$IART earnings report

Integra reported third-quarter total revenue of $411.2 million, up 2.3% on a reported basis and 2.5% on an organic basis. Specialty Surgery generated $304.1 million of revenue and grew 3.9% reported and 4.2% organically, while Tissue Reconstruction generated $107.1 million and declined 2.2% on both measures. The Cincinnati facility disruption had an approximate $7 million revenue impact, and management cited softer-than-expected Tissue Reconstruction results.

Neuro was the main source of portfolio strength, with organic sales growth of 6.5% driven by CereLink®, Certas® Plus, Bactiseal®, DuraSeal® and recovery in cranial perforators. Instruments organic sales declined (0.9%) due to order timing and ENT organic sales declined (1.1%), largely from a low-single digit decline in sinus balloons. In Tissue Reconstruction, strong DuraSorb® and PriMatrix® growth did not offset declines in MicroMatrix® and Integra Skin. Corporate Partnerships was approximately flat.

Profitability improved at the net-income level but gross-margin measures declined. GAAP net income was $14.9 million, or $0.19 per diluted share, compared with a GAAP net loss of $(5.4) million, or $(0.07) per diluted share. Adjusted net income rose to $46.4 million and adjusted diluted EPS rose to $0.59 from $0.54. GAAP gross margin was 51.0% versus 51.5%, adjusted gross margin was 61.1% versus 62.9%, and adjusted EBITDA margin was 19.4% of revenue versus 19.5% of revenue.

Cash generation strengthened materially in the quarter. Operating cash flow was $96.0 million and free cash flow was $85.7 million, compared with $25.8 million of free cash flow in the prior-year quarter. Net debt was $1.5 billion and the consolidated total leverage ratio was 3.8x. Subsequent to quarter-end, the Company completed a $2.1 billion debt refinancing that extended debt maturities, while management expects the effective-interest-rate increase to be near the high end of the previously communicated 100- to 200-basis-point range.

The Company maintained its full-year 2026 revenue outlook of $1.634 billion to $1.654 billion and adjusted EPS outlook of $2.30 to $2.40, consistent with the outlook provided on October 2, 2026. The fourth-quarter revenue guide of $413 million to $433 million implies reported and organic declines under the Company's stated ranges. Management said the updated outlook incorporates the Cincinnati recovery timeline, a revised Tissue Reconstruction outlook, a consistent Specialty Surgery outlook, business interruption insurance recoveries, and incremental refinancing-related interest expense.

Integra provided preliminary, unaudited third quarter 2026 expectations of approximately $410 million to $412 million of revenue and adjusted earnings per diluted share of $0.55 to $0.59. The release did not provide reported third quarter results, prior-year comparisons, segment revenue, margins, operating income, net income, or GAAP earnings per share. The Company said it will report third quarter 2026 financial results during a conference call in October 2026.

The July 2026 flooding event at the Cincinnati facility is the central factor in the update. Management estimates that the supply disruption negatively impacted third quarter revenue by approximately $7 million and expects a further approximately $15 million to $20 million negative effect on fourth quarter revenue. The facility supports several products in the Specialty Surgical Technologies portfolio. Management has used available inventory, activated alternate supply sources for certain products, and continued restoration work.

The full-year 2026 revenue outlook was reduced from $1.654 billion to $1.695 billion to $1.634 billion to $1.654 billion. Adjusted earnings per diluted share guidance was reduced from $2.40 to $2.50 to $2.30 to $2.40. The Company said the preliminary third quarter outlook and updated full-year guidance reflect revised assumptions for the flooding event and updated assumptions for the broader business for the remainder of the year.

Cash generation remains a stated offset in management's outlook. The Company expects greater than $85 million of operating cash flow in the third quarter and approximately $190 million to $200 million for the full year. Integra maintains property and business interruption insurance and expects recoveries to mitigate a substantial portion of the earnings impact during the recovery period, although it continues to work with its insurance carrier to assess and document recoverable losses.

Management expects the Cincinnati site to return to full manufacturing operations during the second quarter of 2027. The main operating markers are the anticipated fourth quarter revenue disruption, restoration progress, insurance recovery assessment, and management's cited improvements in product availability, return of key products to market, and commercial execution. The preliminary figures remain subject to completion of financial closing procedures.

Integra reported second-quarter revenues of $418.8 million, up 0.8% on a reported basis and 0.7% on an organic basis from the prior year. Growth was concentrated in Specialty Surgery, where revenue was $309.3 million and organic growth was 1.6%. Tissue Reconstruction revenue was $109.5 million, with organic revenue declining (2.0)%. The result reflects a modest consolidated growth profile with uneven segment performance.

Specialty Surgery benefited from organic growth in Neuro and Instruments. Neuro increased 1.9% on an organic basis, primarily driven by Certas® Plus, Bactiseal® and CUSA®, while Instruments grew 3.2%. ENT sales declined (1.9)%. In Tissue Reconstruction, strong growth in DuraSorb® and the relaunch of PriMatrix® were offset by declines in MicroMatrix® and Integra Skin, with Integra Skin also facing a prior-year comparison that included clearance of back orders.

Profitability improved materially from the prior year. GAAP gross margin was 52.5%, compared to 50.4%, and adjusted gross margin was 61.3%, compared to 60.7%. Adjusted EBITDA was $78.4 million, or 18.7% of revenue, compared to $71.2 million, or 17.1% of revenue. GAAP net income was $4.5 million, or $0.06 per diluted share, compared with a GAAP net loss of $(484.1) million, or $(6.31) per diluted share. Adjusted EPS rose to $0.56 from $0.45.

Cash flow from operations was $22.8 million. Net debt was $1.6 billion, consolidated total leverage was 4.1x, and total liquidity was approximately $496 million, including $274.1 million in cash plus short-term investments. Management highlighted its effort to reduce balance sheet leverage, making production ramp execution and operating performance relevant to deleveraging progress.

For the third quarter, Integra expects reported revenue of $410 million to $425 million and adjusted EPS of $0.53 to $0.61 per share. The company reduced its full-year reported revenue outlook to $1.654 billion to $1.695 billion from $1.662 billion to $1.702 billion, citing a stronger U.S. dollar, while reaffirming full-year organic revenue growth of 0.8% to 3.3% and adjusted EPS of $2.40 to $2.50. The guide incorporates updated tariff assumptions, a higher interest rate environment and potential debt refinancing actions. The Braintree facility has initiated production, and the company remains on track for the planned fourth-quarter SurgiMend® relaunch.