Activist Irenic takes a stake in Integer. Here’s what could be next for the

Company: Integer Holdings Corp (ITGR)

Business: Integer Holdings Corporation is a medical device contract development and manufacturing company. Its brands include Greatbatch Medical and Lake Region Medical. The company’s Cardio & Vascular product line offers a range of components, subassemblies, and finished devices used in interventional cardiology, structural heart, heart failure, peripheral vascular, neurovascular, interventional oncology, electrophysiology, vascular access, infusion therapy, hemodialysis, urology and gastroenterology procedures. Its interventional cardiology portfolio is focused primarily on the design, development and manufacture of catheter and wire-based technologies intended to diagnose and treat cardiac disease. Its electrophysiology products include devices used by electrophysiologists and interventional cardiologists for the treatment of cardiac arrythmias, such as atrial fibrillation.

Stock Market Value: $3.01B ($85.78 per share)

Activist: Irenic Capital Management

Ownership: greater than 3%

Average Cost: n/a

Activist Commentary: Irenic Capital was founded in October 2021 by Adam Katz, a former portfolio manager at Elliott Investment Management, and Andy Dodge, a former investment partner at Indaba Capital Management. Irenic invests in public companies and works collaboratively with firm leadership. The firm’s activism has thus far primarily focused on strategic activism, recommending spinoffs and sales of businesses.

What’s happening

On Dec. 18, it was reported that Irenic took a position of more than 3% in Integer Holdings and is calling for a board refreshment and the exploration of a potential sale of the company.

Behind the scenes

Integer Holdings is a medical device contract development and manufacturing organization (“CDMO”). The company acts as an outsourced design and development partner for original equipment manufacturers (“OEMs”), such as Medtronic, Boston Scientific and Johnson & Johnson. When developing new medical devices, OEMs typically outsource certain components to third parties, who then become responsible for those parts for the entire lifecycle of the product. Integer is the largest of such companies and the only publicly traded pure-play medical device CDMO. From an end market perspective, the company specializes in cardiovascular and neuromodulation applications, which are generally considered to be very high quality because of their interventional, and therefore highly sticky nature. Moreover, the stringent regulatory and FDA approval requirements for these markets create very high barriers to change. However, despite this strong market position and competitive moat, the company’s share price has struggled, down nearly 40% in the past year.

The catalyst for this downturn was Integer’s most recent quarterly report, which disclosed that the market demand for three specific products fell short of the…