Integer Holdings Corporation to Divest Non-Medical Business for $50 million
Rhea-AI Summary
Integer Holdings (NYSE: ITGR) has announced an agreement to divest its Electrochem business to Ultralife (NASDAQ: ULBI) for $50 million in cash. This divestiture transforms Integer into a pure-play medical technology company. The transaction is expected to close by the end of October, subject to customary working capital adjustments.
Key points:
- Electrochem focuses on non-medical applications for energy, military, and environmental sectors
- Integer will report Electrochem's results as part of discontinued operations
- Proceeds will be used to pay down debt and for general corporate purposes
- The transaction is expected to be neutral to EPS
- 2024 full-year guidance for the non-medical segment included $36 million in sales and $5 million in Adjusted EBITDA
Positive
- Divestiture of non-core business for $50 million in cash
- Transformation into a pure-play medical technology company
- Proceeds to be used for debt reduction and inorganic growth strategy
- Transaction expected to be neutral to EPS
Negative
- Loss of $36 million in annual sales from divested business
- Reduction of $5 million in annual Adjusted EBITDA
Insights
The divestiture of Integer Holdings 's Electrochem business for
Key financial implications:
- The
$50 million cash influx will strengthen Integer's balance sheet and provide flexibility for strategic initiatives. - The company expects the transaction to be EPS neutral, suggesting minimal immediate impact on profitability.
- The divestiture removes approximately
$36 million in annual sales and$5 million in adjusted EBITDA from Integer's financials. - Debt reduction from the proceeds could lead to lower interest expenses, potentially improving future profitability.
For investors, this move simplifies Integer's business model and may lead to a higher valuation multiple as a pure-play medical technology company. However, the loss of diversification and the relatively small size of the divested business suggest a short-term impact on the company's overall financial performance.
Integer's transformation into a pure-play medical technology company through this divestiture has significant implications for its future in the medical device sector:
- Increased focus on medical CDMO services could lead to enhanced innovation and potentially faster growth in this high-demand area.
- The company can now allocate all its resources to medical technology, potentially accelerating R&D and improving competitiveness.
- This move may attract more partnerships with medical device companies looking for specialized manufacturing expertise.
- The pure-play status could make Integer more attractive to investors focused on the healthcare sector, potentially leading to improved valuations.
However, investors should note that while this strategic shift streamlines operations, it also increases Integer's exposure to healthcare industry-specific risks and regulatory challenges. The company's success will now be more tightly linked to the performance and growth of the medical device market.
~ Planned Electrochem divestiture makes Integer a pure-play medical technology company ~
PLANO, Texas, Sept. 30, 2024 (GLOBE NEWSWIRE) -- Integer Holdings Corporation (NYSE: ITGR), a leading medical device contract development and manufacturing organization (CDMO), today announced it has entered into an agreement to divest its Electrochem business, which focuses on non-medical applications for the energy, military and environmental sectors, to Ultralife Corporation (NASDAQ: ULBI). Ultralife is acquiring Electrochem for
“The divestiture of our non-medical business is another example of Integer managing our portfolio to accomplish our strategic financial objectives,” said Joe Dziedzic, Integer’s president & CEO. “Following the transaction, Integer will be a pure-play medical business with additional cash to pay down debt and execute our inorganic growth strategy. Ultralife is an ideal buyer for Electrochem because they are a leader in providing critical power solutions to a variety of industries that include energy, defense, and environmental markets.”
Going forward, Integer will report the results of its Electrochem business, currently included in its “Non-Medical” segment, as part of discontinued operations. This will include any gain or loss recognized on the sale of the business. The Company intends to use the proceeds from the sale to pay down outstanding debt and for general corporate purposes.
In the 2024 full year guidance provided as part of our second quarter 2024 earnings release, we assumed the following in relation to our non-medical segment, adjusted to include
- Sales of
$36 million . - GAAP operating income of
$3 million . Non-GAAP adjusted operating income of$4 million . - Adjusted EBITDA of
$5 million . - GAAP net income of
$0 million . Non-GAAP adjusted net income of$1 million . - GAAP diluted EPS of
$0.00 . Non-GAAP adjusted EPS of$0.02 .
We expect this transaction to be neutral to EPS.
Please see “Notes Regarding Non-GAAP Financial Information” and “2024 Outlook” in our earnings release for the second quarter of 2024, dated July 25, 2024 for additional information regarding our use of the non-GAAP financial measures set forth above.
About Integer®
Integer Holdings Corporation (NYSE:ITGR) is one of the largest medical device contract development and manufacturing organizations (CDMO) in the world, serving the cardiac rhythm management, neuromodulation, and cardio and vascular markets. As a strategic partner of choice to medical device companies and OEMs, the Company is committed to enhancing the lives of patients worldwide by providing innovative, high-quality products and solutions. The Company's brands include Greatbatch Medical®, Lake Region Medical® and Electrochem®. Additional information is available at www.integer.net.
Forward-Looking Statements
Some of the statements contained in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the statements relating to the expected timing for the closing of the divestiture of the Electochem business, the intended use of proceeds by the Company from the transaction, and the impact of the transaction on the Company’s EPS. You can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or variations or the negative of these terms or other comparable terminology. These statements are only predictions and actual events or results may differ materially from those stated or implied by these forward-looking statements. In evaluating these statements, you should carefully consider a number of factors, including, but not limited to, risks and uncertainties that arise from time to time and are described in our earnings release, dated July 25, 2024 (filed as Exhibit 99.1 to our Current Report on Form 8-K filed July 25, 2024), Item 1A “Risk Factors” of our Annual Report on Form 10-K and in our other periodic filings with the SEC. Except as may be required by law, we assume no obligation to update forward-looking statements in this press release, whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.
| Investor Relations: Andrew Senn andrew.senn@integer.net 763.951.8312 | Media Relations: Kelly Butler kelly.butler@integer.net 469.731.6617 |
FAQ
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