On November 4, 2024 Integra LifeSciences Holdings Corporation (NASDAQ: IART), a leading global medical technology company, reported financial results for the third quarter ending September 30, 2024 (Press release, Integra LifeSciences, NOV 4, 2024, View Source [SID1234647664]).
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Third Quarter 2024 Highlights
•Third quarter revenues of $380.8 million decreased 0.4% on a reported basis and 8.6% on an organic basis compared to the prior year. Revenue decreased 10.3% on an organic basis excluding Boston.
•Third quarter GAAP earnings per diluted share of $(0.14), compared to $0.24 in the prior year; adjusted earnings per diluted share of $0.41, compared to $0.76 in the prior year.
•Shipping holds communicated during the second quarter earnings call are releasing in line with expectations.
•Integra Skin production is on pace to meet historical revenue run rates for the fourth quarter.
•Updating full-year 2024 revenue guidance to a range of $1.609 billion to $1.619 billion and adjusted EPS guidance to a range of $2.41 to $2.49 per share.
•The Company announced Mojdeh Poul as Integra’s next president and chief executive officer.
"Our third-quarter results highlight the early progress we are making to identify and remediate the gaps in our quality management system," said Jan De Witte, president and CEO of Integra LifeSciences. "We are progressing with the implementation of our compliance master plan across our manufacturing and supply chain operations, which will position us to meet robust market demand and more consistently and reliably deliver to customers, patients, and shareholders."
Third Quarter 2024 Consolidated Performance
Total reported revenues of $380.8 million decreased 0.4% on a reported basis and 8.6% on an organic basis compared to the prior year. Revenue decreased 10.3% on an organic basis excluding Boston.
The Company reported GAAP gross margin of 52.6%, compared to 57.1% in the third quarter of 2023. Adjusted gross margin was 63.0%, compared to 64.6% in the prior year.
Adjusted EBITDA for the third quarter of 2024 was $61.8 million, or 16.2% of revenue, compared to $88.1 million, or 23.0% of revenue, in the prior year.
The Company reported a GAAP net loss of $(10.7) million, or $(0.14) per diluted share, in the third quarter of 2024, compared to GAAP net income of $19.5 million, or $0.24 per diluted share, in the prior year.
Adjusted net income for the third quarter of 2024 was $31.7 million, or $0.41 per diluted share, compared to $60.5 million, or $0.76 per diluted share, in the prior year.
Third Quarter 2024 Segment Performance
Codman Specialty Surgical (~70% of Revenues)
Total revenues were $270.8 million, representing reported growth of 1.0% and an organic decline of 10.7% compared to the third quarter of 2023.
•Sales in Neurosurgery declined 16.0% on an organic basis
◦The decline was driven primarily by temporary shipping holds in CSF management and Neuro monitoring, which have largely been resolved within the third quarter, as well as supply challenges in Dural access and repair
◦Advanced energy grew mid-single digits driven by CUSA capital and CUSA disposables
•Sales in Instruments grew 8.7% on an organic basis
•ENT reported revenue grew substantially due to the Acclarent acquisition
Tissue Technologies (~30% of Revenues)
Total revenues were $110.1 million, representing a reported decline of 3.6% and organic decline of 3.7% compared to the third quarter of 2023. Tissue Technologies sales were down 9.4% excluding sales of the Company’s products manufactured in Boston. Key drivers for the quarter include:
•Low double-digit decline in Integra Skin due to production challenges
•Low double-digit growth in DuraSorb, MicroMatrix and Cytal
•Sales in private label grew 13.3% on an organic basis
CEO Transition Update
Today, the Company announced Mojdeh Poul as Integra’s next president and chief executive officer. Ms. Poul succeeds Jan De Witte, who previously announced he will retire as president and chief executive officer. Ms. Poul will join Integra on January 6, 2025, at which time she will also be appointed to Integra’s board of directors.
Advancing our Strategy
•Continued strong demand for Integra’s diverse portfolio of leading brands
•Advancing the compliance master plan and investments in supply reliability
◦Neurosurgery shipping holds clearing in line with expectations
◦Integra Skin production is on pace to meet historical revenue run rates for the fourth quarter
•Began installing equipment in Braintree facility
•Continued integration success with the Acclarent ENT products
•Growth in DuraSorb and UBM portfolio remains strong
Balance Sheet, Cash Flow and Capital Allocation
The Company generated cash flow from operations of $22.5 million in the quarter. Total balance sheet debt and net debt at the end of the quarter were $1.81 billion and $1.54 billion, respectively, and the consolidated total leverage ratio was 4.0x.
As of quarter end, the Company had total liquidity of approximately $1.18 billion, including $277 million in cash plus short-term investments and the remainder available under its revolving credit facility.
2024 Outlook
For the fourth quarter 2024, the Company expects reported revenues in the range of $441 million to $451 million, representing reported growth of 11.1% to 13.6% and organic growth of 2.0% to 4.5%. Fourth quarter guidance reflects the integration of Acclarent, stepped up revenue from progress clearing the third-quarter shipping holds, improved production for Integra Skin, partially offset by additional quality holds. The Company expects adjusted EPS in a range of $0.81 to $0.89.
For the full year 2024, the Company is updating its revenue and adjusted EPS ranges of $1.609 billion to $1.619 billion and $2.41 to $2.49, respectively. The revenue range represents reported growth of 4.4% to 5.0% and organic growth of -1.7% to -1.0%.
The Company’s organic sales growth guidance for the fourth quarter and the full year excludes acquisitions and divestitures, as well as the effects of foreign currency.
Conference Call and Presentation Available Online
Integra has scheduled a conference call for 8:30 a.m. ET on Monday November 4, 2024, to discuss third quarter 2024 financial results and forward-looking financial guidance. The conference call will be hosted by Integra’s senior management team and will be open to all listeners. Additional forward-looking information may be discussed in a question-and-answer session following the call. Integra’s management team will reference a presentation during the conference call, which can be found on the Investor section of the website at investor.integralife.com.
A live webcast will be available on the Investors section of the Company’s website at investor.integralife.com. For those planning to participate on the call, register here to receive dial-in details and an individual pin. While not required, it is recommended to join 10 minutes prior to the event’s start. A webcast replay of the conference call will be available on the Investors section of the Company’s website following the call.