What happened
Shares of Integra LifeSciences (IART -0.31%) were crashing on Tuesday, with the stock falling 20.7% as of 3:39 p.m. ET. The steep decline came after the company revealed in a regulatory filing that it initiated a global recall of all SurgiMed, PriMatrix, Revize, and TissueMend surgical tissue products made in its Boston, Massachusetts facility that were distributed between March 1, 2018, and May 22, 2023. Manufacturing at this facility will also be temporarily suspended.
Integra stated that the recall was voluntary. However, it was done "after consultation with the U.S. Food and Drug Administration."
The company said that an internal investigation found that products could have been distributed with higher levels of endotoxins than are allowed. These endotoxins can cause an immune response.
So what
This global recall isn't just embarrassing for Integra; it's also costly. The company said it expects to write-off inventories of around $22 million. Products made at the Boston facility make up roughly 5% of the company's total revenue.
Integra isn't sure at this point exactly how long the manufacturing halt at the Boston facility will be. If the suspension of manufacturing extends through the rest of 2023, the company estimates that its full-year revenue will be reduced by $60 million, with adjusted earnings per share $0.35 lower than previously projected.
Now what
Integra is now scrambling to implement additional quality controls to ensure that the issues resulting in higher endotoxin levels are addressed. The company expects to provide more information on the financial impact of the recall and manufacturing stoppage in its second-quarter earnings call. In the meantime, the healthcare stock could remain under a dark cloud.
