Integer Holdings (ITGR) Q4 Earnings and Sales Beat, Margins Up
Integer Holdings Corporation ITGR delivered adjusted earnings per share (EPS) of $1.39 in the fourth quarter of 2023, which improved 25.2% year over year. The figure topped the Zacks Consensus Estimate by 3.7%.
The adjustments include expenses related to the amortization of intangible assets and restructuring and restructuring-related charges, among others.
GAAP EPS for the quarter was 78 cents, reflecting an improvement of 52.9% year over year.
Revenues in Detail
Integer Holdings registered revenues of $413.2 million in the fourth quarter, up 10.9% year over year. The figure surpassed the Zacks Consensus Estimate by 0.3%.
Organically, revenues increased 9.5%.
Robust Medical sales drove the company’s top line in the reported period.
Segmental Analysis
Integer Holdings operates through two segments — Medical Sales and Non-Medical Sales.
Medical Sales reported revenues of $404.1 million, up 13.3% year over year on a reported and 11.9% on an organic basis.
Medical Sales has three product lines — Advanced Surgical, Orthopedics & Portable Medical (AS&O); Cardio & Vascular; and Cardiac Rhythm Management (CRM) & Neuromodulation.
Integer Holdings’ AS&O revenues amounted to $28.6 million, up 0.7% year over year on a reported basis but down 9.1% organically.
Revenues at the Cardio & Vascular business totaled $222.6 million, up 19.9% from the prior-year quarter on a reported basis and up 16.9% organically. This business was driven by strong demand, acquisition performance and supply-chain improvements.
Revenues at the Cardiac Rhythm Management & Neuromodulation business were $152.8 million, up 7.1% year over year both on a reported and organic basis. The business was driven by double-digit CRM growth from strong customer demand, double-digit neuromodulation growth from emerging customers and supply-chain improvements.
Revenues in the Non-Medical segment totaled $9.1 million, down 41.9% year over year both on a reported and organic basis.
Margin Analysis
Integer Holdings generated a gross profit of $110.3 million in the fourth quarter, up 12.6% year over year. The gross margin in the reported quarter expanded 40 basis points (bps) to 26.7%.
Selling, general and administrative expenses were $45.8 million, up 11.6% year over year. Research, development and engineering costs were $13.3 million in the quarter, down 4.2% year over year. Operating expenses of $66.7 million increased 9.3% year over year.
Operating income totaled $43.5 million, reflecting an 18% uptick from the prior-year quarter. Operating margin in the fourth quarter expanded 60 bps to 10.5%.
Financial Position
Integer Holdings exited the fourth quarter of 2023 with cash and cash equivalents of $23.7 million compared with $32.1 million at the end of the third quarter. Total long-term debt at the end of fourth-quarter 2023 was $959.9 million compared with $941.4 million at the third-quarter end.
Cumulative net cash used by operating activities at the end of fourth-quarter 2023 was $180.2 million against cumulative net cash provided by operating activities of $116.5 million a year ago.
Full-Years Results
Integer Holdings recorded total revenues of $1.6 billion in 2023, up 16.0% year over year. Adjusted EPS for 2023 was $4.67 compared with $3.88 year over year.
2024 Guidance
Integer Holdings has issued its financial outlook for 2024.
For 2024, the company expects revenues in the range of $1.73 billion-$1.77 billion. The Zacks Consensus Estimate is pegged at $1.73 billion.
The company now expects full-year adjusted EPS in the band of $5.01-$5.43. The Zacks Consensus Estimate is pegged at $5.44.
Our Take
Integer Holdings exited the fourth quarter of 2023 with earnings and revenues surpassing the respective consensus estimates by 3.7% and 0.3%, respectively.
The solid year-over-year top-line and bottom-line performances were impressive. Robust performances by the Medical segment and strength in the majority of its product lines were encouraging. The expansion of both margins bodes well for the stock.
In January 2023, Integer Holdings acquired Pulse Technologies for approximately $140 million to bring in differentiated complex machining and manufacturing capabilities as well as proprietary technologies.
However, the decline in Non-Medical revenues was discouraging.
Integer Holdings Corporation Price, Consensus and EPS Surprise
Integer Holdings Corporation price-consensus-eps-surprise-chart | Integer Holdings Corporation Quote
Zacks Rank and Other Key Picks
Integer Holdings currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks to consider in the broader medical space are Universal Health Services UHS, Cardinal Health CAH and Elevance Health, Inc ELV.
Universal Health Services, carrying a Zacks Rank #2 at present, has an estimated growth rate of 4.4% for 2024. UHS’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UHS’s shares have gained 1.9% in the past six months against the industry’s 5% decline.
Cardinal Health reported second-quarter fiscal 2024 adjusted EPS of $1.82, beating the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion surpassed the Zacks Consensus Estimate by 1.1%. It currently carries a Zacks Rank #2.
Cardinal Health has a long-term estimated growth rate of 15.2%. CAH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 15.6%.
Elevance Health, carrying a Zacks Rank of 2, reported fourth-quarter 2023 adjusted earnings per share of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
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