On April 27, 2022 Integra LifeSciences Holdings Corporation (NASDAQ: IART), a leading global medical technology company, reported financial results for the first quarter ending March 31, 2022 (Press release, Integra LifeSciences, APR 27, 2022, View Source [SID1234613016]).
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First Quarter 2022 Highlights
•Revenues of $376.6 million increased 4.6% on a reported basis and 5.6% on an organic basis compared to the prior year.
•GAAP earnings per diluted share of $0.39, compared to $0.53 in the first quarter of 2021; adjusted earnings per diluted share of $0.74, compared to $0.69 in the prior year.
•The Company is raising its previous full-year 2022 organic growth guidance of 3.5% to 5% to a new range of 3.8% to 5.2%, reflecting the better than expected first quarter revenue results. Reported revenue growth is reaffirmed at 2.5% to 3.5%. Adjusted earnings per share guidance range reaffirmed at $3.27 to $3.35.
"I am pleased with the resilience shown by Integra colleagues as we navigated the COVID-19 Omicron wave early in the quarter," said Jan De Witte, Integra’s president and chief executive officer. "With global procedure volumes improving in March, our strong execution enabled us to deliver better-than-expected first quarter revenue with organic growth exceeding five percent."
First Quarter 2022 Consolidated Performance
Total reported revenues of $376.6 million increased 4.6% on a reported basis and 5.6% on an organic basis compared to the prior year.
The Company reported GAAP gross margin of 62.1%, compared to 59.5% in the first quarter of 2021. Adjusted gross margin was 67.7%, compared to 67.3% in the prior year.
Adjusted EBITDA for the first quarter of 2022 was $93.5 million, or 24.8% of revenue, compared to $89.9 million, or 25.0% of revenue, in the prior year.
The Company reported GAAP net income of $32.9 million, or $0.39 per diluted share, in the first quarter of 2022, compared to a GAAP net income of $45.4 million, or $0.53 per diluted share, in the prior year. GAAP net income for the first quarter 2021 included a gain of $42.9 million from the divestiture of the Extremity Orthopedics business, which was completed in January of 2021.
Adjusted net income for the first quarter of 2022 was $62.0 million, or $0.74 per diluted share, compared to $59.0 million, or $0.69 per diluted share, in the prior year.
First Quarter 2022 Segment Performance
•Codman Specialty Surgical (66% of Revenues)
•Total revenues were $247.3 million, representing reported growth of 2.5% and organic growth of 5.0% compared to the first quarter of 2021, driven by strength in Neurosurgery. Sales in the first quarter benefited from our recently-launched CereLink ICP Monitoring System, as well as a late quarter recovery in neurosurgery procedures.
•Tissue Technologies (34% of Revenue)
•Total revenues were $129.3 million, representing reported growth of 8.8% and organic growth of 6.9% compared to the first quarter of 2021, driven by favorable timing in Private Label customer orders and growth in Wound Reconstruction and Care led by sales in our Integra Dermal Matrices and SurgiMend.
Strategic Initiatives and Key Developments
•Advancing key products
•NeuraGen 3D, the Company’s new peripheral nerve repair product, launched late in the first quarter. This innovative product is a nerve guide matrix designed to optimize the environment for nerve regeneration and may allow for more complete functional recovery following mid-gap nerve repair when compared to hollow nerve conduits alone.
•Following our U.S. and Europe launch of CereLink in the third quarter of 2021, we expanded market coverage to Canada and Australia as well as several indirect markets through the first quarter.
Balance Sheet, Cash Flow and Capital Allocation
The Company generated cash flow from operations of $44 million in the quarter. Net debt at the end of the quarter was $1.15 billion, and the consolidated total leverage ratio was 2.5x.
As of quarter end, the Company had total liquidity of approximately $1.66 billion, including approximately $407 million in cash and the remainder available under the revolving credit facility.
The Company completed the previously announced $125 million accelerated share repurchase program (ASR) in the first quarter. The Company received 1.48 million shares at inception of the ASR on January 14, 2022, which represented approximately 80% of the expected total shares. Upon settlement of the ASR in March 2022, the Company received an additional 0.46 million shares determined using the volume-weighted average price of the Company’s common stock during the term of the transaction.
In addition, on April 26, 2022, the Board of Directors authorized the Company to repurchase up to $225 million of the Company’s common stock. The program allows the Company to repurchase its shares opportunistically from time to time. The repurchase authorization expires in December 2024. This stock repurchase authorization replaces the previous $225 million stock repurchase authorization, of which $100 million remained authorized at the time of its replacement, and which was otherwise set to expire on December 31, 2022. Purchases may be effected through one or more open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, accelerated share repurchases, tender offers or open market solicitations for shares, some of which may be effected through Rule 10b5-1 plans, or a combination of the foregoing. The timing of repurchases will depend upon several factors, including market and business conditions, and repurchases may be discontinued at any time.
2022 Outlook
For the second quarter 2022, the Company expects reported revenues in the range of $392 million to $400 million, representing reported growth of approximately 0.5% to 2.5% and organic growth of approximately 2.8% to 4.8%. Adjusted earnings per diluted share are expected to be in a range of $0.78 to $0.82.
For the full year 2022, the Company is raising its organic growth expectations from an initial range of 3.5% to 5% to now 3.8% to 5.2%. This reflects the better-than-expected first quarter 2022 revenue performance but also reflects current uncertainty in global markets as well as continuing supply constraints. 2022 full year reported revenue guidance remains unchanged, within a range of $1,580 million to $1,600 million, representing reported growth of approximately 2.5% to 3.5%. This revenue guidance reflects absorbing an additional 30 basis points unfavorable currency impact, principally driven by the continuing strengthening of the US dollar against other currencies we transact sales.
Organic sales growth excludes acquisitions and divestitures as well as the effects of foreign currency and the year-over-year change in revenue from discontinued products. Organic growth includes ACell as of January 20, 2022.
Full year 2022 adjusted earnings per diluted share guidance is unchanged and is expected to be in a range of $3.27 to $3.35.
The Company is providing forward-looking guidance regarding adjusted earnings per diluted share but is not providing a reconciliation to GAAP earnings per share, because certain GAAP expense items are highly variable, and management is unable to predict them with reasonable certainty and without unreasonable effort. Specifically, the financial impact and timing of divestitures, acquisitions, integrations, structural optimization and efforts to comply with the EU Medical Device Regulation are uncertain, depend on various dynamic factors and are not reasonably ascertainable at this time. These expense items could have a material impact on GAAP results. Adjusted earnings per diluted share also excludes the impact of intangible asset amortization associated with prior business acquisitions, which we expect to be approximately $0.76 per diluted share for the full-year 2022.
Conference Call and Presentation Available Online
Integra has scheduled a conference call for 8:30 a.m. ET on Wednesday, April 27, 2022, to discuss first quarter 2022 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.
Access to the live call is available by dialing (800)-289-0720 and using the passcode 5706502. A simultaneous webcast of the call will be available via the Company’s website at www.integralife.com. A webcast replay of the call can be accessed through the Investor Relations homepage of Integra’s website at www.integralife.com. A replay of the call will be available until May 7, 2022 by dialing (888) 203-1112 and using the passcode 5706502.