10-Q · April 30, 2026
Integer Holdings Corporation reported strong Q1 2026 results with revenue of $439.58 million and EPS of $1.20, both surpassing estimates. Despite slight revenue growth of 0.5% compared to Q1 2025, profitability metrics…
Earnings analysis · 10-Q
ITGR earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Integer reported Q2 revenue of $464.110 million, down 2.6% year over year but up 5.5% sequentially, while diluted EPS from continuing operations declined 33.7% year over year to $0.69. Lower-than-anticipated adoption of…
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Integer reported Q2 revenue of $464.110 million, down 2.6% year over year but up 5.5% sequentially, while diluted EPS from continuing operations declined 33.7% year over year to $0.69. Lower-than-anticipated adoption of three new products, the Portable Medical Exit, lower fixed-cost absorption, and higher restructuring charges drove gross margin down to 24.3% and operating margin down to 7.4%. First-half operating cash flow improved to $84.430 million, but the operating outlook is tempered by management's expectation that weak adoption of the three products will affect 2026 sales growth; the company is also subject to closing risks under KKR's $127-per-share cash merger agreement.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $0.69
What stood out
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Sequential recovery, but year-over-year sales decline
Q2 sales were $464.110 million, up 5.5% sequentially from $439.580 million in Q1 2026, but down $12.384 million, or 2.6%, from $476.494 million in Q2 2025. The reported $0.69 diluted EPS from continuing operations rose from $0.48 in Q1 but fell $0.35, or 33.7%, year over year.
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CRM&N delivers modest growth
CRM&N was the only growing product line: Q2 revenue increased $1.714 million, or 1.0%, to $173.712 million. First-half CRM&N sales rose $9.633 million, or 2.9%, to $341.976 million.
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Cash generation and free cash flow improved
First-half operating cash flow increased $9.292 million to $84.430 million from $75.138 million. After $46.700 million of property, plant and equipment purchases, calculated first-half free cash flow was $37.730 million, with capex equal to 5.2% of $903.690 million of first-half sales.
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Working capital and liquidity increased
Liquidity strengthened modestly: cash and equivalents increased $4.214 million from December 31 to $21.375 million, while working capital increased $55.438 million to $593.494 million and the current ratio rose to 3.73 from 3.32.
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KKR agreement fixes $127-per-share consideration
The announced KKR transaction offers $127 per common share in cash and has no financing condition. Parent and Merger Sub have equity and debt financing commitments, although closing remains subject to shareholder and regulatory conditions.
What to watch
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Volume-driven margin compression
Margins compressed sharply as gross margin declined 280 basis points year over year to 24.3%, and operating margin declined 510 basis points to 7.4%. Management attributed the gross-margin decline to lower fixed-cost absorption from lower production volumes.
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Product-line declines and weak new-product adoption
Other Markets Q2 sales fell $7.551 million, or 42.8%, to $10.090 million, primarily because of the Portable Medical Exit. Cardio & Vascular sales also declined $6.547 million, or 2.3%, to $280.308 million, with two new electrophysiology products below anticipated market adoption.
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Merger completion risk and $154 million break fee
New merger-specific risk factors state that the transaction may not close by the May 2, 2027 outside date; failure or a superior-proposal termination can require a $154 million Company termination fee. Closing requires approval by holders of a majority of outstanding common shares, regulatory clearances, and no material adverse effect.
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Merger restrictions and elevated professional costs
The pending merger may constrain operations and distract management: the agreement restricts certain asset transactions, new business lines, indebtedness, and capital expenditures. The company reported $9.093 million of Q2 professional fees, including $0.6 million related to a stockholder activist matter and $1.8 million for securities class-action defense.
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High debt balance despite covenant headroom
Debt remained substantial at $1.238 billion net of issuance costs and discounts, including $50 million outstanding under the revolver. Although covenant headroom was solid at 2.9x net leverage versus a 5.00x maximum, Q2 interest expense increased $0.381 million to $10.135 million.
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Impairment and restructuring charges pressure earnings
Q2 restructuring and other charges rose $6.786 million to $9.437 million, including $5.9 million of fixed-asset impairment charges due primarily to revised expectations for future use of certain assets. These charges helped drive operating income down $24.810 million, or 41.8%, to $34.528 million.
Management's outlook
No quantitative revenue or EPS outlook was provided in the 10-Q. Management expects 2026 year-over-year sales growth to be primarily affected by lower sales of three new products due to lower-than-anticipated market adoption.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.