New Jersey-based medical device manufacturer, Integra LifeSciences Holdings Corporation IART reported adjusted earnings per share (EPS) of 74 cents in the first quarter of 2016, which were 2 cents short of the year-ago adjusted number. However, adjusted EPS beat the Zacks Consensus Estimate by a penny. Including the one-time item, the company reported net income of 31 cents compared to net income from continuing operations of 25 cents per share. Revenue Details Total revenue in the reported quarter increased 16.9% year over year to $236.2 million, ahead of the Zacks Consensus Estimate of $231 million. Excluding the contribution of revenues from acquisitions, discontinued products and the effect of currency exchange rates, organic revenues increased 8.9% year over year, in line with management’s expectation. The first quarter’s solid revenue growth was primarily driven by strength observed in the Regenerative product portfolios of both the company’s Specialty Surgical Solutions and Orthopedics and Tissue Technologies segments. In terms of product categories, revenues from the company's Specialty Surgical Solutions rose 7.9% (up 8.5% at CER) to $151.2 million, aided by a strong performance in the dural repair franchise, which grew in low teens in the reported quarter largely due to increased volumes driven by new customer wins for both DuraGen and DuraSeal. Further, management witnessed consistent, strong momentum in Integra’s Precision Tools and Instruments franchise, which increased by more than 7% in the first quarter. Orthopedics and Tissue Technologies’ revenues came in at $85.6 million in the first quarter, up 37% year over year (up 37.5% at CER and up 11% organically). Regenerative Technologies, the largest franchise in the segment, led the overall growth. Sales of this segment’s extremities franchise were up over 20% in the first quarter, driven by the addition of Salto ankle. However, TEI product sales were softer than expected as run rates for the private-label business were lower than initially projected. Margin Trends Gross margin expanded 134 basis points (bps) to 64.2% in the reported quarter, primarily due to the favorable product mix with regenerative technology products outperforming other franchises. While selling, general and administrative expenses increased 20% to $111.9 million in the reported quarter, research and development expenses rose 30.4% to $14.5 million. Adjusted operating margin (excluding amortization of intangible asset) experienced a contraction of 53 bps to 10.8% in the first quarter. Financial Position Integra LifeSciences exited the first quarter of 2016 with cash and cash equivalents of $77.1 million, up from $48.1 million as of Dec 31, 2015. For the first quarter of 2016, net cash flow from operating activities was $19.2 million, lower than $24.9 million in 2015. 2016 Outlook Integra has raised the lower end of its full-year 2016 revenue guidance to an updated range of $985 million–$1 billion, reflecting annualized growth of 8% organically (the earlier range was $975 million–$1 billion; organic growth of 7%). The Zacks Consensus Estimate for 2016 revenues is pegged at $985 million, at the lower end of the guidance. The company currently expects its 2016 adjusted EPS in the range of $3.38–$3.50 ($3.35–$3.50). The Zacks Consensus Estimate for adjusted EPS is pegged at $3.42, within the company's guidance. Our Take Integra Lifesciences kick started the year 2016 on an impressive note. Both earnings and revenues were ahead of the Zacks Consensus Estimate. Strong year-over-year improvement on the revenue front, in particular, is indicative of the company's healthy growth via organic and inorganic means across all its segments. While the topline was robust for Integra, its sluggish bottom-line performance was a tad disappointing. However, we should note that pressure was largely due to the company’s significant investment in selling, marketing, clinical and product development, which according to management will continue through the first half of 2016. Integra encouragingly noted that this will lead to greater margin expansion in the back half of 2016. We, however, remain concerned about the unfavorable foreign currency fluctuations that can considerably hamper Integra's financial performance in the coming quarters. We believe the company will successfully overcome these hurdles soon, backed by new product launches and an efficient management team. Zacks Rank Currently, Integra has a Zacks Rank #3 (Hold). Some better-ranked medical stocks are Anika Therapeutics Inc. ANIK, ANI Pharmaceuticals, Inc. ANIP and AlliquaBioMedical, Inc. ALQA. All the three stocks sport a Zacks Rank #1 (Strong Buy). 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