Integer Q4 Earnings Call Highlights

by · The Markets Daily

Integer (NYSE:ITGR) reported fourth-quarter and full-year 2025 results that management said landed toward the high end of the company’s October outlook, while also outlining a 2026 forecast pressured by lower-than-expected adoption of three newer products.

2025 results and share repurchase actions

CEO Payman Khales said the company’s 2025 performance reflected “diligent execution,” with reported sales up 8% for the year and adjusted operating income up 13%. Adjusted EPS rose 21%, which management attributed to higher sales, improved profitability, and “effective capital management.”

Khales also highlighted capital returns. Integer repurchased $50 million of common stock during the fourth quarter and announced its intention to initiate an accelerated share repurchase (ASR) of approximately $50 million under its existing authorization. Management said the repurchase program reflects confidence in its strategy, financial position, and ability to generate strong free cash flow.

Fourth-quarter financial performance

CFO Daron Smith reported fourth-quarter sales of $472 million, up 5% on a reported basis and up 2% organically. Smith defined organic growth as excluding the impact of acquisitions, the company’s strategic exit of the portable medical market, and foreign currency fluctuations.

Adjusted EBITDA for the quarter was $106 million, up 11% year over year. Adjusted operating income rose 10%, and adjusted operating margin expanded 74 basis points to 17.6%, which Smith said was driven primarily by improved gross margin.

Adjusted net income was $62 million, up 22%, and adjusted EPS was $1.76, up 23% from the prior-year quarter. Smith said both reflected interest expense savings tied to a convertible note offering completed in March 2025.

Full-year 2025 profitability, cash flow, and leverage

For full-year 2025, sales totaled $1.854 billion, up 8% reported and up 6% organically. Adjusted EBITDA was $402 million, up 12% year over year, while adjusted operating margin was 17.3%, up 76 basis points. Adjusted net income increased 23% to $226 million, and adjusted EPS rose 21% to $6.40.

Smith provided additional drivers behind the year’s earnings growth, noting operational improvements of $30 million (or $0.86 per share), reflecting higher volume, manufacturing efficiencies, operating expense management, and acquisition performance. Interest expense was $14 million lower year over year, adding $0.33 per share after tax, while foreign exchange pressure reduced adjusted net income by $2 million (or $0.07 per share). He also noted that a higher adjusted weighted average share count reduced adjusted EPS by $0.11.

Cash generation improved modestly on a free cash flow basis. Integer generated $196 million of cash flow from operations for the year, with capital expenditures of $91 million (about 5% of sales), resulting in free cash flow of $105 million, up $5 million from the prior year. Net total debt at year-end was $1.19 billion, and net leverage was 3.0x trailing four-quarter adjusted EBITDA, which Smith said was the midpoint of the company’s targeted 2.5x–3.5x range.

Segment trends: Cardio & Vascular grows; CRM&N mixed

In Cardio & Vascular (C&V), fourth-quarter sales increased 11% to $284 million, which Smith said was driven by the Precision Coating and VSI Parylene acquisitions and strong demand in neurovascular. On a trailing four-quarter basis, C&V sales rose 17% to $1.107 billion, supported by new product ramps in electrophysiology, acquisition contributions, and continued neurovascular demand.

In Cardiac Rhythm Management & Neuromodulation (CRM&N), fourth-quarter sales decreased 2% to $167 million. Smith said cardiac rhythm management growth was offset by a decline in neuromodulation, primarily due to lower demand from select emerging customers with PMA products. On a trailing four-quarter basis, CRM&N sales increased 1% to $669 million, with CRM and neuromodulation growing at market, offset by the planned decline of an early spinal cord stimulation finished implantable pulse generator customer that Integer previously announced in 2020.

2026 outlook: headwinds from three products, margins pressured early

Management maintained the midpoint of the 2026 sales outlook it first shared in October but narrowed the range. Integer expects 2026 reported sales of $1.826 billion to $1.876 billion (down 1% to up 1%) and organic sales to be flat to up 3%.

The company said the outlook includes an estimated 3%–4% headwind from three new products (two in electrophysiology and one in neuromodulation) due to lower-than-expected market adoption, even though Integer remains the supplier. Smith said those three products represented nearly 6% of total sales in 2025 and are expected to be “significantly lower” in 2026. Excluding those products, management expects the underlying business to grow about 4%–6%, in line with market growth.

For profitability, Integer guided to adjusted EBITDA of $391 million to $415 million (down 3% to up 3%), adjusted operating income of $304 million to $324 million (down 5% to up 1%), and adjusted EPS of $6.29 to $6.78 (down 2% to up 6%). The company expects an adjusted effective tax rate of 16%–18% for the year, with the first quarter “slightly above” the full-year rate. The EPS outlook incorporates share count reduction from fourth-quarter repurchases and the expected impact of the new $50 million ASR.

On cadence, management expects organic sales to be down low single digits in the first half before returning to market growth in the second half. For the first quarter, Integer expects reported sales to be flat to down low single digits and noted a 5% tailwind in the first quarter and a 5% headwind in the fourth quarter due to differences in production days.

Smith said first-quarter adjusted operating margin is expected to decline 200–250 basis points year over year, citing fixed-cost absorption challenges at lower sales volumes and the company’s decision not to make structural changes given its expectation for improved growth in 2027. He said operating margin rate is expected to improve throughout 2026, with a return to margin expansion in the second half.

Integer also guided to 2026 operating cash flow of $200 million to $220 million and capital expenditures of $95 million to $105 million, implying free cash flow of $100 million to $120 million. Year-end net debt is expected to be $1.17 billion to $1.19 billion, including the estimated impact of the ASR, with leverage remaining within the 2.5x–3.5x targeted range.

During the Q&A, management said narrowing the organic sales guidance range was not driven by changes in customer forecasts, characterizing the reduction in the top end as “more around rounding.” Executives also reiterated confidence in returning to 200 basis points of above-market organic growth in 2027, citing the strength of the underlying business, an active development pipeline, and additional new products expected to launch in the second half of 2026 and through 2027.

About Integer (NYSE:ITGR)

Integer Holdings Corporation (NYSE: ITGR) is a global provider of outsourced medical device design, development and manufacturing solutions. The company partners with leading medical technology firms to deliver complex components, subsystems and finished devices across a range of therapeutic areas. Its services encompass concept and product design, precision machining, microelectronic assembly, terminal sterilization and regulatory support, enabling customers to accelerate time to market and optimize product performance.

Integer’s product portfolio is organized into two core segments: Advanced Delivery and MedTech.

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