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INTEGRA LIFESCIENCES HOLDINGS CORP (IART)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue and adjusted EPS topped internal guidance; revenue beat Street by ~$20.5M and adjusted EPS was modestly above consensus, while GAAP EPS reflected a non-cash $511M goodwill impairment tied to tariff uncertainty and quality/operational issues *.
  • Reported revenue was $415.6M (-0.6% y/y), adjusted EPS $0.45, GAAP EPS $(6.31) due to impairment; adjusted gross margin fell ~450 bps y/y to 60.7% on remediation costs and under-absorption .
  • Guidance: FY25 revenue narrowed to $1.655–$1.680B (2.8%–4.3% reported, 0.6%–2.1% organic) with adjusted EPS maintained at $2.19–$2.29; Q3 guide set at $410–$420M revenue and $0.40–$0.45 EPS .
  • Catalysts: Elevated quality execution visibility (all manufacturing site baseline assessments complete), Integra Skin production at record levels, and a $25–$30M annualized cost-savings program expected over the next 12–18 months .

What Went Well and What Went Wrong

What Went Well

  • “Second quarter revenues exceeded guidance; adjusted EPS at the top end of the range,” supported by mid-single-digit demand ex-ship holds and strong CSS and Tissue Tech brand performance .
  • Integra Skin achieved highest-ever production levels and returned to normal revenue run-rate; management expects maintained output and rebuilding safety stock in 2H .
  • Compliance Master Plan: completed baseline assessments at all manufacturing sites; “No related shipping holds initiated in Q2,” and ongoing FDA updates on warning letter actions .

What Went Wrong

  • Adjusted gross margin down to 60.7% (−450 bps y/y) and adjusted EBITDA margin 17.1% (−290 bps y/y) on remediation costs, under-absorption, and tariffs; adjusted EPS fell to $0.45 from $0.63 y/y .
  • Tissue Technologies declined 4.1% y/y (reported and organic) as ship holds and private label component delays offset strong growth in DuraSorb, Integra Skin, MicroMatrix, and Cytal .
  • ENT growth below expectations on reimbursement pressure in sinuplasty balloons and timing of capital sales; international performance pressured by ship holds and Medihoney recall impact .

Financial Results

Actuals vs Prior Periods and Estimates

MetricQ4 2024Q1 2025Q2 2025Q2 2025 ConsensusPerformance
Revenue ($USD)$443.0M $382.653M*$415.605M $395.062M*Beat ($+20.5M vs Street)*
GAAP EPS ($)$0.97 (adjusted EPS) $(0.33)*$(6.31) N/AMiss vs prior; impairment-driven
Adjusted EPS ($)$0.97 $0.41 $0.45 $0.431*Beat (~+$0.02)*
Adjusted EBITDA ($USD)$109.0M*$68.667M*$71.224M $66.748M*Beat (~+$4.5M)*
Adjusted Gross Margin (%)65.2% N/A60.7% N/ADown ~450 bps y/y

Values with asterisks retrieved from S&P Global.

Segment and Sub-Segment Breakdown (Q2 2025 vs Q2 2024)

Segment / Sub-SegmentQ2 2024 RevenueQ2 2025 RevenueChange
Neurosurgery$205.502M $208.992M +1.7%
Instruments$54.537M $53.080M −2.7%
ENT$41.722M $41.886M +0.4%
Total Codman Specialty Surgical$301.761M $303.958M +0.7%
Wound Reconstruction & Care$87.695M $84.747M −3.4%
Private Label$28.719M $26.900M −6.3%
Total Tissue Technologies$116.414M $111.647M −4.1%
Total Reported Revenues$418.175M $415.605M −0.6%
Organic Revenues$418.175M $412.368M −1.4%

KPIs and Balance Sheet

KPIQ2 2025Notes
Cash from Operations$8.919M
Free Cash Flow$(11.227)M
Adjusted Free Cash Flow Conversion(32.7)%
Net Debt$1.591B
Total Debt$1.85B
Liquidity~$1.14B (incl. $254M cash+ST investments)
Consolidated Total Leverage Ratio4.5x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)FY 2025$1.65B–$1.72B $1.655B–$1.680B Narrowed / Updated
Adjusted EPS ($)FY 2025$2.19–$2.29 $2.19–$2.29 Maintained
Reported/Organic Growth (%)FY 20252.4%–6.5% reported; ~0.4%–4.4% organic 2.8%–4.3% reported; 0.6%–2.1% organic Updated
Revenue ($USD)Q3 2025N/A$410M–$420M Initial Q3 guide
Adjusted EPS ($)Q3 2025N/A$0.40–$0.45 Initial Q3 guide

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Compliance Master Plan / QualityBroad rollout; ship holds cleared into Q4; warning letter remediation continued Baseline assessments at all manufacturing sites complete; no new CMP-related ship holds in Q2; remediation plans underway Improving execution visibility
Supply Chain & Ship HoldsQ1: ship holds expanded to $55–$70M for 2025; resolution into 2H FY ship hold impact refined to ~$100M; no new material holds anticipated in 2H Near-term pressure, path to stabilization
Tariffs / MacroTariff headwind estimated ~$$22M for 2025; mitigation strategies outlined Tariff headwind now ~$13M EPS for FY25, mostly in Q4; mitigation ongoing Headwind moderated vs prior guide
Product Performance – Integra SkinQ4 ramp; Q1 constraints due to maintenance and low safety stock Record production; normal revenue run-rate achieved; safety stock rebuild in 2H Strengthening
ENT / AcclarentHigh single-digit 2025 growth targeted; integration synergy with MicroFrance ENT ENT below expectations due to reimbursement and capital timing; AERA registry launched; still mid-single-digit expected for 2H Mixed near term; long-term supportive
Regulatory / LegalWarning letter actions prioritized; PMA strategy for SurgiMend/DuraSorb ongoing FDA updates ongoing; PMA plans advancing; no new holds from CMP Q2 Progressing
Private LabelComponent delays; expected 2H recovery; ~$5M Q4 impact Q2 −5.9% y/y; recovery timelines extended; softer partner demand Weaker than prior

Management Commentary

  • “Our strong revenue performance is a testament to our disciplined progress and the solid underlying demand trends for our portfolio of neurosurgery and tissue technology products.” — Mojdeh Poul, CEO .
  • “Completed all manufacturing site baseline assessments…No related shipping holds initiated in Q2.” .
  • “Achieved the highest-ever production rate for Integra Skin, returning to normal revenue levels.” .
  • CFO on impairment: “Goodwill impairment charge of approximately $511 million…non-cash…reflects accounting requirements under GAAP” with drivers including tariffs and recovery risks .
  • Cost program: “Minimum annualized savings of $25–$30 million over the next 12–18 months” to support margin expansion .

Q&A Highlights

  • Tariffs: FY25 EPS impact updated to ~$0.13, mostly in Q4; mitigation via pricing, sourcing, logistics, exemptions; 2026 impact TBD .
  • Q3 vs Q4 cadence: Street noted lower Q3 EPS guide; management expects ~$38M revenue step-up from Q3 to Q4 driven ~60% by normal seasonality and Integra Skin momentum, ~40% by supply recovery .
  • Ship holds: FY25 impact refined to ~$100M; no new CMP-related holds in Q2; some remediation timelines extended into 2H .
  • ENT reimbursement dynamics: pressure in sinuplasty balloons; double-digit growth in AERA and TruDi disposables; mid-single-digit ENT growth expected in 2H .
  • PriMatrix/SurgiMend: last full-year pre-market revenue ~$64M (2022); reintroduction will require share recapture efforts; PMA plans underway .

Estimates Context

  • Q2 2025: Revenue $415.6M vs Street $395.1M; Adjusted EPS $0.45 vs Street $0.431; Adjusted EBITDA $71.2M vs Street $66.7M; 10 estimates for EPS and revenue. The quarter was a broad top-line beat with modest adjusted EPS upside despite margin headwinds. Values retrieved from S&P Global.*
  • Prior quarters: Q1 2025 revenue $382.653M vs Street $381.166M; adjusted EPS $0.41 vs Street $0.431 (miss); Q4 2024 adjusted EPS $0.97 vs Street $0.854 (beat). Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q2 was operationally resilient: top-line and adjusted EPS at high end of internal guidance and above consensus, indicating demand strength despite supply constraints *.
  • Margin pressure should persist near term (remediation, under-absorption, tariffs); management is offsetting with disciplined OpEx and a $25–$30M cost program; look for incremental margin improvements into Q4 and 2026 .
  • Execution confidence improving: CMP assessments complete, no new CMP-related holds in Q2, and clearer FY ship hold impact (~$100M); expect more stable supply exiting 2025 .
  • Product catalysts: Record Integra Skin production and safety stock rebuild support 2H growth; PMA pathway for SurgiMend/DuraSorb is a medium-term growth lever in breast reconstruction .
  • ENT remains mixed near term on reimbursement pressure; long-term AERA pediatric registry and integration synergies underpin sustainable growth .
  • Trading setup: Into Q3, guidance implies flattish revenue vs Q2 with EPS $0.40–$0.45; the expected Q4 step-up and improving supply visibility are key valuation catalysts if delivered .
  • Estimates likely need mild upward revenue revisions for 2H on Integra Skin momentum and narrowed FY revenue range; margins may lag revisions given remediation/tariff drag.*

Additional Data Tables

Revenue and EPS Trend (Document-sourced, oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD)$443.0M $383.0M approx $415.6M
GAAP EPS ($)N/A$(0.33)*$(6.31)
Adjusted EPS ($)$0.97 $0.41 $0.45
Adjusted EBITDA ($USD)$109.0M*$68.7M*$71.2M

Values with asterisks retrieved from S&P Global.

Gross Margin and EBITDA Margin (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Adjusted Gross Margin (%)65.2% N/A60.7%
Adjusted EBITDA Margin (%)23.7% 16.6% 17.1%

Cash Flow and Leverage (Q2 2025)

MetricQ2 2025
Cash from Operations ($USD)$8.919M
Free Cash Flow ($USD)$(11.227)M
Net Debt ($USD)$1.591B
Liquidity ($USD)~$1.14B (incl. $254M cash+ST investments)
Total Debt ($USD)$1.85B
Leverage Ratio4.5x

Note on non-GAAP: Adjusted metrics exclude structural optimization, acquisition/divestiture/integration charges, EU MDR costs, Boston recall/Braintree transition, impairment, and intangible amortization; reconciliations provided in the 8‑K press release tables .

Values with asterisks retrieved from S&P Global.