Exhibit 99.1
News Release
Contacts:
Integra LifeSciences Holdings Corporation
John B. Henneman, III John Bostjancic
Executive Vice President Senior Director of Finance
Chief Administrative Officer (609) 936-2239
(609) 936-2481 jbostjancic@integra-ls.com
jhenneman@integra-ls.com
Integra LifeSciences Reports Record Pre-Tax Earnings and
Revenues for the First Quarter 2003
Cash Flows from Operations Totaled $8.8 Million
Plainsboro, NJ /April 25, 2003 / -- Integra LifeSciences Holdings Corporation
(Nasdaq: IART) today reported net income of $5.4 million, or $0.18 per share,
for the first quarter of 2003, as compared to net income of $4.1 million, or
$0.13 per share, in the first quarter of 2002.
Total revenues in the first quarter of 2003 increased $10.9 million to $36.8
million, a 42% increase over total revenues in the first quarter of 2002.
Revenues from product lines acquired since the beginning of the first quarter
2002 accounted for $6.2 million of the increase in total revenues. Excluding
revenues attributable to product lines acquired since the beginning of the first
quarter of 2002, first quarter 2003 product revenues increased by $4.4 million,
or 18%, over the prior year period.
Pre-tax earnings for the period were $8.6 million, an increase of 36% over the
first quarter of 2002.
"I am very pleased with our record revenues and pre-tax earnings this quarter,"
said Stuart M. Essig, Integra's President and Chief Executive Officer. "We also
completed two significant transactions that position us for further growth. Our
acquisition of JARIT(R) Surgical Instruments provides us with an established and
respected name in general surgery instruments and broadens our distribution
channels and customer base. We also issued $105 million of contingent
convertible subordinated notes, which significantly increased our financial
flexibility."
Following our integration of several diverse businesses we acquired, in 2003 we
began to manage our business and review financial results on an aggregate basis,
instead of through different operating segments. Now, integrated teams manage
functions such as marketing, manufacturing, research, sales and administration
for the entire Company. Accordingly, we now report our financial results under a
single operating segment--the development, manufacturing, and distribution of
medical devices. For comparative purposes, we have revised our prior period
results to reflect this change.
Revenues are now segregated into the following categories:
Quarter Ended March 31,
2003 2002 % Increase
-------- ------- ----------
Product revenue:
Neuromonitoring products $10,532 $ 8,582 23%
Operating room products 12,588 7,872 60%
Instruments 6,247 3,823 63%
Private label products 5,763 4,242 36%
-------- -------- ----------
Total product revenue $35,130 $24,519 43%
Other revenues 1,650 1,397 18%
-------- -------- ----------
Total revenue $36,780 $25,916 42%
Product revenues for the first quarter of 2003 increased $10.6 million, or 43%,
over the first quarter of 2002 to $35.1 million. Increased sales of drainage and
cranial access kits provided most of the growth in neuromonitoring products.
Revenues from neurosurgical shunt products acquired in 2002 and the continued
growth in sales of the DuraGen(R) Dural Graft Matrix and the NeuraGen(TM) Nerve
Guide products drove the increase in operating room product revenues. Sales of
the Padgett(R) and JARIT surgical instrument lines acquired in 2002 and 2003
accounted for most of the year over year increase in instrument revenues.
Revenues from acquired product lines and increased revenue from the VitaCuff(R)
device and the Absorbable Collagen Sponge used in Medtronic's bone graft product
contributed significantly to the increase in private label product revenues. The
growth in other revenue is attributable to an increase in product development
revenue offset in part by a decrease in distribution and license fees.
Acquisitions and recent product launches continue to contribute significantly to
the Company's revenue growth. Product revenues in the first quarter of 2003
included the following amounts in sales of acquired product lines:
Revenue from product Total revenue
lines acquired in from acquired Total
2003 2002 product lines revenue
------ ------ -------------- -------
Neuromonitoring products $ -- $ 922 $ 922 $10,532
Operating room products -- 2,346 2,346 12,588
Instruments 1,132 1,056 2,188 6,247
Private label products -- 719 719 5,763
Reported gross margin on product revenues in the first quarter of 2003 remained
consistent with the first quarter of 2002 at 61% of product revenues and
included the negative impact of $346,000 of inventory fair value purchase
accounting adjustments.
Sales and marketing expense increased by $2.0 million to $7.6 million in the
first quarter of 2003, a slight decrease as a percentage of product revenues
from the prior year period. General and administrative expense increased by $1.9
million over the first quarter of 2002 to $4.8 million, primarily as a result of
costs incurred in operating the businesses acquired in 2002 and 2003.
The Company generated $8.8 million in cash flows from operations in the first
quarter of 2003, as compared to $5.5 million in the prior year quarter.
Operating cash flows improved in the first quarter of 2003 primarily as a result
of higher net income.
The Company's net interest income decreased by $0.2 million to $0.8 million in
the first quarter of 2003, primarily as a result of a continued decrease in
interest rates.
The $0.9 million increase in income tax expense in the first quarter of 2003
reflects a slight increase in the effective tax rate projected for 2003 to
36.5%, as compared to the 35% effective rate reported for the first quarter of
2002. The Company expects to report an effective tax rate of 36.5% for the full
year 2003.
The Company used approximately $42.4 million of cash to purchase JARIT Surgical
Instruments on March 17, 2003. On March 31, 2003, the Company received net
proceeds of $101.9 million from the sale of $105.0 million of its 2 1/2%
Contingent Convertible Subordinated Notes due March 15, 2008. The Company used
approximately $35.3 million of the proceeds from the sale of the notes to
repurchase 1.5 million shares of its common stock.
The Company's cash and investments totaled $170 million at March 31, 2003. On
April 11, 2003 the Company received $14.5 million in net proceeds from the sale
of an additional $15.0 million of notes.
Integra is revising its expectations for revenues, gross margin and earnings for
2003 and 2004. We expect total revenues to increase to between $168 and $171
million in 2003 and $196 and $206 million in 2004. Gross margin is expected to
be 60% and 62% of product revenues in 2003 and 2004. Excluding a potential
in-process research and development charge related to a $1.5 million milestone
payment that may become due in connection with a product development agreement,
we expect our earnings to be within a range of $0.80 to $0.82 per share in 2003
and $1.05 to $1.10 per share in 2004. The Company's guidance for the second
quarter of 2003 is for total revenues in the range of $42.5 to $43.5 million and
earnings per share of $0.18. The Company's second quarter guidance includes the
negative impact of approximately $700,000 of inventory fair value purchase
accounting adjustments from the JARIT and Padgett acquisitions. In accordance
with the Company's usual practices, management's expectations for 2003 and 2004
financial performance do not include the impact of acquisitions or other
strategic corporate transactions that have not yet closed.
The Company has scheduled a conference call for 9:00 am ET today, April 25,
2003, to discuss the financial results for the first quarter of 2003 and to
further discuss its forward-looking financial guidance. The call is open to all
listeners and will be followed by a question and answer session. Access to the
live call is available by dialing (973) 935-2100 or through a listen-only
webcast via a link provided on the home page of Integra's website at
www.Integra-LS.com. A replay of the conference call will be accessible starting
one hour following the live event. Access to the replay is available through May
9, 2003 by dialing (973) 341-3080 (access code 3609049) or through the webcast
accessible on our home page.
Additional information about the individual product lines that comprise the
various product revenue categories is available in the Investor Relations
section of our website (www.Integra-LS.com) under "Presentations".
Integra LifeSciences Holdings Corporation is a diversified medical technology
company that develops, manufactures, and markets medical devices for use in a
variety of applications. The primary applications for our products are
neuro-trauma and neurosurgery, plastic and reconstructive surgery, and soft
tissue repair. Integra is a leader in applying the principles of biotechnology
to medical devices that improve patients' quality of life. The Company has its
corporate headquarters in Plainsboro, New Jersey, with manufacturing and
research facilities located throughout the world. The Company has approximately
860 permanent employees.
This news release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
include, but are not limited to, statements concerning future financial
performance, including projections for revenues, gross margins, income tax
rates, and earnings per share. The accuracy of such forward-looking statements
is necessarily subject to risks and uncertainties that could cause actual
results to differ materially from predicted or expected results. Such
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from predicted or expected results. Among
other things, the Company's ability to maintain relationships with customers of
acquired entities, physicians' willingness to adopt the Company's recently
launched and planned products and the Company's ability to secure regulatory
approval for products in development may adversely affect the Company's future
product revenues; the Company's ability to increase sales and product volumes
may adversely affect its future gross margins; the geographic mix of the
Company's taxable income may adversely affect the Company's income tax rates;
and the Company's ability to integrate acquired businesses, increase product
sales and gross margins, and control its nonproduct cost will affect its
earnings per share. In addition, the economic, competitive, governmental,
technological and other factors identified under the heading "Risk Factors"
included in the Business section of Integra's Annual Report on Form 10-K for the
year ended December 31, 2002 and information contained in subsequent filings
with the Securities and Exchange Commission could affect actual results.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
CONSOLIDATED FINANCIAL RESULTS
(In thousands, except per share data)
(UNAUDITED)
Statement of Operations Data:
Three Month Period
Ended March 31
2003 2002
Product revenue $ 35,130 $ 24,519
Other revenue 1,650 1,397
-------- --------
Total revenue 36,780 25,916
Cost of product sales 13,703 9,528
Research and development 2,650 2,078
Selling and marketing 7,576 5,672
General and administrative 4,834 2,963
Amortization 577 350
-------- --------
Total costs and expenses 29,340 20,591
Operating income 7,440 5,325
Interest income, net 776 993
Other income (expense), net 349 (23)
-------- --------
Income before income taxes 8,565 6,295
Provision for income taxes 3,127 2,204
-------- --------
Net income $ 5,438 $ 4,091
Diluted earnings per share $ 0.18 $ 0.13
Diluted weighted average common
shares outstanding 30,869 30,717
Condensed Balance Sheet Data:
March 31 Dec 31
2003 2002
Cash and marketable securities, including
non-current portion $169,688 $132,311
Accounts receivable, net 24,065 19,412
Inventory, net 37,394 28,502
Total assets 356,756 274,668
Current liabilities 25,452 21,921
Long-term debt 104,681 --
Total liabilities 135,344 27,071
Stockholders equity 221,412 247,597
SOURCE: INTEGRA LIFESCIENCES HOLDINGS CORPORATION