INTEGRA LIFESCIENCES HOLDINGS CORP 10-Q

Item 1. Financial Statements INTEGRA LIFESCIENCES HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) (Dollars in thousands, except per share amounts) Three Months Ended March 31, 2025 2024 Total revenue, net $ 382,653 $ 368,872 Costs and expenses: Cost of goods sold 188,221 162,038 Research and development 24,728 26,965 Selling, general and administrative 181,497 165,798 Intangible asset amortization 3,704 10,107 Total costs and expenses 398,150 364,908 Operating (loss) income ( 15,497 ) 3,964 Interest income 4,420 5,040 Interest expense ( 18,815 ) ( 13,624 ) Other expense, net ( 144 ) ( 610 ) Loss before income taxes ( 30,036 ) ( 5,230 ) Benefit for income taxes ( 4,743 ) ( 1,949 ) Net loss $ ( 25,293 ) $ ( 3,281 ) Net loss per share Basic and diluted $ ( 0.33 ) $ ( 0.04 ) Weighted average common shares outstanding (See Note 13): Basic and diluted 76,463 77,735 Comprehensive (loss) income (See Note 14) ( 21,828 ) 1,179 The accompanying unaudited notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents INTEGRA LIFESCIENCES HOLDINGS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands, except per share amounts) March 31, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 239,104 $ 246,375 Short-term investments 34,191 27,192 Trade accounts receivable, net of allowances of $ 6,482 and $ 6,917 252,446 272,370 Inventories, net 445,418 429,090 Prepaid Expenses 103,874 77,001 Other Current Assets 32,214 29,653 Total current assets 1,107,247 1,081,681 Property, plant and equipment, net 422,913 405,723 Right of use asset - operating leases 138,463 144,042 Intangible assets, net 1,187,535 1,207,588 Goodwill 1,105,386 1,096,952 Deferred tax assets, net 38,008 34,923 Other assets 53,199 66,515 Total assets $ 4,052,751 $ 4,037,424 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current portion of borrowings under senior credit facility $ 38,750 $ 33,906 Current portion of lease liability - operating leases 14,171 14,540 Convertible securities 573,899 573,170 Accounts payable, trade 91,296 82,502 Contract liabilities 10,539 10,483 Accrued compensation 52,381 85,617 Accrued expenses and other current liabilities 137,416 121,908 Total current liabilities 918,452 922,126 Long-term borrowings under senior credit facility 1,128,541 1,087,917 Long-term borrowings under securitization facility 102,100 108,100 Lease liability - operating leases 161,476 166,930 Deferred tax liabilities 57,581 60,833 Other liabilities 160,462 146,238 Total liabilities 2,528,612 2,492,144 Stockholders’ equity: Preferred stock; no par value; 15,000 authorized shares; none outstanding — — Common stock; $ 0.01 par value; 240,000 authorized shares; 92,136 and 91,610 issued at March 31, 2025 and December 31, 2024, respectively 921 916 Additional paid-in capital 1,323,081 1,323,431 Treasury stock, at cost; 14,424 shares and 14,445 shares at March 31, 2025 and December 31, 2024, respectively ( 690,379 ) ( 691,411 ) Accumulated other comprehensive loss ( 24,106 ) ( 27,571 ) Retained earnings 914,622 939,915 Total stockholders’ equity 1,524,139 1,545,280 Total liabilities and stockholders’ equity $ 4,052,751 $ 4,037,424 The accompanying unaudited notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents INTEGRA LIFESCIENCES HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands) Three Months Ended March 31, 2025 2024 OPERATING ACTIVITIES: Net loss $ ( 25,293 ) $ ( 3,281 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 37,188 30,566 Non-cash impairment charges — 7,064 Deferred income tax benefit ( 1,832 ) ( 2,856 ) Share-based compensation 1,870 5,599 Amortization of debt issuance costs and expenses associated with debt refinancing 1,385 1,398 Non-cash lease expense ( 254 ) 149 Loss on disposal of property and equipment 495 12 Change in fair value of contingent consideration and others ( 162 ) 456 Changes in assets and liabilities: Accounts receivable 21,451 16,827 Inventories ( 13,696 ) ( 19,021 ) Prepaid expenses and other current assets ( 17,551 ) ( 2,676 ) Other non-current assets 1,510 339 Accounts payable, accrued expenses and other current liabilities ( 18,000 ) ( 19,210 ) Contract liabilities 244 ( 1,498 ) Other non-current liabilities 1,388 1,888 Net cash (used in) provided by operating activities ( 11,257 ) 15,756 INVESTING ACTIVITIES: Purchases of property and equipment ( 28,920 ) ( 15,465 ) Purchases of short term investments ( 7,000 ) ( 38,500 ) Net cash used in investing activities ( 35,920 ) ( 53,965 ) FINANCING ACTIVITIES: Proceeds from borrowings of long-term indebtedness 54,400 370,500 Payments on debt ( 15,244 ) ( 15,100 ) Payments for contingent considerations ( 2,600 ) — Proceeds from exercised stock options 957 6,398 Cash taxes paid in net equity settlement ( 2,136 ) ( 3,122 ) Net cash provided by financing activities 35,377 358,676 Effect of exchange rate changes on cash and cash equivalents 4,529 ( 4,963 ) Net (decrease) increase in cash and cash equivalents ( 7,271 ) 315,504 Cash and cash equivalents at beginning of period 246,375 276,402 Cash and cash equivalents at end of period $ 239,104 $ 591,906 The accompanying unaudited notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents INTEGRA LIFESCIENCES HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Dollars in thousands) Three Months Ended March 31, 2025 Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Equity Shares Amount Shares Amount Balance, January 1, 2025 91,609 $ 916 ( 14,445 ) $ ( 691,411 ) $ 1,323,431 $ ( 27,571 ) $ 939,915 $ 1,545,280 Net loss — — — — — — ( 25,293 ) ( 25,293 ) Other comprehensive income (loss), net of tax — — — — — 3,465 — 3,465 Issuance of common stock through employee stock purchase plan 44 — — — 957 — — 957 Issuance of common stock for vesting of share based awards, net of shares withheld for taxes and forfeitures 483 5 21 1,032 ( 3,167 ) — — ( 2,130 ) Share-based compensation — — — 1,860 — — 1,860 Balance, March 31, 2025 92,136 $ 921 ( 14,424 ) $ ( 690,379 ) $ 1,323,081 $ ( 24,106 ) $ 914,622 $ 1,524,139 Three Months Ended March 31, 2024 Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Equity Shares Amount Shares Amount Balance, January 1, 2024 90,920 $ 909 ( 12,751 ) $ ( 647,262 ) $ 1,302,484 $ ( 15,106 ) $ 946,859 $ 1,587,884 Net loss — — — — — — ( 3,281 ) ( 3,281 ) Other comprehensive income, net of tax — — — — — 4,460 — 4,460 Issuance of common stock through employee stock purchase plan 23 — — — 965 — — 965 Issuance of common stock for vesting of share based awards, net of shares withheld for taxes and forfeitures 541 2 16 840 1,470 — — 2,312 Share-based compensation — 4 — — 5,608 — — 5,612 Balance, March 31, 2024 91,484 $ 915 ( 12,735 ) $ ( 646,422 ) $ 1,310,527 $ ( 10,646 ) $ 943,578 $ 1,597,952 The accompanying unaudited notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION General The terms “we,” “our,” “us,” “Company” and “Integra” refer to Integra LifeSciences Holdings Corporation, a Delaware corporation, and its subsidiaries unless the context suggests otherwise. In the opinion of management, the March 31, 2025 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 for the periods presented. 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. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K. The consolidated balance sheet as of December 31, 2024 was derived from audited financial statements, but does not include all disclosures required by GAAP. Operating results for the three-month period ended March 31, 2025 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. Significant estimates affecting amounts reported or disclosed in the unaudited condensed consolidated financial statements include allowances for doubtful accounts receivable and sales returns and allowances, net realizable value of inventories, valuation of intangible assets including amortization periods for acquired intangible assets, discount rates and estimated projected cash flows used to value and test impairments of long-lived assets and goodwill, estimates of projected cash flows and depreciation and amortization periods for long-lived assets, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation, valuation of derivative instruments, valuation of contingent liabilities, the fair value of debt instruments and loss contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances. Actual results could differ from these estimates. Recent Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) 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, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application to all prior periods presented in the financial statements is permitted. The Company will adopt ASU 2023-09 for the annual period ending on December 31, 2025. We are currently evaluating the impact that the adoption of this guidance will have on our disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), 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. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company adopted ASU 2023-07 as of December 31, 2024 on a retrospective basis to all prior periods presented. The adoption did not have a material impact on the Company’s consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires additional disclosure of the nature of expenses included in the income statement. The standard requires disclosures about specific types of expenses included in the expense captions presented in the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The requirements should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have 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. 7 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Cash and cash equivalents The Company had cash and cash equivalents, primarily consisting of cash on-hand, as well as time deposits with original maturities of three months or less and money market funds, which are highly liquid and readily convertible to cash, totaling approximately $ 239.1 million and $ 246.4 million at March 31, 2025 and December 31, 2024, respectively. Short-term investments The Company had short term investments, primarily consisting of time deposits with original maturities between three months and one year, totaling approximately $ 34.2 million at March 31, 2025 compared to $ 27.2 million at December 31, 2024. The short term investments are valued based on Level 1 measurements in the fair value hierarchy. Liquidity The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Management evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern over the next twelve months from the issuance of the accompanying unaudited condensed consolidated financial statements. Recent tariff changes imposed by the U.S. and China have created increased risks and uncertainties surrounding the Company’s future results of operations. The impact of tariffs in the first quarter of 2025 was not material. However, should universal tariffs be implemented as initially announced in April 2025, the Company anticipates a significant adverse impact on its future costs of revenue, which will impact its results of operations. Particularly, the U.S. import tariffs and the reciprocal measures by China, are expected to increase the Company’s cost of goods sold. The Company anticipates that some of its suppliers will incur incremental tariff-related costs, which may be passed on to the Company. The extent and duration of the tariffs and the resulting impact on general economic conditions and on the business are uncertain and are expected to be impacted by various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that already exist or may be granted, availability and cost of alternative sources of the products and materials, and the Company’s ability to offset the effects of any tariffs that might be imposed. Compliance with the financial covenants contained in the seventh amendment and restatement entered into by the Company on March 24, 2023 (the “March 2023 Amendment”) of the Senior Credit Facility (the “Senior Credit Facility”) (as discussed in Note 6. Debt ) is measured quarterly and failure to meet the covenant requirements would constitute an event of default under the Senior Credit Facility. Due to risks and uncertainties concerning tariffs with regards to the Company’s operations, industry, financial condition, performance, operating results and liquidity, the Company may not maintain compliance with the financial covenants over the next twelve months from the issuance of the accompanying interim unaudited condensed consolidated financial statements, which noncompliance, should it occur, would raise substantial doubt about the Company’s ability to continue as a going concern. If an event of default occurs and the Company is unable to obtain necessary waivers or amendments, the lenders may elect to declare all outstanding borrowings, together with accrued and unpaid interest and other amounts payable thereunder, to be immediately due and payable. Further, if an event of default occurs, the lenders will have the right to proceed against the collateral granted to them to secure that debt. If the debt under the Senior Credit Facility were to be accelerated, the Company’s assets may not be sufficient to repay in full the debt that may become due as a result of that acceleration. The Company could seek replacement financing at prevailing market rates or raise additional capital by issuing equity or debt securities; however, this may not be on terms favorable to the Company, or available at all. As of March 31, 2025, the Company was in compliance with the financial covenants in the Senior Credit Facility. In response to the risks and uncertainties surrounding the Company’s future results of operations due to tariffs, the Company has taken actions to reduce expenses and maintain compliance with its financial covenants. In the event that performance is below the forecasted levels, the Company may also implement certain additional initiatives, such as price increases to offset tariff costs and rationalization of selling, general and administrative expenses, which would allow it to continue to comply with the financial covenants. The Company may consider taking other actions, including negotiating with its lenders for an amendment or modification to the financial covenants, as deemed appropriate. 8 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Employee termination benefits The Company does not have a written severance plan, but has a history of providing benefits for employees in the case of involuntary termination. In situations outside the U.S., there are minimum statutory termination benefits requirements by country that must be paid to the affected employees. The Company records employee severance costs associated with these restructuring activities in accordance with the authoritative guidance for non-retirement post-employment benefits. Charges associated with these activities are recorded when the payment of benefits is probable and can be reasonably estimated. In situations where the Company pays out termination benefits in excess of statutory minimum amounts based on management’s discretion, the Company records these termination costs once communication is made to the affected employees. The timing of the recognition of charges for employee severance costs other than minimum statutory benefits depends on whether the affected employees are required to render service beyond their legal notification period in order to receive the benefits. If affected employees are required to render service beyond their legal notification period, charges are recognized over the future service period. Otherwise, charges are recognized when management has approved a specific plan and employee communication requirements have been met. The Company incurred employee termination costs on restructuring activities in the consolidated statement of operations for the three months ended March 31, 2025 and 2024. The following table summarizes the activity in the restructuring related accrual balances included within accrued expenses and other current liabilities in the consolidated balance sheet for the three months ended March 31, 2025 and 2024. Three Months Ended March 31, (Dollars in thousands) 2025 2024 Balance, beginning of the year $ 5,151 $ 2,113 Charges: Cost of Goods Sold 6 — Research and development 342 — Selling, general and administrative 5,251 — Payments and other adjustments ( 1,330 ) ( 971 ) Balance, end of the period $ 9,420 $ 1,142 9 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) 2. ACQUISITIONS AND DIVESTITURES Acquisition of Durepair® On October 2, 2024, the Company completed the acquisition of the product rights for Durepair Regeneration Matrix (“Durepair”), a non-synthetic dura substitute for repair of the dura mater during neurosurgical procedures, from Medtronic plc for total consideration of $ 45.0 million. The Company made a cash payment of $ 10.0 million upon the closing of the acquisition and will make additional cash payments of $ 15.0 million upon the first anniversary of the acquisition and $ 20.0 million upon the second anniversary of the acquisition. The additional cash payments to be paid in October 2025 and October 2026 were included at their present values in accrued expenses and other current liabilities and other liabilities, respectively, as of March 31, 2025. The acquisition of the product rights for Durepair, which consist of certain patents and trademarks, regulatory approvals, and other records, has been accounted for as an asset acquisition in accordance with ASC 805, Business Combinations (“ASC 805”) as the acquisition does not include an assembled workforce and substantially all of the fair value of the assets acquired is concentrated in a single identifiable intangible asset. Acquisition of Acclarent, Inc. On April 1, 2024, the Company completed the acquisition of all of the outstanding capital stock of Acclarent, Inc. (“Acclarent”), a developer and marketer of medical devices used in ear, nose, throat (“ENT”) procedures, from Ethicon, Inc., a subsidiary of Johnson & Johnson, 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. In the second half of 2024, the Company finalized and settled the working capital adjustment in the amount of $ 4.2 million, which resulted in a reduction to goodwill and also recognized a measurement period adjustment to recognize deferred tax liabilities of $ 1.1 million with a corresponding increase to goodwill as a result of a change to the estimated deferred tax rate applied and the book-to-tax difference associated with fixed assets acquired. The addition of Acclarent’s ENT product portfolio, including sinus balloon dilation, eustachian tube balloon dilation, and surgical navigation systems technologies, and dedicated salesforce will enhance the Company’s position in the ENT specialty device market. Acclarent’s results of operations have been reported in the Company’s Codman Specialty Surgical reportable segment from the date of acquisition. The Company recorded revenue from Acclarent of approximately $ 29.1 million, in the consolidated statements of operations and comprehensive income for the three months ended March 31, 2025. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it is in the process of being integrated into the Company’s operations. Assets Acquired and Liabilities Assumed at Fair Value The Acclarent acquisition has been accounted for using the acquisition method of accounting in accordance with ASC 805. This method requires that assets acquired and liabilities assumed in a business combination are recognized at their fair values as of the acquisition date. 10 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date: Dollars in thousands Estimated Fair Value Estimated Useful Life Current assets: Cash $ — Trade accounts receivable, net of allowances of $ 3,885 23,716 Inventories, net 20,294 Prepaid expenses 273 Other current assets 476 Total current assets $ 44,759 Property, plant and equipment, net 7,716 Right of use asset - operating leases 989 Intangible assets, net Completed technology 202,000 12 years Trademarks/brand names 3,000 5 years All other 17,000 4 years Goodwill 62,482 Deferred tax assets 6,895 Total assets acquired $ 344,841 Current liabilities: Accounts payable, trade 3,989 Contract liabilities 3,984 Accrued compensation 1,037 Accrued expenses and other current liabilities 2,278 Current portion of lease liability - operating leases 365 Total current liabilities $ 11,653 Lease liability - operating leases 624 Deferred tax liabilities 54,753 Total liabilities assumed 67,030 Net assets acquired $ 277,811 The carrying value of trade accounts receivable, prepaid expenses, other current assets, accounts payable, contract liabilities, accrued compensation, accrued expenses and other current liabilities, as well as certain other current and non-current assets and liabilities, generally represented the fair value at the date of acquisition. Intangible Assets The estimated fair value of the intangible assets acquired 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 attributable to the intangible assets. The significant assumptions used in developing the valuation included the estimated annual net cash flows including application of revenue growth rates, cost of sales, the discount rate that appropriately reflects the risk inherent in each future cash flow stream, obsolescence rate, and an assessment of the asset’s life cycle, as well as other factors. The assumptions used in the financial forecasts were based on historical data, supplemented by current and anticipated growth rates, management plans, and market-comparable information. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. The intangible assets acquired have a weighted average useful life of 11 years. The Company used a discount rate of 12.2 % 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. 11 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Goodwill Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected synergies of the combined company and assembled workforce. Goodwill has been allocated to the Codman Specialty Surgical segment, as shown in Note 5. Goodwill and Other Intangible Assets . Goodwill recognized as a result of this acquisition is non-deductible for income tax purposes. 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. 3. REVENUES FROM CONTRACTS WITH CUSTOMERS Summary of Accounting Policies on Revenue Recognition Revenue is recognized upon the transfer of control of promised products or services to the customers in an amount that reflects the consideration the Company expects to receive in exchange for those products and services. Performance Obligations The Company’s performance obligations consist mainly of transferring control of goods and services identified in the contracts, purchase orders, or invoices. The Company has no significant multi-element contracts with customers. Significant Estimates Usage-based royalties and licenses are estimated based on the provisions of contracts with customers and recognized in the same period that the royalty-based products are sold by the Company’s strategic partners. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information, and expected sales trends. Differences between actual reported licensee sales and those that were estimated are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been significant. The Company estimates returns, price concessions, and discount allowances using the expected value method based on historical trends and other known factors. Rebate allowances are estimated using the most likely method based on each customer contract. The Company’s return policy, as set forth in its product catalogs and sales invoices, requires review and authorization in advance prior to the return of product. 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. The Company disregards the effects of a financing component if the Company expects, at contract inception, that the period between the transfer and customer payment for the goods or services will be one year or less. The Company has no significant revenues recognized on payments expected to be received more than one year after the transfer of control of products or services to customers. Contract Assets and Liabilities Revenues recognized from the Company’s private label business that are not invoiced to the customers as a result of recognizing revenue over time are recorded as a contract asset included in the prepaid expenses and other current assets account in the consolidated balance sheet. Upon invoicing to the customer, the balance is recorded in trade receivable, net in the consolidated balance sheet. Other operating revenues may include fees received under service agreements. Non-refundable fees received under multiple-period service agreements are recognized as revenue as the Company satisfies the performance obligations to the other party. A portion of the transaction price allocated to the performance obligations to be satisfied in the future periods is recognized as contract liability. 12 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 three months ended March 31, 2025: Dollars in thousands Total Contract Asset Contract asset, January 1, 2025 $ 6,146 Transferred to trade receivable from contract asset included in beginning of the year contract asset $ ( 6,146 ) Contract asset, net of transferred to trade receivables on contracts during the period $ 5,115 Contract asset, March 31, 2025 $ 5,115 Contract Liability Contract liability, January 1, 2025 $ 19,669 Recognition of revenue included in beginning of year contract liability $ ( 3,387 ) Contract liability, net of revenue recognized on contracts during the period $ 3,619 Foreign currency translation $ 40 Contract liability, March 31, 2025 $ 19,941 At March 31, 2025, the short-term portion of the contract liability of $ 10.5 million and the long-term portion of $ 9.4 million are included in current liabilities and other liabilities, respectively, in the consolidated balance sheet. As of March 31, 2025, 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 The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in the cost of goods sold. Product Warranties Certain of the Company’s medical devices, including monitoring systems and neurosurgical systems, are designed to operate over long periods of time. These products are sold with warranties which may extend for up to two years from the date of purchase. The warranties are not considered a separate performance obligation. The Company estimates its product warranties using the expected value method based on historical trends and other known factors. 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. 13 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Disaggregated Revenue The following table presents revenues disaggregated by the major sources of revenues for the three months ended March 31, 2025 and 2024 (dollar amounts in thousands): Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 Neurosurgery $ 190,912 $ 202,268 Instruments 50,950 44,373 ENT (1) 38,802 9,793 Total Codman Specialty Surgical 280,664 256,434 Wound Reconstruction and Care 74,779 80,877 Private Label 27,210 31,561 Total Tissue Technologies 101,989 112,438 Total revenue $ 382,653 $ 368,872 (1) Prior period revenues included within our instruments business have been reclassified under the ENT business. See Note 15. Segment and Geographic Information , for details of revenues based on the location of the customer. 4. INVENTORIES Inventories, net consisted of the following: Dollars in thousands March 31, 2025 December 31, 2024 Finished goods $ 225,362 $ 223,729 Work in process 92,638 79,423 Raw materials 127,418 125,938 Total inventories, net $ 445,418 $ 429,090 5. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Changes in the carrying amount of goodwill for the three-month period ended March 31, 2025 were as follows: Dollars in thousands Codman Specialty Surgical Tissue Technologies Total Goodwill at December 31, 2024 $ 715,730 $ 381,222 $ 1,096,952 Foreign currency translation 5,503 2,931 8,434 Goodwill at March 31, 2025 $ 721,233 $ 384,153 $ 1,105,386 In accordance with FASB Topic 350, Intangibles—Goodwill and Other (“ASC 350”), goodwill is not subject to amortization but is tested for impairment at the reporting unit level annually in the third quarter. Additionally, the Company may perform interim tests of goodwill for impairment if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit below its carrying amount. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. The Company tests for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors, including reporting unit specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of a reporting unit is less than its carrying amount, including goodwill. The Company may elect to bypass this qualitative evaluation for some or all of its reporting units and perform a quantitative test. The quantitative test uses a combination of both an income approach and a market approach to determine the fair value of the reporting unit. The income approach utilizes the estimated discounted cash flows for the reporting unit, while the market approach utilizes comparable publicly-traded companies’ revenue and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) multiples. Estimates and assumptions used in the income 14 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) approach to calculate projected future discounted cash flows included revenue growth rates, cost of sales, terminal growth rates, and a discount rate for each reporting unit. Discount rates are determined using a weighted average cost of capital for risk factors specific to each reporting unit and other market and industry data. The assumptions used are inherently subject to uncertainty and slight changes in these assumptions could have a significant impact on the concluded value. The estimates and assumptions applied represent a Level 3 measurement in the fair value hierarchy. Level 3 inputs are supported by limited or no market activity and reflect the Company’s assumptions in measuring fair value. During the third quarter of 2024, the Company elected to bypass the qualitative evaluations of its Tissue Technologies, Neurosurgery, and Instruments and ENT reporting units and perform quantitative tests. The quantitative test for the Tissue Technologies reporting unit utilized a terminal growth rate of 2.5 % and a discount rate of 12.5 % in the income approach. 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 21.2 % headroom. The quantitative test for the Neurosurgery reporting unit utilized a terminal growth rate of 2.5 % and a discount rate of 12.0 % in the income approach. The Company determined, after performing the quantitative analysis, that the fair value of the Neurosurgery reporting unit was not less than its carrying amount, with 11.7 % headroom. The quantitative test for the Instruments and ENT reporting unit utilized a terminal growth rate of 2.5 % and a discount rate of 11.5 % in the income approach. The Company determined, after performing the quantitative analysis, that the fair value of the Instruments and ENT reporting unit was not less than its carrying amount, with 22.1 % headroom. Based on the results of these quantitative tests, the Company recorded no impairment of goodwill for Tissue Technologies, Neurosurgery, or Instruments and ENT reporting units. The Company performed a hypothetical sensitivity analysis of the fair value for each reporting unit by increasing the discount rate by 50 basis points, decreasing the terminal growth rate by 50 basis points, and holding all other assumptions constant, which resulted in a decrease to the estimated fair value of the Tissue Technology reporting unit by 4.5 %, a decrease to the estimated fair value of the Neurosurgery reporting unit by 3.8 %, and a decrease to the estimated fair value of the Instruments and ENT reporting unit by 3.5 %. Based on the results of the hypothetical sensitivity analyses, the Company would still not have recorded an impairment of goodwill for Tissue Technologies, Neurosurgery, or Instruments and ENT reporting units During the first quarter of 2024, due to third-party audit findings and an update to the estimated timeframe to resume the commercial distribution of products manufactured in the Company’s manufacturing facility located in Boston, Massachusetts (the “Boston facility”), the Company elected to perform a quantitative analysis of its Tissue Technologies reporting unit. The quantitative test utilized a terminal growth rate of 2.0 % and a discount rate of 14.5 % in the income approach. An impairment loss is recognized when the reporting unit’s carrying amount exceeds its estimated fair value. 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 19.9 % headroom. Other Intangible Assets The components of the Company’s identifiable intangible assets were as follows: March 31, 2025 Dollars in thousands Weighted Average Life Cost Accumulated Amortization Net Completed technology 17 years $ 1,458,727 $ ( 551,340 ) $ 907,387 Customer relationships 12 years 167,028 ( 139,286 ) 27,742 Trademarks/brand names 27 years 100,809 ( 43,541 ) 57,268 Codman tradename Indefinite 170,320 — 170,320 Supplier relationships 30 years 30,211 ( 19,371 ) 10,840 All other 6 years 23,014 ( 9,036 ) 13,978 $ 1,950,109 $ ( 762,574 ) $ 1,187,535 15 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) December 31, 2024 Dollars in thousands Weighted Average Life Cost Accumulated Amortization Net Completed technology 17 years $ 1,452,545 $ ( 525,959 ) $ 926,586 Customer relationships 12 years 166,038 ( 137,186 ) 28,852 Trademarks/brand names 27 years 99,951 ( 42,173 ) 57,778 Codman tradename Indefinite 168,202 — 168,202 Supplier relationships 30 years 30,211 ( 19,126 ) 11,085 All other 6 years 22,820 ( 7,735 ) 15,085 $ 1,939,767 $ ( 732,179 ) $ 1,207,588 Intangible Assets with Indefinite Lives The Company does not amortize intangible assets with indefinite lives but tests its intangible assets with indefinite lives for impairment annually in the third quarter in accordance with ASC 350. Additionally, the Company performs interim tests of its intangible assets with indefinite lives for impairment if an event occurs or circumstances change that could potentially reduce the fair value of a indefinite lived intangible asset below its carrying amount. The Company tests for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors, including specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of the intangible asset is less than its carrying amount. The Company may elect to bypass this qualitative evaluation and perform a quantitative test. In the third quarter of 2024, the Company elected to bypass the qualitative evaluation for its Codman trade name intangible asset and perform a quantitative test. In performing this test, the Company utilized a discount rate of 13.0 %. The assumptions used in evaluating the Codman trade name for impairment are subject to change and are tracked against historical results by management. Based on the results of the quantitative test, the Company recorded no impairment to the Codman trade name intangible asset. Intangible Assets with Definite Lives Developed technologies and other definite-lived intangible assets are amortized over their estimated useful lives either using the straight-line method or, if reliably determinable, based on the pattern of which the economic benefit of the asset is expected to be utilized. Definite-lived intangible assets are periodically evaluated for impairment in accordance with FASB Topic 360, Property, Plant and Equipment (“ASC 360”) whenever events or changes in circumstances indicate that a definite-lived intangible asset’s carrying value may not be recoverable. Total amortization of intangible assets for the three months ended March 31, 2025 was $ 26.5 million. Of this amount, $ 22.8 million was related to amortization of technology based intangibles and included in cost of goods sold. Total amortization of intangible assets for the three months ended March 31, 2024 was $ 27.7 million. Of this amount, $ 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. Based on quarter-end exchange rates, amortization expense (including amounts reported in cost of goods sold) is expected to be approximately $ 79.6 million for the remainder of 2025, $ 106.0 million in 2026, $ 105.0 million in 2027, $ 101.4 million in 2028, $ 96.2 million in 2029, $ 90.1 million in 2030 and $ 439.2 million thereafter. 16 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) In the first quarter of 2024, 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 quantitative 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 . 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 Company determined that the carrying amount of these definite-lived intangible assets were recoverable and, therefore, the intangible assets were not deemed to be impaired. In the second quarter of 2024, the Company approved a plan to transition the commercial distribution of SurgiMend and PriMatrix from the Boston facility to the Company’s manufacturing facility in Braintree, Massachusetts (the “Braintree facility”). The Company considered the impact to the update to the estimated timeframe to resume the commercial distribution of products manufactured in the Boston facility on the assumptions used in the quantitative assessment of the definite-lived intangible assets completed in the first quarter of 2024, which did not require further evaluation for impairment. The carrying values of SurgiMend and PriMatrix are $ 31.0 million and $ 23.3 million, respectively, as of March 31, 2025. Potential Impact of Risks and Uncertainties on Management’s Estimates The recent tariff changes imposed by the U.S. and other countries have created increased risks and uncertainties surrounding the Company’s future results of operations. In April 2025, President Trump announced reciprocal tariffs on many countries with additional tariffs on the pharmaceutical industry to be announced in the near future. Certain countries, such as China, have responded with retaliatory tariffs. The assumptions used by the Company in its quantitative tests of goodwill and intangible assets are inherently subject to uncertainty and slight changes in these assumptions, including the extent and duration of any subsequent changes in U.S. import tariffs and reciprocal measures by China and the resulting impact on general economic conditions and on the Company’s business, could have a significant impact on the concluded values. 6. DEBT Amendment to the Seventh Amended and Restated Senior Credit Agreement On March 24, 2023, the Company entered into the March 2023 Amendment of the Senior Credit Facility with a syndicate of lending banks with Bank of America, N.A., as Administrative Agent. The March 2023 Amendment extended the maturity date to March 24, 2028, amended the contractual repayments of the term loan component, and amended the interest rate from LIBOR to SOFR-indexed interest. The Company continues to have the aggregate principal amount of up to approximately $ 2.1 billion available to it through the following facilities: (i) a $ 775 million term loan facility, and (ii) a $ 1.3 billion revolving credit facility, which includes a $ 60 million sublimit for the issuance of standby letters of credit and a $ 60 million sublimit for swingline loans. The terms of the Senior Credit Facility limit the amount of dividends the Company may pay. The Company’s maximum Consolidated Total Leverage Ratio (as defined in the March 2023 Amendment) in the financial covenants is outlined below. Concurrent with the Durepair acquisition (see Note 2. Acquisitions and Divestitures), in accordance with the terms of the March 2023 Amendment, the Company elected to increase the maximum Consolidated Total Leverage Ratio to 5.00 from the fiscal quarter ending December 31, 2024 through the fiscal quarter ending September 30, 2025. Fiscal Quarter Ending Maximum Consolidated Total Leverage Ratio December 31, 2024 through September 30, 2025 5.00 to 1.00 December 31, 2025 through June 30, 2026 4.25 to 1.00 September 30, 2026 and the last day of each fiscal quarter thereafter 4.00 to 1.00 Borrowings under the Senior Credit Facility bear interest, at the Company’s option, at a rate equal to the following: i. Term SOFR in effect from time to time plus 0.10 % plus the applicable rate (ranging from 1.00 % to 1.75 %), or ii. The highest of: 1. the weighted average overnight Federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.50 %; 2. the prime lending rate of Bank of America, N.A.; or 3. the one-month Term SOFR plus 1.00 %. 17 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) The applicable rates are based on the Company’s Consolidated Total Leverage Ratio (defined, as of any date of determination, as the ratio of (a) Consolidated Funded Indebtedness as of such date (as defined in the Seventh Amended and Restated Credit Agreement (the “Credit Agreement”)) less cash that is not subject to any restriction on the use or investment thereof to (b) Consolidated EBITDA (as defined by the Credit Agreement)), for the period of four consecutive fiscal quarters ending on such date. The Company will pay an annual commitment fee (ranging from 0.15 % to 0.30 %), based on the Company’s consolidated total leverage ratio, on the amount available for borrowing under the revolving credit facility component of the Senior Credit Facility. The Senior Credit Facility is collateralized by substantially all of the assets of the Company’s U.S. subsidiaries, excluding intangible assets. The Senior Credit Facility is subject to various financial and negative covenants and, at March 31, 2025, 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, 2025 and December 31, 2024, there wa s $ 415.0 million and $ 365.0 million, respectively, ou tstanding under the revolving credit facility component of the Senior Credit Facility. At March 31, 2025 and December 31, 2024, there was $ 755.6 million and $ 760.5 million outstanding under the term loan component of the Senior Credit Facility at a weighted average interest rate of 5.9 % and 6.0 %, respectively. As of March 31, 2025 and December 31, 2024 there was $ 38.8 million and $ 33.9 million, respectively, of the term loan component of the Senior Credit Facility classified as current on the condensed consolidated balance sheet. The fair value of the term loan and revolving portion of the Senior Credit Facility at March 31, 2025 was $ 743.5 million, and $ 407.8 million, respectively. The fair value was determined by using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair value hierarchy. Level 2 inputs represent inputs that are observable for the asset or liability, either directly or indirectly, and are other than active market observable i nputs that reflect unadjusted quoted prices for identical assets or liabilities. Letters of credit outstanding as of March 31, 2025 and December 31, 2024 to taled $ 1.7 million. There were no amounts drawn under the letters of credit outstanding as of March 31, 2025. Contractual repayments of the term loan component of the Senior Credit Facility are due as follows: As of March 31, 2025 Principal Repayment Dollars in thousands Remainder of 2025 $ 29,063 2026 38,750 2027 53,281 2028 634,531 $ 755,625 Future interest payments on the term loan component of the Senior Credit Facility based on current interest rates are expected to approximate $ 33.1 million for the remainder of 2025, $ 42.2 million in 2026, $ 39.7 million in 2027, and $ 8.7 million in 2028. 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 facility component of the Senior Credit Facility are due on March 24, 2028. Convertible Senior Notes On February 7, 2020, the Company issued $ 575.0 million aggregate principal amount of its 0.5 % Convertible Senior Notes due 2025 (the “2025 Notes”) pursuant to an indenture, dated as of February 7, 2020 (the “Original Indenture”), between the Company and Citibank, N.A., as trustee. The 2025 Notes will mature on August 15, 2025 and bear interest at a rate of 0.5 % per annum payable semi-annually in arrears, unless earlier converted, repurchased or redeemed in accordance with the terms of the 2025 Notes. In connection with this offering, the Company capitalized $ 13.2 million of financing fees. 18 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) The 2025 Notes are senior, unsecured obligations of the Company, and are convertible into cash and shares of its common stock based on an initial conversion rate, subject to adjustment of 13.5739 shares per $1,000 principal amounts of the 2025 Notes (which represents an initial conversion price of $ 73.67 per share). The 2025 Notes convert only in the following circumstances: (1) if the closing price of the Company’s common stock has been at least 130 % of the conversion price during the period; (2) if the average trading price per $1,000 principal amount of the 2025 Notes is less than or equal to 98 % of the average conversion value of the 2025 Notes during a period specified in the Original Indenture; (3) if the Company calls the notes for optional redemption as described in the Original Indenture; or (4) if specified corporate transactions occur. As of March 31, 2025, none of these conditions existed and the 2025 Notes are classified as current convertible securities on the consolidated balance sheet, as they are due within one year. On December 9, 2020, the Company entered into the first supplemental indenture to the Original Indenture (the “First Supplemental Indenture” and, together with Original Indenture, the “Indenture”), pursuant to which the Company irrevocably elected (1) to eliminate the Company’s option to choose physical settlement on any conversion of the 2025 Notes that occurs on or after the date of the First Supplemental Indenture and (2) with respect to any Combination Settlement (as defined in the First Supplemental Indenture) for a conversion of the 2025 Notes, the Specified Dollar Amount (as defined in the First Supplemental Indenture) that will be settled in cash per $1,000 principal amount of the 2025 Notes shall be no lower than $ 1,000 . Holders of the 2025 Notes will have the right to require the Company to repurchase for cash all or a portion of their 2025 Notes at 100 % of their principal amount, plus any accrued and unpaid interest, upon the occurrence of a fundamental change (as defined in the Indenture). The Company will also be required to increase the conversion rate for holders who convert their 2025 Notes in connection with certain Fundamental Changes (as defined in the Original Indenture) occurring prior to the maturity date or following delivery by the Company of a notice of redemption. 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”). The cost of the call transactions was $ 104.2 million for the 2025 Notes. The Company received $ 44.5 million of proceeds from the warrant transactions for the 2025 Notes. The call transactions involved purchasing call options from the hedge participants, and the warrant transactions involved selling call options to the hedge participants with a higher strike price than the purchased call options. The initial strike price of the call transactions was $ 73.67 , subject to anti-dilution adjustments substantially similar to those in the 2025 Notes. The initial strike price of the warrant transactions was $ 113.34 for the 2025 Notes, subject to customary anti-dilution adjustments. At March 31, 2025 , the carrying amount of the liability of the 2025 Notes w as $ 575.0 million . The fair value of the 2025 Notes at March 31, 2025 was $ 564.9 million . Factors that the Company considered when estimating the fair value of the 2025 Notes included recent quoted market prices or dealer quotes. The 2025 Notes are valued based on Level 1 measurements in the fair value hierarchy. Level 1 inputs represent quoted prices in active markets for identical assets or liabilities. 19 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Securitization Facility In 2018, the Company entered into an accounts receivable securitization facility (the “Securitization Facility”) under which accounts receivable of certain domestic subsidiaries are sold on a non-recourse basis to a special purpose entity (“SPE”), which is a bankruptcy-remote, consolidated subsidiary of the Company. Accordingly, the assets of the SPE are not available to satisfy the obligations of the Company or any of its subsidiaries. From time to time, the SPE may finance such accounts receivable with a revolving loan facility secured by a pledge of such accounts receivable. The amount of outstanding borrowings on the Securitization Facility at any one time is limited to $ 150.0 million. The Securitization Facility Agreement (“Securitization Agreement”) governing the Securitization Facility contains certain covenants and termination events. An occurrence of an event of default or a termination event under this Securitization Agreement may give rise to the right of its counterparty to terminate this facility. As of March 31, 2025, 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 2023 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, three 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 December 2023 Amendment and April 2023 Amendment did not increase the Company’s total indebtedness. At March 31, 2025 and December 31, 2024, the Company had $ 102.1 million and $ 108.1 million, respectively, of outstanding borrowings under its Securitization Facility at an interest rate of 5.4 % and 5.4 %, respectively. The fair value of the outstanding borrowing of the Securitization Facility at March 31, 2025 was $ 100.0 million. These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair value hierarchy. 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. Estimated Fair Value of Debt Measurements The carrying amounts and the estimated fair values of debt as of March 31, 2025 and December 31, 2024 are as follows: March 31, 2025 December 31, 2024 Fair Value Measurement Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Dollars in thousands Senior credit facility - term loan Level 2 $ 755,625 $ 743,524 $ 760,469 $ 751,143 Senior credit facility - revolving component Level 2 415,000 407,798 365,000 360,144 2025 Notes Level 1 575,000 564,938 575,000 555,594 Securitization Level 2 102,100 100,049 108,100 105,831 Subtotal $ 1,847,725 $ 1,816,309 $ 1,808,569 $ 1,772,712 Debt issuance costs ( 4,435 ) ( 5,476 ) Total debt $ 1,843,290 $ 1,816,309 $ 1,803,093 $ 1,772,712 20 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) 7. DERIVATIVE INSTRUMENTS Interest Rate Hedging The Company’s interest rate risk relates to U.S. dollar denominated variable interest rate borrowings. The Company uses interest rate swap derivative instruments to manage earnings and cash flow exposure resulting from changes in interest rates. These interest rate swaps apply a fixed interest rate on a portion of the Company’s expected SOFR-indexed borrowings. Additionally, 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, 2025 and December 31, 2024 (dollar amounts in thousands): March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024 Hedged Item Notional Amount Designation Date Effective Date Termination Date Fixed Interest Rate Estimated Fair Value Asset (Liability) 1-month Term SOFR Loan 75,000 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.220 % 224 421 1-month Term SOFR Loan 75,000 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.199 % 208 502 1-month Term SOFR Loan 75,000 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.209 % 215 403 1-month Term SOFR Loan 100,000 100,000 December 18, 2018 December 30, 2022 December 31, 2027 2.885 % 2,178 3,406 1-month Term SOFR Loan 100,000 100,000 December 18, 2018 December 30, 2022 December 31, 2027 2.867 % 2,313 3,507 1-month Term SOFR Loan 575,000 575,000 December 15, 2020 July 31, 2025 December 31, 2027 1.415 % 29,856 34,537 1-month Term SOFR Loan 125,000 125,000 December 15, 2020 July 1, 2025 December 31, 2027 1.404 % 6,796 7,848 Basis Swap (1) — — March 31, 2023 March 24, 2023 December 31, 2027 N/A ( 1,885 ) ( 1,829 ) $ 1,125,000 $ 1,125,000 $ 39,905 $ 48,795 (1) The notional of the basis swap amortizes to match the total notional of the interest rate swap portfolio over time 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, 2025 and 2024 the Company recorded a loss of $( 7.5 ) million and a gain of $ 14.7 million, respectively, in AOCI related to the change in fair value of the interest rate swaps. For the three months ended March 31, 2025 and 2024, the Company recorded gains of $ 1.4 million and $ 5.2 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, 2025 within the next twelve months is $ 13.9 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 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. 21 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Foreign Currency Hedging From time to time, the Company enters into foreign currency hedge contracts intended to protect the U.S. dollar value of certain forecasted foreign currency denominated transactions. The Company assesses the effectiveness of the contracts that are designated as hedging instruments. The changes in fair value of foreign currency cash flow hedges are recorded in AOCI, net of tax. Those amounts are subsequently reclassified to earnings from AOCI as impacted by the hedged item when the hedged item affects earnings. If the hedged forecasted transaction does not occur or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. For contracts not designated as hedging instruments, the changes in fair value of the contracts are recognized in other income, net in the consolidated statements of operation, along with the offsetting foreign currency gain or loss on the underlying assets or liabilities. The success of the Company’s hedging anticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activities during periods of currency volatility. In addition, changes in currency exchange rates related to any unhedged transactions may affect earnings and cash flows. Cross-Currency Rate Swaps 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. dollars. 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. In December 2020, the Company entered into cross-currency swap agreements to convert a notional amount of $ 471.6 million equivalent to 420.1 million of a CHF-denominated intercompany loan into U.S. dollars. The CHF-denominated intercompany loan was the result of an intra-entity transfer of certain intellectual property rights to a subsidiary in Switzerland completed during the fourth quarter of 2020. The intercompany loan requires quarterly principal payments of CHF 5.8 million plus accrued interest. As a result, the aggregate notional amount of the related cross-currency swaps will decrease by a corresponding amount. In February 2025, the Company amended the CHF-denominated intercompany loan to extend the maturity to December 2030. Concurrently, the Company amended the cross-currency swap agreement, with a notional amount of $ 368.4 million, equivalent to CHF 328.1 million, to extend the maturity to December 2030. The Company held the following cross-currency rate swaps as of March 31, 2025 and December 31, 2024 (dollar amounts in thousands): March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024 Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value Asset (Liability) Pay CHF December 21, 2020 February 19, 2025 3.00 % CHF — 328,136 — ( 4,367 ) Receive U.S.$ 3.98 % $ — 368,362 Pay CHF February 20, 2025 December 20, 2030 3.25 % CHF 322,387 — ( 16,092 ) — Receive U.S.$ 6.14 % $ 361,907 — Total $ ( 16,092 ) $ ( 4,367 ) 22 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) The cross-currency swaps designated as cash flow hedges 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 months ended March 31, 2025 and 2024 the Company recorded a loss of $( 10.0 ) million and a gain of $ 29.5 million, respectively, in AOCI related to change in fair value of the cross-currency swaps. For the three months ended March 31, 2025 and 2024 the Company recorded a loss of $( 9.4 ) million and a gain of $ 30.1 million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation to offset the gains and losses, respectively, recognized on the intercompany loans. For the three months ended March 31, 2025 and 2024 the Company recorded gains of $ 1.2 million and $ 1.3 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps. The estimated gain that is expected to be reclassified to other income (expense), net from AOCI as of March 31, 2025 within the next twelve months is $ 7.8 million. As of March 31, 2025, 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 The Company manages certain foreign exchange risks through a variety of strategies, including hedging. 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. In February 2025, the Company entered into a cross-currency swap agreement with a notional amount of CHF 67.8 million equivalent to $ 75.0 million, where the Company agreed with third-parties to sell CHF 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. The Company held the following cross-currency rate swaps designated as net investment hedges as of March 31, 2025 and December 31, 2024, respectively (dollar amounts in thousands): March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024 Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value Asset (Liability) Pay EUR October 3, 2018 September 30, 2025 — % EUR 38,820 38,820 3,026 4,827 Receive U.S.$ 2.19 % $ 45,000 45,000 Pay CHF May 26, 2022 December 16, 2028 — % CHF 240,175 240,175 ( 30,561 ) ( 27,951 ) Receive U.S.$ 1.94 % $ 250,000 250,000 Pay CHF November 17, 2023 December 17, 2029 — % CHF 66,525 66,525 ( 3,208 ) ( 3,248 ) Receive U.S.$ 2.54 % $ 75,000 75,000 Pay CHF May 6, 2024 December 18, 2030 — % CHF 68,483 68,483 ( 4,694 ) ( 4,741 ) Receive U.S.$ 2.74 % $ 75,000 75,000 Pay CHF February 21, 2025 December 15, 2031 — % CHF 67,800 — ( 1,742 ) — Receive U.S.$ 3.24 % $ 75,000 — Total ( 37,179 ) ( 31,113 ) 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 months ended March 31, 2025 and 2024, the Company recorded a loss of $( 3.4 ) million and a gain of $ 24.9 million, respectively, in AOCI related to the change in fair value of the cross-currency swaps. For the three months ended March 31, 2025 and 2024, the Company recorded gains of $ 2.6 million and $ 2.2 million, respectively, in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps. 23 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) The estimated gain that is expected to be reclassified to interest income from AOCI as of March 31, 2025 within the next twelve months is $ 10.9 million. Foreign Currency Forward Contracts The Company has entered into forward contracts designated as cash flow hedges for forecasted purchases in foreign currencies, primarily CHF denominated intercompany purchases. To the extent these forward contracts meet hedge accounting criteria, changes in their fair value are not included in accumulated comprehensive loss. These changes in fair value will be recognized into earnings as a component of cost of sales when the forecasted-transaction occurs. These contracts typically settle at various dates within twelve months of execution. As of March 31, 2025 the notional amount of foreign currency forward contracts was CHF 15.5 million. For the three months ended March 31, 2025 and 2024, the Company recorded a gain of $ 0.4 million and a loss of $( 0.6 ) million, respectively, in AOCI related to the change in fair value of the foreign currency forward contracts. For the three months ended March 31, 2025 and 2024, the Company recorded an immaterial gain and a loss of $( 0.1 ) million, respectively, in other income and cost of goods sold included in the consolidated statements of operations related to the amortization of forward points and rate translation on the foreign currency forward contracts. Counterparty Credit Risk The Company manages its concentration of counterparty credit risk on its derivative instruments by limiting acceptable counterparties to a group of major financial institutions with investment grade credit ratings, and by actively monitoring their credit ratings and outstanding positions on an ongoing basis. Therefore, the Company considers the credit risk of the counterparties to be low. 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. Fair Value of Derivative Instruments The Company has classified all of its derivative instruments within Level 2 of the fair value hierarchy because observable inputs are available for substantially the full term of the derivative instruments. The fair values of the interest rate swaps and cross-currency swaps were developed using a market approach based on publicly available market yield curves and the terms of the swap. The Company performs ongoing assessments of counterparty credit risk. 24 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, 2025 and December 31, 2024: Fair Value as of Location on Balance Sheet (1) : March 31, 2025 December 31, 2024 Dollars in thousands Derivatives designated as hedges — Assets: Prepaid expenses and other current assets Cash Flow Hedges Interest rate swap $ 14,855 $ 12,320 Cross-currency swap 7,813 — Foreign currency forward contracts 9 — Net Investment Hedges Cross-currency swap 8,895 8,605 Other assets Cash Flow Hedges Interest rate swap 26,935 38,302 Total derivatives designated as hedges — Assets $ 58,507 $ 59,227 Derivatives designated as hedges — Liabilities: Accrued expenses and other current liabilities Cash Flow Hedges Interest rate swap $ 936 $ 684 Cross-currency swap — 4,367 Foreign currency forward contracts — 914 Net Investment Hedges Cross-currency swap 1,269 210 Other liabilities Cash Flow Hedges Interest rate swap 949 1,145 Cross-currency swap 23,905 — Net Investment Hedges Cross-currency swap 44,805 39,507 Total derivatives designated as hedges — Liabilities $ 71,864 $ 46,827 (1) The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months. 25 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) The following presents the effect of derivative instruments designated as cash flow hedges and net investment hedges on the accompanying condensed consolidated statement of operations during the three months ended March 31, 2025 and 2024: Dollars in thousands Balance in AOCI Beginning of Quarter Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Reclassified from AOCI into Earnings Balance in AOCI End of Quarter Location in Statements of Operations Three Months Ended March 31, 2025 Cash Flow Hedges Interest rate swap $ 48,794 $ ( 7,463 ) $ 1,426 $ 39,905 Interest expense Cross-currency swap ( 11,621 ) ( 10,032 ) ( 8,230 ) ( 13,423 ) Other income, net Foreign Currency Forward Contract ( 624 ) 436 23 ( 211 ) Cost of Sales Net Investment Hedges Cross-currency swap ( 31,130 ) ( 3,435 ) 2,633 ( 37,198 ) Interest income $ 5,419 $ ( 20,494 ) $ ( 4,148 ) $ ( 10,927 ) 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 ( 15,763 ) 29,532 31,473 ( 17,704 ) Other income, net Foreign Currency Forward Contract $ — $ ( 629 ) $ ( 110 ) $ ( 519 ) Net Investment Hedges Cross-currency swap ( 45,498 ) 24,920 2,202 ( 22,780 ) Interest income $ ( 17,705 ) $ 68,546 $ 38,784 $ 12,057 Derivative Instruments not Designated Hedges: During 2024 and 2025 the Company entered into foreign currency forward contracts to mitigate risk from the fluctuations in foreign currency exchange rates associated with intercompany balances in Chinese yuan (“CNH”) and CHF. These contracts typically settle at various dates within twelve months of execution. As of March 31, 2025, the notional amounts totaled CNH 150.0 million and CHF 20.0 million, equivalent to $ 20.8 million and $ 22.9 million, respectively. In 2021, the Company entered into a foreign currency swap, with a notional amount of 800.0 million JPY, equivalent to $ 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 JPY 500.0 million, equivalent to $ 4.6 million as of March 31, 2025. The fair value of the foreign currency swaps not designated as hedges was $ 1.6 million and $ 1.7 million as of March 31, 2025 and December 31, 2024, respectively. The following table summarizes the gains 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, 2025 2024 Foreign currency forward contracts 174 — Foreign currency swaps 169 $ 273 Total $ 343 $ 273 26 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) 8. STOCK-BASED COMPENSATION As of March 31, 2025, 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, as amended (the “2003 Plan”). Stock options issued under the 2003 Plan become exercisable over specified periods, generally within four years from the date of grant for officers and employees, within one year from date of grant for directors which generally expire eight years from the grant date for employees, and from six to ten years for directors and certain executive officers, except in certain instances that result in accelerated vesting due to death, disability, retirement age or change in-control provisions within their grant agreements. The Company values stock option grants using the binomial distribution model. Restricted stock issued under the 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 March 31, 2025, there were approximately $ 4.6 million of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately three years . There were 395,252 stock options granted during the three months ended March 31, 2025. For the three months ended March 31, 2025, the weighted average grant date fair value for stock options granted was $ 10.77 per option. Awards of Restricted Stock and Performance Stock Performance stock and restricted stock awards generally have requisite service periods of three years , except in certain instances that result in accelerated vesting due to death, disability, retirement age provision or change in-control provisions in their grant agreements. Performance stock units are subject to graded vesting conditions based on revenue goals of the Company. The Company expenses the fair value of restricted stock awards on a straight-line basis over the requisite service period. As of March 31, 2025, there was approximately $ 46.6 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 752,668 restricted stock awards and 395,781 performance stock awards during the three months ended March 31, 2025. For the three months ended March 31, 2025, the weighted average grant date fair value for restricted stock awards and performance stock units granted was $ 23.76 and $ 23.95 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. 9. RETIREMENT PLANS The Company has various defined benefit plans which cover certain employees in France, Japan, Germany and Switzerland. Net periodic benefit costs for the Company’s defined benefit pension plans for the three months ended March 31, 2025 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, 2025 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. The estimated fair values of plan assets were $ 54.4 million and $ 51.8 million as of March 31, 2025 and December 31, 2024, respectively. The net plan assets of the pension plans are invested in common trusts as of March 31, 2025 and December 31, 2024. Common trusts are classified as Level 2 in the fair value hierarchy. The fair value of common trusts is valued at the net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. The investment strategy of the Company’s defined benefit plans is both to meet the liabilities of the plans as they fall due and to maximize the return on invested assets within an appropriate risk profile. Deferred Compensation Plan The Company maintains a deferred compensation plan in which certain employees of the Company may defer the payment and taxation of up to 75 % of their base salary and up to 100 % of bonus amounts and other eligible cash compensation. 27 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) This deferred compensation is invested in funds offered under this plan and is valued based on Level 1 measurements in the fair value hierarchy. Assets of the Company’s deferred compensation plan are included in other current assets and recorded at fair value based on their quoted market prices. The fair value of these assets were $ 6.8 million and $ 6.7 million as of March 31, 2025 and December 31, 2024, respectively. Offsetting liabilities relating to the deferred compensation plan are included in other liabilities. 10. LEASES AND RELATED PARTY LEASES The Company leases administrative, manufacturing, research and distribution facilities, and vehicles through operating lease agreements. The Company has no finance leases as of March 31, 2025. Many of the Company’s leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common-area or other maintenance costs). For vehicles, the Company has elected the practical expedient to group lease and non-lease components. Most facility leases include one or more options to renew. The exercise of lease renewal options is typically at the Company’s sole discretion, therefore, the majority of renewals to extend the lease terms are not included in the Right of Use (“ROU”) assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates renewal options and when they are reasonably certain of exercise, the renewal period is included in the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. Total operating lease expense for the three months ended March 31, 2025 and March 31, 2024 was $ 5.9 million and $ 6.3 million, respectively, which includes $ 0.1 million, in related party operating lease expense. Supplemental balance sheet information related to operating leases were as follows: Dollars in thousands, except lease term and discount rate March 31, 2025 December 31, 2024 ROU assets $ 138,463 $ 144,042 Current lease liabilities 14,171 14,540 Non-current lease liabilities 161,476 166,930 Total lease liabilities $ 175,647 $ 181,470 Weighted average remaining lease term (in years): Leased facilities 16.0 years 16.1 years Leased vehicles 2.3 years 2.3 years Weighted average discount rate: Leased facilities 5.3 % 5.4 % Leased vehicles 2.8 % 2.8 % Supplemental cash flow information related to leases for the three months ended March 31, 2025 and 2024 were as follows: Dollars in thousands March 31, 2025 March 31, 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 5,890 $ 5,734 ROU assets obtained in exchange for lease liabilities, net of modifications: Operating leases $ 958 $ 746 28 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Future minimum lease payments under operating leases at March 31, 2025 were as follows: Dollars in thousands Related Parties Third Parties Total Remainder of 2025 $ 222 $ 17,011 $ 17,233 2026 296 19,584 19,880 2027 296 19,256 19,552 2028 296 17,230 17,526 2029 246 17,021 17,267 2030 — 16,828 16,828 Thereafter — 150,848 150,848 Total minimum lease payments $ 1,356 $ 257,778 $ 259,134 Less: Imputed interest 83,487 Total lease liabilities 175,647 Less: Current lease liabilities 14,171 Long-term lease liabilities 161,476 There were no future minimum lease payments under finance leases at March 31, 2025. Related Party Leases The Company leases one of its manufacturing facilities in Plainsboro, New Jersey, from a general partnership that is 50 % owned by a principal stockholder of the Company. The term of the current lease agreement is through October 31, 2029 at an annual rate of approximately $ 0.3 million. The current lease agreement also provides (i) a 5-year renewal option for the Company to extend the lease from November 1, 2029 through October 31, 2034 at the fair market rental rate of the premises, and (ii) another 5-year renewal option to extend the lease from November 1, 2034 through October 31, 2039 at the fair market rental rate of the premises. 11. TREASURY STOCK As of March 31, 2025 and December 31, 2024, there were 14.4 million and 14.4 million shares of treasury stock outstanding with a cost of $ 690.4 million and $ 691.4 million, at a weighted average cost per share of $ 47.86 and $ 47.86 , respectively. In 2024, the Company entered into a $ 50 million accelerated share repurchase (“the 2024 ASR”) and received 1.3 million shares of common stock at inception of the 2024 ASR, which represented approximately 70 % of the expected total shares under the 2024 ASR. The early exercise provision was exercised by the 2024 ASR counterparty. The Company received an additional 0.4 million shares determined using the volume-weighted average price of the Company’s common stock during the term of the 2024 ASR. On July 18, 2023, the Board of Directors authorized a new $ 225 million share repurchase program. A s of March 31, 2025, $ 50 million remained authorized . The program, which was authorized in July 2023 and expires on December 31, 2025, allows the Company to repurchase its shares opportunistically from time to time. The Company may utilize various methods to effect any repurchases, including open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, including accelerated share repurchases, or a combination of the foregoing, some of which may be effected through Rule 10b5-1 plans. 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. 29 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) 12. INCOME TAXES The following table provides a summary of the Company’s effective tax rate: Three Months Ended March 31, 2025 2024 Reported tax rate 15.8 % 37.3 % The Company’s effective income tax rates for the three months ended March 31, 2025 and 2024 were 15.8 % and 37.3 %, respectively. For the three months ended March 31, 2025, the Company’s effective tax rate was driven by federal, state, and international tax benefits generated from operating losses in certain jurisdictions, offset by the inclusion of Global Intangible Low-Taxed Income (“GILTI”) and additional taxes to meet the global minimum tax in certain foreign jurisdictions. For the three months ended March 31, 2024, the Company’s effective tax rate was driven by a $ 1.5 million shortfall from stock based compensation, offset by a tax benefit for intangible asset impairment. Changes to income tax laws and regulations, in any of the tax jurisdictions in which the Company operates, could impact the effective tax rate. Various governments, both U.S. and non-U.S., are increasingly focused on tax reform and revenue-raising legislation. The current U.S. administration and legislators are considering new tax legislation, which may impact the Company's income tax provision. 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”). A number of the jurisdictions that the Company operates in have adopted some form of the model rules, which became effective beginning in 2024. The Pillar 2 rules are complex and provide for delays for implementing the tax during the early transition years, if certain conditions are met. The Company is calculating a $ 2.7 million expense related to Pillar 2 tax liability for the year ending December 31, 2025. Related changes in U.S. and non-U.S. jurisdictions could have an adverse effect on the Company’s effective tax rate. The Company will continue to monitor legislative activity across its U.S. and non-U.S. jurisdictions. 30 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) 13. NET LOSS PER SHARE Basic and diluted net loss per share was as follows: Three Months Ended March 31, Dollars in thousands, except per share amounts 2025 2024 Basic net loss per share: Net loss $ ( 25,293 ) $ ( 3,281 ) Weighted average common shares outstanding 76,463 77,735 Basic net loss per common share $ ( 0.33 ) $ ( 0.04 ) Diluted net loss per share: Net loss $ ( 25,293 ) $ ( 3,281 ) Weighted average common shares outstanding — Basic 76,463 77,735 Effect of dilutive securities: Stock options and restricted stock — — Weighted average common shares for diluted earnings per share 76,463 77,735 Diluted net loss per common share $ ( 0.33 ) $ ( 0.04 ) Basic earnings per share is computed by dividing net income by the weighted-average common shares outstanding during the period. Diluted earnings per share is computed based on the weighted-average common shares outstanding plus the effect of dilutive potential common shares outstanding during the period calculated using the treasury stock method. Dilutive potential common shares include employee equity share options, non-vested shares, and similar equity instruments granted by the Company. Potential common share equivalents have been excluded where their inclusion would be anti-dilutive. For periods in which the Company generated a net loss, the Company does not include the potential impact of dilutive securities in diluted net loss per share, as the impact of these items is anti-dilutive. Common stock of approximately 1.6 million and 1.3 million shares at March 31, 2025 and 2024, res pectively, were not included in the computation of diluted net loss per share because their effect would have been anti-dilutive. 14. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME Comprehensive (loss) income for the three months ended March 31, 2025 and 2024: Three Months Ended March 31, Dollars in thousands 2025 2024 Net loss $ ( 25,293 ) $ ( 3,281 ) Foreign currency translation adjustment 11,631 730 Change in unrealized (gain) loss on derivatives, net of tax ( 8,016 ) 3,735 Pension liability adjustment, net of tax ( 150 ) ( 5 ) Comprehensive (loss) income, net $ ( 21,828 ) $ 1,179 31 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Changes in accumulated other comprehensive (loss) income by component between December 31, 2024 and March 31, 2025 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 Balance at January 1, 2025 $ 26,612 $ 4,028 $ ( 58,211 ) $ ( 27,571 ) Other comprehensive (loss) gain ( 14,101 ) — 13,655 ( 446 ) Less: Amounts reclassified from accumulated other comprehensive income, net ( 6,085 ) 150 2,024 ( 3,911 ) Net current-period other comprehensive (loss) gain ( 8,016 ) ( 150 ) 11,631 3,465 Balance at March 31, 2025 $ 18,596 $ 3,878 $ ( 46,580 ) $ ( 24,106 ) For the three months ended March 31, 2025, the Company reclassified a loss of $( 7.0 ) million and a gain of $ 3.1 million from accumulated other comprehensive income to other income, net and interest income, respectively. 15. SEGMENT AND GEOGRAPHIC INFORMATION The Company is organized primarily on the basis of products and operates two global reportable segments. Resources are allocated and performance is assessed by the Company’s President and Chief Executive Officer, which the Company has determined to be the Chief Operating Decision Maker (“CODM”). The two reportable segments and their activities are described below. • The Codman Specialty Surgical segment operations consist of (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; and (iii) the ENT business, which includes instrumentation, balloon technologies for sinus dilation and eustachian tube dilation, as well as surgical navigation systems. • The Tissue Technologies segment operations consist of such offerings as skin and wound repair, plastics and surgical reconstruction products, bone grafts, and nerve and tendon repair products. The Tissue Technologies segment includes the Company’s private label business. 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, which are not allocated to the reportable segments. For both segments, the CODM uses segment revenue and segment operating income to assess the performance for each segment and in the annual budgeting and forecasting process. The CODM considers budget-to-actual variances on a quarterly basis for segment revenue and segment operating income when making decisions about allocating capital and personnel to the segments. The operating results of the 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 reportable segments. 32 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Net sales and profit by each reportable segment for the three months ended March 31, 2025 and 2024 are as follows: Three Months Ended March 31, 2025 Dollars in thousands Codman Specialty Surgical Tissue Technologies Corporate and Other Total Total revenue, net $ 280,664 $ 101,989 $ — $ 382,653 Cost of goods sold 92,682 45,063 50,476 188,221 Research and development 7,945 3,719 13,064 24,728 Selling, general and administrative 69,674 37,161 74,662 181,497 Intangible asset amortization — — 3,704 3,704 Total cost and expenses 170,301 85,943 141,906 398,150 Operating income (loss) $ 110,363 $ 16,046 $ ( 141,906 ) ( 15,497 ) Interest income 4,420 Interest expense ( 18,815 ) Other income, net ( 144 ) Loss before income taxes $ ( 30,036 ) Three Months Ended March 31, 2024 Dollars in thousands Codman Specialty Surgical Tissue Technologies Corporate and Other Total Total revenue, net $ 256,434 $ 112,438 $ — $ 368,872 Cost of goods sold 92,973 37,538 31,527 162,038 Research and development 5,765 4,901 16,299 26,965 Selling, general and administrative 54,204 39,333 72,261 165,798 Intangible asset amortization — — 10,107 10,107 Total cost and expenses 152,942 81,772 130,194 364,908 Operating income (loss) $ 103,492 $ 30,666 $ ( 130,194 ) 3,964 Interest income 5,040 Interest expense ( 13,624 ) Other income, net ( 610 ) Loss before income taxes $ ( 5,230 ) The Company does not allocate any assets to the reportable segments. No asset information is reported to the CODM and disclosed in the financial information for each segment. The Company attributes revenues to geographic areas based on the location of the customer. Total revenue by major geographic area consisted of the following: Three Months Ended March 31, Dollars in thousands 2025 2024 United States $ 282,217 $ 256,229 Europe 35,326 41,596 Asia Pacific 45,105 49,545 Rest of World 20,005 21,502 Total Revenues $ 382,653 $ 368,872 33 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) 16. COMMITMENTS AND CONTINGENCIES In consideration for certain technology, manufacturing, distribution, and selling rights and licenses granted to the Company, the Company has agreed to pay royalties on sales of certain products that it sells. The royalty payments that the Company made under these agreements were not significant for any of the periods presented. In the ordinary course of its business, the Company is involved in, from time to time, various legal actions, including any matters described below, involving product liability, employment, intellectual property and commercial disputes, shareholder related matters, environmental proceedings, tax disputes, and governmental proceedings and investigations, some of which have been settled by the Company. In the opinion of management, such matters are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material, adverse effect on the Company’s financial condition. However, it is possible that the Company’s results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies. The Company accrues for loss contingencies when it is deemed probable that a loss has been incurred and that loss is estimable. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is recorded. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded and actual results may differ from these estimates. The amounts accrued are based on the full amount of the estimated loss before considering insurance proceeds and do not include an estimate for legal fees expected to be incurred in connection with the loss contingency. 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 February 21, 2025, a derivative lawsuit captioned Grabowsky v. Integra LifeSciences Holding Corp. et al, No. 3:25-cv-01399 (D.N.J.) was filed in the United States District Court for the District of New Jersey. The action purports to assert derivative claims on behalf of the Company against its current Board of Directors and certain of its current or former officers and directors. The action asserts claims that the individual defendants breached their fiduciary duties and harmed the Company by making false and misleading statements and omissions relating to certain quality systems issues identified by the U.S. Food and Drug Administration (“FDA”) at the Company’s Boston, Massachusetts manufacturing facility, the Company’s efforts to remediate those issues, and the Company’s forecasts for certain products in its Tissue Technologies segment. On March 28, 2025, the derivative lawsuit was voluntarily dismissed by the plaintiff. On December 21, 2023, Fortis Advisors, LLC (representative of the security holders of ACell, Inc. (“ACell”)) filed for arbitration against Integra LifeSciences before the Court of International Arbitration of the International Chamber of Commerce claiming breach of contract related to the earnout consideration from the 2021 acquisition of ACell. Refer to the “Contingent Consideration” subheading of this Note for additional information on the ACell contingent consideration. 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. Integra LifeSciences Holdings Corporation , No. 23-cv-20321 (D.N.J.), was filed by a purported stockholder of the Company in the United States District Court for the District of New Jersey (the “Pembroke Litigation”) against the Company and certain of the Company’s current and former executive officers. The Pembroke Litigation, filed on behalf of a putative class of stockholders who purchased or acquired the Company’s common stock between March 11, 2019 and May 22, 2023, inclusive, alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, on the basis of purportedly materially false and misleading statements and omissions relating to certain quality systems issues identified by the FDA at the Company’s Boston, Massachusetts manufacturing facility, the Company’s efforts to remediate those issues, and the Company’s forecasts for certain products in its Tissue Technologies segment. The complaint seeks, among other things, compensatory damages, attorneys’ fees, expert fees, and other costs. The Company believes that it has strong defenses to the allegations in the Pembroke Litigation, and intends to defend the matter vigorously. Contingent Consideration The Company determined the fair value of contingent consideration during the three month period ended March 31, 2025 and March 31, 2024 to reflect the change in estimate, additions, payments, transfers and the time value of money during each period. 34 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) A reconciliation of the opening balances to the closing balances of these Level 3 measurements for the three months ended March 31, 2025 and March 31, 2024 is as follows (in thousands): Three Months Ended March 31, 2025 Contingent Consideration Liability Related to Acquisition of: Arkis (1) Derma Sciences (2) ACell (2) Surgical Innovations Associates (SIA), Inc. (2) Balance as of January 1, 2025 $ 12,968 $ 2,686 $ 3 54,000 Payment ( 5,000 ) — — — Change in fair value of contingent consideration liabilities ( 812 ) 50 — 600 Balance, March 31, 2025 7,156 2,736 3 54,600 Short-Term - Accrued expenses and other liabilities $ 3,598 $ — $ — $ 35,000 Long-Term - Other liabilities 3,558 2,736 3 19,600 Total 7,156 2,736 3 54,600 Three Months Ended March 31, 2024 Contingent Consideration Liability Related to Acquisition of: Arkis (1) Derma Sciences (2) ACell (2) Surgical Innovations Associates (SIA), Inc. (2) Balance as of January 1, 2024 $ 15,755 $ 2,557 $ 300 $ 68,700 Change in fair value of contingent consideration liabilities ( 83 ) 39 — 500 Balance as of March 31, 2024 $ 15,672 $ 2,596 $ 300 $ 69,200 Short-Term - Accrued expenses and other liabilities $ 7,562 $ — $ — $ 29,300 Long-Term - Other liabilities 8,110 2,596 300 39,900 Total 15,672 2,596 300 69,200 (1) Location in financial statements: Research and development (2) Location in financial statements: Selling, general and administrative Arkis BioSciences Inc. As part of the acquisition of Arkis BioSciences Inc. (“Arkis”), the Company is required to pay the former shareholders of Arkis up to $ 25.5 million based on the timing of certain development milestones of $ 10.0 million and commercial sales milestones of $ 15.5 million, respectively. The Company used a probability weighted income approach to calculate the fair value of the contingent consideration that considered the possible outcomes of scenarios related to each specified milestone. The Company estimated the fair value of the contingent consideration to be $ 13.1 million at the acquisition date. In the first quarter of 2025, the Company paid out a development milestone related to design verification procedures for $ 5.0 million. Derma Sciences, Inc. The Company assumed contingent consideration incurred by Derma Sciences, Inc. (“Derma Sciences”) related to its acquisitions of BioD, LLC and the intellectual property related to Medihoney® products. The Company accounted for the contingent liabilities by recording the fair value on the date of the acquisition based on a probability weighted income approach. The Company has already paid $ 33.3 million related to the aforementioned contingent liabilities. One contingent milestone remains, which relates to net sales of Medihoney products exceeding certain amounts defined in the agreement between the Company and Derma Sciences. The potential maximum undiscounted payment amounts to $ 3.0 million. 35 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) ACell, Inc. 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 Company estimated the fair value of the contingent consideration to be $ 23.9 million at the acquisition date. 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. 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 pre-market approval ("PMA") application for DuraSorb for certain uses by certain timing targets (up to $ 40.0 million in additional payments). 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. In the second quarter of 2024, the Company paid out $ 12.4 million related to the 2023 performance year. 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. 36 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) 17. FAIR VALUE MEASUREMENTS ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 establishes a three-level hierarchy of the inputs (i.e., assumptions that market participants would use in pricing an asset or liability) used to measure fair value, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable inputs in measuring fair value. The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the entire fair value measurement. The three levels of the valuation hierarchy are defined as follows: Level 1 : Inputs to the valuation methodology are quoted prices in active markets for identical assets or liabilities. Level 2 : Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 : Inputs to the valuation methodology are unobservable inputs that are supported by little or no market activity and are based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk. Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company has investments in time deposits that are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices, as well as certain debt obligations that are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The investments in time deposits are classified as cash and cash equivalents and short-term investments on the consolidated balance sheets which is determined based on maturities at the time of purchase and re-evaluated at each balance sheet date. The Company also has investments in derivative instruments, which are comprised of interest rate swaps, cross currency swaps, net investment hedges, and forward foreign currency contracts that are classified within Level 2 of the fair value hierarchy because they are valued using analyses obtained from independent third-party valuation specialists based on market observable inputs. The fair values of these derivative contracts represent the estimated amounts the Company would receive or pay to terminate the contracts. Refer to Note 7. Derivative Instruments for further discussion and information on these derivative contracts. In addition, the Company has contingent consideration liabilities that are classified within Level 3 of the fair value hierarchy because they are measured at fair value using significant unobservable inputs, including management’s forecast of future revenues for the acquired businesses as well as management’s estimates of the likelihood of achieving the other specified criteria. Refer to Note 16. Commitments and Contingencies for additional information on these contingent consideration liabilities. 37 INTEGRA LIFESCIENCES HOLDINGS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Assets and liabilities measured and recorded at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 consisted of the following: Dollars in thousands Fair Value Measurement March 31, 2025 December 31, 2024 Assets: Cash and cash equivalents Level 1 $ 239,104 $ 246,375 Short-term investments Level 1 34,191 27,192 Interest rate swaps Level 2 39,905 48,795 Foreign currency forward contracts Level 2 9 — Foreign currency forward contracts (not designated as hedges) Level 2 1,608 1,700 Total Assets: $ 314,817 $ 324,062 Liabilities: Cross currency rate swaps Level 2 $ 16,092 $ 4,367 Net investment hedges Level 2 37,179 31,113 Foreign currency forward contracts Level 2 — 914 Contingent consideration Level 3 64,495 69,657 Total Liabilities: $ 117,766 $ 106,051 A roll forward of the fair value of the contingent consideration liabilities, as determined by Level 3 unobservable inputs, during the three months ended March 31, 2025 and 2024 were as follows: Three Months Ended March 31, Dollars in thousands 2025 2024 Balance at beginning of period $ 69,657 $ 87,312 Change in fair value ( 162 ) 456 Payments ( 5,000 ) — Balance at end of period $ 64,495 $ 87,768 There were no transfers into or out of Level 3 during the three months ended March 31, 2025 and 2024. Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis The Company remeasures the fair value of certain assets and liabilities, including property, plant and equipment; operating lease - right of use assets; and goodwill and other intangible assets, upon the occurrence of certain events. The amounts recognized were recorded to remeasure the carrying amount of assets to the assets’ fair values, which were generally estimated, based upon a market participant’s perspective, using Level 3 measurements, including values estimated using the income approach. Other than the fair value estimates disclosed in Note 2. Acquisitions and Divestitures , Note 5. Goodwill and Other Intangible Assets , and Note 10. Leases and Related Party Leases , there were no non-recurring fair value measurements during the three months ended March 31, 2025 and 2024.