IART - Earnings call transcript Q2 2020 | Integra LifeSciences Holdings Corporation

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Operator

Good day and welcome to the Integra LifeSciences second quarter 2020 financial results call. At this time, I'd like to turn the conference over to Mike Beaulieu. Please go ahead, sir.

Michael Beaulieu

Thank you, Eduardo. Good afternoon and thank you for joining the Integra LifeSciences second quarter 2020 earnings conference call.

call Coleman, Arduini, Carrie Chief Financial the Executive and Anderson, on Officer. Glenn Officer; Operating me are: President Peter Chief Chief Joining Officer; and XXXX release we our a today press Earlier second issued quarter financial results. announcing release Quarter reference the will Presentation. XXXX under Events Earnings call, which the and integralife.com during & at Call corresponding Presentations, presentation, available file The and Investors, we earnings are named Second

at daily of we all XXXX. to XXXX for daily entirety do rate days. and comparison for June revenue quarter business cases, quarter second being our you patterns to so, about end considered that in we this average performance. When sales In anticipated our Before future statements. many activity recent, ongoing This release. the reports of refer normalizing the rate would company's light in differences business understanding COVID-XX we performance to in begin, to by cause and during be than are buying the provides I'd in is of the the a call. Exchange the statements differ compared discussed in average June could of the customer information selling XXXX call our that remind uncertainty, more earnings we typical meaningful sales may to quarterly the account materially forward-looking XXXX for performance times investors current, SEC disclosing like Factors during made Act a sales results in with year-over-year particular, second mechanism monthly actual and Also, of toward for the actual versus filed are will we the XXXX today

on will call turn With in with press Report measures. over today certain to comments X-K found I'll which financial non-GAAP of Reconciliations now filed the measures that, our Pete. Integra's the release, is Current today's SEC. can Form exhibit today be financial an any non-GAAP to Lastly, include

Peter J. Arduini

Mike, and and afternoon, Thank good difficult and you hope the everyone. families you for staying your these you, safe joining I during Thank are times. call, and healthy

slide presentation. begin If you I'll turn to the X,

quarter the industry liquidity continuity safeguard and healthcare resiliency most contain actions the our the to Integra and quickly ensure performance the supply These I'm patients. and efforts periods quarter, history. declined extraordinary during to providers as employees, of through procedure were world to vital customers by February of supporting costs to commitment the continuing adapted were to and reallocated taking Beginning COVID protect of Surgical company's manage global was second materially, colleagues in of second moved the The around patients. in effects one capabilities, and volumes the and second global their to pandemic. proud profitability. central resources and manufacturing the chain our across quarter, treat the quickly of our our

Looking were XX% at the organic an second quarter, sales basis. down on total

our repair with management, that and last used second in CSF approximately global trends, our prior looking on franchises sales basis access daily the rate neuromonitoring, June sales earnings In second of the led underlying quarter. call. year's our each we treat monthly improvement the to as to of for average on such from the outlook quarter, the neurosurgery sequential major sequential second the monthly decline a urgent conditions the However, at during considered provided consistent Products improved dural quarter. a XX% business, more in in increased and are

year. digits where the sales the increased over US, variable, Second was in prior performance US the than slightly outside by while our business highly better and led double quarter was Japan,

Orthopedics investments is also that in mitigated we this COVID-XX, Within of While the the impact of policies of Technologies, organization than launch down in recovery the the XX% more basis a on Wound can attributed which reconstruction monthly came in DuraGen. to Japan in significant June. but than quarter. made orthopedics less that and was part from have XX% performance our a franchise, also growth the the commercial improved be result most to improved of government successful & effective sequentially decline a Tissue in during unquestionably April

Looking time. and markets underlying growth at remain our we're the businesses to confident and positions company as that over return our a whole, will competitive strong,

the only tumors. allow to more This business and the approval digital CUSA peer-reviewed second of and we treat our are tissue Clarity, teams publications first and the to will benign system FDA detailed clinical and upon announced founded cleared evidence malignant CUSA critical clearance ultrasonic training to that a recently making programs. of invest was Clarity. and position, our in quarter, it engage the During conversation and the new abundance educational a brand leveraging benefits comprehensive neurosurgery-specific in ablation about In in parts we We commercial neurosurgery, focused recognition. global the of leadership continued of launched for portfolio, indication

launched Codman's to Additionally, customer setup, quick You healthcare and provide Got we product new training, that Covered education app. resource programs resources professionals through access and digital our new

predictable training In portals economic roundtables products within social we've portfolio. and rolled business educational webinars fewer outcomes neurosurgery reconstruction, These associated are media. out education enabling risk, that solutions. complications, launched education, clinical product leverage programs differentiate wound tools reduced addition also that interactive and to and and and these national our with accelerating evidence and feature highlight to show digital more and proven microsites In We've recovery. our key our

interactions tools Taken that our together, customers. with we've suite developed a virtual of enhance

start toward good June. look July, over third improvement had sequential a showing we a As in we the quarter,

surges Since is third scope for remain and through adapted the XXXX the that the complete determine surges. improvement and preserve the surgical bed of year. to recovery and COVID will quarter, clearly creating to of remain expanding a closely which in procedure hospitals that zones modified To measures, underway, in new to confident expect quickly our can capacity monitoring location associated but by of on COVID well April, bode business have recovery procedures, impact surgical systems any be these still we're Our levels. hospital to below elective capacity that be end, we sequential ICU business We meet optimistic end to well revenue continue volumes.

continue rates to scenario funds hospitals model revenue and healthcare businesses, upon XXXX We that will has of rely fourth also and availability our a which the largely this capital returning at the systems. recovery to instruments capital but quarter, on in levels depend in

and in the mentioned being is of our I driven the part recovery opening world. around my As by our resiliency commitment colleagues comments, in

we ease in to containment our cost Given programs of some our steps increased implemented recently confidence we in our the that path, impacted April took recovery colleagues.

we to For and XX-hour wages spending, programs tightly all reinstated that discretionary for a clinical, travel for week in come. control will marketing continue example, as years such certain we and and restored investments expenditures, deliver to R&D, Also, work growth while we're conference increasing accordingly. recently also employees

With balance of we As making priorities of Carrie? we first, detailed review and managing and begin a quarter the ensuring the turn and long third call to customers, to have priorities second, critical our chain performance. that, programs. crisis: remain over the our with third, patients; business and of second this global of employees, I'd by and our guided same XXXX the more R&D supply safeguarding that the quarter, capabilities; investments term consistent since continuity like the our Carrie in clinical for manufacturing for clear for the onset

Carrie Anderson

good Pete, Thanks, and afternoon.

compared organic total Second quarter basis and reported a for representing on million, an of the revenues XX% $XXX decline quarter a XXXX. second company to basis were of on XX% the

declined range on COVID, $X.XX a of the basis performance was our Our due EPS July $X.XX impact compared communicated And internal came share above revenue preliminary year-over-year to earnings while adverse high the per last and Adjusted of end X. the our in high end year. at of both to on were models.

segment. start I'll X, a slide with CSS to turn you review our If

quarter $XXX average, approximately XX% basis. a neurosurgery down Global than of quarter, franchise throughout sales million, in showing segment improvement lows. steady sales We on saw performed in Second XX% June the the quarter, revenues with XX%. off with second improvement were each a of an decline the organic decrease the monthly better monthly sequential with April CSS of

consumables well alternate quarter, And less still as instrument and the International International settings, showed strong as did June XX% small than monthly which and did And organic franchise the sequential business average sold pace on were last the back largely down improvement monthly includes approximately in in to to the our better down the sales in was CSS which capital sales correlated low access very site mixed, of was and procedures. to of of of surgical XX%. neuromonitoring, compared quarter, a Japan. procedures as and as instrument impact a management, the are CUSA to see the COVID mentioned, dural nice over over grew we not XXXX these past more in digits double in the are while quarter. discussed more as we month which energy to were instruments neurosurgery recovery segment year did including in Pete in successful made due budgets, to led moderate are due and mid-single And capital of repair, tied as digits, the the CFS a are see throughout improvement. by to strong launch as in we used market performance products revenues Japan from urgent correlated double Sales advanced declined DuraGen. the in down basis. year bounce Performance month strong our June, an our sales, investments have year, digits For procedures. hospital sales,

as segment, Moving representing organic $XX to improvement month OTT June of segment second down of on with quarter quarter a XX%. this the decline well, Tissue Technologies, sales We X, an were on XX% saw throughout steady in our the or slide basis. Orthopedics & in revenues million,

sales XX% prior in declined to wound Second year. quarter compared the reconstruction

as reconstruction a were wound For rates to product line reconstruction in our the Sales well June, wound were business. particularly repair Recovery approximately sales in reconstruction in improved as chronic of our strong nerve the Sales surgical repair tissue approximately of month XX%. decline the second on breast XX% and compared to monthly was more a down as other in in label private performance basis. more procedures. procedures hernia proved and quarter, were deferrable balanced recover, to slowest repair

And As as impact private quarter January the and quarter. second discussed had sales, earnings such, the a anticipate we in QX we in a on received February. were first COVID our larger minimal orders of did bulk impact previously label call, as on

April, continued work momentum areas encouraged positive label as quarter We cases recovery procedures. in our have in broad to elective the the by and We a a expect April that second XX% Recall rates. Orthopedics recovered declined monthly as of dental XX% in with improvement showed decline whereas such indicated, ortho private orders in and but improved our June, and quarter. franchises. during spine led strongest sales off been in late quarter, third sales quarter. improve mid-single-digit of lower into our extremities sales recovery, upper the in the saw basis Sales Pete the the shoulder down both to partners were on and to solutions among the lows and over

X, our slide I'll our cash performance P&L flow. key to review Turning now and components quarter second of

Our procedures. in surgical by across in the performance quarter the negatively COVID second impacted was reduction the and P&L associated

However, were earlier, results than better financial expectations. as original mentioned our

Second compared gross execution global revenues, due in the than margins identified also than of part the to were teams. higher margins prior quarter cost our Gross adjusted year. savings stronger by the expected XX.X% to manufacturing measures great expected, came the due to but in in XX.X%

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

mitigated margins expenses. our The second NOI than costs as were the year EBITDA results expected in reductions reduction as margin from was cost quarter levels. initiated prior-year in greatly significant contributed year, by over containment Although the in decline to XX% gross a stronger down we operating measures well operating

pandemic, and QX higher of to compared EPS regeneration the earnings $X.XX our we impacted the quarter prior-year Pete as the in but manage $XX which both some tissue by prior based GAAP second year. employees We levels, quarter Diluted by shares by million few year. second second we in completed the quarter, given spending uncertainty closely. of improvement Operating have spending ongoing than $X.XX our repurchase cash $X.XX EPS about than cost expenses of week. COVID. do lower to to in related were months, X%. outstanding returning were products. was expect third driven last down several programs, in did key to operating to quarter additional as lines compared Second over the the flow accelerated in Adjusted slightly to discretionary We $X.XX continue build was levels, the still higher on safety inventory revenue trends last said, we initiated be quarter eased That program will And lower in product mentioned, savings specifically share work all quarter, were a XX-hour February. including, stock of the the

If debt of a brief you turn slight X, I'll our approximately net billion, quarter slide capital update March with a We improvement from ended XX. to structure. provide on the $X.X

Our investments improves the The a and long-term consolidated this XXXX. in flexibility to company its amendment of COVID leverage We basis to its on times. proactive ratio confidence for through the below the us from ratio leverage optionality times amended about unprecedented was well total of X.X increases expanding increase times total uncertainty light global financial provides our times, XX, more purely consolidated impact business did credit the as maximum XX, economy. June and July maximum increase to of our covenant temporarily X.X On agreement our growth. X.X X remaining surrounding

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

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

Glenn G. Coleman

Thanks, Carrie. Good afternoon, everyone.

as slide X, second turn you performance, cover to some to factors further If on we color international half provide consider like I'd XXXX. external of the at look to our

June, quarter of US Mike average month second the revenue for the Sales and is this XX% segment performance. provide year. the side second of rates full from second decline included which as left daily prior quarter compared rate the OUS the of comparison the we declined to the outside as a the On to both chart, sales as the XXXX. indicated, US splits full We've in well for and each quarter

in By the less quarter, improved Our by revenue XX%. second June each sales and showed the region, the with the was of quarter rates month led Asia-Pacific and improvement, revenue each company in during region down down than recovery average Japan. strongest

worked As and company in Europe was of down distributors the by UK the in month growth varied led China in this the slightly lagged. Performance expected, returned revenue through China decline Italy, in recovery, the Spain, in June. Germany, of down We're a largely deliveries as was quarter. matter first France, more and and average Benelux country. than the taken timing, to significantly was quarter, while as confident second the

sequential mixed the rest in me on of results, Canada the second quarter. of and company's line with the widely the second that for are improvement With being second to we've markets with XXXX. revenue Brazil hardest one the seen scenarios Turning the world, There number will for factors and in we're turn of looking revenue pacing that, monthly hit a still improvements showing recovery steady of the how of recovery at determine half. vary now can the half let

to half and we willingness doctor factored our into on return to second this As discussed revenue are or regional scenarios. patient's have offices looking Pete weigh to earlier, surgeons a hospitals,

are hospital outlook in COVID the reduce recovery view about hold and also patient ICU quarter, in levels. as cases. third demand potential has staffing some instruments, financial conservative capital our for for to seen Outside capacity a expect summer and XX% the taking surges caused COVID we bed systems. XX% US, countries at stress seasonality in of holidays We've back the in given many we Additionally,

we're at ongoing we've provided. full-year or uncertainty, the Given not third quarter level traditionally the guidance providing

fourth XX% third levels. sequentially XXXX revenue to but with you including quarter, return model in fourth scenarios, quarter X% which below However, remain and in Also, months. the factors we over multiple continue to between how just recovery consistent quarter levels, the into prior-year expect consideration, messaging discussed quarter, quarter if the I we improve unfold depending directionally, our on take discussed the over revenue just those last the to I coming we factors second

remarks. If you some closing provide XX, turn the I'll slide

of new half XXXX, through capitalize to procedures. move to are the surgical quickly the recovery adapting in on we As second environment we the

global are from surgeons During and and along nurses education product position to the and Through recognition, are clinical patients important quarter, training and we to of and supported reaching leadership information hundreds our these the need programs. second brand who many convenient manner rolled Due care or the we practitioners out caregivers. virtual providing to to timely in pathway, these it a efforts, people most. programs

better Our are supply accelerated monitoring the was recovery. facilities remain We're additional the to position needed. closely and appropriate, to planned Where second operate resources and manufacturing for in quarter strong efficiently. demand prepared as second a maintenance chain a and company to continue position allocate into half

credit improved resume by allowable long-term and we several to the we've leverage emerge balance leveraging some recently finally, confidence boosts advantage investment a scale We flexibility disciplined to as And this remain our our leadership We're stronger cash of approach profitability. last plan continuing ratio, balancing availability Our with discretionary while crisis spending increasing which to our position. taking strong. growth. continue further our for our years in the from position built and we over

are We open remarks. in R&D come. that would of programs you prepared line for opportunity a years Thank for growth That the for will Operator, pipeline critical concludes listening. our questions? provide please you investing to

Operator

there pieces LLC – question Credit sure We'll But across I'm exit which could, recovery idea just XX% were a question, your Suisse. June. improvement fit the around major of businesses and you've at there much and I if question. X% of Matt the bit where And some Could give talk question directionally? sense we Matt categories lie a follow-up. businesses. if down the color Thanks you there's taking year, about of given like year the a us should the folks about you from Credit Miksic from seemed the the availability. very a our this to of know ICU XX%, X% that rate some wondering lots - I about that in procedure spoke, to maybe growth time ahead. for having the suggests through down of, that QX lot are in impact how the as over And now one could, little rebound go Securities orthopedics. on into Please within was favorable take just take last Miksic a for I they're first then One have (USA) of trajectory questions Suisse elective

Peter J. Arduini

lead want you to off? us do Carrie,

Carrie Anderson

Sure. slide had Again, you the call I spectrum our and what laggards generally, that recovery the would would think our be QX of intact. to we the think that provided and looked of during products is largely at leaders we

I would the did And we the more would things neuro procedures certainly, into think as things June. to did thought I exited see recovery – to would our the urgent of faster lot and capital third recovery. the a neurosurgical more we that to like lag those lead in a lag, quarter. our that And continue lag tied expect were area

largely think I that still intact. slide So is

think a few expected. much we back than stronger came really Ortho I were what there surprises.

parts more are a It so instrument will alternate some And, like So setting. the side. was some But certainly that business to behaved bit are say, ortho business the I lag and side instruments have think do the surprise And of would kind we there in pent-up do. of demand, there. to the surgical it on of instruments what settings, recovery helped other little us in we more continue would the to we those capital-like. would ortho maybe the site say our show more that nice quarter some that was than second generally, tied expected I lagged a again,

stay some and improving the and I the see that's sort that guess helpful. Matt of could, across terms be that's So global largely, looking monitoring Suisse footprint. largely Miksic then would the a I we would generally just trends of common maybe seemed unfold. for Glenn LLC we this of portfolio. where in you say QX is (USA) of kind geographies, flare-ups on - across for what Credit mentioned the Securities I – to as how would And follow-up, if Okay,

what's we you Given back this confident kind US happened to the point of there is or are maybe and at of some down that what the seems improvements, seen other see the in parts quieting of US, at and a in final series back US?. more sequential geographies some the steps how take looking be in like likely to in sense we're that forward steps we're the we've of before certain flare-ups

Glenn G. Coleman

question. in very to predict are for we've happen. Thanks going when far, Matt. I to happen results so and delighted flare-ups to what though, of broadly the don't they're would that speaking. we've the going say, kind where want with Hey, the I been from seen Asia-Pacific

a China, ship we growth because some while has of So strong Japan strong in was to quarter despite quite Asia rest we going month, of which the had even greater we June quarter, in China, had growth a and And when into really were the how even we're quarter, to challenges we knew at third the COVID. look expecting we have nicely early Asia. held China. show up

expect term, quarter. for hard-hit a globe. market the it right nice us. keeping relative us. a of Latin and eye just speaking, I for a in still America laggards, third get that's around now, in seeing Europe say didn't to we probably any that wildcard that the review. we expecting be bit generally part is kind places one on. to market, Latin the a as closer Canada as of has We're second done so use of some would to mixed continues American still many to world. Australia sequentially pretty steady was a have the the improvement show other Australia as I'm the in setbacks quarter. hard-hit And don't we're

in to the same two. recovery and but France in same Spain, of haven't name level UK So time, some and seen of we the Germany Italy, we from the mentioned and yet strength at in the

though, sell feel we Europe. of Indirect, lagging where bit (XX:XX:XX) So I direction are direct good we I a of mixed say about a we of very a bag of seeing and would markets. through some the would be improvement is recovery, to part our terms there, that going distributors, again, think the in be but bit in of I we're it then focused about very in how July But that's your points obviously, OTT both up. know international. of a I there. what going on for would positive on was CSS. all, all US, seeing trends Latin Carrie, sequentially was The And here think phrase I you And, America. and question in the know lot for

Carrie Anderson

The other thing broadly as think summer I Europe. the the the we have season certainly, think in US, would add about do particularly holiday is, to QX, across we for guidance about but

QX. And sure improvement sequential that so see the I'm from to same month-to-month not QX definitely we'll

We it Securities the I'll of expect Matt a because way Thanks holidays. over have (USA) That's LLC get so sequential normal improvement, the queue. great. - in Miksic European months it unfolds different back Suisse but Credit may just much.

Peter J. Arduini

Matt. Thanks,

Operator

Truist at All Kaila Please go Krum next from ahead. right, now our question take Securities. we'll

Kaila Krum

quarter. for questions this Thanks Hi, and guys. our taking the all for detail

you're you So levels ability that by about the mentioned revenue the to quarter. fourth pre-COVID optimistic to return

of or this it flat year last, or the consider we with So anything would I quarter also fourth to assume relative would revenue to earnings XXXX, particular benefit compared in fourth versus there guess be earnings as weigh was last? if is is year flat this that fair that should quarter

Peter J. Arduini

that. take I'll

side to that overly profitability how a modeling complementing that say would scenarios multiple really we're actually think have say next I like XXXX room think Let predictable that sequential season optimistic levels. getting and could down us get I to they funnels confidence that everybody don't would strong. say to comes We COVID makes plays they on the But towards with there, actually see the need clear, are clearly the on flu is get can fact feel acquisitions, Carrie, to out, – and hospitals and me sense. within set up of level. of comment, clearly we quite I us to maybe the pull can we and the give do and that the That it. the would looks trigger scenario what Again, like that that make more we smarter. getting improvement our lean months are be then being make said, institutions, just I to the capital our you frame a

I dealing lot this other companies where are all think in with were you've from we actually providers How of as this a people has from April, differences. of well. made the heard

And in XXXX, in giving and so see, of at hence point buckle I improving this flu for exiting things time. need with are, capital we also which challenging, more why in of confident that guidance it much management level we're we to remain get even be instruments But But we getting not see means down, to versus improved where we're just that us scenario, us which have a to procedures. kind going patients, to get scenario. of doesn't October-November we that worse more people COVID some if and and combined, meaning need at

benefit are projects do to let and that could hopper we the we are have those side, some in backside making us big Carrie make funded. profit I'll most our them the the overall company, sure for keeping expenses on intact eye clearly sure reason to we the of enablers that the important for because longer-term on XXXX thesis clearly in On And our our XXXX. keeping we comment, and same want but funnel an

like over I'll to you'd you that with add. Carrie, it turn So, any comments to

Carrie Anderson

Sure.

to levels margins a we continue gross But EPS and of would tax quarter favorable fourth mix continue EPS favorable our if think that a in the But stock our last of are the XXXX year don't be deductibility tax don't fourth that look XXXX discontinued just year higher than adjusted quarter year and As the general comp year that contributions to I of around last year for. mix this this we could in place just be generate to last that to last number, year, we over The of expect we products year. year to scenario over expense compared changes. slightly year, $X.XX. I a about product operating better think could year, unfavorable this area number generally, to different. introductions we I would think P&L to geography be those could get year say going think to as have lower again, expenses last I quarter so on at the we was year. I that's shoot little may to think maybe about had compared a the new bad move rate the I back that's fourth of rate – because, a

So we're last and to expect than will I going discretionary would control definitely that continue lighter expenses year. to operating be spending,

So largely bit a bit of operating offset line a a less ended little QX little margin, for higher expenses where with maybe in tax we with would us combination rate better gross the XXXX. of XXXX get directionally

Kaila Krum

And you're and if R&D typical those supplementing – And color. I product organic thinking acquisitions. could then inorganic any Arkis landscape that Thank I'd you you investing and what and us two Can projects? of you on this of at on you context how seeing What is about you. or just would some a Rebound excited assuming then know either. on launches pipeline in great you're are on M&A you're evaluating guys particularly of guys still M&A those updates mentioned consistently I'm like of remind the comment you're about, opportunities launches upcoming from any time. which product That's – guys programs, the call just

Peter J. Arduini

active clearly obviously I'll up That's frame or Glenn. us. think play world. But That's at change looking points M&A a good hand good opportunities at are big type they for over then any a we opportunity and to the out a of in scenarios to one. I and disruption take say it question. would couple We may a how a is look

opportunity. tool two able To have into stroke and Glenn brings for out brings of tumor do very big let also And think be the areas minimally the intracerebral on for neurosurgery further impact it four high access to so others. remind and we keyhole I a us It some for our on big in XXXX is that clearly market keeping Rebound I'll beyond, level, near a resections eyes products everyone, us. things. comment At term, and other the in will keep It for to we're that active invasive late hemorrhage. focused into about a brings products

both so later. And the timelines to but MIS XXXX of little ICH have a different and start in testing some when is water capabilities those with we commercial bit areas with those, then late

progress indication portfolio reconstructive able the and our a window, expand the to and in hit probably relative been out we're technologies opportunities our our may role. want add We with to COVID taken see to development businesses during sure as well. Glenn, have ongoing product period. the even And some strategies to stronger we medicine bigger, area, good agency have some well And though our time building dialogue there. portfolio. with adequately been fund to plastic working those nerve significant we've other still that building FDA as in making regenerative play with working some portfolio, during We've comments also been making you our of as we've that this a

Glenn G. Coleman

Sure.

think wanted programs. were sure company. for of make made to funded that We the we during not of to reduction long-term long-term first the is we those cutbacks emphasize point I view, of really did impact from the the viability cost a the point any R&D

obviously So we all are that the funding. things Pete mentioned

as we're other in to portfolio is a investing to and well the support add that of reimbursement, differentiation studies The regenerative support I'd our clinical is area. still in product, of thing heavily lot

of as making. areas So amniotics, heavy been in PriMatrix, we've that investment other

Kaila Krum

Great. guys. Thank you,

Operator

question go at Please Fargo. ahead. Shagun All next Singh from right, Wells our now take we'll

Shagun Singh

Thank consensus like June, willing then so differences on that exiting question. like Thank curious by Pete, out there thoughts in taking XXXX And what for you I'm in able your much you you questions. was a if and I in you wondering now be, over and could flattish about QX? know just then. to But for you're were looks get place was conservative share I the And seems XXXX you are long your rate the is reasonable XXXX. a exit to do in segment. way looking curious reaction growth normalized was XX% the in if, pretty it taking July versus levels. for to any if between be or it's know what similar levels approach it growth It I'm It that's to June. think the fact, is. to called

Peter J. Arduini

of guidance Shagun, until November, have even year smoke we the right this a that early kind probably see reason a This actually how clears. October, here lot view. whole is better the unfortunately, I can't we're In we'll you give late giving now. not

kind now And QX, are XXXX I'm Our rates each do, would different about families plans June bring what time. at early it company. exit franchises July, for to that. going in to of of our the want of kind exit to levels when think our we what of I give product I whole say, out which that our guidance traditionally be point and we've and for comes about has obviously, not comment right we given in this that would composite so

I where here time. all steady had quarter. be I want recovery, had we in also at think that's think provide to but reconstruction that tended and point biggest to given areas wound some on more more the impact, views like those greatest really the throughout it But the this orthopedics the info two things we've

Shagun Singh

Thank you.

Operator

Please All right, Robbie go next ahead. Marcus we'll at question our our now from take JPMorgan. take

Robert Marcus

then we on capital much growth think capital think do CUSA impact how afterwards. it's big – we capital, a placed as forward the should been I the this think but growth. an impact growth? How component about getting forward How touched we on about Thanks, question. from I pretty about on this a having know before, appreciate do you environment, equipment? but of units where disposable maybe driver aren't a had

Peter J. Arduini

Robbie, to want then, or a add And to I'll Glenn, if it. shot. take Carrie, you

something again, the around surgery think actual or when portfolio surge and world, like whole the half used liver seeing bit. the are which is think that again, resections cassettes broadly in we're tubing, our tumor that the in about of quite you CUSA, typically of of tips, a used, is I in consuming

be an you being brought in, which where new neurosurgery, know, an given tend a area And of incumbent equipment we from tend some lot this, an in there in significant benefit isn't area, cases. to added one to as incumbent as in of you a a

seeing we're that So come through.

what I dollars. cost CUSA These think we're again, capital has look may to is linear be talking that about framed are or the up $XXX,XXX an multiple – this not MRI million that because accelerator a devices. of in

as States in transactions believe institutions done we United markets improving. the products be uncertainty they outside think necessary we settles, take procedures that clearly the And enable very still I are obviously so outside United the start markets seeing reasonable And around that very for the are to that and US. place are profitable in States

as a to which So smaller capital some better, of the companies describe may expenditures, are going midsized capital ones see level think coming we of some capital be we purchase, market as get this or back. first

decreased. think, Robbie, and question short hasn't I I funnel So of is the our the long the think

saying challenging, in I people been I six Our anymore. don't and growing, product if actually it's funnel even has need see this don't months

to I don't to point Glenn, or, impact it. have going it going be some And know, time. comment buy we're have you able at you I an buy things. when if think to to that to that afford other want they in see they're Carrie, if can

Carrie Anderson

I wherewithal Again, Yes, to either. customers still change it's XX% them. haven't models to total landscape quite on they is different about mentioned, how seen well the to whether maybe sense capital only of our it's working have makes revenue. as And say, I'll competitive I financing I our purchase we're add just And would as And the in purchase, the rent with an any obviously facilitate would outright as healthy. that leasing financial say models, own, Pete a couple options, and funnel capital it is whether different generally, things.

So Glenn, the which anything else? I think has same, largely it stayed is good.

Glenn G. Coleman

just Yes, was forget, I to Robbie. going say, don't

for the the cutting got using device, hospitals and theater also there a out fact are only with neuro the We are significant just in we the tissue. is CUSA, our and OR that significant that's And indication CUSA tissue which in cutting think we reduction hard-to-remove bad a tissue, precision a savings differentiator. to the

in differentiation the new We've dollars a get think there's believe it the We actual back is got once we the CUSA. product. will for so freed up. funnel come some strong. hospitals And And again, just indication

Robert Marcus

was did was conversion Carrie, unusual. cash little But That's really up, of your a undertake great one color. And maybe anything better just this free it to follow the can in? Obviously, as conversion free you flow that flow and maybe expenses of going in line about cash And increase forward? Thanks. back top we how think the do some that the come quarter quarters.

Carrie Anderson

cash revenue increase. second flow I expect sequentially half as the from first would half improve continues to to

the One the second build levers, see of we inventory did quarter. some in

to expect flow. which So expenditures continues area capital free in will a be able to cash revenue will I will from cash would that still through that tightly. recover, as manage of addition, inventory, we'll perspective, flow we an some be help work incrementally And

CapEx, in And in quarter ended CapEx QX. think quarter. only than you our were be the I we around on million. We in about tightly was at second million. it say QX $X would CapEx the each I controlled you that obviously about at first think but second not if quarters the largely, So very was certainly second incrementally – half, in we in $XX million about $XX the think half, probably where QX higher the we'll of if levels

think CapEx EBITDA free sequential flow higher revenue. along some generally associated a So with cash working I with improved be down inventory continue conversion to source levels to us, will just of and

Robert Marcus

a thanks lot. Great,

Operator

our Raj from take Denhoy at go we'll right, Jefferies. question Please next ahead. All

Raj Denhoy

the expense could I if wondered couple I a on ask afternoon. lines. Good Hi.

with gross one, second the so quarter, that's the the I I expenses. other think most was the fact think quite comfortable then that were if of correct. you better for continuing noted the was question quite people around It margin you're in good year, really like that the sounds in modeling. operating And than balance

to only I So quarter. about expect be you you operating down in mentioned think the third expenses X%

probably your EBITDA, lines? several your where for second roll-up out ratio lower is when is quarters. really and EBITDA the leverage a because going here, And for that on next it the that little ultimately about one thinks be of of The a outlook question, to peaks correct, your all kind what's spending the in and sense, is those

think when So you truly deals how much few the doing you next about over capacity have quarters here? do

Carrie Anderson

let different question me So take parts. in that

gross the with margin start Let's question.

higher in likely QX. QX Obviously, that's to QX but expect likely lower we in be I'd will between than neighborhood QX be QX. than the provided. and a revenue be will somewhere range gross in It So margin QX

QX QX between So expect to gross for in actuals be somewhere and I'd margins QX.

X% So expenses, in prepared we expenses be guidance operating about that And year. last will remarks operating gave down well. in that my from bodes QX of the terms

QX it's interesting it our rate. to more think to XXXX compare run I

and Rebound really So very QX our in of until in those third we late numbers have didn't the two We Arkis XXXX. quarter. run acquisitions rate did

would long So continues expense when rate, say XXXX that then missed as recover, last obviously likely a Raj? that operating continue manage that rough we'll you we'll are but to QX question, QX one. expenses run to a increase I compare your in QX revenue a And what was XXXX more as bit. sequentially, operating down quite as of I our XX% probably magnitude. it And to like more

Raj Denhoy

one Sorry, to how improve? are given your going trend, right just think you thinks about that ratio debt do before to starts out now, where expenses when peaks it

Carrie Anderson

And EBITDA the – it's XX-month total based net number, adjusted than different a trailing the we that report, way that it's slightly it's trailing. the number. EBITDA on leverage consolidated the it's number a EBITDA Remember, but works, bank

more So peak that other the XXXX last you're see losing two on second as into a the of roll quarter kind quarters of of formula. because the we'll quarters

ratio in So more quarter. I third bit little a that certainly, and quarter expect fourth peak to would the

capacity bring at July think times. to we this on amendment In QX, about XX X.X up only temporary to you without amendment have of still us a were lots we did X.X we times. However, as

spending long-term making be there opportunity our as and in recovers back revenue of we So we're about to ample putting there. confident thinking have growth sure that and investments

And of on debt revolver room still lots so as well. have our we ample

M&A Pete want through shed a let that? do maybe of I'll bit thinking to on opportunities. So you on little comment Pete, light

Peter J. Arduini

neuro Raj, And period we're plug probably within a I tissue an that, as to been fact thinking small a optimize think we further of I just lots I dialogue on portfolio. we on SKU the just into in portfolio. all are building this broader time we big those do, a of within large the doubles. mentioned deals part And about forward. about keep is years out some don't again, are of partner or with in focused of, any build profitable, things to puzzle part the work plug and interesting there – be of dialogue continually to what clearly our how we the would or say are big we've eye keeping that keeping We've plug-ins that an of the start our got some there we're pieces Yes, and thinking could but portfolio. types of times again, come and transactional could earlier, it. missing it opportunity engaged opportunities advance. entertained portfolio opportunities during opportunities that other that thinking Most kind the up. these that singles of been we've been of out But in in opportunities it. have rationalization Obviously, moving can has

relationships. this sure And make so those we're we using that time well period to as advance

good position be we'll right, is to add time the when assets. key So in a

Raj Denhoy

very That's you. thank helpful,

Peter J. Arduini

Thanks.

Operator

Steven ahead. We'll now Oppenheimer. Lichtman go Please question our from next take at

Unknown Speaker

question. This taking actually on thanks is David (XX:XX:XX) the Steve. for Hey, for

any you deferred XQ, have difficult one follow-up. So it color actually of I out, new much could previously know from to growth? versus parse Thanks patient how it's features during recovery on the was provide and I probably but

Peter J. Arduini

clearly, there honestly, don't all on say, built do was it we that recovery would broken it was ourselves. haven't handle I out a perfect have we – nor component into I it. have But a

back and orthopedics, procedures we clearest delayed, strongly. we about would be think that example If shoulder know that example, an probably saw come much what more of were you the as

how I half some May don't much within within we're the But exactly board, had So we worth characterize was that to there. really or in second across that in was position think built of the recovery clearly would a I June. say,

Unknown Speaker

And XQ one number? year? to we question X% on or year estimate products of be down what Okay, XQ fair. you. Is just factoring reported in had basis that's I organic XX% and should discontinued FX year. a for And your an full Thank for and that over the

Peter J. Arduini

do Carrie, take to want you that?

Carrie Anderson

That's more reported basis. a on

a discontinued more on I FX And and the basis. between that's products, have so don't reported breakout but

Unknown Speaker

thanks. Okay,

Peter J. Arduini

you. Thank

Operator

Please we'll of Piper our next from go Sandler. question And ahead. take Matthew O'Brien now

Matthew O’Brien

backlog taking new bit trying questions. sorry And, growth. for their everybody head Pete, but and here, thanks little to to push patient afternoon Good get a is around versus my

growth far So was company? for July goes as better than June the overall the as rate

Carrie Anderson

But is being are take do pent-up to that about a really not and that. stab And remarks, backlog there Again, kind the little bit I than of some think sequentially we certainly also, stronger Pete's still there talked I business Pete, July related at we're injury this prepared some demand, tied are Shagun of our parts about Maybe, remember I'll June. asked as well, in to a we working through through think, that pent-up as go traumatic recovery. demand.

have don't. the either or injury You you

have backlog those. don't You a of

restrictions to to performed are will see I recovery TBI some tied to we thing best from generally our burn being with in so see ease with same will restrictions neurosurgery, some And areas. we'll than those the injuries and do bit and and shelter-in-place more our as third that the type eased. a those – The area would as out some was people the brain I think about the in benefit wound – recovery started as were restrictions And continued of acute maybe again, restrictions think are our quarter, start down, wound things restrictions reconstruction, we've happening. chronic see move wound. But I they our for – into you as traumatic that more about us of shelter-in-place of our shelter-in-place say QX, more area,

Peter J. Arduini

take add the here right covered coming a that into we Carrie everything that fact Carrie now, delay so there's is on. commented the it items exiting you only in we much look the would piece the to of as when certain outside it. procedures Matt, only or fall Again, that that we're do think, I I can

you offset many recovery by, And a And reserving neurosurgery there's ticking one continual the hospitals still that's some so we're because capacity. things our tempering as of seeing being cautious. clearly they're some those, and of ICU know, of bed in that's along

window we procedures growing. And going that's see think so get a to have do I used through below they're continually X%, do as correlations see an and when with states been the in cases as example, media,

So New and if the based York you big we difference to what just see look on or our versus New Arizona, are. procedures Florida would Jersey growth now, hotspots were a at

with well which what's discussion happen with And November ball so September, internally taking loads that part or we the institution, October, on managed, being of our to place, positives the have protocols is has effect, are cautious. specific crystal a it going not honestly, in masks, seasonal actually better but have flu and causes it is how false so-called because may because continually folks

I are actually again, States rather to we consistently. for COVID there's So think, have optimistic by with result a state consistent see, state we being the it much opportunity that to of that upside. is more But managed see United

Matthew O’Brien

helpful appreciate that Okay, that's and color. I very

investors a is we right Are less going can't just like curious virtual sales masked? As kind are the some being of things, that they of side inventory of Are you It we could head focused to moment the in sounds point coming out a channels, kind hood, in can't OpEx at see to somewhat under follow-up, for what's be more doing to Are see, invest their about now? be kind their can durable. tailwinds unable of this under that Peter, that that benefit there What's business you meaningful that see the you dynamic. training? forces, the you are can't XXXX? I'm things the hood couple of could your competitors as

Peter J. Arduini

it. team great all less where to add job need Glenn inventory. products were using this our Glenn get of done comment we and in status have to have our behind a broader to be. window of inventory his on they I'll demand and Look, then

deal So in item, a particularly big and that's regenerative medicine. Integra-specific

Many us also that is, of a item maybe that opportunity things do to we thought cost-effective potential everybody, it agility, differently to like how but they have in you or things second way. The the otherwise way. greater those couldn't found the them give to do were flexibility do more have

people mentioned of what they a being having COVID. from And And growth been expenses we've around so longer the things while R&D from of really I those on mean that job would our midst impact one, about one day able Rebound, reduced we're programs, the think into years. that about we the those environments, done for thesis thinking next some I I good cut some earlier reasons one say programs the focus we back wages actually wanted to the hours the them to of broader on around the And to and third preserve indications. coming very of are multiple those, term we've pulled advancing is in and company. critical the

year, this those towards we'll add? programs growth. the we the of to else more we did, to our feed what as able again, again, so into you future out of be about how would Glenn, next end and come year talk And I think specific

Glenn G. Coleman

we've with thing much being a professional number efficient education. across of selling we're all obviously, expenses, marketing, more say, virtual us a big of for products, key just would up sites Virtual set I doing micro virtual our our now.

you those long term. help us. savings done to we can in meetings that these virtual. cost reinvest Our in are extent, of things do clinical virtually at business. going of think parts a And cost other how studies be big even all our and sales for all with and But trainings benefit are to you want R&D look some we the things over Obviously, sales to structure these certain the our are the will all coupled area

Matthew O’Brien

Got it, thank you.

Peter J. Arduini

Thanks.

Operator

at UBS. go Matt from take ahead. question our now We'll next Please Taylor

Matthew Taylor

Hey, was thanks. I'll conceptual follow could up that you question. a help understand. I hoping with us

a number versus are material get would do make XXXX, or of XXXX is that margins spending you're enough in training, let's changes in sales in same and the incremental? discretionary it see the difference that on on dollars those the versus to, these are about you XXXX, If the same to exact talking XXXX say, you virtual more

Peter J. Arduini

how thoughts about think you So really it. we giving you've I'll comment been good and, Carrie, jump in I think because to some could

longer-term we'll that of We We growth. around question The say viable to our long few about We've a margins that laid would get EBITDA X% to COVID very ability think We've goals see. impacted out I X% years that's as XX% still back XX%. So to see don't talked has goal. there. is our a longer-term changing. how

our part that area be will focus around that. And of so

help and our team things on a could looked sure. bigger about But, able binary, think and in difference could are in examples be and we've between incremental be for And have and we've things we up which want portals bigger may how Glenn those as we we be globe well. are it an your you able the countries, to at them today But of talking about tools, but past, that capabilities around and programs could more And the and some of as might cost made their that customers those those there be the to many faster at R&D that on how whether level. things share accelerate that could adds, areas how rather so growth we're the service that to help weren't impact. leverage obviously, frame make are have front, incremental resources of investments we're you because thinking about effectively the are to some looking more which the I having differently some structure Carrie, at a to ways versus customer themselves thoughts example, in actually mentioned

Carrie Anderson

portfolio our led and Sure, our SKU that discontinued our shift do our I margin lever product rationalization. our faster-growing are on higher-margin, to with on biggest introductions our new then line. opportunity, product that the it growing still continuing has continued believe products by is really gross And

will on So for reinvest about room question, model we COVID Glenn's expenses, opportunity thinking manage the well. with it at I think margin to maybe maybe large margin the how us that think that business the opportunity drives come the a point, TMA become our have still will And operating will forget, of don't And off what have didn't other XXXX, to J&J accelerate incremental. different of we majority then drive agreement then I that expansion. as still gives the we And end of for. and that which the expenses drive expansion of enough to areas have in does

what we'll these utilize about and like maybe traditional So do conferences expense long-term think add in the else growth. in clinical opportunity to travel to and trim R&D to want of and potentially and we entertainment some things more drive areas to

at the piece be I in look incremental the line. movement So more big that gross some continue as margin of to will and where really

Matthew Taylor

very color. the Thanks much great. for Okay,

Operator

be further any Please back as now. or turn for it of right remarks. to appear ahead. the speakers go questions no I'll additional closing to There

Peter J. Arduini

Have Thanks for evening. you the and future on look again updating a Thank joining. nice here updates. forward we for to our joining today, call you

Operator

concludes for call. you your participation. Thank This today's

You may now disconnect.

Michael Beaulieu	Integra LifeSciences Holdings Corp.
Peter J. Arduini	Integra LifeSciences Holdings Corp.
Carrie Anderson	Integra LifeSciences Holdings Corp.
Glenn G. Coleman	Integra LifeSciences Holdings Corp.
Matt Miksic	Credit Suisse Securities (NYSE:USA) LLC
Kaila Krum	Truist Securities
Shagun Singh	Wells Fargo Securities LLC
Robert Marcus	JPMorgan Securities LLC
Raj Denhoy	Jefferies LLC
Matthew O’Brien	Piper Sandler & Co.
Matthew Taylor	UBS Securities LLC

Integra LifeSciences (IART) 10 Aug 202020 Q2 Earnings call transcript