Integra LifeSciences (IART) reported EPS of 38 cents for the first quarter of fiscal 2011 compared with 50 cents in the year-ago quarter, down 24%. However, adjusted EPS (excluding one-time items) was 66 cents, keeping in line with the Zacks Consensus Estimate and 4.76% above the year-ago quarter.
The earnings growth was attributable to a 5% year over year increase in revenues to $181.0 million in the quarter, meeting the Zacks Consensus Estimate. Currency movements favorably impacted the quarter’s sales by $1.08 million.
Integra recorded sales growth across its segments- Orthopedic ($72.2 million, up 3% year over year), Neurosurgery ($68.4 million, up 6%) and Instruments ($40.4 million, up 7%).
Integra witnessed a 6.1% year-over-year increase in gross profit leading to 71 basis points (bps) expansion in gross margin to 64.1%. Operating expenses increased 6.7% to $160.1 million, primarily driven by a 10.4% rise in selling, general and administrative expenses to $80.1 million and 7.5% increase in research and development expenses to $12.1 million. This in turn led to a 7.8% fall in operating income causing a 318 bps dip in operating margin to 11.5%.
Integra exited the quarter with $104.3 million in cash and cash equivalents compared to $128.7 million at the end of December 2010. The company generated $21.3 million of cash flow and used up $5.9 million for capital expenditures in the quarter. Additionally, in order to pay down its revolving line of credit, Integra used $40 million of cash during the first quarter.
Outlook
Integra reiterated its fiscal 2011 revenue and EPS guidance. The company expects to report adjusted EPS within the range of $2.87-$3.02 on revenues of $765–$780 million. The Zacks Consensus Estimate for revenue and EPS are $774 million and $1.46 respectively.
Integra is a global leader in regenerative medicine. The company’s products are used primarily in neurosurgery, extremity reconstruction, orthopedics, and general surgery to treat millions of patients in the US, Europe and the Asia Pacific every year.
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