Integer sold slightly less in the latest three months, and kept a lot less of each dollar.
Revenue fell 2.6% to $464.1 million from the comparable three-month period a year earlier. Gross margin dropped to 24.3% from 27.1%, while operating margin fell to 7.4% from 12.5%. Shares still closed at $125.08 on August 4, up 0.5% for the day.
The key detail is not simply that sales slipped. Integer says lower production volumes reduced the amount of fixed manufacturing cost spread across those sales, turning a modest top-line decline into a much larger profit contraction.
"Gross profit for the second quarter and first six months of 2026 decreased $16.2 million and $26.9 million, respectively, primarily driven by lower fixed cost absorption due to lower production volumes."
Integer Holdings, 10-Q, August 4, 2026
That explanation accounts for much of the arithmetic: gross profit fell 12.6%, operating income fell 41.8%, and net income dropped 36.2% to $23.6 million. Integer's diluted EPS fell to $0.69 from $1.04, helped somewhat by a 4.4% reduction in diluted shares.
One business line made the revenue comparison harder. Other Markets sales fell $7.6 million, or 43%, with the company pointing to its Portable Medical Exit.
"Other Markets sales for the second quarter and first six months of 2026 decreased $7.6 million, or 43%, and $16.1 million or 45%, respectively, versus the comparable 2025 periods, primarily due to the Portable Medical Exit."
Integer Holdings, 10-Q, August 4, 2026
The exit is a disclosed explanation for the smaller sales base in that line. It does not, by itself, explain every change in consolidated profitability, but it shows why production volume matters so much to the quarter's margin profile.
The balance sheet adds a second tension. Inventory rose 8.1% to $288.1 million, and accounts receivable increased 12.1% to $338.7 million, even as revenue declined. Integer does not say why those balances moved. Cash fell 7.6% to $21.4 million, while the company carried $1.2 billion of net debt.
That makes the operating margin drop more consequential than a one-line sales decline would suggest. The company is still coming off a strong annual growth run: 2025 revenue reached $1.9 billion, up 8.0%, with a full-year operating margin of 11.9%. The latest three-month result sits well below that recent annual level.
Integer's valuation provides context for that difference. The stock trades at 43.3 times trailing earnings, with an earnings yield of 2.3%. The question is not whether the company can post growth over a full year; it is how much production volume the business needs to keep that growth from losing its margin support.
The next quarterly report's inventory, receivables, and Other Markets disclosures will show whether those balances and the Portable Medical Exit are moving back toward the company's broader operating pattern.
Integer sold a little less, while its fixed costs noticed a lot more, according to the 10-Q.