Integra LifeSciences Holdings Corp. (IART)
Q3 2008 Earnings Call
November 10, 2008 9:00 am ET
Stuart Essig - President and CEO
Jack Henneman - EVP, CFO and CAO
Gerry Carlozzi - EVP and COO
Amit Hazan - Oppenheimer & Co.
Matt Miksic - Piper Jaffray
Amit Bhalla - Citigroup
Joshua Zable - Natixis
Tao Levy - Deutsche Bank
Jayson Bedford - Raymond James
David Roman - Morgan Stanley
Bill Plovanic - Canaccord Adams
Previous Statements by IART
» Integra LifeSciences Holdings Corp., Q4 2008 Earnings Call Transcript
» Integra LifeSciences Holdings Corp Q2 2008 Earnings Call Transcript
» Integra LifeSciences Holdings Corp. Q4 2007 Earnings Call Transcript
At this time, I'd like to turn the call over to Mr. Stuart Essig, President and Chief Executive Officer. Please go ahead, Sir.
Thank you. Good morning, everyone, and thank you for joining us for the Integra LifeSciences third quarter 2008 earnings release conference call. I am Stuart Essig, President and Chief Executive Officer of Integra LifeSciences Holdings Corporation. Gerry Carlozzi, Chief Operating Officer, and Jack Henneman, Chief Financial Officer, join me today.
Gerry is traveling abroad, and while he hasn’t dialed-in, if we have any technical difficulties, Jack or I will try to field any questions you may have for him.
During this call, we will review our financial results for the third quarter of 2008 and our forward-looking guidance for the fourth quarter of 2008 and the full year 2009, which we released on Friday. At the conclusion of our prepared remarks, we will take questions from members of the telephonic audience.
Before we begin, Jack will make some remarks regarding the content of this conference presentation.
This presentation is open to the general public and can be heard through telephone access or via live webcast. A replay of the conference call will be accessible starting one hour after the conclusion of the live event. Access to the replay is available through November 24, 2008 by dialing 719-457-0820, access code 8405173, or through the webcast accessible on the Investor Relations page of our website.
Today's call is a proprietary presentation of Integra LifeSciences Holdings Corporation and is being recorded by Integra. No recording, reproduction, transcript, transmission or distribution of today's presentation is permitted without Integra's consent.
Because the content of this call is time sensitive, the information provided is accurate only as of the date of this live broadcast, November 10, 2008. Unless otherwise posted or announced by Integra, the information on this call should not be relied upon beyond November 24, 2008, the last day that an archived replay of the call authorized by Integra will be available.
Certain statements made during this call are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, among others, statements concerning management's expectations of future financial results, new product launches, regulatory approval and market acceptance of these new products, future product development programs and potential business acquisitions are forward-looking. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from predicted results.
For a discussion of such risks and uncertainties, please refer to the Risk Factors included in Item 1A of Integra's annual report on Form 10-K for the year ended December 31, 2007, and the information contained in our subsequent filings with the Securities and Exchange Commission. These forward-looking statements are made based upon our current expectations and we undertake no duty to update information provided during this call.
Certain non-GAAP financial measures are disclosed in this presentation. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is provided in the press release we issued Friday evening, which is available on our website in the press release section under Investor Relations.
Additionally, in this press release and in the current report on Form 8-K that we filed on Friday, we provide explanations for why management believes that presentation of these non-GAAP financial measures provide useful information to investors regarding Integra's financial condition and results of operations, and the reasons for which Integra's management uses the non-GAAP financial measures.
I will now turn the call over to Stuart to review the highlights of the quarter.
Thanks Jack. The business delivered a particularly strong performance this quarter with revenues well above our guidance and Street expectations. Total revenues in the third quarter of 2008 increased by $32 million to $167 million, a 24% increase over revenues of $135 million in the third quarter of 2007. This was $2 million above the high end of our guidance.
Our organic revenue growth was more than 11% calculated the way we have done so historically. If you exclude the eliminated LXU distributed product lines that we discontinued because of their low margins, organic growth was about 13%.
On Friday, we also announced the acquisition of our Australia/New Zealand distributor, which provides us with direct access to those significant markets and also the ability to provide service and support capabilities to other markets in Southeast Asia.
Our Australia subsidiary will provide the base for future expansion in that part of the world. Integra's distributor for those markets has been providing top quality Integra and non-Integra products and superb service to hospitals for many years and has a long history of serving the surgical communities in Australia/New Zealand.
We have worked together for the past seven years and they have been our primary representative in Australia and New Zealand for such products as DuraGen, Camino, CUSA EXcel, MAYFIELD and INTEGRA Dermal Regeneration Template.
Starting this quarter, we will be reporting our revenues in three categories; Integra NeuroSciences, Integra Orthopedics and Integra Medical Instruments, and we've redesigned our website and other corporate communications to reflect these three market categories.
I invite you to take a look, explore and discover the organizations and products that we offer across our companies. We will also be highlighting these new business units at our upcoming Investor Forum next Monday, November 17.
I'm sure that many of you are interested in the breakout of our historical revenues in the new categories. We have posted a reconciliation of our historical revenues in these new categories on the presentations page of our Investor Relations website.
The first revenue category, Integra NeuroSciences, encompasses the products sold to the neurosurgeon and the neuro nurse. The products in this category represent approximately 40% of Integra's overall revenue and our expected to grow at an annual rate of 10% to 14%.
These products are sold in the United States by our NeuroSciences' sales force and internationally by both direct and distributor sales forces. Integra NeuroSciences' revenue previously reported in both the Medical Surgical Equipment category, such as neuromonitoring devices and ultrasonic aspirators, as well as being recorded as implant products, such as Duragen.
Our second category, Integra Orthopedics, defines our significant orthopedics business. This is our fast growing category and includes our Extremity Reconstruction, Integra OrthoBiologics, Integra Spine and private label revenues, the majority of which are orthopedic.
Together, they comprise approximately one-third of Integra's revenue in the quarter and are anticipated to have growth rates in the 18% to 22% range. We're excited about the orthopedic franchise that we are building.
With over $50 million in revenue in the quarter and only partial period results from Integra Spine, this business is already running at more than $200 million. The revenues in this category were almost all reported in the implant category in prior quarters.