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Item 1. Financial Statements

2023-10-25 compared with 2023-07-27 · 221 added, 181 removed, 783 unchanged (34% 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,

2023 2022 2023 2022

9 unchanged sentences

Interest expense ( 13,062 ) ( 12,809 ) ( 37,626 ) ( 36,700 )

Gain (loss) from the sale of business — 644 — 644

Other income (expense), net 471 2,648 1,705 8,056

14 unchanged sentences

(Dollars in thousands, except per share amounts)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

37 unchanged sentences

240,000 authorized shares;

90,881 and 90,477 issued at June 30, 2023 and December 31, 2022, respectively

90,935 and 90,477 issued at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 1,262,319 1,276,977

Treasury stock, at cost;

9,527 shares and 6,823 shares at June 30, 2023 and December 31, 2022, respectively

11,823 shares and 6,823 shares at September 30, 2023 and December 31, 2022, respectively

( 612,777 ) ( 362,862 )

7 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES:

7 unchanged sentences

Loss (gain) on disposal of property and equipment ( 4 ) 914

Gain from the sale of business — ( 644 )

Change in fair value of contingent consideration and others 8,278 ( 19,481 )

10 unchanged sentences

Purchases of property and equipment ( 42,330 ) ( 27,887 )

Proceeds from Sale of Business — 23,960

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

17 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

14 unchanged sentences

Balance, June 30, 2023 90,881 $ 909 ( 9,527 ) $ ( 513,782 ) $ 1,283,675 $ 4,830 $ 907,528 $ 1,683,160

Six Months Ended June 30, 2022

Net income — — — — — — 19,497 19,497

Other comprehensive income, net of tax — — — — — ( 3,085 ) — ( 3,085 )

Treasury shares retirement — — — — — — — —

Issuance of common stock for vesting of share based awards, net of shares withheld for taxes 54 — — 17 424 — — 441

Share-based compensation — — — — 5,457 — — 5,457

Accelerated shares repurchased — — ( 2,296 ) ( 99,012 ) ( 27,237 ) — — ( 126,249 )

Balance, September 30, 2023 90,935 909 ( 11,823 ) ( 612,777 ) 1,262,319 1,745 927,025 1,579,221

Nine Months Ended September 30, 2022

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

13 unchanged sentences

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

Net income — — — — — — 49,915 49,915

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

Treasury shares retirement — — — — — — — —

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

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, 2023 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, 2023 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 in the United States ("GAAP") 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, 2022 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

Operating results for the three and six-month periods ended June 30, 2023 are not necessarily indicative of the results to be expected for the entire year.

Operating results for the three and nine-month periods ended September 30, 2023 are not necessarily indicative of the results to be expected for the entire year.

The preparation of consolidated financial statements is in conformity with 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.

3 unchanged sentences

Recent Accounting Pronouncements

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

In March 2020, the Financial Accounting Standards Board ("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):

7 unchanged sentences

In connection with the March 2023 Amendment, the Company replaced all LIBOR-based contracts with SOFR, which is calculated based on overnight transactions under repurchase agreements backed by Treasury securities.

In addition, on April 17, 2023 the company entered into an amendment (the "April 2023 Amendment") of the Securitization Facility and amended the interest rate from LIBOR to SOFR indexed rate.

In addition, on April 17, 2023 the Company entered into an amendment (the "April 2023 Amendment") of the Securitization Facility (as defined below) and amended the interest rate from LIBOR to SOFR indexed rate.

(See Note 6).

7 unchanged sentences

On December 6, 2022, the Company completed its acquisition of Surgical Innovation Associates, Inc.

("SIA") for an acquisition purchase price of $ 51.5 million (the "SIA Acquisition").

In addition to the purchase price, the acquisition includes two separate contingent considerations payments, which are dependent on 1) achieving certain revenue-based performance milestones in 2023, 2024, and 2025 (up to $ 50.0 million in additional payments), as well as 2) the approval by the FDA of the Premarket Approval (“PMA”) Application for DuraSorb for certain uses by certain timing targets (up to $ 40.0 million in additional payments).

("SIA") for an acquisition purchase price of $ 51.5 million (the "SIA Acquisition") plus contingent consideration of up to $ 90.0 million.The contingent consideration includes two separate payments, which are dependent on 1) achieving certain revenue-based performance milestones in 2023, 2024, and 2025 (up to $ 50.0 million in additional payments), as well as 2) the approval by the FDA of the Premarket Approval (“PMA”) Application for DuraSorb for certain uses by certain timing targets (up to $ 40.0 million in additional payments).

SIA's core technology, DuraSorb, is a fully resorbable scaffold of a globally accepted polymer, which is cleared for use in hernia repair, abdominal wall, and other soft tissue reinforcement.

DuraSorb sales will be reported within Integra’s Tissue Technologies ("TT") segment as part of its Wound Reconstruction and Care franchise.

DuraSorb sales are reported within Integra’s Tissue Technologies ("TT") segment as part of its Wound Reconstruction and Care franchise.

Assets Acquired and Liabilities Assumed at Fair Value

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

Dollars in thousands Preliminary Valuation Weighted Average Life

Dollars in thousands Final Valuation Weighted Average Life

Current assets:

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Changes in assumptions utilized in the contingent consideration fair value estimates could result in an increase in the contingent consideration obligation and a corresponding charge to operating results.

As part of the SIA Acquisition, the Company is required to pay to the shareholder of SIA up to $ 90.0 million for two separate payments, which are dependent on 1) achieving certain revenue-based performance milestones in 2023, 2024, and 2025 (up to $ 50.0 million in additional payments), as well as 2) the approval by the FDA of the PMA for DuraSorb for certain uses by certain timing targets (up to $ 40.0 million in additional payments).

As part of the SIA Acquisition, the Company is required to pay to the former shareholders of SIA up to $ 90.0 million for two separate payments, which are dependent on 1) achieving certain revenue-based performance milestones in 2023, 2024, and 2025 (up to $ 50.0 million in additional payments), as well as 2) the approval by the FDA of the PMA for DuraSorb for certain uses by certain timing targets (up to $ 40.0 million in additional payments).

The Company used iterations of the Monte Carlo simulation to calculate the fair value of the contingent consideration for the revenue-based milestone that considered the possible outcomes of scenarios related to each specific milestone for the revenue based performance milestone.

The Company used probabilities of achieving the conditions to calculate the fair value of the contingent consideration for the PMA approval milestone.

The Company estimated the fair value of the contingent consideration for the revenue based milestone to be $ 32.6 million at the acquisition date and $ 25.0 million for the PMA approval milestone as of December 31, 2022.

The company recorded a total of $ 50.1 million in other liabilities as of June 30, 2023 and $ 12.7 million in accrued expenses and other current liabilities at June 30, 2023 in the consolidated balance sheet of the company.

The company recorded a total of $ 51.2 million in other liabilities as of September 30, 2023 and $ 13.0 million in accrued expenses and other current liabilities at September 30, 2023 in the consolidated balance sheet of the Company.

Deferred Tax Liabilities

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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 transaction, the Company transferred all inventory associated with these products to Gentell and recognized an asset of $ 11.1 million, as a form of a deposit for the inventory transferred, which based on the expected timing of inventory purchases, was primarily included within prepaid expenses and other current assets in the consolidated balance sheet.

On the close date of this transaction, the Company transferred manufacturing inventory associated with these products to Gentell and recognized an asset of $ 11.1 million, as a form of a deposit for the inventory transferred, which based on the expected timing of inventory purchases, was primarily included within prepaid expenses and other current assets in the consolidated balance sheet.

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

As of June 30, 2023, the Company had a deposit remaining of $ 6.2 million which is included in prepaid assets and recognized a payable due to Gentell of $ 0.6 million, which is included in the condensed consolidated balance sheet within accrued expenses and other current liabilities.

As of September 30, 2023, the Company had a deposit remaining of $ 6.0 million which is included in prepaid assets.

In addition, there are outstanding balances related to the Company's ongoing purchase of MediHoney® and TCC-EZ® products subsequent to the close of the TWC divestiture.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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Upon the authorization, a credit will be issued for the goods returned within a set amount of days from the shipment, which is generally 90 days.

In the second quarter of 2023, due to the voluntary recall of Primatrix®, Surgimend®, Revize™, and TissueMend™, the Company recorded a $ 12.9 million provision for product returns, as a reduction of net revenue.

Of this amount, $ 0.7 million was paid out in Q2.

Due to the voluntary recall of all products manufactured at the Boston facility, including Primatrix®, Surgimend®, Revize™, and TissueMend™ ("The Boston recall") the Company recorded a total of $ 6.8 million and $ 19.7 million provision for product returns, as a reduction of net revenue during the three and nine months ended September 30, 2023, respectively.

Additionally, the Company has credited $ 8.3 million and $ 9.0 million to customers during the three and nine months ended September 30, 2023, respectively.

As of September 30, 2023, the return reserve was $ 10.7 million.

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.

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

The following table summarized the changes in the contract asset and liability balances for the six months ended June 30, 2023:

The following table summarizes the changes in the contract asset and liability balances for the nine months ended September 30, 2023:

Dollars in thousands Total

4 unchanged sentences

Contract asset, net of transferred to trade receivables on contracts during the period 10,392

Contract asset, June 30, 2023

Contract asset, September 30, 2023

Contract Liability

3 unchanged sentences

Foreign currency translation ( 51 )

Contract liability, June 30, 2023

At June 30, 2023, the short-term portion of the contract liability of $ 8.3 million and the long-term portion of $ 8.5 million is included in current liabilities and other liabilities, respectively, in the consolidated balance sheets.

As of June 30, 2023, the Company is expected to recognize revenue of approximately 49 % of unsatisfied (or partially unsatisfied) performance obligations as revenue within 12 months, with the remaining balance to be recognized thereafter.

Contract liability, September 30, 2023

At September 30, 2023, the short-term portion of the contract liability of $ 8.1 million and the long-term portion of $ 8.1 million are included in current liabilities and other liabilities, respectively, in the consolidated balance sheets.

As of September 30, 2023, the Company is expected to recognize revenue of approximately 50 % of unsatisfied (or partially unsatisfied) performance obligations as revenue within 12 months, with the remaining balance to be recognized thereafter.

Shipping and Handling Fees

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Disaggregated Revenue

The following table presents revenues disaggregated by the major sources of revenues for the three and six months ended June 30, 2023 and 2022 (dollar amounts in thousands):

Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

The following table presents revenues disaggregated by the major sources of revenues for the three and nine months ended September 30, 2023 and 2022 (dollar amounts in thousands):

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Neurosurgery $ 209,229 $ 193,848 $ 607,902 $ 588,818

7 unchanged sentences

Inventories, net consisted of the following:

Dollars in thousands June 30, 2023 December 31, 2022

Dollars in thousands September 30, 2023 December 31, 2022

Finished goods $ 182,066 $ 172,088

3 unchanged sentences

Boston Recall

In the second quarter of 2023, due to the voluntary recall of Primatrix®, Surgimend®, Revize™, and TissueMend™, the Company recorded a $ 24.1 million write off of inventory that was no longer able to be sold.

Subsequent Event

On July 24, 2023, a severe tornado struck the Lelocle, Switzerland area (the “Lelocle Tornado”) causing significant damage to certain inventory held at one of the Company’s storage facilities.

There wasn’t any damage to Integra’s manufacturing facility in Switzerland.

The extent of damage to the facility is being assessed, however, the Company believes the inventory write-off will not exceed $ 8 million.

The Company maintains insurance coverage for damage to its facilities and inventory, as well as business interruption insurance.

The Company is in the process of reviewing these coverages with its insurance carriers.

The Company believes there will be a recovery under its insurance policies, however no assurance can be given regarding the amounts, if any, that will be ultimately recovered or when any such recoveries will be made.

In the nine months ended September 30, 2023, due to the Boston recall, the Company recorded a $ 24.6 million write off of inventory to cost of goods sold that was no longer able to be sold.

Inventory Write-off

There was a tornado that struck the LeLocle, Switzerland area on July 24, 2023.

After review of the damage to the product caused by the tornado, it was determined that the inventory write-off was $ 0.8 million.

GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the six-month period ended June 30, 2023 were as follows:

Changes in the carrying amount of goodwill for the nine-month period ended September 30, 2023 were as follows:

Dollars in thousands Codman Specialty

3 unchanged sentences

Foreign currency translation ( 1,486 ) ( 867 ) ( 2,353 )

Goodwill at June 30, 2023

Goodwill at September 30, 2023

$ 654,733 $ 381,413 $ 1,036,146

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

In the second quarter of 2023, due to the voluntary recall of Primatrix®, Surgimend®, Revize™, and TissueMend™ as well as the

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.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

associated drop in the Company's stock price in Q2, the Company elected to perform a quantitative analysis for its Tissue Technologies reporting unit.

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.

The quantitative test estimates the fair value of the reporting unit using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty

In the second quarter of 2023, due to the Boston recall, as well as the associated drop in the Company's stock price in that quarter, the Company elected to perform a quantitative analysis for its TT reporting unit.

The quantitative test utilized a long-term growth rate of 2 % and a discount rate of 10 %.

The Company determined, after performing the quantitative analysis, that the fair value of the goodwill of the reporting unit was not less than the carrying amount, with more than 20 % headroom.

In the third quarter of 2023, the Company performed the annual qualitative analysis for its three reporting units and intangible assets 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 than the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test.

Other Intangible Assets

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

June 30, 2023

September 30, 2023

Dollars in thousands Weighted

19 unchanged sentences

$ 1,697,532 $ ( 570,923 ) $ 1,126,609

Total amortization of intangible assets for the three and nine months ended September 30, 2023 was $ 20.9 million and $ 62.1 million, respectively.

Of these amounts, $ 17.7 million and $ 52.8 million, respectively was related to amortization of technology based intangibles and included in cost of goods sold, with the remainder included in intangible amortization in the statement of operations.

Total amortization of intangible assets for the three and nine months ended September 30, 2022 was $ 19.2 million and $ 58.7 million, respectively.

Of these amounts, $ 16.1 million and $ 48.3 million, respectively was related to amortization of technology based intangibles and included in cost of goods sold, with the remainder included in intangible amortization in the statement of operations.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Based on quarter-end exchange rates, amortization expense (including amounts reported in cost of goods sold) is expected to be approximately $ 20.7 million for the remainder of 2023, $ 82.2 million in 2024, $ 82.1 million in 2025, $ 82.0 million in 2026, $ 80.0 million in 2027, $ 78.5 million in 2028 and $ 477.1 million thereafter.

The Company periodically performs testing for impairment on certain long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

In the second quarter of 2023, due to the voluntary recall of Primatrix®, Surgimend®, Revize™, and TissueMend™, the Company elected to perform impairment testing on certain definite lived intangibles.

The impairment testing estimates the fair value of the intangibles using an undiscounted cash flow model.

The Company determined, after performing the impairment testing, that the fair value of the intangibles was not less that the carrying amount.

In the second quarter of 2023, due to the Boston recall, the Company elected to perform impairment testing on certain definite lived intangibles.

The intangible components associated with the recalled products include completed technology and customer relationships with a net book value of $ 29.9 million and $ 8.1 million, respectively, as of September 30, 2023.

The company used an undiscounted cash flow methodology and obtained revenue projections through the useful life of the intangibles.

After performing the analysis, no impairment was noted.

The Company will continue to monitor these intangibles as we return to the market and evaluate any changes that would impact our sales of these products.

Amendment to the Seventh Amended and Restated Senior Credit Agreement

On March 24, 2023, the Company entered into the seventh amendment and restatement (the "March 2023 Amendment") of the Senior Credit Facility (the "Senior Credit Facility") with a syndicate of lending banks with Bank of America, N.A., as Administrative Agent.

The March 2023 Amendment extended the maturity date to March 24, 2028, amended the contractual repayments of Term loan A, and amended the interest rate from LIBOR to SOFR-indexed interest.

The March 2023 Amendment extended the maturity date to March 24, 2028, amended the contractual repayments of the term loan component, and amended the interest rate from LIBOR to SOFR-indexed interest.

The Company continues to have the aggregate principal amount of up to approximately $ 2.1 billion available to it through the following facilities:

(i) a $ 775.0 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.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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

13 unchanged sentences

subsidiaries, excluding intangible assets.

The Senior Credit Facility is subject to various financial and negative covenants and at June 30, 2023, the Company was in compliance with all such covenants.

The Senior Credit Facility is subject to various financial and negative covenants and at September 30, 2023, the Company was in compliance with all such covenants.

The Company capitalized $ 7.6 million in deferred financing costs in connection with the modification of the Senior Credit Facility and wrote off $ 0.2 million of previously capitalized financing costs during the first quarter of 2023.

At June 30, 2023 and December 31, 2022 there wa s no balance ou tstanding under the revolving portion of the Senior Credit Facility.

At June 30, 2023 and December 31, 2022, there was $ 775.0 million outstanding under the term loan component of the Senior Credit Facility at a weighted average interest rate of 6.6 % and 5.6 %, respectively.

The liability related to the Senior Credit Facility shown on the balance sheet at June 30, 2023 and December 31, 2022 is reflected net of $ 5.5 million and $ 3.7 million, respectively, in deferred financing costs.

As of June 30, 2023 and December 31, 2022 there was $ 4.8 million and $ 38.1 million of the Term Loan component of the Senior Credit Facility classified as current on the condensed consolidated balance sheet, respectively.

The fair value of outstanding borrowings of the Senior Credit Facility's Term Loan component at June 30, 2023 was $ 759.3 million.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

At September 30, 2023 there wa s $ 90.0 million ou tstanding under the revolving portion of the Senior Credit Facility.

At December 31, 2022 there was no outstanding balance under the revolving portion of the Senior Credit Facility.

At September 30, 2023 and December 31, 2022, there was $ 775.0 million outstanding under the term loan component of the Senior Credit Facility at a weighted average interest rate of 6.8 % and 5.6 %, respectively.

The liability related to the Senior Credit Facility shown on the balance sheet at September 30, 2023 and December 31, 2022 is reflected net of $ 5.2 million and $ 3.7 million, respectively, in deferred financing costs.

As of September 30, 2023 and December 31, 2022 there was $ 9.7 million and $ 38.1 million of the term loan component of the Senior Credit Facility classified as current on the condensed consolidated balance sheet, respectively.

The fair value of outstanding borrowings of the Senior Credit Facility's term loan component at September 30, 2023 was $ 752.3 million.

This fair value was determined by using a discounted cash flow model based on current market interest rates available to the Company.

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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, 2023 and December 31, 2022 to taled $ 1.7 million and $ 1.6 million, respectively.

There were no amounts drawn as of June 30, 2023.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Letters of credit outstanding as of September 30, 2023 and December 31, 2022 to taled $ 1.7 million and $ 1.6 million, respectively.

There were no amounts drawn as of September 30, 2023.

Contractual repayments of the term loan component of the Senior Credit Facility are due as follows:

Quarter Ended June 30, 2023

As of September 30, 2023

Principal Repayment

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Interest is calculated on the term loan portion of the Senior Credit Facility based on SOFR plus the certain amounts set forth in the Credit Agreement.

As the revolving credit facility and Securitization Facility can be repaid at any time, no interest has been included in the calculation.

As the revolving credit facility and Securitization Facility (defined below) can be repaid at any time, no interest has been included in the calculation.

Any outstanding borrowings on the revolving credit component of the Senior Credit Facility is due on March 24, 2028.

3 unchanged sentences

In connection with this offering, the Company capitalized $ 13.2 million of financing fees.

The 2025 Notes are senior, unsecured obligations of the Company, and are convertible into cash and shares of its common stock based on initial conversion rate, subject to adjustment of 13.5739 shares per $1,000 principal amounts of the 2025 Notes (which represents an initial conversion price of $ 73.67 per share).

The 2025 Notes are senior, unsecured obligations of the Company, and are convertible into cash and shares of its common stock based on an initial conversion rate, subject to adjustment of 13.5739 shares per $1,000 principal amounts of the 2025 Notes (which represents an initial conversion price of $ 73.67 per share).

The 2025 Notes convert only in the following circumstances:

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or (4) if specified corporate transactions occur.

As of June 30, 2023, 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.

The Company irrevocably elected (1) to eliminate the Company’s option to choose physical settlement on any conversion of the 2025 Notes that occurs on or after the date of the First Supplemental Indenture and (2) with respect to any Combination Settlement for a conversion of the 2025 Notes, the Specified Dollar Amount that will be settled in cash per $1,000 principal amount of the 2025 Notes shall be no lower than $ 1,000 .

As of September 30, 2023, none of these conditions existed and the 2025 Notes are classified as long term obligations.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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

The Company irrevocably elected (1) to eliminate the Company’s option to choose physical settlement on any conversion of the 2025 Notes that occurs on or after the date of the First Supplemental Indenture and (2) with respect to any Combination Settlement (as defined in the indenture) for a conversion of the 2025 Notes, the Specified Dollar Amount (as defined in the indenture) that will be settled in cash per $1,000 principal amount of the 2025 Notes shall be no lower than $ 1,000 .

Holders of the 2025 Notes will have the right to require the Company to repurchase for cash all or a portion of their 2025 Notes at 100 % of their principal amount, plus any accrued and unpaid interest, upon the occurrence of a fundamental change (as defined in the indenture relating to the 2025 Notes).

6 unchanged sentences

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

At June 30, 2023 , the carrying amount of the liability w as $ 575.0 million.

The fair value of the 2025 Notes at June 30, 2023 was $ 524.6 million.

At September 30, 2023 , the carrying amount of the liability w as $ 575.0 million.

The fair value of the 2025 Notes at September 30, 2023 was $ 524.7 million.

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

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

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Securitization Facility

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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, 2023, the Company was in compliance with the covenants and none of the termination events had occurred.

As of September 30, 2023, 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.

In addition, on April 17, 2023 the company entered into an amendment (the "April 2023 Amendment") of the Securitization Facility and amended the interest rate from LIBOR to SOFR indexed rate.

The April 2023 Amendment and the May 2021 Amendment does not increase the Company’s total indebtedness.

The April 2023 Amendment and the May 2021 Amendment do not increase the Company’s total indebtedness.

The Securitization Facility is currently indexed to SOFR.

At June 30, 2023 and December 31, 2022, the Company had $ 90.8 million and $ 104.7 million, respectively, of outstanding borrowings under its Securitization Facility at a weighted average interest rate of 6.3 % and 5.0 %, respectively.

At June 30, 2023, the total amount outstanding under the Securitization Facility is classified as current on the consolidated balance sheet as the total amount is due on May 28, 2024.

The fair value of the outstanding borrowing of the Securitization Facility at June 30, 2023 was $ 90.6 million.

At September 30, 2023 and December 31, 2022, the Company had $ 75.7 million and $ 104.7 million, respectively, of outstanding borrowings under its Securitization Facility at a weighted average interest rate of 6.6 % and 5.0 %, respectively.

At September 30, 2023, the total amount outstanding under the Securitization Facility is classified as current on the consolidated balance sheet as the total amount is due on May 28, 2024.

The fair value of the outstanding borrowing of the Securitization Facility at September 30, 2023 was $ 74.8 million.

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

11 unchanged sentences

In March 2023, the Company entered into a basis swap where the Company receives Term SOFR and pays LIBOR to convert the portfolio of swaps from LIBOR to SOFR.

The Company held the following interest rate swaps as of June 30, 2023 and December 31, 2022 (dollar amounts in thousands):

June 30, 2023 June 30, 2023

The Company held the following interest rate swaps as of September 30, 2023 and December 31, 2022 (dollar amounts in thousands):

September 30, 2023 September 30, 2023

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

42 unchanged sentences

Cross-Currency Rate Swaps

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.

On September 22, 2023, the Company amended the Swiss Franc ("CHF")-denominated intercompany loan to partially settle CHF 20.0 million and extend the termination date to September 2024 and as a result, the Company terminated the cross-currency swap designated as cash flow hedge of an intercompany loan with aggregate notional amount of $ 48.5 million.

Simultaneously, the Company entered into a cross-currency swap agreement to hedge a notional amount of CHF 28.5 million equivalent to $ 31.5 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.

9 unchanged sentences

dollars from the counterparties.

The Company held the following cross-currency rate swaps as of June 30, 2023 and December 31, 2022 (dollar amounts in thousands):

June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022

The Company held the following cross-currency rate swaps as of September 30, 2023 and December 31, 2022 (dollar amounts in thousands):

September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value

4 unchanged sentences

Receive U.S.$ 5.32 % $ — 49,142

Pay CHF September 22, 2023 September 29, 2024 2.40 % CHF 28,500 — 342 —

Receive U.S.$ 6.27 % $ 31,457 —

Total $ ( 8,984 ) $ ( 7,769 )

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 AOCI.

For the three and six months ended June 30, 2023 the Company recorded losses of $ 8.5 million and $ 12.0 million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation to offset the losses recognized on the intercompany loans.

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 gain or losses recognized on the intercompany loans.

For the three and six months ended June 30, 2023, the Company recorded losses of $ 12.9 million and $ 10.7 million in AOCI, 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 a loss of $ 21.1 million and a gain of $ 21.5 million in AOCI, respectively, related to change in fair value of the cross-currency swaps.

For the three and six months ended June 30, 2023, the Company recorded gains of $ 1.4 million and $ 2.9 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, 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.

The estimated loss that is expected to be reclassified to other income (expense), net from AOCI as of June 30, 2023 within the next twelve months is $ 2.0 million.

As of June 30, 2023, the Company does not expect any gains or losses will be reclassified into earnings because the original forecasted transactions will not occur.

For the three and nine months ended September 30, 2023 the Company recorded gains of $ 15.3 million and $ 3.3 million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation to offset the losses recognized on the intercompany loans.

For the three and nine months ended September 30, 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 to offset the losses recognized on the intercompany loans.

For the three and nine months ended September 30, 2023, the Company recorded gains of $ 13.8 million and $ 3.1 million in AOCI, respectively, related to change in fair value of the cross-currency swaps.

For the three and nine months ended September 30, 2022, the Company recorded a loss of $ 12.3 million and a gain of $ 33.8 million in AOCI, respectively, related to change in fair value of the cross-currency swaps.

For the three and nine months ended September 30, 2023, the Company recorded gains of $ 1.5 million and $ 4.4 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

For the three and nine months ended September 30, 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.

The estimated gain that is expected to be reclassified to other income (expense), net from AOCI as of September 30, 2023 within the next twelve months is $ 4.2 million.

As of September 30, 2023, the Company does not expect any gains or losses will be reclassified into earnings because the original forecasted transactions 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, 2023 and December 31, 2022, respectively (dollar amounts in thousands):

June 30, 2023 December 31, 2022 June 30, 2023

The Company held the following cross-currency rate swaps designated as net investment hedges as of September 30, 2023 and December 31, 2022, respectively (dollar amounts in thousands):

September 30, 2023 December 31, 2022 September 30, 2023

December 31, 2022

9 unchanged sentences

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 AOCI.

For the three and six months ended June 30, 2023, the Company recorded losses of $ 11.1 million and $ 10.1 million, respectively, in AOCI 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 $ 10.8 million and $ 12.1 million in AOCI, respectively, related to change in fair value of the cross-currency swaps.

For the three and six months ended June 30, 2023, the Company recorded gains of $ 2.1 million and $ 4.2 million, respectively, 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, 2022, the Company recorded gains of $ 1.0 million and $ 2.3 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 AOCI as of June 30, 2023 within the next twelve months is $ 10.6 million.

For the three and nine months ended September 30, 2023, the Company recorded a gain of $ 6.1 million and a loss of $ 4.1 million, respectively, in AOCI related to the change in fair value of the cross-currency swaps.

For the three and nine months ended September 30, 2022, the Company recorded gains of $ 9.4 million and $ 21.5 million in AOCI, respectively, related to change in fair value of the cross-currency swaps.

For the three and nine months ended September 30, 2023, the Company recorded gains of $ 1.8 million and $ 6.0 million, respectively, in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

For the three and nine months ended September 30, 2022, the Company recorded gains of $ 2.4 million and $ 4.7 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 AOCI as of September 30, 2023 within the next twelve months is $ 6.9 million.

Foreign Currency Forward Contract

2 unchanged sentences

These changes in fair value will be recognized into earnings as a component of cost of sales when the forecasted-transaction occurs.

During the first half of 2023, the Company entered into Foreign Currency Forward Contracts to mitigate the risk of foreign currency on intercompany purchases in CHF.

During 2023, the Company entered into foreign currency forward Contracts to mitigate the risk of foreign currency on intercompany purchases in CHF.

These contracts typically settle at various dates within twelve months of execution.

As of June 30, 2023 the notional amount of Foreign Currency Forward Contracts was $ 12.6 million.

During the three and six months ended June 30, 2023 the Company recorded gains of $ 0.3 million and $ 0.2 million, respectively in AOCI related to the change in fair value of the Foreign Currency Forward Contracts.

For the three and six months ended June 30, 2023 the company recorded a gain of $ 0.4 million in cost of goods sold included in the consolidated statements of operations related to the Foreign Currency Forward Contracts.

As of September 30, 2023 the notional amount of foreign currency forward contracts was $ 3.5 million.

During the three and nine months ended September 30, 2023 the Company recorded gains of $ 0.1 million and $ 0.3 million, respectively in AOCI related to the change in fair value of the foreign currency forward contracts.

For the three and nine months ended September 30, 2023 the company recorded a gain of $ 0.1 million and $ 0.4 million, respectively, in cost of goods sold included in the consolidated statements of operations related to the foreign currency forward contracts.

Counterparty Credit Risk

8 unchanged sentences

The Company performs ongoing assessments of counterparty credit risk.

The following table summarizes the fair value for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022:

The following table summarizes the fair value for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022:

Fair Value as of

Location on Balance Sheet (1) :

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Dollars in thousands

30 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, 2023 and December 31, 2022, the total notional amounts related to the Company’s interest rate swaps were both $ 1.5 billion, respectively.

(2) At September 30, 2023 and December 31, 2022, the total notional amounts related to the Company’s interest rate swaps were both $ 1.5 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, 2023 and 2022:

Dollars in thousands Balance in AOCI

6 unchanged sentences

Statements of

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Cash Flow Hedges

5 unchanged sentences

$ 16,614 $ 35,262 $ 22,170 $ 29,706

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Cash Flow Hedges

12 unchanged sentences

Statements of

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Cash Flow Hedges

5 unchanged sentences

$ 29,527 $ 22,858 $ 22,679 $ 29,706

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Cash Flow Hedges

5 unchanged sentences

Derivative Instruments not designated hedges:

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 an intercompany loan denominated in JPY.

During the second quarter of 2021, the Company entered into a foreign currency swap, with a notional amount of $ 7.3 millions to mitigate the risk from fluctuations in foreign currency exchange rates associated with an intercompany loan denominated in Japanese Yen.

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.

4 unchanged sentences

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 June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

2 unchanged sentences

STOCK-BASED COMPENSATION

As of June 30, 2023, 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, 2023, 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.

3 unchanged sentences

Stock Options

As of June 30, 2023, there were approximately $ 5.0 million of total unrecognized compensation costs related to unvested stock options.

As of September 30, 2023, there were approximately $ 4.3 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 151,293 stock options granted during the six months ended June 30, 2023.

For the six months ended June 30, 2023, the weighted average grant date fair value for stock options granted was $ 21.58 per option.

There were 151,293 stock options granted during the nine months ended September 30, 2023.

For the nine months ended September 30, 2023, the weighted average grant date fair value for stock options granted was $ 21.58 per option.

Awards of Restricted Stock and Performance Stock

2 unchanged sentences

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

As of June 30, 2023, there was approximately $ 43.3 million of total unrecognized compensation costs related to these unvested awards.

As of September 30, 2023, there was approximately $ 37.7 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 397,664 restricted stock awards and 161,218 performance stock awards during the six months ended June 30, 2023.

For the six months ended June 30, 2023, the weighted average grant date fair value for restricted stock awards and performance stock units granted was $ 52.92 and $ 52.87 per award, respectively.

The Company granted 466,636 restricted stock awards and 161,218 performance stock awards during the nine months ended September 30, 2023.

For the nine months ended September 30, 2023, the weighted average grant date fair value for restricted stock awards and performance stock units granted was $ 51.24 and $ 52.87 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 and six months ended June 30, 2023 were $ 0.3 million and $ 0.6 million.

The components of the net periodic benefit costs other than the service cost component of $ 0.5 million and $ 1.1 million for the three and six months ended June 30, 2023 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, 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 nine months ended September 30, 2023 were $ 0.3 million and $ 0.9 million.

The components of the net periodic benefit costs other than the service cost component of $ 0.5 million and $ 1.6 million for the three and nine months ended September 30, 2023 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, 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.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The estimated fair values of plan assets were $ 38.0 million and $ 38.1 million as of June 30, 2023 and December 31, 2022, respectively.

The net plan assets of the pension plans are invested in common trusts as of June 30, 2023 and December 31, 2022.

The estimated fair values of plan assets were $ 38.2 million and $ 38.1 million as of September 30, 2023 and December 31, 2022, respectively.

The net plan assets of the pension plans are invested in common trusts as of September 30, 2023 and December 31, 2022.

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 $ 5.4 million and $ 4.7 million as of June 30, 2023 and December 31, 2022, respectively.

The fair value of these assets were $ 5.4 million and $ 4.7 million as of September 30, 2023 and December 31, 2022, respectively.

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, 2023.

The Company has no finance leases as of September 30, 2023.

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).

4 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, 2023 and June 30, 2022 was $ 11.8 million and $ 10.2 million respectively, which includes $ 0.1 million, in related party operating lease expense.

Total operating lease expense for the nine months ended September 30, 2023 and September 30, 2022 was $ 17.9 million and $ 16.6 million respectively, which includes $ 0.2 million, in related party operating lease expense.

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

Dollars in thousands, except lease term and discount rate June 30, 2023 December 31, 2022

Dollars in thousands, except lease term and discount rate September 30, 2023 December 31, 2022

ROU assets $ 156,760 $ 148,284

10 unchanged sentences

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

Supplemental cash flow information related to leases for the six months ended June 30, 2023 and 2022 were as follows:

Dollars in thousands June 30, 2023 June 30, 2022

Supplemental cash flow information related to leases for the nine months ended September 30, 2023 and 2022 were as follows:

Dollars in thousands September 30, 2023 September 30, 2022

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

2 unchanged sentences

Operating leases $ 19,540 $ 75,588

Future minimum lease payments under operating leases at June 30, 2023 were as follows:

Future minimum lease payments under operating leases at September 30, 2023 were as follows:

Dollars in thousands Related Parties Third Parties Total

12 unchanged sentences

Long-term lease liabilities 168,017

There were no future minimum lease payments under finance leases at June 30, 2023.

There were no future minimum lease payments under finance leases at September 30, 2023.

Related Party Leases

The Company leases its manufacturing facility in Plainsboro, New Jersey, from a general partnership that is 50 % owned by a principal stockholder of the Company.

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

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

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.

TREASURY STOCK

As of June 30, 2023 and December 31, 2022, there were 9.5 million and 6.8 million shares of treasury stock outstanding with a cost of $ 513.8 million and $ 362.9 million, at a weighted average cost per share of $ 53.93 and $ 53.18 , respectively.

As of September 30, 2023 and December 31, 2022, there were 11.8 million and 6.8 million shares of treasury stock outstanding with a cost of $ 612.8 million and $ 362.9 million, at a weighted average cost per share of $ 51.83 and $ 53.18 , respectively.

On August 15, 2023, the Company entered into a $ 125 million accelerated share repurchase ("August 2023 ASR") and received 2.3 million shares of the common stock at inception of the August 2023 ASR, which represented approximately 80 % of the expected total shares under the August 2023 ASR.

On October 18, 2023 the early exercise provision was exercised by the August 2023 ASR counterparty.

The Company received an additional 0.9 million shares determined using the volume-weighted average price of the Company's common stock during the term of the August 2023 ASR.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

On January 26, 2023, the Company entered into a $ 150 million accelerated share repurchase ("2023 ASR") and received 2.1 million shares of the Company common stock at inception of the 2023 ASR, which represented approximately 80 % of the expected total shares under the 2023 ASR.

The settlement of the ASR agreement was completed in two separate transactions on April 26, 2023 and May 4, 2023, where the Company received an additional 0.30 million and 0.31 million shares respectively, determined using the volume-weighted average price of the Company's common stock during the term of the 2023 ASR.

On January 26, 2023, the Company entered into a $ 150 million accelerated share repurchase ("January 2023 ASR") and received 2.1 million shares of common stock at inception of the January 2023 ASR, which represented approximately 80 % of the expected total shares under the January 2023 ASR.

The settlement of the January ASR agreement was completed in two separate transactions on April 26, 2023 and May 4, 2023, where the Company received an additional 0.30 million and 0.31 million shares respectively, determined using the volume-weighted average price of the Company's common stock during the term of the January 2023 ASR.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “Act”) was signed into law.

The Act implements a new excise tax of 1% on the net share repurchases made by the Company effective for share repurchases performed January 1, 2023, or after.

The Company accrued $ 1.2 million regarding the excise tax the first half of 2023 related to the ASR mentioned above.

On April 26, 2022, the Board of Directors authorized the Company to repurchase up to $ 225 million of the Company’s common stock.

The Company accrued $ 2.5 million of excise tax related to the two ASR agreements during 2023.

On July 18, 2023, the Board of Directors authorized a new $ 225 million share repurchase program, replacing the existing $ 225 million program authorized in April 2022, and of which $ 75 million remained authorized at the time of its replacement .

6 unchanged sentences

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,

2023 2022 2023 2022

Reported tax rate ( 4.8 ) % 15.1 % 8.2 % 14.8 %

The Company’s effective income tax rates for the three months ended June 30, 2023 and 2022 w ere ( 9.4 )% and 13.2 %, respectively.

For the three months ended June 30, 2023, the primary drivers of the lower tax rate relate to a reduction to book income and a $ 1.1 million benefit associated with the Federal R&D credit.

The Company’s effective income tax rates for the six months ended June 30, 2023 and 2022 were 15.5 % and 14.5 %, respectively.

For the six months ended June 30, 2023 , the primary drivers of the tax rate relate to a reduction to book income and a $ 1.1 million benefit associated with the Federal R&D credit.

The lower rate from the six months ended June 30, 2022 was primarily due to a $ 5.7 million benefit related to excess tax benefits from stock compensation.

The Company’s effective income tax rates for the three months ended September 30, 2023 and 2022 were ( 4.8 )% and 15.1 %, respectively.

For the three months ended September 30, 2023, the primary drivers of the lower tax rate relate to a reduction to book income in higher-taxed jurisdictions and a $ 3.3 million benefit related to the filing of prior year tax returns.

The Company’s effective income tax rates for the nine months ended September 30, 2023 and 2022 were 8.2 % and 14.8 %, respectively.

For the nine months ended September 30, 2023, the primary drivers of the lower tax rate relate to a reduction to book income in higher-taxed jurisdictions and a $ 3.8 million benefit related to the filing of prior year tax returns..

The lower rate from the nine months ended September 30, 2022 was primarily due to a $ 5.5 million benefit related to excess tax benefits from stock compensation.

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

5 unchanged sentences

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

As of June 30, 2023, 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 September 30, 2023, 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.

5 unchanged sentences

Basic and diluted net income per share was as follows:

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

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

Dollars in thousands, except per share amounts 2023 2022 2023 2022

10 unchanged sentences

Diluted net income per common share $ 0.24 $ 0.60 $ 0.59 $ 1.53

Common stock of approximately 0.6 million an d 0.2 million shares at June 30, 2023, and 2022, 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.

Basic earnings per share is computed by dividing net income by the weighted-average common shares outstanding during the period.

Diluted earnings per share is computed based on the weighted-average common shares outstanding plus the effect of dilutive potential common shares outstanding during the period calculated using the treasury stock method.

Dilutive potential common shares include employee equity share options, non-vested shares, and similar equity instruments granted by the Company.

Potential common share equivalents have been excluded where their inclusion would be anti-dilutive.

Common stock of approximately 0.6 million an d 0.3 million shares at September 30, 2023, and 2022, 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.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income for the six months ended June 30, 2023 and 2022 was as follows:

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

Comprehensive income for the three and nine months ended September 30, 2023 and 2022:

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

Dollars in thousands 2023 2022 2023 2022

4 unchanged sentences

Comprehensive income, net $ 16,412 $ 55,691 $ 39,387 $ 165,320

Changes in accumulated other comprehensive income by component between December 31, 2022 and June 30, 2023 are presented in the table below, net of tax:

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Changes in accumulated other comprehensive income by component between December 31, 2022 and September 30, 2023 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) 112 — ( 8,632 ) ( 8,520 )

Balance at June 30, 2023

Balance at September 30, 2023

$ 22,929 $ 9,322 $ ( 30,506 ) $ 1,745

For the six months ended June 30, 2023, the Company reclassified a gain of $ 9.4 million and a loss of $ 9.0 million from accumulated other comprehensive income to other income, net and interest income, respectively.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

For the nine months ended September 30, 2023, the Company reclassified a gain of $ 17.5 million from accumulated other comprehensive income to other income, net and interest income, respectively.

SEGMENT AND GEOGRAPHIC INFORMATION

5 unchanged sentences

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

Net sales and profit by each reportable segment for the three and six months ended June 30, 2023 and 2022 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, 2023 and 2022 are as follows:

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

Dollars in thousands 2023 2022 2023 2022

12 unchanged sentences

Operating income $ 26,593 $ 65,049 $ 75,479 $ 171,080

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The Company does not allocate any assets to the reportable segments.

2 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 2023 2022 2023 2022

7 unchanged sentences

The royalty payments that the Company made under these agreements were not significant for any of the periods presented.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The Company is subject to various claims, lawsuits and proceedings in the ordinary course of the Company's business, including claims by current or former employees, distributors and competitors and with respect to its products and product liability claims, lawsuits and proceedings, some of which have been settled by the Company.

In the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material, adverse effect on the Company's financial condition.

In the ordinary course of its business, the Company is involved in, from time to time, various legal actions, including any matters described below, involving product liability, employment, intellectual property and commercial disputes, shareholder related matters, environmental proceedings, tax disputes, and governmental proceedings and investigations, some of which have been settled by the Company.

In the opinion of management, such matters are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material, adverse effect on the Company's financial condition.

However, it is possible that the Company's results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies.

2 unchanged sentences

The Company consistently accrues legal fees expected to be incurred in connection with loss contingencies as those fees are incurred by outside counsel as a period cost.

On September 12, 2023, a securities class action complaint, captioned Pembroke Pines Firefighters & Police Officers Pension Fund v.

Integra LifeSciences Holdings Corporation , No.

23-cv-20321 (D.N.J.), was filed by a purported stockholder of the Company in the United States District Court for the District of New Jersey (the “Pembroke Litigation”) against the Company and certain of the Company’s current and former executive officers.

The Pembroke Litigation, filed on behalf of a putative class of stockholders who purchased or acquired the Company’s common stock between March 11, 2019 and May 22, 2023, inclusive, alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, on the basis of purportedly materially false and misleading statements and omissions relating to certain quality systems issues identified by the U.S.

Food and Drug Administration at the Company’s Boston, Massachusetts manufacturing facility, the Company’s efforts to remediate those issues, and the Company’s forecasts for certain products in its Tissue Technologies segment.

The complaint seeks, among other things, compensatory damages, attorneys’ fees, expert fees, and other costs.

The Company believes that it has strong defenses to the allegations in the Pembroke Litigation, as we intend to defend the matter vigorously.

Contingent Consideration

The Company determined the fair value of contingent consideration during the six month period ended June 30, 2023 and June 30, 2022 to reflect the change in estimate, additions, payments, transfers and the time value of money during the period.

A reconciliation of the opening balances to the closing balances of these Level 3 measurements for the six months ended June 30, 2023 and June 30, 2022 is as follows (in thousands):

Six Months Ended June 30, 2023 Contingent Consideration Liability Related to Acquisition of:

The Company determined the fair value of contingent consideration during the nine month period ended September 30, 2023 and September 30, 2022 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 nine months ended September 30, 2023 and September 30, 2022 is as follows (in thousands):

Nine Months Ended September 30, 2023 Contingent Consideration Liability Related to Acquisition of:

Arkis Location in Financial Statements Derma Sciences ACell Surgical Innovations Associates, Inc.

(FN 2) Location in Financial Statements

Short-term Long-term Long-term Long-term Short-term Long-term

Balance as of January 1, 2023

$ 12,895 $ 230 $ 3,700 57,600

Transfers — — — — 12,500 ( 12,500 )

Change in fair value of contingent consideration liabilities 1,991 Research and development 1,887 ( 2,200 ) 6,600 Selling, general and administrative

Balance as of June 30, 2023 4,389 11,587 230 1,500 12,700 50,107

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

Balance as of September 30, 2023 14,886 2,117 1,500 64,200

Short-Term $ 4,373 $ — $ 503 $ 13,000

Long-Term 10,513 2,117 997 51,200

Total $ 14,886 $ 2,117 $ 1,500 $ 64,200

Nine Months Ended September 30, 2022 Contingent Consideration Liability Related to Acquisition of:

Arkis Location in Financial Statements Derma Sciences ACell Inc.

Location in Financial Statements

Short-term Long-term Long-term Short-term Long-term

Balance as of January 1, 2022

$ 15,099 $ 230 $ 21,800

Transfers — — — 4,885 ( 4,885 )

Change in fair value of contingent consideration liabilities ( 2,681 ) Research and development — ( 16,800 ) Selling, general and administrative

Balance as of June 30, 2022

Balance as of September 30, 2022

$ 12,418 $ 230 $ 5,000

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Short-Term $ 2,829 $ — $ —

Long-Term 9,589 230 5,000

Total $ 12,418 $ 230 $ 5,000

Arkis BioSciences Inc.

3 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, 2023 and June 30, 2022 was $ 16.0 million and $ 13.0 million, respectively.

The Company recorded $ 11.6 million and $ 9.4 million in other liabilities at June 30, 2023 and June 30, 2022, respectively, and $ 4.4 million and $ 3.5 million in accrued expenses and other current liabilities at June 30, 2023 and June 30, 2022, respectively, in the consolidated balance sheet of the Company.

Derma Sciences

Derma Sciences, Inc.

The Company assumed contingent consideration incurred by Derma Sciences, Inc.

("Derma Sciences") related to its acquisitions of BioD and the intellectual property related to Medihoney products.

The Company accounted for the contingent liabilities by recording their fair value on the date of the acquisition based on a probability weighted income approach.

("Derma Sciences") related to its acquisitions of BioD, LLC and the intellectual property related to Medihoney® products.

The Company accounted for the contingent liabilities by recording the fair value on the date of the acquisition based on a probability weighted income approach.

The Company has already paid $ 33.3 million related to the aforementioned contingent liabilities.

1 unchanged sentence

The potential maximum undiscounted payment amounts to $ 3.0 million.

The estimated fair value as of June 30, 2023 and June 30, 2022 was $ 0.2 million.

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 2023 and 2025.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

As part of the acquisition of ACell ("The Acell Acquisition"), the Company is required to make payments to the former shareholders of ACell up to $ 50 million based on the achievement by the Company of certain revenue-based performance milestones in 2023 and $ 50 million 2025.

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 June 30, 2023 was $ 1.5 million .

The Company recorded $ 1.5 million and $ 18.1 million in other liabilities at June 30, 2023 and June 30, 2022 , respectively, and $ 0.0 million in accrued expenses and other current liabilities at June 30, 2022 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.

1 unchanged sentence

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