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Integra's (IART) Q4 Earnings and Revenues Beat Estimates

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Integra LifeSciences Holdings Corporation IART delivered adjusted earnings per share (EPS) of 65 cents in the fourth quarter of 2018, up 1.6% from the year-ago figure. The same surpassed the Zacks Consensus Estimate by 4.8%.

Adjusted EPS in 2018 came in at $2.42, up 24.7% year over year.

Revenue Discussion

Total revenues in the reported quarter rose 4% year over year to $383.3 million and surpassed the Zacks Consensus Estimate by 0.6%. Excluding revenues from current-period acquisitions, product discontinuations and the effect of currency exchange rates, organic revenues rose 4.4% year over year. Per management, strength in the U.S. Codman Specialty Surgical business drove the top line in the reported quarter.

Revenues in 2018 came in at $1.47 billion, up 23.9% year over year.

Coming to product categories, revenues from the company's Codman Specialty Surgical segment rose 4.1% to $249.3 million. The improvement came primarily on the back of the Codman consolidation and solid performance by the Dural Access and Repair, Advanced Energy and Precision Tools and Instruments.

Orthopedics and Tissue Technologies revenues totaled $134 million in the fourth quarter, up 3.7% year over year. The upside was fueled by continued strength in Regenerative Technologies and Private Label businesses.

Margin Trend

Gross margin expanded 200 basis points (bps) to 61.8% in the reported quarter on a 7.4% rise in gross profit to $236.8 million. Selling, general and administrative expenses declined 7% to $177.2 million in the quarter under review while research and development expenses rose 18% to $20.3 million. However, adjusted operating margin saw a 690-bp expansion to 10.3% in the quarter.

Financial Position

Integra exited 2018 with cash and cash equivalents of $138.8 million, down from $174.9 million at the end of 2017. In 2018, net cash flow from operating activities was $199.7 million, up from $114.5 million a year ago.

2019 Outlook

Integra has provided its earnings and revenues guidance for 2019. The company expects 2019 revenues in the range of $1.515-$1.525 billion, showing 3.5% growth at the midpoint. Organic revenue growth is expected at roughly 5%. The Zacks Consensus Estimate for 2019 revenues is pinned at $1.53 billion, near the high end of the guided range.

The company expects adjusted earnings per diluted share in the range of $2.65-$2.72. The Zacks Consensus Estimate for 2019 adjusted earnings is pegged at $2.66, within the company’s guided range.

Our Take

Integra exited the fourth quarter of 2018 on a solid note. Also, the company continued to witness double-digit growth in revenues and earnings for the fifth consecutive year. Moreover, a strong year-over-year rise in the top line on the back of strength in the U.S. Codman Specialty Surgical business buoys optimism.

Benefitting from product launches and enhanced sales force performance, the company expects faster organic growth in the second half of 2019.

We are also encouraged by the company’s year-over-year revenue growth across all segments in the fourth quarter. Integra’s advancement with channel expansion strategy as well as Codman integration raises investor hope.

Zacks Rank & Key Picks

Integra carries a Zacks Rank #3 (Hold).

Some better-ranked MedTech stocks that posted solid quarterly results are Varian Medical Systems VAR, AngioDynamics ANGO and CONMED Corporation CNMD. 

Varian reported fiscal first-quarter adjusted EPS of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2 (Buy). 

AngioDynamics’ fiscal second-quarter adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million beat the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.

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