Sign in
IL

INTEGRA LIFESCIENCES HOLDINGS CORP (IART)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue of $382.653M grew 3.7% reported but fell 3.5% organically; adjusted EPS was $0.41 and GAAP EPS was $(0.33) .
  • Against Wall Street consensus, revenue modestly beat ($382.653M vs $381.166M*) while EPS modestly missed ($0.41 vs $0.431*), both within guidance ranges .
  • Management reaffirmed FY 2025 revenue guidance ($1.650B–$1.715B) but lowered adjusted EPS to $2.19–$2.29 to reflect new tariffs (up to ~$0.22/share headwind) .
  • Key drivers: shipping holds increased to $55–$70M for 2025 (from $27M prior), private label component supply delays, and Integra Skin production pacing with yields improving into Q2 .

What Went Well and What Went Wrong

What Went Well

  • CSS segment reported revenue +9.4% to $280.664M with strong Instruments growth (+14.8% organic) and ENT growth driven by Acclarent (~$29M) .
  • Management progress on Compliance Master Plan: 10 of 14 sites assessed; remediation underway; transformation and program management office established to improve execution .
  • CEO tone confident: “laser focused on strengthening our quality systems… driving improved accountability and execution…” .

What Went Wrong

  • Neurosurgery organic sales declined 4.7% due to shipping holds across several product lines; Tissue Technologies down 9.3% reported (9.1% organic), with Integra Skin production timing and private label components delays .
  • Gross margin compression: GAAP GM 50.8% (vs 56.1% YoY) and adjusted GM 62.2% (vs 64.4%); adjusted EBITDA margin fell to 16.6% (from 19.5% YoY) .
  • Shipping holds impact expanded: total 2025 ship holds now $55–$70M vs previously $27M; additional holds identified late Q1, including CSS and Tissue Tech .

Financial Results

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus*
Revenue ($USD)$381,000,000 $442,645,000 $382,653,000 $381,165,720*
GAAP Diluted EPS ($)—$0.25 $(0.33) —
Adjusted EPS ($)$0.41 $0.97 $0.41 $0.431*
Margin MetricQ3 2024Q4 2024Q1 2025
GAAP Gross Margin %——50.8%
Adjusted Gross Margin %63.0% —62.2%
Adjusted EBITDA Margin %16.2% 23.7% 16.6%
Q1 2025 Segment Revenue ($USD)AmountYoY Change
Neurosurgery$190,912,000 (5.6)%
Instruments$50,950,000 14.8%
ENT$38,802,000 296.2%
Total CSS$280,664,000 9.4%
Wound Reconstruction & Care$74,779,000 (7.5)%
Private Label$27,210,000 (13.8)%
Total Tissue Technologies$101,989,000 (9.3)%
Q1 2025 KPIsAmount
Cash from operations$(11,257,000)
Free cash flow$(40,177,000)
Net debt$1,574,431,000
Consolidated leverage4.3x
Liquidity~$1.16B (incl. ~$273M cash/STI)

Note: *Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($)FY 2025$1.650B–$1.715B $1.650B–$1.715B Maintained
Adjusted EPS ($)FY 2025$2.41–$2.51 $2.19–$2.29 Lowered (tariffs)
Revenue ($)Q2 2025—$390M–$400M New
Adjusted EPS ($)Q2 2025—$0.40–$0.45 New
Tariff impact (EPS)Q2 2025—~$(0.04)/share New
Tariff impact (EPS)FY 2025—up to ~$(0.22)/share New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Shipping holds/supplyCSS holds largely resolved by Q3 end; Q4 impact ~$10M expected Continued intermittent holds; 2025 framed to absorb disruptions Holds increased to $55–$70M for 2025; ~$25M impact expected in Q2 Worsened near-term
Compliance Master Plan (CMP)CMP underway; remediation through 2025 Emphasis on quality and capacity; Braintree on track H1’26 10/14 site assessments complete; new PMO established Execution ramping
Tariffs/macroNot a focus (pre-announcement)Not a focus (pre-announcement)New global and China-specific tariffs; FY EPS cut; mitigation plans New headwind
Integra Skin productionHeadwinds, plan to return to run rate in Q4 Mid-single-digit growth in Q4; production constraints noted Production pacing improved; normal revenue in Q2; rebuild safety stock H2 Improving
ENT/AcclarentIntegration outperforming; ~$30M Q3 reported ENT growth; acquisition integrated ~$29M Q1; organic ENT roughly flat due to MicroFrance constraints Sustained strength
Leverage/covenants4.0x; revolver to repay converts; swaps in low 3% Net debt $1.535B; liquidity ~$1.2B 4.3x; intends to satisfy Aug convert via revolver, swaps low-3% Stable management

Management Commentary

  • CEO: “We remain laser focused on strengthening our quality systems, improving supply reliability, and driving operational excellence… driving improved accountability and execution across the enterprise…” .
  • CEO: “We have embarked on a turnaround… portfolio prioritization and disciplined program management… transformation and program management office” .
  • CFO: “Adjusted EPS for the quarter was $0.41… gross margins 62.2%… adjusted EBITDA margins 16.6%… operating cash flow was negative $11.3M” .
  • CFO on tariffs: “We estimate an impact of approximately $22M in 2025 or $0.22 per share… progressive impact to gross margin and adjusted EPS… ~$0.04 in Q2” .

Q&A Highlights

  • Ship holds: Incremental holds identified late Q1 lifted annual impact to $55–$70M (from $27M); Q2 revenue headwind ~$25M; high-end FY revenue guide still possible given offsets (Integra Skin, FX tailwind, demand) .
  • Tariffs: ~half of 2025 impact is China; mitigation (pricing, sourcing, surcharges, exemptions) underway but not embedded in guidance yet .
  • Private label: Expect ~$10M step-up H2 vs H1; full-year now low single-digit decline vs prior “flat” assumption .
  • Capital structure: August convert to be repaid via revolver; swaps to fix >50% of debt at low-3% through 2027; covenant step-down to 4.25x in Q4 but company expects compliance .
  • Braintree & FDA: Aim to resolve warning letter actions by time Braintree is operational; most remediations by year-end 2025, some into 2026 .

Estimates Context

  • Q1 2025: Revenue beat ($382.653M vs $381.166M*), EPS miss ($0.41 vs $0.431*), both inside prior company guidance ($375M–$385M revenue; $0.40–$0.45 EPS) .
  • FY 2025: S&P Global consensus EPS ~$2.20* sits near the low end of updated company guidance ($2.19–$2.29), suggesting limited immediate estimate cuts if mitigation offsets tariffs; consensus revenue ~$1.634B* is below guidance range midpoint .

Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term revenue stability with organic challenges: Q1 revenue near top of guide, but organic declines from ship holds and Integra Skin timing underscore operational execution risk .
  • Tariffs drive EPS reset: FY adjusted EPS cut to $2.19–$2.29 reflects ~$0.22/share tariff impact; watch mitigation cadence (pricing, sourcing) and any policy changes .
  • Execution pivot underway: PMO launch, site assessments, and leadership additions aim to improve quality/supply reliability; trajectory should show into H2’25 and 2026 .
  • Segment mix supportive: ENT/Acclarent remains a growth engine; Instruments strong; Neurosurgery constrained by holds—monitor release timing and international resolution pace .
  • Cash and leverage manageable: Liquidity ~$1.16B; leverage 4.3x with revolver and swaps plan for convert; covenant dialogue active—operational improvement key to de-risk .
  • Q2 setup: Guidance implies sequential revenue step-up on seasonality and Integra Skin yields, offset by ~$25M ship hold and ~$0.04 tariff EPS headwind; track execution vs plan .
  • FY revenue guide intact: Despite expanded ship holds, reaffirmed revenue range suggests demand strength outside supply-constrained SKUs; monitor private label recovery timing .