On April 26, 2023 Integra LifeSciences Holdings Corporation (NASDAQ: IART), a leading global medical technology company, reported financial results for the first quarter ending March 31, 2023 (Press release, Integra LifeSciences, APR 26, 2023, View Source [SID1234630526]).
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First Quarter 2023 Highlights
•First quarter revenues of $380.8 million increased 1.1% on a reported basis and increased 4.6% on an organic basis compared to the prior year.
•First quarter GAAP earnings per diluted share of $0.29, compared to $0.39 in the prior year; adjusted earnings per diluted share of $0.74, compared to $0.74 in the prior year.
•The Company is reaffirming its full-year 2023 revenue and adjusted earnings per share guidance with a range of $1,602 million to $1,620 million and $3.43 to $3.51 respectively.
•The company is hosting its Investor Day on May 4, 2023 in New York. A live webcast will be available on the Investors section of the Company’s website at investor.integralife.com.
"Our first quarter sales performance continues to demonstrate the strength of our diverse portfolio. We experienced solid growth and demand across many of our product lines and saw positive dynamics in our markets," said Jan De Witte, Integra’s president and chief executive officer. "We remain focused on delivering profitable growth while making critical investments to support our long-term strategic objectives and commitments."
First Quarter 2023 Consolidated Performance
Total reported revenues of $380.8 million increased 1.1% on a reported basis and increased 4.6% on an organic basis compared to the prior year.
The Company reported GAAP gross margin of 61.1%, compared to 62.1% in the first quarter of 2022. Adjusted gross margin was 67.3%, compared to 67.7% in the prior year.
Adjusted EBITDA for the first quarter of 2023 was $92.3 million, or 24.2% of revenue, compared to $93.5 million million, or 24.8% of revenue, in the prior year.
The Company reported GAAP net income of $24.2 million, or $0.29 per diluted share, in the first quarter of 2023, compared to a GAAP net income of $32.9 million, or $0.39 per diluted share, in the prior year.
Adjusted net income for the first quarter of 2023 was $60.7 million, or $0.74 per diluted share, compared to $62.0 million, or $0.74 per diluted share, in the prior year.
First Quarter 2023 Segment Performance
•Codman Specialty Surgical (~65% of Revenues)
•Total revenues were $248.1 million, representing reported growth of 0.3% and organic growth of 3.5% compared to the first quarter of 2022, driven by strength in CUSA Clarity capital and disposables and Certas Plus valves, including high single-digit growth for international, led by Japan and China. The growth momentum was partially offset by the lack of CereLink monitor revenue in the quarter, following the third quarter 2022 recall, as well as continued supply challenges.
Tissue Technologies (~35% of Revenues)
•Total revenues were $132.7 million, representing reported growth of 2.6% and organic growth of 6.8% compared to the first quarter of 2022, driven by broad strength in our Wound Reconstruction portfolio, with double digit growth from Integra Skin, MicroMatrix, Gentrix, and Cytal and high single-digit growth from SurgiMend, partially offset by the continued pressure in Private Label as our partners normalize their inventory levels.
Key Products and Business Highlights
•Strong market demand and procedure volumes near pre-COVID levels
•Expanded the CUSA Clarity portfolio with the launch of the single-sided bone tip in the U.S., Canada, Australia and New Zealand
•Launched MicroMatrix in the Europe
•Progressed return-to-market plans for the CereLink ICP monitor with expectation to re-launch late third quarter
•Advanced PMA projects for SurgiMend and DuraSorb
◦Submission of PMA supplement for SurgiMend still expected in third quarter
◦SIA integration and DuraSorb PMA clinical trial on track
◦Paused production at the Boston manufacturing site in March while pulling forward quality system upgrades project into the first half of 2023
•Enhanced our leadership and clinical capability with the appointment of Stuart Hart, M.D., as chief medical officer
•Strengthened our balance sheet by amending and extending our credit facility from 2025 to 2028
•Returned value to shareholders by initiating a $150 million accelerated share repurchase
Balance Sheet, Cash Flow and Capital Allocation
The Company generated cash flow from operations of $26 million in the quarter. Total balance sheet debt and net debt at the end of the quarter were $1.45 billion and $1.15 billion, respectively, and the consolidated total leverage ratio was 2.5x.
As of quarter end, the Company had total liquidity of approximately $1.61 billion, including $307 million in cash and the remainder available under the revolving credit facility.
2023 Outlook
For the full year 2023, the Company is reaffirming its February revenue and adjusted EPS expectations of $1,602 to $1,620 million and $3.43 to $3.51, respectively. The revenue range represents reported growth of 2.9% to 4.0%, with organic growth of 4.0% to 5.2%.
For the second quarter 2023, the Company expects reported revenues in the range of $396 million to $400 million, representing reported growth of -0.5% to 0.5% and organic growth of 1.5% to 2.5%. Adjusted earnings per diluted
share are expected to be in the range of $0.75 to $0.79, including the impact of the acceleration of the Boston quality system upgrades from the second half of the year into the second quarter.
The Company’s guidance for the second quarter and full-year organic sales growth excludes acquisitions and divestitures, the effects of foreign currency and the year-over-year change in revenue from discontinued products. Organic growth excludes sales from the TWC divestiture as of September 1, 2022, and sales from the acquisition of SIA through December 1, 2023. Adjusted earnings per share guidance reflects the impact of the divestiture of the TWC business, the SIA acquisition and the impact of foreign currency.