What Integra LifeSciences (IART) Said on Its Q3 Earnings Call

Key Points

• Third-quarter revenue rose 2.3% to $411.2 million, while adjusted EPS increased to $0.59 and free cash flow reached $86 million. Neurosurgery and international Specialty Surgery growth partly offset weaker Tissue Reconstruction results and a flood-related disruption at the Cincinnati facility.
• The Cincinnati disruption reduced third-quarter revenue by about $7 million and is expected to cut fourth-quarter revenue by another $15 million to $20 million. Production recovery is expected to extend into the second quarter of 2027, with disruption continuing through the first quarter.
• Integra maintained its 2026 revenue outlook of $1.634 billion to $1.654 billion and adjusted EPS guidance of $2.30 to $2.40, but lowered the revenue midpoint and gross-margin expectations. The company expects higher interest costs following its $2.1 billion refinancing, while targeting 2027 growth from the SurgiMend relaunch, PriMatrix momentum and productivity gains.

Integra LifeSciences NASDAQ: IART reported third-quarter revenue at the low end of its guidance range as a flooding-related disruption at its Cincinnati facility and slower-than-expected Tissue Reconstruction performance weighed on results. The company said strength in neurosurgery and international Specialty Surgery partially offset those pressures.

Revenue for the third quarter totaled $411.2 million, up 2.3% on a reported basis and 2.5% organically from the prior-year period. Adjusted earnings per share rose to $0.59 from $0.54 a year earlier, while operating cash flow reached a quarterly record of $96 million. The company also reported $86 million in free cash flow and repaid $46 million of debt during the quarter.

Chairman and Chief Executive Officer Stuart Essig said the Cincinnati disruption had a larger impact than initially expected, reducing third-quarter revenue by about $7 million. The company expects an additional $15 million to $20 million revenue impact in the fourth quarter, primarily tied to the MAYFIELD product family.

Cincinnati recovery extends into 2027

Integra said it has reoccupied the Cincinnati site and is repairing and replacing equipment needed to resume production. The recovery plan includes equipment validation, supplier coordination and other operational work, with normal site operations expected to resume in the second quarter of 2027.

Chief Financial Officer Lea Knight said the company expects the disruption to affect all of the first quarter of 2027 and expects limited revenue contribution in the second quarter as shipments begin to resume. Quarterly revenue effects in early 2027 are expected to be similar to the $15 million to $20 million impact forecast for the fourth quarter of 2026.

The company does not expect meaningful backlog clearance once shipments resume, according to Knight. Instead, it expects to ship against then-current demand. Essig said Integra is using its loaner pool, offering extended service arrangements and providing incentives to help customers defer purchases until MAYFIELD products are again available. He acknowledged the company could lose some business to competitors but said MAYFIELD remains a longstanding product used broadly by neurosurgeons.

The flood-related lost revenue also pressured gross margin. Integra said it excludes direct flood costs, including inventory losses, fixed-asset write-offs, remediation and plant restart expenses, from adjusted results. Business-interruption insurance recoveries for lost revenue remain in adjusted results but may lag the revenue losses because claims must be reviewed and approved.

Neurosurgery strength offsets softer Tissue Reconstruction

Specialty Surgery revenue rose 3.9% on a reported basis and 4.2% organically to $304.1 million. Neurosurgery grew 6.5% organically despite the Cincinnati disruption, supported by demand for CereLink, Certas Plus, Bactiseal, DuraSeal and cranial perforators. International Specialty Surgery increased 7.8%, benefiting from improved product availability and commercial execution across multiple geographies.

Essig described neurosurgery as a foundational business with strong market positions and customer relationships. While management does not expect fourth-quarter growth to repeat the third quarter’s outperformance, Essig said the company views the business as capable of low- to mid-single-digit growth over the longer term.

Instruments revenue declined 0.9% organically because certain orders shifted into the fourth quarter. ENT revenue fell 1.1% organically, with sinus balloon sales down in the low single digits. Essig said Integra expects ENT to return to growth beyond 2026, citing AERA’s pediatric indication, greater collaboration between MicroFrance ENT instruments and the company’s instruments division, and planned product introductions in 2027.

Tissue Reconstruction revenue declined 2.2% to $107.1 million. Strong growth from DuraSorb and PriMatrix was more than offset by lower sales in the UBM portfolio and Integra Skin. The company said PriMatrix’s sales run rate remained above 50% of historical revenue levels.

Essig attributed pressure in UBM primarily to MicroMatrix, citing greater competition, promotional activity and sales-force turnover. He said Integra Skin continued to grow sequentially in the second and third quarters, but recapturing share in some SKUs has been slower than expected. In burn care, Essig said competitors gained business during periods when Integra could not supply certain products, in some cases competing on price.

Knight said Integra expects its base Tissue Reconstruction business to remain approximately flat in 2027 compared with 2026, though SurgiMend is expected to contribute growth during its first full year back on the market.

SurgiMend launch and breast reconstruction plans

Integra continued to target a limited commercial relaunch of SurgiMend in December, though Essig noted there is timing risk around final documentation, release activities and inventory buildup. The company’s fourth-quarter guidance assumes no material revenue contribution from SurgiMend.

For 2027, the company plans a measured commercial ramp similar to its approach with PriMatrix. Integra also expects an expanded SurgiMend label for implant-based breast reconstruction in 2027, followed later by DuraSorb. Essig said the U.S. implant-based breast reconstruction market is approximately $800 million and that the company plans to expand its related sales force from about 30 representatives to roughly 50 by the end of 2027. The timing of a SurgiMend label expansion depends on a pre-approval inspection of the Braintree facility by the FDA.

Guidance reduced as refinancing raises interest expense

Integra reaffirmed its updated full-year outlook for revenue of $1.634 billion to $1.654 billion and adjusted earnings per share of $2.30 to $2.40. Fourth-quarter revenue is projected at $413 million to $433 million, representing a reported decline of 5.2% to 0.5% and an organic decline of 5.1% to 0.4%.

The company reduced the midpoint of its full-year revenue outlook by approximately $30 million, reflecting the larger Cincinnati impact and a more measured fourth-quarter expectation for Tissue Reconstruction. Adjusted gross margin for 2026 is now expected to be approximately flat with 2025, 60 basis points below prior expectations. Integra attributed about 20 basis points of the change to Cincinnati and about 40 basis points to product and portfolio mix.

At quarter-end, net debt was about $1.5 billion, total liquidity was approximately $559 million and leverage improved to 3.8 times. On Oct. 19, Integra completed a $2.1 billion refinancing, including a $1.65 billion senior secured credit facility and $450 million of 9.5% senior secured notes due 2033.

The refinancing is expected to add roughly $8 million of interest expense in the fourth quarter and $24 million in 2027 compared with the company’s updated 2026 outlook. Still, Knight said Integra expects revenue and earnings-per-share growth in 2027, supported by the SurgiMend relaunch, PriMatrix momentum, international supply availability, productivity gains and lower remediation spending. The company expects to finish 2026 just above its target leverage range of 2.5 to 3.5 times.

About Integra LifeSciences (NASDAQ:IART)

Integra LifeSciences Holdings Corporation NASDAQ: IART is a global medical technology company that develops and manufactures products used in neurosurgery, reconstructive surgery, orthopedics and wound care. Its portfolio includes medical devices, surgical instruments and regenerative tissue technologies designed to help healthcare professionals treat complex conditions and support patient recovery.

Integra's neurosurgical products include dural repair products, cerebrospinal fluid management systems, cranial stabilization devices and specialized surgical instruments.

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