Integra Lifesciences Holdings Corp (IART), NuVasive, Inc. (NUVA), CareFusion Corporation (CFN): A Solid Orthopedic Implants Manufacturer

In the instruments segment, Integra competes with V. Mueller, a division of CareFusion Corporation (NYSE:CFN), having a wide range of surgical products, including surgical clippers and surgical instruments. In in the fourth quarter, which ended June 30, CareFusion Corporation (NYSE:CFN) reported revenue of $903 million, down by 6% at constant currency, due to 12% decline in sales of medical systems. The decline is partly offset by 7% increased sales of procedural solutions. Adjusted net income during the quarter was $121 million, up by 9% and adjusted EPS was $0.55, up by 10%. In the coming year, the company expects to meet analyst estimates of $2.36 EPS and a revenue growth of between 1%-4%.

Integra’s performance

Integra generates revenue from its core businesses, represented by five segments. Around 80% of revenues come from the U.S. market, and neurosurgery and spine accounts for a majority of it. In the recent quarter that ended June 30, total revenues were $205.5 million, a decrease by $4.7 million compared to last year, due to decreased sales of spine and instruments in the U.S. It represents 21% of total revenues compared to neurosurgery (20%), instruments (19%), and extremities (16%). Outside the U.S., the company reported sales of $47.3 million, 23% of total revenues.

The lower sales in this growing segment effects the company’s operating performance as well. In the second quarter of 2013, adjusted EBITDA was $33.5 million, down by 17% due to decreased sales coupled with higher SG&A and R&D costs. Declined sales and higher operating expenses drove down its bottom line. Adjusted net income was $16.8 million, or $0.60 per diluted share, compared to $21.1 million, or $0.74 per diluted share in the same quarter a year ago. Integra generated cash flow of $2.9 million from operations and invested $13.6 million in capital expenditures during the quarter.

Investment highlights

Integra continues to strengthen its product portfolio while focusing on its diversified business. Firstly, the company maintains its top line growth through extremities reconstruction products, as the orthopedic market is driven by soft tissue repair and reconstruction of bone in lower extremities (knee, foot and leg) and upper extremities (hand, wrist, elbow and shoulder). Then, the instrument business has the capacity to generate more cash for the company. Finally, neurosurgery products should have stable growth for the company as the market has some selective procedures. Integra is a solid value company, in my opinion.

The article A Solid Orthopedic Implants Manufacturer originally appeared on Fool.com and is written by Kanak Kanti De.

Kanak Kanti De has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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