Integra LifeSciences Holdings Corporation
) reported earnings per share ('EPS') of 46 cents in the third
quarter of fiscal 2012, significantly up from 39 cents in the
year-ago quarter. Adjusted EPS increased 10.3% year over year to
85 cents and comfortably beat the Zacks Consensus Estimate of 76
Total revenue during the quarter increased 4% year over year
(5% at constant exchange rates or CER) to $210.1 million.
However, it missed the Zacks Consensus Estimate of $211 million.
The growth was primarily on the back of improved sales across
most of the segments of Integra.
Segment wise, barring International revenues (down 3.4%
year over year to $43.2 million) and U.S. Instruments (down 0.2%
year over year to $41.5 million), all the other segments of
Integra recorded growth - U.S. Spine & Other (up 1.9% to
$49.2 million), U.S. Neurosurgery (up 1.1% to $43.3 million), and
U.S. Extremities (up 32.8% to $32.9 million) at CER.
Product category wise, worldwide Orthopedics sales increased
9.9% year over year to $94.2 million (up 12.5% in the U.S.,
offset by a 4.9% dip outside the U.S.) in the quarter. The
company also registered a 0.1% year-over-year drag in worldwide
Neurosurgery sales to $69.7 million as a 0.8% rise in US
Neurosurgery revenues were more than offset by a 1.6% dip in the
non-U.S. revenues during the quarter. Worldwide Instruments
revenues were $46.2 million, down 1.0% year over year with a 0.1%
decline in U.S. sales and 7.3% dip in non-U.S. sales.
Integra witnessed a 5.7% year-over-year increase in gross
profit to $130.6 million. Gross margin during the quarter was up
108 basis points (bps) to 62.16%. During the quarter, research
and development expenses dropped 0.6% to $13.1 million but
selling, general and administrative expenses increased 6.4% year
over year to $93.1 million. Operating margin expanded 35 bps to
Integra exited the quarter with $125.7 million in cash, cash
equivalents compared with $100.8 million at the end of 2011. The
company generated $27.9 million in cash flow from operations and
incurred capital expenditures of $19.7 million in the
Integra reiterated its 2012 revenue guidance of $828-$838
million. However, the company increased its 2012 adjusted EPS
guidance to $3.04-$3.09 (earlier guidance being $2.97-$3.06). The
current Zacks Consensus Estimate for revenues and EPS of $834
million and $3.05, respectively, are in line with the company's
We are encouraged by the company's balanced performance in the
reported quarter amidst a challenging macroeconomic environment.
The company's focus on strategic initiatives to drive growth and
profitability in the orthopedic market is quite encouraging.
Several initiatives on the company's part like planned product
launches and acquisitions are expected to accelerate sales growth
for the next several quarters.
However, tighter capital spending continues to challenge the
surgical instruments market. Moreover, Integra faces direct
competition in the medical instruments & supplies industry
from major players like
). Currently, the company retains a short-term Zacks #3 Rank
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