Integra LifeSciences Holdings Corp. (IART) filed Quarterly Report for the period ended 2009-09-30.
Integra LifeSciences Corp. develops manufactures and markets medical devices implants and biomaterials primarily used in the treatment of burns and skin defects spinal and cranial disorders orthopedics and other surgical applications. Integra seeks to be the world's leading company specializing in implantable medical and biopharmaceutical therapies to target and control cell behavior and to build shareholder value by acquiring discovering and developing cost-effective off-the-shelf products that satisfy unmet medical needs. Integra Lifesciences Holdings Corp. has a market cap of $885 million; its shares were traded at around $31.12 with a P/E ratio of 15.8 and P/S ratio of 1.3. Integra Lifesciences Holdings Corp. had an annual average earning growth of 24.5% over the past 5 years.
Highlight of Business Operations:
In August 2008, we acquired Theken Spine, LLC, Theken Disc, LLC and Therics, LLC (collectively, “Theken”) for $75.0 million in cash, acquisition expenses of $2.4 million and working capital adjustments of $4.0 million. In addition, the Company may pay up to an additional $121.0 million in future payments based on the revenue performance of the business in each of the two years after closing, including the $52.0 million that has been accrued at September 30, 2009. Theken, based in Akron, Ohio, designs, develops and manufactures spinal fixation products, synthetic bone substitute products and spinal arthroplasty products. With Theken, we acquired a unique and comprehensive portfolio of spinal implant products and a robust technology pipeline and demonstrated product development capacity, an established network of spinal hardware distributors with established access to the orthopedic spine market, and a strong management team with extensive experience in the orthopedic spine market. Theken does not currently sell its products outside of the U.S. Accordingly, we expect that the business will benefit from Integra’s large international presence. The Theken products are now being marketed under the name Integra Spine™.
For the three months ended September 30, 2009, total revenues increased by $5.3 million, or 3.2%, to $172.3 million from $167.0 million for the same period during 2008. Domestic revenues increased by $3.9 million to $132.1 million, or 77% of total revenues, for the three months ended September 30, 2009 from $128.2 million, or 77% of total revenues, for the three months ended September 30, 2008. International revenues increased to $40.1 million from $38.8 million in the prior-year period, an increase of 3.4%.
Gross margin increased by $6.6 million to $109.3 million for the three-month period ended September 30, 2009, from $102.7 million for the same period last year. Gross margin as a percentage of total revenue was 63% for the third quarter 2009 compared to 61% for the same period last year. This increase results from a higher portion of product sales coming from higher margin implants, particularly spine and extremity reconstruction, in combination with reduced sales of lower margin instrument, distributed and capital products, partially offset by an impairment of technology assets of $0.9 million and increased reserves. In addition, the 2009 period contains less inventory purchase accounting adjustments, where charges of $0.6 million related to Theken in the third quarter of 2009 compared to $1.3 million related to this acquisition in the third quarter of 2008. The 2008 period also contained charges related to discontinued product lines totaling $1.2 million.
Research and development expenses in the third quarter of 2009 decreased by $23.2 million to $11.5 million, compared to $34.7 million in the same period last year. This decrease is due to a $25.2 million charge for In Process Research and Development (“IPRD”) associated with the Theken acquisition in 2008, partially offset by a $0.3 million IPRD charge in the third quarter of 2009. Excluding the IPRD charges, spending increased $1.7 million to $11.5 million, and most of the increase in spending is attributable to our spine business and our clinical trial to support FDA approval of expanded claims for our INTEGRA® Dermal Regeneration Template product.
Selling, general and administrative expenses in the third quarter of 2009 decreased by $17.8 million to $69.9 million, compared to $87.7 million in the same period last year, largely due to the 2008 non-cash charge of $18.0 million in connection with the chief executive officer’s stock-based compensation. Selling expenses increased by $1.5 million primarily due to the increase in revenues and the corresponding commission costs, particularly in connection with our spine product revenues, which generate relatively higher distributor commission costs. In addition to spine, selling expenses also increased in the third quarter of 2009 compared to the same period last year in connection with the acquisitions of the Integra Neurosciences Pty Ltd. in Australia and New Zealand and Omni-Tract businesses. Excluding the stock-based compensation charge in 2008, general and administrative costs decreased $1.2 million primarily due to lower legal fees driven by the settlement of our Codman litigation, lower consulting and professional fees related to our financial operations, which offset increases related to the acquisitions of the Theken, Integra Neurosciences Pty Ltd. in Australia and New Zealand, and Omni-Tract businesses. We will continue to expand our direct sales organizations in our direct selling platforms where business opportunities are most attractive, including extremity reconstruction, and increase corporate staff to support our information systems infrastructure to facilitate future growth.
For the nine-month period ended September 30, 2009, total revenues increased by $18.8 million or 3.9%, to $499.0 million from $480.2 million during the prior-year period. Domestic revenues increased by $24.5 million to $381.8 million and were 77% of total revenues, as compared to 74% of revenues in the nine months ended September 30, 2008. International revenues decreased $5.8 million to $117.1 million, a decrease of 4.7% compared to the same period in 2008.
IART is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
Rate This Article: |
  |