Dive Brief:
- Integra LifeSciences is aiming to restart manufacturing at its Boston tissue product plant in the fourth quarter and resume commercial sales in the second quarter of next year, CEO Jan De Witte said in a Thursday earnings call.
- The forecast, which follows the recall of all devices made at the plant over the past five years, confirms that the problem will continue to drag on Integra’s results into next year. Further delays are possible.
- Integra expects the quality situation to wipe $60 million from its revenues this year, and predicts that it will take another $50 million sales hit next year.
Dive Insight:
Integra disclosed the problems at its Boston plant in May. After discovering endotoxin testing deviations, the company recalled SurgiMend collagen matrix and other tissue devices made over a five-year period. Integra lowered its second quarter revenue forecast by $24 million and told investors the full-year impact could reach $60 million.
Management provided an update on Integra’s second-quarter results conference call. The company has made a remediation plan that expects production resuming by the end of the year. After that, Integra said it will take time to make finished products, build inventory and undergo an audit by outside experts, leading the company to target a commercial launch in the mid-to-late part of the second quarter.
Analysts at BTIG said the “timelines were extended into FY24” after listening to the call. Their peers at Truist Securities told investors the timeline was in line with their prior modeling. Both sets of analysts picked up on the risk of further delays, which De Witte outlined on the conference call.
“[There] may be moments where there’s new work that we discover or work that we need to redo if a validation does not lead to the required outcomes. The biggest elements that we are watching closely would be elements of validation and verification,” De Witte said. “We’ve built some of that contingency in, but the risk is there.”
Integra expects to firm up the timeline over the next three months. The company’s sales leadership thinks Integra can fully regain lost market share “within the year,” De Witte said.
In the second quarter, sales fell 4.2% to $381.3 million. Analysts at Truist told investors the update “leaves room for continued uncertainty” over the timing of a full recovery.