What changed in this filing

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Item 1. Financial Statements

2022-07-27 compared with 2022-04-27 · 252 added, 171 removed, 760 unchanged (36% of the section changed)

4 unchanged sentences

(Dollars in thousands, except per share amounts)

Three Months Ended March 31,

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

2022 2021 2022 2021

Total revenue, net $ 397,815 $ 389,992 $ 774,453 $ 750,063

8 unchanged sentences

Interest expense ( 12,236 ) ( 13,149 ) ( 23,891 ) ( 26,078 )

Gain from the sale of business — 42,876

Gain (loss) from the sale of business — ( 679 ) — 42,197

Other income, net 1,979 5,034 5,408 9,903

13 unchanged sentences

(Dollars in thousands, except per share amounts)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets:

4 unchanged sentences

Prepaid expenses and other current assets 102,168 91,051

Assets held for sale 30,525 —

Total current assets 1,137,414 1,153,716

14 unchanged sentences

Accrued expenses and other current liabilities 85,403 120,458

Liabilities held for sale 2,303 —

Total current liabilities 295,596 340,021

14 unchanged sentences

240,000 authorized shares;

89,956 and 89,600 issued at March 31, 2022 and December 31, 2021, respectively

90,334 and 89,600 issued at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 1,259,852 1,264,943

Treasury stock, at cost;

6,823 shares and 4,899 shares at March 31, 2022 and December 31, 2021, respectively

6,823 shares and 4,899 shares at June 30, 2022 and December 31, 2021, respectively

( 362,880 ) ( 234,448 )

7 unchanged sentences

(Dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

OPERATING ACTIVITIES:

23 unchanged sentences

Acquired in-process research and development milestone ( 4,742 ) —

Net proceeds from swaps designated as net investment hedges 4,909 —

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

3 unchanged sentences

Payments on debt ( 23,000 ) ( 102,200 )

Payment of debt issuance costs — ( 249 )

Purchases of treasury stock ( 125,000 ) —

10 unchanged sentences

(Dollars in thousands)

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

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

8 unchanged sentences

Balance, March 31, 2022 89,956 $ 900 ( 6,823 ) $ ( 362,886 ) $ 1,266,739 $ ( 21,025 ) $ 731,469 $ 1,615,197

Three Months Ended March 31, 2021

Net income — — — — — — 44,788 44,788

Other comprehensive loss, net of tax — — — — — 7,810 — 7,810

Issuance of common stock for vesting of share based awards, net of shares withheld for taxes 378 3 — 6 ( 13,655 ) — — ( 13,646 )

Share-based compensation — — — — 6,768 — — 6,768

Balance, June 30, 2022 90,334 $ 903 ( 6,823 ) $ ( 362,880 ) $ 1,259,852 $ ( 13,215 ) $ 776,257 $ 1,660,917

Six Months Ended June 30, 2021

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

9 unchanged sentences

Balance, March 31, 2021 89,406 $ 894 ( 4,899 ) $ ( 234,461 ) $ 1,231,638 $ ( 43,627 ) $ 574,887 $ 1,529,331

Net income — — — — — — 35,068 35,068

Other comprehensive loss, net of tax — — — — — ( 6,336 ) — ( 6,336 )

Issuance of common stock for vesting of share based awards, net of shares withheld for taxes 68 1 — — 1,175 — — 1,176

Share-based compensation — — — — 15,742 — — 15,742

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

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 March 31, 2022 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.

In the opinion of management, the June 30, 2022 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, 2021 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-month period ended March 31, 2022 are not necessarily indicative of the results to be expected for the entire year.

Operating results for the three and six-month period ended June 30, 2022 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

The COVID-19 pandemic has had, and may continue to have, an adverse effect on the Company’s business, results of operations, financial condition, and cash flows, and its future impacts remain highly uncertain and unpredictable.

Although there was not a material impact to the Company’s consolidated financial statements as of and for the three months ended March 31, 2022, changes in the Company’s assessment about the length and severity of the pandemic, as well as other factors, could result in actual results differing from estimates.

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.

Although there was not a material impact to the Company’s consolidated financial statements as of and for the six months ended June 30, 2022, changes in the Company’s assessment about the length and severity of the pandemic, as well as other factors, could result in actual results differing from estimates.

Even after the COVID-19 pandemic and government responses thereto have subsided, residual economic and other effects may have an impact on the demand for post-pandemic surgery levels that are difficult to predict.

2 unchanged sentences

Employee Termination Benefits

The Company incurred restructuring costs related to employee terminations associated with a future plant closure in the consolidated statement of operations for the three months ended March 31, 2022.

Restructuring liability is included in accrued expenses and other current liabilities in the consolidated balance sheet for the three months ended March 31, 2022 and December 31, 2021 , respectively.

Restructuring liability activity for the three months ended March 31, 2022 were as follows:

The Company incurred restructuring costs related to employee terminations associated with a plant closure and future outsourcing plans for select transactional back office activities in the consolidated statement of operations for the six months ended June 30, 2022.

The following table summarizes our restructuring related accrual balances included within accrued expenses and other current liabilities in the consolidated balance sheet for the six months ended June 30, 2022.

All balances are expected to be paid within the current fiscal year.

(Dollars in thousands) Amount

3 unchanged sentences

Selling, general and administrative 1,807

Adjustments $ ( 365 )

Balance at March 31, 2022 $ 11,119

Payments and other adjustments $ ( 6,885 )

Balance at June 30,2022 $ 6,698

Recent Accounting Pronouncements

11 unchanged sentences

The amendments in this ASU affect the guidance in ASU 2020-04 and are effective in the same timeframe as ASU 2020-04.

The Company currently has contracts that are indexed to LIBOR and are continuing to monitor this activity and evaluate the associated risk.

The Company is continuing to evaluate the scope of impacted contracts and the potential impact.

The Company currently has contracts that are indexed to LIBOR and are continuing to evaluate the scope of impacted contracts and potential risk.

The Company is also monitoring the developments regarding alternative rates and may amend certain contracts to accommodate those rates if the contract does not already specify a replacement rate.

5 unchanged sentences

The guidance also simplifies the diluted net income per share calculation in certain areas.

The ASU will be effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years using either the modified retrospective or full retrospective method.

The ASU was effective for annual and interim periods beginning after December 15, 2021, and early adoption was permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years using either the modified retrospective or full retrospective method.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

25 unchanged sentences

There are no other recently issued accounting pronouncements that are expected to have any significant effect on the Company's financial position, results of operations or cash flows.

ASSETS AND LIABILITIES HELD FOR SALE

On May 20 2022, the Company and certain of its subsidiaries, entered into an agreement to sell its non-core traditional wound care ("TWC") business to Gentell, LLC for $ 28.8 million, which consists of $ 27.8 million in cash plus $ 1.0 million in contingent consideration which may be received upon achieving certain revenue-based performance milestones.

The transaction includes the sale of the Company's TWC products, such as sponges, gauze and conforming bandages, and certain advanced wound care dressings, such as supportive, calcium alginate, hydrogel, and foam dressings.

This transaction is expected to close during the third quarter of 2022, subject to the satisfaction of customary conditions.

The Company considered the assets and liabilities associated with the TWC business to be accounted as held-for-sale as the six criteria under ASC 260 were met during the second quarter of 2022.

Upon designation of the assets and liabilities as held for sale, the Company recorded the assets at the lower of their carrying value or their estimated fair value, less estimated costs to sell.

Goodwill was allocated to the assets and liabilities held for sale using the relative fair value method of the TWC business to the Company's Tissue Technologies reporting unit.

The fair value of the business less costs to sell exceeded the related carrying value.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The TWC business was treated as a single disposal group and presented separately in the condensed consolidated balance sheet as assets and liabilities held for sale as of June 30, 2022.

These balances are presented as current assets and liabilities as they are expected to be sold within twelve months.

The sale of the TWC business does not represent a strategic shift that will have a major effect on the Company's operations and financial statements.

The major classes of assets and liabilities classified as a held for sale consisted of the following as of June 30, 2022 (dollar amounts in thousands):

Other assets $ 53

Deferred tax assets 178

Prepaid expenses and other current assets 338

Right of use asset - operating leases 1,316

Property, plant, and equipment, net 3,752

Goodwill 5,083

Inventories, net 9,275

Intangible assets, net 10,530

Total assets held for sale $ 30,525

Accrued expenses and other current liabilities $ 102

Current portion of lease liability - operating leases 584

Lease liability - operating leases 742

Deferred tax liabilities

Total liabilities held for sale $ 2,303

ACQUISITIONS AND DIVESTITURES

3 unchanged sentences

The Company received an aggregate purchase price of $ 240.0 million from Smith & Nephew and concurrently paid $ 41.5 million to the Consortium of Focused Orthopedists, LLC ("CFO") effectively terminating the licensing agreement between Integra and the CFO relating to the development of shoulder arthroplasty products.

The divestiture does not represent a strategic shift that will have a major effect on the Company's operations and financial statements.

The divestiture did not represent a strategic shift that had a major effect on the Company's operations and financial statements.

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 reportable business segment.

In connection with the sale, the Company recognized a preliminary gain of $ 42.9 million that was presented in Gain from the sale of business in the consolidated statement of operations for the three months ended March 31, 2021.

The gain was finalized at $ 41.8 million as Gain from the sale of business for the year ended December 31, 2021.

In connection with the sale, the Company recognized a $ 41.8 million as Gain from the sale of business in the consolidated statement of operations for the year ended December 31, 2021.

The Company finalized the net working capital and paid an additional $ 1.3 million to Smith & Nephew as of December 31, 2021.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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 transition services agreement.

The Company also recognized a payable due to Smith & Nephew of $ 8.5 million for invoicing and cash collection from customers on behalf of Smith & Nephew, pursuant to the transition services agreement, as of March 31, 2022, which is included in the consolidated balance sheets within accrued expenses and other current liabilities.

In April 2022, the Company and Smith & Nephew completed a significant portion of the transition service agreement, including order-to-cash.

The Company also entered into a transition services agreement ("TSA") 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 TSA.

The Company recognized a payable due to Smith & Nephew of $ 6.5 million as of June 30, 2022, which is included in the consolidated balance sheets within accrued expenses and other current liabilities.

The TSA includes services such as invoicing and cash collections from customers on behalf of Smith & Nephew.

As of June 30, 2022, the Company has concluded the majority of the transition services agreement, pending final payment.

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

5 unchanged sentences

This method requires that assets acquired and liabilities assumed in a business combination are recognized at their fair values as of the acquisition date.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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

23 unchanged sentences

Net assets acquired $ 306,938

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Intangible Assets

7 unchanged sentences

Goodwill recognized as a result of this acquisition is non-deductible for income tax purposes.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Contingent Consideration

As part of the ACell Acquisition, the Company is required to make payments to the former shareholders of ACell up to $ 100 million based on the achievement by the Company 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 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 March 31, 2022 was $ 22.1 million.

The Company recorded $ 17.2 million and $ 23.9 million in other liabilities at March 31, 2022 and March 31, 2021, respectively, and $ 4.9 million in as accrued expenses and other current liabilities at March 31, 2022 in the consolidated balance sheet of the Company.

The estimated fair value as of June 30, 2022 was $ 18.1 million.

The Company recorded $ 18.1 million and $ 23.5 million in other liabilities at June 30, 2022 and June 30, 2021, respectively, in the consolidated balance sheets of the Company.

The change in the fair value of the contingent obligation was primarily as a result of changes in estimates related to the timing of achieving these revenue-based performance milestones for each given year.

The Company determined 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.

17 unchanged sentences

Historically, such adjustments have not been significant.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The Company estimates returns, price concessions, and discount allowances using the expected value method based on historical trends and other known factors.

6 unchanged sentences

Revenues recognized from the Company's private label business that are not invoiced to the customers as a result of recognizing revenue over time are recorded as a contract asset included in the prepaid expenses and other current assets account in the consolidated balance sheet.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Other operating revenues may include fees received under service agreements.

1 unchanged sentence

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 summarized the changes in the contract asset and liability balances for the three months ended March 31, 2022:

The following table summarized the changes in the contract asset and liability balances for the six months ended June 30, 2022:

Dollars in thousands Total

3 unchanged sentences

Contract asset, net of transferred to trade receivables on contracts during the period 10,568

Contract asset, March 31, 2022

Contract asset, June 30, 2022

Contract Liability

3 unchanged sentences

Foreign currency translation ( 60 )

Contract liability, March 31, 2022

At March 31, 2022, the short-term portion of the contract liability of $ 5.3 million and the long-term portion of $ 6.9 million is included in current liabilities and other liabilities, respectively, in the consolidated balance sheets.

As of March 31, 2022, the Company is expected to recognize revenue of approximately 44 % of unsatisfied (or partially unsatisfied) performance obligations as revenue within twelve months , with the remaining balance to be recognized thereafter.

Contract liability, June 30, 2022

At June 30, 2022, the short-term portion of the contract liability of $ 5.4 million and the long-term portion of $ 7.2 million is included in current liabilities and other liabilities, respectively, in the consolidated balance sheets.

As of June 30, 2022, the Company is expected to recognize revenue of approximately 43 % of unsatisfied (or partially unsatisfied) performance obligations as revenue within twelve months , with the remaining balance to be recognized thereafter.

Shipping and Handling Fees

8 unchanged sentences

The Company includes them in accrued expenses and other current liabilities in the consolidated balance sheet.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Taxes Collected from Customers

The Company elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Disaggregated Revenue

The following table presents revenues disaggregated by the major sources of revenues for the three months ended March 31, 2022 and 2021 (dollar amounts in thousands):

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

The following table presents revenues disaggregated by the major sources of revenues for the three and six months ended June 30, 2022 and 2021 (dollar amounts in thousands):

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Neurosurgery $ 200,295 $ 202,600 $ 394,970 $ 391,854

5 unchanged sentences

Total revenue $ 397,815 $ 389,992 $ 774,453 $ 750,063

On May 20 2022, the Company and certain of its subsidiaries, entered into an agreement to sell its non-core traditional wound care ("TWC") business.

Assets and Liabilities Held for Sale.

See Note 16, Segment and Geographical Information , for details of revenues based on the location of the customer.

Inventories, net consisted of the following:

Dollars in thousands March 31, 2022 December 31, 2021

Dollars in thousands June 30, 2022 December 31, 2021

Finished goods $ 164,277 $ 162,528

2 unchanged sentences

Total inventories, net $ 320,208 $ 317,386

At June 30, 2022, $ 9.3 million of inventories, net were presented separately as "assets held for sale" in conjunction with the sale of the TWC business.

Assets and Liabilities Held for Sale.

GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the three-month period ended March 31, 2022 were as follows:

Changes in the carrying amount of goodwill for the six-month period ended June 30, 2022 were as follows:

Dollars in thousands Codman Specialty

1 unchanged sentence

Goodwill at December 31, 2021 $ 663,428 $ 350,030 $ 1,013,458

Transfer to assets held for sale (1)

— ( 5,083 ) ( 5,083 )

Foreign currency translation ( 11,822 ) ( 6,147 ) ( 17,969 )

Goodwill at March 31, 2022

Goodwill at June 30, 2022

$ 651,606 $ 338,800 $ 990,406

(1) See Note 2.

Assets and Liabilities Held for Sale

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

2 unchanged sentences

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

March 31, 2022

June 30, 2022

Dollars in thousands Weighted

19 unchanged sentences

$ 1,646,892 $ ( 501,319 ) $ 1,145,573

At June 30, 2022, $ 10.5 million of customer relationships, net were presented separately as "assets held for sale" in conjunction with the sale of the TWC business.

Assets and Liabilities Held for Sale.

Based on quarter-end exchange rates, amortization expense (including amounts reported in cost of goods sold) is expected to be approximately $ 38.4 million for the remainder of 2022, $ 76.5 million in 2023, $ 75.8 million in 2024, $ 75.8 million in 2025, $ 75.7 million in 2026, $ 73.7 million in 2027 and $ 499.8 million thereafter.

4 unchanged sentences

(i) a $ 877.5 million Term Loan facility, and (ii) a $ 1.3 billion revolving credit facility, which includes a $ 60 million sublimit for the issuance of standby letters of credit and a $ 60 million sublimit for swingline loans.

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 through June 30, 2021, in light of the unprecedented impact and uncertainty of the COVID-19 pandemic on the global economy.

The July 2020 amendment 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:

The Company’s maximum consolidated total leverage ratio in the financial covenants (as defined in the Senior Credit Facility) is the following:

Fiscal Quarter Maximum Consolidated Total Leverage Ratio

Execution of July 2020 Amendment through June 30, 2021 5.50 to 1.00

September 30, 2021 through June 30, 2022 5.00 to 1.00

1 unchanged sentence

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

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

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:

the Eurodollar Rate (as defined in the amendment and restatement) in effect from time to time plus the applicable rate (ranging from 1.00 % to 2.25 %), or

3 unchanged sentences

the one-month Eurodollar Rate plus 1.00 %

The applicable rates are based on the Company’s consolidated total leverage ratio (defined as the ratio of (a) consolidated funded indebtedness as of such date less cash that is not subject to any restriction on the use or investment thereof to (b) consolidated EBITDA (as defined by the July 2020 amendment), for the period of four consecutive fiscal quarters ending on such date).

The applicable rates are based on the Company’s consolidated total leverage ratio (defined as the ratio of (a) consolidated funded indebtedness as of such date less cash that is not subject to any restriction on the use or investment thereof to (b) consolidated EBITDA, for the period of four consecutive fiscal quarters ending on such date).

The Company will pay an annual commitment fee (ranging from 0.15 % to 0.30 %), based on the Company's consolidated total leverage ratio, on the amount available for borrowing under the revolving credit facility.

1 unchanged sentence

subsidiaries, excluding intangible assets.

The Senior Credit Facility is subject to various financial and negative covenants and at March 31, 2022, the Company was in compliance with all such covenants.

At March 31, 2022 and December 31, 2021, there wa s $ 42.5 million an d $ 31.3 million, respectively, ou tstanding under the revolving portion of the Senior Credit Facility at weighted average interest rates of 1.7 % and 1.4 %, respectively.

At March 31, 2022 and December 31, 2021, there was $ 832.5 million and $ 843.8 million, respectively, outstanding under the Term Loan component of the Senior Credit Facility at a weighted average interest rate of 1.7 % and 1.4 %, respectively.

At both March 31, 2022 and December 31, 2021, there was $ 45.0 million, of the Term Loan component of the Senior Credit Facility classified as current on the consolidated balance sheets.

The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit and Term Loan components at March 31, 2022 wer e $ 43.4 million and $ 847.4 million, re sp ectively.

The Senior Credit Facility is subject to various financial and negative covenants and at June 30, 2022, the Company was in compliance with all such covenants.

At June 30, 2022 and December 31, 2021, there wa s $ 53.8 million an d $ 31.3 million, respectively, ou tstanding under the revolving portion of the Senior Credit Facility at weighted average interest rates of 3.0 % and 1.4 %, respectively.

At June 30, 2022 and December 31, 2021, there was $ 821.3 million and $ 843.8 million, respectively, outstanding under the Term Loan component of the Senior Credit Facility at a weighted average interest rate of 3.0 % and 1.4 %, respectively.

At June 30, 2022 and December 31, 2021, there was $ 50.6 million and $ 45.0 million, respectively of the Term Loan component of the Senior Credit Facility classified as current on the consolidated balance sheets.

The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit and Term Loan components at June 30, 2022 wer e $ 52.5 million and $ 803.6 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 March 31, 2022 and December 31, 2021 to taled $ 1.6 million.

There were no amounts drawn as of March 31, 2022.

Letters of credit outstanding as of June 30, 2022 and December 31, 2021 to taled $ 1.6 million.

There were no amounts drawn as of June 30, 2022.

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

Quarter Ended March 31, 2022

Quarter Ended June 30, 2022

Principal Repayment

19 unchanged sentences

or (4) if specified corporate transactions occur.

As of March 31, 2022, 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 June 30, 2022, 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.

11 unchanged sentences

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

At March 31, 2022 , the carrying amount of the liability w as $ 575.0 million.

The fair value of the 2025 Notes at March 31, 2022 was $ 613.7 million.

At June 30, 2022 , the carrying amount of the liability w as $ 575.0 million.

The fair value of the 2025 Notes at June 30, 2022 was $ 542.1 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.

As a result of the adoption of ASU 2020-06, the Company recognized only cash interest related to the contractual interest coupon of $ 0.7 million on the 2025 Notes for the three months ended March 31, 2022 and March 31, 2021.

As a result of the adoption of ASU 2020-06, the Company recognized only cash interest related to the contractual interest coupon of $ 1.4 million on the 2025 Notes for both the six months ended June 30, 2022 and June 30, 2021.

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 March 31, 2022, the Company was in compliance with the covenants and none of the termination events had occurred.

As of June 30, 2022, the Company was in compliance with the covenants and none of the termination events had occurred.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

2 unchanged sentences

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

At March 31, 2022 and December 31, 2021, the Company had $ 112.0 million and $ 112.5 million, respectively, of outstanding borrowings under its Securitization Facility at a weighted average interest rate of 1.2 % and 1.1 %, respectively.

The fair value of the outstanding borrowing of the Securitization Facility at March 31, 2022 was $ 113.0 million.

At June 30, 2022 and December 31, 2021, the Company had $ 112.5 million of outstanding borrowings under its Securitization Facility at a weighted average interest rate of 2.1 % and 1.1 %, respectively.

The fair value of the outstanding borrowing of the Securitization Facility at June 30, 2022 was $ 110.0 million.

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

7 unchanged sentences

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

The Company held the following interest rate swaps as of March 31, 2022 and December 31, 2021 (dollar amounts in thousands):

March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

The Company held the following interest rate swaps as of June 30, 2022 and December 31, 2021 (dollar amounts in thousands):

June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

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

24 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.

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 subsequently settled its foreign currency forward contracts associated with the intercompany receivables denominated in JPY during the first quarter of 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 March 31, 2022 and March 31, 2021.

The fair value of the foreign currency forward contracts denominated in CAD was $ 0.2 million as of March 31, 2022 and December 31, 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").

During the fourth quarter of 2020, the Company entered into foreign currency forward contracts, with a notional amount of $ 4.2 million, to mitigate the foreign exchange risk related to certain intercompany loans denominated in Canadian Dollar ("CAD").

During the second quarter of 2022, the Company entered into foreign currency forward contract, with a notional amount of $ 4.2 million, to mitigate the foreign exchange risk related to certain intercompany receivables denominated in Japanese Yen ("JPY").

The contracts are n ot designated as hedging instruments.

The Company recognized $ 0.1 million and $ 0.3 million losses from the change in fair value of such contracts, which was included in other income, net in the consolidated statement of operations as of June 30, 2022 and June 30, 2021, respectively.

The fair value of the foreign currency forward contracts was less than $ 0.1 million and $ 0.2 million as of June 30, 2022 and December 31, 2021, respectively.

During the second quarter of 2021, the Company entered into a foreign currency swap, with a notional amount 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").

In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another currency at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount.

The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party.

The change in fair value of the foreign currency swap was $ 1.0 million as of March 31, 2022.

The Company subsequently paid down a portion of this swap, bringing the notional amount down to $ 6.4 million.

The change in fair value of the foreign currency swap was $ 1.6 million as of June 30, 2022.

The success of the Company’s hedging program depends, in part, on forecasts of certain activity denominated in foreign currency.

14 unchanged sentences

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

The Company held the following cross-currency rate swaps as of March 31, 2022 and December 31, 2021 (dollar amounts in thousands):

March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

The Company held the following cross-currency rate swaps as of June 30, 2022 and December 31, 2021 (dollar amounts in thousands):

June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value

8 unchanged sentences

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 months ended March 31, 2022, and 2021, the Company recorded a gain of $ 6.5 million and $ 42.9 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 months ended March 31, 2022, and 2021, the Company recorded a gain of $ 7.9 million and $ 40.2 million in AOCL, respectively, related to change in fair value of the cross-currency swaps.

For the three months ended March 31, 2022, and 2021, the Company recorded a gain of $ 1.8 million and $ 1.3 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 March 31, 2022 within the next twelve months is $ 2.4 million.

As of March 31, 2022, 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.

For the three and six months ended June 30, 2022, the Company recorded gains of $ 19.3 million and $ 25.8 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 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 gain or losses recognized on the intercompany loans.

For the three and six months ended June 30, 2022, the Company recorded gains of $ 21.1 million and $ 21.5 million in AOCL, respectively, related to change in fair value of the cross-currency swaps.

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, 2022, the Company recorded gains of $ 2.0 million and $ 3.8 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, 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.

The estimated gain that is expected to be reclassified to other income, net from AOCL as of June 30, 2022 within the next twelve months is $ 3.6 million.

As of June 30, 2022, 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

1 unchanged sentence

The Company is exposed to foreign exchange risk from its international operations through foreign currency purchases, net investments in foreign subsidiaries, and foreign currency assets and liabilities created in the normal course of business.

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 March 31, 2022 and December 31, 2021, respectively (dollar amounts in thousands):

March 31, 2022

On October 1, 2018, December 16, 2020 and May 26, 2022, the Company entered into cross-currency swap agreements designated as net investment hedges to partially offset the effects of foreign currency on foreign subsidiaries.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The Company held the following cross-currency rate swaps designated as net investment hedges as of June 30, 2022 and December 31, 2021, respectively (dollar amounts in thousands):

June 30, 2022

December 31, 2021

5 unchanged sentences

Receive U.S.$ 2.19 % $ 45,000

Pay CHF December 16, 2020 December 16, 2027 — % CHF 222,300 ( 1,716 ) ( 792 )

December 16, 2020 December 16, 2027 — % CHF 222,300 — ( 792 )

Receive U.S.$ 1.10 % $ 250,000

Pay CHF May 26, 2022 December 16, 2028 — % CHF 288,210 ( 1,824 ) —

Receive U.S.$ 1.94 % $ 300,000

Total $ 8,700 $ 3,858

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

(1) The following currency swaps designated as a net investment hedge were early settled during the three months ended June 30, 2022.

During the six months ended June 30, 2022 , the Company early settled cross-currency swaps designated as net investment hedge with an aggregate notional amount of $ 250.0 million equivalent to 222.3 million Swiss Franc.

The original settlement date was December 16, 2027.

As a result of the settlement, the Company recorded a gain of $ 4.9 million in AOCL.

On May 26, 2022, the Company entered into cross-currency swap agreements designated as net investment hedge to replace the following swaps of a notional amount of $ 300.0 million equivalent to 288.2 million Swiss Franc.

On September 30, 2021, in accordance with the termination date, 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.

1 unchanged sentence

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 months ended March 31, 2022 and 2021, the Company recorded gains of $ 1.3 million and $ 40.2 million, respectively, in AOCL related to the change in fair value of the cross-currency swaps.

For the three months ended March 31, 2022, and 2021, the Company recorded gains of $ 1.3 million and $ 1.7 million, respectively, 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 March 31, 2022 within the next twelve months is $ 5.3 million.

For the three and six months ended June 30, 2022, the Company recorded gains of $ 10.8 million and $ 12.1 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 $ 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, 2022, the Company recorded gains of $ 1.0 million and $ 2.3 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, 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.

The estimated gain that is expected to be reclassified to interest income from AOCL as of June 30, 2022 within the next twelve months is $ 8.5 million.

Counterparty Credit Risk

8 unchanged sentences

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 March 31, 2022 and December 31, 2021:

The following table summarizes the fair value for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021:

Fair Value as of

Location on Balance Sheet (1) :

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Dollars in thousands

2 unchanged sentences

Cash Flow Hedges

Interest rate swap (2)

Cross-currency swap $ 6,122 $ 4,900

14 unchanged sentences

Net Investment Hedges

Cross-currency swap $ — —

Other liabilities

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(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 March 31, 2022 and December 31, 2021, the total notional amounts related to the Company’s interest rate swaps were both $ 1.8 billion, respectively.

(2) At June 30, 2022 and December 31, 2021, the total notional amounts related to the Company’s interest rate swaps were both $ 1.8 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 and net investment hedges on the accompanying condensed consolidated statement of operations during the three months ended March 31, 2022 and 2021:

Dollars in thousands Balance in AOCL

6 unchanged sentences

Statements of

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Cash Flow Hedges

4 unchanged sentences

$ ( 17,103 ) $ 52,068 $ 18,355 $ 16,610

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Cash Flow Hedges

4 unchanged sentences

$ ( 59,004 ) $ ( 25,894 ) $ ( 15,721 ) $ ( 69,177 )

Dollars in thousands Balance in AOCL

Year Amount of

Recognized in

AOCL Amount of Gain (Loss)

Reclassified from

Earnings Balance in AOCL

End of Quarter Location in

Statements of

Six Months Ended June 30, 2022

Cash Flow Hedges

Interest rate swap $ ( 43,956 ) $ 61,790 $ ( 9,105 ) $ 26,939 Interest expense

Cross-currency swap ( 9,688 ) 21,452 29,599 ( 17,835 ) Other income, net

Net Investment Hedges

Cross-currency swap ( 2,321 ) 12,125 2,298 7,506 Interest income

$ ( 55,965 ) $ 95,367 $ 22,792 $ 16,610

Six Months Ended June 30, 2021

Cash Flow Hedges

Interest rate swap $ ( 93,769 ) $ 19,505 $ ( 11,528 ) $ ( 62,736 ) Interest expense

Cross-currency swap ( 1,073 ) 29,225 32,515 ( 4,363 ) Other income, net

Net Investment Hedges

Cross-currency swap ( 12,291 ) 13,661 3,448 ( 2,078 ) Interest income

$ ( 107,133 ) $ 62,391 $ 24,435 $ ( 69,177 )

STOCK-BASED COMPENSATION

As of March 31, 2022, 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.

As of June 30, 2022, 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”).

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.

The Company values stock option grants using the binomial distribution model.

Restricted stock issued under the Plans vests over specified periods, generally three years after the date of grant.

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

Restricted stock issued under the 2003 Plan vests over specified periods, generally three years after the date of grant.

The vesting of performance stock issued under the 2003 Plan is subject to service and performance conditions.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Stock Options

As of March 31, 2022, there were approximately $ 5.8 million of total unrecognized compensation costs related to unvested stock options.

As of June 30, 2022, there were approx imately $ 5.3 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 145,565 stock options granted during the three months ended March 31, 2022.

For the three months ended March 31, 2022, the weighted average grant date fair value for stock options was $ 23.15 per option.

There were 145,565 stock options granted during the six months ended June 30, 2022.

For the six months ended June 30, 2022, the weighted average grant date fair value for stock options was $ 23.15 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 March 31, 2022, there was approximately $ 44.6 million of total unrecognized compensation costs related to these unvested awards.

A s of June 30, 2022, there was approximately $ 40.2 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 320,385 restricted stock awards and 130,753 performance stock awards during the three months ended March 31, 2022.

For the three months ended March 31, 2022, the weighted average grant date fair value for restricted stock awards and performance stock units was $ 65.27 and $ 65.11 per award, respectively.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The Company granted 363,326 restricted stock awards and 130,753 performance stock awards during the six months ended June 30, 2022.

For the six months ended June 30, 2022, the weighted average grant date fair value for restricted stock awards and performance stock units was $ 64.65 and $ 65.11 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 the three months ended March 31, 2022 were $ 0.3 million.

The components of the net periodic benefit costs other than the service cost component of $ 0.7 million for the three months ended March 31, 2022 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 months ended March 31, 2021 were $ 0.6 million.

The components of the net periodic benefit costs other than the service cost component of $ 0.8 million for the three months ended March 31, 2021 are included in other income, net in the consolidated statements of operations.

The estimated fair values of plan assets were $ 34.9 million and $ 39.9 million as of March 31, 2022 and December 31, 2021, respectively.

The net plan assets of the pension plans are invested in common trusts as of March 31, 2022 and December 31, 2021.

Net periodic benefit cost for the Company’s defined benefit pension plans for the three and six months ended June 30, 2022 were $ 0.3 million and $ 0.5 million.

The components of the net periodic benefit costs other than the service cost component of $ 0.6 million and $ 1.3 million for the three and six months ended June 30, 2022 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 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, net in the consolidated statements of operations.

The estimated fair values of plan assets were $ 34.4 million and $ 39.9 million as of June 30, 2022 and December 31, 2021, respectively.

The net plan assets of the pension plans are invested in common trusts as of June 30, 2022 and December 31, 2021.

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.

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

This deferred compensation is invested in funds offered under this plan and is valued based on Level 1 measurements in the fair value hierarchy.

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 at March 31, 2022 were $ 4.7 million and $ 3.8 million as of March 31, 2022 and December 31, 2021.

The fair value of these assets were $ 4.3 million and $ 3.8 million as of June 30, 2022 and December 31, 2021.

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 March 31, 2022.

The Company has no finance leases as of June 30, 2022.

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 three months ended March 31, 2022 and March 31, 2021 was $ 4.9 million and $ 5.3 million respectively, which includes $ 0.1 million, in related party operating lease expense.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Total operating lease expense for the six months ended June 30, 2022 and June 30, 2021 was $ 10.2 million and $ 10.6 million respectively, which includes $ 0.1 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 March 31, 2022 December 31, 2021

Dollars in thousands, except lease term and discount rate June 30, 2022 December 31, 2021

ROU assets $ 145,135 $ 84,543

8 unchanged sentences

Leased vehicles 2.7 % 2.6 %

Supplemental cash flow information related to leases for the three months ended March 31, 2022 and 2021 were as follows:

Dollars in thousands March 31, 2022 March 31, 2021

Supplemental cash flow information related to leases for the six months ended June 30, 2022 and 2021 were as follows:

Dollars in thousands June 30, 2022 June 30, 2021

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

2 unchanged sentences

Operating leases $ 69,489 $ 10,528

Future minimum lease payments under operating leases at March 31, 2022 were as follows:

Future minimum lease payments under operating leases at June 30, 2022 were as follows:

Dollars in thousands Related Parties Third Parties Total

12 unchanged sentences

Long-term lease liabilities 154,029

There were no future minimum lease payments under finance leases at March 31, 2022.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Related Party Leases

The Company leases its manufacturing facility in Plainsboro, New Jersey, from a general partnership that is 50 % owned by a corporation whose stockholders are trusts, whose beneficiaries include family members of the Company’s principal stockholder and former director.

The term of the current lease agreement is through October 31, 2029 at an annual rate of approximately $ 0.3 million per year.

The current lease agreement also provides (i) a 5 -year renewal option for the Company to extend the lease from November 1, 2029 through October 31, 2034 at the fair market rental rate of the premises, and (ii) another 5 -year renewal option to extend the lease from November 1, 2034 through October 31, 2039 at the fair market rental rate of the premises.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

TREASURY STOCK

As of March 31, 2022 and December 31, 2021, there were 6.8 million and 4.9 million shares of treasury stock outstanding with a cost of $ 362.9 million and $ 234.4 million, at a weighted average cost per share of $ 53.18 and $ 47.86 , respectively.

On December 7, 2020, the Board of Directors 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.

The repurchase authorization expires in December 2022.

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, and such repurchases may be discontinued at any time.

On January 12, 2022, the Company entered into a $ 125.0 million accelerated share repurchase ("2022 ASR") and received 1.48 million shares of Company common stock at inception of the 2022 ASR, which represented approximately 80 % of the expected total shares under the 2022 ASR.

On March 24, 2022, the early exercise provision under the 2022 ASR was exercised by 2022 ASR counterparty.

Upon settlement of the 2022 ASR on March 24, 2022, the Company received an additional 0.46 million shares determined using the volume-weighted average price of the Company's common stock during the term of the 2022 ASR.

On April 26 2022, the Board of Directors authorized the Company to repurchase up to $ 225.0 million of the Company’s common stock.

3 unchanged sentences

Purchases may be affected through one or more open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, or a combination of the foregoing.

As of June 30, 2022 and December 31, 2021, there were 6.8 million and 4.9 million shares of treasury stock outstanding with a cost of $ 362.9 million and $ 234.4 million, at a weighted average cost per share of $ 53.18 and $ 47.86 , respectively.

On January 12, 2022, the Company entered into a $ 125.0 million accelerated share repurchase ("2022 ASR") and received 1.48 million shares of Company common stock at inception, which represented approximately 80 % of the expected total shares under the 2022 ASR.

On March 24, 2022, the early exercise provision was exercised by 2022 ASR counterparty.

Upon settlement on March 24, 2022, the Company received an additional 0.46 million shares determined using the volume-weighted average price of the Company's common stock during the term of the 2022 ASR.

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Reported tax rate 13.2 % 21.8 % 14.5 % 28.2 %

The Company’s effective income tax rates for the three months ended March 31, 2022 and 2021 w ere 16.3 % and 32.5 %, respectively.

For the three months ended March 31, 2022, the primary drivers of the tax rate are a favorable jurisdictional mix of income, as well as a $ 0.8 M benefit related to excess tax benefits from stock compensation.

For the three months ended March 31, 2021 , the primary driver of the higher tax rate is the tax impact of the gain on the sale of the Extremity Orthopedics business, which closed during the first quarter of 2021.

The Company’s effective income tax rates for the three months ended June 30, 2022 and 2021 were 13.2 % and 21.8 %, respectively.

For the three months ended June 30, 2022, the primary driver of the lower tax rate is a $ 4.8 million benefit related to excess tax benefits from stock compensation.

The Company’s effective income tax rates for the six months ended June 30, 2022 and 2021 were 14.5 % and 28.2 %, respectively.

For the six months ended June 30, 2022, the primary driver of the tax rate is a $ 5.7 million benefit related to excess tax benefits from stock compensation.

For the six months ended June 30, 2021, the primary driver of the higher tax rate was the tax impact of the gain on the sale of the Extremity Orthopedics business which was completed during the first quarter of 2021.

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

8 unchanged sentences

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

As of March 31, 2022, the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed to be indefinitely reinvested unless there is a manner under which to remit the earnings with no material tax cost.

As of June 30, 2022, the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed to be 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.

1 unchanged sentence

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

As such, the Company has determined the tax impact of repatriating these foreign earnings would not be material as of March 31, 2022.

As such, the Company has determined the tax impact of repatriating these foreign earnings would not be material as of June 30, 2022.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

2 unchanged sentences

Basic and diluted net income per share was as follows:

Three Months Ended March 31,

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

Dollars in thousands, except per share amounts 2022 2021 2022 2021

10 unchanged sentences

Diluted net income per common share $ 0.54 $ 0.41 $ 0.93 $ 0.94

Common stock of approximately 0.2 million an d 0.5 million shares at March 31, 2022, and 2021, 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.

Common stock of approximately 0.2 million an d 0.1 million shares at June 30, 2022, and 2021, 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.

Based on the adoption of ASU 2020-06, as the principal amount of the 2025 Notes will be paid in cash and only the conversion spread is settled in shares, the Company will be utilizing the if-converted method and only includes the net number of incremental shares that would be issued upon conversion.

ACCUMULATED OTHER COMPREHENSIVE LOSS

Comprehensive income for the three months ended March 31, 2022 and 2021 was as follows:

Three Months Ended March 31,

Comprehensive income for the six months ended June 30, 2022 and 2021 was as follows:

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

Dollars in thousands 2022 2021 2022 2021

1 unchanged sentence

Foreign currency translation adjustment ( 18,067 ) 1,558 ( 23,749 ) ( 5,243 )

Change in unrealized loss on derivatives, net of tax 29,822 36,915

Change in unrealized gain (loss) on derivatives, net of tax 25,922 ( 7,804 ) 55,744 29,111

Pension liability adjustment, net of tax ( 45 ) ( 91 ) ( 54 ) 228

2 unchanged sentences

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

Changes in accumulated other comprehensive loss by component between December 31, 2021 and March 31, 2022 are presented in the table below, net of tax:

Changes in accumulated other comprehensive loss by component between December 31, 2021 and June 30, 2022 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

4 unchanged sentences

Net current-period other comprehensive gain (loss) 55,744 ( 54 ) ( 23,750 ) 31,940

Balance at March 31, 2022

Balance at June 30, 2022

$ 12,763 $ 1,839 $ ( 27,817 ) $ ( 13,215 )

For the three months ended March 31, 2022, the Company reclassified a gain of $ 6.4 million and a loss of $ 3.0 million from accumulated other comprehensive loss to other income, net and interest income, respectively.

For the six months ended June 30, 2022, the Company reclassified a gain of $ 22.8 million and a loss of $ 5.2 million from accumulated other comprehensive loss to other income, net and interest income, respectively.

SEGMENT AND GEOGRAPHIC INFORMATION

2 unchanged sentences

• The Codman Specialty Surgical segment includes (i) the Neurosurgery business, which sells a full line of products for neurosurgery and neuro critical care such as tissue ablation equipment, dural repair products, cerebral spinal fluid management devices, intracranial monitoring equipment, cranial stabilization equipment, and solutions for use in minimally invasive neurosurgery and in the management of intracerebral hemorrhages, and (ii) the Instruments business, which sells more than 40,000 instrument patterns and surgical and lighting products to hospitals, surgery centers, dental, podiatry, and veterinary offices.

• The Tissue Technologies segment includes a large, complementary portfolio of products to address plastic and surgical reconstructive procedures such as complex and traumatic wounds, hernia and abdominal wall repair, breast reconstruction, and nerve repair.

The Tissue Technologies segment has four unique technology platforms, including bovine engineered collagen matrix, bovine dermal matrix, amniotic technology and porcine bladder matrix technology, to address regenerative soft tissue reconstruction procedures.

1 unchanged sentence

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 months ended March 31, 2022 and 2021 are as follows:

Three Months Ended March 31,

Net sales and profit by each reportable segment for the three and six months ended June 30, 2022 and 2021 are as follows:

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

Dollars in thousands 2022 2021 2022 2021

18 unchanged sentences

Total revenue by major geographic area consisted of the following:

Three Months Ended March 31,

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

Dollars in thousands 2022 2021 2022 2021

14 unchanged sentences

Contingent Consideration

The Company determined the fair value of contingent consideration during the three month period ended March 31, 2022 and March 31, 2021 to reflect the change in estimate, additions, payments, transfers and the time value of money during the period.

The Company determined the fair value of contingent consideration during the six month period ended June 30, 2022 and June 30, 2021 to reflect the change in estimate, 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 three months ended March 31, 2022 and March 31, 2021 is as follows (in thousands):

Three Months Ended March 31, 2022 Contingent Consideration Liability Related to Acquisition of:

A reconciliation of the opening balances to the closing balances of these Level 3 measurements for the six months ended June 30, 2022 and June 30, 2021 is as follows (in thousands):

Six Months Ended June 30, 2022 Contingent Consideration Liability Related to Acquisition of:

Arkis Location in Financial Statements Derma Sciences ACell Inc.

5 unchanged sentences

Change in fair value of contingent consideration liabilities ( 155 ) $ ( 1,978 ) Research and development — ( 4,885 ) 1,219 Selling, general and administrative

Balance as of March 31, 2022 $ 3,750 $ 10,284 $ 230 $ 4,885 $ 17,215

Three Months Ended March 31, 2021 Contingent Consideration Liability Related to Acquisition of:

Arkis Derma Sciences ACell Inc.

Balance as of June 30, 2022 $ 3,536 $ 9,430 $ 230 $ — $ 18,134

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

Arkis Location in Financial Statements Derma Sciences ACell Inc.

(See Note 3) Location in Financial Statements

3 unchanged sentences

Additions from acquisition of ACell — — — 23,900

Change in fair value of contingent consideration liabilities 17 265 — — Research and development

Balance as of March 31, 2021

Transfers ( 3,432 ) 3,432 — —

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

6 unchanged sentences

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 March 31, 2022 and March 31, 2021 was $ 14.0 million and $ 15.4 million, respectively.

The Company recorded $ 10.3 million and $ 12.0 million in other liabilities at March 31, 2022 and March 31, 2021, respectively, and $ 3.8 million and $ 3.4 million in accrued expenses and other current liabilities at March 31, 2022 and March 31, 2021, respectively, in the consolidated balance sheet of the Company.

The estimated fair value as of June 30, 2022 and June 30, 2021 was $ 13.0 million and $ 14.8 million, respectively.

The Company recorded $ 9.4 million and $ 14.8 million in other liabilities at June 30, 2022 and June 30, 2021, respectively, and $ 3.5 million in accrued expenses and other current liabilities at June 30, 2022, 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 March 31, 2022 and March 31, 2021 was $ 0.2 million.

The estimated fair value as of June 30, 2022 and June 30, 2021 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