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Integra (IART) Q2 Earnings Top Estimates, 2021 Guidance Up

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Integra LifeSciences Holdings Corporation IART delivered adjusted earnings per share (EPS) of 79 cents in the second quarter of 2021, up 139.4% from a year ago. The metric surpassed the Zacks Consensus Estimate by 17.9%.

The adjustment excludes the impact of certain non-recurring charges like divestiture, acquisition and integration, intangible asset amortization expenses and structural optimization charges, among others.

GAAP EPS for the second quarter was 41 cents compared with break-even earnings in the year-ago quarter.

Revenue Discussion

Total revenues in the reported quarter improved 50.8% year over year to $389.9 million. The metric exceeded the Zacks Consensus Estimate by 3.7%. Organically, revenues improved 48.7 % year over year.

Total reported revenues include $17.7 million from the acquisition of ACell, which was completed on Jan 20, 2021.

Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise

Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise
Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise

Integra LifeSciences Holdings Corporation price-consensus-eps-surprise-chart | Integra LifeSciences Holdings Corporation Quote

Notably, the quarter’s figure exceeds the company’s second-quarter sales estimate of $372-$378 million announced in April.

Segmental Details

Coming to product categories, revenues from the Codman Specialty Surgical (“CSS”) segment rose 51.3% year over year on a reported basis to $256.8 million (organically, up 49.5%).This improvement can be attributed to double-digit organic growth in global neurosurgery and instruments. The segment also reported double-digit growth in international sales across all regions compared to the prior year.

Tissue Technologies revenues totaled $133.2 million in the second quarter, up 49.8% year over year on a reported basis and 47.1% on an organic basis. This growth was led by strength in burn, trauma and surgical reconstruction. During the second quarter, sales in wound reconstruction improved 52% on an organic basis compared to the prior year. Sales in private label increased double digits in the second quarter owing to recovery in demand from the company’s partners.

Margin Trend

In the reported quarter, gross profit totaled $238.7 million, up 55.8% year over year. Gross margin expanded 199 basis points (bps) to 61.2%. The company-adjusted gross margin of 68.1% rose 190 bps.

Selling, general and administrative expenses surged 40% to $162.6 million in the quarter under review, while research and development expenses rose 34.8% to $20.1 million.

Overall, adjusted operating profit was $56.1 million, up 153% year over year. Adjusted operating margin saw a 581-bp expansion year over year to 14.4%.

Financial Position

Integra exited the second quarter of 2021 with cash and cash equivalents of $397.4 million, down from $408.9 million at the end of first-quarter 2021.

Cumulative net cash flow from operating activities at the end of the second quarter was $160.4 million compared with $53.9 million in the year-ago period.

2021 Outlook

The company has raised its financial guidance for 2021, taking into account pandemic-related uncertainty across all markets and product lines.

For 2021, the company raised its revenue guidance to $1.54 billion to $1.55 billion from the earlier-projected $1.53 billion to $1.54 billion. The Zacks Consensus Estimate for the same is pegged at 1.53 billion.

The company currently expects to report at the high end of the adjusted earnings per diluted share guidance of $2.98 to $3.05 for 2021, an improvement from the previously announced range of $2.86 to $2.93. The Zacks Consensus Estimate for the same is pegged at $2.92.

Q3 Outlook

For the third quarter of 2021, Integra expects revenues in the range of $382 million to $389 million. The Zacks Consensus Estimate for the same is pegged at 389.9 million.

Adjusted earnings per diluted share are estimated in the range of 71 cents to 74 cents, the Zacks Consensus Estimate for which is pegged at 75 cents.

Our Take

Integra exited the second quarter of 2021 with better-than-expected earnings and revenue results. The ongoing recovery within the company’s business looks encouraging. The year-over-year growth in CSS and Tissue Technologies segments buoys optimism. Robust demand for the company’s products is also a positive. Expansion of both margins looks encouraging. Further, the company raised its financial guidance for 2021.

However, the increase in operating expenses is concerning.

Zacks Rank & Key Picks

Integra currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks which are supposed to report earnings soon are AMN Healthcare Services Inc AMN, ResMed Inc. RMD and Globus Medical, Inc.GMED, each sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for AMN Healthcare’s second-quarter 2021 adjusted EPS is currently pegged at $1.47. The consensus estimate for second-quarter revenues is pegged at $829.4 million.

The Zacks Consensus Estimate for Resmed’s fourth-quarter fiscal 2021 adjusted EPS is currently pegged at $1.24. The consensus estimate for fourth-quarter revenues is pinned at $778.1 million.

For Globus Medical, the Zacks Consensus Estimate for its second-quarter 2021 adjusted EPS is currently pegged at 45 cents. The consensus estimate for its revenues stands at $226.96 million.


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