On October 27, 2016 Integra LifeSciences Holdings Corporation (NASDAQ:IART) reported its financial results for the third quarter ending September 30, 2016 (Press release, Integra LifeSciences, OCT 27, 2016, View Source [SID1234516072]).

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Highlights:

Third quarter revenue increased 10.6% over the prior-year quarter to $250.3 million, and year-to-date revenue grew 14.8% over the prior year period;
Organic revenue increased 9.5% over the prior-year quarter, and year-to-date organic revenue grew 9.7% over the prior-year period;
Both GAAP and adjusted gross margin increased 230 basis points over the prior-year quarter to 64.3% and 69.3%, respectively;
GAAP net income increased to $20.1 million, or $0.50 per share, versus a loss of $31.9 million in the third quarter of 2015;
Adjusted net income increased 33.7% to $36.1 million and adjusted earnings per share of $0.93 increased 24%, compared to the third quarter of 2015;
Operating cash flow was $46.8 million in the third quarter, more than double the prior-year quarter; free cash flow conversion exceeded 75% on a trailing twelve-month basis; and,
The Company is maintaining its previously issued 2016 full-year sales guidance range of $992 million to $1.002 billion, raising organic growth guidance to a range of 9.0% to 9.5% and increasing the low end of its diluted adjusted EPS guidance by $0.04 to a new range of $3.47 to $3.53.
Total revenues for the third quarter were $250.3 million, reflecting an increase of $24.0 million, or 10.6%, over the third quarter of 2015. Both global segments contributed to the growth, with revenue in Orthopedics and Tissue Technologies and Specialty Surgical Solutions increasing by 14.7% and 8.4%, respectively, compared to the prior year.

Excluding the revenue contribution from acquisitions, discontinued products, and the effect of currency exchange rates, revenues increased 9.5% over the third quarter of 2015.

"We are seeing consistent and solid organic growth across both our global segments driven by our differentiated products, leading brand positions, new product introductions and end market growth," said Peter Arduini, Integra’s President and Chief Executive Officer. "Double-digit growth outside the United States in both segments reflects improved execution of our international strategy."

The Company reported GAAP net income of $20.1 million, or $0.50 per diluted share, for the third quarter of 2016, compared to a GAAP net loss of $31.9 million, or $0.90 per diluted share, for the third quarter of 2015. Results for the third quarter of 2015 included a $35.6 million non-cash tax charge to establish a valuation allowance for certain deferred tax assets associated with the SeaSpine separation.

Adjusted measures discussed below are computed with the adjustments to GAAP reporting set forth in the attached reconciliation.

Adjusted net income for the third quarter of 2016 was $36.1 million, or $0.93 per share, compared to adjusted net income of $27.0 million, or $0.75 per share, in the third quarter of 2015.

Adjusted EBITDA for the third quarter of 2016 was $58.6 million, or 23.4% of revenue, compared to $47.7 million, or 21.1% of revenue, in the third quarter of 2015.

Operating cash flow for the third quarter was $46.8 million, more than double the prior-year period. Trailing twelve month adjusted free cash flow conversion ended September 30, 2016, was 75.6%, versus 73.4% in the prior year.

Outlook for 2016

Based on third quarter results, the Company is maintaining its full-year 2016 revenue guidance in the range of $992 million to $1.002 billion. Guidance for full-year 2016 organic revenue growth is being increased to a new range of 9.0% to 9.5%, up from 9% previously. The Company is raising the low end of its full-year GAAP and adjusted earnings per share guidance range by $0.04, to a new range of $1.82 – $1.88 and $3.47 – $3.53, respectively, mainly due to a lower effective tax rate.

"We executed on our operational and financial plans in the third quarter, which drove double-digit revenue growth, a record adjusted gross margin, EBITDA margin expansion of 230 basis points and over 20% improvement in adjusted earnings per share," said Glenn Coleman, Integra’s Chief Financial Officer. "We are on track to meet our full-year 2016 financial objectives and are well positioned to achieve the 2018 financial targets provided at our analyst meeting last November."

In the future, the Company may record, or expects to record, certain additional revenues, gains, expenses, or charges as described in the Discussion of Adjusted Financial Measures below that it will exclude in the calculation of adjusted EBITDA and adjusted earnings per share for historical periods and in providing adjusted earnings per share guidance.