Integra LifeSciences Holdings Corporation
) reported earnings per share ('EPS') of 46 cents in the fourth
quarter of fiscal 2012, significantly up from 16 cents in the
year-ago quarter. Adjusted EPS increased 8.3% year over year to
78 cents, beating the Zacks Consensus Estimate by a penny.
Fiscal 2012 adjusted EPS was $3.06, significantly down from
the year-ago $2.79. However, it missed the Zacks Consensus
Estimate of $3.08.
Total revenue during the reported quarter increased 5.4% year
over year (up 5.7% at constant exchange rates or CER) to $214.4
million, keeping at par with the Zacks Consensus Estimate. The
fiscal revenue came in at $830.9 million, up 6.5% (up 7.4% at
CER) year over year. The fiscal numbers, with regard to both
revenue and adjusted EPS, remained in line with the company's
projection of $828-$838 million and $3.04-$3.09,
The quarterly revenue growth was primarily on the back of
improved sales across most of the segments of Integra.
Segment-wise, all the segments of Integra recorded growth:
International revenues (up 3.2% year over year to $48.4 million),
U.S. Neurosurgery (up 4.8% to $45.5 million), U.S. Instruments
(up 6.9% year over year to $41.6 million), U.S. Spine & Other
(up 4.7% to $47.7 million), and U.S. Extremities (up 8.6% to
$31.3 million) at CER.
On a product-category basis, worldwide Orthopedics sales
increased 4.2% year over year to $93.3 million (up 6.4% in the
U.S., offset by a 6.3% dip outside the U.S.) in the quarter. The
company also registered a 6.7% year-over-year increase in
worldwide Neurosurgery sales to $74.0 million as there was a 4.7%
rise in the US Neurosurgery revenues combined with a 9.8%
increase in the non-U.S. revenues during the quarter.
Worldwide Instruments revenues were $47.1 million, up 5.6%
year over year with a 6.1% upsurge in the U.S. sales and 2.9%
rise in the non-U.S. sales.
Integra witnessed a 9.7% year-over-year increase in gross
profit to $132.5 million. Gross margin during the quarter was up
245 basis points (bps) to 61.2%. During the quarter, research and
development expenses dropped 4.0% to $12.9 million but selling,
general and administrative expenses increased 1.8% year over year
to $96.5 million. Operating margin expanded a huge 459.9 bps to
Integra exited the fiscal with $96.9 million in cash and cash
equivalents compared with $100.8 million at the end of 2011. The
company used $3.8 million in cash flow from operations and
invested $24.7 million in capital expenditures in the
Integra provided its fiscal 2013 guidance. The company expects
to generate revenues of $865−$880 million with adjusted EPS in
the range of $3.08−$3.27. The current Zacks Consensus Estimate
for revenues and EPS of $870 million and $3.20, respectively, are
in line with the company's guided range.
We are encouraged by the company's balanced performance in the
reported quarter amid a challenging macroeconomic environment.
The company's focus on strategic initiatives to drive growth and
profitability in the orthopedic and Neurosurgery market is quite
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, the company believes that
the medical device excise tax and new depreciation on its ERP
system will temper its 2013 margin growth.
Integra faces direct competition in the medical instruments
& supplies industry from major players like
), among others. Currently, the company retains a Zacks Rank #3
Other Stocks to Consider
While we prefer to remain on the sidelines on Life
Technologies, other medical device stocks worth a look are
Medical Action Industries Inc.
Given Imaging Ltd.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
GIVEN IMAGING (GIVN): Free Stock Analysis
INTEGRA LIFESCI (IART): Free Stock Analysis
MEDICAL ACTION (MDCI): Free Stock Analysis
MEDTRONIC (MDT): Free Stock Analysis Report
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