What changed in this filing

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Item 1. Financial Statements

2022-10-26 compared with 2022-07-27 · 238 added, 214 removed, 798 unchanged (36% of the section changed)

4 unchanged sentences

(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,

2022 2021 2022 2021

9 unchanged sentences

Interest expense ( 12,809 ) ( 12,192 ) ( 36,700 ) ( 38,270 )

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

Gain (loss) from the sale of businesses 644 ( 230 ) 644 41,967

Other income, net 2,648 4,985 8,056 14,888

13 unchanged sentences

(Dollars in thousands, except per share amounts)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Current assets:

21 unchanged sentences

Accrued expenses and other current liabilities 78,992 120,458

Liabilities held for sale 2,303 —

Total current liabilities 304,452 340,021

14 unchanged sentences

240,000 authorized shares;

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

90,341 and 89,600 issued at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 1,267,641 1,264,943

Treasury stock, at cost;

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

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

( 362,863 ) ( 234,448 )

7 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES:

8 unchanged sentences

Loss on disposal of property and equipment 914 2,029

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

Gain from the sale of businesses ( 644 ) ( 41,967 )

Change in fair value of contingent consideration and others ( 19,481 ) ( 544 )

10 unchanged sentences

Purchases of property and equipment ( 27,887 ) ( 20,595 )

Proceeds from sale of Extremity Orthopedics business — 191,736

Proceeds from sale of property and equipment — 3

Proceeds from sale of businesses 23,960 190,468

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

18 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

9 unchanged sentences

Net income — — — — — — 44,788 44,788

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

Other comprehensive income, 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 )

1 unchanged sentence

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

Net income — — — — — — 49,915 49,915

Other comprehensive income, net of tax — — — — — 5,776 — 5,776

Issuance of common stock for vesting of share based awards, net of shares withheld for taxes 7 — — 17 ( 1,160 ) — — ( 1,143 )

Share-based compensation — — — — 8,949 — — 8,949

Balance, September 30, 2022 90,341 903 ( 6,823 ) ( 362,863 ) 1,267,641 ( 7,439 ) 826,172 1,724,414

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Dollars in thousands)

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

Net income — — — — — — 43,229 43,229

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

Issuance of common stock for vesting of share based awards, net of shares withheld for taxes 123 1 — 12 2,529 — — 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

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, 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 September 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 and six-month period ended June 30, 2022 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, 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 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.

Although there was not a material impact to the Company’s consolidated financial statements as of and for the nine months ended September 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.

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, containment measures and other macroeconomic factors which could cause a local/or global economic recession.

3 unchanged sentences

Employee Termination Benefits

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.

The Company incurred employee termination costs on restructuring activities associated with a closure of a manufacturing facility in France, outsourcing plans for select transactional back office activities, and executive reorganization in the consolidated statement of operations for the nine months ended September 30, 2022.

(Dollars in thousands) Amount

4 unchanged sentences

Payments and other adjustments $ ( 10,569 )

Balance at June 30,2022 $ 6,698

Balance at September 30,2022 $ 4,660

Included in the accrual balance at September 30, 2022 above is $ 1.8 million related to the closure o f a manufacturing facility located in France, $ 1.7 million related to executive reorganization and $ 1.2 million related to the outsourcing plans for select transactional back office activities.

Assets Held for Sale

On July 18 2022, the Company entered into a preliminary agreement to sell a manufacturing facility located in France which is expected to close during the fourth quarter of 2022, subject to satisfaction of customary conditions.

The Company considered the building to be accounted as held-for-sale as the six criteria under ASC 260 were met during the third quarter of 2022.

Assets held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale.

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

Recent Accounting Pronouncements

6 unchanged sentences

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.

This amendment applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform.

This ASU is effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

In January 2021, the FASB also issued ASU 2021-01, Reference Rate Reform- Scope which clarified certain optional expedients and exceptions to entities that are affected because of the reference rate reform.

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

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), and subsequent amendment to the initial guidance:

ASU 2021-01, Reference Rate Reform (Topic 848):

Scope (collectively, “Topic 848”).

Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts, hedging relationships, and other transactions that reference London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform.

The guidance generally can be applied from March 12, 2020 through December 31, 2022.

On October 5, 2022, the FASB approved an extension of the sunset date of the reference rate reform from December 31, 2022 to December 31, 2024, past LIBOR’s end date.

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

1 unchanged sentence

While the notional value of agreements potentially indexed to LIBOR is material, the Company does not expect a material impact to the consolidated financial statements and related disclosures associated with this transition.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

In August 2020, the FASB issued ASU 2020-06, Debt- Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40):Accounting for Convertible Instruments and Contracts in an Entity's Own Equity .

4 unchanged sentences

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

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

As detailed in Note 6, Debt , on February 4, 2020, the Company issued $ 575.0 million aggregate principal amount of its 0.5 % Convertible Senior Notes due 2025 (the "2025 Notes").

23 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

Sale of non-core traditional wound care business

On August 31, 2022, the Company completed its previously announced sale of its non-core traditional wound care ("TWC") business to Gentell, LLC ("Gentell") 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 two years after the closing date.

The proceeds from the sale of the TWC business of $ 27.8 million is presented in the consolidated statement of cash flows net of cash transferred of $ 3.5 million and other transaction fees .

The transaction included 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.

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 TWC business to the Company's Tissue Technologies reportable business segment.

In connection with the sale, the Company recognized $ 0.6 million as a gain from the sale of the business in the consolidated statement of operations for the nine months ended September 30, 2022.

The transaction is subject to final working capital adjustments.

In addition to the purchase and sale agreement, the Company also entered into a contract manufacturing agreement with Gentell.

Under the terms of the agreement, Gentell received inventory, equipment, and tooling to manufacture certain MediHoney ® and TCC-EZ ® products on behalf of the Company.

On the close date of this transa ction, the Company transferred all inventory associated with these products to Gentell and subsequently recognized a prepaid asset of $ 11.1 million, as a form of a deposit for the inventory transferred.

Based on the expected timing of inventory purchases, $ 8.3 million was included within prepaid expenses and other current assets and $ 2.8 million within other assets in the consolidated balance sheet.

This deposit will be utilized by the Company on future orders placed to G entell for such products.

Sale of Extremity Orthopedics Business

4 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 reportable business segment.

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.

In connection with the sale, the Company recognized a $ 41.8 million as a gain from the sale of the business in the consolidated statement of operations for the year ended December 31, 202 1.

The Company finalized the net working capital with Smith & Nephew as of December 31, 2021.

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 Company recognized a payable due to Smith & Nephew of $ 3.0 million as of September 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.

As of September 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.

47 unchanged sentences

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, 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 estimated fair value as of September 30, 2022 was $ 5.0 million.

The Company recorded $ 5.0 million and $ 23.0 million in other liabilities at September 30, 2022 and September 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 the timing and amount of revenue estimates.

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.

21 unchanged sentences

Upon the authorization, a credit will be issued for the goods returned within a set amount of days from the shipment, which is generally ninety days .

In the third quarter of 2022, due to the voluntary recall of the CereLink ® intracranial pressure monitors, the Company recorded a $ 1.5 million provision for product returns, as a reduction of net revenue, and a $ 0.8 million rework accrual in cost of goods sold.

The Company disregards the effects of a financing component if the Company expects, at contract inception, that the period between the transfer and customer payment for the goods or services will be one year or less.

The Company has no significant revenues recognized on payments expected to be received more than one year after the transfer of control of products or services to customers.

Contract Asset and Liability

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)

Contract Asset and Liability

Upon invoicing to the customer, the balance is recorded in trade receivable, net in the consolidated balance sheet.

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 six months ended June 30, 2022:

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

Dollars in thousands Total

3 unchanged sentences

Contract asset, net of transferred to trade receivables on contracts during the period 6,281

Contract asset, June 30, 2022

Contract asset, September 30, 2022

Contract Liability

3 unchanged sentences

Foreign currency translation ( 120 )

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.

Contract liability, September 30, 2022

At September 30, 2022, the short-term portion of the contract liability of $ 6.4 million and the long-term portion of $ 7.9 million is included in current liabilities and other liabilities, respectively, in the consolidated balance sheets.

As of September 30, 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.

Shipping and Handling Fees

9 unchanged sentences

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

1 unchanged sentence

Disaggregated Revenue

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

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

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Neurosurgery $ 193,848 $ 199,210 $ 588,818 $ 591,064

4 unchanged sentences

Total Tissue Technologies (1)

135,395 130,364 404,677 382,349

Total revenue $ 385,191 $ 386,861 $ 1,159,644 $ 1,136,924

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.

(1) On August 31, 2022, the Company completed the sale of its non-core traditional wound care ("TWC") business.

See Note 2, Acquisitions and Divestitures.

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, 2022 December 31, 2021

Dollars in thousands September 30, 2022 December 31, 2021

Finished goods $ 163,160 $ 162,528

2 unchanged sentences

Total inventories, net $ 311,060 $ 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 six-month period ended June 30, 2022 were as follows:

Changes in the carrying amount of goodwill for the nine-month period ended September 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)

Divestitures (1)

— ( 5,019 ) ( 5,019 )

Foreign currency translation ( 20,117 ) ( 10,462 ) ( 30,579 )

Goodwill at June 30, 2022

Goodwill at September 30, 2022

$ 643,311 $ 334,549 $ 977,860

(1) See Note 2.

Assets and Liabilities Held for Sale

(1) On August 31, 2022, the Company completed the sale of the TWC business.

See Note 2, Acquisitions and Divestitures.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

2 unchanged sentences

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

June 30, 2022

September 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.

On August 31, 2022, $ 10.5 million of customer relationship assets, net were divested in conjunction with the sale of the TWC business.

See Note 2 , Acquisitions and Divestitures .

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 2022, 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 $ 19.1 million for the remainder of 2022, $ 76.3 million in 2023, $ 75.7 million in 2024, $ 75.7 million in 2025, $ 75.5 million in 2026, $ 73.6 million in 2027 and $ 499.0 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

6 unchanged sentences

September 30, 2022 through June 30, 2023 4.50 to 1.00

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, 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.

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

At September 30, 2022 and December 31, 2021, there wa s $ 65.0 million an d $ 31.3 million, respectively, ou tstanding under the revolving portion of the Senior Credit Facility at weighted average interest rates of 4.5 % and 1.4 %, respectively.

At September 30, 2022 and December 31, 2021, there was $ 810.0 million and $ 843.8 million, respectively, outstanding under the Term Loan component of the Senior Credit Facility at a weighted average interest rate of 4.5 % and 1.4 %, respectively.

At September 30, 2022 and December 31, 2021, there was $ 56.3 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 September 30, 2022 wer e $ 64.1 million and $ 799.7 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, 2022 and December 31, 2021 to taled $ 1.6 million.

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

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

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

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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

Quarter Ended June 30, 2022

Quarter Ended September 30, 2022

Principal Repayment

5 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, 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 September 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.

8 unchanged sentences

The initial strike price of the warrant transactions was $ 113.34 for the 2025 Notes, subject to customary anti-dilution adjustments.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

At December 31, 2020, the carrying amount of the liability component was $ 485.9 million , the remaining unamortized discount wa s $ 89.1 million , and the principal amount outstanding was $ 575.0 million .

1 unchanged sentence

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

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.

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

The fair value of the 2025 Notes at September 30, 2022 was $ 505.2 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 $ 1.4 million on the 2025 Notes for both the six months ended June 30, 2022 and June 30, 2021.

As a result of the adoption of ASU 2020-06, for the nine months ended September 30, 2022 and September 30, 2021, the Company recognized only cash interest related to the contractual interest coupon on the 2025 Notes of $ 2.2 million and $ 2.1 million, respectively.

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

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

As of September 30, 2022, 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, 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.

At September 30, 2022 and December 31, 2021, the Company had $ 106.0 million and $ 112.5 million, respectively, of outstanding borrowings under its Securitization Facility at a weighted average interest rate of 3.5 % and 1.1 %, respectively.

The fair value of the outstanding borrowing of the Securitization Facility at September 30, 2022 was $ 104.5 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.

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

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

September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021

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

12 unchanged sentences

The Company has designated these derivative instruments as cash flow hedges.

The Company assesses the effectiveness of these derivative instruments and has recorded the changes in the fair value of the derivative instrument designated as a cash flow hedge as unrealized gains or losses in accumulated other comprehensive loss (“AOCL”), net of tax, until the hedged item affected earnings, at which point any gain or loss was reclassified to earnings.

The Company assesses the effectiveness of these derivative instruments and has recorded the changes in the fair value of the derivative instrument designated as a cash flow hedge as unrealized gains or losses in accumulated other comprehensive loss (“AOCL”), net of tax, until the hedged item has affected earnings, at which point any gain or loss was reclassified to earnings.

If the hedged cash flow does not occur, or if it becomes probable that it will not occur, the Company will reclassify the remaining amount of any gain or loss on the related cash flow hedge recorded in AOCL to interest expense at that time.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Foreign Currency Hedging

6 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 $ 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 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.

1 unchanged sentence

In addition, changes in currency exchange rates related to any unhedged transactions may affect earnings and cash flows.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Cross-Currency Rate Swaps

On October 2, 2017, the Company entered into cross-currency swap agreements to convert a notional amount of $ 300.0 million equivalent to 291.2 million of Swiss Francs ("CHF") denominated intercompany loans into U.S.

On October 2, 2017, the Company entered into cross-currency swap agreements to convert a notional amount of $ 300.0 million equivalent to 291.2 million of Swiss Franc ("CHF") denominated intercompany loans into U.S.

The CHF-denominated intercompany loans were the result of the purchase of intellectual property by a subsidiary in Switzerland as part of an acquisition.

As of December 31, 2021, $ 150.0 million of the $ 300.0 million notional amount remained outstanding.

On September 26, 2022, the Company amended the CHF-denominated intercompany loan to extend the termination date to September 2023 and as a result, the Company early terminated the cross-currency swap designated as cash flow hedge of an intercompany loan with aggregate notional amount of $ 50.0 million.

Simultaneously, the Company entered into a cross-currency swap agreement to convert a notional amount of CHF 48.5 million equivalent to $ 49.1 million of this amended intercompany loan into U.S.

The loss recorded by the Company upon the settlement of the swap was not material for the period.

On December 21, 2020, the Company entered into cross-currency swap agreements to convert a notional amount of $ 471.6 million equivalent to 420.1 million of a CHF-denominated intercompany loan into U.S.

6 unchanged sentences

dollars from the counterparties.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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

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

September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value

Asset (Liability)

Pay CHF September 28, 2022 September 29, 2023 1.95 % CHF 48,532 — ( 106 ) —

Receive U.S.$ 5.32 % $ 49,142 —

Pay CHF October 2, 2017 October 3, 2022 1.95 % CHF 97,065 145,598 2,281 ( 8,283 )

3 unchanged sentences

Total $ 20,569 $ ( 8,242 )

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 gain recorded by the Company upon the settlement of the swap was not material for the period.

On October 3 rd , 2022, in accordance with the termination date, the Company settled cross-currency swaps designated as cash flow hedges of an intercompany loan with aggregate notional amounts of $ 100 million.

Based on the closing exchange rates, the gain upon settlement of these swaps was approximately $ 1.6 million which was offset by the loss on the settlement of the intercompany loan.

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, 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

4 unchanged sentences

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

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

September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value

4 unchanged sentences

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

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

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

Receive U.S.$ 1.10 % $ — 250,000

2 unchanged sentences

Total $ 15,725 $ 3,858

(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.

On May 26, 2022, the Company early settled cross-currency swaps designated as net investment hedge with an aggregate notional amount of $ 250 million equivalent to 222.3 million CHF.

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 May 26, 2022, the Company entered into cross-currency swap agreements designated as net investment hedge to replace these swaps with a notional amount of $ 300 million equivalent to 288 million CHF.

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.

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

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, 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.

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

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 June 30, 2022 and December 31, 2021:

Effects of Derivative Instruments on Financial Position and Results of Operations

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

Fair Value as of

Location on Balance Sheet (1) :

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Dollars in thousands

16 unchanged sentences

Interest rate swap (2)

$ 62 $ 18,187

Cross-currency swap $ 105 8,283

Net Investment Hedges

Other liabilities

Cash Flow Hedges

Interest rate swap (2)

$ 1,987 30,143

Cross-currency swap $ — 4,859

3 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, 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 September 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 and six months ended June 30, 2022 and 2021:

The following table presents the effect of derivative instruments designated as cash flow hedges and net investment hedges on the AOCL and earnings, both net of tax, during the three and nine months ended September 30, 2022 and 2021:

Dollars in thousands Balance in AOCL

6 unchanged sentences

Statements of

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Cash Flow Hedges

4 unchanged sentences

$ 16,610 $ 54,674 $ 19,279 $ 52,005

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Cash Flow Hedges

12 unchanged sentences

Statements of

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Cash Flow Hedges

4 unchanged sentences

$ ( 55,965 ) $ 150,041 $ 42,071 $ 52,005

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 )

For the three and nine months ended September 30, 2022, the Company recorded gains of $ 16.5 million and $ 42.2 million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation of the cross-currency swaps, designated as cash flow hedges, to offset the losses recognized on the intercompany loans.

For the three and nine months ended September 30, 2021, the Company recorded a 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 of the cross-currency swaps, designated as cash flow hedges, to offset the losses recognized on the intercompany loans.

For the three and nine months ended September 30, 2022, the Company recorded gains of $ 1.1 million and $ 5.0 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps designated as cash flow hedges.

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 designated as cash flow hedges.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The estimated gain that is expected to be reclassified to other income, net from AOCL as of September 30, 2022, for the cross-currency swaps designated as cash flow hedges, within the next twelve months is $ 9.2 million.

As of September 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.

The estimated gain that is expected to be reclassified to interest income from AOCL as of September 30, 2022, for the c ross-currency swaps designated as net investment hedges, within the next twelve months is $ 16.1 million.

Derivative Instruments not designated hedges:

These contracts were settled in third quarter of 2022, in accordance with their termination date with a gain of $ 0.2 million.

During the third quarter of 2022, the Company also entered into foreign currency forward contracts, with a notional amount of $ 2.0 million, which was also settled in the third quarter of 2022 in accordance with its term, resulting in a gain of $ 0.1 million.

During the third quarter of 2022, the Company entered into foreign currency forward contracts, with a notional amount of $ 16.4 million, to mitigate the foreign exchange risk related to certain intercompany receivables denominated in JPY, CHF and the Chinese Renminbi traded in Hong Kong.

The contracts are not designated as hedging instruments.

The fair value of the foreign currency forward contracts was $ 1.2 million and $ 0.2 million as of September 30, 2022 and December 31, 2021, respectively.

During the third quarter of 2022, the Company entered into a foreign currency swap, with a notional amount of $ 12.2 million to mitigate the risk from fluctuations in foreign currency exchange rates associated with an intercompany loan denominated in CHF.

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

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

The following table summarizes the gains (losses) of derivative instruments not designated as hedges on the condensed consolidated statements of income, which was included in other income:

Dollars in thousands Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Foreign currency forward contracts $ 1,162 $ 117 $ 1,154 $ ( 186 )

Foreign currency swaps 184 ( 7 ) 1,777 404

Total $ 1,346 $ 110 $ 2,931 $ 218

STOCK-BASED COMPENSATION

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”).

As of September 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.

5 unchanged sentences

Stock Options

As of June 30, 2022, there were approx imately $ 5.3 million of total unrecognized compensation costs related to unvested stock options.

As of September 30, 2022, there were approx imately $ 3.9 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 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.

There were 145,565 stock options granted during the nine months ended September 30, 2022.

For the nine months ended September 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.

A s of June 30, 2022, there was approximately $ 40.2 million of total unrecognized compensation costs related to these unvested awards.

A s of September 30, 2022, there was approximately $ 33.6 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 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 granted 397,333 restricted stock awards and 130,753 performance stock awards during the nine months ended September 30, 2022.

For the nine months ended September 30, 2022, the weighted average grant date fair value for restricted stock awards and performance stock units was $ 63.62 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 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.

Net periodic benefit cost for the Company’s defined benefit pension plans for the three and nine months ended September 30, 2022 were $ 0.3 million and $ 0.8 million.

The components of the net periodic benefit costs other than the service cost component of $ 0.6 million and $ 1.9 million for the three and nine months ended September 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 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.

The estimated fair values of plan assets were $ 34.0 million and $ 39.9 million as of September 30, 2022 and December 31, 2021, respectively.

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

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

5 unchanged sentences

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 $ 4.3 million and $ 3.8 million as of June 30, 2022 and December 31, 2021.

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

The Company has no finance leases as of September 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).

6 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, 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.

Total operating lease expense for the nine months ended September 30, 2022 and September 30, 2021 was $ 16.6 million and $ 15.7 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, 2022 December 31, 2021

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

ROU assets $ 148,270 $ 84,543

8 unchanged sentences

Leased vehicles 2.7 % 2.6 %

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

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

Dollars in thousands September 30, 2022 September 30, 2021

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

2 unchanged sentences

Operating leases $ 75,588 $ 10,725

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

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

Dollars in thousands Related Parties Third Parties Total

24 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.

As of September 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 March 24, 2022, the early exercise provision was exercised by the 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 June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

Reported tax rate 15.1 % 14.9 % 14.8 % 24.1 %

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.

The Company’s effective income tax rates for the three months ended September 30, 2022 and 2021 were 15.1 % and 14.9 %, respectively.

For the three months ended September 30, 2022, the primary driver of the higher tax rate is a decrease of income in lower-taxed jurisdictions, offset by a $ 1.2 million benefit related to prior year amended tax returns.

The Company’s effective income tax rates for the nine months ended September 30, 2022 and 2021 were 14.8 % and 24.1 %, respectively.

For the nine months ended September 30, 2022, the primary driver of the lower tax rate is a $ 5.5 million benefit related to excess tax benefits from stock compensation, offset by the prior year 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.

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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, may 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-sharing project begun by the Organization for Economic Cooperation and Development ("OECD").

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

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.

On August 16, President Biden signed into law the Inflation Reduction Act of 2022.

The Act imposes a Corporate Minimum Tax of 15% on book income profits greater than $1 billion.

The company is not expected to be subject to the Corporate Minimum Tax.

The act provides for credits for investments in clean energy production, and the Company is exploring whether those credits align with any plans it may develop for clean energy production.

The Act imposes an excise tax of 1% on share repurchases.

Beginning in 2023, all share repurchases shall be subject to the excise tax, but the Company does not expect the excise tax to impact the company’s capital deployment plans.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

As of September 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 June 30, 2022.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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

NET INCOME PER SHARE

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 2022 2021 2022 2021

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Diluted net income per common share $ 0.60 $ 0.51 $ 1.53 $ 1.45

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.

Common stock of approximately 0.3 million an d 0.1 million shares at September 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 six months ended June 30, 2022 and 2021 was as follows:

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

Comprehensive income for the nine months ended September 30, 2022 and 2021 was as follows:

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

Dollars in thousands 2022 2021 2022 2021

6 unchanged sentences

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

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:

Changes in accumulated other comprehensive loss by component between December 31, 2021 and September 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) 82,957 ( 99 ) ( 45,142 ) 37,716

Balance at June 30, 2022

Balance at September 30, 2022

$ 39,976 $ 1,794 $ ( 49,209 ) $ ( 7,439 )

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.

For the nine months ended September 30, 2022, the Company reclassified a gain of $ 36.3 million and a loss of $ 4.0 million from accumulated other comprehensive loss to other income, net and interest income, respectively.

SEGMENT AND GEOGRAPHIC INFORMATION

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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, 2022 and 2021 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, 2022 and 2021 are as follows:

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

Dollars in thousands 2022 2021 2022 2021

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 2022 2021 2022 2021

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Contingent Consideration

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.

The Company determined the fair value of contingent consideration during the nine month period ended September 30, 2022 and September 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 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:

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

Nine Months Ended September 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 ( 862 ) $ ( 1,819 ) Research and development — ( 4,885 ) ( 11,915 ) Selling, general and administrative

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:

Balance as of September 30, 2022 $ 2,829 $ 9,589 $ 230 $ — $ 5,000

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

Arkis Location in Financial Statements Derma Sciences ACell Inc.

6 unchanged sentences

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

Balance as of June 30, 2021

Balance as of September 30, 2021

$ — $ 14,617 $ 230 $ 23,000

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 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.

The estimated fair value as of September 30, 2022 and September 30, 2021 was $ 12.4 million and $ 14.6 million, respectively.

The Company recorded $ 9.6 million and $ 14.6 million in other liabilities at September 30, 2022 and September 30, 2021, respectively, and $ 2.8 million in accrued expenses and other current liabilities at September 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 June 30, 2022 and June 30, 2021 was $ 0.2 million.

The estimated fair value as of September 30, 2022 and September 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