Integra LifeSciences (IART) Beats on Q4 Earnings & Revenues

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Integra LifeSciences Holdings Corporation IART reported adjusted earnings per share (EPS) of 64 cents in the fourth quarter of 2017, up 23.1% from the year-ago figure.

Adjusted EPS surpassed the Zacks Consensus Estimate of 57 cents by 12.2%.

Full-year adjusted earnings came in at $1.94, reflecting increase of 10.23% from the year-ago quarter. Full-year adjusted EPS also surpassed the Zacks Consensus Estimate of $1.86 by 4.3%.

Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise

Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise | Integra LifeSciences Holdings Corporation Quote

Revenue Discussion

Total revenues in the reported quarter increased 44.2% year over year to $368.6 million, which surpassed the Zacks Consensus Estimate of $364.9 million. Excluding revenues from acquisitions, discontinued products and the effect of currency exchange rates, organic revenues rose 5.8% year over year.

Full-year revenues came in at $1.19 billion, reflecting an increase of 19.8%. The figure also surpassed the Zacks Consensus Estimate of $1.17 billion.

The solid revenue growth was primarily driven by high organic revenues and better-than-expected performance by both the recently-acquired businesses - Johnson & Johnson Codman Neurosurgery business and Derma Sciences.

Coming to product categories, revenues from the company's Codman Specialty Surgical segment increased 46.2% to $239.4 million.

Orthopedics and Tissue Technologies revenues came in at $129.2 million in the fourth quarter, up 40.6% year over year.

Margin Trend

Adjusted gross margin contracted 679 basis points (bps) to 59.8% in the reported quarter. Selling, general and administrative expenses increased 70% to $190.6 million in the reported quarter, while research and development expenses rose 23.6% to $17.2 million. Accordingly, adjusted operating margin saw a 1388-bps contraction to 3.4% in the fourth quarter.

Financial Position

Integra LifeSciences exited 2017 with cash and cash equivalents of $174.9 million, up from $102.1 million recorded at the end of 2016. Full-year 2017 cash flow from operating activities was $114.5 million, down from $116.4 million in the year-ago period.

2018 Outlook

The company now expects full-year 2018 revenue guidance at the high end of the range of $1.46-$1.48 billion, on the back of more favorable foreign currency rates. The Zacks Consensus Estimate for full-year 2018 revenues is $1.48 billion, at the high end of the guided range.

The company expects adjusted earnings per diluted share to be at the high end of its previously provided range of $2.25-$2.35. The Zacks Consensus Estimate for 2018 adjusted earnings is pegged at $2.30, within the company's guided range.

For full-year 2018, the company reiterated adjusted gross margin at the band of 68% to 69%.

For the first quarter of 2018, the company expects adjusted EPS in the range of 48 - 51 cents, representing about 25% growth year over year. The Zacks Consensus Estimate for first-quarter 2018 adjusted EPS is pegged at 50 cents, within the company's guided range.

For the first quarter of 2018, the company expects total revenues in the range of $347-$352 million, which includes about 2% organic growth. The Zacks Consensus Estimate is $351.4 million, within the guided range.

Our Take

Integra LifeSciences exited the fourth quarter of 2017 on a solid note. The strong year-over-year increase in revenues on the back of its recent acquired business buoys optimism. We are also encouraged to note that the company's segments saw year-over-year revenue growth in the quarter. Nonetheless, we believe the company is trying to execute its growth plan through an efficient management team. Moreover, the increase in year-over-year investments in research and development is encouraging. The company's promising guidance also instills confidence in the stock.

However, significant margin contractions caused by escalating costs and expenses are concerns.

Zacks Rank & Key Picks

Integra LifeSciences has a Zacks Rank #3 (Hold).

A few better-ranked stocks that reported solid results this earnings season are PetMed Express PETS , PerkinElmer PKI and Becton, Dickinson and Company BDX . While PetMed sports a Zacks Rank #1 (Strong Buy), PerkinElmer and Becton, Dickinson carry a Zacks Rank #2 (Buy). You can see  the complete list of today's Zacks #1 Rank stocks here .

PetMed reported third-quarter fiscal 2018 results. Adjusted EPS of 44 cents were up 88.3% from the prior-year quarter. Revenues rose 13.7% to $60.1 million.

PerkinElmer reported fourth-quarter 2017 adjusted EPS of 97 cents. Adjusted revenues were approximately $641.6 million, up from $567 million in the year-ago quarter.

Becton, Dickinson reported first-quarter 2018 adjusted EPS of $2.48, up 3.9% at constant currency. Revenues totaled $3.08 billion, up 3.7% at constant currency.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: PETS , PKI , IART , BDX

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