IART - Earnings call transcript Q4 2021 | Integra LifeSciences Holdings Corporation

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Operator

Good day and welcome to the Integra LifeSciences' Fourth Quarter 2021 Financial Results Call. Today's call is recorded. And I'd now like to turn the conference over to Chris Ward, Senior Director of Investor Relations. Please, go ahead, sir.

Chris Ward

Thank you, Emma. you year the XXXX thank quarter LifeSciences' and full and earnings morning for Integra joining fourth Good conference call.

the Chief full financial Coleman, press release on Witte, year Officer. Earlier Carrie XXXX me call our issued are, Financial morning Joining a we Jan Anderson, President Chief and Operating fourth Executive results. Chief Glenn announcing today, Officer; Officer; and this De quarter and

be Events Our integralife.com referenced Presentations. presentation, corresponding will during at and which is under call, Investors and the available earnings

will non-GAAP turn well non-GAAP any is growth X-K our Integra's Extremity I press current otherwise And the franchise-level can disaggregated Before we sale of filed considered on we Exchange like company's SEC. are all would actual to remind stated, during Reconciliation measures. revenue this to reported materially including Jan. found report you call to effects include today ACell, made the SEC and the business, the release, financial now begin, measures revenue Unless I an in Factors that, for in growth of the Act including today's products. release. cause that reports with call as Form be over which are will growth make forward could remarks, foreign differ in statements certain today may that and performance. both exhibit Orthopedics And discontinued will filed excludes comments organic to Also with divestitures, Organic prepared to be organic with XXXX. based lastly, financial of results discussed looking. rates revenue our in acquisitions, the the currency, reference as our

Jan De Witte

of to us. call, you my earnings start good with Chris, you, would brief call few first at remarks like a morning, and Thank the Integra. for make this Thank joining everyone. I

potential. the a team from readily its And focus Through our platform resilience the a be congratulating company, it I ship for our leading charge through I'm apparent pandemic. reaching lead with We've to Let many the and and first globe successful and team into year has be me recent ongoing forward. and thrilled while Integra But despite joined business future steady future. driven was strong alongside to run seas. rough growth XXXX COVID we been customers potential. proud into years and I'm ahead, legacy has working organization to team Integra dedication thanking months have future. sound across significant company, as look tremendous untapped global serving and its challenges this our path our my forward our will so, the years. employees. with platform team's our the I with full this the to my Since start showed in in capabilities the our achieved unusual months strengthened throughout year, priorities exciting impressed also significant continuing this quite in on of in forward. with changes values few resilience patients, what the and doing our a me. while we've board, move portfolio And for to the

a our and outlook Glenn will share detail XXXX. we'll performance at Carrie more XXXX today's and accomplishments. deeper performance into And our During key financial then go presentation, about our provide for will look

in for thoughts focus areas my on the key accelerating this for Finally, our I will growth company's year. initiatives for conclude with

turn let Glenn. So it with that, over to me

Glenn Coleman

Thanks, good six. slide and morning. to Please Jan, turn

and at great in strides made another for Jan inflection XXXX mentioned, we believe point growth. As we’re

So let a me accomplishments. highlight key our few of

and ACell, business and business. our profitable of the acquisition portfolio we a faster-growing our transformed tissue low-growth First, through more Orthopedics of divestiture regenerative the non-core

time. to levers footprint, continue of our margins optimize improve also as one key over our to our manufacturing We gross

manufacturing the the to Codman product in Mansfield, close completed and portfolio from year. manufacturing our transfers the Massachusetts complete on we're substantially site transfer track France into necessary have location J&J facility. of this of the to And our We existing end by another

meaningful our also products and in In measuring CSS, made innovative both our progress the pressure system several XXXX. of on monitoring we launched of advanced each third the segments. in intracranial new We in Europe for US CereLink, quarter

CereLink and We year the have markets several in later also Japan other full in year. XXXX, two international will of launching benefit in we're plus markets these this

to phased Aurora in solution a use lesions. surgiscope, sea MIS, initiated surgical integrated deep our also brain specifically invasive proprietary clinical or We of neurosurgery for for minimally designed launch with visualization

same addressable intervention ICH intracerebral about we of and are billion. two We evidence neurosurgery the using FDA our are for a gathering to early Technologies, surgical treatment $X as SurgiMend in market in In specific expand PMA or the for and these ICH by well. panel reconstruction. MIS regarding indication expected followed opportunities, Tissue an meeting, hemorrhages technology for breast participated clinical for the Together,

study treating a the completed use diabetic regarding also PriMatrix foot commercial multicenter of expand to intended ulcers in We coverage.

outside last leadership and of Integra validation leadership. a a These year, diversity by R&D to been most care Some has external And important of I'm technology health XXXX executed serve at commercial an recognized CEO. in top of one the leading as companies. our transition, Diversity publications new setting. the also Company of accomplishments end efforts XXXX pleased of Jan, honors our Best and occurred a inclusion or smooth for that we market share our XXX welcoming and as as

once challenging XXXX. slide financial provide I'll external Despite turn also results. thoughts environment Let's seven, to delivered XXXX financial and XXXX, some strong highlights where we some again in a initial on

billion, lines of as over saw to XXXX We $X.X the XX% of X.X% revenues from our to compared full our XXXX. Our organic compared portfolio. as and were recovery most the with despite diversity products, growth benefiting just across critical setbacks, our year strong nature well COVID of exceeding product

lives. of Our quality patients' products a role crucial the in play improving

of which bodes revenue the time, of continuing short which for beyond the as used, deferred move related disruptions we majority in well result, pandemic a are XXXX. for procedures only recovery, products periods our lingering be in As can

versus was expanded adjusted representing operating million. growth XX% $X.XX, basis EPS The of year to Our XXXX. XXXX margins cash compared record XXX delivered of flow XX% we full points, $XXX also and EBITDA and

the chain of staffing specifically look As we impacts hospitals the XXXX, we the and with posing first expect at year, in linger supply challenges half to risk. that greatest production COVID and will disruptions

commercial on normal levels. modest the X.X closing, with recovering, in and manufacturing year. of the second more will confidence are to Our Consequently them to take first subside. current keeping targets times turn growth production half to is we with be staffing plants our our growth continue normal, the even These in our call for In Carrie. demand I it about sales faster and COVID plans our with And are and own back the so in seeing impacts that we as acutely the expect the quarter as we supply pressures to quarter hospitals, I'll chain reiterate expect challenges want second to in our long-term order teams up most now growth ability our will to once deliver of the over felt in first and than requirements. time higher customers' quarter continue to beyond return levels

Carrie Anderson

a QX, impacted and X.X% of to Thanks reported $XXX increase fourth year. on like compared revenue Revenues of on quarter. were and organic a the an the negatively approximately $X basis basis X.X% in million on prior an by slide full FX good representing X. revenues everyone. morning, million, results total I'd Glenn, to with year start summary and were quarter of our

growth full achieved of of For over Despite were X.X% billion, year growth and staffing XXXX to XXXX, growth COVID compared and XX.X% to XXXX. we XXXX. in reported hospital revenues half in delta organic and compared representing impacts XX.X% compared second QX, just X.X% in organic QX $X.XX impacts of to Omicron

our by business, and in half was second driven well ICP label including benefit monitor our private instruments as part recovery markets a recovery capital CereLink in in our growth strong of the Our businesses. as and a top-line both indirect new our

from in and also continued benefit We to Japan. growth double-digit China

countries both highlights X.X% continued and even into XX% on organic to excluding launch quarter. the saw CSS and $XXX compared continue a our sales slide CSS increase and Europe. grew basis to you and from the contribution Japan year. over revenue on in in If CSS over US in XXXX. grew a and sales take major growth X% basis recovery to revenues in The capital to with deeper grew with the And global deliver the sales in digits The equal of low all and were of pent-up benefit prior was growth to compared prior and XX, to about in We sales CereLink, an an million, fourth instruments. from we'll and of compared our dive international the high reported contribution approximately sales regions double-digit sales for US demand. XXXX sales instruments CereLink single XXXX. delivering neurosurgery turn neurosurgery Geographically from broad-based China growth X% the QX both low to increased strong compared across year QX double continued International XXXX. digits

a business ACell our during $XXX in increased guidance. burn Moving Tissue basis to Integra up on fourth in to in the stabilized driven on $XX.X led trauma organic compared year. in basis label private quarter Technologies increased and by reported compared slightly X.X% XX. orders. customer surgical in Sales basis, Sales X.X% million Slide an the line SurgiMend continued to wound XXXX sales on in were by construction and from rig markets. our Tissue The recovery Skin an delivering million, prior on QX Technologies reconstruction sales segment with organic November in and XXXX, XX%

Adjusted caused charges sites which, staffing XX, including to QX return only continue and levels. Since our margin on negatively into to inventory of first of freight impacted under sheet and in the expected disruption This quarter. factories levels costs gross impacted the to was will first idle the was in of for unusually and than high is to what be we our I'll increased normalized cover now cost, turns, our only highlights full are gross absorption supply variant. And balance by by capacity year. P&L costs factors, as and factories manufacturing absenteeism under-absorption multiple half the the pandemic-related lower beginning have recognized capitalized chain fourth Turning to continued XXXX. our through The causes the disruptions quarter and XX.X%. margin omicron the was slide in

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

strong And studies. operating expenses in our disciplined continue in while margins spending operating the the into and year further helped flat by us place the innovation, spending basis points to fourth Adjusted XXXX. as As although global XXX per for expenses new was into response use compared in investing we to XXXX. increase while XXXX for discussed geographic full full remain expand $X.XX increased product versus expansion year put year-over-year, to clinical we the XXXX, EBITDA in recovery restrictions quarter share Nevertheless, QX, we grew pandemic. earnings in EPS XX% full adjusted year revenue the

turn flow $XX in the I'll company. structure balance a if record was cash XX, cash On $XX a million. flow XXXX, free capital Now on highs free flow. $XXX of to of for provide and were quarter flow of cash update higher was the our and basis spending. $XXX million sheet our reflecting cash both conversion you our cash million flow QX year operating slide for cash was Free XX% brief capital and in million flow levels Operating full

billion As company was our in The available cash times. the $XXX total credit total remainder $X.XX including under ratio was and liquidity had XXst billion million leverage consolidated our debt of net $X.XX facility. X.X December of revolving and

share our of $XXX strong the the the expected half a to result that be program year, of and is of flow position accelerated in we liquidity January first in repurchase a As the end year. completed commenced at cash million

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

around uncertainty business. the the its guidance on XXXX our and pandemic duration continuing of related impacts reflects scope Our half for first and

and XXXX, effects disruptions. COVID year full sales the variability anticipate staffing of challenges a chain half direct a supply in the less and we as underlying uncertainty expect procedures than result For indirect in continue ongoing impact including while we of of to XXXX, on do first

to to X.X% revenues range $X.XX reported growth of in of compared expect to X.X% growth representing billion to XXXX. billion, $X.X organic We X% to of be the and X.X%

in year-to-year included Our of for to fluctuation one-year organic the in The headwind revenue the range from discontinued the anniversary XX ACell as and point change acquisition. growth accounts in prior XX, And organic of from year-over-year revenue FX. an products was a basis calculation removes FX. ACell January XX. growth of January the revenue reminder, as

pronounced a staffing supply and challenges compared the growth of quarter of expect first We in result, $XXX to X% reported of quarter. XXXX. and revenue the negative X.X% $XXX are be to we more million first chain to to growth expecting million X% organic And as X.X% to positive representing

quarterly beyond think growth second the phasing to about exceed in we of X% we organic As anticipate half year. QX the

Turning to adjusted guidance for earnings XXXX.

effective rate accelerated year We quarter be and $X.XX the to repurchase $X.XX tax expect the guidance and $X.XX share slightly adjusted to XX.X%. expect a adjusted the includes of $X.XX. EPS the EPS to This we higher adjusted be first the of full range in range to of in for benefit year-over-year of

earlier prioritize growth our in as build to our activate XXXX compared moderate expect to half pandemic-related we challenges the catalysts, to as headwinds investments second gross out margin Given margin adjusted and well continue some discussed abate. XXXX the OpEx to the of improvements in as our to EBITDA plans capabilities of as

We once reach targets of long-term we call to return to that With of Jan. I'd toward to the the the pandemic. like margin side impacts other macro turn over our back expect expansion greater the

Jan De Witte

you, Thank Carrie.

next XXXX. markets ease we As how points still XXXX our our normality will world Omicron of confident capabilities. and the now that caution operations towards have earlier how We very although getting data start we're few for hence in was level COVID fare will on indicated over about outlook the the exactly our and and feeling

to of a performance However, caution to should years. to and opportunities the our obscure and the next our over ambition in invest near-term not future our continue coming business to level accelerate

how path. you expected like and this I XX, will trajectory accelerate If revenue our to turn to outline growth would Slide we

four have momentum historic first in delivered between the factor X% The results growth organic we portfolio. core is years, When the the over today look past into for we growth our back X%. and we've

to in COVID. mentioned expect We acknowledging Carrie likely our as range continue a growth impacted be be to XXXX near-term by our guidance, this will in that

We returns to and limited worldwide state. customers', back normal our see chains expect which speed pandemic staffing steady with to supply a to the move

However, look to strengthen allow in from the segments growth our XXXX. on organic begin invest as past we X% see growth COVID substantial above and same us we during to mark. years the time, first solidly a expand that and we we will growth. At continue which half see get of will TAM which return-to-normal two to focus in should in existing to the These and XXXX initiatives and past us continued more benefits procedure will volumes NPIs our have positions more will NPIs

rhythm international including be the to are to our we as The areas third in efforts Once into a areas, commercial the access, expect These broadening we value-added of executing growth factor of finally, solidly see mid exited fourth benefits growth in portfolio, laser target. on with XXXX X% building we -- our be our strengthen factor synergistic the and further about will opportunities. focus, M&A the XXXX. And momentum organic on new with value-enhancing which to business to growth our organic organic is expanding we activities long-term will these adjacencies as advance our about along digital capabilities. accretive opportunity our further X% is XXXX. well leveraging long-term

function, COVID acceleration. While impacts And acceleration of and long-term foundation opportunities the same how mid- time, leave and capturing at behind. the for a building near-term as faster seeding markets

Let's turn to Slide XX.

NPIs, as as that countries of other opportunities mid- further strong capturing drive China, of the initiatives our growth cover. expanding focus commercial there our midterm, growth international that to territory and will drive ramping in parallel near our catalysts a Japan, and about In think we This markets up of key catalyst, lot to capturing performance. ACell well great success strengthen potential long-term are capabilities we European and includes, can our those potential. our around As

diversified We the a new products of talent segments. innovation we business portfolio the resilience full With employee across our both lessons engagement, on COVID during are ideas development of stepping our leveraging and focus period. as very and and up learned speak

to path making with aiming our to communicated to year, translate our markets, bring and finally, our to momentum the we're portfolio will I execution of international and curve. And earlier ESG on And this map also in a up leverage additional pillar ambitions our products division three-year We've ramping game started focus M&A parallel strengthen board R&D to international working in to leaders, product year. management years. development, operational a the amplify published company later our steeper define and into factories. as longer-term while be these inaugural We will and as with capacities the an I'm and a ESG strategic ESG initiatives evaluate learned support from regulatory growth optimizing capabilities we over future for drive multiyear new and to to in lessons this our options, ongoing report an road past define

to If date like we've to you taken set that have our acknowledge I slide actions XX, long-term the success. Slide would us to up turn final for

We knowing balance more sheet execute us to additional on our in on products. focusing made up We're our profitable that our COVID stepping provide portfolio, has growth as more commercially. well resilient our operations optionality tested and our important rigor substantially as have us but strategy. financial us growth agile, initiatives, and differentiated focus transformed strong

and between margins headwinds organic initiatives and to In my and growth lead past above and the pandemic margins great in XX% as a of them with like would XX% forward for in the future double-digit open our the XX. EBITDA range expect position our bringing priority our outcomes long-term With to revenue XX% opportunity Q&A. adjusted distractions, to shareholders me adjusted X% that, growth to our the to free X% move XX% call patients, on about as to adjusted excitement conclusion, let conversion surgeons, we their team and focus Integra's well to we reiterate gross cash current into EPS I As colleagues. for Integra

Operator

Thank you. now & Oppenheimer take ahead. Company. Instructions] [Operator question Litchman Please We Steven from first go will our from

Your open. line is

Steven Lichtman

as on growth granularity product morning. what Good Any is near provide outlook could in first in of Integra? terms the you the do This you your what outlook XXXX. question for And you. for further here term segment? see Jan, biggest by Thank revenue driver opportunities your

Carrie Anderson

I'll Steve, hit and there. question, your can then half good the Jan start back of morning. that question

second say, And pickup of segment the of that, take generally, terms full the and I that CSS with benefit a the will of of product to But TT be In you the year back launches for in for the as you'll of year, minuses of the line say, full think, in Jan, half pluses color, in some there both corporate other the will would In more you would half the say in line probably then the I to should the corporate acceleration Obviously, averages. I from there. some and range TT, our see want segments there. that. somewhere be the ranges. be model should largely and year, in would ACell I year it if

Jan De Witte

Yeah.

over if – up of take COVID you one. as the the our If we get momentum business of one, you building as core

those top COVID. of specific we and that say after ACell, like out comeback products this, that our further additional where are I take on building CereLink will normal accelerate products commercial, over products you would above like If are

Carrie Anderson

further And capital And we an but the as although, saw some in think we have but – I think opportunity in recover in capital to smaller unit. further in Yes. sized opportunity our see COVID bounce capital XXXX would headwinds. recovery nice move saw nice some a largest we QX, capital XXXX. And some area say in through still rebound to We back Jan the XXXX. still is still I CereLink, CUSA our the itself is mentioned, has also compared I to

Glenn Coleman

at going And place really the If little China cities. these we to and China. for organically. Tier well. putting just likely be plan I China. look XX% good into in over would mean, growth fastest-growing give color market most Tier be XXXX, in I We've a X should it's got Steve, We're X a up I geography expanding as

the $XX XXXX as to us So hear now market of which kind XXXX. growth market XX of the talk to for China, consistently But for that, a over will sure, for growth highlight in as in years would going I an about be million key coming X over next it's a exceptional I'm pretty us about well. market us. out you're us

Steven Lichtman

direct Great. weeks Thank what little relative COVID you. terms but color wondering, December you bit if spoke provide, in about versus versus could provide Any you've color obviously I January Relative to that you impact, you and impact, dynamic. of very indirect seen the months, been front? could to more the a in on recent on February

Glenn Coleman

Yes. then you into can add Jan, Carrie I'll start this. and and

at first is by thing up seeing manufacturing absentee has think our which caused better. absentee facilities. rates, spike a saw in disruption. the our foremost, I and getting Day rates in the day biggest significant we're that's We business

quarter. a normal rest But have certainly in components, be an materials, packaging whether used certain good with plastic things struggling So this to January the news going products. back nevertheless and not of that's to the we're did supplies probably be We're impact that that in normal cases, trend, it but for early moldings, more still is coming our in February. get electronic still

our ago. what three so to months consistency it And is not four supplier was

two half that in $XX see. I million got normal and we means, of incremental higher this to million we my typically think it than of terms I just but orders, into times, back back $XX quantitative orders. wouldn't And number our terms, part we're working was high through to record comments mean, put of around that,

improving. trending on I in capacity COVID is that's looks like bed procedures, about all As it positive a ICU think direction.

well. that want So, in did you have all right things the like, XXXX. that Carrie, the impact all of exited and as beginning are an part looks we direction to as these XXXX add? moving of But it's

Carrie Anderson

comprehensive I would I hospital are only I lingering well. Yes. was And as pretty say that would a still challenges add, think response. staffing

So it's Those think quarter are quarter biggest year two combination, pieces what to I place we're took the that the to compare as in it the think dynamics I the about now. second a last first seeing and is issues continued impacted as the hospital well. supply also the just staffing just being to it supply but and then nature the disruption and -- continued as our chain chain of in facilities in Omicron contagious relates labor

Steven Litchman

Got it. Thanks everyone. I’ll queue. jump back in

Jan De Witte

Steve Thanks,

Glenn Coleman

Hey, Steve.

Operator

you. Thank

We Credit will now Please from our line question The take next open. ahead. Suisse. Miksic go Matt from is

Matt Miksic

so much Great. questions. taking staffing follow-up QX. in and this COVID-related on Thanks One for transition of pressures

complete inflection Wondering I like inflection you liquid it that in better. in that to sometime but beginning follow-up. little things as are And think and a color QX are the sounds other get think just OUS, quick starting to our because out focused you're to not our breaking just an elective the love some I be exposed surgery-focused elective maybe sort provide US nuance. understand And how one suggesting bit of names any seeing universe is now? mentioned Glenn could this is until may and and you if names

Glenn Coleman

Yes.

the I clearly procedures of happening. recovery think is

So point that happening. inflection is

immediately not chain to challenge going disruptions see we to to be is think I supply back are normal. the the coming the

quarter things mentioned and a The right the I to trending levels. go rate So to getting to but in the bit back ways we in now to the through earlier. at more still day-by-day direction we're staffing that that's is before normal very of was take That's time on better, levels. absentee end our the all probably get And get facilities high a going it two us through. really

is take us to part time chain through. to some other The work the of going supply

packaging more to product So, is mind take back and and customers much a getting that cadence. do least rhythm to to to in else months going everything materials at better components need to my several to we get ship

challenges a have perspective like more affect procedure that March would yet. we where by more That's geography, come obviously a So, say globe. has these still discussion. markets the in not from certain issues back of Australia I

to you'll we've that still the talked market-by-market, about are the procedure impact that see on So really But items normal. some not the areas globe. back whole,

Jan De Witte

everything still a Maybe a we perspective, see add our staffing that Hence, customer it a constraints going to and QX, step okay? steady that is hospitals is -- see struggling normal, part staffing working QX to or change. of back steadily be that through improvement suddenly are back they're with not we come customers but see where from step but of what a change moves we not

Matt Miksic

Understood. a out, as stable up follow-up QX QX on from just to slightly ACell, pointed And then Gary. you

moving And to of should that sequentially love term? would stable Just it's in get get upward be what are or going understanding growing business the an to again some near it of start again. whether we expect here that to the drivers sort of

Glenn Coleman

we love listen, foremost, the first Yes. ACell and portfolio. Matt, think I No

Hiatal in a improvements We've are have us procedures. We portfolio. to the and powder changes that big the for product MicroMatrix also made going product used love necessary and laparoscopic I So Gentrix benefit XXXX. in think the

territories we added coverage and added and in I what have think So resources. first more foremost we've more done?

add double probably resources think that So XX-plus going QX. we're that in and then incrementally probably net-net you QX as of to could in

so. sales So back I revenue well. the think plans, two done of kind a line portfolio And compensation getting growing or plan. more ultimately be our as recovery mid-year help I the those with we'll overall tech We've about so going trajectory start terms growth we also is change frame. of this to tissue this which adding better talking single-digits us is items to call things coverage, time combination on And is the important think of be put high resources to to where in think I in of that going business kind going

say would our the good just this So these resources We still business. on like asset. I adding we're back is we're when we in achieving and think bought the path. the models right news financial we

So and line, in can overachievement you it's see of and overall our EBITDA our expansion. our that accretive EBITDA to very numbers bottom margin

resources, financial this the targets business. still back our when on adding even we're So track we our with ROIC measures bought and to

improvement look the of just a growth would to I set of it for and So that's kind continued how here return This is would mid-year. kind expectation. say real

Matt Miksic

Great. you. Thank

Operator

you. Thank

We will now ahead. take line our The go next question is from from Robbie JPMorgan. Marcus open. Please

Lilia-Celine Breton Lozada

Robbie. Lilly, up. implies growth By is to is year something pretty half, second for the first math guidance X% X% X% actually taking step the which the in Thanks This half a to the X% question. meaningful and Hi. for like in of on

that acceleration what you in back year? in So the gives confidence the the of half

Carrie Anderson

that take Yes Lilly. I'll

see what terms greater in in a the as faster And that I And would impacted by think as going growth second that's mentioned those can of of obviously, growth the it to stronger than abate, down rate see clearly first half in first more in is we the year. disruptions. issues I half obviously be the tamp X%. COVID-related half we

I underlying think the have year of the mentioned up that talked the about in second you of just pick that we full some is that momentum start Steve's ACell launch, Glenn recovery benefit half. what to if you the the the think have there of question, first you about will benefit CereLink in

end recovery hasn't well nice the say as markets. in well large it's two gotten well still China be growth some QX international other as nerve on the back some here growth that of double-digit Glenn that would talked and to recovery expected with the continued add of of as start then areas, see launching at about that I contribution the fully as capital capital I'd will we'll We other our as – product

in it's think those I combination lead all really that then us a So momentum half. the to that things of second of

Jan De Witte

half the we're orders and back in significant to at normal that get expect forget don't sitting to we this point on situation. second And back

the chain we point this supply be with of that fulfill. our up at So will some demand catching can't

Lilia-Celine Breton Lozada

Okay. do That's follow-up. helpful. quick and you things how from Thanks. any a And then give us baked on trended Can the inflationary EPS have the side you just pressure into much have on for year? guidance color how this

Carrie Anderson

call of level has the talked kind over high that last impacts turns. of we've temporary in I over this as of would is which the our say of I their what period creates time Yes. to couple -- move changed absenteeism under-absorption has thing plant new some the through months things it would that our relates this inventory P&L about is more part the the to of that

and hasn't abate So that I'd still changed us hoping inflation faster I I that with of in would are say we're we the trying will quarter say second backorder and maybe with that get new. the some certainly fourth freight first to into be be. the we've more there the to would was freight talked quarter product us it with to into those costs deal that say issue the -- needs I'd was and bit incrementally about necessarily likely continue where and a as

have sourcing well. our with We incorporated working as we commensurate pressures And inflationary group. increases global have price incorporated also

at the Obviously to have that We process looking factoring price. we annual in XXXX. look for that at opportunity that's aggressive half into So budget and here an ops were pretty the for us. our second

that tend the an that obviously longer not in we opportunity be have with add incremental those And part customers opportunity have in And even price. to leads add if ensure looking price negotiations open as products do and only commitments of your to we but those those do to the to about But lot also we nature. contracts. are new we volume have term opportunity at a audit discount commitments as think those contracts not to our opportunity on volume can bit a then contracts made. bring that they're to us As being of those. Those incremental little enterprise have When adjustments list new can price. price we the they introduce do we levels, I

we've gross new think tried offset the I that And to -- order are pressures. impacting is the of largely that inflationary of the levels issues net think incrementally of margins. because absenteeism what's So high information some I of that some back our

Lilia-Celine Breton Lozada

helpful. That’s Thanks.

Operator

you. Thank

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

Ryan Zimmerman

questions. Thanks Good the for taking morning.

there that in dragging the the I for slower of of cadence the average? business. of other here. been that some to there So growth appreciate think drivers you I ask corporate other down or want stay or discontinuation just they're makes divestiture Are appreciate potentially given either kind of Integra. products sense areas areas to areas development the the now you've I Jan, process in Are growth

Jan De Witte

immediate The see we is take action. do not short area answer where slow that growth I should an obvious

course NPIs how it's focused where of -- are discussing are the international is but on area one the -- focus first it's area board where my small. relatively on across leveraging can looking get they sure accelerate We is we a and we and attention. make classic full There's

Carrie Anderson

look Ryan portfolio. say that we continuously would at the I

So is this done one the Integra I thing Integra before joined well was review I of continued portfolio. has even that think

point where to look we will I spending of to growth portfolio we've the continue be. to portfolio think more to would that it I that the But type review want and opportunities refine is faster at gotten that we Jan's continuous say largely opportunities. to to

Glenn Coleman

lift obviously Ryan, Yes, heavy the was orthopedic. divesting

But the was as really of to There's the last the portfolio was like last that's we done. year. some piece So It business we portfolio. it going go-forward think done to portfolio I That the always pruning. now and have. big be relates

Ryan Zimmerman

Okay. And could if And your Surgiscope, contributions guidance guide, other some the say these those in XD the initiatives in for of assumed their about of comments of Carrie, you kind product be for growth comment XXXX the new I What's of product. appreciated. and bigger and on profile then SurgiMend of for just just on kind appreciate would each contribution like XXXX? NeuraGen

Carrie Anderson

question. the for Ryan Thanks

of a us. we our say started we for certainly with the do as our of as for limited I would -- us really placed or it the in of can control SurgiMend think with -- Surgiscope it's XXXX. and Aurora later to ourselves to trial the help that midterm hope Surgiscope in launch year. being quarter third randomized a initiation I near in relates see drivers part Surgiscope, And that inform to KOLs clinical-based

the start opportunity. At limited concentrated same And Mira this time, the regarding the sales to that launch. you'll part Aurora other and for of it which the in information relates a capture the some clinical opportunity. ICH as our is evasive opportunity from looking so this Surgiscope Aurora is it's minimally really to to And Registry data Surgiscope see launched we've also

revenue lot XXXX. in So, from Surgiscope going not the a that's Aurora to come of

that yes. revenue, the the over are for just say I'd for can't reconstruction We and cannot market. it. traction complex But as it product nice the product for beyond promote then as in specifically and has hernia And bigger promote XXXX. -- that to breast we Some advertise is opportunity XX on today. SurgiMend well market We reconstruction, are remember selling some relating but breast gaining both years the been we

and about for opportunity it let right impact would doesn't we our as So, our the now. here. opportunity PMA growth I'll guidance talk about our think I Glenn say for maybe But XXXX

Glenn Coleman

I'd Carrie's our new we've comments about introductions add Yes, of growth. is thing the contributing XX% about product only to talked organic

of a So, you could as point and that about growth. half of think organic

will think launches at I with with nerve year the we're the product new that this be look when that consistent Aurora, CereLink you product launching.

we're that the feel that breast piece way So, NPI growth at we products least certainly this year. to it. but out counting incremental indication half On we're any not revenue launching that's SurgiMend, on and is the revenues XXXX. contribute to of from good given not the the We're individual point quite a to break going going think each for about in

But with for growth now we included we advance into relative been later more think on the you color we'll in this has XXXX we in XXXX how the I as nothing SurgiMend. incremental year I to see this get FDA. once give rolling think for out

Ryan Zimmerman

you guys. Thank

Glenn Coleman

Thanks.

Operator

from We will ahead, from your next Brodovsky Go question Samuel Truist. line our take is now open.

Samuel Brodovsky

for All Thanks taking the question. right.

with a be hear the potentially data you specifically comes competitive that readout positively? a the curious And the positioning little and think in NeuraGen product bit on few the a Just products more to here. do there potential about if I'd go-to-market strategy space? to back how about XD, new Starting detail with data regards

Glenn Coleman

Yes.

think on I relatively years. mind, foremost of market short about business It's first in product think many, the it's nerve revenues the have repair. So already when gap X% we only you in for our and nerve nerve addressing keep urgent. market many been a consolidated our It's small.

some to more NeuraGen does XD And is takes included us market us, short chondroitin the it's conduit, opportunity. but mid-cap, gives so that chondroitin-X-sulfate. hollow gap in And addressable it what basically, conduit sulfate, us for from collagen

And accelerate these repair it helps for nerve nerve the to mid-GAAP issues. of growth so

our expand got portfolio. things some that's we're team the be nerve a already very team the a And hired selling portfolio. and We've ready go will in so that longer additional will got further we've to the excited And that that selling nerve pipeline dedicated products. it. about hopefully will then be our got term, We've

addressing it. always about thing think But I So that's thinking It's to gap. way for the is a nerve really growth number us. a had of we're of in we've again, key portfolio keep the mind one short drivers

think opportunity. gap get repair to mid- bigger we're moving market nerve overall which I long is we what a part now and of do the how to is

Samuel Brodovsky

helpful. And Got then... it. That's

Glenn Coleman

obviously And in step first the NeuraGen direction. that XD is

Samuel Brodovsky

it. Got

of half inflection can And to to switching product growth I about and sort to that on terms that then you're reps days, reps we adding of this you the think in shortages that seeing So of as there? over add year you we're characterize of is just second sort kind that -- may labor these impact seeing can reliant ability the place and mean, of that ACell, to how with all the how franchise that now growth? much what

Glenn Coleman

think attrition good made look a and getting ACell I I quarter. we've that for that's into an first here you growth anybody just more we for at even in should the ads gives net coverage. of are key had continue that ramping part the meaning the quarter. idea the mentioned is some And here second the when first quarter left, plus progress and XX% we're really we've though you probably

to into to going ACell up, parts with the get So later we along help I'd wound be selling our of stages XX reconstruction as like just us and net right? other They're really business, QX the portfolio that's to products. not of ACell people grow see overall

talent. fortunate in bring important a it's part good been to So ramp lot about really be we And business. that this of I our of we've continue very to to able feel it.

we've are come work external they look that here. as of things of want a These lot Medtech top and a lot to positive I all people a goes when getting been diversity think to to at these why XXX company, top company, recognitions Integra company.

It's positive around we hear you to we more that are stories you're filled and doing we're jobs making territories get And good what in as important in so progress. midyear and filled. ACell I and particular these that these to going continue expect get

Samuel Brodovsky

Thanks. it. Got

Glenn Coleman

Thanks.

Operator

you. Thank

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

Larry Biegelsen

were Good morning, helpful gross One if be for morning. Good cadence provide half more that's I heard specific margin comments gross were P&L. Maybe thought you on the one for implied. color margin year little your Carrie. on and of I color and for margin just I on a more EPS had could And the you bit taking question. to operating the the would year? the Thanks the follow-up. on second the any it

Carrie Anderson

on in gross a Yes. modest level Sure, margins and remarks of correct heard those improvement half was the my specifics Larry. And second you I EBITDA in of think that margins in year. the margin

growth interpret the half the half OpEx, should that and margins second of on gross and in margins margins year. in EBITDA first you modest the as So flat

headwinds think want I to of take of will back these to of turns the that important us to the it high go the and gets it's that fact I in absorption has the going bit on take P&L. little until work full it's some of to impact again the a and some just out under that and time factories. And that levels absenteeism inventory time through

OpEx of are in. where we think And XXXX OpEx we we In make are something you that in our investments to plans in would I through about OpEx But That's that right long-term year, will of wanting prioritizing over should good addition, our gradually the think investments, a still of and long-term growth have look about a number as then I prioritizing gross the because to of to want our OpEx Larry, would to similarly. well flow say going through prioritizing OpEx annualize to EPS be make sure did kind say, margin really sacrifice those probably sure gradually now. really the how at there. for as back brought we're increase number that very that we not and that that investments. the business. That's that XXXX disruption the terms at of lot this COVID something investment year We of momentum we're we're about optimizing next would I I is we about expense it temporary think that. And year, QX thinking excited

Larry Biegelsen

that. Yes. about taking questions. quick you that Sorry Thanks. the quarter super That's you pretty And of second helpful. and follow-up. for Thanks similar. should do or in just expect growth suggesting that be kind here, the of an Is QX? one the are the first Carrie, message kind QX quarter improvement organic over

Carrie Anderson

to of see it quarter a I these that saw of maybe recovery, of would sequential QX. challenges of year. you think but we bounce look QX back year. sequential hope impacts back second the Yes. a that don't gradual quarter orders, lingering was some that impacting I expect bounce happened substantial think our should start QX of that staffing in back at still there expecting at think do comments are that things you last back level spring XXXX, the are between this of of from some I kind you revenue in the I same growth a hospitals right? I because I if not I it's but will we're And mean, will to and What with more and compare what last us. think abate, first expect be year to QX, acutely here

Larry Biegelsen

the for Thanks taking questions.

Operator

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

Craig Bijou

Good morning. my taking for Thanks questions.

XXXX? not to you when capital want back to quick before probably you clear. a within smaller a of kind mentioned do then needs kind am that or on What your Just follow-ups normal get And that couple -- you markets, are to to back. And I make of are I are capital And know those markets, they I the here. back think on they comments are foresee happen the Carrie, larger level? of quite ones level? do a just sure the normal

Carrie Anderson

Craig. Yes,

percent me let reference start our CereLink. total including capital as It's total only of with our a our X% a about of of sales, So first new sales.

we at for X% So where capital if revenue. came XXXX, was of I about in look

a for see as which But big us. capital, think certainly, CUSA recovery the is a really the broader to not XXXX, I in So driver. larger about opportunities

neighborhood couple smaller saw dollars. into talking, XX,XXX in that we as is. less at price capital small back you're trended of unit hundred how then look nice in everything capital falls So of is And is, a what CUSA, or smaller And capital. the that in capital which the XXXX, a bounce thousand else we

as our in of think with obviously, our that, systems, did some would generators, momentum here our units. see So I even still cranial be as as that And the Licox nice CereLink a nice us. for say, as lighting proved systems, second half. stabilization quarter quarter we launch our And fourth to

from quarter expected third quarter, hospitals the to a quarter, most we to that. So fourth fourth as in fiscal see end rebound quarter -- the see three did we years

I and from I further But CUSA to about recovery opportunities Our do XXXX. in as that the to well. were up was XXXX, look as some I quarter to back see $X part relative of fourth that, recovery think probably at QX. sales million think in QX bounce capital there's CUSA

variant, has take to and slow. think to committees started going And staffing so it's forth. shortages contagious little a owe think nature the VAC out of I the QX impacting that time. and of bit Omicron I that, we

get where we very, these very those before items The going So past things of funnel it strong. some the see of one still funnel. to we're is is have to to start

CUSA great fundamentally not cycle. just visibility the believe landscape. competitive to have changed of We has the selling We the an do It's extension in that anything funnel.

Glenn Coleman

I capital in stream recurring with And Craig, disposables. for capital, just sales, get keep but the talking you mind, know revenue we're these

growth So you procedure on as because a procedures gets recover, time revenue. we'll CereLink, done, CUSA see on faster recurring disposable every our get

disposal normal, our note disposals -- revenue business, our So in an uptick see capital. as in that, to procedures that's we'll attached in just something much very well get to as to back

Craig Bijou

helpful. That's it. Got

Next SurgiMend. on just one,

and maybe know us here. wanted wanted any had I you to timing to follow-up more you're -- was approval still expecting year, Just me you I'm of correct FDA? if the that, And of please if any it color breast half of with incorrect. for kind the recon if guys still discussions the of additional or and indication if I remind kind this the second planning believe, but

Glenn Coleman

Yes.

work and we're to We're continuing first FDA. foremost, around with the the doing So additional analysis data.

the know, I think, had panel you we we've submitted PMA, discussion. the

the to but approval, to to so, take work get some things necessary going to there. And us through it's we're get time obviously continuing the

we into would an approval, approval. approval once PMA, further timing It say better to year. it's we'll when need XXXX you think get shooting that. what can idea a this XXXX but we XXXX talking for be not will later expect for before is and I we're the I into a we about a of get give

Craig Bijou

questions. the taking for Thanks Great.

Glenn Coleman

Thanks.

Operator

our will We Bedford Instructions] next Jayson Please go ahead. [Operator take from now question from you. James. Thank Raymond

Jayson Bedford

morning. Good Thanks the for questions.

relative gross the to Just flat XXXX quick ones. first that I Carrie, to half. a or your you is quarter commentary, of I flat said was to back the Getting couple margin number? curious think, half relative first fourth just in

Carrie Anderson

of XXXX, No. It's first quarter Jayson.

Jayson Bedford

Okay.

Okay. And for EPS the then guidance is implied what XXXX? in your margin gross

Carrie Anderson

that again you Yes. compared margins. half of I improvement to compared gross would roughly flat are about think say margins -- XXXX slight second first margin XXXX half roughly it gross again as to

Jayson Bedford

Okay.

impact -- what XXXX then And mentioned of helpful. price in is just terms That's in Okay. you of top-line? net price the on the

Carrie Anderson

that I would we level numbers. and don't is that Yes. working necessarily breakdown. into that commercial something teams our have with provide But of that we that have We our actively reflected very been say

So definitely of it part our is guidance.

Jayson Bedford

meaning is business of can And TT. biggest you $XX mentioned assume order? versus by quarter the the million third of much million areas that seeing of to how we exhausted you've which are that the in $XX And back kind back order Okay. the Glenn CSS

Glenn Coleman

Yes. and products. the It's CSS CSS mostly

in QX. back that expect until CSS certainly we heavily to impacts a orders normal our But back international exit state than later going in year. both It US be We business in the as don't our where not be are we business. concentrated in and we're QX. the be better because to should we're probably the to normal So international obviously

Carrie Anderson

orders parts in there. business the the to say backorder by label be side. label we technology area of impacted on one well. will as work the the be business prioritize of I'd see tissue private our that of that in issue technology we'll tissue private issue could of back of some different Obviously, areas And

Jayson Bedford

Thank Okay. you.

Operator

you. Thank

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

Matt Taylor

for taking you question. Thank Hi. the

Jan De Witte

morning. Good

Matt Taylor

emphasize that you land? And your about tweak of bring Are strategy? Integra's morning. wanted ask I to experience had you think of some might you the you question. -- you kind higher key or there mean to like role? of the I What role. or level new in your Good the strengths under a belt to things assessment if just some of do now label you could wanted strategic give are what some you that from change differently? your I us can time And

Jan De Witte

heavy for of earlier, very portfolio the you portfolio like the portfolio profitability Glenn Thank a question. Yeah. been growth, the higher has terms in mean, shifting done. mean like towards I said I I lifting first, the higher much

more more and products started and road countries, second of I of map, leaders have, is is great really health have, part to way broaden I from weeks that a mean great solutions the to more pathways are out international investment So more the the And serve what dimension countries. my with a more lay is portfolio represent what be some that we player, we which the clearly what back professionals we successes we adjacencies the can in we there's cases to into need care portfolio partner about sell make that and past which where discussion today. build care of can out we a having despite yeah, there's how we few have to really do to within a first do. with we divisional have the sure the project

our business I by enhance mean, technology, So as inorganic that portfolio value building opportunities as well will guide any has broaden capabilities. any its proposition capabilities. process to more organic including digital to digital investments

in those those great that's potential to and different are two an And then, to with course, business of reflect this do So is I try vectors. what acquisitions. acquisitive

as near make the sense within look to continuing we're Integra so further further family. and into And adjacencies businesses build opportunities the to of portfolio that out

Matt Taylor

there. I’ll it Thanks. leave

Operator

you. Thank

ahead. O'Brien from from take question now Piper Sandler. will Matthew a Please We go

Matthew O'Brien

and the I'll question, stick one Thanks for here. with given we're just that getting late

back commentary On here. loading the -- guidance in about increase the the of half half or back

companies. QX we've about than heard commentary is little Your bit other worse a from

pressure So year. the just I'm -- -- just puts half you've on the got more it back of

needs through And the back absenteeism talked half feel productive? really comfortable numbers, but just go about new you all back built the that the wondering much numbers. to And you Thanks. spike conservatism need reps the these these need be know half get of or the new big meaningfully that I enough have hit you how very products, so I'm right backlog? in to Does in what the hit have to to you in Do come down to to year? ACell

Glenn Coleman

right of you look think when at we time, conservatism got confident to at look be going year, I forecast. clearing. the to the our the At they're we're When back back going of built the into we've same level half get the there. we're orders,

is from COVID to are launches starting new going be us to for normal be a That's continue us. back nice ramp. perspective going getting help for a procedures to then going is these that's going supply to product point to And better. to tailwind an as more positive a us get going So, to overall

number in Europe. launching Canada, with now of ramp. a nerve is back the going to in us product be to the opportunity That's first our We've half CereLink, of be a quarter. and markets. full launched the a launching in so of Australia. obviously, in continue US along We'll at indirect we're more to So, year the just the going a Japan year. for contributor midyear, here We're which obviously good benefit having end

a these improvement the so the us then resources in well. sequential for these so half should tailwind launches nice back show we and more NPI as ACell of And And add year. be year-over-year as should

it to us. like about good key the frankly. it's back you are feel we drivers those anytime for so growth We it And Understand half-loaded quite it. it, a have risk good about but quite year got looks feel it quite

Jan De Witte

change I'm think in underlying our our not do I assumption we on think I Maybe any say counting steady appropriately we're on see steady one both up. improvement. since following be. nicely a that that where second One to step asked there to tracking I staffing ACell from situations would the We're drawn On deadline is December We're own line improvement. the the we want internal on end was The customers. in cautious. we've despite challenges market. question gradual are of staffing see we the that snapback two quarter December

steady So, to improvements. assumption of come appropriately and

Matthew O'Brien

Got it. Appreciate it.

Operator

the remarks. will host call back I your to you. closing some for turn Thank now

Chris Ward

for conference the for Well, call us today. thank joining you

our over have a follow-up We'll quarter XXXX fourth results. questions. Going

much. very to please you us or my free you reach information me to you post to need contact investorrelations@integralife.com can today. directly Thank release If at out reach find feel

Jan De Witte

Thank you much. very

Operator

today's conclude Ladies that and gentlemen, call. will

all You may disconnect. now

Integra LifeSciences (IART) 23 Feb 222021 Q4 Earnings call transcript