical reported second-quarter 2019 adjusted earnings per share of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank #1.

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