Tissue Products Recall and Facility Closure Weigh on Integra LifeSciences 3Q23 Results; Expected to Be Resolved in Mid-2024
Integra LifeSciences has announced its financial results for the third quarter ending on September 30, 2023 with total revenues of $382.4 million, which reflects a decline of 0.7% on a reported basis. On an organic basis revenue grew 7.1%, excluding the impact of the Boston recall on its tissue business. Analysts had been forecasting total revenue of $387.1 million.
Integra’s Codman Specialty Surgical segment reported total revenues of $268.2 million for the third quarter. This reflects reported growth of 7.4%. Growth in CSF management, Neuro Monitoring, Dural Access and Repair, and Instruments contributed to this segment’s success. Integra also relaunched its CereLink® ICP Monitor in select international markets and submitted a 510(k) premarket notification in the U.S. following a previous recall in 2022.
The Tissue Technologies segment reported total revenues of $114.2 million for the third quarter. This segment experienced a reported decline of 15.6% due to the impact of lost revenue and increased return provisions related to the Boston product recall. However, double-digit growth from MicroMatrix®, Cytal®, Gentrix®, and amniotics helped offset these challenges. The segment’s organic growth, excluding Boston products, reached 6.7%.
In August the company received an FDA warning letter for its TEI Bioscience Plant in Boston and said it would not restart manufacturing until the FDA’s concerns were alleviated. The impacted products included SurgiMend, PriMatrix, Revize and TissueMend and the company announced a recall. The third quarter saw the successful completion of all interim external inspections in preparation for the restart of the Boston manufacturing facility. The company remains on track to meet its committed timelines. The company expects to restart manufacturing in Boston by 4Q23 and restart commercialization in the 2Q24.
From a profitability perspective, the company reported adjusted EBITDA of $88.1 million, constituting 23.0% of revenue, compared to $105.3 million or 27.3% of revenue in the prior year. Adjusted earnings per diluted share were $0.76, compared to $0.86 in the prior year. Street forecasts called for earnings of $0.78 in the quarter. Management noted that there was a $0.07 impact from the tissue recall.
The company updated its full-year 2023 revenue and adjusted earnings per share guidance. This update included a range of $1.541 billion to $1.547 billion in revenue and $3.10 to $3.14 in adjusted earnings per share. Management noted that for 2024 it is anticipating a revenue impact of $50 million and $0.30 due to the recall.
Integra LifeSciences’ President and Chief Executive Officer, Jan De Witte, commented on the results, stating, “Although the Boston returns weighed further on our third quarter results, we are on track to restart the Boston facility by the end of the year, and we also met two significant CereLink milestones with the relaunch in international markets and submission for regulatory approval in the U.S. At the same time, our strong organic growth performance in the Codman Specialty Surgical and Tissue Technologies businesses, excluding Boston, plus advances across our product pipeline, give us confidence in our long-range growth commitments.”