Integra LifeSciences Holdings Reports First Quarter 2015 Financial Results

Revenue Increased 8.7% to $233.7 Million

Reported EPS Increased to $0.25; Adjusted EPS Increased to $0.76

Full Year 2015 Revenue and EPS Guidance Raised

PLAINSBORO, N.J., April 30, 2015 (GLOBE NEWSWIRE) -- Integra LifeSciences Holdings Corporation (Nasdaq:IART) today reported its financial results for the first quarter ending March 31, 2015.

First Quarter Highlights:

• Reported revenue increased 8.7% to $233.7 million;
   
• Organic revenue increased 7.3%, the second consecutive quarter of organic revenue growth above 5%;
   
• Adjusted EBITDA margin increased 320 basis points to 20.4%;
   
• Adjusted free cash flow conversion for the trailing twelve months ended March 31, 2015 was 58.0% versus 10.8% in the prior period;
   
• Full year 2015 revenue guidance raised to $965 million to $980 million, reported EPS guidance raised to $0.97 and $1.15, and adjusted EPS guidance raised to $3.15 and $3.33; and,
   
• Spin-off of SeaSpine remains on track to be completed during the second half of 2015.

Total revenues for the first quarter were $233.7 million, reflecting an increase of $18.6 million, or 8.7%, over the first quarter of 2014.

Excluding the contribution of revenues from acquisitions, discontinued products and the effect of currency exchange rates, revenues increased 7.3% over the first quarter of 2014.

"Strong execution within our regenerative product lines, including dural repair and skin, resulted in first quarter results exceeding our expectations," said Peter Arduini, Integra's President and Chief Executive Officer. "We are continuing to see benefits from the optimization strategies we put in place over the last few years, including the highest organic growth rate in several years."

The Company reported GAAP net income of $8.4 million, or $0.25 per diluted share, for the first quarter of 2015, compared to GAAP net income of $2.2 million or $0.07 per diluted share, for the first quarter of 2014.

Adjusted measures discussed below are computed with the adjustments to GAAP reporting set forth in the attached reconciliation.

Adjusted net income for the first quarter of 2015 was $25.4 million, or $0.76 per diluted share, compared to adjusted net income of $18.6 million, or $0.57 per diluted share, in the first quarter of 2014.

Adjusted EBITDA for the first quarter of 2015 was $47.6 million, or 20.4% of revenue, compared to $36.9 million, or 17.2% of revenue, in the prior year first quarter.

During the first quarter, Integra generated $31.6 million in cash flows from operations and invested $8.9 million in capital expenditures. Adjusted free cash flow conversion for the trailing twelve months ended March 31, 2015 was 58.0% versus 10.8% in the prior-year period.

Business Update

Today, Integra published a separate press release announcing that the Board of Directors has named Keith Valentine as the Chief Executive Officer of SeaSpine, effective May 1, 2015. "With today's CEO announcement and the filing of the Form 10 Registration Statement earlier this month, the spin-off of SeaSpine is on track to be completed later this year, as planned," said Mr. Arduini. "Following the spin-off, not only will Integra's top line show faster growth, but we also expect SeaSpine's growth to accelerate under the leadership of industry veteran Keith Valentine."

Outlook for 2015

Based on the strength of its first quarter results, Integra is raising the low end of its previous revenue guidance by $5 million to a revised range of $965 million to $980 million, despite an expectation for additional foreign currency translation headwinds.

The Company is also increasing its expectations for GAAP earnings per diluted share for the full year to be between $0.97 and $1.15, compared to prior guidance of $0.87 to $1.05. In addition, the Company is raising its 2015 adjusted earnings per diluted share guidance to $3.15 to $3.33 from its prior range of $3.05 to $3.23.

"Reported revenues came in better than expected as a result of strong organic growth," said Glenn Coleman, Integra's Chief Financial Officer. "We are increasing the low end of our revenue guidance, despite worsening foreign currency, and are increasing our full year organic revenue growth rate to 5% or greater. We are also raising our guidance for adjusted earnings per diluted share to a new range of $3.15 to $3.33, reflecting the strong start to the year and better than expected profitability in the first quarter. Our business outlook is strong, and we will continue with our planned 2015 investments in new product introductions, sales channel expansion and our optimization strategy."

In accordance with our usual practice, expectations for financial performance do not include the impact of acquisitions or other strategic corporate transactions that have not yet closed, and thus include the spine business for the full year.

In the future, the Company may record, or expects to record, certain additional revenues, gains, expenses or charges as described in the Discussion of Adjusted Financial Measures below that it will exclude in the calculation of adjusted EBITDA and adjusted earnings per share for historical periods and in providing adjusted earnings per share guidance.

Conference Call

Integra has scheduled a conference call for 4:30 PM ET today, Thursday, April 30, 2015 to discuss financial results for the first quarter and forward-looking financial guidance. The conference call will be hosted by Integra's senior management team and will be open to all listeners. Additional forward-looking information may be discussed in a question and answer session following the call.

Integra's management team will reference a presentation during the conference call, which can be found on the Investor section of the website at investor.integralife.com.

Access to the live call is available by dialing (913) 312-1516 and using the passcode 2235512. The call can also be accessed through a webcast via a link provided on the Investor Relations homepage of Integra's website at investor.integralife.com. Access to the replay is available through May 18, 2015 by dialing (719) 457-0820 and using the passcode 2235512. The webcast will also be archived on the website.

Integra LifeSciences, a world leader in medical technology, is dedicated to limiting uncertainty for caregivers, so they can concentrate on providing the best patient care. Integra offers innovative solutions, including leading regenerative technologies, in specialty surgical solutions, orthopedics and tissue technologies, and spine hardware and orthobiologics. For more information, please visit www.integralife.com

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and reflects the Company's judgment as of the date of this release. Forward-looking statements include, but are not limited to, statements concerning future financial performance, including projections for revenues, GAAP and adjusted net income, GAAP and adjusted earnings per diluted share, non-GAAP adjustments such as global enterprise resource planning ("ERP") system implementation charges, certain expenses associated with product recalls, acquisition-related charges, impairment charges, non-cash amortization of imputed interest for convertible debt, intangible asset amortization, and income tax expense (benefit) related to non-GAAP adjustments. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from predicted or expected results. Such risks and uncertainties include, but are not limited to: the Company's ability to execute its operating plan effectively, the Company's ability to manufacture and ship sufficient quantities of its products to meet its customers' demand; the ability of third-party suppliers to supply us with raw materials and finished products; global macroeconomic conditions; continued weakness in sales outside of the U.S.; the Company's ability to manage its direct sales channels effectively; the Company's ability to maintain relationships with customers of acquired entities; physicians' willingness to adopt and third-party payors' willingness to provide reimbursement for the Company's recently launched and planned products; initiatives launched by the Company's competitors; downward pricing pressures for customers; the Company's ability to secure regulatory approval for products in development; the Company's ability to remediate quality systems violations; fluctuations in hospital spending for capital equipment; the Company's ability to comply with and obtain approvals for products of human origin and comply with recently enacted regulations regarding products containing materials derived from animal sources; difficulties in controlling expenses, including costs to procure and manufacture our products; the impact of changes in management or staff levels; the Company's ability to integrate acquired businesses; the impact of goodwill and intangible asset impairment charges if future operating results of acquired businesses are significantly less than the results anticipated at the time of the acquisitions, the Company's ability to leverage its existing selling organizations and administrative infrastructure; the Company's ability to increase product sales and gross margins, and control non-product costs; the Company's ability to achieve anticipated growth rates, margins and scale and execute its strategy generally, including the anticipated spinoff; the amount and timing of acquisition and integration related costs; the geographic distribution of where the Company generates its taxable income; the effect of legislation effecting healthcare reform in the United States and internationally; fluctuations in foreign currency exchange rates; the amount of our convertible notes and bank borrowings outstanding and other factors influencing liquidity; and the economic, competitive, governmental, technological and other risk factors and uncertainties identified under the heading "Risk Factors" included in Item 1A of Integra's Annual Report on Form 10-K for the year ended December 31, 2014 and information contained in subsequent filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.