Total reported revenues of $368.9 million declined 3.1% on a reported basis and declined 2.5% on an organic basis compared to the prior year. Organic growth excluding Boston was 1.6%. Revenue exceeded the outlook the Company provided in February. The Company reported GAAP gross margin of 56.1%, compared to 61.1% in the first quarter of 2023. Adjusted gross margin was 64.4%, compared to 67.3% in the prior year. Integra LifeSciences Reports First Quarter 2024 Financial Results PRINCETON, N.J., May 6, 2024 - I ...

PRINCETON, N.J., May 06, 2024 (GLOBE NEWSWIRE) -- Integra LifeSciences Holdings Corporation (NASDAQ:IART), a leading global medical technology company, today reported financial results for the first quarter ending March 31, 2024. First Quarter 2024 Highlights First quarter revenues of $368.9 million declined 3.1% on a reported basis and declined 2.5% on an organic basis compared to the prior year. Revenue increased 1.6% on an organic basis excluding BostonFirst quarter GAAP earnings per diluted share of $(0 ...

PRINCETON, N.J., April 30, 2024 (GLOBE NEWSWIRE) -- Integra LifeSciences Holdings Corporation (NASDAQ:IART), a leading global medical technology company, is pleased to announce that following a successful Q1 2024 U.S. relaunch of its CereLink® ICP Monitoring System, the innovative product will be featured at the upcoming AANS Annual Scientific Meeting from May 3 through 6, 2024, in Chicago, Illinois. The CereLink ICP Monitoring System provides clinicians with uncompromised advanced continuous ICP monitoring ...

PRINCETON, N.J., April 18, 2024 (GLOBE NEWSWIRE) -- Integra LifeSciences Holdings Corporation (NASDAQ: IART), a leading global medical technology company, today announced that it has rescheduled the release of the Company’s first quarter 2024 financial results to Monday, May 6, 2024. In conjunction with the earnings release, Integra’s management team will host a conference call at 8:30 a.m. EDT. A live webcast will be available on the Investors section of the Company’s website at investor.integralife.com. F ...

PRINCETON, N.J., April 18, 2024 (GLOBE NEWSWIRE) -- Integra LifeSciences Holdings Corporation (NASDAQ: IART), a leading global medical technology company, today announced that it has rescheduled the release of the Company’s first quarter 2024 financial results to Monday, May 6, 2024. In conjunction with the earnings release, Integra’s management team will host a conference call at 8:30 a.m. EDT. A live webcast will be available on the Investors section of the Company’s website at investor.integralife.com. F ...

Integra LifeSciences Holdings Corporation (IART) is well-poised to grow in the coming quarters, given the healthy demand for its industry-leading products within Codman Specialty Surgical (“CSS”). The company’s strong overseas performance is encouraging, while strategic initiatives undertaken will help reach a wider customer base. In addition, efforts to optimize the portfolio with new acquisitions and product developments buoy optimism. Meanwhile, headwinds from currency fluctuations and escalated expenses ...

Revenue and Segment Performance - Codman Specialty Surgical (CSS) segment represents approximately two-thirds of the company's total revenue, while Tissue Technologies (TT) segment accounts for about one-third[19] - The company's CSS segment is a global leader in neurosurgery and one of the top three providers in precision, specialty, and general surgical instruments[19] - The company's TT segment focuses on complex wound surgery, surgical reconstruction, and peripheral nerve repair, with products like Integra Dermal Matrices and NeuraGen®[33] - The CSS business has experienced growth driven by geographic expansion and new product registrations in markets such as China, Japan, and Europe, with expectations for continued growth in the near-to-long term[44] - Q4 revenues tend to be stronger due to increased hospital purchases aligning with budget cycles, with Q1 typically having lower revenues[55] Product Development and Launches - The company completed enrollment in the DuraSorb U.S. IDE clinical study for two-stage breast reconstruction in June 2023, with FDA approvals expected in 2025[23][42] - In 2023, the company launched CUSA® Clarity Tips for surgical procedures and expanded its product offerings in international markets, including MicroMatrix® and Certas Plus® Programmable Valve in Europe[23][24] - The company received FDA 510(k) clearance for MicroMatrix® Flex in 2023[43] - The CUSA Clarity platform was updated with new ultrasonic handpiece and integrated electrosurgical capabilities, and a modified 23 kHz CUSA Electrosurgery Module (CEM) for Clarity handpieces was launched in August 2023[44] - The Aurora Surgiscope, a single-use medical device for cranial surgery, received 510(k) clearance from the FDA in Q4 2023[46] - The CereLink® ICP Monitor System was voluntarily removed globally in 2022 due to out-of-range readings, but the company received 510(k) clearance from the FDA on February 4, 2024, with plans to resume U.S. shipments in Q1 2024[48] Acquisitions and Strategic Expansions - The company acquired Acclarent, Inc. in December 2023 to strengthen its ENT product portfolio and expand its presence in the ENT segment[23] - The company has acquired two businesses between January 2021 and December 2023 for a total cost of $358.4 million, including ACell, Inc. for $306.9 million and Surgical Innovation Associates, Inc. for $51.5 million[111] - The company entered into a definitive agreement to acquire Acclarent from Johnson & Johnson for $275.0 million in cash, with an additional $5.0 million payment upon achieving a regulatory milestone[113] - The company's new facility in Suzhou, China, is part of its In-China-For-China strategy to expand assembly capabilities[24] Regulatory Compliance and Quality Assurance - The company initiated a voluntary global recall of products manufactured at the Boston facility in Q2 2023, including Primatrix®, Surgimend®, Revize™, and TissueMend™[41] - The company is subject to extensive FDA regulations, including Quality System Regulation and Good Manufacturing Practices, which can impact product approvals and manufacturing[58] - The company's manufacturing facilities are subject to FDA inspections and must comply with Quality System Regulations, with most participating in the Medical Device Single Audit Program[70] - The company received a warning letter from the FDA related to quality system issues at its Boston manufacturing facility, impacting commercial distribution of products manufactured there[150] - The company initiated a voluntary global recall of all products manufactured at its Boston facility between March 1, 2018, and May 22, 2023[154] International Operations and Market Expansion - The company's international operations are subject to various laws and regulations, including the U.S. Foreign Corrupt Practices Act and local anti-bribery laws, which could restrict or prevent sales in certain countries[118] - The company's global business is exposed to operational and economic risks, including potential disruptions from trade tensions, tariffs, and geopolitical events such as the Russia-Ukraine conflict[120][121] - The company generates significant revenues in multiple foreign currencies, exposing it to currency exchange risk, particularly with transactions in Australian dollars, British pounds, Canadian dollars, Chinese yuan, Euros, Japanese yen, and Swiss francs[123] - The company's growth strategy involves expanding existing foreign operations and entering new jurisdictions, which may be complicated by customer acceptance, regulatory restrictions, and unfamiliar distribution channels[119] Financial Performance and Shareholder Returns - The company's total consolidated external debt as of December 31, 2023, was approximately $1.4 billion[171] - The company repurchased 928,485 shares at an average price of $37.17 per share during October 2023, as part of a $225 million stock repurchase program[207] - The company entered into a $125 million accelerated share repurchase (ASR) in August 2023, receiving 2.3 million shares initially and an additional 0.9 million shares upon early exercise[207] - The company accrued $2.5 million in excise tax related to share repurchases under the Inflation Reduction Act of 2022[209] - The company's Board authorized a new $225 million share repurchase program in July 2023, expiring on December 31, 2025, with $100 million remaining authorized as of December 31, 2023[210] - The company's cumulative shareholder return over five years (2018-2023) is compared to the S&P 500 and S&P Healthcare Equipment Index, based on a $100 investment[213] Competitive Landscape and Market Risks - The medical device industry is highly competitive, with competitors potentially offering lower-cost products or better reimbursement options[107] - The company's ability to compete effectively may be hindered by competitors with greater financial, technical, and marketing resources[107] - The company's profitability could be adversely affected by competitive pressures, including price competition, technological advancements by competitors, and changes in reimbursement rates[108][109] - The company's future success depends on its ability to compete effectively, respond to technological advances, and meet changing customer and regulatory requirements[108] - Market acceptance of the company's products depends on factors such as convincing customers of the technology's superiority, manufacturing efficiency, and favorable reimbursement status[130] Supply Chain and Operational Risks - The company maintains long-term supply contracts and sufficient inventory to mitigate disruptions in raw material availability, though some components are sourced from limited suppliers[50] - The company faces risks from global supply constraints, which could increase manufacturing costs and impact the availability of raw materials and components[140] - The company's supply chain and cost of goods may be negatively impacted by unanticipated price increases due to global economic disruptions, inflation, and geopolitical events[136] - The company may experience difficulties, delays, or unexpected costs from consolidating facilities and transferring manufacturing operations[138] - The company's facilities and suppliers are at risk of damage or disruption from natural disasters, geopolitical events, or other unforeseen circumstances[139] - The COVID-19 pandemic has caused disruptions in the global supply chain, including material shortages and increased costs for raw materials and logistics[174] Regulatory and Legal Risks - The company is subject to stringent domestic and foreign medical device regulations, and any adverse action could impact its ability to compete and its financial condition[144] - Compliance with the European Medical Device Regulation (MDR) has cost the company $46.6 million in 2023, with additional expenditures anticipated for ongoing certification efforts[147] - The company is subject to the U.S. Foreign Corrupt Practices Act (FCPA) and other international anti-bribery laws, with potential risks in its interactions with healthcare professionals abroad[152] - The company's products are subject to FDA and international regulatory reporting requirements, including recalls, which could harm its reputation and financial results[154][155] - The company faces risks from healthcare reform initiatives, including potential changes in FDA clearance processes and increased pricing pressures[156][158] - The company is subject to environmental, health, safety, and transportation laws, which may increase compliance costs and expose it to potential liabilities[163][164] - The company faces risks related to climate change, including physical risks to facilities and supply chain disruptions, as well as potential regulatory changes[165] - The company's business may be adversely affected by evolving environmental, social, and governance (ESG) expectations and regulations, potentially impacting investor and customer decisions[166] Intellectual Property and Cybersecurity - The company's intellectual property rights may not provide significant competitive advantage, and patents could be challenged or invalidated[177] - The company relies on unpatented trade secrets, which are difficult to protect and could be independently developed by competitors[178] - Cybersecurity risks are heightened due to reliance on internet technology and remote work, increasing vulnerability to cyber-attacks[184] - The company faces potential financial penalties and reputational harm if it fails to comply with data privacy laws such as HIPAA and GDPR[186] - The company maintains a comprehensive cybersecurity program, including regular audits and penetration tests, to protect sensitive information[188] - The company has not experienced any material cybersecurity incidents as of December 31, 2023, but acknowledges ongoing risks from cyber-attacks, ransomware, and other threats[195] Employee and Workforce Management - As of December 31, 2023, the company had approximately 3,946 regular full and part-time employees and 1,383 contingent, subcontracted, and outsourced partners, with 70% located in the United States[89] - The company expanded its Employee Resource Groups (ERGs) to seven in fiscal year 2023, focusing on diversity, inclusion, and career development[90] - The company conducts regular pay equity analyses to ensure fair compensation practices, adjusting pay as necessary based on role and scope[92] - The company offers comprehensive health and wellbeing programs, including health insurance, disability coverage, parental leave, and on-demand health advocates[98] - The company faces significant competition for key personnel, particularly in regions with labor shortages and remote work trends[167] Financial and Tax Risks - The company may incur additional tax liabilities due to changes in tax laws, including the adoption of a 15% global minimum tax regime in several jurisdictions[169] - The company's debt service obligations could impede growth by diverting cash flow from business expansion and acquisitions[172] - The company may face impairments or other charges related to goodwill and indefinite-lived intangible assets, which could materially affect its financial results[125] - The company may need to record impairment charges or accelerate amortization on certain trade names or technology-related intangible assets due to discontinued products or profitability assessments[128] Product Liability and Market Acceptance - The company is exposed to product liability claims, and its insurance may not cover all potential claims or be renewed at comparable costs[141] - Economic and political instability could reduce orders for the company's products or interrupt production and distribution[142] - Market acceptance of medical products depends on reimbursement policies, with potential impacts from legislative or regulatory reforms to reimbursement systems[76][77] - The company's products derived from animal sources, particularly bovine tissue, are subject to scrutiny and potential regulatory bans in certain countries due to concerns over disease transmission[160][161][162] - 43.4% of the company's 2023 revenue came from products containing materials derived from bovine tissue[160] Facilities and Operations - The company leases approximately 166,991 square feet of space in Princeton, NJ, for its principal headquarters, with the lease expiring in 2035[196] - The company operates manufacturing and research facilities in multiple locations globally, including the U.S., Europe, and Asia, with FDA-registered facilities[197] - The company's common stock trades on the Nasdaq Global Select Market under the symbol "IART," with approximately 749 stockholders of record as of February 27, 2024[202] Research and Development - The company's regenerative technology platform includes FDA-approved products for dermal tissue regeneration and peripheral nerve repair[40][43] - The CerebroFlo® EVD catheter with Endexo® technology demonstrated an average of 99% less thrombus accumulation compared to a market-leading EVD catheter in vitro[45] - The company focuses on surgical, neurologic, and regenerative care, with product lines developed from its engineered collagen technology platform[217] Data Privacy and Security - The company is subject to strict data privacy and security regulations, including the EU General Data Protection Regulation (GDPR), which imposes significant fines for non-compliance and requires prompt notice of data breaches[84] - Compliance with data privacy laws may require changes in business practices, complicate operations, and impact clinical research activities and product offerings involving clinical data[86]

Financial Performance - Q4 2023 - Total reported revenue was $397 million, a decrease of 0.2% compared to Q4 2022[19] - Organic revenue decreased by 1.2% compared to Q4 2022, but increased by 3.6% excluding Boston[20] - Adjusted EPS was $0.89, a decrease of 5.3% compared to Q4 2022[20] - Adjusted EBITDA margin was 25.3%, a 230 bps increase compared to 2022[4] - Operating cash flow was $58.7 million, with a 49.5% free cash flow conversion[20] Financial Performance - Full Year 2023 - Reported revenue was $1.542 billion, a decrease of 1.0% compared to 2022[43] - Organic revenue was flat compared to 2022, but increased by 5.5% excluding Boston[44] - Adjusted EPS was $3.10, a decrease of 7.7% compared to 2022[44] - Adjusted EBITDA margin was 24.0%, a 240 bps increase compared to 2022[37] - Operating cash flow was $140 million, with a 29.5% free cash flow conversion[44] Segment Performance - Q4 2023 - Codman Specialty Surgical (CSS) revenue was $271.6 million[9] - Tissue Technologies (TT) revenue was $125.4 million[14] - Neurosurgery grew 2.0%[9] - Instruments grew 3.0%[9] - Wound Reconstruction declined 11.1%[5] 2024 Outlook - Q1 2024 revenue is projected to be between $360 million and $365 million[55] - Q1 2024 organic growth is expected to be between 4.0% and 5.0%[48] - Full year 2024 revenue is projected to be between $1.603 billion and $1.618 billion[48]

[Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) This section provides an overview of Integra LifeSciences' financial results for Q4 and full-year 2023, highlighting key revenue and earnings trends [Fourth Quarter 2023 Financial Summary](index=1&type=section&id=Fourth%20Quarter%202023%20Financial%20Summary) In the fourth quarter of 2023, Integra LifeSciences reported a slight revenue decrease of 0.2% to $397.0 million, with organic revenue declining 1.2% Excluding the impact of the Boston facility recall, organic revenue grew by 3.6% GAAP earnings per share fell sharply to $0.25 from $0.63 in Q4 2022, and adjusted EPS also decreased to $0.89 from $0.94 Q4 2023 Key Financial Metrics | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Reported Revenues | $397.0M | $398.0M | -0.2% | | Organic Revenue Growth | -1.2% | N/A | N/A | | Organic Revenue Growth (Ex-Boston) | +3.6% | N/A | N/A | | GAAP EPS (Diluted) | $0.25 | $0.63 | -60.3% | | Adjusted EPS (Diluted) | $0.89 | $0.94 | -5.3% | | Adjusted EBITDA | $100.5M | $109.7M | -8.4% | [Full-Year 2023 Financial Summary](index=1&type=section&id=Full-Year%202023%20Financial%20Summary) For the full year 2023, total reported revenues decreased by 1.0% to $1,541.6 million, while organic sales were flat Excluding the Boston recall impact, organic revenue grew 5.5% Both GAAP and adjusted earnings per share saw significant declines, with GAAP EPS at $0.84 compared to $2.16 in 2022, and adjusted EPS at $3.10 compared to $3.36 in 2022 Full-Year 2023 Key Financial Metrics | Metric | Full-Year 2023 | Full-Year 2022 | Change | | :--- | :--- | :--- | :--- | | Reported Revenues | $1,541.6M | $1,557.7M | -1.0% | | Organic Revenue Growth | 0.0% | N/A | N/A | | Organic Revenue Growth (Ex-Boston) | +5.5% | N/A | N/A | | GAAP EPS (Diluted) | $0.84 | $2.16 | -61.1% | | Adjusted EPS (Diluted) | $3.10 | $3.36 | -7.7% | | Adjusted EBITDA | $369.7M | $411.3M | -10.1% | [Business Highlights](index=1&type=section&id=Business%20Highlights) Throughout 2023, Integra LifeSciences made significant strategic progress despite operational challenges Key achievements include advancing the Boston facility relaunch, completing the global CereLink® relaunch, integrating the SIA acquisition, and expanding its international product portfolio The company also executed $275 million in share repurchases and signed a definitive agreement to acquire the Acclarent® ENT business - The relaunch of products from the Boston facility is on track for mid-to-late Q2 2024[7](index=7&type=chunk) - Completed the global relaunch of CereLink® and successfully integrated the SIA acquisition[7](index=7&type=chunk) - Signed a definitive agreement to acquire the Acclarent® ENT business, expected to close by Q2 2024[7](index=7&type=chunk) - Executed **$275 million** in share repurchases during the year[7](index=7&type=chunk) [Fourth Quarter 2023 Segment Performance](index=2&type=section&id=Fourth%20Quarter%202023%20Segment%20Performance) This section details the revenue performance of Integra LifeSciences' Codman Specialty Surgical and Tissue Technologies segments in Q4 2023 [Codman Specialty Surgical](index=2&type=section&id=Codman%20Specialty%20Surgical) The Codman Specialty Surgical (CSS) segment, representing 69% of total revenue, reported Q4 revenues of $271.6 million, an increase of 2.7% on a reported basis and 2.3% organically Growth was driven by a 2.0% organic increase in Neurosurgery, led by Certas® Plus valves and DuraGen, and a 3.0% organic increase in Instruments CSS Q4 2023 Performance | Category | Revenue | Reported Growth | Organic Growth | | :--- | :--- | :--- | :--- | | **Total CSS** | **$271.6M** | **+2.7%** | **+2.3%** | | Neurosurgery | N/A | N/A | +2.0% | | Instruments | N/A | N/A | +3.0% | - Neurosurgery growth was driven by mid-single digit growth in CSF management (Certas® Plus valves) and dural access and repair (DuraGen)[14](index=14&type=chunk) [Tissue Technologies](index=2&type=section&id=Tissue%20Technologies) The Tissue Technologies segment reported Q4 revenues of $125.4 million, a decrease of 6.0% on a reported basis and 8.0% organically The decline was primarily due to lost revenue from the Boston product recall, which was partially offset by double-digit growth from BioD® and Gentrix®, and mid-single-digit growth in Integra skin and MediHoney® Tissue Technologies Q4 2023 Performance | Category | Revenue | Reported Growth | Organic Decline | | :--- | :--- | :--- | :--- | | **Total Tissue Technologies** | **$125.4M** | **-6.0%** | **-8.0%** | - The revenue decline was driven by the Boston product recall[14](index=14&type=chunk) - The decline was partly offset by strong performance in other products, including double-digit growth from BioD® and Gentrix®[14](index=14&type=chunk) [2023 Balance Sheet, Cash Flow and Capital Allocation](index=3&type=section&id=2023%20Balance%20Sheet,%20Cash%20Flow%20and%20Capital%20Allocation) This section summarizes Integra LifeSciences' financial position at year-end 2023, including net debt, liquidity, and cash flow activities [Year-End Financial Position](index=3&type=section&id=Year-End%20Financial%20Position) As of year-end 2023, Integra's financial position included net debt of $1.2 billion and a consolidated total leverage ratio of 3.0x The company maintained strong liquidity of approximately $1.5 billion, comprising $309 million in cash and short-term investments and the rest available under its revolving credit facility Full-year cash flow from operations was $140.0 million, with capital expenditures of $67.0 million Key Financial Position Metrics (Year-End 2023) | Metric | Value | | :--- | :--- | | Cash Flow from Operations (FY) | $140.0M | | Capital Expenditures (FY) | $67.0M | | Net Debt | $1.2B | | Consolidated Total Leverage Ratio | 3.0x | | Total Liquidity | ~$1.5B | [2024 Revenue and Adjusted Earnings Per Share Guidance](index=3&type=section&id=2024%20Revenue%20and%20Adjusted%20Earnings%20Per%20Share%20Guidance) This section outlines Integra LifeSciences' financial projections for full-year and first-quarter 2024, including revenue and adjusted EPS guidance [Full-Year and First-Quarter 2024 Outlook](index=3&type=section&id=Full-Year%20and%20First-Quarter%202024%20Outlook) Integra LifeSciences projects full-year 2024 revenues between $1,603 million and $1,618 million, representing 4.0% to 5.0% reported and organic growth Adjusted EPS is expected to be in the range of $3.15 to $3.25 For the first quarter of 2024, the company anticipates revenues of $360 million to $365 million and adjusted EPS between $0.53 and $0.57 This guidance excludes the pending acquisition of the Acclarent ENT business Full-Year 2024 Guidance | Metric | Range | | :--- | :--- | | Revenues | $1,603M - $1,618M | | Reported Growth | 4.0% - 5.0% | | Organic Growth | 4.0% - 5.0% | | Adjusted EPS (Diluted) | $3.15 - $3.25 | First Quarter 2024 Guidance | Metric | Range | | :--- | :--- | | Revenues | $360M - $365M | | Reported Growth | -5.5% to -4.1% | | Organic Growth | -5.1% to -3.7% | | Adjusted EPS (Diluted) | $0.53 - $0.57 | - The 2024 guidance does not include the impact of the pending acquisition of the Acclarent ENT business[16](index=16&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents Integra LifeSciences' condensed consolidated financial statements, including statements of operations, balance sheet, and cash flows [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the twelve months ended December 31, 2023, total revenues decreased to $1.54 billion from $1.56 billion in 2022 Operating income fell sharply to $111.5 million from $238.9 million, and net income decreased to $67.7 million ($0.84 per diluted share) from $180.6 million ($2.16 per diluted share) in the prior year, driven by higher costs of goods sold and operating expenses Full-Year Statement of Operations Summary (in thousands) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Total revenues | $1,541,573 | $1,557,666 | | Operating income | $111,526 | $238,920 | | Net income | $67,741 | $180,550 | | Diluted net income per share | $0.84 | $2.16 | [Condensed Balance Sheet Data](index=14&type=section&id=CONDENSED%20BALANCE%20SHEET%20DATA) As of December 31, 2023, Integra's balance sheet showed cash and cash equivalents of $276.4 million, a decrease from $456.7 million in 2022 Inventory increased to $389.6 million from $324.6 million, while total stockholders' equity declined to $1.59 billion from $1.80 billion over the same period Balance Sheet Summary (in thousands) | Line Item | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $276,402 | $456,661 | | Inventory, net | $389,608 | $324,583 | | Total Borrowings* | $1,499,049 | $1,481,444 | | Stockholders' equity | $1,587,884 | $1,804,403 | [Condensed Statement of Cash Flows](index=14&type=section&id=CONDENSED%20STATEMENT%20OF%20CASH%20FLOWS) For the full year 2023, net cash provided by operating activities was $140.0 million, a significant decrease from $264.5 million in 2022 Net cash used in investing activities was $94.2 million, and cash used in financing activities was $229.9 million This resulted in a net decrease in cash and cash equivalents of $180.3 million for the year Full-Year Cash Flow Summary (in thousands) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $139,955 | $264,469 | | Net cash used in investing activities | ($94,178) | ($58,580) | | Net cash used in financing activities | ($229,925) | ($251,953) | | Net (decrease) in cash and cash equivalents | ($180,259) | ($56,787) | [Reconciliation of GAAP to Non-GAAP Measures](index=5&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliations of Integra LifeSciences' GAAP financial results to various non-GAAP measures, such as Adjusted EBITDA and Adjusted EPS [Reconciliation to Adjusted EBITDA](index=12&type=section&id=Reconciliation%20to%20Adjusted%20EBITDA) For the full year 2023, Adjusted EBITDA was $369.7 million, down from $411.3 million in 2022 The reconciliation from GAAP net income of $67.7 million includes major adjustments for depreciation and amortization ($122.5 million), EU Medical Device Regulation charges ($46.6 million), and charges related to the Boston Recall ($40.0 million) Full-Year Reconciliation to Adjusted EBITDA (in thousands) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | GAAP net income | $67,741 | $180,550 | | Total of non-GAAP adjustments | $301,964 | $230,796 | | **Adjusted EBITDA** | **$369,705** | **$411,346** | [Reconciliation to Adjusted Net Income and Adjusted EPS](index=13&type=section&id=Reconciliation%20to%20Adjusted%20Net%20Income%20and%20Adjusted%20EPS) Adjusted net income for the full year 2023 was $247.8 million ($3.10 per share), compared to $280.9 million ($3.36 per share) in 2022 Key adjustments to GAAP net income included intangible asset amortization ($82.8 million), EU Medical Device Regulation charges ($46.6 million), and Boston Recall charges ($40.0 million) Full-Year Reconciliation to Adjusted Net Income (in thousands) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | GAAP net income | $67,741 | $180,550 | | Total of non-GAAP adjustments | $180,036 | $100,316 | | **Adjusted net income** | **$247,777** | **$280,866** | | **Adjusted diluted net income per share** | **$3.10** | **$3.36** | [Reconciliation of Net Debt](index=16&type=section&id=Reconciliation%20of%20Net%20Debt) The company's net debt increased to $1.20 billion at the end of 2023 from $998.0 million at the end of 2022 The calculation sums total short- and long-term borrowings and subtracts cash, cash equivalents, and short-term investments Net Debt Calculation (in thousands) | Line Item | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Borrowings* | $1,499,549 | $1,443,315 | | Less: Short-term investments | ($32,694) | $0 | | Less: Cash & Cash Equivalents | ($276,402) | ($456,661) | | **Net Debt** | **$1,200,104** | **$998,039** |

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Q3 and nine months ended September 30, 2023, with notes on accounting policies and financial details Condensed Consolidated Statements of Operations Highlights | Indicator | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total revenue, net** | $382,421 | $385,191 | $1,144,534 | $1,159,644 | | **Operating income** | $26,593 | $65,049 | $75,479 | $171,080 | | **Net income** | $19,497 | $49,915 | $47,907 | $127,604 | | **Diluted EPS** | $0.24 | $0.60 | $0.59 | $1.53 | Condensed Consolidated Balance Sheets Highlights (in thousands) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $273,732 | $456,661 | | Total current assets | $1,027,229 | $1,161,498 | | Total assets | $3,739,371 | $3,889,758 | | Total current liabilities | $355,712 | $320,906 | | Total liabilities | $2,160,150 | $2,085,355 | | Total stockholders' equity | $1,579,221 | $1,804,403 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $81,205 | $179,135 | | Net cash used in investing activities | ($36,949) | ($3,760) | | Net cash used in financing activities | ($223,035) | ($154,254) | | Net decrease in cash and cash equivalents | ($182,929) | ($1,511) | [Note 2. Acquisitions and Divestitures](index=10&type=section&id=2.%20ACQUISITIONS%20AND%20DIVESTITURES) Details the acquisition of SIA for $51.5 million plus contingent consideration and the sale of the non-core TWC business for $28.8 million - Completed the acquisition of Surgical Innovation Associates, Inc. (SIA) for **$51.5 million** plus up to **$90.0 million** in contingent consideration based on revenue and FDA approval milestones[25](index=25&type=chunk) - In August 2022, the company sold its non-core traditional wound care (TWC) business for **$28.8 million**, resulting in a gain of **$0.6 million**[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3. Revenues from Contracts with Customers](index=13&type=section&id=3.%20REVENUES%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Explains revenue recognition policies, highlighting the significant impact of the Boston facility product recall on net revenue due to return provisions - Due to the voluntary recall of products manufactured at the Boston facility, the company recorded a provision for product returns of **$6.8 million** in Q3 2023 and **$19.7 million** for the nine months ended September 30, 2023, as a reduction of net revenue[43](index=43&type=chunk) Disaggregated Revenue by Segment (in thousands) | Segment/Franchise | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | **Codman Specialty Surgical** | **$268,205** | **$787,371** | | Neurosurgery | $209,229 | $607,902 | | Instruments | $58,976 | $179,469 | | **Tissue Technologies** | **$114,216** | **$357,163** | | Wound Reconstruction and Care | $88,071 | $280,129 | | Private Label | $26,145 | $77,034 | | **Total revenue** | **$382,421** | **$1,144,534** | [Note 5. Goodwill and Other Intangible Assets](index=15&type=section&id=5.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Details annual goodwill impairment tests, confirming no impairment for 2023, even after an interim test on the Tissue Technologies unit due to the Boston recall - Total goodwill stood at **$1.036 billion** as of September 30, 2023, down slightly from **$1.039 billion** at year-end 2022[57](index=57&type=chunk) - A quantitative goodwill impairment test was performed for the TT reporting unit in Q2 2023 due to the Boston recall and stock price drop; the fair value was determined to be more than **20%** above the carrying amount[58](index=58&type=chunk) [Note 6. Debt](index=17&type=section&id=6.%20DEBT) Details the March 2023 amendment of the Senior Credit Facility, extending maturity to 2028 and transitioning to SOFR, alongside other outstanding debt instruments - On March 24, 2023, the company amended its Senior Credit Facility, extending maturity to March 2028 and replacing LIBOR-based rates with SOFR-indexed rates[65](index=65&type=chunk) - As of September 30, 2023, outstanding debt included **$775.0 million** under the term loan, **$90.0 million** under the revolver, **$575.0 million** in convertible notes, and **$75.7 million** under the securitization facility[70](index=70&type=chunk)[74](index=74&type=chunk)[82](index=82&type=chunk) [Note 11. Treasury Stock](index=28&type=section&id=11.%20TREASURY%20STOCK) Details two accelerated share repurchase agreements in 2023 totaling **$275 million** and a new **$225 million** share repurchase program authorized in July - Entered into a **$150 million** accelerated share repurchase (ASR) in January 2023 and a **$125 million** ASR in August 2023[128](index=128&type=chunk)[130](index=130&type=chunk) - A new **$225 million** share repurchase program was authorized by the Board of Directors on July 18, 2023, replacing the previous program[132](index=132&type=chunk) [Note 12. Income Taxes](index=29&type=section&id=12.%20INCOME%20TAXES) The company's effective tax rate significantly decreased in Q3 and the first nine months of 2023 due to lower book income in higher-taxed jurisdictions Effective Tax Rate Comparison | Period | 2023 | 2022 | | :--- | :--- | :--- | | **Three Months Ended Sep 30** | (4.8)% | 15.1% | | **Nine Months Ended Sep 30** | 8.2% | 14.8% | [Note 15. Segment and Geographic Information](index=31&type=section&id=15.%20SEGMENT%20AND%20GEOGRAPHIC%20INFORMATION) Provides a breakdown of net sales and profit by Codman Specialty Surgical and Tissue Technologies segments, along with disaggregated revenue by major geographic area Segment Net Sales (in thousands) | Segment | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Codman Specialty Surgical | $268,205 | $787,371 | | Tissue Technologies | $114,216 | $357,163 | | **Total revenues** | **$382,421** | **$1,144,534** | Revenue by Geography (in thousands) | Region | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | United States | $269,838 | $817,622 | | Europe | $41,524 | $120,040 | | Asia Pacific | $48,777 | $146,956 | | Rest of World | $22,282 | $59,916 | | **Total Revenues** | **$382,421** | **$1,144,534** | [Note 16. Commitments and Contingencies](index=32&type=section&id=16.%20COMMITMENTS%20AND%20CONTINGENCIES) Details legal actions, including a securities class action complaint filed September 12, 2023, regarding quality system issues at the Boston facility, and contingent consideration liabilities - A securities class action complaint was filed against the company on September 12, 2023, alleging violations of securities laws related to quality system issues at the Boston manufacturing facility[149](index=149&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, strategic developments, and regulatory matters, analyzing results of operations, liquidity, and the significant impact of the Boston facility recall [FDA Matters](index=38&type=section&id=FDA%20Matters) Details two key regulatory issues: the global voluntary removal of CereLink monitors and the ongoing quality system issues and recall at the Boston manufacturing facility - In May 2023, the company initiated a voluntary recall of products manufactured in its Boston facility and temporarily halted manufacturing; resumption is expected late in Q4 2023[186](index=186&type=chunk) - The Boston recall resulted in a **$19.7 million** provision for product returns and a **$24.6 million** inventory write-off in the first nine months of 2023[187](index=187&type=chunk) - A voluntary global product removal of all CereLink intracranial pressure monitors was initiated in August 2022; a 510(k) application with design changes was submitted to the FDA in September 2023[184](index=184&type=chunk)[185](index=185&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Analyzes decreased net income and revenues for Q3 and nine months ended September 30, 2023, primarily due to the Boston recall, impacting gross margin and segment performance Special Charges (in thousands) | Charge Type | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Acquisition, divestiture and integration-related | $5,832 | $18,056 | | Structural optimization | $5,893 | $15,022 | | EU medical device regulation | $13,490 | $34,172 | | Boston recall expenses | $5,636 | $33,687 | | **Total** | **$30,851** | **$100,937** | - Q3 2023 total revenues decreased by **$2.8 million** YoY, driven by the Boston recall which included a **$6.8 million** return reserve and a **$20.5 million** revenue decline[194](index=194&type=chunk) - Gross margin as a percentage of revenue fell to **57.1%** in Q3 2023 from **61.5%** in Q3 2022, primarily due to the Boston recall's impact, including a **$6.8 million** provision for returns and **$5.1 million** in idle capacity charges[197](index=197&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Discusses decreased working capital and cash, with net cash from operating activities significantly lower due to reduced net income and working capital changes, alongside cash utilization for repurchases and debt - Working capital decreased from **$840.6 million** at Dec 31, 2022, to **$671.5 million** at Sep 30, 2023[231](index=231&type=chunk) - Net cash provided by operating activities for the nine months ended Sep 30, 2023, was **$81.2 million**, a decrease of **$97.9 million** from the same period in 2022[233](index=233&type=chunk)[234](index=234&type=chunk) - Financing activities for the first nine months of 2023 included **$275.0 million** for share repurchases and **$85.9 million** in debt repayments[240](index=240&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses exposure to market risks from foreign currency and interest rates, managed through derivative instruments like forward contracts and interest rate swaps - The company is primarily exposed to foreign currency risk from transactions in Euros, British pounds, Swiss francs, Canadian dollars, and Japanese yen, among others[258](index=258&type=chunk) - Interest rate risk is managed through interest rate swaps on its SOFR-indexed borrowings; a **100 basis point** change in interest rates would impact annual interest expense on unhedged debt by approximately **$1.7 million**[263](index=263&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting - Based on an evaluation as of September 30, 2023, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[265](index=265&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[266](index=266&type=chunk) [PART II. OTHER INFORMATION](index=48&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 16 for details on legal proceedings, including a securities class action lawsuit related to the Boston manufacturing facility - Refers to Note 16, Commitments and Contingencies, for details on current legal proceedings, which includes a securities class action lawsuit related to the Boston facility[149](index=149&type=chunk)[268](index=268&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to risk factors from those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - There have been no material changes in risk factors from those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[269](index=269&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the company's share repurchase activities during Q3 2023, highlighting the **$125 million** accelerated share repurchase agreement in August Issuer Purchases of Equity Securities (Q3 2023) | Period | Total Shares Purchased | Average Price Paid | Approx. Value Remaining for Purchase | | :--- | :--- | :--- | :--- | | July 2023 | — | — | — | | August 2023 | 2,296,739 | $54.42 | $25,000,000 | | September 2023 | — | — | $25,000,000 | - On August 15, 2023, the company entered into a **$125 million** accelerated share repurchase (ASR) and received an initial **2.3 million** shares[272](index=272&type=chunk)