Integra LifeSciences Holdings Corporation (NASDAQ:IART) Q1 2018 Earnings Conference Call - Final Transcript
Apr 25, 2018 • 08:30 am ET
Peter J. Arduini
Clarity in Japan, and we're on track to receive approval for DuraGen there later this year. As a reminder, our direct sales channel in Japan is substantially larger than it was a year ago, allowing us to sell directly to customers and to drive increased growth and profitability when compared to the indirect model we had in place prior to the acquisition.
So if you turn to slide five, when we announced our plan to acquire the Codman business from Johnson & Johnson over a year ago, we highlighted the strategic fit and how we plan to generate significant shareholder value. On left-hand side of the page is a picture of that slide that we used to describe the strategic rationale for the Codman acquisition when we announced it in February 2017.
Today, we're even more confident that when we signed the deal about the shareholder value to be created. The breadth of our product portfolio, the global leadership position that we now have in neurosurgery, the strong recognition of the Codman brand, and the scale that enables will help us improve our EBITDA margin profile and global growth.
In the first quarter, our commercial teams identified multiple opportunities for cross-selling, which resulted in increased sales. Among them are clinicians who regularly use Integra products and are now excited to learn about Codman's leading products, electrosurgery and hydrocephalus management, likewise Codman customers who brought opportunities for legacy Integra product such as CUSA Clarity. Outside the US, we're seeing similar benefits from the union of the product portfolios and sales expertise.
As I mentioned on slide four, we are ahead of our commercial integration plans and the remaining items are on track. We've combined the R&D pipelines and see opportunities to generate a steady flow of new products over our five-year planning horizon. With these investments and a commercial channel that is 30% larger in the US and 50% larger internationally were in a position not only to drive growth in our existing portfolio but also to launch new products through a larger, more effective channel.
The closure of the transition service agreements will represent a significant milestone for Integra and will correspond to the investments that we're making to stand up our own global organization. Exiting these agreements will signify that we have successfully built the necessary infrastructure to assume direct control of all operations. At this point, we'll be running the business independently and be better positioned to manage our operating costs and drive leverage.
Consistent with the strategic value that we discussed when we announced this transaction in February last year, Codman is accretive, it's accretive to our EBITDA margins. It generates a positive effect on our tax rate, and provides avenues to drive organic growth through our rich R&D pipeline of core technologies. So based on two quarters of running the Codman business, we're pleased with how the team has come together and achieved above expectations. Therefore, we're raising our full year revenue and earnings outlook for