IART - Earnings call transcript Q1 2020 | Integra LifeSciences Holdings Corporation

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Operator

Good day, and welcome to the Integra LifeSciences First Quarter 2020 Financial Results Conference Call. Today's conference is being recorded.

And at this time, I would like to turn the conference over to Mike Beaulieu. Please go ahead.

Michael Beaulieu

Thank you, Savanna. you Conference the Call. thank Quarter LifeSciences and Earnings XXXX morning, for Integra joining First Good

Operating Anderson, Joining Arduini, Executive Chief President on and and me the Chief Officer; call Glenn Financial Officer. Chief are Peter Officer; Carrie Coleman,

First Investors, release the the we financial XXXX quarter at call, Quarter release corresponding are press The file we which under our earnings first available Earlier this presentation, Presentation. a Events will Call announcing in morning, and issued named and XXXX Presentations results. reference Earnings integralife.com during

anticipated to Before we the discussed status been with many reports company's forward-looking Factors during that filed may begin, business that and with release. for our I'd remind quarterly to current results include in and given the are actual you call pandemic, considered SEC uncertainty ongoing like our this future more of differ earnings that to has COVID-XX past information of statements. materially be end, the intend the could calls. made in during about the the typical that associated Act To statements we the Exchange call today's cause

discussions will any financial today's non-GAAP filed X-K can SEC. financial include measures. the non-GAAP to in is Reconciliations press report be of found an which Form on certain measures release, exhibit the current Also, Integra's today with

over Pete. the to that, I'll now call turn With

Peter Arduini

for Integra, and I'd also lives all the these workers start times. support during and morning, care to to I of to good here everyone. the like employees Mike, pandemic. around would patients you, during at expressing behalf COVID-XX serve Thank their world our to thank our their On by risking difficult resiliency for health like gratitude everyone

the health from impact financial the procedures. through despite to and turn I'll In agencies of If to virus effects as selling performance China, strong and Europe, March as off XXXX limit the you throughout of X, relationships strong, our distributor from our In as early medical was the spread and recommended all plans our March, initial international ahead February. federal COVID-XX helped COVID-XX. nonurgent model presentation. We organizations tracking January U.S. begin started well in Slide of the postponement state and

policies In incidence shelter-in-place resulted in addition, traumatic injuries. lower of a

result, in decline med most mid-March. a business As we, other companies, tech a like March in experienced -- significant beginning in

Our in underlying our remain used conditions underlying COVID-XX. for revenue return medicine were for many can time are end entirely of risk a of related be markets, are they period consequences. March to we more products a neurosurgery which without and and declines only to Treatment The confident will serious regenerative especially strong, of growth. limited deferred

Throughout the our remained priorities pandemic, have consistent.

and health of took staff. to while to customers. safety limit the our number ensure our travel ensuring our implemented aggressively policies a of work-at-home for We office-based employees. products to First, We central steps available remain

we addition, work the who including distribution added safeguards new of In employees risk within on and infection our continue manufacturing to reduce PPE facilities, to to processes site. and our

business. Throughout around our in remain to tools we customers. and contact education our high communication April, professional across colleagues continuous and video platforms for and with used Second, world. level to we've of we're online technology leveraging conducted a conferencing service customers other maintain training And the

February, environment, investments environment. cost-saving and strong and This We enabled position Third, to and position. in we a The quickly adapt our years. flexible investments made we've technology is operational strong by entered in few liquidity a initiated cash in protect able over changing this to in April, financial to the crisis we organization programs challenging past as last this business cash have as for position volumes facility. over the R&D that our soon by for We on remain and on $XXX company jobs million credit preserving programs currently full-time strengthened will maintaining on growth our focused and and in capital procedure managing clinical critical undrawn hand $X.X the return. in the over and long-term structure billion

In breadth to supported of diversity customers challenging our markets, portfolio the technologies by we end market-leading of in I'm which patients. and many we economic markets are in benefit and efforts proud times the and leadership our also our from and clinical this, data support the compete. like and positions which of of our extremely people

the global over for health our care by to who to have dedicated are and professionals. talented providing Integra's vision care patients employees limiting X,XXX committed best uncertainty We of possible

of with but plans and sequential built preparations based volumes for Carrie provide an return acceleration. procedure procedures, assumption details will first some me and Glenn will perspective. underlying provide on on our let the We've recovery plans additional rebound that our

for with to Our hospital procedures. by the evaluating commercial sales remotely while with and are feedback close to in geographic preparing customers contact ways work but also of find not teams using this We're build system. data recovery today customers, forecast, region to only our

bed to daily is response challenges is which just example, while one capacity is a leadership still procedures the Our and of to many of conducting a neurosurgery to question, exists. majority to team confidence medical critical recovery operation Without full ICU availability, briefings COVID-XX. and facilities. executive our monitor the patients others to returning include vast

that the we will As year. are month-over-month these we throughout see overcome, challenges are improvement optimistic

exit before growth provide I'd Before turning will where to the trajectory. to on feel to we we a like that we were a over pandemic and of the why the year view confident Carrie, call demonstrate

of Please that were you turn XXXX. from In above levels X. trending orders chart, this global to our XXXX to can Slide see January mid-March

that momentum several by strong orders capital Our by can and regenerative introductions, decline supply continued soon manufacturing sales. as you including procedures postponed scale. product mid-March, the occurred see In surgical wide dramatic performance driven on improved fueled was in a higher as factors, new were

March as For about down line. whole, XX% of company run to varied weeks last the for and X product the XXXX a by compared rate were

of declines, as quarter XXXX. not the be than which with quarter fourth will In To know days. second base million, the most revenues third quarter XXXX performance In the our for under scenario, growth. many procedures the will quarter, today, favorable the expect in same in the case full of and employed effect XXXX, of we quarter although Despite roughly assumed clear, roughly year-over-year more XX more be rate products opportunities the quarter line And be the the challenging see based in bear as for the with quarter are our we on we flat fourth be in COVID-XX. at of basis to organic cannot second deferred our what we year. first an $XXX the these of declines, scenarios, first April of on will we compared closed

of global a plans recovery unimaginable magnitude have that of impact in the remains the and the Integra term. and are over we place was the While once ago, for taking I'm environment months confident we to will outperformance the X full position this returns growth, actions just uncertain, the timing long

the Now Carrie I'd of the like review performance call turn detailed a our COVID-XX. and quarter over more to ongoing first for Carrie? of to impact

Carrie Anderson

first a our about brief, can thinking the had we're results I'll COVID-XX Thanks, of relatively detailed revenue quarter. keep Pete, to on more and good my comments has impact quarter discussion the second move so and we on profile morning. how the

basis to were the was XXXX. basis a on first end compared unchanged the well X. and quarter preliminary total $X.XX a as adverse our performance April an results declines the EPS a announced Adjusted year-over-year earnings decline were expectations the as at This COVID-XX. to revenues due First high on year. on representing of share per Both of basis of our $X.XX quarter guidance million, $XXX to last unfavorable to organic compared X.X% original of reported the revenue entirely impact on and were variance

saw of X.X% Slide advanced both and franchises. monitoring. Global review CSS CSF single-digit dural of and X, the were revenues the we million, quarter, an a slowdown with I'll reported both organic all to on in Despite low high start sales our neuro increase single-digit the growth We segment. neurosurgery an repair, on an basis. growth turn basis. Management you and Reported strong organic of energy X.XX% organic in was neurosurgery access $XXX at increased across growth end If

XX% Instruments basis. Sales in our organic an franchise on declined about

growth largest with previous late the softness we show early our decline as expectations, and did significant in to continue single-digit medical distributors in deferred line light through procedures. our office-based of typical orders their Instruments While March, March in see in dental low end-of-quarter

in We late also saw lighting capital purchases such the as surgical quarter. slow

advanced International in purchases first global by over sales markets, spread and including indirect digits precautionary COVID-XX. in several during single CSS in concerns were up China, to strength Japan due quarter, the of the high led

increased double at coming on by Moving year X. and our a Revenues in to Tissue basis. quarter, decline from the Sales Slide SurgiMend the AmnioExcel and in we OTT, or segment & capital supply facilities. Orthopedics $XXX the representing million, last were initiated of investments increase X.X% Boston Technologies, an organic Memphis our of driven digits on

Our broader for wound of last reconstructive the nonemergent the the weeks on through March. quarter treatment first regenerative X.X Most plastic and growth impacted procedure was while months low in portfolio took until were double-digit X deferrals us surgeries. COVID-XX-related track and of chronic

to were the saw reconstruction COVID-XX quarter, as digits private to business were in in single private In We Sales digits largely label in compared the quarter label increased line mid-single sales limited first quarter prior prescheduled. low with down orders year. impact expectations. total, our wound the in first in

growth year-over-year positive both U.S. COVID-XX-related markets deferrals in mid-March. down and seeing until nonemergent were our we orthopedics, in virtually procedures In international shut

products sales International sales digits based tissue in increased full quarter low early mid-single on Europe. For quarter, orthopedic in strength in the the single digits. OTT declined in

will XXXX. performance quarter review Adjusted cash gross was P&L to XX.X%, components. now I of Slide the from our quarter first and the unchanged Turning flow key X. margin first of

compared prior to margin in adjusted the Our XX.X% EBITDA was XX.X% year.

in quarter year. year. quarter share in per compared $X.XX first were compared $X.XX prior the to First share to earnings Adjusted the $X.XX $X.XX per earnings were GAAP last

were to revenue revenue an COVID-XX, caused expectations. decreases were nonemergent U.S. This EBITDA primarily resulted procedures compared decline growth in deferred, international our in as original unfavorable primarily lower-than-expected in The and margin revenues, gross in to surgical related U.S. relative to margin which the gross in

spending -- rate same our blended by related to were SG&A and contributed in R&D revenue and EPS down a factors. as the levels well COVID-related lower the tax higher relative Additionally, as to decline

share repurchase slightly outstanding total expected February, Diluted shares the due initiate program. were be program agreement. share first XX% In delivered. an quarter, did under down year-over-year accelerated to in the Recall repurchased of that the early to repurchase the approximately we were shares

both about Operating year, which million $XX quarter, levels, by first million flow in last than was lower inventory earnings lower were of COVID-XX. cash by the higher and $X impacted adversely driven

organization. have during expenses. this cash the a preserve revenue We structure in we more Before estimate chart, taken leave expenses reduce In and including our to manage by let than actions elaborate the announced cost period about this reductions XX% I April, operating on total, will these XX% steps me reduction variable sweeping our cost of across cost we instability. in

decreased have shape significantly recovery amounting some these our our to largely manufacturing an facilities, actions to the reduced but duration in the depend overall on will hours also likely reduction The capital quarter. third will expenditures. We've of last of XX%. of We revenue XX% of into

the of time, the for with second we and in in low quarter. have and deliberate decline prioritization actions lower improves. company is certain ensure to and sharp R&D critical significant we capital, growth revenues, these programs margins cost same expected clinical very At been positioned supply regenerative of expect products on the the the with environment EBITDA our as single-digit profitability Even the

X.Xx. to allowable provide debt its of bank billion at ended a March and you capital the of to leverage XX. Slide quarter as under I'll approximately maximum the our consolidated June ratio The structure We agreement net remains turn update of of XXXX. total $X.X leverage with brief Xx company's through ratio credit If X,

have on and June due we XXXX. credit not cash our revolver. does until company undrawn facility $XXX and million The equivalents Importantly, principal repayments of cash have billion any of $X.XX

for the in revenue how If environment the about you scenarios second context to likely think current of and turn profile Slide into our insight you quarter. the XX, to COVID-XX some provide I'll revenue

guidelines, pandemic and have talking our of and deferrable recommending This period. procedures certain data various the our urgent plot the on enabled procedures. to where surgical the surgical this fall has urgent, during products reviewed moderately spectrum deferral us have more more We elective of customers been to throughout

illustrates slide thinking on our following The information. current available based

urgent procedures longer provide a right, boxes that skew to the to scale attempted that be procedures, left, a have with skewed into slightly We can more period. are the those qualitative deferred and indicating for the

many orthopedic basis. procedures a budgets purchases, Traumatic to capital and acute elective to brain typically hospital are and urgent deferred are longer. are Extremity more be injuries treated expected and burns doing tied which wounds on more are

broader much patient-specific in more wider category, the time can for must many the to that moderately from of Also, patient. serious variables, deferred be underlying to used which it's range of are environment urgent for our analyzing the period considered. remember without only the outcome be set of important products a In a conditions which of short risk hospital

provide who we're about I'd Now like call how thinking the over some turn will and insights recovery. to to Glenn, additional Glenn?

Glenn Coleman

and Carrie, Thanks, morning, good everyone.

to Slide turn to Carrie's we and you look as XXXX. If I'd the second second build comments XX, at like on half quarter of

of variability base, down XX%, XX%. revenue less OUS side Overall, neurosurgery to as procedure this acute year declines trauma parts corresponded Within outlined. business. prior few compared With down decline for for such versus our of to roughly the wide in of while revenue was month and for revenue decline year. of provided of our than we of left orthopedics about declined the the April over to Carrie U.S. just prior rates. month the The range is chart, rates there On XX% surgical categories and April the our were segments the others compared a

saw Japan, lifting of part during country a in a stable decline less early second The our of business, and quickly recover. state's key be quarter. remained procedures as with Canada such how international determining we shelter-in-place Geographically, markets, and will factor restrictions the the Australia

pace availability variables where of impact However, procedures resumed, bed mentioned, ICU as recovery. even as the Pete will in locations have such

resources procedures our revenues company, urgent XX% We are COVID-XX shift a to weighted inpatient moderately our an improvement critical in procedures. revenues. believe towards over from be hospitals back As will to in

in we in as sequentially April, continues, are signs revenue China, May by States, improvement will over positive seen news Germany. of beginning have Japan more the a encouraged United we Outside We also like states in June. we're expect If places reopen. recovery improve to that the trend significant and anticipate the certain

quarter and to base a scenarios, of In levels. roughly third in assume fourth XXXX see but expected case with quarter show quarter should XXXX will sales XXXX, The fourth in growth. favorable sequential the of we the be healthy is line improvement, below be scenario, opportunities we for the our more

If once ensure taken Slide many implemented our demand continue I'll customers contingency returns. you and to manufacturing the a brief steps In we've provide turn our produced restore growth final quickly essential we in to of XX, review to to products customer of and March, our facilities plans be delivered to patients.

of on been In past months. the addition, number of safety products constrained over supply stock plans. XX key we've regenerative building our been a focusing We've

to possible select care made our These them by I'd patients. for health pandemic. who our We to thank employees, customers this the expect see later are safety procedures taking dedicated making to like products make manufacturing continue by once for a to difference essential been throughout slowdown and of products have stock year. of we this demand, building temporary efforts advantage return meet

full-time and employee while and R&D travel, reduction key in and As actions earlier, implemented benefit measures hiring, and cost we curtailments jobs containment consultants cost preserving programs. aggressive clinical These costs. temporary meetings, included workers mentioned

In addition, us leadership Board furloughed work employees we've a moved executive plans week select our XX-hour taken of company-wide. and team to take and have to Directors,

motivated them field temporary and for our helps bring implemented compensation them this as also keep period We recovers. business sales teams adjustments to our

adhering through we've are monitoring work personal distributed mobilized. our closely a we equipment, enabling To engagement basis, multiple teams restrictions. while our protective As essential regular on scenarios, customers end, to recovery with local commercial and that

relationships adaptability maintain resiliency infrastructure been and global to restricted. part meetings in our and have we made even sales of training face operations possible by in customer prior was that hospitals access this crisis technology, company's and in been workforce. made online and have teams The investments Our the and close committed our has holding talented to virtual investments in

long We for while term. are the at term, addressing the the planning same time short

in we Pete's demand year-over-year there echo confident quarter. our the feel fourth people products. We closing, as the and comments in restore In in recovery plans can believe would right place scenarios as the have soon that which growth I are we we're and for underlying

the for would our Operator, questions. prepared you for remarks. Thank line That concludes open you listening. please

Operator

And our Jefferies. Instructions]. will question we [Operator Denhoy first Raj from take

Rajbir Denhoy

start maybe commentary for this last like to the year look wonder could the the I I expectations quarter with around fourth year.

described You case. your it as base

so And And to for economy? terms I of I'm Does that. of your burn, a baked does assume related as economic it that follow-up COVID? my imagine. second major sort several really, that, just into economy, contemplate curious categories, What of in what's that is to of perhaps neuro the the activity, trauma, relates wave

you sort around thought your you're outlook. recovery of describe so And thinking could that perhaps just broadly

Peter Arduini

Thanks, Raj, for the question.

there say W. talk we're our U probably not we that is what think peaks is the We're similar recovery. think the will So be we COVID as And contemplating We're But that a it fall. reach base contemplating I when in case, sharp the about of here it we would effects won't think V. the of more of in we contemplating which I reality, clearly not that saw spring.

to us, ongoing is cases coming that growth the availability percentage level X/X had Even an and for high take to neuro having that to we'll procedures. of And board. of but think business, out having as sequential of a on Glenn ICU in Carrie access the care there, neurosurgery see beds. tied mentioned ICU of our beds We

trauma, broader which think if acute tied accidents economy, To is to about you about typically your the burns, driving. point from

better opens up side, we're incidents. the see injuries, view time, or increasing. of on, we thinking It's that falls had that we point work-related and to could at But of early here we'll impact as amount that? continue see for economy this we than about kind to that's related how neurosurgery do opportunity the obviously brain It do how Obviously, an clearly it. On recurrence would be the it. the lower. How in traumatic

Rajbir Denhoy

Maybe helpful. Carrie, just a That's Okay. for follow-up you. question

to I you sort operating curious said you I'm how can that? expenses commented you that And about at Is to dollar that by last by operating reduce of can a the run quarter? XX%. the expenses think you second look the the down of even first at in your in think if of fourth quarter you sort rate absolute XX% take quarter, amount year, the in assume

Carrie Anderson

it. Yes. That's at we're looking the way

you If for actions R&D and so think to in we steps our take operating that's G&A look selling our essentially of where We we're expenses, those at our we will expenses. and taking about XX% landed lines. announced QX the have that the employees out

So plan. that's our

Operator

from And Miksic our come Suisse. Matt with next question Crédit will

Matthew Miksic

maybe next So the And about you of that the some into mentioned of in a end sort talked you've signs be about get recovery quarter on sort to just follow-up. accelerating your quarter? on of follow-up several Raj's scenario, get hospitals of third to as just third, one you second seen? accelerating months. the that -- the on do think what follow-up into tail I've And base-case second, a assumptions capacity comment the in fourth then maybe of Can go over fourth and that, and pace that those quarter operating you've through expect guess, comments quarter, you the these of what talk about I And you'd improvements improvements I May. early you like something the terms as

Glenn Coleman

Matt, it's crack this Glenn. I'll at take -- one.

is being orders shelter-in-place the obviously, May us. obviously at a sign look for we positive removed As

a As ICU for up, us. we it's sign beds more see more opening and positive

markets so China, or even in are U.S. an normal. from back so places Japan, the XX% considered holding seeing what's many levels like improvement we and outside Germany And in U.S., the to

beyond We have procedures, in or to issues things COVID-XX to lot being deferrable. we the have but number days, cases, could for up starting the procedures that this with they neurosurgical of during learned of of a nonelectric that but is without situation we really saw they One they deferred are can't some be go deferred patient. XX XX

crystal start or May, recovery at look months we're several plans, and moment. that clearly no way and that's we're QX so. and into way a ball, could big our from QX. going Obviously, into XXXX for modeling virus a when for the QX, time we now that But we what expect I right we different out things been we our acceleration flat in ways. in things week should back see a pickup we further at That in comes in where if don't already first have given in this now, assuming to we'll when In this play we could change think see position the seeing June, the procedures. QX a everything get we're we'd now, to the perspective, we've continue expect QX. know, setbacks, different So to then frame. into to and be late But scenarios But is

Matthew Miksic

improving And so not end then I the comments but you it sounds correctly, yet? if -- as your not not Yes. get use into capacity of that banking the read just XXX% on year like maybe reaching

Glenn Coleman

Yes.

certain fair. seen in extent, At wounds Pete, to have we been to think a that in shelter-in-place burn same I hold. on with add you and as injuries have situation. want and think And see procedures traumatic the on that's put decline as pent-up everybody time, for well demand just do neurosurgery procedures we'll a the I anything?

Peter Arduini

country, I in were would to the Yes. issues is, -- we what be, went we deal just difference you think surprise will Matt, what so had think say, if I would we as fall through compare with. a think more April the everybody say, to I

clearly more mean elective, draconian pending cases, procedure everything impact. hold don't will see see procedures. when trauma. see for of done, wave those effect come patients, don't had all a they didn't, whether ICU neurosurgery COVID you bigger or burns, for say so And we're beds down an collected But aren't has you as elective basically they shutting your no you I what this on actions be don't like you

with manage the testing understanding disease, that's within to institution sales And that's world. of the green our systems to that's the different how zones go have to that, we weekly health And we're think pretty the feedback improved getting. seeing. fall, IDNs, create you nice from that data collect there, quantitative out forces better way feedback a If the the to I ongoing we're around the

know as some folks comments, for health know, procedures you maybe of as On systems said, in particular think tend the be to well I our the trauma many neurosurgical we XX, to up profitable maybe delay benign tumor. we a that's and procedures as top of fact, prepared reasonably can cases.

you malignant, fall, we're past with XX creating happen in other the cases of of that's And get priority. Something that to again, XX will types of we those days, you those see back issues. get type whatever And properly to come some in. peaks start here believe procedures starting managing

Matthew Miksic

Got it. ICU on care then and alternate a acute wound procedures. if site, as -- hospital, Maybe about a beds safe you've follow-up, as and could, ASCs, I you of mentioned service care. could And centers just talk if

impacts remind mix expectations? us business how and of your that seeing there anything into that's kind you're If baked your

Peter Arduini

Yes.

question. good So

our care Wound have business, chronic Care, we Advanced AWC, So which in wound business. is the

and parts our business of parts reconstructive with areas, centers ASC or plastic deal and doctors' of Some all our instruments actually offices. surgical

limited as until April, cases were very the New and south up LA, this and of the Chicago, York so imagine the Coast beginning as hotspots, well. you can in those through And of the to end

hampered hospitals capabilities. Now they're not and those by

mentioned, of with outside Glenn starting standpoint one even that that actually done some our -- laggards. Extremity at say, back. of are see those of to would orthopedics we're probably procedures at be hospital. of would So Orthopedics But those the business, as come the most I

back rate. have confidence that And going reasonable to a those able so we're be we at to come see

on trying care were stay sequential majority chronic for and acute to front, more seeing inpatient actually issues That's by to there up technology-type start still volumes I with But a would are well. hypothesis. the areas, how We're more we'll that pick the rate our see may can what assuming at for is home revenues many on patients a deal do again patients delayed they say of the is of that period that procedures. many driven that the We'll that plays. are reality we're time means also what have with. have But it that of basically as that wound solutions.

Operator

next Kaila SunTrust. question comes Krum our from And with will

Kaila Krum

just talk mean bit have a side, business So I or the that's can capital mix exposure you deferrable. little you but which have on you is your some moderate more business? about a more of neurosurgery urgent,

through year? of you puts And just later assuming the in talk would sort this and So as to it the relates environment what takes that business? you're CapEx

Peter Arduini

deferrable. business, could our which as more a our you more up was products, Yes. more and of neurosurgery ablation And of the a CSS Mayfield, jump can clearly the see say it -- then CUSA, if comment guys instruments viewed be Carrie, I it, lighting we Maybe in anything. implications went between obviously, chart a framing I'll you nice so and little has you includes through, think urgent does give the which or and the job if Glenn bit that at and I'd deferrable. think think revenue XX in tissue if profile, the Page look or chart of for I capital, business, those on deck that

capital said, small hundred purchase items, of some these $XX,XXX, are some thousand. that $XX,XXX, Now of are of being are there a a these couple

$X object. a not They're million

big capital But delayed believe are the the that's majority that level a the year. through we our how to be those are tied obviously items that So going are. of to of there's assumptions deferability

all used craniotomy, leader the in that access those. dural the the think products the these disposables, to and case. are tumor. CUSA of about a do If to They're We're market disposables remove you are used the in

And on so those are the shelf.

gives more urgent, us through have And those if but on confidence coming you'll back. the my those our obviously lean that sales, malignant the you delayed tumor, can I we and move to as cases So of that see good earlier, be made days. point pretty some -- more to a insights XX even

off. a And If cause that anything what pressing for it's that on XX decision days, damage could someone I hold we're you have make tumor, you would they a benign not that's seeing. think may

managing the you're as may adult levels different issue that patients. Management are deemed child can as CSF A certain a it. well bringing. have There are very urgent hydrocephalus of pressure be

cases So part. taking the any place ICU more and those in we don't for type see many of follow-up cases, need most

are more those So enabled.

such as deferrables show area. things doctor more spanning could broader instruments, then office. Why? individual a And our be we Well, dentist an of example, some or into as

procedures. While being used of ones instruments that more potentially these are some or are patients the of some urgent in urgent actually COVID

the kind is up, mix. start to move of have that's key neuro of ICU a procedure see excuse starting you most was part June me, April you that, corresponding to. now a of neurosurgery So the for available. -- for we're to part our the patient you that want bed view But not and it open to And where when the know

Kaila Krum

of Got it. sense. a of ton It's That makes a color. lot great

also $XX preferred with I So XX $XX like be first guess, mentioned, you impact million to million procedures, lot mentioned, But of can't a days. in quarter. beyond a the your you

how those Are any signs coming of of yet? sort procedures back? thinking So seeing about are you you that

Peter Arduini

to want comment? do you Glenn,

Glenn Coleman

Yes.

that's why QX ICU half. whole scenario in we early see into of third be the I beds we've And that procedures we to are first outlined modeling get better better here of to half the should back how of terms just the these open quarter. in be starting And May. and than quarter part back the come our It will say up. gradual would as So point, yes,

starting rest expect So be gradual, will It we we to see that and continue of really recovery. are the do throughout the year. the to

Operator

Marcus And next, with from hear we will JPMorgan. Robbie

Lilia-Celine Breton Lozada

is Lilli This on actually for Robbie.

think ability half strong and ramp in the second that of will expense up control your in fairly XXXX. implementing You're this impact and compete the year you Do to measures.

Peter Arduini

Why you why you and Yes. ahead go Carrie, don't comment. don't --

Carrie Anderson

think say, aggressive in the I most Yes. flex can would unflex -- can we've hard. really so flex pretty we that I done, rapidly. pretty back on Obviously, we and taken have we that, we spending on everything turn the discretionary stance

protect and full-time tried preserve We to have really jobs.

is that's to that And allow so to factor great we recover. us think a going

at preserve tried prioritize flex and looked protect well and there's need we that plan. critical want the and back of would of our that really have in programs R&D we clinical done, nothing actions spending on we've as to. So cuts the in and the of what as can't that we we prioritization I spending, spectrum I even to terms for turn as say when our cost to say think would -- And I we've

about this, So cases, we below plant we Glenn, plants maybe reduction safety ask little terms stocks, the XX%, a as more I think about on took by talk average products. our was peanut-butter our it to wasn't It bit then tissue facilities, in a the to actions very I'll even spread. XX% and specific plant regenerative at were some of really our particularly the because in across

the about a some do to And we'll the in recovery -- facilities. inventory we advantage on and inventory the where able continue to build bit to because some talk manufacturing see levels to little to to those so our areas areas maybe we are we've want you those back take need. can approach where expect taken be of we Glenn, getting

Glenn Coleman

sure. Yes,

we during hernia Those should plants not So in actually of as we're when we SurgiMend be along for to care Carrie's stock. lower pretty for capacity. and make much like get in of manufacturing very of plastic all plants products as see normal XX reconstructive normal, to demand, are back good we wound this and growth sites, Memphis, And regular And procedures. are building point. going are Memphis. about period used come with certain when have in tissue to These safety PriMatrix that out equal Boston. we which as in things sites, the well running regenerative Boston the plants each

were last year. growth double-digit posting we So

we support to back normal, plenty we're have to Once to ramp that. get going it comes to of stock safety We that continue expect when back.

that's news. the So good

The making our are other our is and reps every -- of point would care I during carefully medicine. is sure this period highlight recovery taken

we us the some protective got come a do get routine and employees when normal so obviously So priority that come our for can for a and so back the for as field, our been as into equipment financial see ramp back, things sure through we'll obviously up even then we've faster. the for this done to when incentives shore We all period. we've personal to we as office-based make reps continue our to And that's well, quickly they possible. recover back,

Lilia-Celine Breton Lozada

Great. one more quick And one.

we the fairly to thinking about be delays a product How should You potential robust new have launches? pipeline.

Peter Arduini

I'd R&D acquisitions the for market how of that. Yes. particularly Obviously, well out With our studies deem some some on-site engineers locations recently specific the procedures. technology advancing keep see cases, that those stroke moving utilize environmentally, in would could them any doctors technologies. on different mean or select might approach products that And by we the we I those delay. a programs, do critical out those monitoring here of keep based weren't months technologies, we catheter into made, are plays -- forward. few with we in of pipeline say, that the clinical on in We'll programs remote rebound that critical played All moving, we as what that? and doing that summer. as A to study

and we So preserving clearly keeping them those that focused on going. are areas

at in substantial plans. So see this point any don't our pipeline to impact I time,

Operator

And with Singh next, Wells hear from Shagun Fargo. we'll

Shagun Chadha

So of sales And leaders total are pretty May? second within kind respect question is, kind categories X the gave laggards. rescheduled the guess versus to falls neurosurgery And respect just in the be slide seeing guess of I data may seeing What that are far percentage trends recovery of share you percentage what What to those regen canceled? guys any versus you with helpful you procedures then categories? with was if in in how can or being backlog versus ortho? was you of I I the wondering those

Peter Arduini

discussions hospitals, a in the clearly mean as see been comment of about There's teams at sourcing well Shagun, up as certain can a would kind question a details to comment little neurosurgery, position the decide give business a different we're And would percentage trying first our relative to a bit the surgeons any point, I to Carrie, with how this that what's we pent So areas. at built I bit But deferred patients I'll falls of that demand. you categories. have little of I in the list how in think not part. maybe, into the Shagun, themselves. on say, still they're

trauma when safe of and a burns the and institutions well as more well our come little out with it's you've going brain back that's sure as others bit clear economy So about are putting to components the back. say a traumatic opening chronic such pathway I'm seen trickier care. as to ads injuries, with wound to come as things, then up. And

us we'll We say, green we see why have are think gives broader on see to share. we zones. I and But I in lot a we continue details starting out? that the would had laid to Again, you that. talk it profile for have confidence want the that sequential hoped uplift than implications a that, little really do as to the bit them the to of revenue don't you've Carrie, about May. thoughts

Carrie Anderson

the a be some OR be as other. essentially patients' bucket give that say really of the confidence much majority I do is disaggregated and that It influenced is question we was that a Slide urgent falls you And are availability, OR very we our the on our within bed of stay bed X of the as middle ortho, one you the We Yes. the say, note ICU big get factor of in our buckets revenue, something the And to of well lines Shagun, piece. the have you're really, by is much very capital factors that at on then factors, that as would just is as will which can spectrum. being home portfolio didn't ICU XX% it percent presented, key well there the I the fourth recovery. pace really place sliding about like what our the #XX, a on very the for indicate capital confidence. all would the versus guess, shelter a that back. that on of And and probably is vertical an in considerations and it indication, coming will on as clearly sales. the availability, But to going the to is scale I revenue will that and moderately availability lifted. determine patients' dependent slide

deferrable in tails looks bulk there So going the at would And somewhere of I the somewhere portfolio are on more and our the to certainly, of that then the middle. urgent. But that sit urgent side. scale in the more X got the is portfolio moderately of hiding the say bulk we've

Operator

Dave from JMP hear Securities. we'll next, with And Turkaly

David Turkaly

I on some some and got slide but tried XX. Actually, the really love coverage deferrable right for in similar universe, a matrix I create Page this I and wrong the nonelective to world. new my

and So of I'm that's how helpful. the bit sort want much are We on the your space label, a is kind there of just urgent in? do look at that business? locked the Or private to orders how category. of part visibility moderately in I that out of curious,

Glenn Coleman

that, line get need good I first a quarter, advance we the we Glenn. modify we the the the product. and in of orders said customers held hand are or mean to the and in QX. have These from second private we're of two when quarter that our some up in partnerships. the We long-term in have things And quarter forecast label quite it's actual well Dave, use sight getting larger orders private because likely Having had visibility into of partners label. because in demand changed. will

line to to we partners it. And seeing label have make have they're going commitments them seeing here loss visibility they're of in marketplace. in our dealing we'll second we the have, orders. so bit unique some while what to with, of sight the label we're and with based a Normally, be with we likely adjust do But to in the to adjustments But be and what long-term and in firm good given private obviously, quarter have for would private forecasts partners, marketplace. just forecast our circumstances we're on the working flexible

Peter Arduini

at that don't procedures to I but up point it's into insights a say, that are and some -- they're control diversified some right? tissue wound have markets, areas fair used line to dental me, them central used orthopedic from in things, deferrable end to side we And excuse or to pick it's or think pick reduce procedures, being reconstruction. to to have infection the Dave, a portfolio, going probably other but of of the closer line more of that products We

So of bit things obviously, seeing This in end longer feed area. little right we our think that's probably positions which is that because expecting, private in into lasted deferrable a not positioned. procedures the a it. the is it the now, If whole of day, of at mainly a the that that rebound has properly was diversification we're got But more everyone than that's what label, the that one lot range.

David Turkaly

Got what charges. it. million One was. quick $X.X comment exactly financial COVID-related just that wondered on you follow-up. The could I if

Peter Arduini

Carrie, you want take that? to

Carrie Anderson

Absolutely.

So say $X.X XX% I and accounts would with that million do the doubtful charges. And had onetime inventory to the we related on incremental of COVID accounts. took receivable reserves

that. of context some you give me let So

with at, the risk X environment to months. quarter we sales the our declining, product over X we our look in as next balance through work of So given expiry sheet our understanding of auditors, really rapidly

a financial additional would would of need at placed payments as customer the again, of of what AR quarter, a in create really The receivables it that as that's we expect, that kind looking likely end reserves some our slowdown of environment. at for stream though of reserves, result And economy say, taking customers. didn't a so X/XX. the some we aged And dramatic see look could the we issues do at with the our of been I

particular Europe, in our determining we additional countries taking those certainly and some looking So particular Europe Italy, of whether not reserves. with different focus aged needed a lens or at receivables and on on like and

up. at and go the as a through those through pick And look say lot as to we'll we of working Then reverse I to to it ourselves will continue And special us do continue we'll obviously, inventory. that's that related well. to was around find then $XXX,XXX So cleaning sales charges PP&E, piece, and which piece, the inventory Hopefully, for is facilities, helpful was remaining expedited to about those AR. incremental that the charges. And you. was XX% reserves of charges freight, on cancellation so remaining incremental would

Operator

our we UBS. next take will question from Matt with And Taylor

Young Li

first Maybe Matt. the This just is Young for on one.

Chinese and comments your the Germany think on market I and recovering. stabilizing

the much the color, in provide wondering recovery market? later? recovery a maybe you you be their few some that for months read-through U.S. and Are just curves you can Just U.S., helpful. trends similar can If how do you would think assuming

Peter Arduini

read-through is and that the Yes, the Matt, so see I of into think kind from question Germany States. what could we your and United China implications

China. than point come definitely there's particularly on China, of particular are the And overall minutes Glenn, all some in neurosurgery, here. there. a few at But probably remain -- I we comment Germany a commented about priority comment back beds, think But some, since when I that definitely have down want as more this first you're I more around think international. run optimistic obviously, and Glenn to what you about view maybe then neurosurgery the gets that recovery. procedures you of locked ICU need we're to seeing

Glenn Coleman

coming I at as relates seeing procedures China, of close we're something XX% would to Yes. to probably to say XX% this back point. it

As March and shut off. you was much pretty know, February

fall range seen we've well. XX% So still procedures. XX% that's to We're well some an off Japan, in in sign. encouraging that as

like That's is And now. mean so and I I looks actually would holding procedures. and a Australia. like say with well, right Europe those up well. we're mixed Canada bag X there. are strong quite U.K. to the markets lagging. along XX% for about Germany us health still Spain, Obviously, very system other Italy, it's care XX% markets doing a of quite But normal

by hard the we're signs starting in we country Italy upon have dependent Italy. even virus. it's largely with hit to of see in how part say, would I and bag, mixed it's been some country, though, southern recovery the of now So

first it's country, quarter. coming held market, So different. by things here, market in on are we along country nicely by the quite actually overall, But

put double-digit You organic up almost growth. do growth. organic were we to on pace saw We X%

you COVID-XX in the April as hit. is at business international not before results, look the down momentum as good if business obviously, much really then So international And our overall company.

outside moment. see U.S. we the how of the that's things at So

Young Li

another on Okay, question guess really color. I maybe great. That's helpful M&A.

Just short expense and the understanding on control cash focus term. in your

think when again? valuation M&A your do wondering you maybe can thoughts Just of on And you strategic assets? on focus

Glenn Coleman

M&A we an standpoint, of opportunities. came from Look, pipeline Yes. as significant we a this, into had

where we're It's about it's and spent during window would I on. also to we've about focused before, valuations a some time period, opportunity say go. portfolio, primarily the take tuck-in an which our As time us a acquisitions. see where But broader we've we'll given look on talked hard think

market no high. valuations in secret, quite public think I it's were

private followed the as well. of Some

And so we're believe in a good position. we

take moves we take keep strong of that all reasons want One actions were the we very on rebound M&A we the partnership that world. that in our obviously advantage our of secondly, types that is to advantage or position. aggressive of One the come and to may right position is the actually around to be the opportunities cost of coming. of up company see in But a a

So I think at I'll leave the comments that.

Operator

Ryan next with question And our from BTIG. Zimmerman will come

Ryan Zimmerman

A time extremity asked I'm and asked pressure time, over certainly of on from changed also right couple time. acquired question. because you get the related still be I that's is little WMGI under now have it or to the the from maybe by Stryker question portfolio in has over one, outlook what's Does time going period. this sense a pandemic. you business make being -- me, bit to and mean been your to Number just before. your if not it's wondering

Peter Arduini

thanks Ryan, for Yes, the question.

in we orthopedic still a any taking it I up. world question the you're there's at debating where where changed. segment to hasn't orthopedics brings when obviously, what most that's believe say the future But more one. think, the growth And urgent elective-based that that in or slightly you I'd that of of emerging, is look is start this procedures segments potential, area

has it's that some synergies scale repair, sense. products, to with secondly, of why be tissue is I add primary that But such, tendon which at it believe be it market really think nerve within and that we make a is repair the more area the and whether will where continuing look heading And think as business the the us will important. scale time. be right the of place, take and I crucial add I acquisitions at we can other mean taking more integrations part does that

at time. of So I COVID business nothing would horizon fundamentally we time thinking the think business, say and the has that from this how about changed and our

Ryan Zimmerman

And certainly the dynamics. helped couple margin Okay. quarters, margins Carrie, The gross have then, past side. on particularly gross That's regener fair. manufacturing over on sites of

margin just was invested thinking perspective? with from impact how in about a measured pandemic wondering I going manufacturing forward So gross against what you've the you're

Carrie Anderson

which Yes. is that. Yes, really at a couple of I about we One, with -- thoughts a first on obviously, expected. not it we if think gross what was ended margin the quarter, XX%,

the expected quarter. to of driven close And be declined much that international delivering business, had better. meant X% really in unfavorable basically that organic actually side And growth, the We We really the was U.S. still to by the that mix. growth. nice organically

and see And really year-over-year we expected. mix that we margin so gross improvement tempered didn't our performance, the

dramatic expect see to that don't -- issue think mix the a us you of I quarter, As the about don't second second see quarter. for in I

in The first U.S. China with of we of even gross declines, up example. see as international as in that quarter And a international side. to margins, on relates indirect relatively to rate the a margin more markets held QX our decrement XX%. as expect both would high the side of lost particular, like really will quite the business, revenue model, an as margin high well reduction because well that gross on the quarter cost some out the it of we labor nature our probably second performance international impact hours balance But the given would fixed XX% as

gross margin scenarios you April. you to So as you to get that compare we've data given some points in on could certain QX, XX% revenue

from I could better do for some we'll will But Glenn April, Pete in Glenn you that. certain I that hope for our you I the QX. that think a in in to on that You've the for margins comments XX% some made impact Pete than heard landed revenue to that an have I bit and get see QX. stronger. and comments think we margin quarter gross and gross comes region QX given where about a in the of hope

Operator

And our will from question come Oppenheimer. with Steven next Lichtman

Steven Lichtman

growth neurosurgery, versus the in held recent trends in it up looked Overall falloff. obvious despite XQ like

course, there. you neuro Japan, wondering underlying if ahead, core factor that held business running relatively be up called I'm holding Was well. any got up? the out heading was know momentum into So on of business helpful. that And has you would a which mid-March. Just I in comments

Peter Arduini

to start? And to some maybe, then you you it. Carrie, want color can Glenn, add

Carrie Anderson

Glenn, have start that's you Yes. first, I'll if okay?

Glenn Coleman

Yes. Sure.

QX, as well of our up side until both core actually So well neuro ahead, terms was quite business Steve, side our mid-March. CSS doing the and trending We're on business. OTT in actually as of the

orders that So up nicely through you went saw one chart sales during Pete very our were up prepared were through remarks, mid-March. our his

the been growing our the impact not which the the we COVID-XX saw quarter business mid-single the we of of the U.S. we to actually U.S., end of back And the numbers in a neuro fact, our still plan in we in held pretty the core quite the until mid-March. things month, had all transpire have overall. business. were, of outside trending quarter, ahead outside then instruments substantial would pretty were Obviously, the in through up our well better up even though look we way even at But up good saw So that put decline for digits. half We

Carrie Anderson

would side, of I really And international mentioned add, the a up. combination holding Yes. Japan on it's I as before,

about mentioned, are to see concerned results really indirect I mid-XXXX product COVID. as had of distributors there some DuraGen We we launched the continue spread with in some our our really model, the in there, closing and nice borders that of

that's So is there. we advanced performance you will yourselves were performance, in little And have -- in international April bit orders XX% QX. certainly, QX in the negative why some there obviously the see that there in -- a month correct the April coming

seeing Boston. the were but on the well double-digit a corrected side of low the for with Memphis say side board, would, business, OTT wound we supply trending -- some the So in of and I actually of across reconstruction out being quite that that growth

some seeing overall there well. as really growth nice So

Steven Lichtman

thinking regulatory quick back? one [indiscernible] just would you I any impact on on be product-related actually. on then impact were you reentry. the that question your CereLink the needed. And changes could product processes think COVID-XX come Any XXX(k) Does know when thought

Peter Arduini

up. you question you Can just the broke Steve, repeat more one time?

Steven Lichtman

Yes. I'm sorry, Pete.

a know would does product thinking reentry? XXX(k) Just on impact about on needed. be on you're impact COVID-XX thought it any I your CereLink relative to regulatory,

Peter Arduini

Yes.

actually is short the to the have dates haven't talking key management. and relative had of timing with not discussions products. time response even and negatively any so we've answer had So And is delay of some No, to EU point I good beginning we're at CereLink, our been the impacted. in with would of where any we agency, this resource launch. effects MDR in specifically helpful XXXX say Obviously, the

Operator

from And our Sandler. next with question Matthew O'brien will come Piper

Matthew O'Brien

that largely think, with late expected, The and We're as with I commentary one. stick anticipating. getting a are declines QX you're little so bit the in the QX, just on call here, I'll

we're little names. a different than other is med commentary hearing tech QX the think bit I from most

kind numbers of in in to this out the profile a what happen? with Is the in headwinds hit to that you you're for X to or know happen you scenario? some headwind what base-case But to capital I what QX? then to or base And a question. laying about case in need QX all would So upside for pricing growth you deliver need did versus it little bit Raj's really being the talked

Peter Arduini

primarily sequential but obviously, think case, is the that, to which our portfolio, base we I part take believe that's first improvements place. Matt, the we neurosurgery, that relative going to across also within, see

happen trauma, that more happen up, as we silo everyday fundamental life when the that a I opens think people on injury, more society brain level that traumatic staying majority from don't plan are more the actually that in things at seeing home.

QX I think variability and getting QX of between level things. the level couple is in outperforming a to a

One is, much into system. how is normalcy the back

reconstruction, our talked in some And view of have more know that's I I are as until but areas the it, upside. cautious this we a life the necessarily then for we the businesses out there's take the of recoveries procedures about we'll potential we how next it. think we end trying to back in procedures. we to normal are model longer much have about getting the a appropriately have faster, those business, we're the call like. think level won't say repair, time of open key. great orthopedics breast opportunities what of better planning The we're around I think the world looks would that year. say, slope But side actually we And that July, hernia be, into by say to I'd the we about. and our of really tissue all Relative up countries

that so beds, going our world But what prepared a more could The the are kind ICU on. to happen percentage in of looks other like. some in much something place well what better country as as manage to if again, that's with tied to and revenue the curve March to around eye fall, be April, keep of fact sharp is large I a countries I hospitals we the just our compare that think

how is out, lower. and And zone components to shut of that bode basically continued would green Obviously, so for think risk procedures plays well the we'll all which neurosurgery we need hospitals. ICUs, that see down

it's it's But things So to longer neuro, business. back into those that's is as it. near about talk pool. about trauma, term, kind term, getting In the we see we that TBI range of more in is adding deferrable back the the

Operator

from And we will take question final Jayson Bedford our James. Raymond with

Jayson Bedford

of your variable XX% percent Just a in quick OpEx reduction of sequentially, versus what is questions. couple The fixed? OpEx

Peter Arduini

to Carrie, it? you want answer

Carrie Anderson

as variable. take Yes. But that fixed we understand fixed XX% impacted cost buckets some the those did actually XX% is well. and is of actions

of work talk would the cuts pay of weeks be the that we hour enact, some reduced and when that the So about did we part fixed bucket.

a story where overall complete targeted. the you So gives expenses of we what that's the operating XX% of terms more in

Jayson Bedford

Right.

question, margin Okay. That's in XX-ish the answering mentioned potentially. And then percent in helpful. you XQ gross

the this gross improvement or is clarification, with XX% for Just June? the based May Or April margin... does in modest on down in

Carrie Anderson

Yes.

QX, if somewhere low $XXX margin. you're the where XX% essentially, in So a gross would talking say for million I that's in about you're

to to gross would get mid-XXXs, can obviously expect some -- you see you're to we start If then improvements. margins

I from So it It of But like. more XX% entire our Pete for until my our of we June recovery doesn't and we modest say assume to conservative gross view given improvement. definitely P&L experience close looks of it's quarter. I view indications perspective, Again, a as May like April. have continue for what that would the depends But say, of XX% more Glenn and do on expect what in books I margin the -- some it's some more your would had looks June. like May and you is

Operator

this call. today's And you session, and concludes you concludes question-and-answer for your now participation, also Thank and today's may it disconnect.

Integra LifeSciences (IART) 9 May 202020 Q1 Earnings call transcript