Integra Lifesciences Posts 11 Percent Spike in 2014 Revenue

Integra LifeSciences Holdings Corporation ended 2014 on a very positive note.

The company reported adjusted earnings per share (EPS) of 94 cents in the fourth quarter of 2014, up 13.3 percent compared with Q4 2013. Adjusted results beat the Zacks Consensus Estimate by a nickel. However, including certain one-time items, the company reported net income of $17.2 million or 52 cents per share, reflecting a significant year-over-year improvement of 24.7 percent or 15.6 percent, respectively.

For full year 2014, Integra Lifesciences reported adjusted earnings of $2.96 per share, reflecting 28.1 percent increase compared with 2013. The full year result also beat the Zacks Consensus Estimate by 6 cents.

Total revenue during the fourth quarter (ended Dec. 31, 2014) jumped 14.2 percent to $252.2 million. Double-digit growth observed in Integra’s U.S. Neurosurgery, U.S. Extremities and International segments primarily benefited the top line in the quarter. Organic revenue growth in the quarter was 5.8 percent, owing to strong performance delivered by Integra’s worldwide neurosurgery and skin and wound businesses.

“We are proud of these results, which reflect the progress we have made as a company against our plans,” said Peter Arduini, Integra’s president/CEO.

The company reported (full-year) 2014 revenues of $928.3 million, up 11 percent year over year.

On the basis of product categories, revenues from the company’s U.S. neurosurgery business climbed 45.2 percent (up 11 percent on an organic basis) to $67.3 million in the fourth quarter, driven by higher sales of DuraSeal.

Revenues from the U.S. Extremities business increased 16.7 percent to $40.3 million, driven by a ramp up observed in the demand of the new thin version of Integra Wound Matrix. The addition of new sales representatives to Integra’s skin and wound channel in the second half of 2014, and other new product launches like the Total Foot System 2 and Freedom Wrist also contributed to this business’ sales growth, the company noted.

Integra LifeSciences’ U.S. Spine & Other business revenues declined 8.3 percent compared with Q4 2013 to $43.2 million, largely driven by a decline in hardware sales due to ongoing pricing pressure, delays in expected product launches and slower addition of new distributors. All these adverse impacts outweighed the sales growth observed in this segment’s Orthobiologics business. Also, revenues from the U.S. Instruments segment slipped 0.6 percent from the prior-year quarter to $41.7 million, owing to declining sales in alternate sight channels, which outweighed the modest sales growth of acute care and lighting.

Fourth-quarter revenues from the international segment rose 17.5 percent to $59.6 million, with strong sales growth delivered by the company’s businesses in Europe, China and Japan.

“We look forward to the opportunities that lie ahead in 2015, including new product introductions, ramping up production in our new collagen manufacturing center, publication of the data from our diabetic foot ulcer study, and the sales channel investments we are making in our wound, extremities and international businesses,” Arduini said. “The accomplishments of the last two years have laid the foundation for Integra to achieve our long-term growth and profitability objectives.”

Gross margin declined 70 basis points (bps) to 61.3 percent in the fourth quarter owing to 16.3 percent rise in cost of goods, which amounted to $97.5 million.

While selling, general and administrative expenses increased 10.5 percent to $112.5 million in the quarter, research and development expenses declined 16.2 percent to $12.2 million. Adjusted operating margin (excluding amortization of intangible asset and goodwill impairment charge) improved 250 bps to 11.9 percent.

For first quarter 2015, the company expects revenues in the range of $229 million to $233 million, which represents 6 percent to 8 percent growth and assumes an organic growth rate of roughly 5 percent.

For the first quarter, Integra expects adjusted EPS of 60 cents to 65 cents with the mid point of the guidance range showing low double-digit growth over the prior-year quarter.

Meanwhile, management expects the spin-off of the companys spine and orthobiologics business into SeaSpine to be over in the second half of 2015. “As we move forward with the realignment of our business into two global segments, we expect the simplified, more focused structure to result in faster growth and margin expansion. Overall, our 2015 guidance reflects continued progress toward our long-term growth and profitability targets,” said Glenn Coleman, chief financial officer.