Integra LifeSciences Holdings Corporation (NASDAQ:IART) Q1 2018 Earnings Conference Call - Final Transcript

Apr 25, 2018 • 08:30 am ET

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Integra LifeSciences Holdings Corporation (NASDAQ:IART) Q1 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Peter J. Arduini

from these activities beginning in late second quarter and accelerating in the second half of the year. We're also very encouraged about our R&D and new product investments, which will begin to deliver sales growth later this year and position us well for 2019.

Within our regenerative franchise, we'll introduce new products including AmnioExcel Plus, an enhanced version of our amniotic product, and we also expect European approvals for our IDRT meshed and SurgiMend macroporous products for use in wound and surgical reconstructive procedures. In extremity orthopedics, we'll be launching a new fusion nail in 2018 called the Panta II for ankle fixation. And within our ankle arthroplasty portfolio, we will introduce a new total ankle revision system in the US, which will enable the revision of many competitive ankle systems and position Integra as with one of the broadest and most comprehensive ankle arthroplasty product lines.

I'm pleased with the progress that we've made to date within the OTT segments, specifically how well the teams navigated through the channel expansion in the first quarter. As we look forward to the rest of the year and begin to benefit from the channel investments and new products, we feel confident in our ability to achieve 8% to 10% organic growth in this segment for the full year.

Our performance in Codman Specialty Surgical segment exceeded our expectations in the first quarter. Similar to OTT, we experienced reduced selling time in the first quarter as our commercial teams were training on the combined portfolio and taking on new territory assignments. Our careful management of this process and the commitment of our teams resulted in both the legacy and acquired Codman businesses performing ahead of plan. We also successfully completed the transition of the Codman business in China, which represents the country with the largest revenue base that was not part of the closing in October 2017.

As we enter the second quarter, it's important to note that the integrated sales territories associated with over 90% of the Codman revenue globally by the end of the first quarter. And I'm pleased that the low turnover we faced in the process helped to preserve the combined talent pool. We also opened a new campus in Mansfield, Massachusetts, which will serve as the home of the conveying Codman teammates. This facility is located near the legacy J&J campus.

With the commercial integration nearing completion, the next significant step will be to exit the transition services agreements that we have with J&J, with the first exits occurring in the third quarter. As previously discussed, given the size and complexity of the integration, we will continue to roll off additional TSAs through 2019. After those exits, the most significant remaining step will be the eventual transfer of manufacturing to our Mansfield location.

In the first quarter, we integrated the R&D organizations and have prioritized a new pipeline of registrations and product introductions that will accelerate growth in 2019 and beyond. We recently received approval to sell CUSA