Integer Holdings Corporation ITGR delivered adjusted earnings per share (EPS) of $1.14 in the first quarter of 2024, which improved 31% year over year. The figure topped the Zacks Consensus Estimate by 1.8%.
The adjustments include expenses related to the amortization of intangible assets and restructuring and restructuring-related charges, among others.
GAAP EPS for the quarter was 59 cents, reflecting an improvement of 51.3% year over year.
Revenues in Detail
Integer Holdings registered revenues of $414.8 million in the first quarter, up 9.5% year over year. The figure surpassed the Zacks Consensus Estimate by 0.4%.
Organically, revenues increased 6.4%.
Robust Medical sales drove the company’s top line in the reported period.
Segmental Analysis
Integer Holdings operates through two segments — Medical Sales and Non-Medical Sales.
Medical Sales reported revenues of $407.2 million, up 11.8% year over year on a reported and 8.6% on an organic basis. This figure compares to our Medical Sales first-quarter projection of $398.5 million.
Medical Sales has three product lines — Advanced Surgical, Orthopedics & Portable Medical (AS&O); Cardio and Vascular (C&V); and Cardiac Rhythm Management & Neuromodulation (CRM&N).
Integer Holdings’ AS&O revenues amounted to $29.1 million, up 4.3% year over year on a reported and 21.4% on an organic basis. Per management, this resulted from the growth of Advanced Surgical and Orthopedics, partially offset by a decline in Portable Medical from the execution of the planned multi-year exit announced in 2022. This compares to our first-quarter projection of $31.4 million for AS&O revenues.
Revenues at the C&V business totaled $221.8 million, up 16% from the prior-year quarter on a reported basis and up 9.3% organically. The solid year-over-year performance was driven by continued strong demand across all markets, new product ramps in electrophysiology and structural heart and the InNeuroCo and Pulse acquisitions. This compares to our first-quarter projection of $209 million.
Revenues at the CRM&N business were $156.3 million, up 7.7% year over year on a reported and 6.9% on an organic basis, with strong growth in emerging Neuromodulation customers with pre-market approval products and strong demand in CRM. This compares to our first-quarter projection of $158.1 million for the product line.
Revenues in the Non-Medical segment totaled $7.6 million, down 47.7% year over year both on a reported and organic basis. This was due to Electrochem sales returning to a normalized run rate after previously higher sales from the supply chain recovery. This figure compares to our segmental projection of $14.6 million for the first quarter.
Integer Holdings Corporation Price, Consensus and EPS Surprise
Integer Holdings Corporation price-consensus-eps-surprise-chart | Integer Holdings Corporation Quote
Margin Analysis
Integer Holdings generated a gross profit of $109.8 million in the first quarter, up 13.6% year over year. The gross margin in the reported quarter expanded 96 basis points (bps) to 26.5%.
We had projected 26.9% of gross margin for the first quarter.
Selling, general and administrative expenses were $46.9 million, up 12% year over year. Research, development and engineering costs were $15.8 million in the quarter, down 17.5% year over year. Adjusted operating expenses of $62.7 million increased 2.8% year over year.
Adjusted operating profit totaled $47.2 million, reflecting a 32.1% uptick from the prior-year quarter. Adjusted operating margin in the first quarter expanded 195 bps to 11.4%.
Financial Position
Integer Holdings exited the first quarter of 2024 with cash and cash equivalents of $42.2 million compared with $23.7 million at the end of 2023. Total debt (including the current portion) at the end of first-quarter 2024 was $1.14 billion compared with $959.9 million at 2023-end.
Net cash flow from operating activities at the end of first-quarter 2024 was $23.2 million compared with $6.2 million a year ago.
2024 Guidance
Integer Holdings has reiterated its financial outlook for 2024.
For 2024, the company continues to expect revenues in the range of $1,735 million-$1,770 million (suggesting an improvement of 9-11% from the 2023 reported figure). The Zacks Consensus Estimate is pegged at $1.76 billion.
The company continues to expect full-year adjusted EPS in the band of $5.01-$5.43 (suggesting a rise of 7-16% from the 2023 reported figure). The Zacks Consensus Estimate is pegged at $5.37.
Our Take
Integer Holdings exited the first quarter of 2024 with better-than-expected results. The strong year-over-year top-line and bottom-line performances were impressive. Robust performances by the Medical segment and strength in all the product lines of the Medical segment were encouraging. The expansion of both margins bodes well for the stock.
Integer Holdings continued to benefit from strong demand across all markets and the InNeuroCo and Pulse acquisitions. These also look promising for the stock.
However, the continued decline in Non-Medical revenues was discouraging.
Zacks Rank and Key Picks
Integer Holdings currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. ALGN, ResMed Inc. RMD and Laboratory Corporation of America Holdings LH, or Labcorp.
Align Technology, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 7.3%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
ResMed reported third-quarter of fiscal 2024 adjusted EPS of $2.13, beating the Zacks Consensus Estimate by 10.9%. Revenues of $1.19 billion surpassed the Zacks Consensus Estimate by 1.9%. It currently carries a Zacks Rank #2.
ResMed has a long-term estimated growth rate of 10.9%. RMD’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.
Labcorp reported first-quarter 2024 adjusted EPS of $3.68, beating the Zacks Consensus Estimate by 6.4%. Revenues of $3.18 billion surpassed the Zacks Consensus Estimate by 1.6%. It currently carries a Zacks Rank #2.
Labcorp has a long-term estimated growth rate of 9%. LH’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 1.4%.
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