Integra's (IART) Q4 Earnings Miss Estimates, Margins Down

Integra LifeSciences Holdings Corporation IART delivered adjusted earnings per share (EPS) of 89 cents in the fourth quarter of 2023, down 5.3% year over year. The metric missed the Zacks Consensus Estimate by 1.1%.

The adjustment excludes the impact of certain non-recurring charges like amortization expenses, the Boston recall and EU Medical Device Regulation charges.

GAAP EPS in the fourth quarter was 25 cents, plunging 60.3% from 63 cents in the year-ago quarter.

For the full year, adjusted EPS was $3.10 compared with the year-ago period’s figure of $3.36, down 7.7%.

Revenue Discussion

Total revenues in the reported quarter dropped 0.3% year over year to $397.04 million. The metric missed the Zacks Consensus Estimate by 0.4%. Organically, revenues fell 1.2% year over year. Revenues increased 3.6% on an organic basis excluding Boston.

Total revenues in 2023 were $1.54 billion, down 1% from the year-ago period’s figure.

Segmental Details

Coming to product categories, revenues in the Codman Specialty Surgical (CSS) segment rose 2.7% year over year on a reported basis to $271.6 million (organically, up 2.3%). This improvement can be attributed to mid-single-digit growth in CSF management driven by Certas Plus valves and low-single-digit growth in neuro monitoring propelled by BactiSeal catheters and ICP microsensors, mid-single-digit growth in Dural Access and Repair driven by DuraGen.

Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise

 

Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise

Integra LifeSciences Holdings Corporation price-consensus-eps-surprise-chart | Integra LifeSciences Holdings Corporation Quote

 

Tissue Technologies revenues totaled $125.4 million in the fourth quarter, down 6% year over year on a reported basis and 8% on an organic basis. The downside was due to the impact of the lost revenues related to the Boston product recall, which was partially offset by double-digit growth in BioD and Gentrix and mid-single-digit growth in Integra skin and MediHoney.

Margin Trend

In the reported quarter, gross profit totaled $226.5 million, down 9.4% year over year. The gross margin contracted 579 basis points (bps) to 57%.

Selling, general and administrative expenses rose 7.4% to $163.1 million in the quarter under review, while research and development expenses fell 9.3% to $24.3 million.

Overall, adjusted operating profits were $39.1 million, down 45.3% year over year. Adjusted operating margin saw an 809-bps contraction year over year to 9.8%.

Financial Position

Integra exited 2023 with cash and cash equivalents of $276.4 million, down from $456.7 million at the end of 2022.

Cumulative net cash flow from operating activities at the end of 2023 was $139.9 million compared with $264.5 million at the end of 2022.

Guidance

The company provided its financial guidance for 2024.

For the first quarter of 2024, Integra expects reported revenues in the range of $360-$365 million, suggesting reported growth of nearly -5.5% to -4.1% and organic growth of -5.1% to -3.7%. The Zacks Consensus Estimate for the same is pegged at $384.2 million.

Adjusted earnings per diluted share are expected in the range of 53-57 cents. The Zacks Consensus Estimate for the metric is pegged at 72 cents.

For the full year, IART projects revenues in the band of $1.60-$1.62 billion. This suggests reported and organic growth of 4-5%. The Zacks Consensus Estimate for the same is pegged at $1.63 billion.

The company projects adjusted EPS guidance for 2024 in the $3.15-$3.25. The Zacks Consensus Estimate for the metric is pegged at $3.40.

Our Take

Integra exited the fourth quarter of 2023 with lower-than-expected earnings and revenues. Unfavorable product and geographic mix and Boston quality project expenses are exerting pressure on the bottom line. Escalating costs and the contraction of both margins are discouraging. The decline in the Tissue Technologies segment due to the impact of the lost revenues related to the Boston product recall is also disappointing.

On a positive note, in CSS, the company registered strong growth on the back of mid-double-digit growth in CSF management and low-single-digit growth in Neuro Monitoring driven by Certas Plus valves, BactiSeal catheters and ICP microsensors, mid-single-digit growth in Dural Access and Repair driven by DuraGen.

Zacks Rank & Key Picks

Integra currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Stryker Corporation SYK, Cencora, Inc. COR and Cardinal Health CAH.

Stryker, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.

Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.

COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.

Cardinal Health reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion increased 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.

CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.

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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.

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