Integra's (IART) Q3 Earnings Miss Estimates, 2023 View Cut
Integra LifeSciences Holdings Corporation IART delivered adjusted earnings per share (EPS) of 76 cents in the third quarter of 2023, down 11.6% year over year. The metric missed the Zacks Consensus Estimate by 2.6%.
The adjustment excludes the impact of certain non-recurring charges like amortization expenses, the Boston recall and EU Medical Device Regulation charges.
GAAP EPS in the third quarter was 24 cents, plunging 90.6% from 60 cents in the year-ago quarter.
Revenue Discussion
Total revenues in the reported quarter dropped 0.7% year over year to $382.4 million. The metric missed the Zacks Consensus Estimate by 1.4%. Organically, revenues fell 0.4% year over year.
Segmental Details
Coming to product categories, revenues in the Codman Specialty Surgical (“CSS”) segment rose 7.4% year over year on a reported basis to $268.2 million (organically, up 7.4%). This improvement can be attributed to low-double-digit growth in CSF management and Neuro Monitoring driven by Certas Plus valves, BactiSeal catheters and ICP microsensors, high-single-digit growth in Dural Access and Repair driven by DuraGen DuraSeal and Mayfield, low single-digit decline in Advanced Energy due to timing of CUSA capital orders, and mid-single-digit growth in Instruments. This figure compares with our third quarter’s CSS model’s projection of $268.4 million.
Tissue Technologies revenues totaled $114.2 million in the third quarter, down 15.6% year over year on a reported basis and 15.1% on an organic basis. The downside was due to the impact of the lost revenues and an increase in the return provision related to the Boston product recall, which was partially offset by double-digit growth from MicroMatrix, Cytal, Gentrix and amniotics. This figure compares with our third quarter’s Tissue Technologies model’s projection of $119.6 million.
Margin Trend
In the reported quarter, gross profit totaled $218.3 million, down 7.7% year over year. The gross margin contracted 437 basis points (bps) to 57.1%. The company-adjusted gross margin was 64.6%.
Selling, general and administrative expenses rose 12.6% to $161.9 million in the quarter under review, while research and development expenses increased 7.5% to $26.6 million.
Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise
Integra LifeSciences Holdings Corporation price-consensus-eps-surprise-chart | Integra LifeSciences Holdings Corporation Quote
Overall, adjusted operating profits were $29.8 million, down 56.3% year over year. Adjusted operating margin saw a 991-bps contraction year over year to 7.8%.
Financial Position
Integra exited the third quarter with cash and cash equivalents of $3273.7 million, down from $309.2 million at the end of second-quarter 2023.
Cumulative net cash flow from operating activities at the end of the third quarter of 2023 was $81.2 million compared with $1.79 billion at the end of third-quarter 2022.
Guidance
The company updated its financial guidance for 2023.
For the full year, IART projects revenues in the band of $1.541-$1.547 billion (the previous guidance was $1.55-$1.56 billion). This suggests reported growth of (1.1%)-(0.7%) and organic growth of 0.1-0.5%. The Zacks Consensus Estimate for the same is pegged at $1.56 billion.
The company projects adjusted EPS guidance for 2023 in the $3.10-$3.14 (the previous guided range was $3.10-$3.18). The Zacks Consensus Estimate for the same is pegged at $3.14.
Integra also provided its guidance for the fourth quarter of 2023.
For the fourth quarter, Integra expects revenues in the range of $397-$403 million, which suggests growth of approximately (0.4%) to 1.1% and organic growth of (0.8)-0.7% year over year. The Zacks Consensus Estimate for the same is pegged at $405.9 million.
Adjusted EPS is estimated in the range of 89-93 cents. This considers the impact of the acceleration of the Boston recall, the strength of the U.S. dollar, and an updated tax rate.
The Zacks Consensus Estimate for adjusted EPS is pegged at 92 cents.
Our Take
Integra exited the third quarter of 2023 with lower-than-expected earnings and revenues. Unfavorable product and geographic mix and Boston quality project expenses are exerting pressure on the bottom line. Escalating costs and the contraction of both margins are discouraging. The company also narrowed its 2023 view, which is a concern.
On a positive note, in CSS, the company registered strong growth on the back of low-double-digit growth in CSF management and Neuro Monitoring driven by Certas Plus valves, BactiSeal catheters and ICP microsensors, high-single-digit growth in Dural Access and Repair driven by DuraGen DuraSeal and Mayfield.
Zacks Rank & Key Picks
Integra currently carries a Zacks Rank #3 (Hold).
Some of the top-ranked stocks from the broader medical space that are supposed to report earnings soon are Addus HomeCare ADUS, Insulet PODD and Inari Medical NARI.
Addus currently sports a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its third-quarter 2023 adjusted EPS is pegged at $1.05. The same for its revenues stands at $266.2 million.
Addus has a long-term historical growth rate of 12.6%. ADUS’ earnings yield of 5.24% compares favorably with the industry’s yield of 4.37%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Insulet’s third-quarter 2023 adjusted EPS is currently pegged at 40 cents. The consensus estimate for revenues is pegged at $413.8 million. Insulet currently carries a Zacks Rank #2 .
Insulet has an estimated long-term growth rate of 41.5%. PODD’s earnings yield of 1.14% compares favorably with the industry’s -2.62%.
Inari Medical currently has a Zacks Rank #2. The Zacks Consensus Estimate for its third-quarter 2023 adjusted EPS is currently pegged at a breakeven level. The same for revenues is pegged at $122.4 million.
NARI has an estimated growth rate of 107.3% for 2023. NARI’s earnings yield of 0.07% compares favorably with the industry’s yield of -8.47%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Integra LifeSciences Holdings Corporation (IART) : Free Stock Analysis Report
Insulet Corporation (PODD) : Free Stock Analysis Report
Addus HomeCare Corporation (ADUS) : Free Stock Analysis Report
Inari Medical, Inc. (NARI) : Free Stock Analysis Report
