What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-02 compared with 2021-07-29 · 228 added, 188 removed, 839 unchanged (33% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME / (LOSS)

AND COMPREHENSIVE INCOME

(Dollars in thousands, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

13 unchanged sentences

Provision for income taxes 7,559 9,174 39,199 13,456

Net income (loss) $ 35,068 $ ( 369 ) $ 80,462 $ 8,811

Net income $ 43,229 $ 32,337 $ 123,691 $ 41,148

Net income per share

4 unchanged sentences

Diluted 85,447 84,752 85,391 85,303

Comprehensive income (loss) (See Note 14) 28,731 1,095 104,558 $ ( 17,912 )

Comprehensive income (See Note 14) 46,417 43,548 150,975 $ 25,637

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(Dollars in thousands, except per share amounts)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

40 unchanged sentences

240,000 authorized shares;

89,474 and 89,251 issued at June 30, 2021 and December 31, 2020, respectively

89,597 and 89,251 issued at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 1,258,830 1,290,909

Treasury stock, at cost;

4,899 shares and 4,914 shares at June 30, 2021 and December 31, 2020, respectively

4,899 shares and 4,914 shares at September 30, 2021 and December 31, 2020, respectively

( 234,449 ) ( 235,141 )

7 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES:

17 unchanged sentences

Accounts payable, accrued expenses and other current liabilities 33,858 ( 67,178 )

Contract liabilities — ( 548 )

Other non-current liabilities 1,509 ( 5,417 )

4 unchanged sentences

Proceeds from sale of property and equipment 3 3,311

Cash (paid) provided for business acquisitions, net of cash acquired ( 303,910 ) —

Cash paid for business acquisitions, net of cash acquired ( 303,910 ) —

Acquired in-process research and development — ( 5,000 )

Net proceeds on swaps designated as net investment hedges 76 —

Net cash used in investing activities ( 133,958 ) ( 32,152 )

16 unchanged sentences

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Dollars in thousands, except per share amounts)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Equity

14 unchanged sentences

Balance, June 30, 2021 89,474 $ 895 ( 4,899 ) $ ( 234,461 ) $ 1,248,555 $ ( 49,963 ) $ 609,955 $ 1,574,981

Six Months Ended June 30, 2020

Net income — — — — — — 43,229 43,229

Other comprehensive income, net of tax — — — — — 3,189 — 3,189

Treasury shares retirement — — — 12 ( 12 ) — — —

Issuance of common stock for vesting of share based awards, net of shares withheld for taxes 123 1 — — 2,541 — — 2,542

Share-based compensation — — — — 7,746 — — 7,746

Balance, September 30, 2021 89,597 896 ( 4,899 ) ( 234,449 ) 1,258,830 ( 46,774 ) 653,184 1,631,687

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Dollars in thousands, except per share amounts)

Nine Months Ended September 30, 2020

Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Equity

17 unchanged sentences

Balance, June 30, 2020 89,189 892 ( 4,915 ) ( 235,226 ) 1,279,370 ( 103,125 ) 407,185 1,349,096

Net loss — — — — — — 32,337 32,337

Other comprehensive loss, net of tax — — — — — 11,212 — 11,212

Issuance of common stock for vesting of share based awards, net of shares withheld for taxes 2 — — 2 ( 69 ) — — ( 67 )

Share-based compensation — — — — 5,410 — — 5,410

Balance, September 30, 2020 89,191 $ 892 ( 4,915 ) $ ( 235,224 ) $ 1,284,711 $ ( 91,913 ) $ 439,522 $ 1,397,988

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

The terms “we,” “our,” “us,” “Company” and “Integra” refer to Integra LifeSciences Holdings Corporation, a Delaware corporation, and its subsidiaries unless the context suggests otherwise.

In the opinion of management, the June 30, 2021 unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the financial position, statement of changes in shareholder's equity, results of operations and cash flows of the Company.

In the opinion of management, the September 30, 2021 unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the financial position, statement of changes in shareholders' equity, results of operations and cash flows of the Company.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.

1 unchanged sentence

The December 31, 2020 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

Operating results for the three and six month period ended June 30, 2021 are not necessarily indicative of the results to be expected for the entire year.

Operating results for the three and nine month period ended September 30, 2021 are not necessarily indicative of the results to be expected for the entire year.

The preparation of consolidated financial statements is in conformity with generally accepted accounting principles in the United States ("GAAP") which requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses.

5 unchanged sentences

During the beginning of 2020, the Company's customers diverted resources to treat COVID-19 patients and deferred or canceled elective or non-emergent surgical procedures, all of which impacted hospitals' abilities to meet their obligations, including to the Company.

Towards the end of 2020 and during the first half of 2021, procedural volumes relevant to the Company’s products steadily increased and, in some geographic areas, began to approach normalized levels.

However, on-going uncertainty persists about the continuing sustainability of those procedural volumes as virus outbreaks constrain healthcare networks.

Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic recession.

Such economic disruption has had an adverse effect on the Company's business as customers curtailed and reduced capital and overall spending.

Towards the end of 2020 and through the end of the third quarter of 2021, procedural volumes relevant to the Company’s products steadily increased and, in some geographic areas, began to approach normalized levels.

However, on-going uncertainty persists about the continuing sustainability of those procedural volumes as virus outbreaks and staffing constrains at hospitals and surgical centers impact healthcare networks.

Furthermore, capital markets and economies worldwide have also seen other indirect COVID-19 pandemic related disruptions including supply chain impacts, material inflation, and labor constraints in certain markets and geographies.

Such economic disruption has had an adverse effect on the Company's business as customers curtailed and reduced capital and overall spending that have resulted in higher freight costs, longer supply chains and select labor constraints in certain geographic regions.

Policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and the economy as a whole.

The magnitude and overall effectiveness of these actions remains uncertain.

The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, duration of the pandemic, including resurgences, new variants or strains, impact of government regulations, the speed and effectiveness of vaccine distribution, vaccine adoption rates and the direct and indirect economic effects of the pandemic and containment measures.

The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operations challenges faced by its customers.

During the first half of 2021, the Company's revenues were still impacted due to COVID-19 resurgences and lower surgical procedural volumes, though not to the levels seen in early 2020.

The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, duration of the pandemic, including resurgences, new variants or strains, impact of government regulations, the speed and effectiveness of vaccine distribution, vaccine adoption rates and the duration of direct and indirect economic effects of the pandemic and containment measures.

The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, the extent of inflationary pressure on material and labor costs and the impact of any initiatives or programs that the Company may undertake to address financial and operations challenges faced by its customers.

Through the end of the third quarter of 2021, the Company's revenues were still impacted due to COVID-19 resurgences and lower surgical procedural volumes, though not to the levels seen during 2020.

As a result, the Company has continued to manage its operating costs in this environment.

35 unchanged sentences

Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively.

The adoption of this guidance did not have a material impact on the Company's results or financial position.

The adoption of this guidance did not have a significant impact on the Company's consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform , which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

22 unchanged sentences

Net impact of cumulative-effect adjustment Additional paid-in capital ( 63.3 )

Upon adoption of this ASU 2020-06, the Company’s Convertible Senior Notes were reflected entirely as a liability since the embedded conversion feature will no longer be separately presented within stockholders’ equity.

On December 9, 2020, the Company made an irrevocable election under the indenture to require the principal portion of its convertible senior notes to be settled in cash and any excess in shares.

Upon adoption of ASU 2020-06, the Company’s 2025 Notes were reflected entirely as a liability since the embedded conversion feature will no longer be separately presented within stockholders’ equity.

On December 9, 2020, the Company made an irrevocable election under the indenture to require the principal portion of its 2025 Notes to be settled in cash and any excess in shares.

Following the irrevocable notice, only the amounts settled in excess of the principal will be considered in diluted earnings per share under the “if-converted” method.

Additionally, from January 1, 2021, the Company is no longer incurring non-cash interest expense for the amortization of debt discount, therefore the interest expense for the 2025 Notes, which is included in the interest expense on the consolidated statements of operations and comprehensive loss, is lower as compared to the fiscal year of 2020.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements , which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations.

The ASU will be effective for the Company for annual and interim periods beginning after January 1, 2021.

Securities and Exchange Commission (the "SEC") .

The ASU has been effective for the Company for annual and interim periods beginning after January 1, 2021.

The Company adopted this standard on the January 1, 2021.

The adoption of this guidance did not have a material impact on the Company's results, financial position or disclosures.

The adoption of this guidance did not have a significant impact on the Company's consolidated financial statements and related disclosures.

In May 2021, the FASB issued ASU No.

29 unchanged sentences

Goodwill was allocated to the assets and liabilities divested using the relative fair value method of the Extremity Orthopedics business to the Company's Tissue Technologies reporting unit.

In connection with the sale, the Company recognized a loss of $ 0.7 million associated with certain working capital adjustments and gain of $ 42.2 million that is presented in Gain from the sale of business in the consolidated statement of operations for the three and six months ended June 30, 2021.

The net proceeds are subject to adjustments based on changes in the actual closing net working capital.

The purchase price is preliminary pending finalization of potential working capital adjustments.

The Company also entered into a transition services agreement ("TSA") with Smith & Nephew which requires the Company to provide certain services on behalf of Smith & Nephew for the duration of the period subsequent to the sale of the business as defined in the agreement.

The Com pany recognized a payable due to Smith & Nephew of $ 10.9 million as of June 30, 2021, included in the consolidated balance sheet within accrued expenses and other current liabilities respectively.

In connection with the sale, the Company recognized a gain of $ 42.0 million that is presented in Gain from the sale of business in the consolidated statement of operations for the nine months ended September 30, 2021.

The Company finalized the net working capital and paid an additional $ 1.3 million to Smith & Nephew as of September 30, 2021.

The Company also entered into a transition services agreement with Smit h & Nephew which requires the Company to provide certain services on behalf of Smith & Nephew for the duration of the period subsequent to the sale of the business as defined in the agreement.

The Company recognized a payable due to Smith & Nephew of $ 7.2 million as of September 30, 2021, included in the consolidated balance sheet within accrued expenses and other current liabilities.

On January 20, 2021, the Company acquired ACell, Inc.

(the "ACell Acquisition") for an acquisition purchase price of $ 306.9 million plus contingent consideration of up to $ 100 million, that may be payable upon achieving certain revenue-based performance milestones in 2022, 2023 and 2025.

(the "ACell Acquisition") for an acquisition purchase price of $ 306.9 million plus contingent considerations of up to $ 100 million, that may be payable upon achieving certain revenue-based performance milestones in 2022, 2023 and 2025.

The final working capital adjustments of $ 1.3 million was finalized and paid as of June 30, 2021.

however certain amounts relating to tax related matters have not been finalized.

The finalization of these matters may result in changes to goodwill.

ACell was a privately-held company that offered a portfolio of regenerative products for complex wound management, including developing and commercializing products based on MatriStem Urinary Bladder Matrix ("UBM"), a technology platform derived from porcine urinary bladder extracellular matrix.

Certain amounts relating to tax matters have not been finalized which may result in changes to goodwill upon completion.

ACell was a privately-held company that offered a portfolio of regenerative products for complex wound management, including developing and commercializing products based on MatriStem Urinary Bladder Matrix, a technology platform derived from porcine urinary bladder extracellular matrix.

Assets Acquired and Liabilities Assumed at Fair Value

4 unchanged sentences

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date:

Dollars in thousands Preliminary Valuation as of June 30, 2021 Weighted Average Life

Dollars in thousands Preliminary Valuation as of September 30, 2021 Weighted Average Life

Current assets:

33 unchanged sentences

Contingent Consideration

As part of the acquisition, the Company is required to pay the former shareholders of ACell up to $ 100 million based on the achievement of certain revenue-based performance milestones in 2022, 2023, and 2025.

As part of the acquisition, the Company is required to make payments to the former shareholders of ACell up to $ 100 million based on the achievement of certain revenue-based performance milestones in 2022, 2023, and 2025.

T he Company used iterations of the Monte Carlo simulation to calculate the fair value of the contingent consideration that considered the possible outcomes of scenarios related to each specific milestone.

The Company estimated the fair value of the contingent consideration to be $ 23.9 million at the acquisition date.

The estimated fair value as of June 30, 2021 was $ 23.5 million.

This amount is included in other liabilities at June 30, 2021 in the consolidated balance sheets of the Company.

The estimated fair value as of September 30, 2021 was $ 23.0 million.

This amount is included in other liabilities at September 30, 2021 in the consolidated balance sheets of the Company.

The Company determines the acquisition date fair value of contingent consideration obligations using a Monte Carlo simulation, as well as significant unobservable inputs, reflecting the Company’s assessment of the assumptions market participants would use to value these liabilities.

1 unchanged sentence

The resultant most likely payouts are discounted using an appropriate effective annual interest rate.

At each reporting date, the contingent consideration obligation will be revalued to estimated fair value and changes in fair value will be reflected as income or expense in our consolidated statement of operations.

At each reporting date, the contingent consideration obligations will be revalued to estimated fair value and changes in fair value will be reflected as income or expense in our consolidated statement of operations.

Changes in the fair value of the contingent considerations may result from changes in discount periods and rates and changes in the timing and amount of revenue estimates.

3 unchanged sentences

Pro Forma Results (unaudited)

Pro forma revenues for the three months ended June 30, 2021 and 2020 were $ 390.0 million and $ 269.6 million, re spectively.

Pro forma revenues for the six months ended June 30, 2021 and 2020 were $ 754.7 million and $ 646.9 million, respectively.

Pro forma revenues for the three months ended September 30, 2021 and 2020 were $ 386.9 million and $ 396.8 million, respectively.

Pro forma revenues for the nine months ended September 30, 2021 and 2020 were $ 1,141.5 million and $ 1,051.9 million, respectively.

Pro forma net income and earnings per share are not presented for this acquisition as they are not material.

23 unchanged sentences

A portion of the transaction price allocated to the performance obligations to be satisfied in the future periods is recognized as contract liability.

The following table summarizes the changes in the contract asset and liability balances for the six months ended June 30, 2021:

The following table summarizes the changes in the contract asset and liability balances for the nine months ended September 30, 2021:

Contract Asset

2 unchanged sentences

Contract asset, net of transferred to trade receivables on contracts during the period 8,378

Contract asset, June 30, 2021

Contract asset, September 30, 2021

Contract Liability

3 unchanged sentences

Foreign currency translation ( 26 )

Contract liability, June 30, 2021

At June 30, 2021, the short-term portion of the contract liability of $ 5.9 million and the long-term portion of $ 6.2 million were included in accrued expenses and other current liabilities and other liabilities, respectively, in the consolidated balance sheet.

As of June 30, 2021, the Company is expected to recognize approximately 49 % of unsatisfied (or partially unsatisfied) performance obligations as revenue within twelve months , with the remaining balance to be recognized thereafter.

Contract liability, September 30, 2021

At September 30, 2021, the short-term portion of the contract liability of $ 5.4 million and the long-term portion of $ 5.9 million were included in accrued expenses and other current liabilities and other liabilities, respectively, in the consolidated balance sheet.

As of September 30, 2021, the Company is expected to recognize approximately 48 % of unsatisfied (or partially unsatisfied) performance obligations as revenue within twelve months , with the remaining balance to be recognized thereafter.

Shipping and Handling Fees

13 unchanged sentences

Disaggregated Revenue

The following table presents revenues disaggregated by the major sources of revenues for the three and six months ended June 30, 2021 and 2020 (dollar amounts in thousands):

Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020

The following table presents revenues disaggregated by the major sources of revenues for the three and nine months ended September 30, 2021 and 2020 (dollar amounts in thousands):

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

Neurosurgery $ 199,210 $ 189,674 $ 591,064 $ 516,048

8 unchanged sentences

Total revenue $ 386,861 $ 370,232 $ 1,136,924 $ 983,221

(1) On January 4, 2021, the Company completed its previously announced sale of its Extremity Orthopedics business.

(1) On January 4, 2021, the Company completed its sale of its Extremity Orthopedics business.

In conjunction with the sale of this business, the Company rebranded the Orthopedics and Tissue Technologies segment as Tissue Technologies in the first quarter of 2021.

1 unchanged sentence

(2) See Note 2.

Acquisitions and Divestitures, for details around the ACell Inc.

Acquisitions and Divestitures, for details around the ACell acquisition.

See Note 15, Segment and Geographical Information , for details of revenues based on the location of the customer.

Inventories, net consisted of the following:

Dollars in thousands June 30, 2021 December 31, 2020

Dollars in thousands September 30, 2021 December 31, 2020

Finished goods $ 180,766 $ 180,301

4 unchanged sentences

GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the six-month period ended June 30, 2021 were as follows:

Changes in the carrying amount of goodwill for the nine-month period ended September 30, 2021 were as follows:

Dollars in thousands Codman Specialty

3 unchanged sentences

Foreign currency translation ( 9,546 ) ( 5,038 ) ( 14,584 )

Goodwill at June 30, 2021 $ 664,757 $ 350,881 $ 1,015,638

Goodwill at September 30, 2021 $ 662,429 $ 349,652 $ 1,012,081

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

1 unchanged sentence

The components of the Company’s identifiable intangible assets were as follows:

June 30, 2021

September 30, 2021

Dollars in thousands Weighted

21 unchanged sentences

(1) Prior period amounts were reclassified as it relates to All other within this table to conform to the current period presentation.

The increase in the Company's identifiable intangible assets at June 30, 2021 as compared to the year ended December 31, 2020, was primarily driven from intangible assets acquired in conjunction with the ACell Inc.

The increase in the Company's identifiable intangible assets at September 30, 2021 as compared to the year ended December 31, 2020, was primarily driven from intangible assets acquired in conjunction with the ACell Acquisition.

See Note 2, Acquisitions and Divestitures , for details.

Based on quarter-end exchange rates, amortization expense (including amounts reported in cost of product revenues) is expected to be approximately $ 40.6 million for the remainder of 2021, $ 79.1 million in 2022, $ 78.4 million in 2023, $ 77.7 million in 2024, $ 77.7 million in 2025, $ 77.5 million in 2026 and $ 585.7 million thereafter.

Goodwill and Intangible Assets with Indefinite Lives

The Company tests goodwill and intangible assets with indefinite lives for impairment annually in the third quarter in accordance with ASC Topic 350.

Additionally, the Company may perform interim tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit or indefinite lived intangible asset below its carrying amount.

The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.

The Company tests for impairment by either performing a qualitative evaluation or a quantitative test.

The qualitative evaluation is an assessment of factors, including reporting unit specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of a reporting unit is less than its carrying amount, including goodwill.

The Company may elect to bypass this qualitative evaluation for some or all of its reporting units and perform a quantitative test.

During the third quarter of 2021, the Company elected to perform a qualitative analysis for its three reporting units and intangible asset with indefinite lives.

The Company determined, after performing the qualitative analysis, that there was no evidence that it is more likely than not that the fair value was less that the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test.

Based on quarter-end exchange rates, amortization expense (including amounts reported in cost of goods sold) is expected to be approximately $ 20.2 million for the remainder of 2021, $ 78.8 million in 2022, $ 78.1 million in 2023, $ 77.4 million in 2024, $ 77.4 million in 2025, $ 77.2 million in 2026 and $ 588.9 million thereafter.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Amendment to the Sixth Amended and Restated Senior Credit Agreement

4 unchanged sentences

On July 14, 2020, the Company entered into an amendment (the "July 2020 Amendment") to the February 2020 Amendment of the Senior Credit Facility to increase financial flexibility in light of the unprecedented impact and uncertainty of the COVID-19 pandemic on the global economy.

The July 2020 amendment does not increase the Company’s total indebtedness.

The July 2020 amendment which expired during June 30, 2021, did not increase the Company’s total indebtedness.

In connection with the July 2020 amendment, the Company’s maximum consolidated total leverage ratio in the financial covenants (as defined in the Senior Credit Facility) was modified to the following:

4 unchanged sentences

September 30, 2023 and the last day of each fiscal quarter thereafter 4.00 to 1.00

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Borrowings under the Senior Credit Facility bear interest, at the Company’s option, at a rate equal to the following:

8 unchanged sentences

subsidiaries, excluding intangible assets.

The Senior Credit Facility is subject to various financial and negative covenants and at June 30, 2021, the Company was in compliance with all such covenants.

The Senior Credit Facility is subject to various financial and negative covenants and at September 30, 2021, the Company was in compliance with all such covenants.

In connection with the February 2020 Amendment, the Company capitalized $ 4.6 million of financing costs in connection with modification of the Senior Credit Facility and wrote off $ 1.2 million of previously capitalized financing costs during the first quarter of 2020.

In connection with the July 2020 amendment, the Company expensed $ 3.3 million of incremental financing costs in connection with the modification of the Senior Credit Facility during the third quarter of 2020.

At June 30, 2021 and December 31, 2020, there wa s $ 8.8 million an d $ 97.5 million, respectively, ou tstanding under the revolving credit component of the Senior Credit Facility at weighted average interest rates of 1.5 %.

At June 30, 2021 and December 31, 2020, there was $ 866.3 million and $ 877.5 million, respectively, outstanding under the Term Loan component of the Senior Credit Facility at a weighted average interest rate of 1.5 %.

At June 30, 2021, $ 45.0 million of the Term Loan component of the Senior Credit Facility is classified as current on the consolidated balance sheet.

The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit and Term Loan components at June 30, 2021 wer e $ 8.6 million and $ 850.4 million, re sp ectively.

At September 30, 2021 and December 31, 2020, there wa s $ 20.0 million an d $ 97.5 million, respectively, ou tstanding under the revolving credit component of the Senior Credit Facility at weighted average interest rates of 1.3 % and 1.5 %, respectively.

At September 30, 2021 and December 31, 2020, there was $ 855.0 million and $ 877.5 million, respectively, outstanding under the Term Loan component of the Senior Credit Facility at a weighted average interest rate of 1.3 % and 1.5 %, respectively.

At September 30, 2021, $ 45.0 million of the Term Loan component of the Senior Credit Facility is classified as current on the consolidated balance sheet.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit and Term Loan components at September 30, 2021 wer e $ 19.3 million and $ 826.6 million, re sp ectively.

These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company.

1 unchanged sentence

Level 2 inputs represent inputs that are observable for the asset or liability, either directly or indirectly, and are other than active market observable i nputs that reflect unadjusted quoted prices for identical assets or liabilities.

Letters of credit outstanding as of June 30, 2021 and December 31, 2020 to taled $ 1.6 million.

There were no amounts drawn as of June 30, 2021.

Letters of credit outstanding as of September 30, 2021 and December 31, 2020 to taled $ 1.6 million.

There were no amounts drawn as of September 30, 2021.

Contractual repayments of the Term Loan component of the Senior Credit Facility are due as follows:

Quarter Ended June 30, 2021

Quarter Ended September 30, 2021

Principal Repayment

6 unchanged sentences

The outstanding balance of the revolving credit component of the Senior Credit Facility is due on February 3, 2025.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Convertible Senior Notes

10 unchanged sentences

or (4) if specified corporate transactions occur.

As of June 30, 2021, none of these conditions existed with respect to the 2025 Notes and as a result the 2025 Notes are classified as long term.

As of September 30, 2021, none of these conditions existed with respect to the 2025 Notes and as a result the 2025 Notes are classified as long term.

On December 9, 2020, the Company entered into the First Supplemental Indenture to the original agreement dated as of February 4, 2020 between the Company and Citibank, N.A., as trustee, governing the Company’s outstanding 2025 Notes.

2 unchanged sentences

The Company will also be required to increase the conversion rate for holders who convert their Notes in connection with certain fundamental changes occurring prior to the maturity date or following delivery by the Company of a notice of redemption.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

In connection with the issuance of the 2025 Notes, the Company entered into call transactions and warrant transactions, primarily with affiliates of the initial purchasers of the 2025 Notes (the “hedge participants”).

7 unchanged sentences

See Note 1, Basis of Presentation, for further details.

At June 30, 2021 , in conjunction with the adoption of the ASU, the carrying amount of the liability w as $ 575.0 million.

The fair value of the 2025 Notes at June 30, 2021 was $ 630.7 million.

At September 30, 2021 , the carrying amount of the liability w as $ 575.0 million.

The fair value of the 2025 Notes at September 30, 2021 was $ 636.7 million.

Factors that the Company considered when estimating the fair value of the 2025 Notes included recent quoted market prices or dealer quote.

The level of the 2025 Notes is considered as Level 1.

On January 1, 2021, the Company adopted ASU 2020-06 using the modified retrospective method.

See Note 1, Basis of Presentation, for further details.

As a result of the adoption of the ASU, the Company recognized only cash interest related to the contractual interest coupon of $ 1.4 million on the 2025 Notes for the six months ended June 30, 2021.

Prior to the adoption, during the six months ended June 30, 2020, the Company recognized cash interest of $ 1.2 million and amortization of the discount on the liability component of $ 6.8 million for a total interest charge of $ 8.0 million on the 2020 Notes.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

As a result of the adoption of ASU 2020-06, the Company recognized only cash interest related to the contractual interest coupon of $ 2.1 million on the 2025 Notes for the nine months ended September 30, 2021.

Prior to the adoption, during the nine months ended September 30, 2020, the Company recognized cash interest of $ 1.9 million and amortization of the discount on the liability component of $ 11.1 million for a total interest charge of $ 13.0 million on the 2020 Notes.

Securitization Facility

5 unchanged sentences

An occurrence of an event of default or a termination event under this Securitization Agreement may give rise to the right of its counterparty to terminate this facility.

As of June 30, 2021, the Company was in compliance with the covenants and none of the termination events had occurred.

As of September 30, 2021, the Company was in compliance with the covenants and none of the termination events had occurred.

On May 28, 2021, the Company entered into an amendment (the "May 2021 Amendment") of the Securitization Facility which extended the maturity date from December 21, 2021 to May 28, 2024.

The May 2021 Amendment does not increase the Company’s total indebtedness.

At June 30, 2021 and December 31, 2020, the Company had $ 112.5 million, respectively, of outstanding borrowings under its Securitization Facility at a weighted average interest rate of 1.2 % and 1.3 %, respectively.

The fair value of the outstanding borrowing of the Securitization Facility at June 30, 2021 was $ 110.3 million.

At September 30, 2021 and December 31, 2020, the Company had $ 111.7 million and $ 112.5 million, respectively, of outstanding borrowings under its Securitization Facility at a weighted average interest rate of 1.2 % and 1.3 %, respectively.

The fair value of the outstanding borrowing of the Securitization Facility at September 30, 2021 was $ 108.0 million.

These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company.

1 unchanged sentence

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

DERIVATIVE INSTRUMENTS

4 unchanged sentences

These interest rate swaps apply a fixed interest rate on a portion of the Company's expected LIBOR-indexed floating-rate borrowings.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The Company held the following interest rate swaps as of June 30, 2021 and December 31, 2020 (dollar amounts in thousands):

June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020

The Company held the following interest rate swaps as of September 30, 2021 and December 31, 2020 (dollar amounts in thousands):

September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020

Hedged Item Notional Amount Designation Date Effective Date Termination Date Fixed Interest Rate Estimated Fair Value

23 unchanged sentences

For contracts not designated as hedging instruments, the changes in fair value of the contracts are recognized in other income, net in the consolidated statements of operation, along with the offsetting foreign currency gain or loss on the underlying assets or liabilities.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

During the fourth quarter of 2020, the Company entered into foreign currency forward contracts, with a notional amount of $ 9.7 million, to mitigate the foreign exchange risk related to certain intercompany loans denominated in Canadian Dollar ("CAD") and intercompany receivables denominated in Japanese Yen ("JPY").

The contracts are not designated as hedging instruments.

The Company recognized a $ 0.3 million loss from the change in fair value of the contracts, which was included in other income, net in the consolidated statement of operations as of June 30, 2021.

The Company recognized a $ 0.2 million loss from the change in fair value of the contracts, which was included in other income, net in the consolidated statement of operations as of September 30, 2021.

The Company subsequently settled its foreign currency forward contracts associated with the intercompany receivables denominated in JPY during the first quarter of 2021.

The fair value of the foreign currency forward contracts denominated in CAD was $ 0.3 million as of June 30, 2021.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The fair value of the foreign currency forward contracts denominated in CAD was $ 0.2 million as of September 30, 2021.

During the second quarter of 2021, the Company entered into a foreign currency swap, with a notional of $ 7.3 million to mitigate the risk from fluctuations in foreign currency exchange rates associated with certain intercompany loan denominated in Japanese Yen ("JPY").

14 unchanged sentences

Under the terms of these contracts, which have been designated as cash flow hedges, the Company will make interest payments in Swiss Francs and receive interest in U.S.

Upon the maturity of these contracts, the Company will pay the principal amount of the loans in Swiss Francs and receive U.S.

Upon the maturity of these contracts, the Company will pay the remaining principal amount of the loans in Swiss Francs and receive U.S.

dollars from the counterparties.

The Company held the following cross-currency rate swaps as of June 30, 2021 and December 31, 2020 (dollar amounts in thousands):

June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020

The Company held the following cross-currency rate swaps as of September 30, 2021 and December 31, 2020 (dollar amounts in thousands):

September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value

7 unchanged sentences

Total $ 8,759 $ ( 23,440 )

The cross-currency swaps are carried on the consolidated balance sheet at fair value, and changes in the fair values are recorded as unrealized gains or losses in AOCL.

For the three and six months ended June 30, 2021, the Company recorded a loss of $ 12.9 million and a gain of $ 30.0 million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation to offset the gains or losses recognized on the intercompany loans.

For the three and six months ended June 30, 2020, the Company recorded losses of $ 3.4 million and $ 5.1 million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation to offset the gains recognized on the intercompany loans.

For the three and six months ended June 30, 2021, the Company recorded a loss of $ 11.0 million and a gain of $ 29.2 million in AOCL, respectively, related to change in fair value of the cross-currency swaps.

For the three and six months ended June 30, 2020, the Company recorded a loss of $ 2.3 million and a gain of $ 3.6 million in AOCL, respectively, related to change in fair value of the cross-currency swaps.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

For the three and six months ended June 30, 2021, the Company recorded gains of $ 1.3 million and $ 2.5 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

For the three and six months ended June 30, 2020, the Company recorded gains of $ 1.5 million and $ 3.0 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

The estimated gain that is expected to be reclassified to other income (expense), net from AOCL as of June 30, 2021 within the next twelve months is $ 7.0 million.

As of June 30, 2021, the Company does not expect any gains or losses will be reclassified into earnings as a result of the discontinuance of these cash flow hedges because the original forecasted transaction will not occur.

On October 4, 2021 in accordance with the termination date, the Company settled a cross-currency swap designated as a cash flow hedge of an intercompany loan with an aggregate notional amount of $ 50.0 million.

The cross-currency swaps are carried on the consolidated balance sheet at fair value, and changes in the fair values are recorded as unrealized gains or losses in AOCL.

For the three and nine months ended September 30, 2021, the Company recorded gains of $ 4.3 million and $ 34.3 million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation to offset the losses recognized on the intercompany loans.

For the three and nine months ended September 30, 2020, the Company recorded losses of $ 6.9 million and $ 12.0 million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation to offset the gains recognized on the intercompany loans.

For the three and nine months ended September 30, 2021, the Company recorded gains of $ 7.0 million and $ 36.3 million in AOCL, respectively, related to change in fair value of the cross-currency swaps.

For the three and nine months ended September 30, 2020, the Company recorded a loss of $ 6.3 million and a gain of $ 2.7 million in AOCL, respectively, related to change in fair value of the cross-currency swaps.

For the three and nine months ended September 30, 2021, the Company recorded gains of $ 1.5 million and $ 4.1 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

For the three and nine months ended September 30, 2020, the Company recorded gains of $ 1.5 million and $ 4.5 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

The estimated gain that is expected to be reclassified to other income (expense), net from AOCL as of September 30, 2021 within the next twelve months is $ 6.9 million.

As of September 30, 2021, the Company does not expect any gains or losses will be reclassified into earnings as a result of the discontinuance of these cash flow hedges because the original forecasted transaction will not occur.

Net Investment Hedges

2 unchanged sentences

On October 1, 2018 and December 16, 2020, the Company entered into cross-currency swap agreements designated as net investment hedges to partially offset the effects of foreign currency on foreign subsidiaries.

The Company held the following cross-currency rate swaps designated as net investment hedges as of June 30, 2021 and December 31, 2020, respectively (dollar amounts in thousands):

June 30, 2021

The Company held the following cross-currency rate swaps designated as net investment hedges as of September 30, 2021 and December 31, 2020, respectively (dollar amounts in thousands):

September 30, 2021

December 31, 2020

10 unchanged sentences

Total $ 9,234 $ ( 6,036 )

During the nine months ended September 30, 2021, the Company settled cross-currency swaps designated as net investment hedge with an aggregate notional amount of $ 52 million equivalent to 44.9 million Euros based on the termination date.

As a result of the settlement, the Company recorded a gain of $ 0.1 million in AOCL.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The cross-currency swaps were carried on the consolidated balance sheet at fair value and changes in the fair values were recorded as unrealized gains or losses in AOCL.

For the three and six months ended June 30, 2021, the Company recorded gains of $ 0.1 million and $ 13.7 million, respectively, in AOCL related to the change in fair value of the cross-currency swaps.

For the three and six months ended June 30, 2020, the Company recorded a loss of $ 2.5 million and a gain of $ 16.4 million, respectively, in AOCL related to the change in fair value of the cross-currency swaps.

For the three and six months ended June 30, 2021, the Company recorded gains of $ 1.7 million and $ 3.4 million in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

For the three and six months ended June 30, 2020, the Company recorded gains of $ 2.2 million and $ 4.4 million in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

The estimated gain that is expected to be reclassified to interest income from AOCL as of June 30, 2021 within the next twelve months is $ 4.5 million.

For the three and nine months ended September 30, 2021, the Company recorded gains of $ 6.9 million and $ 20.5 million, respectively, in AOCL related to the change in fair value of the cross-currency swaps.

For the three and nine months ended September 30, 2020, the Company recorded a loss of $ 11.3 million and a gain of $ 5.1 million, respectively, in AOCL related to the change in fair value of the cross-currency swaps.

For the three and nine months ended September 30, 2021, the Company recorded gains of $ 1.7 million and $ 5.2 million in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

For the three and nine months ended September 30, 2020, the Company recorded gains of $ 2.2 million and $ 6.6 million in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

The estimated gain that is expected to be reclassified to interest income from AOCL as of September 30, 2021 within the next twelve months is $ 5.3 million.

Counterparty Credit Risk

2 unchanged sentences

Furthermore, none of the Company’s derivative transactions are subject to collateral or other security arrangements, and none contain provisions that depend upon the Company’s credit ratings from any credit rating agency.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Fair Value of Derivative Instruments

2 unchanged sentences

The Company performs ongoing assessments of counterparty credit risk.

The following table summarizes the fair value for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020:

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following table summarizes the fair value for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020:

Fair Value as of

Location on Balance Sheet (1) :

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Dollars in thousands

28 unchanged sentences

(1) The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months.

(2) At June 30, 2021 and December 31, 2020, the total notional amounts related to the Company’s interest rate swaps were $ 1.8 billion and $ 1.9 billion, respectively.

(2) At September 30, 2021 and December 31, 2020, the total notional amounts related to the Company’s interest rate swaps were $ 1.8 billion and $ 1.9 billion, respectively.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following presents the effect of derivative instruments designated as cash flow hedges on the accompanying condensed consolidated statement of operations during the three and six months ended June 30, 2021 and 2020:

Dollars in thousands Balance in AOCL

6 unchanged sentences

Statements of

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Cash Flow Hedges

4 unchanged sentences

$ ( 69,177 ) $ 16,415 $ 2,189 $ ( 54,951 )

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Cash Flow Hedges

12 unchanged sentences

Statements of

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Cash Flow Hedges

4 unchanged sentences

$ ( 107,133 ) $ 78,806 $ 26,624 $ ( 54,951 )

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Cash Flow Hedges

5 unchanged sentences

STOCK-BASED COMPENSATION

As of June 30, 2021, the Company had stock options, restricted stock awards, performance stock awards, contract stock awards and restricted stock unit awards outstanding under the 2003 Equity Incentive Plan (the “2003 Plan”).

As of September 30, 2021, the Company had stock options, restricted stock awards, performance stock awards, contract stock awards and restricted stock unit awards outstanding under the Integra LifeSciences Holdings Corporation Fifth Amended and Restated 2003 Equity Incentive Plan (the “2003 Plan”).

The 2000 and 2001 Equity Incentive Plans were terminated as of February 19, 2021, and no further awards may be issued under the plans.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Stock options issued under the 2003 Plan become exercisable over specified periods, generally within four years from the date of grant for officers and employees, within one year from date of grant for directors which generally expire eight years from the grant date for employees, and from six to ten years for directors and certain executive officers, except in certain instances that result in accelerated vesting due to death, disability, retirement age or change in-control provisions within their grant agreements.

2 unchanged sentences

The vesting of performance stock issued under the Plans is subject to service and performance conditions.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Stock Options

As of June 30, 2021, there were approximately $ 4.6 million of total unrecognized compensation costs related to unvested stock options.

These costs are expected to be recognized over a weighted-average period of approximately three years .

There were 149,558 stock options granted during the six months ended June 30, 2021.

For the six months ended June 30, 2021, the weighted average grant date fair value for stock options was $ 22.59 per option.

As of September 30, 2021, there were approximately $ 3.7 million of total unrecognized compensation costs related to unvested stock options.

These costs are expected to be recognized over a weighted-average period of approximately two years .

There were 149,558 stock options granted during the nine months ended September 30, 2021.

For the nine months ended September 30, 2021, the weighted average grant date fair value for stock options was $ 22.59 per option.

Awards of Restricted Stock and Performance Stock

2 unchanged sentences

The Company expenses the fair value of restricted stock awards on a straight-line basis over the requisite service period.

As of June 30, 2021, there was approximately $ 32.9 million of total unrecognized compensation costs related to these unvested awards.

As of September 30, 2021, there was approximately $ 26.8 million of total unrecognized compensation costs related to these unvested awards.

The Company expects to recognize these costs over a weighted-average period of approximately two years .

The Company granted 242,464 restricted stock awards and 176,147 performance stock awards during the six months ended June 30, 2021.

For the six months ended June 30, 2021, the weighted average grant date fair value for restricted stock awards and performance stock units was $ 68.21 and $ 68.10 per award, respectively.

The Company granted 258,265 restricted stock awards and 176,147 performance stock awards during the nine months ended September 30, 2021.

For the nine months ended September 30, 2021, the weighted average grant date fair value for restricted stock awards and performance stock units was $ 68.41 and $ 68.10 per award, respectively.

The Company also maintains an Employee Stock Purchase Plan (the “ESPP”), which provides eligible employees with the opportunity to acquire shares of common stock at periodic intervals by means of accumulated payroll deductions.

2 unchanged sentences

The Company maintains defined benefit pension plans that cover certain employees in France, Japan, Germany and Switzerland.

Net periodic benefit costs for the Company’s defined benefit pension plans for three and the six months ended June 30, 2021 were $ 0.6 million and $ 1.2 million.

The components of the net periodic benefit costs other than the service cost component of $ 0.8 million and $ 1.7 million for the three and six months ended June 30, 2021, are included in other income (expense), net in the consolidated statements of operations.

Net periodic benefit costs for the Company’s defined benefit pension plans for the three and six months ended June 30, 2020 were $ 1.0 million and $ 1.9 million, respectively.

The components of the net periodic benefit costs other than the service cost component of $ 0.9 million and $ 1.9 million for the three and six months ended June 30, 2020, respectively, are included in other income (expense), net in the consolidated statements of operations.

The estimated fair values of plan assets were $ 33.8 million and $ 37.8 million as of June 30, 2021 and December 31, 2020, respectively.

The net plan assets of the pension plans are invested in common trusts as of June 30, 2021 and December 31, 2020.

Net periodic benefit costs for the Company’s defined benefit pension plans for three and the nine months ended September 30, 2021 were $ 0.5 million and $ 1.8 million.

The components of the net periodic benefit costs other than the service cost component of $ 0.8 million and $ 2.4 million for the three and nine months ended September 30, 2021, are included in other income, net in the consolidated statements of operations.

Net periodic benefit costs for the Company’s defined benefit pension plans for the three and nine months ended September 30, 2020 were $ 1.0 million and $ 3.0 million, respectively.

The components of the net periodic benefit costs other than the service cost component of $ 1.0 million and $ 2.9 million for the three and nine months ended September 30, 2020 respectively, are included in other income, net in the consolidated statements of operations.

The estimated fair values of plan assets were $ 34.0 million and $ 37.8 million as of September 30, 2021 and December 31, 2020, respectively.

The net plan assets of the pension plans are invested in common trusts as of September 30, 2021 and December 31, 2020.

Common trusts are classified as Level 2 in the fair value hierarchy.

3 unchanged sentences

The Company maintains a Deferred Compensation Plan in which certain employees of the Company may defer the payment and taxation of up to 75 % of their base salary and up to 100 % of bonus amounts and other eligible cash compensation.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

During the first quarter of 2020, employees participating in the Company's deferred compensation plan began to defer their compensation.

1 unchanged sentence

Assets of the Company's deferred compensation plan are included in other current assets and recorded at fair value based on their quoted market prices.

The fair value of these assets were $ 3.2 million and $ 2.0 million as of June 30, 2021 and December 31, 2020, respectively.

The fair value of these assets at September 30, 2021 were $ 3.4 million and $ 2.0 million as of September 30, 2021and December 31, 2020.

Offsetting liabilities relating to the deferred compensation plan are included in Other liabilities.

1 unchanged sentence

The Company leases administrative, manufacturing, research and distribution facilities and vehicles through operating lease agreements.

The Company has no finance leases as of June 30, 2021.

The Company has no finance leases as of September 30, 2021.

Many of the Company's leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common-area or other maintenance costs).

For vehicles, the Company has elected the practical expedient to group lease and non-lease components.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Most facility leases include one or more options to renew.

2 unchanged sentences

As most of the Company's leases do not provide an implicit rate, the Company uses a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

Total operating lease expense for the six months ended June 30, 2021 and June 30, 2020 was $ 10.6 million and $ 9.7 million respectively, which includes $ 0.1 million, in related party operating lease expense.

Total operating lease expense for the nine months ended September 30, 2021 and September 30, 2020 was $ 15.7 million and $ 14.6 million respectively, which includes $ 0.2 million, in related party operating lease expense.

Supplemental balance sheet information related to operating leases were as follows:

Dollars in thousands, except lease term and discount rate June 30, 2021

Dollars in thousands, except lease term and discount rate September 30, 2021

December 31, 2020

9 unchanged sentences

Leased vehicles 2.5 % 2.3 %

Supplemental cash flow information related to leases for the six months ended June 30, 2021 and 2020 were as follows:

Dollars in thousands June 30, 2021 June 30, 2020

Supplemental cash flow information related to leases for the nine months ended September 30, 2021 and 2020 were as follows:

Dollars in thousands September 30, 2021 September 30, 2020

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Operating leases $ 10,725 $ 6,007

Future minimum lease payments under operating leases at June 30, 2021 were as follows:

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Future minimum lease payments under operating leases at September 30, 2021 were as follows:

Dollars in thousands Related Parties Third Parties Total

11 unchanged sentences

Long-term lease liabilities 94,840

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Related Party Leases

3 unchanged sentences

TREASURY STOCK

As of June 30, 2021 and December 31, 2020, there were 4.9 million shares of treasury stock outstanding with a cost of $ 234.5 million and $ 235.1 million, respectively, at a weighted average cost per share of $ 47.86 .

On December 7, 2020, the Board of Directors of the Company authorized the Company to repurchase up to $ 225.0 million of the Company’s common stock.

As of September 30, 2021 and December 31, 2020, there were 4.9 million shares of treasury stock outstanding with a cost of $ 234.4 million and $ 235.1 million, respectively, at a weighted average cost per share of $ 47.86 .

On December 7, 2020, the Board of Directors of the Company (the "Board") authorized the Company to repurchase up to $ 225.0 million of the Company’s common stock.

The program allows the Company to repurchase its shares opportunistically from time to time.

1 unchanged sentence

The Company has $ 225.0 million remaining under the share repurchase of its common stock.

The price and timing of any future purchases under the share repurchase program will depend on factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, dividends, economic and market conditions and stock price.

During the twelve months ended December 31, 2020, the Company repurchased 2.1 million shares of Integra’s common stock as part of the previous share repurchase authorization.

4 unchanged sentences

Upon settlement of the ASR in June 2020, the Company received an additional 0.6 million shares determined using the volume-weighted average price of the Company's common stock during the term of the transaction.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following table provides a summary of the Company's effective tax rate:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Reported tax rate 14.9 % 22.1 % 24.1 % 24.6 %

The Company’s effective income tax rates for the three months ended June 30, 2021 and 2020 w ere 21.8 % and 122.4 %, respectively.

For the three months ended June 30, 2021, the primary driver of the lower tax rate is due to mix of income impacted by the COVID-19 pandemic.

For the three months ended June 30, 2020, the primary drivers of the higher tax rate was lower income impacted by the COVID-19 pandemic and a $ 3.4 million valuation allowance on certain foreign deferred tax assets.

The Company's effective income tax rates for the six months ended June 30, 2021 and 2020 were 28.2 % and 32.7 %, respectively.

For the six months ended June 30, 2021, the primary drivers of the lower tax rate were mix of income in lower-taxes jurisdictions, offset by the tax impact of the gain on the sale of the Extremity and Orthopedics business which was completed during the first quarter of 2021.

For the six months ended June 30, 2020, the primary drivers of the higher tax rate were lower book income in low er-taxed jurisdictions and a $ 3.4 million valuation allowance on certain foreign deferred tax assets as the Company determined that it was no longer more likely than not that these foreign deferred tax assets would be realized due to the adverse impact of the COVID-19 pandemic in certain jurisdictions.

As of June 30, 2021, the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed indefinitely reinvested.

Such taxes would primarily be attributable to foreign withholding taxes and local income taxes when such earnings are distributed.

As such, the Company has determined the tax impact of repatriating these earnings would not be material as of June 30, 2021.

The Company’s effective income tax rates for the three months ended September 30, 2021 and 2020 w ere 14.9 % and 22.1 %, respectively.

For the three months ended September 30, 2021, the primary drivers of the tax rate are due to the jurisdictional mix of income and a benefit related to excess tax benefits from stock compensation.

For the three months ended September 30, 2020, the primary drivers of the tax rate are due to the jurisdictional mix of income and a $ 4.2 million recognition of a deferred tax liability related to an outside tax basis from the sale of the Extremity Orthopedics business, offset by the reversal of $ 3.2 million valuation allowance on certain foreign deferred tax assets as the Company determined that it was more likely than not that these foreign deferred tax assets would be realized.

The Company's effective income tax rates for the nine months ended September 30, 2021 and 2020 were 24.1 % and 24.6 %, respectively.

For the nine months ended September 30, 2021, the primary drivers of the tax rate are due to the jurisdictional mix of income and a benefit related to excess tax benefits from stock compensation, offset by the tax impact of the gain on the sale of the Extremity and Orthopedics business which was completed during the first quarter of 2021.

For the nine months ended September 30, 2020, the primary drivers of the tax rate are the jurisdictional mix of income and a $ 4.2 million recognition of a deferred tax liability related to an outside tax basis from the sale of the Extremity Orthopedics business.

Additionally, changes to income tax laws and regulations, in any of the tax jurisdictions in which the Company operates, could impact the effective tax rate.

Various governments, both U.S.

and non-U.S., are increasingly focused on tax reform and revenue-raising legislation.

The current U.S.

administration has proposed tax reform which, if enacted, would increase the Company’s U.S.

federal income tax liability.

Further, legislation in foreign jurisdictions may be enacted, in response to the base erosion and profit-shifting (BEPS) project begun by the Organization for Economic Cooperation and Development (OECD).

The OECD recently finalized major reform of the international tax system with respect to a minimum tax rate.

Such changes in U.S.

jurisdictions could have an adverse effect on the Company’s effective tax rate.

As of September 30, 2021, the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed indefinitely reinvested unless there is a manner under which to remit the earnings with no material tax cost.

Material taxes would primarily be attributable to foreign withholding taxes and local income taxes when such earnings are distributed.

The Company will repatriate foreign earnings when there is no need for reinvestment overseas and no material tax cost to bring the earnings back to the United States.

Reinvestment considerations would include future acquisitions, transactions, and capital expenditure plans.

The Company does not anticipate the need to repatriate earnings from foreign subsidiaries as a result of the impact of the COVID-19 pandemic.

3 unchanged sentences

Basic and diluted net income per share was as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Dollars in thousands, except per share amounts 2021 2020 2021 2020

Basic net income per share:

Net income (loss) $ 35,068 $ ( 369 ) $ 80,462 $ 8,811

Net income $ 43,229 $ 32,337 $ 123,691 $ 41,148

Weighted average common shares outstanding 84,754 84,325 84,647 84,745

1 unchanged sentence

Diluted net income per share:

Net income (loss) $ 35,068 $ ( 369 ) $ 80,462 $ 8,811

Net income $ 43,229 $ 32,337 $ 123,691 $ 41,148

Weighted average common shares outstanding — Basic 84,754 84,325 84,647 84,745

3 unchanged sentences

Diluted net income per common share $ 0.51 $ 0.38 $ 1.45 $ 0.48

Common stock of approximately 0.1 million and 0.5 million shares at June 30, 2021, and 2020, respectively that are issuable through exercise of dilutive securities were not included in the computation of diluted net income per share because their effect would have been anti-dilutive.

Common stock of approximately 0.1 million an d 0.6 million shares at September 30, 2021, and 2020, res pectively that are issuable through exercise of dilutive securities were not included in the computation of diluted net income per share because their effect would have been anti-dilutive.

Performance Shares and Restricted Units that entitle the holders to approximately 0.5 million shares of common stock are included in the basic and diluted weighted average shares outstanding calculation from their date of issuance because no further consideration is due related to the issuance of the underlying common shares.

1 unchanged sentence

ACCUMULATED OTHER COMPREHENSIVE LOSS

Comprehensive income (loss) for the six months ended June 30, 2021 and 2020 was as follows:

Three Months Ended June 30, Six Months Ended June 30,

Comprehensive income for the nine months ended September 30, 2021 and 2020 was as follows:

Three Months Ended September 30, Nine Months Ended September 30,

Dollars in thousands 2021 2020 2021 2020

Net income (loss) $ 35,068 $ ( 369 ) $ 80,462 $ 8,811

Net income $ 43,229 $ 32,337 $ 123,691 $ 41,148

Foreign currency translation adjustment ( 7,815 ) 21,181 ( 13,058 ) 24,801

1 unchanged sentence

Pension liability adjustment, net of tax 39 ( 291 ) 267 ( 498 )

Comprehensive income (loss), net $ 28,731 $ 1,095 $ 104,558 $ ( 17,912 )

Comprehensive income, net $ 46,417 $ 43,548 $ 150,975 $ 25,637

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Changes in accumulated other comprehensive loss by component between December 31, 2020 and June 30, 2021 are presented in the table below, net of tax:

Changes in accumulated other comprehensive loss by component between December 31, 2020 and September 30, 2021 are presented in the table below, net of tax:

Dollars in thousands Gains and Losses on Derivatives Defined Benefit Pension Items Foreign Currency Items Total

3 unchanged sentences

Net current-period other comprehensive income (loss) 40,076 267 ( 13,058 ) 27,285

Balance at June 30, 2021 $ ( 53,138 ) $ ( 4,877 ) $ 8,052 $ ( 49,963 )

For the six months ended June 30, 2021, the Company reclassified a gain of $ 25.0 million and a loss of $ 6.2 million from accumulated other comprehensive loss to other income (expense), net and interest income.

Balance at September 30, 2021 $ ( 42,173 ) $ ( 4,838 ) $ 237 $ ( 46,774 )

For the nine months ended September 30, 2021, the Company reclassified a gain of $ 29.5 million and a loss of $ 9.1 million from accumulated other comprehensive loss to other income, net and interest income.

SEGMENT AND GEOGRAPHIC INFORMATION

6 unchanged sentences

The operating results of the various reportable segments as presented are not comparable to one another because (i) certain operating segments are more dependent than others on corporate functions for unallocated general and administrative and/or operational manufacturing functions and (ii) the Company does not allocate certain manufacturing costs and general and administrative costs to the operating segment results.

Net sales and profit by each reportable segment for the three and six months ended June 30, 2021 and 2020 are as follows :

Three Months Ended June 30, Six Months Ended June 30,

Net sales and profit by each reportable segment for the three and nine months ended September 30, 2021 and 2020 are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

Dollars in thousands 2021 2020 2021 2020

18 unchanged sentences

Total revenue by major geographic area consisted of the following:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Dollars in thousands 2021 2020 2021 2020

14 unchanged sentences

Contingent Consideration

The Company determined the fair value of contingent consideration during the six month period ended June 30, 2021 and June 30, 2020 to reflect the change in estimates, additions, payments, transfers and the time value of money during the period.

A reconciliation of the opening balances to the closing balances of these Level 3 measurements for the six months ended June 30, 2021 and June 30, 2020 is as follows (in thousands):

Six Months Ended June 30, 2021 Contingent Consideration Liability Related to Acquisition of:

The Company determined the fair value of contingent consideration during the nine month period ended September 30, 2021 and September 30, 2020 to reflect the change in estimates, additions, payments, transfers and the time value of money during the period.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

A reconciliation of the opening balances to the closing balances of these Level 3 measurements for the nine months ended September 30, 2021 and September 30, 2020 is as follows (in thousands):

Nine Months Ended September 30, 2021 Contingent Consideration Liability Related to Acquisition of:

Arkis Location in Financial Statements Derma Sciences ACell Inc.

4 unchanged sentences

Transfers ( 3,415 ) 3,415 — —

Gain (loss) from change in fair value of contingent consideration liabilities 17 $ ( 402 ) Research and development — ( 400 ) Selling, general and administrative

Balance as of June 30, 2021 $ — $ 14,776 $ 230 $ 23,500

Six Months Ended June 30, 2020 Contingent Consideration Liability Related to Acquisition of:

Change in fair value of contingent consideration liabilities — $ ( 544 ) Research and development — ( 900 ) Selling, general and administrative

Balance as of September 30, 2021 $ — $ 14,617 $ 230 $ 23,000

Nine Months Ended September 30, 2020 Contingent Consideration Liability Related to Acquisition of:

Arkis Derma Sciences Location in Financial Statements

1 unchanged sentence

Balance as of January 1, 2020 $ 14,210 $ 230

Loss from change in fair value of contingent consideration liabilities ( 708 ) — Research and development

Balance as of June 30, 2020 $ 13,502 $ 230

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Change in fair value of contingent consideration liabilities ( 45 ) — Research and development

Balance as of September 30, 2020 $ 14,165 $ 230

Arkis BioSciences Inc.

1 unchanged sentence

("Arkis") for an acquisition purchase price of $ 30.6 million (the "Arkis Acquisition") plus contingent consideration of up to $ 25.5 million, that may be payable based on the successful completion of certain development and commercial milestones.

Arkis was a privately-held company that marketed the CerebroFlo® external ventricular drainage (EVD) catheter with Endexo® technology, a permanent additive designed to reduce the potential for catheter obstruction due to thrombus formation.

Arkis was a privately-held company that marketed the CerebroFlo ® external ventricular drainage catheter with Endexo® technology, a permanent additive designed to reduce the potential for catheter obstruction due to thrombus formation.

As part of the acquisition, the Company is required to pay the former shareholders of Arkis up to $ 25.5 million based on the timing of certain development milestones of $ 10.0 million and commercial sales milestones of $ 15.5 million, respectively.

1 unchanged sentence

The Company estimated the fair value of the contingent consideration to be $ 13.1 million at the acquisition date.

The estimated fair value as of June 30, 2021 and June 30, 2020 was $ 14.8 million and $ 13.5 million, respectively.

The Company recorded $ 14.8 million and $ 13.5 million in other liabilities at June 30, 2021 and June 30, 2020, respectively, in the consolidated balance sheet of the Company.

The estimated fair value as of September 30, 2021 and September 30, 2020 was $ 14.6 million and $ 14.2 million, respectively.

The Company recorded $ 14.6 million and $ 14.2 million in other liabilities at September 30, 2021 and September 30, 2020, respectively, in the consolidated balance sheet of the Company.

Derma Sciences

5 unchanged sentences

The potential maximum undiscounted payment amounts to $ 3.0 million.

The estimated fair value as of June 30, 2021 and June 30, 2020 was $ 0.2 million.

The estimated fair value as of September 30, 2021 and September 30, 2020 was $ 0.2 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements