IART - Earnings call transcript Q3 2021 | Integra LifeSciences Holdings Corporation

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Operator

Good day, and welcome to the Integra LifeSciences Third Quarter 2021 Financial Results Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mike Beaulieu, Director of Investor Relations. Please go ahead, sir.

Mike Beaulieu

Thank you, Cecilia. you conference the call. thank quarter LifeSciences and earnings XXXX morning for Integra joining third Good

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

begin, and reports to Extremity will Before and discontinued materially excludes foreign could differ otherwise disaggregated effects franchise of the be with in both reference on and revenue filed we the cause stated, this are Also like considered organic growth products. Organic level of we made may based make Act to results including are I'd including the our that growth reported well performance. SEC rates discussed to remind call prepared revenue all as release. that the business; remarks, actual the statements in you forward divestitures, as the sale acquisitions, organic in Factors currency; looking. Exchange Unless during growth. revenue ACell; Orthopedics our company's

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

Peter Arduini

good and Mike, you, Thank everyone. morning,

Jan excellence next the a transition. market capabilities, few development, X, search announcing as Slide experience and operational after press Last candidates, a has brief and I'd Thursday, Chief turn remarks and please expertise De commercial acceleration, international significant digital make you its Witte pointed issued including global a Officer. board If product a our Jan mindset. like of and that brings comprehensive and release as Executive well we to CEO regarding innovation as President leadership new to

end the amazing employees the of and Stuart forward exceptional of to extend also work around year quarter directors, and to an the capable on As products the robust plan innovative second X,XXX market come. XX than I'd of expansion global his new strategic years United and of I the remain Essig pipeline growth management board with to States the Belgium. the call, to leadership the Integra's Integra noted It's contributions every like and at drive outstanding more Jan a many we of as through and ensure been to be strong work him an Integra from Integra logistics executing build profitable growth my team huge for next phase sincere family joining earnings and supporter look to to our the I as CEO. – Jan's prior I and our years team that coming a months have confidence Jan transition. to I'll will on seamless will foundation Integra us of drive over moving closely strategy next world. from him to with has thanks the a

discuss Now, over our the like Glenn in Glenn? quarter. call to the I'd turn to and to third accomplishments performance

Glenn Coleman

turn morning. good Please and to X. Pete, Slide Thanks,

the its and and to the the results positioned key achieve drove despite Our third factors few our provide I'll several quarter company operating challenging performance of catalysts the an near of update on that financial environment. targets. longer-term that highlight was strong

and growth benefits markets positions. a expand Japan Despite is and portfolio variability private believe positive the and U.S. parts across recovery pleased July, outside products quarter, Europe impact In with in $X.XX of We quarter pent-up sales of with referrals and these most staffing the resulted the from were demand $X.XX impact to and earnings the guidance. businesses, when growth prior mid-single procedural China. commercial in September. strong in experienced seen and to the in recovery adjusted products markets reconstruction label continue organic of of both second third XX% the diverse instruments Geographically, we quarter strong that U.S. with by the $X.XX Delta U.S., our product the there in end above presence. the the wound strong in XXXX. geographies benefited of gradual the including in were each quarter trends lines continuing COVID million, and to mid-point and significant Despite the shortages, compared in neurosurgery, and in guidance the as instruments, was recovery revenue Third of in August indirect to pronounced share high-end compared during our the Australia. our of we sales business. variant demonstrating a the our new was year quarter and improvement compared quarter. the sales a our with XXXX $XXX we the near the We're XXXX hospital in and digits in X.X% growth followed July sales leading Sales was We increased towards third opportunity in in the performance and our per approximately organic achieved introduce deferral continued during increased procedures, market provided

U.S. product Moving quarter. Cerelink the updates, Europe in launched to new third in the we and

advanced a As Cerelink usability monitoring bar through data raises in ICP presentation. reminder, the and accuracy, enhanced

approximately end million benefited July reason it guidance laid U.S. the next Cerelink several for over of high up we sales the the initial of The of for critical will of in and years. drive Cerelink Europe half range. the market and make near quarter care our by Part orders. growth monitors $X global third Our neuro

opinion third leaders for the a key release clinical of of a to the Surgiscope group we quarter, During evaluation. began market phase Aurora select

intervention to a to with novel neurosurgery. use that you is surgical ICH. clinical the of wider Aurora KOLs specifically value expand group designed evaluations of has our the to we on brain in As interest remove for progress minimally use the data Also, cases our on capabilities the expand encouraging types to months. of coming cerebral during early MIRROR of to and plan fourth Surgiscope hemorrhage quarter. which We Initial collect updating is integrated quarter, look forward the product offering. perform And a a reminder, treatment different third begun the registry, this of continue have about during and leaders Aurora we key and been excitement Aurora or opinion visualization surgical feedback to using in solution our These reinforces for designed invasive proprietary lesions. the to over

SurgiMend to held were growth training below the mastectomy see an breast and Integra’s To accounts, provide of large quarter, clinical our section where the reconstruction. Outcomes FDA was MROC, we was safety, This regarding the ASL superior PMA advisory this study I'll reconstruction MROC we place strong regarding are with whether improvement resources powder results adding sequential wrap FDA This and up ASL, in that limitations these risks. one of to the PMA. the expectations our on plan for from discussion and a UBM the in results catalyst outweigh context, PRS Nevertheless, matrix, panel benefits takeaways, approval portfolio who products. and that better and a some was and with discussion results for to to business sales the relationships already the existing in of FDA October of panel of our there analysis and Integra panel micro to We examine members’ formulation worked use such important PMA in multicenter used. with our outcomes divided FDA of committee have meeting is And breast are recent that expanding of design dermal performance procedures the Turning data. statistical in to our appreciate territories plan no broader was for moving in And the post growth XX surgeon Consortium, study demonstrated programs. and our analysis thousands patients. following step breast implant-based product voting This a when and post reconstruction Mastectomy drive meeting Reconstruction select insights which mastectomy process. efficacy, acellular surgeon the sales in education review always the reflected review recognized slightly encouraged was matrix includes we've my but providers the technology. improvements, our Despite the forward. and put the with

following women dermal acellular to believe breast an help there restore quality an for approved continue life need urgent of for We clinical matrix to reconstruction. is FDA

clinical forward today, the As interview coming approved And PMA us long-term keep We products path in FDA of and real-world are we quarter on approval. its achieving In to submission. the the with completes with no which with will on summary, supports targets. there the strong, organic we're market. as believe working third growth months on growth the our FDA our our evidence initiatives, towards our the agency track look

wish Integra his as certainly and customers the for of patients he employees Pete, will around leadership you the at well at Healthcare. positive me, at our you the of has years made missed Pete as for well thank company, we and XX the to like here incredibly I'd Finally, be thousands and difference GE world.

turn financial the over I'll provide quarter to a to detailed call performance. Now review Carrie? third over Carrie

Carrie Anderson

on like good And start third Glenn. to highlights quarter X. Thanks, summary morning, everyone. a with of I'd our Slide

an half quarter up but prior XX.X%, quarter, and in for performance over to growth on the third year, a margins gross compared the expect organic the revenues year, the the half X.X% our be we prior second line With basis representing of to with in remainder reported strong our slightly, an million organic third and slightly XXXX. and when were on the to expectations approximately first down of Third compared increase outlook basis in XXXX in Adjusted our to X% the XXXX. compared total was of quarter $XXX the year. of X.X%

on and discussed we closely monitor we freight quarter supply our in third some related earnings to increased pressures to packaging disruption. the call, impacts continue were and chain material As cost and inflationary July largely

of as have contracts recoup, increased portion supply to to that XXXX. mitigate exposure we have into cost We pricing these to a we through help adjustments opportunity issues. move And an near-term

adjusted margin the QX year, by expenses offset continued XX.X% revenue to the compared costs our as higher operating benefit was higher with from EBITDA in prior as normalize. Our XX% to

As last reduced following place of increasing operating quarter, last put the global gradually the in response year into spending levels pandemic. we to expenses are discussed we

product prioritize new investing and strategies, to our further studies. in spend growth geographic continue We second expansion in half the clinical

to operating ago. in was $XX the margins largely from was EBITDA year $X.XX outlook our year-to-date increased and includes in for representing million Adjusted to now of driven a an we end third in increase range prior small quarter. leverage EPS the our from expect of for third high full update I'll adjusted higher above a the rate And cents by XX% no spending quarter The adjusted on year. operating revenues quarter XX%, provided a full EPS share benefit we tax finally, a year be an was on flow adjusted lower which moment. the Given and provide $X.XX in was per growth QX year July. compared earnings the cash

instruments million, review in a If I'll organic year. of from XX, you basis performance pent-up organic in in outside XX% an and U.S. X% was increase sales increased CSS the increased of Global neurosurgery both based approximately an quarter revenues demand. compared X%, on QX an over X% CSS on the increased and the sales X% reported the from generally sales turn sales neurosurgery year. on basis in sales and basis Recovering our prior XXXX. to broad while compared third the Geographically Slide instrument $XXX prior segment. U.S. were global to to benefited

more modest resulted about from third in With largely As early met, excited order Glen expect benefit of quarter in multiyear the benefit $X remain growth adopters. and from CereLink this million CereLink in launch fourth quarter a the we the trajectory. discussed, backlog

XXXX double The comparison and fourth International Excluding and CereLink return at to increased of normalization levels. capital back improvement compared the are capital quarter XXXX, all in is sales encouraging to funnel. in not digits expect across across more major of trends grew Europe further Sales but strong sales order XXXX, we very to compared and Asia-Pac. in year. XXXX in growth with a sales variability our low the are regions CSS prior given to mixed yet

were China in double-digit discussed growth Japan in countries delivering the standouts Glenn earlier, quarter growth and As to both low compared with XXXX.

on Label strong Wound as reconstructive Private orders plastic by declines order prior reported a to to and by and Tissue flat related Skin, X.X% Integra double-digits to Technologies and growth XXXX, basis driven and Reconstruction increased Wound franchise, sales driven compared our on SurgiMend were an in XXXX approximately the Integra in increased increased offset our X.X% which X.X% by XXXX, a QX XX% by year. recovery X% organic XXXX. to in in million, Skin Slide surgical reminder Tissue and on $XXX customer increased Technologies in comparison basis in QX XX. XXXX compared Moving Sales compared to increased trauma in segment basis markets. a of Reconstruction Compared burn on our organic sales to an in Sales by reconstruction timing. driven led in continued favorable surgery from grew partially

ratio by XX-month $XXX and provide million Slide capital higher flow were extended projects. flow I'll end cash key on reflecting $XXX on free balance of construction $XX conversion capital you quarter million to a timelines cash both $X.X in And cash highs. of the total Adjusted cash the and operating free billion. XXX% trailing driven $XX gradual our a was times. was earnings manufacturing quarter X.X the consolidated more and third cash Net spending quarter, If our and a million On cash our structure record at recovering the brief flow was flow. million. update in Operating debt was of turn our in XX, was leverage sheet, basis, free

XX, billion, the the of credit of and September approximately including liquidity remainder under the As company total cash had $X.XX revolving million $XXX available facility. in

consolidated earnings the Turning Slide I'll for to and per adjusted share and update XXXX to guidance fourth year XX, provide revenue an full our quarter.

low $X.XX previous year range, slightly XXXX ownership. for our growth the at revenue in of revenue to full ACell, reported and $XX in representing the We guidance full growth year end in sequential to expectation approximately the reaffirming expectation organic improvement resulting a be billion are this the to an of $X.XX of billion with XX% approximately for sales more compared XXXX. of partial is than from XX% Embedded million an guidance quarterly in of year

fourth be which our quarter currency. year, to and XXXX range, of in to full even expectation that pandemic organic for of risk revenue at is pleased full end to targeting the XXXX We and approximately compared account This million, target of growth on year approximately the are to the reported low to report of half effects of into the and the corresponds X% changes guidance X.X% compared are to ongoing revenue XXXX. year organic our of takes X% compared second expected growth XXXX. Based we approximately X.X% the $XXX growth foreign of for

the $X.XX. to range quarter in be adjusted to XXXX, $X.XX guidance EPS of we Turning fourth expect earnings for adjusted to

of the compared year, to XX% increasing to XXXX growth adjusted to midpoint to representing full are range $X.XX, the a new and EPS at XXXX. $X.XX XX% we compared For

year rate XX.XX%. full Our is at tax expected now

to back Now turn to for over I'd remarks. call Pete some like Pete? closing the

Peter Arduini

Carrie. Thanks,

COVID exceeded If and you with few all in our lingering as the XXXX with despite our in levels. messages. the to I'd third Slide effects many to like wrap prepared performance XX, We're of our turn of key quarter, remarks pleased up growth businesses a pre-pandemic

focused the into penetrating growth markets leveraging higher quarter and and our strategies, growth deeper trends pursuit optimized I'm evening into what portfolio reconstruction long-term the accomplished humbled We in our here earnings which investments over into existing the In Aurora you. And in breast with matters, have confident global launch and targets. in PMA of The these leadership company achieving we've of market we've products. of a the our pipeline outstanding is remain business executing revenue geographies positive that's a adjacencies. patients’ years about continue will of for deep XXXX expect operator, and what our Ex-Orthopedics, The deep with the I nerve development to team CereLink, for incredibly would doubt now call for to positive listening. to our come. in good. global with few fourth decade no executive a expanding We examples well continue that many the on That We're lives. our last our the and a Integra, appointment impact my by last of just an Miksic the on Surgiscope, will from for XD, in XXXX. lines up on of in at and and And progress closing, Credit are concludes excel by doing and is our of position first really a technology. question new Please And had take you strength Thank of was Jan from company doing questions. prepared proven the Thank healthcare our ahead. experience [Operator if open remarks. Suisse. go Matt to now you Instructions] SurgiMend

Peter Arduini

Hey Matt.

Matt Miksic

much. Great. the in to forward Congrats quarter. working the morning, Pete, looking Thanks Good new on and you touch. it's been with position, a keeping and on congrats so pleasure

Peter Arduini

Matt. Thanks,

Matt Miksic

You bet.

there follow-up in large on the additional heading surprising ICUs. U.S., you results outperformance the those just the look I I guess your the bit areas on and the then I tough particularly reliance to I the of outperformed the wanted of of QX things, trends, as of business folks performance for have understands mentioned to I and sort despite for one think I OUS in the into expectation if couple U.S. little sort held of was to in everybody then to I upside And color get think degree everyone, quarter, is the is what your could. is a here And what So, highlight, think I a in on availability

Carrie Anderson

a color. in Yes, would I August at quarter, remarks, as saw wants Matt. as and I’ll saw that peaked add we impact COVID that say, we Glenn But take Glenn then if prepared recovery. certainly in to through his some the the made stab and went we nice

quarter. think $X as benefited of a result think from gave us the quarter in the CereLink of million. path of about late the high us pent-up We instruments benefit towards a coming And quarter impact about we end CereLink that about the was the the $XXX near achieve certainly was still say talked the worth COVID our I would that with certainly range. that of I of million end final we quarter. helped demand launch in the guidance from the There

about neural deferrals, reconstruction reconstruction capital certainly And some as enough as there. us procedures compared some our but but think surgical when our CereLink, but think, capital, not plastics at earlier, compared deferrals, I pushed saw there double-digit I even and still did was procedural same we then procedural those from levels. even some benefit in XXXX deferrals, when overall, capital, So, of I and portfolio diversity and even see that in growth you mentioned XXXX, exclude to to had

we XXXX. will QX capital So, into us full and of into that as go we some help still normalization have to move

want with you anything So, else Glenn that to would that add?

Glenn Coleman

the team. put business strong up U.S. some that, for we international in and terms the Just Australia, obviously, double-digit New in quarter Europe, of a organic Zealand. outside the really the even COVID we with But impacts in international of saw and growth

of exceptionally put as the we our mid-single bit despite XXXX of A back markets outstanding. of growth coming and of doing Europe well. organically And some up was versus I mentioned did challenges. with China, both indirect digit markets but that even lot Japan bounce a a from that well, So see those

performance the quite whole, not the COVID could some anything been better on we seen had have and international good of headwinds. Pete, the So, was else…

Peter Arduini

Yes.

guys a what think this Just to beauty you said, reinforce is midcap. the Integra model, the I of diversified

get that Carrie ICUs some pressure. mentioned. you the quarter, it sustaining, it saw top neurosurgery benefits And think life the under prioritized of the of life the such are fact I even this when supporting as as products, to of

think I that as so, from we benefited And well.

Matt Miksic

into could contemplating for a QX level hospital organic a I it sort beat That’s are great. in the And on over of shallow still raised just QX staffing guess And bottom that was if looking or in – there’s QX, – and goes issues, some the QX that some Street you’ve it, the Given concerns maybe wondering, little what little QX? and I’m other line you’ve for just – guide? of that. for steeper but into and your what increase kinds things I you on growth mostly. assumption then I think

Carrie Anderson

said Well, Matt, exactly terms what in I thinking it think we’re you of about.

some that fourth QX So, results was there in and our in as digest impact of certainly, still we COVID the exists there uncertainty quarter.

into we fourth month as bit is quarter. expected typically lowest seeing a in the So, of as we’re of move Like months. of terms it in a of caution the first came three October, what quarter the

certainly with the in reflecting we and just I fact think those dollar of continued challenges flu there uncertainty wanting reflect has October likely FX are So, view into supply would even disruption, Staffing And product expedited then FX as of bit came headwinds expected, there some where chain XXXX. a persisting about COVID well. some things – currencies cautious headwinds those needs of factor to be to it season. a where European say a still strengthened in, still persist will through just and the getting little as as more and of freight but all against managing

So, of all the our lower guidance of mix things kind those into end range.

Glenn Coleman

versus XXXX would third number. X.X% good half that’s a that. about just about We you the of feel has second year quite growth in add to good I the quarter, played out. the think the mean Hey organic how if I Matt,

QX be expect our based guidance to upon We X%. above

year X% half the back organic exiting the we’re growth. above So, of

bode year. feel into we to we so, like next that’s as go going And well

So, I just wanted highlight to well. that as

Matt Miksic

Thank Terrific. you.

Glenn Coleman

thanks. Yes,

Operator

question Please next ahead. from now will go Lichtman take Steven Oppenheimer. our We from

Steven Lichtman

and best guys you. Thank luck, of Pete. Hi

for me. questions couple a Just

are comments here. as your dynamics thinking picture, you about reintroduction the days the in of again? what understand on as the the XQ, But the driver certainly are seeing you now you just to a in outlook, and XXXX, QX early CereLink bid field we out talked bigger CereLink market how on First about

Glenn Coleman

excited new accurate one. monitor got better and Glenn. on just more why Yes, monitoring other It this more wave enables patient thanks, is things. better about drift. This that a Steve. compatible. than is CereLink, Again, I’ll form few it the decisions and this clinical monitors the take has One, less It’s It’s we’re on continuous market. outcomes.

XXXX, monitor on we’re launched, this as down like Longer-term driver should in I’ll be us, And but growth for not that’s is a orders. with coming we’re so, third we’re into opportunity of real when a but forward excited about a in growth well. micro those for differentiated feel see XXXX. demand and go see mentioned pent-up many for be drivers launched goes with nice years others in in and and versus the next for so even that in the going next U.S. more along center initial couple with say, But obviously some we we’ve few fourth the third we outside revenues our that because us the to some us certainly here did year, $X the the We’ll to this quarter million. as of We road China is but moving quarter, flexible the the years, capabilities market. quarter markets in the of the of we we extent it. got still the Europe, revenues big U.S. But into one

Steven Lichtman

secondly, obviously of expectations. business Great. Thanks, offsetting organic in the then your initial Glenn. light ACell And just, is coming

you be look stronger say it what XX identified ACell business months? how to outlook your months over next fixes XX a overall potential about you that for ahead, as can and As what you’ve can at driver the and is talk

Glenn Coleman

Sure.

Just We highlight business. our to think in around is positives want asset terms the still of fit be this great things going to and a a I synergistic a couple to ACell.

good I relationships of We have MicroMatrix a in formulation in already at accounts actually was called our grow existing established. out powder we the ACell sequentially and did just quarter, my If look sign. remarks, number sales a you growing prepared third that where the positive

was of plans especially that surgeons, have terms challenges better performance so positive. to across of coverage, putting especially accounts access, those to top resources we more account and the the is getting still a in in part And big the portfolio. get newer getting place moving plans some a in but have around forward. We COVID And big better put XXX

And underway. plans so those are

more hiring We’re people.

I with the committees. fourth access place. think taking as product more we value do in get the more you’ll quarter see trialing We’ll assessment here, more

in impact we go like So, then you path we’re XX we going around ACell alone feel positive good completed context this, quarter, give as on and and forward. education just some events a to a there. And more the specific third education we obviously that’s have to

adding more better account resources, be So, going coverage. to getting we’re

see fourth some will positive open certainly starting I’m see we’re up months us to and take this to which to the by. but want an access for few to encouraged in be, get is quarter. business better think to already where I going we in us to improvement the signs, And a expecting

Steven Lichtman

Great. Thanks Thanks, everyone. Glenn.

Glenn Coleman

you. Thank

Operator

take ahead. now go from next from will question Jefferies. our Petrone Please We Anthony

Anthony Petrone

then luck And well just you. and in I the questions congratulate the stay Thank to have SurgiMend. role finalized to on COVID good is you GE, transition we as want to follow-up team course, on of a forward. of of and Integra here end as Couple tough hope the the year. going Peter on I’ll the And good into of luck

way then here, sort quarter an for on impact How is X of I’ll sort and access instance, over to So on just and led cases. or Thanks. SurgiMend. the then the maybe access, company million range? in and ACell to end versus Q so trauma specifically, lowering of linked follow-up X trauma technology or to into versus just going lower a on Q actually much lower of hospital COVID that two hospital tissue incidence on specific limitations million downtick even areas delta, have to Is there quantify of and the your the the then a other to a rate did related see

Carrie Anderson

Yeah, Anthony, I’ll take that.

If to would that where $XXX original COVID little you guidance flat quarter And say impact, the COVID third in essentially, recovery continued was million. I trends. QX $XXX we $XXX really up very recall our from ended from which for was million about represented sequentially million,

landed, I have closer to certainly, to would say we we us slightly it higher impact, the the midpoint, pushed COVID the a that and – CereLink saw So, than as then where mid benefit. we

would portfolio at been end the say third probably producing the that, really as really result $XXX and successful had back So, But range, through balanced the for lower guidance we end not go a certainly the overall of been closer I sure. of we been not of high showing my if headwinds would there, million. that, had the of diversity the you more largely all, quarter that and comment, CereLink, of at to all would but have comment to have the been if I Pete’s COVID for of look in kind launch it our

I’d quantify COVID. kind as of that from that’s so, And the headwind

these that that business surgical our areas relates are is a reconstruction and more that for period deferred complex These the area probably of it time. area to reconstruction, sees tissue largest procedures hernia the the of the impact. breast certainly As technologies be impacted, were repair can are

still and reconstruction compared down in surgical my XXXX was as surgical against to mentioned I remarks, XXXX prepared So, levels. plastics

probably you would impacted area that that one say, was more tissue. was within Anything I want else, the COVID if within Glenn, to add? So, reconstruction

Glenn Coleman

No.

I think said. well that was

Anthony Petrone

Meeting. the nuances was follow-up here evidence heading Just company SurgiMend, on to ADCOM I the able into a real-world know, one not the see quick of the was

if wondering, – been evidence. company world that believe actually Just able real the to I see has now

those think maybe outcome and and data on Thanks. comment panel change. breast just influenced how path forward of early in reconstruction So on, a the may here the you how the it thoughts any

Glenn Coleman

to Pete some start Thanks, and add Anthony. I’ll comments. feel then free

just you me Let some give context.

start off. maybe So

and FDA go the frame and out the framing little data the of MROC So, through in discussion. right you bit have panel situation the of then a

reiterated actually human FDA And Just of the purposes, PMA. week all for ADMs that American last at require including context Society stated Surgeons. the was Plastic has that ADMs,

are important today, for reconstruction we So, as there a to company file And indication PMA mentioned the FDA with ADMs indication. an approved I and a think no breast only specific earlier, I a are currently breast for that’s point.

well that want to as sure context So, understood. that I make

As And to data PMA. it to part study the to that’s a outcomes upon statistical data. design multi-site best-in-class supplement results to with looking MROC. in done of the are of that’s that’s it’s partially matrix mentioned that earlier, is being study that earlier, data, of also no demonstrates our recognize a to high that quality indicated to and off it MROC the data And dermal such thousands based This at we’re data clinical procedures mentioned worked is used. design data. the data. to support superior used has FDA our and working this And PRS procedures. where PMA safety effectiveness MROC acellular analysis relates that the we some the FDA to limitations been reconstruction the And from as based post-approval I existing the has are the us from us there real-world be with that’s as I the can the I breast and stated results surgery FDA there’s

going a there’s lot So, of work on.

milestone moving but Obviously, The process. panel’s by the forward is in recommendation FDA the advisory. the committee. Their the decision is FDA bound it. itself We’re is not a still is really with important, panel

on that’s the surgeons matrix work acellular help going dermal life to reconstruction. FDA with women change still vote need continue quality we’re following and for approved obviously practices clinical there on from the are going so, The an for is that to among restore current doesn’t urgent an it of And panel, move here. forward any this to going breast

I So, on we’re add the cancer mission confident that approval patients. if the evidence existing to and you supports for it. remain focused anything breast improve know to to obviously don’t outcomes we clinical Pete, want else

Peter Arduini

emphasize points. to three Just

having agency plan. part think it, and submission open with the knowing the have to know So, of PMA data I coming there data no and surprise said, was access of a always of we And interacting been there’s on it through our the MROC that what here. we follow-up I to and think are some expecting type with certain limitations had so I have

doesn’t that that I so change. to And want make just point.

the I be we it’s things coverage, is leading product two that product. with is bear the going procedure has the has think unbelievable that important strength and wider that other it’s here human-based believe to as strongly that this characteristics it volume product. has And really to the out procedures fact category changes we that believe other to new is no SurgiMend about unique aspect including

on you process to is rejection acceptance actually the becomes if it’s Secondly, part third it’s the be into its rate important for is we body an which to this second want the how and integrated very, characteristic our body. And it’s actually none. cellularize, low again very revascularization,

are for a things the Glenn beacon to so as women And keep the reconstruction product to that and the have said, is post-mastectomy. to right, those have fighting we three what tied which

journey’s plan a but it’s so, here. long, the the part And we’re right really and on important the think of path we

Anthony Petrone

again. luck, Good Thank you. Pete. Thanks

Peter Arduini

Thanks.

Operator

from take now will go our Please Truist. We ahead. Brodovsky next question Sam from

Sam Brodovsky

Hey, taking the thanks questions. for

seeing to yet? I demand that that’s some point, the to about. side And point issues are restraints know supply to issues. you you at or touch being the wanted But this chain freight company leading certainly anything any highlighted that there’s you’ve Just talked the fulfil cost on able not on I to

Carrie Anderson

disruption. that saw, would in packaging, the Yes, that expense we some we I’ll freight and about was corrugated quarter then the some other third supply as certainly, I chain packaging impacts particularly probably take it of majority, And increases that. characterize as the side think

where we’re a say thought we need in get add but into move has to yes, and to closely. would I would Glenn, closely. But continue about to the get ability we it sales supply XXXX. into where to to watch very QX even chain challenges. want factoring third we manage I interrupted our on been as not it performance, disruptions So, that our process, that? to there to as to in think continuing say, level quarter we and our very are And some anything product that be, you wanted something

Glenn Coleman

through incredible disruption, as procurement. I we’ve team as some I global environment, but it. operations that done it’s well pushed very our work have want mean, had and our And been logistics but it’s manageable. have way the to recognize a Yes. just teams challenging

And a it’s so, recognize want these to areas but our managing certainly I we’re colleagues environment, it. challenging that through are because in

Sam Brodovsky

it. That’s capital Got just the then market. And on quickly Thanks. helpful.

there? uniform Thanks. maybe be How think we more half above more of the below talked year. it steadily first of is second to a improving levels sort normalized and to is still You about that over XXXX? cadence should back or going levels getting the about was Is next then historical half it

Carrie Anderson

would quarter Yes. Fourth gradual sequential In fourth capital be Sam, I quarter. are year expect to fiscal the improvement. the normally that quarter, improvement budget. expecting of continued it’s tends I from of higher quarter would we fourth say end most to the capital because third hospital

So some loose – be purchases. and that let capital will hopefully, capital of of some cash that some into

to be move quarter. our the recovery into into think we XXXX, continued fourth figuring levels. thoughts for a But back XXXX gradual as I that’s it’ll So

for gradual. to would normalization, but happen, you’re thinking more will more certain, correctly expect think I I certainly that that when it not So, about be but probably that

Glenn Coleman

markets A willing encouraged fourth business move looks even Japan, in outside like. capital terms add customer’s here forward. is in the of this just by I’m The very to what quarter U.S. to that. funnel what would the I capital of Yes, seeing big the I’m our like part in certain

I’m example, see year So, an as our capital business. maybe Japan, like good and recovery even in some to relative news a places to hopefully the we exit as faster expecting

now direct this and force. be You our may distributor, part business through our we’re remember sales of to a used sold selling through

dedicated and months that change a as seeing benefits XX result good really to some capital, channel, ago. a specifically of about have selling we’re XX made we We

Carrie Anderson

seeing Yes. capital hundred a it’s And recovery say for is capital the that couple our to smaller larger would I dollars. relative capital, us mid-sized And small the to larger faster CUSA. a is thousand capital.

low one our So come did see you good new double-digit if even growth, probably third excluded double-digit monitor, we the had which in a though even CereLink, to that’s quarter. growth slower again, capital ICP – is our back, the that’s

certainly good So, some even nice as back larger capital, funnel smaller a visibility we that And capital recovery one even in. mentioned really mid-sized strong bouncing and on on but the stronger. have

selling our landscape has the changed. so, not cycle. extended capital just an –competitive It’s view is And more of

Peter Arduini

Next question operator.

Operator

from from will take your We go now ahead. question next Marcus Robbie JPMorgan. Please

Robbie Marcus

question, the good and best – And miss congrats a on you I’ll taking we’ll luck. for and Thanks quarter. Pete add of great. Oh,

Peter Arduini

Thanks, Robbie.

Robbie Marcus

minute one-time you guidance or like purchases, moving on items on of could CereLink on going we Maybe the in assumed down quarter? just start there, touch is Why sort just, love the assumed quickly, it or fourth was step Is any off. spend could you there? some of about just would a do looks what’s guidance what’s restocking, to I think bulk hoping down? in for if and the in And further what’s again how hear the ACell, also, to there?

Peter Arduini

big we to on mentioned, are a to I as take some progress the bit ACell, going time exit of more more as a little that bit quarter, access it’s third terms in here coverage the Robbie, business, a just seeing us as positives part here I and end COVID mentioned getting earlier make of hopefully account the we better dissipates we getting of the towards better year. get ACell that as is

going quarter. in to into kind as in it ACell of to us it’s should a but that do new see relates we sequential expect much one-time a improvement So, the go see we bit little items QX. fourth And take better we as time, in results more the XXXX, we’ll business

not as to fourth purchases in quarter, because the So, see we’re still to but the quarter, initial we third the CereLink orders extent the received. expecting saw that in same more we of

to out. one want So you I that call would call would that Carrie, be out?

Carrie Anderson

growth XX.X% the Yes, quarter I of up. third was say in bit at a would instruments step obviously a

as as the instruments in be So, strong quarter quarter. fourth expect But normally stronger than to earlier wouldn’t sequentially should is. be I the mentioned capital quarter third as fourth I

So, I other than lumpiness think don’t much, there’s continued recovery. just gradual

gradual expect reflects the in fourth at basically would from back low at our QX. continued the revenue QX that quarter we to $XXX think I million end guidance

Robbie Marcus

on Carrie much much held might’ve ACell thinking. to on about much of And much synergy about, SG&A, spending, the has what was capture, came what next a in just do a all been to faster, year, trying Thanks. was how start thinking come How how as that How at, you big lower think structurally percentage how lower? you’re back, spending was back? it. that lot Got than sense, of normal a street a we get Delta is

Carrie Anderson

things of like favor there up that, what And exciting those going ACell our quarterly Aurora But think was benefit of will expect on XXXX. you’re in that certainly levels. I growth we results. lot the I introductions, I that part in do our likely we and our expect think capture a Definitely into products in updated at a normalized about some the that from continue step remarks, areas as a our are move think synergy some improvement seeing had as catalyst that we his spend that will up prepared of product as would of SG&A continue SG&A. I’d and Surgiscope. there of is Glenn was not in our new QX. great faster Yes, that that agree to about in to QX sequentially

So, make sure that we those launches. market want supporting to we’re

MPIs, we’ve the into further market early at looking as XXXX. well NeuraGen got As XDcoming

moving make clinical we’re sure So, forward that studies want projects to of we supporting. lot really a important that

up X% that think are we we expansion revenue our because long-term still we sure from continue expect OpEx really margin that growth, want our organic manage bodes do think to will I I to about think X% gradually But we into XXXX. I QX well and move can So, to QX as that some into top-line it growth. supporting make XXXX.

Robbie Marcus

Thanks lot. a Great.

Operator

from question next ahead. our Please go take now will America. Craig Bank Bijou from of We

Craig Bijou

endeavor. your wanted to add next Good morning, here, issues. everyone. Thanks question, for on access the on follow-ups just and luck of ask taking the Couple I’ll Pete, good ACell

is So, to know access wanting Glenn, issue. for but understand this I the you really just if don’t you’re

little the get more not and it access wanted just exactly some those a being to to is what an color or able get issue the there, issues it in is physicians hospital? bit are? new products So, So on

Glenn Coleman

Yes.

a we’re have seeing where accounts. was ACell existing So, particular really just struggling we’re in selling have build start the That’s where where on really world. with COVID that, where progress of in and an relationships, reality Having those a territories particular that those don’t to relationships And it think said it’s will the issue. we is good not to relationship COVID improve here quarter. I we those actually COVID existing prior, fourth

add to resources educational events. more we better think have I to and get carver more do

And be what so that’s part to going we’re doing. big a about

of see a XXXX. going with we’re place. have think sequential half and But I to in expecting about an to way So, the performance better we And and improvement we’re feel that’s of the access into it’s probably issue ACell. plans going issue. half again, we coverage it’s confident in fourth see that in a the quarter

Craig Bijou

grow business COVID or for get your beyond you helpful. going, expectations you That’s I it. any first deal. that made pieces mid-XXs to any that moving how or the come the of mean, were the where understand from when to I back XXXX Got there, to it we expect business? in should have understand from when the Lot guys way sales can – where in you obviously And to quantify down guidance see low mean, but original or to way original

Carrie Anderson

the we Tissue business would to is I Yes. for growth. the expectations expect that so X% TT would with that Technologies ASL grow line of generally rest X% at organic will in say

to do, to organic at but to in I'm Glenn we know encouraged And we that type time, We what that that my it our bit And a is be long-term ASL plans little year. our as it for that and rate. of place. need mentioned it of expectation expectation remember just will turns take full a So, have grow is contributor. will next

plans ASL track. XXXX with the about as made and we into a XXth acquisition on all organic in pickup and start, think will we if we lower get growth with in those place, a see moving So, even January back on

we nice is, that will So, in see is XXXX. growth some the expectation

Craig Bijou

questions the good and Great, for thanks. taking Pete. Thanks luck,

Peter Arduini

Thanks.

Operator

our from from We Please then go next ahead. Zimmerman Ryan take BTIG. will question

Ryan Zimmerman

working Great. circle ad And before of on it's the luck agent I for was just, you. the back comments, a of you. or to that with longer-term things the data. that a follow-up pleasure to want Thank Maybe longer-term Pete, were about one they listening kind comes looking or for were data good approval they talking moment, SurgiMend follow-up

approval any understand, there as to based today that, to a and to be utilization this on And most on before amongst using SurgiMend prohibit I just approval is can think see at as there that follow-up longer-term of the so, is is in that the that way just was data any you committee agency want focused chance would kind not your the point that want just a discussions? breast this for to And on corollary surgeons reconstruction, with then, clear, for this but some specific label breast utilization, maybe specific a label?

Peter Arduini

fundamentally pretty a outside you it, the in evolving there last like the utilization would is part, and the Ryan, grow we know, is approach to on-label answer there the in So, with to UK, And have we're but an United to the clearly focus it indication obviously yes, able on some States the access procedures. promote procedures, multiple doing plastic reconstructive is as I and markets these think market. be

real-world there's ties go back able to go have of coming what direction the with a to to in agency companies And out open on and been would of along Amarok different as reality outcomes but then that positive a follow-up it working really there, have it pre-pack follow could the European study and that your a an a been do as to that the knew to lot here we be we this hope best as experience we having able quite itself, approval safety there's pathway is do procedures, the approaches proved is, no products think a then There's ways preponderance with to, would the closely we of I data, get high other appropriate So, and point. approval, well Amarok studies We've with approaches, sub-pack the agency. different with a levels, think with there. is it's and data. the debate realistic lot shows But that question well. were up We reach of I being data think think very panel this we towards that's having case. and along an to about

a be without having needs to Now pre-approval of believe the there it that that's much point, that be there, that pathway perspective study to prospective very I'm could our do randomized sure is hands. to study but the your within a done? one that's we options out

so, with And we'll more to over you be the progress the as about with comes months. And chatting the work we've data it. coming on do agency got out,

Ryan Zimmerman

late. been Carrie, in of follow-up, just then I'm but this the evaluation dislocation will Glenn this, on his have views And a wound is Okay. sure as [indiscernible] for and there's market, chronic significant

today? kind your your get And something just to sheet, of want profile from are, how you chronic on market, that's reconstruction. I separate strength the maybe balance to to you interest perspective views get the appetite on I have so, wound to And in based and guess of your more if

Peter Arduini

No.

And of is do well. obviously as bigger a big that we'd And think one of become sell products business. sold So big have got that in the, are a to And setting breadth our we both outpatient I we these presence, portfolio. we've the outpatient of but Ryan benefits inpatient today. get our and like the inpatient part the

fit and say still we focus our would it's the just business, I be continues So, a focus the primary for inpatient products really that but inpatient but us, have outpatient to both setting. that

Carrie Anderson

just Ryan, sheet balance strength. the would you add, I mentioned

for mentioned and great highs, flow managing free job record XX months, cash of I cash we've flow. and XX flow we're done operating trailing generating think a – my cash I as in really prepared remarks, both at

And talk X.X at targeted to ratio up X.X about so, we times. we're a X.X leverage and

opportunistic only a lot to of M&A priority on tissue allocation. gives of capital to regeneration pockets not to finding to is us the continue freedom but for of a neuro well. opportunities degrees certainly going It and be be also the continue side to side, on expand as So

the some also we'll be there side, opportunities M&A have. investments, well we continue that So, for on that new want active cash want the internal to innovation use of as we but about as to product it to think we

Peter Arduini

Yes.

Ryan big growth One PriMatrix. is about of we catalysts that for the we've reimbursement the talked study have

with significantly a working respect coverage that product. now commercial to we're forward So, payers at more get with

for that'll us be as we big into so win And a and XXXX XXXX. get

Ryan Zimmerman

you. Got it. Thank

Peter Arduini

Thanks.

Operator

Please go now ahead. will question next take from We from James. Bedford our Jayson Raymond

Jayson Bedford

Good morning. forget, Pete, I luck good GE. at before And

Peter Arduini

Thanks Jay.

Jayson Bedford

Questions.

Few welcome. instruments, just demand You're guessing questions, mentioned you market's pent-up growing in the not I'm XX%. the

the just quantify can So, third level of pent-up you quarter? sales the instrument and demand in

Carrie Anderson

May instruments, Yes, so. to probably when Jayson, say I mean, the expected you I'd grow we Investor Day, back instruments X% to or our go

can coming that third from I the an sites. came fact quarter. we was demand articulate of demand a the would alternative So, did incredible of we that at say pent-up amount that see XX.X in the in lot

recovery outside bounce demand the outside of hospitals, inpatient a alternative of of nice settings, the site kind order seeing care. in So, back that

Jayson Bedford

quarters? for quarter Or few thinking the this just fourth die And next grow instruments down? does when can XX% and beyond, Carrie of plus

Carrie Anderson

hard to that lot now of a pent-up I Yes, to we'll say continue third the I satisfied. performance with the see. it's the think is mean, I quarter, would But know much demand how in

and around fourth that will instruments for certainly would long-term I quarter normalize expectations X%. that is so, And think our

So, I instruments what expect a to be. I would say to of think as normalized we level, you should that's more move

So, the attribute rebound that to both saw would to in second largely quarter we instruments some business healthy third demand. and I in the quarter, pent-up

Jayson Bedford

this. was include if But a sales we missed I what of I if apologize And capital CereLink? as Okay. percent

Carrie Anderson

so. don't Capital, for roughly X% or third have of but revenue quarter, the I it's an our number about exact

a So, double-digit saw third to mentioned, amount. – double quarter CereLink, I even growth compared And significant as not it's excluding the XXXX. in low digit we

our capital sail bit a not can think a XXXX to that I encouraging can in So, trends on as good and trends, nonetheless, continues we XXXX side, move back be as to third continue growth performance sure, into some that in levels. compared XXXX, for to And to the But capital. of trends, we normalize, to start the wind encouraging nice in capital XXXX yet as quarter levels. about see

Jayson Bedford

FDA follow expectation that And Is next over on assume Okay. a FDA quick months. receive it the you the SurgiMend. then few year? next that just the panel I question PMA your will recommendation the and opine doesn't the

Peter Arduini

if FDA mean, read get will the was that it's just think the yes, I we terms really at panel on through in was Well, effectiveness I to to when this decide point think approval. and positive they a But There of keep jumped the what based in on safe. in all timing, time, data. mind, voted relative I MROC question can the

pathway And for for an the the caveats agency right with opportunity very clearly and approval. follow so, I find there's ups think much, to a

So we that's believe on. we're in what and focused

even of the follow-up though felt And there it's end that So that used would will study was would a that the because at high-quality of clearly men we study had always again, of there's that other prove data, and of consideration. in involved just components always some it to need the this be part, clearly out. MROC age for with level type a the be surgery most we

Jayson Bedford

Thank Okay. you.

Operator

take We will Mark our ahead. next now question UBS. from from Taylor go Please

Mark Taylor

to question luck for take thanks the Hi, and transition. Pete and you the taking good congrats and over

Peter Arduini

Thank you.

Mark Taylor

So, got of of end expected, range October into QX you like to so a as decent problem. ask you because start. low sounds I said the Clarification was, clarification. just No on wanted the

last see months that the in that out and those and some you two So, of through flu called around implying the that environment risks quarter with guidance staffing? COVID is degradation you the

Carrie Anderson

QX. the guidance say XXX I for call again, Man, would is

month October lower the But remember, about first typically COVID lower. that given quarter expectations. line think year typically – or the is the first the If month with I I is always the came three to any in as quarter so, any look lowest And in of of of out relative a at gate months. XXX non-COVID,

second your month you ramp your So, then third and month. and usually

October expectations. that think I those XXX, line in with my generally relative about as October is So, to expectation came

Mark Taylor

of going and XXXX kind to topic? XXXX, earnings Analyst double EBITDA related then, had end One you're of can by means committed in what into in to spending I year gave still digits about, you whether EBITDA guess, with us it still high two this Day? I the, even then, I the margin questions next XXXX. on spending a the understand at year? follow-up to in feel you help is bridge you if the for coming, that XX% of guidance can Are continue you guess and And grow at talked the the that the you and growth you great. to range next years, confident the margins Okay, now couple Day you answer Analyst to ramp

Carrie Anderson

this we've can control expect Pete part that of guidance and I are say company. as we've would ever on the our have got provide most a time. a catalysts clear at would Certainly, execution XXXX focus guidance as we've Glenn we're in had what We point pipeline at had and as robust year-end focused we earnings of Yes, has we February shared, to not call. providing this

no to spending I we things move are think to we as today, into when I about spending is think as where There XXXX. be that a and positive lot our on levels of XXXX you a So, couple to Integra, there's of also it like as And think we're about. about have shows. we comes have, many open staffing certainly fill role We're many doubt we going not spending. that not restricting in positions. every able that much; situation and the COVID as traveling We're is where hospitals as still to affecting companies not is things

coming. revenue that that that in normalize will in make to ACell great move all that call levels. X%, terms opportunity It's think spending. OpEx of to have So, synergies pipeline also, faster got we've what growth, fuller we I to spend sure grow and below margins. all those positioned into to lot And that XXXX, And we're things as benefited as about lower of of of in support is spending that normalized important there's because realization the realization, we X% too higher I things revenue the result a our XXXX,

going at of not specific guidance this I'm on comment to in point terms So, margins.

until can the see of XXXX. we're next guidance factoring of some in in number on specific more we're ready I even increase February. think still But a I to in over still margin considerations give here months expansion into couple

Mark Taylor

alright. color. Okay, Thanks the for

Carrie Anderson

Thanks.

Operator

Dave from our next Please question go ahead. take Turkaly JMP from now Securities. We’ll

Dave Turkaly

whether to I'm I the Congrats, you of different this to program did than, Pete and could, able data I'm have just be again? option to I'll trying years just both? what you several of the to if sense And see SurgiMend, little make iterations I there in efficacy it the just for have back now were your and the were you sort iterated quick looked device, And at they try or get might if a of think product a MROC best ago. curious,

Peter Arduini

and So, comparison. about study does from Dave nature, the speak product have There's fill what is things the that is they out. that actually the and do could this tissue, we and and you we're But fundamentally talking but same approaches that going different the study, forward, of quite processing that derivative when today are apples-to-apples about that sizes things consistent. all those

Carrie Anderson

questions? other any Dave,

Operator

final ahead. Wells Fargo. our question take go Biegelsen now from will We Please from Larry

Larry Biegelsen

Hey question just, job. in morning. his could I guys. the to Pete I Thanks had well taking wish so a ask for question. new Good

end its question TMA think give the material. a TSA expires have Codman that any chance quantification the QX, Just question. be. how one Thanks the beneficial little is guys bit of said taking Is for You'll of gift? a us of I maybe at might parting or you there Pete

Peter Arduini

how about comment the I'll Larry. It's team above TMA grade, pay here thinking exits? my but about they're just let

Glenn Coleman

initial I complete the schedule and our of point here year where the a from say plans to shortly. to Larry be probably just would all transfer is ahead CMA going

years. So, said gross it's over key margin the of specifically story of several the next drivers other we one the it means quantification, what than our haven't

of one is This them. transfers. plan optimization, plan So,

another that on. we're one We as well have in working France

gross of all couple part margin it's next plans So, years, of the our for improvement

Larry Biegelsen

Glenn. Thanks,

Operator

will and you today's conclude Ladies call. gentlemen, thank That conference connecting. for

disconnect. You may now

Integra LifeSciences (IART) 2 Nov 212021 Q3 Earnings call transcript