What changed in this filing

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Item 1. Financial Statements

2024-05-06 compared with 2023-10-25 · 275 added, 371 removed, 633 unchanged (51% of the section changed)

4 unchanged sentences

(Dollars in thousands, except per share amounts)

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

2023 2022 2023 2022

Three Months Ended March 31,

Total revenue, net $ 368,872 $ 380,846

8 unchanged sentences

Interest expense ( 13,624 ) ( 12,100 )

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

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

Income before income taxes 18,609 58,796 52,211 149,686

Provision (benefit) for income taxes ( 888 ) 8,881 4,304 22,082

Net income $ 19,497 $ 49,915 $ 47,907 $ 127,604

Net income per share

Other (expense) income, net ( 610 ) 1,389

(Loss) income before income taxes ( 5,230 ) 29,778

(Benefit) provision for income taxes ( 1,949 ) 5,552

Net (loss) income $ ( 3,281 ) $ 24,226

Net (loss) income per share

Basic $ ( 0.04 ) $ 0.30

9 unchanged sentences

(Dollars in thousands, except per share amounts)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

Cash and cash equivalents $ 591,906 $ 276,402

Short-term investments 71,194 32,694

Trade accounts receivable, net of allowances of $ 5,050 and $ 4,879

1 unchanged sentence

Inventories, net 403,422 389,608

Prepaid expenses and other current assets 130,976 116,789

Prepaid Expenses 72,667 67,362

Other Current Assets 35,369 32,643

Total current assets 1,415,650 1,058,036

9 unchanged sentences

Current portion of borrowings under senior credit facility $ 19,375 $ 14,531

Current portion of borrowings under securitization facility 75,700 —

Current portion of lease liability - operating leases 16,303 15,284

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240,000 authorized shares;

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

91,484 and 90,920 issued at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,310,527 1,302,484

Treasury stock, at cost;

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

12,735 shares and 12,751 shares at March 31, 2024 and December 31, 2023, respectively

( 646,422 ) ( 647,262 )

Accumulated other comprehensive income 1,745 10,265

Accumulated other comprehensive loss ( 10,646 ) ( 15,106 )

Retained earnings 943,578 946,859

5 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES:

Net income $ 47,907 $ 127,604

Net (Loss) Income $ ( 3,281 ) $ 24,226

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 30,566 31,143

Deferred income tax provision 2,963 1,439

Non-cash impairment charges $ 7,064 —

Deferred income tax provision (benefit) ( 2,856 ) 1,953

Share-based compensation 5,599 3,620

2 unchanged sentences

Loss (gain) on disposal of property and equipment 12 ( 23 )

Gain from the sale of business — ( 644 )

Change in fair value of contingent consideration and others 456 4,699

10 unchanged sentences

Purchases of property and equipment ( 15,465 ) ( 13,704 )

Proceeds from Sale of Business — 23,960

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

Net proceeds from swaps designated as net investment hedges 5,381 4,909

Purchases of Investments ( 38,500 ) —

Net cash used in investing activities ( 53,965 ) ( 13,704 )

6 unchanged sentences

Cash taxes paid in net equity settlement ( 3,122 ) ( 5,231 )

Net cash used in financing activities ( 223,035 ) ( 154,254 )

Net cash provided by (used in) financing activities 358,676 ( 162,683 )

Effect of exchange rate changes on cash and cash equivalents ( 4,963 ) 937

Net decrease in cash and cash equivalents ( 182,929 ) ( 1,511 )

Net increase (decrease) in cash and cash equivalents 315,504 ( 149,294 )

Cash and cash equivalents at beginning of period 276,402 456,661

4 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

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

1 unchanged sentence

Balance, January 1, 2024 90,920 $ 909 ( 12,751 ) $ ( 647,262 ) $ 1,302,484 $ ( 15,106 ) $ 946,859 $ 1,587,884

Net income — — — — — — 24,226 24,226

Net loss — — — — — — ( 3,281 ) ( 3,281 )

Other comprehensive income (loss), net of tax — — — — — 4,460 — 4,460

4 unchanged sentences

Balance, March 31, 2024 91,484 $ 915 ( 12,735 ) $ ( 646,422 ) $ 1,310,527 $ ( 10,646 ) $ 943,578 $ 1,597,952

Net income — — — — — — 4,184 4,184

Other comprehensive loss, net of tax — — — — — ( 2,237 ) — ( 2,237 )

Issuance of common stock for vesting of share based awards, net of shares withheld for taxes 68 1 — 21 985 — — 1,007

Share-based compensation — — — — 5,268 — — 5,268

Accelerated shares repurchased — $ — ( 609 ) ( 32,125 ) 32,125 $ — $ — —

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

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

Three Months Ended March 31, 2023

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

1 unchanged sentence

Balance, January 1, 2023

90,476 $ 905 ( 6,823 ) $ ( 362,862 ) $ 1,276,977 $ 10,265 $ 879,118 $ 1,804,403

Net income — — — — — — 24,226 24,226

5 unchanged sentences

Balance, March 31, 2023

Net income — — — — — — 44,788 44,788

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

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

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

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

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

90,813 $ 908 ( 8,918 ) $ ( 481,678 ) $ 1,245,297 $ 7,067 $ 903,344 $ 1,674,938

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

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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 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.

In the opinion of management, the March 31, 2024 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, 2023 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

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.

Operating results for the three-month period ended March 31, 2024 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 Financial Accounting Standards Board ("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):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , and, in January 2021, subsequently amended the initial guidance in :

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

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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 through December 31, 2024.

In December 2022, the FASB issued ASU 2022-06 , Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , which delayed the effective date from December 31, 2022 to December 31, 2024.

The Alternative Reference Rates Committee, a group of private-market participants convened by the U.S.

3 unchanged sentences

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).

(See Note 6, Debt ).

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

Integra has elected to adopt the optional expedient under ASC 848, which will allow the interest rate swap hedging relationship to continue, without de-designation, due to the change in the indexed rate from LIBOR to SOFR.

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.

Integra has elected to adopt the optional expedient under Topic 848, which will allow the interest rate swap hedging relationship to continue, without de-designation, due to the change in the indexed rate from LIBOR to SOFR.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures which enhances the transparency of income tax disclosures by expanding annual disclosure requirements related to the rate reconciliation and income taxes paid.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company does not plan to early adopt and is currently evaluating this ASU to determine its impact on the Company’s disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company does not plan to early adopt and is currently evaluating this ASU to determine its impact on the Company’s disclosures.

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.

ACQUISITIONS AND DIVESTITURES

Surgical Innovation Associates, Inc.

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") 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 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

The SIA Acquisition has been accounted for using the acquisition method of accounting.

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

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

Dollars in thousands Final Valuation Weighted Average Life

Current assets:

Trade accounts receivable, net 1,551

Inventories, net 2,900

Prepaid expenses and other current assets 1,654

Total current assets $ 10,543

Intangible assets 75,000 14 years

Goodwill 41,380

Total assets acquired $ 126,923

Current liabilities:

Accounts payable and accrued expenses $ 2,044

Total current liabilities $ 2,044

Deferred Tax Liability 11,325

Contingent consideration 57,607

Total liabilities assumed 70,976

Net assets acquired $ 55,947

Developed Technology

The estimated fair value of the developed technology was determined using the multi-period excess earnings method of the income approach, which estimates value based on the present value of future economic benefits.

Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each product including net revenues, cost of sales, R&D costs, selling and marketing costs, working capital, and contributory asset charges, the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of the asset’s life cycle, and competitive trends impacting the asset and the cash flow stream.

The Company used a discount rate of 18 % to arrive at the present value for the acquired intangible assets to reflect the rate of return a market participant would expect to earn and incremental commercial uncertainty in the cash flow projections.

No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change.

For these and other reasons, actual results may vary significantly from estimated results.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The Company allocated goodwill related to the SIA Acquisition to the TT segment.

Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce.

A key factor that contributes to the recognition of goodwill, and a driver for the Company’s acquisition of SIA, is the attractive growth opportunities presented by the surgical matrix business in the breast reconstruction market.

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

Contingent Consideration

The Company determines the acquisition date fair value of contingent consideration obligations based on a probability-weighted income approach derived from revenue estimates and a probability assessment with respect to the likelihood of achieving contingent obligations.

The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined using the fair value concepts in ASC 820.

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

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

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

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 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 at the acquisition date.

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

Deferred tax liabilities result from identifiable intangible assets’ fair value adjustments.

These adjustments create excess book basis over tax basis which is tax-effected by the statutory tax rates of applicable jurisdictions.

Sale of non-core traditional wound care business

On August 31, 2022, the Company completed its 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 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 TT 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 condensed consolidated statement of operations for the year ended December 31, 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 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 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

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

Acquisition of Acclarent Inc.

In December 2023, the Company entered into a definitive agreement to acquire Acclarent, Inc.

(“Acclarent”) from Ethicon, Inc., a subsidiary of Johnson & Johnson, for $ 275.0 million in cash at closing, subject to customary purchase price adjustments, and an additional $ 5.0 million contingent upon the achievement of a regulatory milestone, which was achieved prior to closing.

Acclarent is a developer and marketer of medical devices used in Ear, Nose, Throat (“ENT”) procedures.

Acclarent’s results of operations will be reported in the Company’s Codman Specialty Surgical reportable segment from the date of acquisition.

On April 1, 2024, the Company successfully completed the acquisition of 100 % of Acclarent for approximately $ 282.0 million in cash, subject to customary adjustments set forth in the purchase agreement related to working capital balances transferred to the Company.

To facilitate the completion of the acquisition of Acclarent, the Company drew from the revolving portion of the Senior Credit Facility during the three months ended March 31, 2024.

For further detail on the Company’s additional borrowings, see Note 6.

REVENUES FROM CONTRACTS WITH CUSTOMERS

13 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 90 days.

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.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

In 2023, 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 $ 18.7 million provision for product returns.

As of March 31, 2024, the Company has credited $ 16.7 million to customers and holds a remaining return reserve of $ 2.0 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.

1 unchanged sentence

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 sheets.

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 other current assets account in the consolidated balance sheets.

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.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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

The following table summarizes the changes in the contract asset and liability balances for the three months ended March 31, 2024:

Dollars in thousands Total

2 unchanged sentences

Transferred to trade receivable from contract asset included in beginning of the year contract asset ( 9,233 )

Written off from beginning of the year contract asset due to Boston recall ( 2,379 )

Contract asset, net of transferred to trade receivables on contracts during the period 7,478

Contract asset, September 30, 2023

Contract asset, March 31, 2024

Contract Liability

3 unchanged sentences

Foreign currency translation ( 63 )

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.

Contract liability, March 31, 2024

At March 31, 2024, the short-term portion of the contract liability of $ 7.8 million and the long-term portion of $ 6.9 million are included in current liabilities and other liabilities, respectively, in the consolidated balance sheets.

As of March 31, 2024, the Company is expected to recognize revenue of approximately 53 % of unsatisfied (or partially unsatisfied) performance obligations as revenue within 12 months, with the remaining balance to be recognized thereafter.

Shipping and Handling Fees

8 unchanged sentences

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

Taxes Collected from Customers

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

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Taxes Collected from Customers

Disaggregated Revenue

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

The following table presents revenues disaggregated by the major sources of revenues for the three months ended March 31, 2024 and 2023 (dollar amounts in thousands):

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Neurosurgery $ 202,268 $ 192,870

7 unchanged sentences

Inventories, net consisted of the following:

Dollars in thousands September 30, 2023 December 31, 2022

Dollars in thousands March 31, 2024 December 31, 2023

Finished goods $ 192,287 $ 196,402

2 unchanged sentences

Total inventories, net $ 403,422 $ 389,608

Boston Recall

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 nine-month period ended September 30, 2023 were as follows:

Changes in the carrying amount of goodwill for the three-month period ended March 31, 2024 were as follows:

Dollars in thousands Codman Specialty

1 unchanged sentence

Goodwill at December 31, 2023 $ 666,937 $ 388,525 $ 1,055,462

SIA Acquisition Working Capital Adjustment — ( 382 ) ( 382 )

Foreign currency translation ( 9,622 ) ( 5,605 ) ( 15,227 )

Goodwill at September 30, 2023

Goodwill at March 31, 2024

$ 657,315 $ 382,920 $ 1,040,235

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

The Company tests goodwill and intangible assets with indefinite lives for impairment annually in the third quarter in accordance with FASB ASC Topic 350, Intangibles—Goodwill and Other (“ASC 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)

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

1 unchanged sentence

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.

The quantitative test estimates the fair value of the reporting unit using a

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty.

Due to third-party audit findings and an update to the estimated timeframe to resume the commercial distribution of products manufactured in the Boston facility, the Company elected to perform a quantitative analysis of its Tissue Technologies reporting unit in the first quarter of 2024 in accordance with ASC 350.

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 with respect to future revenue and expense growth rates and discount rates which, by their nature, are characterized by uncertainty.

An impairment loss is recognized when the reporting unit’s carrying amount exceeds its estimated fair value.

The quantitative test utilized a terminal growth rate of 2 %, a discount rate of 15 %, and a range and application of the company guideline multiples.

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

Other Intangible Assets

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

September 30, 2023

March 31, 2024

Dollars in thousands Weighted

19 unchanged sentences

$ 1,729,837 $ ( 662,004 ) $ 1,067,833

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)

Total amortization of intangible assets for the three months ended March 31, 2024 was $ 27.7 million.

Of these amounts, $ 17.6 million was related to amortization of technology based intangibles and included in cost of goods sold.

$ 7.1 million related to the impairment of a customer relationship intangible and the remainder were included in intangible amortization in the statement of operations.

Total amortization of intangible assets for the three months ended March 31, 2023 was $ 20.6 million.

Of these amounts, $ 17.5 million 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.

Based on quarter-end exchange rates, amortization expense (including amounts reported in cost of goods sold) is expected to be approximately $ 60.1 million for the remainder of 2024, $ 80.2 million in 2025, $ 80.0 million in 2026, $ 79.1 million in 2027, $ 78.7 million in 2028, $ 74.9 million in 2029 and $ 403.5 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 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.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Due to third-party audit findings and an update to the estimated timeframe to resume the commercial distribution of products manufactured in the Boston facility, the Company elected to perform impairment testing on certain definite-lived intangible assets including completed technology and customer relationships in accordance with FASB ASC Topic 360, Property, Plant and Equipment .

For the three months ended March 31, 2024, the Company recorded an impairment charge related to the definite-lived intangible asset associated with the customer relationships of $ 7.1 million in intangible asset amortization in the consolidated statement of operations.

With respect to the definite-lived intangible assets associated with the completed technology of SurgiMend® and PriMatrix®, the carrying values are $ 38.3 million and $ 27.7 million, respectively, as of March 31, 2024.

We determined that the carrying amount of these definite-lived intangible assets were recoverable and, therefore, the intangible assets were not deemed to be impaired.

Amendment to the Seventh Amended and Restated Senior Credit Agreement

4 unchanged sentences

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

Fiscal Quarter Maximum Consolidated Total Leverage Ratio

Fiscal Quarter Ending Maximum Consolidated Total Leverage Ratio

March 31, 2023 through December 31, 2024 4.50 to 1.00

11 unchanged sentences

subsidiaries, excluding intangible assets.

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 Senior Credit Facility is subject to various financial and negative covenants and, at March 31, 2024, 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 March 31, 2024 and December 31, 2023 there wa s $ 420.0 million and $ 70.0 million, respectively, ou tstanding under the revolving portion of the Senior Credit Facility.

At March 31, 2024 and December 31, 2023, 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 6.8 %, respectively.

As of March 31, 2024 and December 31, 2023 there was $ 19.4 million and $ 14.5 million, respectively, of the term loan component of the Senior Credit Facility classified as current on the condensed consolidated balance sheet.

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.

The fair value of outstanding borrowings of the Senior Credit Facility’s term loan component at March 31, 2024 was $ 765.5 million.

This fair value was 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 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.

Letters of credit outstanding as of March 31, 2024 and December 31, 2023 to taled $ 1.7 million.

There were no amounts drawn under the letters of credit outstanding as of March 31, 2024.

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

As of September 30, 2023

As of March 31, 2024

Principal Repayment

2 unchanged sentences

Thereafter 634,532

Future interest payments on the term loan component of the Senior Credit Facility based on current interest rates are expected to approximate $ 13.5 million for remainder of 2023, $ 53.4 million in 2024, $ 51.6 million in 2025, $ 48.9 million in 2026, and $ 55.9 million thereafter.

Future interest payments on the term loan component of the Senior Credit Facility based on current interest rates are expected to approximate $ 39.3 million for the remainder of 2024, $ 50.8 million in 2025, $ 48.1 million in 2026, $ 45.0 million in 2027, and $ 10.0 million thereafter.

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 (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.

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

Convertible Senior Notes

8 unchanged sentences

or (4) if specified corporate transactions occur.

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)

As of March 31, 2024, none of these conditions existed and the 2025 Notes are classified as long term obligations.

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.

2 unchanged sentences

The Company will also be required to increase the conversion rate for holders who convert their 2025 Notes in connection with certain fundamental changes occurring prior to the maturity date or following delivery by the Company of a notice of redemption.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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

4 unchanged sentences

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

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.

At March 31, 2024 , the carrying amount of the liability w as $ 575.0 million.

The fair value of the 2025 Notes at March 31, 2024 was $ 549.7 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.

The 2025 Notes are valued based on Level 1 measurements in the fair value hierarchy.

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 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.

As of March 31, 2024, the Company was in compliance with the covenants and none of the termination events had occurred.

On December 15, 2023, the Company entered into an amendment (the “December 2023 Amendment”) of the Securitization Facility which extended the maturity date from May 28, 2024 to December 15, 2026.

The Company incurred approximately $ 0.3 million of new issuance costs associated with the December Amendment which will be amortized over 3 years, the length of the Securitization Agreement as amended by the December 2023 Amendment.

Due to the increase in borrowing capacity, the remaining $ 0.1 million of unamortized costs from the previous agreement will also be amortized over the length of the amended agreement, 3 years.

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 do not increase the Company’s total indebtedness.

The Securitization Facility is currently indexed to SOFR.

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.

The December 2023 Amendment and April 2023 Amendment did not increase the Company’s total indebtedness.

At March 31, 2024 and December 31, 2023, the Company had $ 94.6 million and $ 89.2 million, respectively, of outstanding borrowings under its Securitization Facility at a weighted average interest rate of 6.5 % and 5.9 %, respectively.

The fair value of the outstanding borrowing of the Securitization Facility at March 31, 2024 was $ 92.7 million.

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

9 unchanged sentences

These interest rate swaps apply a fixed interest rate on a portion of the Company’s expected SOFR-indexed borrowings.

In connection with the March 2023 Amendment to the Senior Credit Facility, the Company amended its interest rate from LIBOR to SOFR-indexed interest.

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 September 30, 2023 and December 31, 2022 (dollar amounts in thousands):

September 30, 2023 September 30, 2023

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

The Company held the following interest rate swaps as of March 31, 2024 and December 31, 2023 (dollar amounts in thousands):

March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

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

13 unchanged sentences

(1) The notional of the basis swap amortizes to match the total notional of the interest rate swap portfolio over time

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

December 31, 2022 December 31, 2022

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

Asset (Liability)

1-month USD LIBOR Loan 150,000 December 13, 2017 July 1, 2019 June 30, 2024 2.423 % 5,012

1-month USD LIBOR Loan 200,000 December 13, 2017 January 1, 2018 December 31, 2024 2.313 % 8,380

1-month USD LIBOR Loan 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.220 % 1,831

1-month USD LIBOR Loan 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.199 % 1,905

1-month USD LIBOR Loan 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.209 % 1,970

1-month USD LIBOR Loan 100,000 December 18, 2018 December 30, 2022 December 31, 2027 2.885 % 4,252

1-month USD LIBOR Loan 100,000 December 18, 2018 December 30, 2022 December 31, 2027 2.867 % 4,153

1-month USD LIBOR Loan 575,000 December 15, 2020 July 31, 2025 December 31, 2027 1.415 % 23,742

1-month USD LIBOR Loan 125,000 December 15, 2020 July 1, 2025 December 31, 2027 1.404 % 5,467

$ 1,475,000 $ 56,712

The interest rate 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 accumulated other comprehensive income (“AOCI”).

For the three months ended March 31, 2024 and 2023, the Company recorded a gain of $ 14.7 million and a loss of $ 10.5 million, respectively, in AOCI related to the change in fair value of the interest rate swaps.

For the three months ended March 31, 2024 and 2023, the Company recorded gains of $ 5.2 million and $ 3.5 million, respectively, in the consolidated statements of operations related to the interest rate differential of the interest rate swaps.

The estimated gain that is expected to be reclassified to interest income from AOCI as of March 31, 2024 within the next twelve months is $ 13.6 million.

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 income (“AOCI”), 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 AOCI, net of tax, until the hedged item 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 AOCI to interest expense at that time.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Foreign Currency Hedging

9 unchanged sentences

Cross-Currency Rate Swaps

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.

The objective of these cross-currency swaps is to reduce volatility of earnings and cash flows associated with changes in the foreign currency exchange rate.

Under the terms of these contracts, which have been designated as cash flow hedges, the Company will make interest payments in Swiss francs (“CHFs”) and receive interest in U.S.

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

dollars from the counterparties.

On September 22, 2023, the Company amended the Swiss franc 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.

4 unchanged sentences

As a result, the aggregate notional amount of the related cross-currency swaps will decrease by a corresponding amount.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The objective of these cross-currency swaps is to reduce volatility of earnings and cash flows associated with changes in the foreign currency exchange rate.

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

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

dollars from the counterparties.

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

The Company held the following cross-currency rate swaps as of March 31, 2024 and December 31, 2023 (dollar amounts in thousands):

March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value

4 unchanged sentences

Receive U.S.$ 6.27 % $ 31,457 31,457

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

Receive U.S.$ 6.27 % $ 31,457 —

Total $ ( 12,480 ) $ ( 40,672 )

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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 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.

For the three months ended March 31, 2024 the Company recorded a gain of $ 30.1 million in other income, net related to change in fair value related to the foreign currency rate translation to offset the losses recognized on the intercompany loans.

For the three months ended March 31, 2023, the Company recorded a loss of $ 4.9 million in other income, net related to change in fair value related to the foreign currency rate translation to offset the losses recognized on the intercompany loans.

For the three months ended March 31, 2024, the Company recorded a gain of $ 29.5 million in AOCI related to change in fair value of the cross-currency swaps.

For the three months ended March 31, 2023, the Company recorded a gain of $ 2.2 million in AOCI related to change in fair value of the cross-currency swaps.

For the three months ended March 31, 2024, the Company recorded a gain of $ 1.3 million 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 months ended March 31, 2023, the Company recorded a gain of $ 1.5 million 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 March 31, 2024 within the next twelve months is $ 1.9 million.

As of March 31, 2024, 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

1 unchanged sentence

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

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

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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

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

On October 1, 2018 May 24, 2022, and November 17, 2023, the Company entered into cross-currency swap agreements designated as net investment hedges to partially offset the effects of foreign currency on foreign subsidiaries.

The Company held the following cross-currency rate swaps designated as net investment hedges as of March 31, 2024 and December 31, 2023, respectively (dollar amounts in thousands):

March 31, 2024 December 31, 2023 March 31, 2024

December 31, 2023

3 unchanged sentences

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

Pay EUR October 3, 2018 September 30, 2025 — % EUR 38,820 38,820 4,223 4,307

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

Pay CHF May 26, 2022 December 16, 2028 — % CHF 288,210 288,210 ( 29,614 ) ( 48,047 )

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

Pay CHF November 21, 2023 December 17, 2029 — % CHF 66,525 66,525 ( 736 ) ( 4,037 )

Receive U.S.$ 2.54 % $ 75,000 75,000

Total $ ( 26,891 ) $ ( 49,609 )

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 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

For the three months ended March 31, 2024, the Company recorded a gain of $ 24.9 million in AOCI related to the change in fair value of the cross-currency swaps.

For the three months ended March 31, 2023, the Company recorded a gain of $ 1.0 million in AOCI related to change in fair value of the cross-currency swaps.

For the three months ended March 31, 2024, the Company recorded a gain of $ 2.2 million in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

For the three months ended March 31, 2023, the Company recorded a gain of $ 2.1 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 AOCI as of March 31, 2024 within the next twelve months is $ 4.1 million.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

On May 2, 2024, the Company entered into a cross-currency swap agreement with a notional amount of CHF 68.5 million, equivalent to $ 75.0 million, where the Company agreed with third-parties to sell Swiss francs in exchange for U.S.

dollars at a specified rate at the maturity of the contract.

The new cross-currency swap agreement was designated as a net investment hedge to partially offset the effects of foreign currency on foreign subsidiaries.

Foreign Currency Forward Contracts

The Company has entered into a hedge for forecasted intercompany purchases denominated in foreign currencies through the use of forward contracts designated as cash flow hedges.

1 unchanged sentence

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

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

In the first quarter of 2024, the Company entered into foreign currency forwards to mitigate the exchange rate risk of Swiss franc denominated intercompany purchases.

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

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.

As of March 31, 2024 the notional amount of foreign currency forward contracts was CHF 13.3 million.

For the three months ended March 31, 2024 the Company recorded a loss of $ 0.6 million in AOCI related to the change in fair value of the foreign currency forward contracts and a loss of $ 0.1 million in cost of goods sold included in the consolidated statements of operations.

Counterparty Credit Risk

2 unchanged sentences

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

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

Fair Value of Derivative Instruments

2 unchanged sentences

The Company performs ongoing assessments of counterparty credit risk.

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

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

The following table summarizes the fair value for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023:

Fair Value as of

Location on Balance Sheet (1) :

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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 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.

(2) At March 31, 2024 and December 31, 2023, the total notional amounts related to the Company’s interest rate swaps were $ 1.5 billion.

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 nine months ended September 30, 2023 and 2022:

Dollars in thousands Balance in AOCI

6 unchanged sentences

Statements of

Three Months Ended September 30, 2023

Three Months Ended March 31, 2024

Cash Flow Hedges

Interest rate swap $ 43,556 $ 14,723 $ 5,219 $ 53,060 Interest expense

Cross-currency swap ( 18,925 ) 13,796 15,347 ( 20,476 ) Other income, net

Cross-currency swap ( 15,763 ) 29,532 31,473 ( 17,704 ) Other income (expense), net

Foreign currency forward contract — ( 629 ) ( 110 ) ( 519 ) Cost of sales

2 unchanged sentences

$ ( 17,705 ) $ 68,546 $ 38,784 $ 12,057

Three Months Ended September 30, 2022

Cash Flow Hedges

Interest rate swap $ 26,939 $ 32,939 $ ( 726 ) $ 60,604 Interest expense

Cross-currency swap ( 17,835 ) 12,332 17,627 ( 23,130 ) Other income, net

Net Investment Hedges

Cross-currency swap 7,506 9,403 2,378 14,531 Interest income

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

Dollars in thousands Balance in AOCI

Year Amount of

Recognized in

AOCI Amount of Gain (Loss)

Reclassified from

Earnings Balance in AOCI

End of Quarter Location in

Statements of

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2023

Cash Flow Hedges

5 unchanged sentences

$ 29,527 $ ( 7,462 ) $ 2,092 $ 19,973

Nine Months Ended September 30, 2022

Cash Flow Hedges

Interest rate swap $ ( 43,956 ) $ 94,729 $ ( 9,831 ) $ 60,604 Interest expense

Cross-currency swap ( 9,688 ) 33,784 47,226 ( 23,130 ) Other income (expense), net

Net Investment Hedges

Cross-currency swap ( 2,321 ) 21,528 4,676 14,531 Interest income

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

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 millions to mitigate the risk from fluctuations in foreign currency exchange rates associated with an intercompany loan denominated in Japanese Yen.

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 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.

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 $ 5.5 million.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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,

2023 2022 2023 2022

The Company subsequently paid down a portion of this swap, bringing the notional amount down to $ 5.5 million as of March 31, 2024.

The fair value of the foreign currency swaps not designated as hedges was $ 1.5 million and $ 1.2 million as of March 31, 2024 and December 31, 2023, respectively.

The following table summarizes the gains (losses) on 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 March 31,

Foreign currency swaps 273 55

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STOCK-BASED COMPENSATION

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”).

As of March 31, 2024, 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”).

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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

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

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

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

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

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

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

Stock Options

As of September 30, 2023, there were approximately $ 4.3 million of total unrecognized compensation costs related to unvested stock options.

As of March 31, 2024, there were approximately $ 4.9 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 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.

There were 243,964 stock options granted during the three months ended March 31, 2024.

For the three months ended March 31, 2024, the weighted average grant date fair value for stock options granted was $ 15.68 per option.

Awards of Restricted Stock and Performance Stock

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

As of September 30, 2023, there was approximately $ 37.7 million of total unrecognized compensation costs related to these unvested awards.

As of March 31, 2024, there was approximately $ 48.6 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 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 granted 532,379 restricted stock awards and 263,350 performance stock awards during the three months ended March 31, 2024.

For the three months ended March 31, 2024, the weighted average grant date fair value for restricted stock awards and performance stock units granted was $ 36.46 and $ 36.22 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.

The ESPP is a non-compensatory plan based on its terms.

CEO Separation

On February 27th, 2024, the Company announced that Mr.

De Witte would retire from his position as President and Chief Executive Officer and director of the Company following the completion of a succession process and entered into a letter agreement with Mr.

De Witte to modify his current employment agreement and put forth the form of a post-employment consulting agreement.

The Company applied modification accounting to the outstanding equity-based awards granted to Mr.

De Witte as of that date, which revalued and accelerated stock-based compensation associated with equity-based awards granted to him over his expected service period to the Company.

Pursuant to this letter agreement, Mr.

De Witte’s unvested equity-based awards will continue to vest during his continued service period to the Company and vested stock options were modified such that they will remain exercisable until the lesser of (a) the stated term of the stock options and (b) six months following his cessation of continued service to the Company.

As a result of the modifications, the Company recorded incremental stock-based compensation expense of $ 0.2 million during the three months ended March 31, 2024.

The Company will record a total of $ 1.9 million in accelerated stock-based compensation expenses for the twelve months ended 2024 that would not have been recognized if Mr.

De Witte had not announced his retirement from Integra.

RETIREMENT PLANS

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 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.

Net periodic benefit costs for the Company’s defined benefit pension plans for the three months ended March 31, 2024 were $ 0.4 million.

The components of the net periodic benefit costs other than the service cost component of $ 0.8 million for the three months ended March 31, 2024 are included in other income, net in the consolidated statements of operations.

Net periodic benefit costs for the Company’s defined benefit pension plans for the three months ended March 31, 2023 were $ 0.3 million.

The components of the net periodic benefit costs other than the service cost component of $ 0.5 million for the three months ended March 31, 2023 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 $ 38.2 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.

The estimated fair values of plan assets were $ 40.4 million and $ 45.7 million as of March 31, 2024 and December 31, 2023, respectively.

The net plan assets of the pension plans are invested in common trusts as of March 31, 2024 and December 31, 2023.

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

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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 September 30, 2023 and December 31, 2022, respectively.

The fair value of these assets were $ 5.7 million and $ 6.1 million as of March 31, 2024 and December 31, 2023, respectively.

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

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

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

The Company has no finance leases as of March 31, 2024.

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).

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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 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.

Total operating lease expense for the three months ended March 31, 2024 and March 31, 2023 was $ 6.3 million and $ 6.0 million, respectively, which includes $ 0.3 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 September 30, 2023 December 31, 2022

Dollars in thousands, except lease term and discount rate March 31, 2024 December 31, 2023

ROU assets $ 151,834 $ 156,184

10 unchanged sentences

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

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

Supplemental cash flow information related to leases for the three months ended March 31, 2024 and 2023 were as follows:

Dollars in thousands March 31, 2024 March 31, 2023

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

2 unchanged sentences

Operating leases $ 746 $ 1,721

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

Future minimum lease payments under operating leases at March 31, 2024 were as follows:

Dollars in thousands Related Parties Third Parties Total

12 unchanged sentences

Long-term lease liabilities 170,082

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

There were no future minimum lease payments under finance leases at March 31, 2024.

Related Party Leases

3 unchanged sentences

TREASURY STOCK

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.

As of March 31, 2024 and December 31, 2023, there were 12.7 million and 12.8 million shares of treasury stock outstanding with a cost of $ 646.4 million and $ 647.3 million, at a weighted average cost per share of $ 50.76 and $ 50.76 , 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 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.

3 unchanged sentences

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 $ 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 .

The settlement of the January 2023 ASR agreement was completed in the second quarter of 2023, where the Company received 0.6 million shares, 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 “Inflation Act”) was signed into law.

The Inflation 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.

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, under which $ 75 million remained authorized at the time of its replacement .

A s of March 31, 2024, $ 100 million remained authorized .

The program authorized in July 2023 allows the Company to repurchase its shares opportunistically from time to time.

1 unchanged sentence

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

On January 12, 2022, the Company entered into a $ 125 million accelerated share repurchase ("2022 ASR") and received 1.48 million shares of Company common stock at inception of the 2022 ASR, which represented approximately 80 % of the expected total shares under the 2022 ASR.

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

Upon settlement 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 September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Reported tax rate 37.3 % 18.6 %

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.

The Company’s effective income tax rates for the three months ended March 31, 2024 and 2023 were 37.3 % and 18.6 %, respectively.

For the three months ended March 31, 2024, the higher tax rate is attributable to a $ 1.5 million shortfall from stock based compensation, offset by a tax benefit for the intangible asset impairment, as compared to previous year.

The Company does not have tax basis in the impaired intangible asset and has treated the tax impact as a discrete event in this quarter.

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.

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").

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

On August 16, 2022, the Inflation Act was signed into law.

The Company did not experience a material impact on the Company’s effective tax rate under the Inflation Act.

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

The OECD released model rules related to a new 15% global minimum tax regime (“Pillar 2”).

Several of the jurisdictions that the Company operates in have already adopted some form of the model rules, which could impact the amount of taxes that the Company pays after 2023.

However, the rules are complex and provide for delays for implementing the tax during the early transition years, if certain conditions are met.

At this time, the Company is projecting an immaterial amount related to Pillar 2 tax liability for the 2024 year.

Such changes in U.S.

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

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.

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

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

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

2 unchanged sentences

Basic and diluted net income per share was as follows:

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

Three Months Ended March 31,

Dollars in thousands, except per share amounts 2024 2023

Basic net income per share:

Net income $ 19,497 $ 49,915 $ 47,907 $ 127,604

Basic net (loss) income per share:

Net (loss) income $ ( 3,281 ) $ 24,226

Weighted average common shares outstanding 77,735 81,871

Basic net income per common share $ 0.24 $ 0.60 $ 0.59 $ 1.54

Diluted net income per share:

Net income $ 19,497 $ 49,915 $ 47,907 $ 127,604

Basic net (loss) income per common share $ ( 0.04 ) $ 0.30

Diluted net (loss) income per share:

Net (loss) income $ ( 3,281 ) $ 24,226

Weighted average common shares outstanding — Basic 77,735 81,871

2 unchanged sentences

Weighted average common shares for diluted earnings per share 77,735 82,323

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

Diluted net (loss) income per common share $ ( 0.04 ) $ 0.29

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

2 unchanged sentences

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.

Common stock of approximately 1.3 million and 0.3 million shares at March 31, 2024, and 2023, res pectively, were not included in the computation of diluted net (loss) income per share because their effect would have been anti-dilutive.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

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

Comprehensive income for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Dollars in thousands 2024 2023

Net income $ 19,497 $ 49,915 $ 47,907 $ 127,604

Net (loss) income $ ( 3,281 ) $ 24,226

Foreign currency translation adjustment 730 3,192

4 unchanged sentences

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:

Changes in accumulated other comprehensive income by component between December 31, 2023 and March 31, 2024 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) 3,735 ( 5 ) 730 4,460

Balance at September 30, 2023

Balance at March 31, 2024

$ 25,224 $ 2,707 $ ( 38,577 ) $ ( 10,646 )

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.

For the three months ended March 31, 2024, the Company reclassified a gain of $ 27.2 million and $ 5.7 million from accumulated other comprehensive income to other income, net and interest income, respectively.

SEGMENT AND GEOGRAPHIC INFORMATION

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

• The TT segment includes such offerings as skin and wound repair, plastics & surgical reconstruction products, bone grafts, and nerve and tendon repair products.

• The Tissue Technologies segment includes such offerings as skin and wound repair, plastics & surgical reconstruction products, bone grafts, and nerve and tendon repair products.

The Corporate and other category includes (i) various executive, finance, human resource, information systems and legal functions, (ii) brand management, and (iii) share-based compensation costs.

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 nine months ended September 30, 2023 and 2022 are as follows:

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

Net sales and profit by each reportable segment for the three months ended March 31, 2024 and 2023 are as follows:

Three Months Ended March 31,

Dollars in thousands 2024 2023

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Total revenue by major geographic area consisted of the following:

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

Three Months Ended March 31,

Dollars in thousands 2024 2023

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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 December 21, 2023, Fortis Advisors, LLC (representative of the security holders of ACell, Inc.

(“ACell”)) filed for arbitration against Integra Life Sciences claiming breach of contract related to the earnout consideration from the 2021 acquisition of ACell.

Refer below for additional information on the ACell contingent considerations.

The Company believes that it has strong defenses to the allegations in the arbitration and intends to defend the matter vigorously.

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

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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.

The Company believes that it has strong defenses to the allegations in the Pembroke Litigation, and intends to defend the matter vigorously.

Contingent Consideration

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.

The Company determined the fair value of contingent consideration during the three month period ended March 31, 2024 and March 31, 2023 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

A reconciliation of the opening balances to the closing balances of these Level 3 measurements for the three months ended March 31, 2024 and March 31, 2023 is as follows (in thousands):

Three Months Ended March 31, 2024 Contingent Consideration Liability Related to Acquisition of:

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

Location in Financial Statements

Balance as of January 1, 2024

1 unchanged sentence

Change in fair value of contingent consideration liabilities ( 83 ) Research and development 39 — 500 Selling, general and administrative

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

Balance as of March 31, 2024 15,672 2,596 300 69,200

Short-Term $ 7,562 $ — $ — $ 29,300 Accrued expenses and other current liabilities

Long-Term 8,110 2,596 300 39,900 Other liabilities

Total 15,672 2,596 300 69,200

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

Arkis Location in Financial Statements Derma Sciences ACell Inc.

Three Months Ended March 31, 2023 Contingent Consideration Liability Related to Acquisition of:

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

Location in Financial Statements

2 unchanged sentences

Change in fair value of contingent consideration liabilities 3,299 Research and development — ( 2,200 ) 3,600 Selling, general and administrative

Balance as of September 30, 2022

Balance as of March 31, 2023

$ 16,194 $ 230 $ 1,500 $ 61,207

Short-Term $ 2,829 $ — $ —

Long-Term 9,589 230 5,000

Short-Term $ 4,388 $ — $ — $ 12,500 Accrued expenses and other current liabilities

Long-Term 11,806 230 1,500 48,707 Other liabilities

Total 16,194 230 1,500 61,207

13 unchanged sentences

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.

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

The 2022 and 2023 milestones were not achieved, leaving only one contingent milestone remaining.

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 change in the fair value of the contingent obligation was primarily as a result of changes in the timing and amount of revenue estimates.

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Surgical Innovations Associates, Inc.

As part of the acquisition of Surgical Innovations Associates, Inc.

(“SIA”), 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 probabilities of achieving the conditions to calculate the fair value of the contingent consideration for the PMA approval milestone.

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