Integra LifeSciences Holdings Corporation IART is successfully broadening its international footprint through certain key developments on the overseas front. The company also sees healthy demand for its industry-leading products within the Codman Specialty Surgical (CSS) segment. A strong emphasis on portfolio optimization has steadily ramped up its research and development (R&D) spend, which is highly promising. Meanwhile, macroeconomic headwinds and a negative solvency remain concerns for Integra’s operations.

In the past year, this Zacks Rank #3 (Hold) stock has declined 36.3% compared with the industry’s 7% fall and against the 10.5% increase of the S&P 500 composite.A

The renowned medical device company has a market capitalization of $1.75 billion. Integra has an earnings yield of 10.9% against the industry’s yield of -3.4%. Its earnings surpassed estimates in three of the trailing four quarters and matched in one, delivering an average surprise of 5.2%.

Let’s delve deeper.

Tailwinds for IART Stock

Strong Prospects in CSS: The CSS segment is benefiting from growing market acceptance of the company’s global neurosurgery line-ups, representing a continuum of care from pre-operative to the neurosurgery operating room and to the neuro-critical care unit, and post-care for both adult and pediatric patients suffering from brain tumors, brain injury, cerebrospinal fluid pressure complications and other neurological conditions. Integra is experiencing strong market adoption of dural repair, ultrasonic tissue ablation, ICP monitoring, hydrocephalus management and cranial stabilization systems.

Furthermore, the recently closed acquisition of Acclarent, which positions Integra as a leader in the ENT (Ear, Nose and Throat) segment, expands addressable markets and provides immediate scale and accretive growth to the CSS portfolio. In the fourth quarter of 2024, despite the ongoing supply challenges, Integra registered significant demand for its disposables, Certas Plus programmable valves, DuraGen and Mayfield Capital.

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Solid Growth in International Business: International sales within CSS have been strong recently, driven by growth in the core neurosurgery business and strength in certain key markets such as Europe, Canada, China and Japan. On a global basis, the company accelerated investments in digital capabilities that will enable the commercial teams to reach a broader customer base.

Integra witnessed ongoing strength in its international markets in the fourth quarter, despite adverse consequences of the ongoing supply issues. It expects to continue to build on this momentum in its international markets with more access to its products in new markets, broadening commercial reach and capabilities. Furthermore, the company is gaining from the global relaunch of CereLink and is witnessing strong market uptake, demonstrating the resilience and differentiation of its intracranial pressure monitoring portfolio.

Strong Focus on Portfolio Optimization: Integra reshaped its portfolio with the ACell acquisition, expressing confidence in ACell’s potential to achieve robust long-term growth. In 2024, Integra made a successful global relaunch of CereLink, followed by the 510(k) clearance in the United States. The company also submitted a 510(k) for Aurora Surgiscope. Moreover, Integra registered DuraGen, DuraSeal, Mayfield and Duo LED lighting in EMEA and Latin America and launched DuraGen Plus in China.

The company has also completed the integration of SIA and advanced with its implant-based breast reconstruction PMA strategy for both SurgiMend and DuraSorb. In 2024, the company commercially launched its MicroMatrix Flex in the United States. Further, the acquisition of the Acclarent ENT business is expected to strategically add an adjacent, highly complementary and growth-accretive platform to its neurosurgery business. In recent years, the company has gradually ramped up investment in R&D. In the fourth quarter, Integra’s R&D expenses increased 28.5% from the comparable 2023 period.

Concerns for Integra

Tough Liquidity Position: At the end of the fourth quarter of 2024, Integra reported cash and cash equivalents of $274 million, while total debt far exceeded it, reaching $1.80 billion. Further, the company had $607 million in short-term payables on its balance sheet, much higher than the available cash levels. Its high debt-to-capital of 53.4% and the times interest earned ratio of a mere 0.7 indicate that Integra has a higher risk of struggling to meet its debt obligations.

Choppy Macro Environment: The challenging macroeconomic scenario, specifically in the Asia Pacific and Europe, is driving the higher-than-anticipated rise in raw materials and labor costs. These could also result in broader economic impacts and security concerns, affecting Integra’s business through the months of 2025 too. In fourth-quarter 2024, selling, general and administrative expenses increased 9.4% year over year.

IART Stock Estimate Trend

The Zacks Consensus Estimate for 2025 earnings per share (EPS) has dropped 1.6% to $2.46 in the past 30 days.

The consensus estimate for the company’s 2025 revenues is pegged at $1.68 billion. This suggests a 4.3% rise from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Veracyte VCYT, Hims & Hers Health HIMS and Boston Scientific BSX.

Veracyte has an earnings yield of 3.6% against the industry’s -3.3% yield. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 515.9%. Its shares have gained 55.1% against the industry’s 7.1% decline in the past year.

VCYT carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hims & Hers Health, carrying a Zacks Rank #2 at present, has an earnings yield of 1.9% against the industry’s -7.6%. Shares of the company have surged 135.4% against the industry’s 10.2% decline. HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 40.4%.

Boston Scientific, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 13.3%. Shares of the company have rallied 50.2% compared with the industry’s 7.8% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 8.3%.

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This article originally published on Zacks Investment Research (zacks.com).

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