Integra Lifesciences (NSDQ:IART) shares were down today despite second-quarter results that came in ahead of the consensus forecast.
The surgical and medical instrument maker also announced that it inked an agreement in May to sell its traditional wound care business — including sponges, gauze and conforming bandages and advanced wound care dressings — to Gentell for up to $28.8 million ($27.8 million in cash plus $1 million in milestone payments).
Officials at Princeton, N.J.–based Integra expect the wound care business sale to close around the end of August 2022.
“Our portfolio optimization actions over the past two years have allowed us to increase our focus on Integra’s core portfolio of market-leading products in neurosurgery, surgical instrumentation and regenerative tissue and moves us closer to achieving our long-term organic growth and profitability targets,” Integra CEO Jan De Witte said in a news release.
Integra Lifesciences posted profits of $44.8 million, or 54¢ per share, on sales of $397.8 million for the three months ended June 30, 2022, for a 27.7% bottom-line gain on sales growth of 20.1%.
Adjusted to exclude one-time items, earnings per share were 82¢, 2¢ ahead of Wall Street, where analysts were looking for sales of $395.3 million.
The company’s Codman Specialty Surgery segment saw a 0.4% growth in revenues year-over-year, thanks to strength in both instruments and neurosurgery. That comprised 65% of the company’s sales, while the remainder was brought in by its Tissue Technologies business, which saw 5.1% growth from 2021. That growth was driven by private label customer orders and growth in wound reconstruction and care thanks to the Integra Dermal Matrices and SurgiMend.
“We are pleased with our strong sales performance in the first half of the year. Our balanced portfolio continues to deliver solid, profitable growth in a challenging environment, and we are on track to deliver our full-year organic growth expectations,” De Witte said. “We are encouraged by the momentum we see in our key markets, while our growth initiatives and operational focus further strengthens our ability to deliver on our long-term financial targets.”
Truist analysts Richard Newitter, Samuel Brodovsky, David Rescott and Lin Zhang wrote in a report that they believe the company’s second-quarter results will be received positively by investors.
“The company also announced the divestiture of its traditional wound care business, which we believe is a slower growing business, and we are curious to learn if there is any type of growth lift that could come from it being divested,” the analysts wrote.
Integra said it expects to log adjusted EPS of $3.21 to $3.29, reflecting the planned TWC divestiture. The company projects revenue growth of between 4% and 5.2% for the full year, with the bottom end of that forecast rising from the previous projection of 3.8% to 5.2%.
Shares of IART were down more than 2% at $55.61 apiece by mid-day trading today. MassDevice‘s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — was up slightly.