PRINCETON, N.J., July 28, 2021 (GLOBE NEWSWIRE) — Integra LifeSciences Holdings Corporation (NASDAQ: IART), a leading global medical technology company, today reported financial results for the second quarter ending June 30, 2021.
“We are pleased with second quarter results that exceeded our forecasts. Our business segments were well-positioned to capitalize on the improving demand driven by the ongoing global market recovery,” said Peter Arduini, Integra’s president and chief executive officer. “We saw particularly healthy order activity in products used in neurosurgery, instruments, burn, trauma and surgical reconstruction as markets gradually recovered. Areas such as capital equipment and our international indirect markets are still early in their recovery but are reporting encouraging trends. As a result of our better than expected second quarter financial performance, we are raising our full-year revenue and EPS guidance.”
Second Quarter 2021 Consolidated Performance
Total reported revenues of $390.0 million increased 50.8% on a reported basis and 48.7% on an organic basis compared to the prior year. Total reported revenues include $17.7 million from the acquisition of ACell, which was completed on January 20, 2021.
The Company reported GAAP gross margin of 61.2%, compared to 59.2% in the second quarter of 2020. Adjusted gross margin was 68.1% compared to 66.2% in the prior year.
Adjusted EBITDA for the second quarter of 2021 was $101.0 million, or 25.9% of revenue, compared to $52.8 million, or 20.4% of revenue in the prior year. Adjusted EBITDA margins benefited from higher revenue and higher adjusted gross margins, partially offset by higher operating expenses attributable to the gradual return of spending, which was reduced during the same period in the prior year in response to the global pandemic.
The Company reported GAAP net income of $35.1 million, or $0.41 per diluted share, in the second quarter of 2021, compared to a GAAP net loss of $(0.4 million), or $(0.00) per diluted share, in the prior year.
Adjusted net income for the second quarter of 2021 was $67.4 million, or $0.79 per diluted share, compared to $28.4 million, or $0.33 per diluted share, in the prior year.
Second Quarter 2021 Segment Performance
- Codman Specialty Surgical (66% of Revenues)
- Total revenues were $256.8 million, representing reported growth of 51.3% and organic growth of 49.5% compared to the second quarter of 2020. Broad-based strength in both neurosurgery and instruments were driven by a recovery in demand.
- Tissue Technologies (34% of Revenue)
- Total revenues were $133.2 million, representing reported growth of 49.8% and organic growth of 47.1% compared to the second quarter of 2020. Growth was led by strength in burn, trauma and surgical reconstruction.
Strategic Initiatives and Key Developments
- Advancing key products
- Cerelink® – next generation intracranial pressure monitor is scheduled for a controlled market release in the third quarter.
- Aurora Surgiscope in minimally invasive tumor removal procedures – a targeted phased market launch will begin in the third quarter to generate clinical evidence and gain insights for a broader commercial launch in the second half of 2022.
- PriMatrix® Dermal Repair Scaffold – during the second quarter, the Company completed a randomized clinical study of PriMatrix for use in the closure of Diabetic Foot Ulcers (DFUs). This multi-center study enrolled over 225 patients and found that PriMatrix demonstrated statistically and clinically significant results, healing more DFUs in 12 weeks versus standard of care, with a median number of one application. The results of this study have been published in the Journal of Wound Care.
- The Company announced that Peter Arduini will step down as Chief Executive Officer at the end of 2021 to accept the role of President and Chief Executive Officer of GE Healthcare. The Board of Directors has initiated a formal search and appointed a special committee to direct the search and ensure a seamless transition of responsibilities.
Balance Sheet, Cash Flow and Capital Allocation
The Company generated cash flow from operations of $91.3 million in the quarter. The Company paid down $100 million of debt on its senior credit facility during the second quarter. Net debt at the end of the quarter was $1,166 million and the consolidated total leverage ratio was 2.4x, an improvement of 0.6x from December 31, 2020.
As of quarter end, the Company had total liquidity of approximately $1.7 billion, including approximately $397 million in cash and the remainder available under the revolving credit facility.
2021 Outlook
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 $0.71 per diluted share for the full-year 2021.
In addition, the Company will continue to monitor the ongoing uncertainty around the scope and duration of the pandemic and its impact on financial performance. The Company does not expect the ongoing impact of the pandemic to be uniform across all markets and product lines. The Company’s guidance assumes a gradual improvement in surgical procedures with no further setbacks from new surges or new COVID variants.
Full-Year 2021 Outlook
The Company is raising its full-year 2021 revenue guidance by $15 million to a range of $1,540 million to $1,550 million from $1,525 million to $1,535 million. This new guidance range represents a reported growth range of 12% to 13% and an organic growth range of 13% to 14%. The Company is also raising its full-year 2021 adjusted earnings per share guidance to new range of $2.98 to $3.05, from its prior range of $2.86 to $2.93.
The Company has revised its outlook for a revenue contribution from ACell to $70 million to $74 million for the full-year 2021, from its previous range of $83 million to $88 million, due to the impact of an accelerated integration of the sales force during the pandemic. The Company remains confident in the long-term growth expectations for the ACell portfolio. Strong performance in other parts of the CSS and TT businesses more than offset the slower start in ACell and are included in the new total company revenue guidance range.
Third Quarter Outlook
For the third quarter 2021, the Company expects revenues to be in a range of $382 million to $389 million, representing reported growth of approximately 3% to 5% and organic growth of 5% to 7%. Adjusted earnings per diluted share are expected to be in a range of $0.71 to $0.74.
In the future, the Company may record, or expects to record, gains or losses, expenses, or charges as described in the Discussion of Adjusted Financial Measures below, which will be excluded from the calculation of adjusted EBITDA, adjusted earnings per share for historical periods and in adjusted earnings per share guidance.
About Integra
Integra LifeSciences is a global leader in regenerative tissue technologies and neurosurgical solutions dedicated to limiting uncertainty for clinicians, so they can focus on providing the best patient care. Integra offers a comprehensive portfolio of high quality, leadership brands that include AmnioExcel®, Bactiseal®, CerebroFlo®, CereLink® Certas® Plus, Codman®, CUSA®, Cytal®, DuraGen®, DuraSeal®, Gentrix®, ICP Express®, Integra®, MatriStem® UBM, MAYFIELD®, MediHoney®, MicroFrance®, MicroMatrix®, PriMatrix®, SurgiMend®, TCC-EZ® and VersaTru®. For the latest news and information about Integra and its products, please visit www.integralife.com.
