Group 1 - The company has been experiencing strong demand for its products, which aligns with initial expectations [1] - The company holds a leadership position in attractive markets, supported by strong brand equity and effective commercial execution [2]

Core Insights - The company has experienced strong demand for its products, which aligns with initial expectations [1] - The company holds a leadership position in attractive markets, supported by strong brand equity and effective commercial execution [2]

Integra LifeSciences FY Conference Summary Company Overview - **Company**: Integra LifeSciences (NasdaqGS:IART) - **Date of Conference**: September 10, 2025 Key Points Industry and Market Position - **Market Leadership**: Integra holds a leadership position in attractive markets, particularly in neurosurgery, tissue technologies, and ENT (Ear, Nose, and Throat) [6][18] - **Demand Resilience**: There is a strong and resilient demand for Integra's products, supported by demographic shifts such as an aging population and increasing neurological conditions [18][19] Financial Performance and Growth Strategy - **Growth Opportunities**: The company sees tremendous opportunities for continued growth through organic growth, innovation, and potential inorganic opportunities in the future [6][19] - **Portfolio Prioritization**: A thorough portfolio assessment has been completed, guiding capital allocation decisions to focus on high-growth areas [19][20][24] - **2026 Expectations**: Growth is expected in 2026 compared to 2025, particularly due to the resolution of supply chain issues and the impact of shipholds in 2025 [53][54] Operational Challenges and Compliance - **Operational Challenges**: The company faces deeper operational and execution challenges than anticipated, but these are considered fixable [7][30] - **Compliance Master Plan (CMP)**: The CMP is a top priority, with significant progress made in site assessments and remediation work [30][31] - **Leadership Changes**: Strengthening of leadership teams in quality and operations has been a focus, including the establishment of a supply chain control tower [8][32] Cost Management and Efficiency - **Cost Reduction Initiatives**: An initial cost reduction initiative targeting $25 to $30 million over the next 12 to 18 months has been announced to improve profitability [35][36] - **Focus on COGS and OPEX**: The company is targeting improvements in Cost of Goods Sold (COGS) and operational expenditures (OPEX) to enhance efficiency and profitability [35][36] Product Development and Pipeline - **Product Loyalty**: Strong loyalty from surgeons towards Integra's products has been noted, particularly in neurosurgery [23][42] - **Regulatory Approvals**: The company is pursuing PMAs (Pre-Market Approvals) for key products, including SurgiMend and DozeWorld, with significant market potential [46][47] - **R&D Focus**: Investments in R&D are being prioritized in areas that will enhance clinical evidence and support product leadership [49] Market Dynamics and Reimbursement Landscape - **Wound Care Landscape**: The reimbursement landscape is evolving, with a focus on clinical evidence and cost-effectiveness, which is seen as a growth opportunity for Integra [60][61] - **Consolidation Trends**: There may be shifts in the market leading to consolidation among players, with Integra positioned to benefit from these changes [65] Internal Culture and Team Dynamics - **Company Culture**: A strong commitment to the company's purpose of restoring patients' lives is evident among employees, fostering a resilient and collaborative team environment [14][16] - **Prioritization of Efforts**: The company is focused on aligning efforts towards the most impactful priorities to drive growth and operational excellence [15][19] Future Outlook - **Encouraging Momentum**: There is optimism about the company's future, with expectations of improved performance and the ability to address operational challenges effectively [54][69] - **Focus on Execution**: The immediate focus remains on execution and improving operational reliability, with a long-term view towards growth and shareholder value creation [50][56] This summary encapsulates the key insights and strategic directions discussed during the Integra LifeSciences FY Conference, highlighting the company's market position, operational challenges, growth strategies, and future outlook.

Financial Data and Key Metrics Changes - The company expects gross margins to decline by approximately 300 basis points in 2025, an increase from the previously expected decline of 200 basis points [15][17][36] - The tariff impact was lowered from $22 million to about $30 million for 2025 due to tariff implementation delays and identification of additional products eligible for exemptions [18][19] Business Line Data and Key Metrics Changes - In the Codman Specialty Surgical segment, mid-single-digit growth rates were achieved despite supply constraints, indicating strong underlying demand [39][40] - The ENT segment faced challenges due to reimbursement market pressures, particularly in balloon sinuplasty, but the company is working with payers to address these issues [42][43] Market Data and Key Metrics Changes - The company anticipates growth in 2026 compared to 2025, driven by improvements in quality management and supply reliability [34] - The demand for products remains strong, with the company focusing on stabilizing supply to meet this demand [65] Company Strategy and Development Direction - The company is focused on building foundational capabilities to improve operational execution and reliability [3][5] - A profitability initiative has been launched, aiming for annualized savings of $25 million to $30 million over the next 12 to 18 months, with a focus on operational efficiencies and cost management [23][24][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledges operational and execution challenges but emphasizes the importance of prioritization and disciplined execution to drive improvements [7][9] - The company expects 2025 to represent the peak year for ship hold impacts, with a recovery anticipated in 2026 [34] Other Important Information - The company has completed the first phase of its margin improvement plan, which is expected to contribute $25 million to $30 million by 2026 [5][23] - The focus on international market expansion and innovation is seen as critical for sustainable growth [66] Q&A Session Summary Question: What surprised you to the upside and downside since taking over as CEO? - Management noted strengths in brand and commercial execution but recognized deeper operational challenges than anticipated [2][3] Question: Can you discuss the variables affecting guidance for the back half of the year? - Faster execution of remediation plans could help reach the high end of guidance, while delays could lead to the lower end [10][11] Question: What are the specific areas targeted for the profitability initiative? - The initiative focuses on operational efficiencies and optimizing operating expenses [23][24] Question: What are the company's capital allocation priorities? - The primary focus remains on debt reduction in the near term [58] Question: What are the top growth drivers for the next two to three years? - Stabilizing supply, international market penetration, and category expansion through innovation are identified as key growth drivers [65][66]

Group 1 - Integra LifeSciences Holdings Corporation announced that CEO Mojdeh Poul and CFO Lea Knight will present at two upcoming investor healthcare conferences [1] - The conferences include the Wells Fargo Healthcare Conference on September 3, 2025, and the Morgan Stanley Healthcare Conference on September 10, 2025 [3] - A live webcast of the presentations will be available on the Integra LifeSciences investor relations website [1]

Core Insights - Integra LifeSciences reported Q2 2025 revenue of $415.6 million, exceeding the consensus estimate of $395.0 million by 5.2% [1][5] - Adjusted EPS for the quarter was $0.45, slightly above the expected $0.44, but down 28.6% year-over-year from $0.63 [1][2] - The company faced significant challenges, including a $511 million non-cash goodwill impairment and declining margins, leading to negative free cash flow of ($11.2 million) [1][8][9] Financial Performance - Revenue for Q2 2025 was $415.6 million, a decrease of 0.6% from Q2 2024's $418.2 million [2][5] - Adjusted gross margin fell to 60.7%, down from 65.2% year-over-year, reflecting profitability pressures [2][8] - Adjusted EBITDA decreased by 15% to $71.2 million compared to $83.8 million in Q2 2024 [2][8] Segment Performance - The Codman Specialty Surgical division generated $304.0 million in revenue, accounting for about 70% of total sales, with modest organic growth of 0.3% [6] - The Tissue Technologies segment, representing approximately 30% of revenue, saw a decline of 4.1% year-over-year, although Integra Skin rebounded with 20% growth [7] - Instruments revenue dipped 2.8% organically due to order timing issues [6] Operational Challenges - The company experienced negative free cash flow and increased net debt, which rose to $1.59 billion, with leverage at 4.5 times EBITDA [9] - Tariff impacts reduced EPS by $0.04 in the quarter, with projected impacts of $0.22 on adjusted EPS [10] - Ongoing compliance and operational improvements are being prioritized, with a focus on resolving FDA warning letters [11] Strategic Focus and Outlook - Integra aims to drive innovation, expand internationally, and enhance operational performance to compete against larger medical technology firms [4] - Management provided guidance for Q3 2025 revenue between $410–$420 million and full-year revenue forecast of $1.655 billion to $1.680 billion, reflecting a 2.8% to 4.3% increase from the previous year [12] - Organic growth expectations for the full year are now set at 0.6% to 2.1% [12]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents Integra LifeSciences' unaudited condensed consolidated financial statements, including operations, balance sheets, cash flows, and equity changes, with detailed notes [Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) | Metric (Dollars in thousands, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue, net | $415,605 | $418,175 | $798,258 | $787,047 | | Total costs and expenses | $928,279 | $421,204 | $1,326,429 | $786,112 | | Operating (loss) income | $(512,674) | $(3,029) | $(528,171) | $935 | | Net loss | $(484,073) | $(12,402) | $(509,366) | $(15,683) | | Net loss per share (Basic and diluted) | $(6.31) | $(0.16) | $(6.65) | $(0.20) | | Comprehensive loss | $(490,874) | $(20,482) | $(512,702) | $(19,303) | - The company reported a significant increase in net loss for both the three and six months ended June 30, 2025, **primarily due to a $511.4 million goodwill impairment charge**[9](index=9&type=chunk)[223](index=223&type=chunk) [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric (Dollars in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Total current assets | $1,142,828 | $1,081,681 | | Total assets | $3,667,905 | $4,037,424 | | Total current liabilities | $929,806 | $922,126 | | Total liabilities | $2,629,244 | $2,492,144 | | Total stockholders' equity | $1,038,661 | $1,545,280 | - Total assets decreased by approximately **$369.5 million** from December 31, 2024, to June 30, 2025, largely influenced by a significant goodwill impairment charge[11](index=11&type=chunk)[59](index=59&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity (Dollars in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(2,338) | $56,157 | | Net cash used in investing activities | $(57,568) | $(376,163) | | Net cash provided by financing activities | $14,238 | $264,928 | | Effect of exchange rate changes on cash and cash equivalents | $17,207 | $(6,088) | | Net decrease increase in cash and cash equivalents | $(28,461) | $(61,166) | | Cash and cash equivalents at end of period | $217,914 | $215,236 | - Operating cash flows shifted from a positive **$56.2 million** in H1 2024 to a negative **$2.3 million** in H1 2025, **primarily due to the impact of quality and operational issues on revenue and associated costs**[266](index=266&type=chunk) - Investing activities used **significantly less cash** in H1 2025 (**$57.6 million**) compared to H1 2024 (**$376.2 million**), **mainly because the prior year included a large business acquisition (Acclarent)**[269](index=269&type=chunk)[270](index=270&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) | Metric (Dollars in thousands) | Balance, January 1, 2025 | Net Loss | Other Comprehensive (Loss) Income, net of tax | Issuance of Common Stock | Share-Based Compensation | Other Adjustments | Balance, June 30, 2025 | | :---------------------------- | :----------------------- | :------- | :-------------------------------------------- | :----------------------- | :----------------------- | :---------------- | :--------------------- | | Total Equity | $1,545,280 | $(509,366) | $(3,336) | $(1,373) | $7,201 | $279 | $1,038,661 | - Total stockholders' equity decreased from **$1,545.3 million** at January 1, 2025, to **$1,038.7 million** at June 30, 2025, **primarily driven by a net loss of $509.4 million**[16](index=16&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. BASIS OF PRESENTATION](index=7&type=section&id=1.%20BASIS%20OF%20PRESENTATION) - The financial statements are unaudited and include all normal recurring adjustments necessary for fair presentation, condensed or omitted certain GAAP disclosures per Form 10-Q instructions[18](index=18&type=chunk) - Management makes significant estimates and assumptions affecting reported amounts, including allowances, inventory valuation, intangible asset valuation, impairment tests, taxes, and contingent liabilities[19](index=19&type=chunk) - The company is evaluating the impact of new FASB ASUs 2023-09 (Income Tax Disclosures) and 2024-03/2025-01 (Expense Disaggregation Disclosures), **effective for fiscal years beginning after December 15, 2024, and 2026 respectively**[20](index=20&type=chunk)[21](index=21&type=chunk) - Cash and cash equivalents decreased from **$246.4 million** at December 31, 2024, to **$217.9 million** at June 30, 2025. Short-term investments increased from **$27.2 million** to **$35.7 million** over the same period[23](index=23&type=chunk)[24](index=24&type=chunk) - The company is monitoring trade relations and tariffs, which are expected to significantly impact future costs of revenue. An amendment to the Senior Credit Facility was made in June 2025 to modify financial covenants through December 31, 2026, to maintain compliance[26](index=26&type=chunk)[27](index=27&type=chunk) [2. ACQUISITIONS AND DIVESTITURES](index=9&type=section&id=2.%20ACQUISITIONS%20AND%20DIVESTITURES) - On October 2, 2024, Integra acquired product rights for Durepair Regeneration Matrix from Medtronic plc for **$45.0 million**, accounted for as an asset acquisition[33](index=33&type=chunk)[34](index=34&type=chunk) - On April 1, 2024, Integra acquired Acclarent, Inc. for approximately **$282.0 million** in cash, enhancing its position in the ENT specialty device market and reporting its results within the Codman Specialty Surgical segment[35](index=35&type=chunk)[36](index=36&type=chunk) Acclarent Acquisition: Fair Values of Assets Acquired and Liabilities Assumed (Dollars in thousands) | Category | Estimated Fair Value | | :------------------------ | :------------------- | | Total current assets | $44,759 | | Property, plant and equipment, net | $7,716 | | Right of use asset - operating leases | $989 | | Intangible assets, net | $222,000 | | Goodwill | $62,482 | | Deferred tax assets | $6,895 | | Total assets acquired | $344,841 | | Total current liabilities | $11,653 | | Lease liability - operating leases | $624 | | Deferred tax liabilities | $54,753 | | Total liabilities assumed | $67,030 | | Net assets acquired | $277,811 | - The estimated fair value of acquired intangible assets for Acclarent was determined using the multi-period, excess earnings method with a discount rate of **12.2%** and a weighted average useful life of **11 years**[39](index=39&type=chunk)[40](index=40&type=chunk) [3. REVENUES FROM CONTRACTS WITH CUSTOMERS](index=11&type=section&

Core Insights - Integra LifeSciences reported revenue of $415.61 million for the quarter ended June 2025, reflecting a year-over-year decline of 0.6% and an EPS of $0.45 compared to $0.63 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $395.64 million by 5.05%, and the EPS also surpassed the consensus estimate of $0.43 by 4.65% [1] Revenue Performance - Organic Revenue Growth was -1.4%, better than the average estimate of -6.3% based on four analysts [4] - Codman Specialty Surgical revenue totaled $303.96 million, exceeding the average estimate of $294.18 million by four analysts, representing a year-over-year change of +0.7% [4] - Tissue Technologies revenue was $111.65 million, compared to the estimated $101.48 million, showing a year-over-year decline of -4.1% [4] - Wound Reconstruction and Care revenue within Tissue Technologies was $84.75 million, surpassing the average estimate of $80.24 million, with a year-over-year change of -3.4% [4] - Private Label revenue in Tissue Technologies was $26.9 million, exceeding the two-analyst average estimate of $25.3 million, reflecting a year-over-year decline of -6.3% [4] Stock Performance - Shares of Integra have returned -8.5% over the past month, contrasting with the Zacks S&P 500 composite's +2.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were $415.6 million, reflecting a decline of approximately 0.6% on a reported basis and 1.4% on an organic basis compared to the prior year [17][18] - Adjusted EPS for the quarter was 45 cents, representing a 29% decline compared to the previous year [18] - Gross margin for the quarter was 60.7%, down 450 basis points year over year, primarily due to higher operational costs associated with remediation efforts [19] - Operating cash flow for the quarter was $9 million, with free cash flow being negative $11.2 million due to continued capital investments [24] Business Line Data and Key Metrics Changes - Specialty Surgical Segment (CSS) reported revenues of $304 million, reflecting growth of 0.7% on a reported basis and a decline of 0.3% on an organic basis [20] - Tissue Technology revenues were $111.6 million, down approximately 4% on both a reported and organic basis compared to the prior year [23] - The ENT business experienced growth below expectations due to reimbursement-driven market pressure, despite double-digit growth in certain product lines [21][62] Market Data and Key Metrics Changes - International performance within CSS declined by low single digits, primarily due to ship holds, which offset strong underlying demand from international markets, including high single-digit growth in China [22] - The company noted a slowdown in private label demand due to competitive pressures, impacting overall market expectations [54] Company Strategy and Development Direction - The company is focused on transforming its quality management system and executing its compliance master plan, which is seen as critical for operational readiness and risk reduction [8][14] - Strategic investments and disciplined cost management are being emphasized to enhance supply chain reliability and drive long-term growth [14][15] - The company is optimistic about the proposed Medicare payment changes favoring evidence-backed, cost-effective wound reconstruction products, positioning it well for future growth [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the leadership positions in neurosurgery and tissue technology, citing sustained demand in attractive markets [14] - The company anticipates a revenue range of $410 million to $420 million for Q3 2025, representing approximately 8% to 10% reported growth [13] - For the full year, the revenue guidance has been updated to a range of $1.655 billion to $1.68 billion, reflecting increased visibility into ship hold and remediation outlook [26][27] Other Important Information - A goodwill impairment charge of approximately $511 million was recorded during the quarter, primarily driven by macroeconomic uncertainties [18] - The company ended the quarter with total liquidity of $1.1 billion, including $254 million in cash and short-term investments [25] Q&A Session Summary Question: Thoughts on CMS' proposed 2026 reimbursement changes - Management indicated that the majority of the business is in the acute care setting, so immediate impacts are not expected, but long-term opportunities are seen as favorable for the wound reconstruction portfolio [35][36] Question: Q3 EPS guidance below street expectations - Management explained that the Q3 guidance is consistent with Q2 performance, with a revenue step-up expected in Q4 driven by seasonal lift and supply recovery [38][39] Question: Impact of ship holds and compliance programs - Management expressed confidence in the progress made and estimated a $100 million impact for the year, with no new material ship holds anticipated [44][45] Question: Ability to win back customers after supply issues - Management noted that once products come off ship holds, they typically see a return to market share, although reintroducing some products may require additional effort [50][51] Question: Revenue growth expectations and guidance adjustments - Management clarified that the updated guidance reflects a more refined view of the full-year impact from ship holds and market demand declines [54] Question: Gross margin softness and future expectations - Management attributed the decline in gross margins to manufacturing variances and operational inefficiencies, projecting a full-year gross margin decline of about 300 basis points [58][59] Question: Expectations for ENT business growth - Management expects mid-single-digit growth for the ENT business moving forward, supported by investments in new products and clinical evidence [63][64]

Financial Performance - Q2 2025 revenue was $415.6 million, a decrease of 0.6% compared to Q2 2024's $418.2 million[37] - Organic revenue decreased by 1.4% to $412.4 million in Q2 2025 compared to $418.2 million in Q2 2024[9, 38] - Adjusted EPS for Q2 2025 was $0.45, a decrease of 28.6% compared to $0.63 in Q2 2024[10, 37] - Adjusted EBITDA margin decreased by 290 bps to 17.1% in Q2 2025 compared to 20.0% in Q2 2024[10, 40] - Adjusted gross margin decreased by 450 bps to 60.7% in Q2 2025 compared to 65.2% in Q2 2024[11, 37] - Operating cash flow was $8.9 million with a negative 32.7% free cash flow conversion in Q2 2025[11, 39] Segment Performance - Codman Specialty Surgical Q2 2025 revenue was $304.0 million, a 0.7% increase, with organic growth down 0.3% to $300.9 million[13] - Tissue Technologies Q2 2025 revenue was $111.6 million, a decrease of 4.1%[18] Guidance - Q3 2025 reported revenue is projected to be between $410 million and $420 million, with organic growth between +7.3% and +9.9%[28] - Full year 2025 reported revenue is projected to be between $1.655 billion and $1.680 billion, with organic growth between +0.6% and +2.1%[29, 30]