IART - Earnings call 3 2023 | Integra LifeSciences Holdings Corporation

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Operator

Good day, and thank you for standing by. Welcome to the Integra LifeSciences Third Quarter 2023 Financial Results conference call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to introduce your host for today's call, Chris Ward, Senior Director of Investor Relations. Please go ahead.

Christopher Ward

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

a Joining and me corresponding call, Financial integralife.com on and the results. during announcing call are Jan the XXXX quarter which Presentations Officer; issued press Quarter Investor XXXX file financial Lea under we our we reference third Chief release named De in and Knight, presentation, Third morning, are Chief and and available Officer. This The a Events release earnings Executive Witte, President will presentation.

revenues in Exchange like well reference performance. And manufactured [indiscernible]. excludes revenue because Before press I which Integra's growth any non-GAAP we may now SEC and the based turn certain non-GAAP also found is as divestitures on in of include remind reported global the voluntary begin, Factors an are will of over in organic of remarks, revenues results facility on unusual Management both we stated, at effects lastly, Boston revenue Organic the Jan. measures. SEC. And Act the call I our financial products in organic excludes Organic many X-K in forward-looking current materially and company's growth that, stoppage today, revenue today periods. the organic evaluating the Form prepared report considered of to Boston. made in otherwise the be to growth, would in that we filed Also or with with products growth excluding from call to this excluding filed Reconciliations all differ comments will growth, and franchise-level believes the our exhibit measures revenue in you can as plant that release actual rates our products. when all manufactured revenue cause discussed nature from Boston, company's to organic during provides discontinued acquisitions, useful excluding growth with that the currency, release. information Unless manufacturing disaggregated of could the today's statements. Boston financial will statements and are be the foreign

Jan De Witte

begin leadership good on and an top me with and our our quality and morning, for progress the Chris, team. today analysts manufacturing our market mind everyone. products. at system this our To SurgiMend as remains you, return and our for plans on remarks recognize We for Thank Pharmetics update facility and our is investors private label to Boston of it remediation

let's before the going X. business into broader updates, So turn to Slide

As a the during of manufacturing expected reminder, by told resume end we our call, quarter this year. to fourth we the you last

the first with external be results of FDA This paves audit second to We late the the then way XXXX, also to the the by final highlighted submitted of quarter in updated the XXXX. system quality commercial that quarter distribution conducted mid of resumption the of would in the end the XXXX. for March

consistent are We adequacy of and with capabilities the external changes confirm making. Boston have months, several further our expectations. in matter resources, capacity that expertise, built recently alignment FDA Over plan reviews in worked the our we as with experts remediation diligently bolstered project external the and quality the management operations with X of we on subject system engaged quality Boston interim holistic leadership, past well. the internal we we We've completed

the critical with we we last to So of time couple report milestones way. quarter. Also the a on insight into want this communicated lines I'm restart all schedule result I remain a pleased to as of that along progress, provide

meantime, the audit restart the review will in in submit March. for be These addition shortly build also external clear into FDA the and the to for for independent to of sufficient our plans have reconciled have our to preparation the customers' market. In assessed factory. end the and way relaunch the manage and our activities us then intend now been ahead will have substantially review We after an customers working inventory. recall to we before inventory through the of closely we This with to we

million first for Lea team approval Our $X half with side impact. shows and updated Tissue for in about Technologies our the of customers our manufacturing working the And in the to returns, our effect quarter to of sales results on substitutions were clinical is XXXX. The keeps closely the of discuss financial which will also the us third right product expectations. surgements track Financial XX% detail. XX% of finally, in in of PMA slide for with line facilitate more progress cases

on necessary in bring for overall lines. page. Boston adjusted critical and we're quarter time the that, move let's summary, for our revenues With customers by $X earnings for quarter their communicated. headway right on by towards the points by Slide margin this to share and third addition our of our previously back the the albeit completing lost and XX third to third we gross impacted quarter market In X these making returns communicated to remediation patients, sales highlights. And impact, the requirements isolated are additional $X.XX. In The basis per only the some we to business technologies to track significant side adjusted has starting with million,

and increase, results $X Our by third impact, organic quarter X.X% the growth Boston an revenues performance. including were offset reflect otherwise reserve organic These return the on strong $XXX.X million which basis. decreased million

customers for steps to as quickly will and I things Our taking top this the right be with period below to the for necessary long-term our possible growth performance was and again. get through are position line for but our we're our making this guidance frustrating sustainable as business we our investors, quarter, realize

we unique the the Our strong both Technologies to with across Investor and saw quarter, outlined end markets for May Tissue in and third line our we for the strong our portfolio. continue grow remain CSS demand expectations during Day. In technologies

for -- Technologies organic at range In of end our once X.X% business, excluding And impact, segment. above the nearly Tissue our and growth range. business, Boston this delivered organic Boston again of high we impact. the strong of was our organic X.X% of at the LRP the saw In growth CSS we our X.X% growth Excluding growth XX%. our international we LRP delivered

Now turning to our bottom line.

recall per the third $X.XX from adjusted came and Our in in This our return range. quarter guidance $X.XX the at provision. earnings approximate share result the July headwind included increase Boston within

third laid proof Investor out deliver Day. commitments points and our side left our to of we along revenue we page, beyond As during look our to several path back quarter growth we results continue the the the to

markets innovating about the will to our customers patients. on excited our for We're our the market outcomes. and in their First, in reentry of fourth broadening first for international return satellite relaunched quarter. be and We monitors

in expected We with product first U.S. also XXX(k) filed for in in U.S. the the an launch first -- updated the the early mid-September in in quarter the the XXXX. quarter

which initial submitted the learnings surgiscope the on In Aurora a usability [indiscernible], limited surgiscope for XXX(k) enhanced brings addition X-millimeter to releases. from to also customer next-generation our we based the

and system platform Plus commercial the DuraSeal, further strategy Mayfield international collectively, existing to of they and dual technologies in project Latin our markets Second, as lighting bring China. geographic EMEA CUSA well material showcase our Though growth, we DuraGen extensions advanced launch our as registrations DuraGen, and of America revenue and each be our international expansions, with of growth our to leverage to alone overall strategy won't footprint. in our our

delivering near care We with facility impact of and then Shanghai. And on a our by an a build-out on leased starting manufacturing also significant approval the than breast inorganic opportunities integration our a market. in step of pathways, made the forward strategy high-growth advancement on in-China for-China XXX% third, broadening reconstruction growth of the we're PMA the our SIA business year-to-date with successful revenue second and program for clinical greater

first UBM We bringing organic for our with platform to ACL have flex, also expanded a MicroMatrix XXX(k) clearance NPI portfolio. the UBM the

strengthened minimize executive strong development do also sustainability Resources by talent leadership accountability. And leadership products, driving results. appointing cultures produce our Chantal to Chief Officer. and drive have risks, our integral reduce environmental of Effective a business. experience enrichment enables Human an part and financial business management Veillon brings we impact of remains how as life-saving in ESG rich Chantal finally, us We

Lea accountability, the diverse for financial transparency and that, updates As and for guidance. to have improving issued part customers and our And XXXX. to our our commitment patients, we also details year. And to now workforce rewarding, coming our out lays of inclusive ESG our our it progress on the report plans full This annual more environmental it turn will report building we year second and our and made, commitments continued particularly results I in sustainability. with for

Lea Knight

you, Thank Jan.

begin I'll our financial X. third quarter and Now on to on Slide results,

basis. of a decrease quarter million X.X% total were basis of X.X% $XXX an on revenues a decrease and third representing approximately organic reported Our a on

Jan information results time. impacting was the and on margins, in the Boston based quarter returns returns a that had best our to and of gross declines quarter, third increase adjusted we provision margins and adjusted revenues mentioned, EPS. In our organic driving As growth EBITDA second the we the estimate provision our headwind at the available

the their However, assess inventory, recognize adequately with We our we returns and remaining need we returns. closely to have an during provided the to reconcile any make provision. for third quarter, to returnable believe adjustment our working customers while

quarter. our remains much headwind, more Boston a to significant While the there is results for

planned by was of points X.X%, points and across largely compared our the prior from $X.XX Boston the XXX once of were per basis of was X third demonstrating and down quarter the down business for CIA down our impacted We driven XX.X%, adjusted growth continue Gross by resilience acquisition our margin dilution share driven primarily year impact. investments pressures the to the quarter performance Boston, again year. gross margin adjusted of EBITDA versus and metrics. the see the $X.XX, portfolio. Adjusted EPS quarter earnings organic XX%, EBITDA the XXX to growth outside XXXX, and Boston our with solid margin for Adjusted breadth basis

to growth from business. Shifting to indirect market the Instruments remains micro digits [ We for valves, in growth funnels Energy our the international. were Sales expectations double due strong benefiting you CUSA DuraSeal grew If benefits from market were dural X, exceeding low led a Global in some Reported CUSA reported of with our performance of double-digit offsetting deeper growth the capital during high and growth revenues by low delivered double and neurosurgery for on the quarter the sales excluding are the our timing monitors, and year-to-date mid-single DuraGen, favorable in an ] the X%, The CSF our Capital. and and exceed Certus neuromonitoring to outlined in the mid-single-digit continued Canada. by second Year-to-date, CSS in the to digits segment. driven CSS into quarterly to turn revenue CereLink by Capital share quarter. Overall, stable, sales and range Mayfield. and for plus quarter excluding as momentum in will the China, Investor by low business low and market growth Advanced up the Instruments encouraged organic Feralink, of single-digit long-term demand take of driven were prior segment grew sensors, orders CFS basis portfolio. the the repair team quarter million, sales, growth approximately Australia capital demand. Day. capital high in markets, new X.X% X% saw performance continues increase the quarter, remain management our continues for capital a year. digits, market third to Slide results we single-digit go access ICT down in win timing and by with decline up third driven Overall, double-digit $XXX I due

our Nora Our [ China across grow driven with outlined Investor ] as X performance double-digit regional is our China growth delivering team with our growth we portfolio in strategy at beyond in Tier strong by Day expansion cities. the

was the organic segment Moving to prior basis an Tissue Slide XX.X% basis to XX.X% down our year. Tissue Technologies on X. and on on compared reported Technologies a

Boston, growth organic X.X%. was Excluding

the XX%. of products, quarter Boston franchise, the includes reconstruction wound Third decreased which majority sales in by a

quarter recall organic by as this X.X%, in second growth double-digit MicroMatrix, recall driven activities the products, Gentrix following quarter. of the Excluding our amniotic sales efforts Cytal, related we've the refocused our team and their growth in portfolio, experienced selling

Cito. sales in commercial which confidence growth this strong private We growth to business. In to demand year us continue private such MicroMatrix partners recall. were in with see in due potential Boston, associated the with sales in versus execution in this are XX% Skin, and double provide Integra to franchise, digits franchise, offset label last finally, double-digit label And lost sales which Tissue our international due from of to the long-term down Technologies pleased declined

rest Slide review Turning now metrics. will quarter third P&L the I X. of our to

and the third gross in at the quarter coming an adjustment XX profitability inefficiencies other approximately gross from provision look margin point the XX Boston points we basis recall. The continue the our to to we as due impact return margins, remaining from impact our headwind with the As representing coming XXX is from of metrics, basis point to basis primary points see lost and sales sites. production basis XXX approximate impact

and growth, addition quarter continue year we from of highlighted the year, EPS for call, as in these protect X we margin gross including the impact the in strategic to the to the In our acquisition. On them. SIA long-term also EBITDA second beginning investments critical to dilution investments we our priorities to the the adjusted reflect our adjusted planned originally margins, business and outlined

we rate improved international in our quarter jurisdictional XXX benefit and an utilization and Finally, approximate from tax saw mix of credits. to R&D point the income basis

The a year-to-date third also tax rate quarter true-up. included

approximately expect carry basis We to the XX forward beyond points of XXXX. benefit

you capital and structure I cash XX, a flow. provide to If will brief update balance Slide our on sheet, turn

was million, During the quarter, in cash flow was capital working primarily $XX investments cash million, reflecting and increased flow from Operating free build. inventory $XX

Our is MDR. markets our in for on investment was XX-month safety rebuild stock trailing basis. inventory levels to EU a and in for European Free preparation conversion our flow cash XX% increase inventory

long-term our remains plans. liquidity Our strong short- ample sheet to balance with and support

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

we share has call. our July sheet on repurchase Our balance flexibility enabled earnings to accelerated us the execute announced

X.X% Fourth be and to If range for revenue I guidance the of to to million consolidated and update revenues share you X.X%. turn adjusted and X.X%, to minus quarter positive between growth Slide XXXX. are range will in fourth million, the full X.X% earnings XX, forecasted quarter minus per in approximately our growth approximately organic provide the $XXX $XXX representing an of reported positive to to year

Our the strengthening reported U.S. reflect revenues dollar.

we are by growth at our approximately the continued X.X% driven for midpoint, strong organic Excluding products. forecasting of Boston, demand global

represents to recall the provisions year are be minus quarter organic the $X.XXX The full to additional third growth the billion X.X% in X.X% updated minus current rates. to the which and range to For growth X.X% of XXXX revenues of forecasted range positive billion, Boston reflects and $X.XXX returns FX reported guidance in of approximately X.X%.

growth stable of we have year-to-date. we and Boston, organic our the and performance demand in Excluding demonstrated forecasting global approximately X%, growth are markets reflecting strong

to by to improvements. Turning and of for strategic $X.XX $X.XX, prior and to impact expect tax the from adjusted be quarter, rate down our in our recall, fourth guidance Boston adjusted driven the part EPS of year, of range we the the earnings management OpEx recall the the investments, planned offset

improvement the modest full quarter international We mix gross to impact third recall performance. year. unfavorable our in we and an increased returns saw to gross call, a margin During Boston the sales by earnings estimated driven margins stronger our in the due July for

a We and are also now moderate in slower uptake gross improvements. net margins a yield on seeing We decline versus expect XXXX. productivity

adjusted provision, year Recall U.S. the adjusted full revised the completed $X.XX tax the per recently second half dollar, Boston to $X.XX our outlook, and in gross returns guidance being reflecting management, Our strength favorability. expense is share, to ASR EPS margin

back turn I over Now to Jan. will the call

Jan De Witte

walked wrap And to from Please highlights like prepared you and Thank what I a Slide cover Lea remarks. to through. XX I'd you, turn conclude as you to up, Lea. our few

remains to breadth far 'XX. Tissue in XXXX first the addressing of range of on in manufacturing plan Interim 'XX. approval we the confirm they the on the remain reviews in late made track. quarter towards half the the steps surgiments significant distribution returning portfolio, to remediation are of so and commercial highlighting progress our facility depth our made fourth end of expected Technologies quarter to and the the adequacy within and and external XX% substitutions and changes the our of mid- the for target PMA by second market Boston First, reflect resumption Product XX%, and

Recall's Second, strong. returns third despite performance impact growth the additional has provision, been Boston our and the quarter underlying

excluding delivered and Our exhibit lines Tissue X% Many diversified product portfolio growth, global growth. our our CSS the our of Technology underscoring Boston, health over segments, organic the and double-digit appeal markets. of of

to a and quarter. U.S. commitments, journey we're again. And progress also by CereLink and should long-range potential. In big on related taken bringing and radiations growth bringing deliver and the both Additionally, international presence finally, first continuing our our us to has We're be and has early growth are are regulatory delivered back the step our to LRP significant the capture next-generation we're XXX(k) enable commitments. Integra we've CereLink the and marked continuing to international business We're making stronger derisking submission Aurora with will drivers for to our PMAs. improvements international our in our expand our back international we're filings, financial breast The reconstruction in portfolio challenges. future strong markets investing and our conclusion, with path us significant advancing to consistently the achievements been our surgiscope,

and our and prepared organization, health an a to Together, time deliver we This Operator, shareholders. Thank continue we questions. can the to our on morning. which lasting our patients open concludes lines to meaningful and your value in hard remarks, shaping this work. of and to support make impact for patients' you care their for thank like dedicated unwavering teams we for As we're I to purpose future lives, our advancing remain a would restore dedicated

Operator

first from our Jefferies. Taylor comes And from Matt Instructions] question [Operator

Unknown Analyst

a increase the how And in on I you return to provisions. seemed in you maybe like impact guess than can forward, their also little substitution Matt. bigger a I bit attrition for Boston if post line, maybe impact customer expected. can $X million mean but provide talk Good going Boston. it bit you're can just the are why and on a This it about is had little more hear to business assumptions remediation? ] start, actually rightsized? color rates in as Maybe [ regain Young you

Lea Knight

Yes.

for about the any it and the why So in -- I turn of don't for you over dynamics. customer the saw QX, kind I sort thank impact And question. we of to you that then Jan talk can

so then in the about mentioned, when our announced we XX recall we call, the days post QX it, we and as were call So recall.

So obviously at we to that working that work potentially some all was already point, done had visibility initial inventory customers, of while we the and had out there with returnable. limited

of based information to you the and visibility insight that the imagine, So would be accurately returns. returnable. to time, we've what's appropriate be more our customers can on at an to time, we work and substantially now more able their for assess projected into all what even -- more Since that with as we get provision had had opportunity inventory

the that's so incremental saw that impact you our results. $X And QX million

done September. on our we've we're for work the of visibility we've based so of confident now accurately and and it the the in end provide reserve And that as that that have that captured we it

move us for saw forward, our as the impact provided and for see expect what as from impact So that is only future we QX. reserve. P&L part incremental returns And for that's of we it's we any to been because any perspective a means wouldn't bus

$XX and provide we on while of called projection line. not is articulate That isolated you Boston impact July million XXXX. had top million an called EPS XXXX, of out call, full and top our had year But at it So guidance EPS. mentioned of to is that impact communicated had In originally think $XX $X.XX, -- about dynamic remains we $X.XX. of we for out is $X.XX about we on to did of unchanged. $XX Boston million XXXX number XXXX, We now we as the impact that number line. an out expectations That impact we time, top our had now called line did the

really As we I not an does of what the on have in returns to QX was nature isolated happened XXXX. mentioned, what and called impact in

answers question. So your hopefully, that

Unknown Analyst

Yes, that's very maybe... guess clear. I Appreciate the there. color

Jan De Witte

if You had answered I one? that second okay, your question,

Unknown Analyst

Yes.

how terms follow-up the do I was mid-'XX. reps for are what during you loss, guess, what So impacted question, much focused the time? you can the following wondering, share comment I expect they're they're doing? how this relaunch of recapture to If in about in And on,

Jan De Witte

link to tapping get me in we for how commercial let all So X return. parts, are right,

of I move, them. sales them the definitely also the a higher lot attention, close perspective First, control, some but closely to We them, of say. keep We reps, stay planning attrition in a compensation but communication, both well with force, from than informed. have would

where well with the important, Second, touch force that reconstruction. in surgical as is and reconstruction the substitution sales remains in the customers, our both as wound that's in

relaunch And We door, that we be it have of share as the relaunch the did after Boston work perspective, to the facility. the recall, a the in that from substitute getting then all products to that months reasons, projects which when then before market X back still our and our These procedures that reasons maintain be with sales our and by allows relationships the substitutes. And be XX% XX and were in teams products, indicated and will [indiscernible]. sales business second, to relationship. leadership between really good those were force to we XXX% strength that's out will we of estimate procedures of about elements: XX% a for merits customers the be that and the sales of the of third, launch, one, the driven about come our we have there

Operator

Chopra Vik Fargo. from from next Wells our And question comes

Vikramjeet Chopra

for start one. first the with Two I'll me.

in China sales just just could what remind about then Maybe percent this impact from make had more are that access issues I could follow-up. So anticorruption what heard hospitals your on And of increased us to have China and we've Integra? a difficult.

Jan De Witte

Okay.

that, I'll So take Vik.

over of August, specifically to week, the anticorruption, activities companies, that your the total specifically commercial medtech about seen confusion of think linked X% September we've neurosurgery not and at business, X%, is some seen education is X%, portfolio to China China. it's the That total like and some the then portfolio, month Our essentially I a consumables over procedures. When right, impact in our question we of to and of professional -- And lot X%, linked freezing material. we and our in first improve we've with October. continue on significantly many look on that's our of therefore, have sales in

are procedures what COVID. cannot okay? be seen doesn't into that controls tightening strong don't some in and place. procedures neurosurgery during -- addition, Now have goes delayed judgments for And internal policies of neuro or themselves significant times. on addition, themselves also in with we tightening much So in lead the to controls We've translate overuse, procedures. And the

we change that So processes. there's no using from or in operate we're how our need no

overall, what expect the you numbers quarter yes, as impact that see So we've material business. and no our on seen ways we in some is August, of third but our in

Vikramjeet Chopra

topical, follow-up means any long term as my the Integra impact question, it's of on some what GLP-X's have thoughts for you don't think it other what and companies. I that term clear then Integra. I near guess, And kind Great. about for just for just is pretty on as Maybe GLP-X.

Jan De Witte

That's foresee back customers. material our also and So we GLP-X, any impact. what with from we have interactions hear seen we don't not

at diabetic argue tumors, it's rates link the right? incident to the If wound you look care. settings it's you limited, would linked drivers by GLP-X, would hydrocephalus sales decline impacted of vast look say the for that majority If difficult of prevalence be no diabetes the a traumatic very business our our with and And of at are then brain or our Tissue neurosurgery, the in and I obesity. injuries, in ulcer Technologies. acute growth same and LRP for foot The

again, here, traumatic incidence the GLP-X. of see wounds the construction basic and link of between rates and the impact difficult to So burns,

as So said, not impact. have foresee material don't and seen we any I we

Operator

Marcus JPMorgan. And comes our Robbie from from next question

Robert Marcus

the think the how is there? you headwind we we or XXXX for the And about will XX recall? other sales the done devices? time. and of with and clarification been from would the start of lost do have products? sales? Is the a how of do the take? should about off XX%, to moved XX%, wanted lost have XX% I share? sales recovery have million on the And we it and the what market ability think This recovery highly you likely reported to is the how one lost Boston regain a How market. You about think without Great long that long will off Doctors competitive And tried think $XX do

Lea Knight

Yes.

with start $XX of I'll Ravi, So kind just to. framing what the million relates

And if look just you to April. going at provided so that guidance take to a ground really we you, back the our

Day in of projected full be, we basis, of business Investor we million a terms on So year what assumed as how to The off is we the of part that thought is factor our grow. the growth $XX going to business you the that. apply

maybe And I'll market. into impact to Boston back getting around So in some questions then that's -- let the characterize think about the that how from XXXX. we the of Jan

Jan De Witte

it, on Matt's think, I I as touched also question. Rob,

If and so portfolio, building is market Boston portfolio we're to that. back getting first the back getting our then where to share, and you the look getting we in were beyond

In on of to I get we're take build and as those based making will products where merits the in mid-XXXX, where in terms that [indiscernible] we year X that assuming continue share then were were is it beyond, of sales force exceptional them that's say, where to indicated, getting back to we back and planning our to

Robert Marcus

Great. And if I could just squeeze one more in.

million? think number that a like up back a through that think year? any is not we little As conservative should bit CereLink modeling, about it about around moving something forecasting U.S. may you your move move down or in that is as is How will move we think And looks lower? your Or that the next $XX you

Lea Knight

you're about CereLink. asking So

we So are CereLink, QX launch. anticipating an early

business I to which monitors, markets, rates think in about of and $XX million you what be at we've of the as we've saw previously, the of kind business, said in about back once that annually. think we run for the we'd the size past is relaunched in expect all terms

that So kind of in and impact The late impact back million result the to time commercial coming QX that's Faralink. product specific to question your $XX into portfolio. Boston-based earlier first the of I was characterized to distribution mid- portfolio that frame. as a to

So be of question not of sure that I of part CereLink. independent if would there. I'm missed in kind your

Operator

next our Ryan from BTIG. comes Zimmerman question And from

Ryan Zimmerman

I for could. Tissue the I Technologies business to if moment, want about talk a

are X% If at ex-Boston. You I'm guys organic Analyst Day. did growth to the X.X% mistaken X% estimate from growing not markets the though, you

so me getting if understand, just the relative the third that growth remove to worse how your help And And Boston, is think ex Boston? quarter? even mean, I we from you Boston the tissue in market? spillover Is in market about

Lea Knight

Yes.

I'll maybe Jan in. we can chime have then and start So

So question, -- for the thank Ryan. and you

strategy, happen, right? which started LRP of repositioning, has team. it's it we recall. about ex-Boston, saw still with quite which to were accelerate at not QX, the knew So is again, force the we from were we that. Tissue X.X%. To as on of was ex-Boston the that process business But growth have developing about, perspective, fact we a of what your what point, -- the exactly we they to some into the QX executing for anticipated in substitution I we growth we do think QX, to that, that in a X.X% the if we you saw kind the efforts as that that's to accelerated portfolio. think talked X.X%. And part the sales would reposition And had distraction at is grow in saw There the that of though manage sales that, even at the we lot again, Tech about we had from time rate. our So

full And we so hitting and I deliver as necessarily think all the what in the And that pickup I the Investor basis, Brian? year the was we're we of don't potential second know cylinders a from drive of QX that can out we answered growth. You has expect, back X% terms can in to me. beginning of to continue at to get that we business that I would to fully, on end. your we at But such QX, quarter that again, would we ex-Boston part X% question. we look I saw there if that QX, to momentum that versus kind communicated clear know in don't the that range know have Day. And illustrates be absolute a on this of in that I expect

Ryan Zimmerman

Yes. and you the was growth Lea. how the of kind impact. think Thanks, just about It

does that acquisition in we is kind the Boston, other I ex-Boston, can think remediating is would spillover of you're growth what kind growing the but you have impact As all the mean businesses? what of see XXX%.

the or it's that's market So clearly, of kind And on up for question. ex-Boston, making rate can there. with of losses the at Boston, grow above point that going you of but some everything on

Jan De Witte

Yes.

So let me maybe deeper, go a Ryan. bit

that the that mix. put So we're there. Demand to away. year, to one, for look we continue That of very right Boston growth X% substitution we therefore, I when a So further our from at portfolio is Part and mean back of the within the come when PriMatrix mix, MicroMatrix, next deliver Integra we Skin Gentex portfolio, is definitely, strong strong. is dryer growth-accretive strategy, said they ACL, X%, [indiscernible], into that right? said, breast our double-digit rest that

So performed portfolio, good feel we we market. how it over quarter, feel we and look the the at -- portfolio with with third we good when that the

much inventory understand like from course, Of recalls very they chasing and missing sales the July to perspective, we're back the a products Lea the field. from still said, were Boston the drive

in a [indiscernible]. As of more came back to lot that August

Ryan Zimmerman

very follow-up given be is just of reviewers, question, -- more specifically. the FDA the is what it to again? external to if that your is you get there's the fears -- if, kind manufacture and there Boston of a year, this does potential proceed some facility come so light And specifically third-party impact to what's understand just you walk can come out required as any helpful Do It clear, to would be at through just very need the point? green us be to but think because to I in does normal the to Okay. kind to clear into then ability there just facilities? that And a Jan. FDA later that of just the shutdown helpful, That's government this

Jan De Witte

the the have So come short, to does not Ryan, FDA in. is that

complete We've an that that okay? the FDA is that in we that. FDA, substantially remediation, name decide when from requirements shared bring the the with auditor, we So with we're company external of approved the they've to

shipping the in, audit. audit we've the start the own share there's FDA decide or the be assume by with will that The given the only that or preparation a report factory go our thing audits, on that before the start the done satisfactory come terms But will factory. no wants this check sent that okay? We to FDA. restart again, they sorry. we that is So or We FDA okay, all do we

Ryan Zimmerman

Jan, Okay. Very thank helpful, you.

Lea Knight

And -- on point a other just, if just I'm could or Ryan, clarification I sorry, that. one final

-- One Boston. shutdown, official occurred any line prior with time with remain because is that that our clearance fighting to government for respect CereLink to for that's other in will is case So respect to our for submission unimpacted. thing the understanding U.S. submission

at that an then be this our see is to that but to down, impact tracking understanding won't shut for had we is still that line we If -- communicated. from at the post our submitted point, risk, would either. government what So we time we we

Operator

next question Securities. And our of from Bank comes Craig Bijou America from

Craig Bijou

to I CereLink. wanted ask on

markets. I in, international of relaunch couple the a started guess, you So

it's from and And once U.S. launch about get the international know any relaunch? both here a kind contribution how been little just and or then I could launched U.S. potentially ramp maybe launch full asked to strategy the about either you'll to talk Jan, when So a before, fully it and of outside bit international the how think it's but

Jan De Witte

international on correct. asset, first, So you're the

U.K. couple bit there's then Europe, be line going quarter, there. In we Europe, very is the Southern from determined basic local September, Switzerland assumptions So launching is short. reasonably countries. of is of much X there And a go the [indiscernible] logistics second, third Africa, other end priority to Eastern of the which by on. One, factors. Nordic the of Canada, we'll launched the countries, going European several month The is countries, regulators, on. several October, time of South

And yes, ramp-up, be launched that on month, more every over we next we to us bringing the should Europe. the when January X, is X so be question a months, And countries will the what in brings on to from we start where of picture in market. XX market up we that almost month. million ], in the million roughly 'XX, the to ramp ] XXXX, on we months first before We sold [ [ were the months recalled. so launch comparable first the year a XX in CereLink $XX $X Again,

in function of we up in ramp model 'XX, that And so 'XX.

Craig Bijou

plan see process the with not, to, out with do wanted have it. your That's the guys party. had any with that wanted you to set see, the helpful. going on But the on I if have conversations the FDA? you see And or But other just be that plan wanted you I additional already facility, And any the recognizing if to expect third Boston plan? then to Got to you there's FDA incremental additional there. understand conversations

Jan De Witte

answer short is the So yes.

X holistic they confirmation some broader issues XX We that audit this. to We put responded that March letter the we external with This end letter. that down in plan. a the the warning weeks address where like plan are doing of next back the goes remember from our that to warning to of has aligned those year. dates FDA FDA within this before July and with So got got

companies We and a that understand using we the each that with telephone audit. shared to external will make use we're external the for some also FDA Plus we other had sure well, call okay? of

they that which the are So we wanted FDA, to have in aligned with fully aligned.

X, we updates every the send do months, FDA. As to X of that point,

main major cost So of facility. on stages the on the progress and actions we keep informed

Operator

And our from from Truist next question Newitter Richard comes Securities.

Richard Newitter

wondering think, could come SurgiMend. in And the product. addendum time can could expect for out FDA, I there just is had filed if getting that? to close lines on I potentially clinical was on that anything ask feedback that delay of for we We're there What that the I to providing you that?

Jan De Witte

being some shared. think I communicated, expectations, July that's submitted and further information we there's in So that we addendum

get PMA. We feedback expect to goal next early of that the year part of and the clinical

try last factory the that and PMA you can when becomes to the commercial is running. the inspection critical fully the is what the facility, explain Now Boston happen for only path premarket of and which time, up the

'XX. which in leads XXXX that of expect market PMA either we end so first approval us XXXX, the to to audits And happen of half the or early

Richard Newitter

want XQ? I given the Can any right there? time? then us also, components the you over question. to to and just one the of then more few just and there on months. from Okay. bridge second M&A, space last And have sure between gross to And margin the the capital XQ get comments just I make deployment Just valuation all compression

Lea Knight

to the I'm take Yes, happy question.

So let points. data me provide a of couple

up down quarter. for XXX basis kind tracking. as internally of at from gross made And points about XX.X% So that's where we of margin been was have look It the we X our was elements.

margin growth First, and basis had acceleration XX coupled of by some negative have we then margin a kind on U.S., remaining with had that an slower negative higher we the that that within was also we than the XX of impact about together. basis points. a Boston product [indiscernible] And the and saw But anticipated. was mix margins, driven some also internationally that about direct basis that anticipated, on productivity was impact, points XXX points the uptake that dynamics improvements had And impact. is did

So we played what that's the QX in relative dynamic out expecting. to that were

we'll points back. we the repeat return move basis see couple As One, won't have of comes QX, into Boston a that right? So things. we XX

should revenue see U.S. and timing mix to We more some and to that dynamics international of product margins between of normalized gave dynamics expect growth alleviate. also would negative the kind rise

QX What as net the frame well. back outlined. come that we in should productivity time the in that had So won't come is likely improvement back initiatives

'XX why likely year-on-year a that's calling to year versus full decline will And moderate that continue gap. So we're a full be year 'XX. now

started margins. our greatest We've we've small of gross to As identifying some on being areas. value able And improvement is that that expertise But is of in nature in I about we to execute but deployed the kind those we've to to characterize to drive only not the there, a to net is that uptake uptake Tissue kind see we to of have. support slower needed it plan. teams that same help restart expertise Boston the the of is but what the value pilot confirm or go sites in do initiatives it productivity execute opportunity A after the of been initiatives talked Tech we starting we lot need

And so against we many as effort anticipated. we resources were as that deploy to had able not

causing anticipated. what's uptake had what we so slower versus that's And the

So you and there can if I M&A pause want. on gross into margins, go I'll

Richard Newitter

That helpful. was very

Jan De Witte

range I mean, Rich, clearly, M&A will a your of priority allocation be And M&A on our capital loan question, continue planning. to as for part

often we this point, Tissue specifically on our at given are tempering don't I getting have somewhat. And the in said, we strategic Boston fully is I think game focused obvious, is back. So that boards, That Tech, say would quite timing. very control temporarily which management we

deals on we are requirements return strategically fitting also we investment specifically, meet slides to ] our our midsized So on surgical and or and Codman CSS, that in our fit business within and financial discipline, continuing are the our explore remains [ tuck-in which our Specialty say, then business. to primarily strong

Operator

Litchman Steve from next & comes from And question our Oppenheim Company.

Steven Lichtman

mean, your has you time you over that update, some tracking team. wanted particularly you just opportunities for and see up becomes in of having the the a CFOC? on of you drivers margin. gross for us the updated overall can you margin the you I near-term follow margin, Boston with I I efficiency gross give to next thoughts couple more you now years? if see? other certainly see could, guess where about the of talked But you dynamics gross on less Lea, focus

Lea Knight

Yes, Steve, happy to take the question.

So longer picture, bigger term.

at unpack. drill is there update to But convinced just margin. LRP create, to value we to lot any us So have I clear, for gross providing have but this point. on an remain guidance additional to the point, there improve taken a, that I to not into your it's that time a to be opportunity we're

kind it XXX our margin you period. about a Volume productivity recall embedded footprint improvement The had And driving to was then the And that kind of bucket third places. so you price we to earlier are I in there's initiatives and MPI I price optimization in and X, that is articulated. the said we gross coming totally at over if Investor Day, mix opportunity was of referenced basis X how would market. tell primary mix yield was LRP was bucket X from bucket. volume point for revenue XXX And we bringing

saw, And Boston, very levels. terms that so outside viable. remains of growing based business that on still at Day our of as in the business our you And results QX in LRP Investor is

so And to as gross to the that we continues happen margin we improvements to related will market, realize as that. bring NPI

is are articulated opportunity a still the I that yield, slower the productivity where there. around but uptake, those piece it's areas second The

need efforts or to extract against it. will in deployment to the We redeploy resources order of those accelerate resources

looking that that's so happens now a when from understand we're the what overall and to timing at magnitude. And perspective,

We'll to and it finish as So process. that's now how we're an thinking we going about LRP more our through update right official come. have

Steven Lichtman

on think XXX(k) don't the much touched follow-up a -- just then Aurora in we And on Understood. Okay. I filed.

XXXX? we are you ramp go that opportunity gave How of as think I some thinking in the 'XX. product the market guys on long-term you about -- thoughts for you the sort product of through

Jan De Witte

year, start slope definitely the the go where okay, we into the limited in We we of opportunity release and have is as commercial projection product that we the we're of sales We're surgiscope have to in the we past So has led different on learn but couple real and expect the set, or the guidance product, the some commercial XXXX yet not consider a commercial the and years, market. will upgrades XXX(k). there, force case of first what surgiscope- terms sharing a to X-millimeter that's to that communicated in to price. past,

Lea Knight

the our we for was did point a that. put see digits within growth Just And up It strong high QX, double Aurora. on on quarter.

So some momentum building there.

Operator

Piper comes O'Brien from And Matthew our next question from Sandler.

Matthew O'Brien

facility Boston need Don't warning lifted you before the the quick. submit TMA? SurgiMend Real the at can letter you

Jan De Witte

Yes.

reason and the have we'll audit they into the get we linked the And warning PMA. how Both audit, that's auditing after the the so to pre-markets right? for letter going, to why FDA think

year FDA say, be next mid-next audits there in year, will between, there. So and end

Matthew O'Brien

it Okay. Okay. But lifted to you submit before you need can And then... have it

Jan De Witte

FDA audit, Matt, Sorry, PMA. we the only after can't approve but submit before successful will the

Matthew O'Brien

warning the letter. it. in Got Lift

impact out -- your impact, I does gross to just you're that substitute tease in can you a from XX% or positive Okay. the kind impact selling terms that of includes a bit Boston products can little impact offsets in a net of And on then cases? the XX% that more -- of

Lea Knight

Yes.

not does impact. the it -- that substitution So include

Ryan Zimmerman

Okay.

it's a net It's So gross not it's impact. just a impact.

Jan De Witte

Yes, correct. subsection. of Not net

Operator

Raymond from next our comes And question Jayson James. Bedford from

Jayson Bedford

of a Just quickies. couple

the On Jan, in market, you return lines to previously with communicated time line to mentioned lines. time

Just the late expectation quarter clear, that is second 'XX. to be Is correct?

Jan De Witte

Mid-May to end quarter. second

Okay.

line project for. time months planned the we that's So And we and that X was what communicated ago.

Jayson Bedford

that And clear. of be Boston you Tissue the the Tech we breakout component and pretty then from the business? remind the can rest and the of be private on the label to facility more revenue is private sticky can challenge will between rest assume me just the of Yes, just label and,

Lea Knight

Yes.

it. dimensionalizing of kind of terms in So

revenue private at of dimensionalize recall, total business is label Boston X% within about of XX% So And you the the our is portfolio. Boston, portfolio if about Boston we base. our

to at to that and our our the determination with understand being label partners the path to their the But collaboration interactions in very of process. make them this them take. of with work we are terms of we they plans, of private they as collaborative And have remediation kind much time continuing so insight the day give end throughout Obviously, own will Obviously, are help terms during them. our in

Jayson Bedford

private your is of keep to And XXX% label business? expectation that it

Jan De Witte

have in us. can have they the are to this planning. at frustrated I time, information point know it what and close I sense develop private wise, with customer the they staying is sticky definitely time our a in significant sure private for think, they it you takes label that effort. said, customers and We're to validate new make mean, supply a Jason, said, as label That

see as to if where a commercial have we'll closer think our that's we and we would forward. release, label get impact private where on I business

Operator

our JMP Turkaly David next comes from from question Securities. And

David Turkaly

some 'XX, we quick impact Just guidance. level one the share lower offset updated able those 'XX, with looks And specifically the $X.XX. it's the I lower given through? the high know on view -- you to tax as a share in of EPS may the and probably just you impact that conservative tax count of possibly It the Could but Boston that the in count. some of reiterated carry the you're

Lea Knight

Yes. Yes.

So just not we we provide was be did the Boston point, the to for at 'XX, impact, when looking that for your only 'XX, quantify to guidance in but clear, Boston -- isolation.

is to reflected will point, think your as that that gave that carry benefit tax only. we Boston I have you not number I that forward, that in So EPS because was

David Turkaly

well, as mean fair? that's imagine count share the I And right?

Lea Knight

Correct.

David Turkaly

there, have too many so options that guys XX%, could you I'm line But And given biologics. think and know that said I if that just synthetics have, you please. then quick one XX% you now. options follow-up, that, to that curious low. in be the change? you might you're The with

Jan De Witte

customers month and both is a understanding is bring what we've where learning our how seen them portfolio force getting force answer at that better perspective, and to. for for to process, yes. The sales This from definitely as our sales every

So [indiscernible] at the the higher higher we of to are end be end above the driving hopefully or

Operator

questions. conference further Thank no today's concludes participating. you showing am I And for call. This

You may now disconnect.

Integra LifeSciences (IART) 25 Oct 232023 Q3 Earnings call transcript