What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-05-05 · 163 added, 116 removed, 303 unchanged (48% of the section changed)

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We have made statements in this Quarterly Report that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”).

manufacturing facility in Braintree, Massachusetts (“the Braintree facility”), our transition of the manufacture of SurgiMend® and PriMatrix® to the Braintree facility, our ability to obtain a pre-market approval (“PMA”) of SurgiMend PRS in implant-based breast reconstruction and to obtain a PMA for Durasorb® in 2026 for multiple indications for implant-based breast reconstruction, our expectations regarding the Compliance Master Plan (“the CMP”) implementation and engagement, our restructuring and cost-saving initiatives, our intellectual property rights, litigation and tax matters, governmental proceedings and investigations, mergers and acquisitions, divestitures, market acceptance of our products and services, accounting estimates, financing activities, ongoing contractual obligations and compliance with restrictive and financial covenants of our outstanding indebtedness, working capital adequacy, value of our investments, our effective tax rate, estimates regarding the impact of tariffs adopted or implemented by the U.S.

All statements other than statements of historical fact contained in this Quarterly Report, including, but not limited to, statements regarding our business strategy and plans, our growth and growth strategies, developments in the markets for our products and services, financial results, our planned product launches and effectiveness, our research and development strategy, regulatory approvals, our competitive strengths, objectives of management for future operations and current expectations or forecasts of future results, our expectations regarding the Boston facility and plans to operationalize the Company's manufacturing facility in Braintree, Massachusetts (“the Braintree facility”), our transition of the manufacture of SurgiMend® and PriMatrix® to the Braintree facility, our ability to obtain a pre-market approval (“PMA”) of SurgiMend PRS in implant-based breast reconstruction and to obtain a PMA for Durasorb® in 2026 for multiple indications for implant-based breast reconstruction, our expectations regarding the Compliance Master Plan (“the CMP”) implementation and engagement, our restructuring and cost-saving initiatives, our intellectual property rights, litigation and tax matters, governmental proceedings and investigations, mergers and acquisitions, divestitures, market acceptance of our products and services, accounting estimates, financing activities, ongoing contractual obligations and compliance with restrictive and financial covenants of our outstanding indebtedness, working capital adequacy, value of our investments, our effective tax rate, estimates regarding the impact of tariffs adopted or implemented by the U.S.

or other countries on our business, financial condition and results of operations, our expected returns to shareholders, and our sales efforts, are forward-looking statements.

In some cases, these forward-looking statements may be identified by forward-looking words such as “believe,” “may,” “might,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,” “should,” “would” or the negative version of these words or other similar words and expressions in this Quarterly Report.

In some cases, these forward-looking

statements may be identified by forward-looking words such as “believe,” “may,” “might,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,” “should,” “would” or the negative version of these words or other similar words and expressions in this Quarterly Report.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions about the Company and other matters that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

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These forward-looking statements speak only as of the date of this Quarterly Report and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.

You should carefully consider forward-looking statements and understand that such forward-

looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, and involve a variety of risks and uncertainties.

Integra LifeSciences Holdings Corporation was founded in 1989 and is a leading global medical technology company innovating treatment pathways to advance patient outcomes and set new standards of surgical, neurologic, ear, nose, and throat (“ENT”) and regenerative care.

Our common stock trades on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “IART.” We have developed numerous product lines from our technologies for applications ranging from burn and deep tissue wounds to the repair of dura mater in the brain, as well as nerves and tendons.

You should carefully consider forward-looking statements and understand that such forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, and involve a variety of risks and uncertainties.

Our common stock trades on the Nasdaq Global Select Market under the symbol “IART.” We have developed numerous product lines from our technologies for applications ranging from burn and deep tissue wounds to the repair of dura mater in the brain, as well as nerves and tendons.

We have expanded our base regenerative technology business to include ENT, surgical instruments, neurosurgical products and advanced wound care through global acquisitions and product development to meet the evolving needs of our customers and enhance patient care.

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Codman Specialty Surgical (“CSS”) and Tissue Technologies (“TT”).

The CSS segment, which represents approximately two-thirds of our total revenue, consists of market-leading technologies and instrumentation used for a wide range of specialties, such as neurosurgery, neurocritical care and otolaryngology.

The CSS segment, which represents approximately 70% of our total revenue, consists of market-leading technologies and instrumentation used for a wide range of specialties, such as neurosurgery, neurocritical care and otolaryngology.

We are the world leader in neurosurgery and one of the top three providers in the U.S.

in instruments used in precision, specialty, and general surgical procedures.

Our TT segment generates about one-third of our overall revenue and focuses on three main areas:

Our TT segment generates approximately 30% of our overall revenue and focuses on three main areas:

complex wound surgery, surgical reconstruction, and peripheral nerve repair.

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In 2021, we filed a PMA application for a specific indication for SurgiMend in the use of post-mastectomy implant-based breast reconstruction (“IBBR”).

We currently anticipate PMA approval following the completion of the construction, FDA approval and operationalization of our Braintree facility, which is expected in the first half of 2026.

We are also pursuing a PMA for DuraSorb for multiple indications in the use in IBBR.

We currently anticipate PMA approval following the completion of the construction, FDA approval and operationalization of our Braintree facility, which is expected in 2026.

We are also pursuing a PMA for DuraSorb for indications in the use of IBBR.

We completed enrollment for the DuraSorb U.S.

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In 2024 we expanded our urinary bladder matrix platform with the U.S.

launch of MicroMatrix® Flex, a dual-syringe system enabling the convenient mixing and precise delivery of MicroMatrix paste to provide convenient access to hard-to-reach spaces and to help prepare an even wound surface in challenging wound areas.

Additionally, in 2024, we successfully re-launched our CereLink ® intracranial pressure (“ICP”) monitor system.

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Growing Internationally.

Over the years, we have been significantly expanding our global footprint through investments in our commercial and manufacturing organizations, the expansion and development of international markets and new product introductions.

Over the years, we have significantly expanded our global footprint by investing in our commercial and manufacturing operations, as well as introducing new products.

As part of our In-China-For-China strategy, we continue to build out our assembly capabilities in our facility in Suzhou, China.

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We seek ways to develop and acquire products and technologies that impact the lives of patients, starting with the journey that a patient takes from diagnosis and treatment planning to surgery and postoperative care.

We are well-established in acute care in the hospital setting and continue to leverage that strong position to grow in this segment and shape treatment pathways into preoperative care and additional sites of care.

We are well-established in acute care settings and continue to leverage that strong position to grow in this segment and shape treatment pathways into preoperative care and additional sites of care.

In April 2024, we successfully completed the acquisition of Acclarent, Inc.

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Driving Operations and Customer Excellence.

We have been making investments to build more responsive and scalable processes, enhance the reliability of our quality systems and supply chain, and drive productivity initiatives to further supply and lower costs.

We have been steadily advancing our initiatives to build more responsive and scalable processes, enhance the reliability of our quality systems and supply chain, and drive productivity to further our supply and lower costs.

We continue to invest in technologies, systems and processes to enhance the customer experience.

We also continue to invest in our capacity expansion.

This includes ongoing projects of transferring manufacturing from our Boston facility to our Braintree facility in Massachusetts and further investing in capacity and validating manufacturing processes in our manufacturing facility in Plainsboro, New Jersey.

We are also committed to our capacity expansion.

We have progressed in the transfer from our Boston facility to our Braintree facility, as well as expanding capacity at our manufacturing facility in Plainsboro, New Jersey.

We are implementing the CMP, a systematic and holistic approach to improving our quality management system across our manufacturing and supply network.

The primary objectives of the CMP are to remediate quality system gaps, harmonize the quality management system across the Company, and enhance the quality culture at the Company.

The primary objectives of the CMP are to remediate quality system gaps, harmonize the quality management system and enhance the quality culture across the Company.

Cultivating a High-Performance Culture.

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These efforts have been recognized through our inclusion in several best workplace lists globally.

Additionally, we continue to advance our broader organizational sustainability initiatives and published our third annual environmental, social and governance (“ESG”) report.

We continue to advance our broader organizational sustainability initiatives, and published our third annual environmental, social and governance (“ESG”) report in 2024.

For more information on our ESG strategy, goals, performance, and achievements, please visit “Our Company—ESG Report” at https://www.integralife.com/esg-report.

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Our product development efforts are focused on core clinical applications in cerebrospinal fluid management, neuro-critical care monitoring, minimally invasive instruments and electrosurgery and ultrasonic medical technologies, as well as our ambition to transform the standard of care in neurosurgery with product advancements in minimally invasive surgery and the surgical management of intracerebral hemorrhage.

Our lighting franchise is among the most dynamic in the industry.

We continue to advance the early-stage technology platforms we acquired in 2019.

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Acclarent pioneered the balloon sinuplasty market and has a broad portfolio including the RELIEVA SPINPLUS® Balloon Sinuplasty System.

Acclarent also pioneered eustachian tube balloon dilation and currently markets the AERA® Eustachian Tube Dilation System, which received 510(k)

clearance for expanded pediatric indications in 2023.

Acclarent also sells the TruDi® Navigation System, which includes a portfolio of navigated surgical instrumentation.

Acclarent also pioneered eustachian tube balloon dilation and currently markets the AERA® Eustachian Tube Dilation System, which received 510(k) clearance for expanded pediatric indications in 2023.

In addition, Acclarent sells the TruDi® Navigation System, which includes a portfolio of navigated surgical instrumentation.

In July 2025, we announced the inaugural enrollment of the first patient in the Acclarent AERA Pediatric Registry, a prospective, multi-center observational registry evaluating the real-world use of the AERA Eustachian Tube Balloon Dilation System in children, which marks the focused effort to measure the ongoing, real-world clinical performance of AERA in pediatric patients with obstructive Eustachian tube dysfunction.

The registry is designed to capture both safety and efficacy outcomes for up to 300 pediatric patients who undergo Eustachian tube balloon dilation using AERA.

Regenerative Technologies .

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Our regenerative technology development program applies our expertise in bioengineering to a range of biomaterials including natural materials such as purified collagen, intact human or animal tissues, honey as well as resorbable synthetic polymers with our DuraSorb and DuraSeal product lines.

These unique product designs are used for neurosurgical and reconstructive surgical applications, as well as dermal regeneration, including the management of chronic and acute wounds, tendon and nerve repair.

These unique product designs

are used for neurosurgical and reconstructive surgical applications, as well as dermal regeneration, including the management of chronic and acute wounds, tendon and nerve repair.

Our regenerative technology platform includes our legacy Integra® Dermal Regeneration Template (“IDRT”) products and complementary technologies that we have acquired.

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In 2021, we filed a PMA application for a specific indication for SurgiMend for use in post-mastectomy IBBR and in 2024 received approvable pending GMP status from FDA, which approved and closed out the clinical portion of this PMA application.

We anticipate PMA approval following FDA approval and operationalization of the Braintree facility, which is expected in the first half of 2026.

We anticipate PMA approval following successful closeout of the GMP deficiencies, pre-approval inspection, and operationalization of the Braintree facility, which is expected in 2026.

In 2022, we acquired SIA, which also submitted a PMA application for multiple indications for DuraSorb for use in IBBR.

In 2023 we completed enrollment in the DuraSorb U.S.

IDE clinical trial for two-stage breast reconstruction;

and continue to advance the PMA application.

Currently, we hope to secure PMA approval for DuraSorb for use in IBBR in 2026.

By offering two distinct product solutions for multiple indications for use in IBBR, we believe we have the opportunity to build a leading position in the IBBR market.

IDE clinical trial for two-stage breast reconstruction, and since then have completed treatment and follow up of all subjects as we continue to advance the PMA application.

Currently, we hope to secure PMA approval for DuraSorb in 2026.

By offering two distinct product solutions for multiple indications, we believe we have the opportunity to build a leading position in the IBBR market.

In 2024, MicroMatrix Flex, used in the management of wounds with hard-to-reach geometries, such as deep wounds that present with tunneling or undermining, became commercially available in the U.S.

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We continue to work towards certifying our products under the EU MDR.

In recent years, we received EU MDR certification in our CSS segment for Hakim Programmable Valves, Certas Plus with and without Bactiseal catheters, Surgical Patties & Strips, DuraSeal Dural, and DuraGen Suturable, as well as IDRT, BioPatch, MicroMatrix, and Cytal in our TT segment.

In recent years, we received EU MDR certification in our CSS segment for Hakim Programmable Valves, Certas Plus with and without Bactiseal catheters, Surgical Patties and Strips, DuraSeal Dural, and DuraGen Suturable, as well as IDRT, BioPatch, MicroMatrix, and Cytal in our TT segment.

Although we do not currently anticipate any disruption to our commercial activities in Europe related to EU MDR, we cannot provide assurance of our ability to timely comply with all applicable requirements of EU MDR and our failure to meet the applicable EU MDR requirements could adversely impact our business in the EU and other regions that tie their product registrations to the EU requirements.

On December 19, 2024, a subsidiary of the Company received a warning letter from the FDA (the “2024 Warning Letter”).

On December 19, 2024, the Company received a warning letter from the FDA (the “2024 Warning Letter”).

The 2024 Warning Letter relates to quality system issues identified during FDA inspections at three of the Company’s facilities located in Mansfield, Massachusetts;

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The 2024 Warning Letter states that premarket approval applications for Class III devices to which the quality system regulation violations are reasonably related will not be approved until the violations have been corrected.

The Company has submitted several responses to the 2024 Form 483s issued to each of the three manufacturing facilities to the FDA and has submitted two updates to the 2024 Warning Letter in the first quarter of 2025.

The Company has submitted several responses to the 2024 Form 483s issued to each of the three manufacturing facilities to the FDA and has submitted several updates to the 2024 Warning Letter in the first half of 2025.

On March 7, 2019, TEI Biosciences, Inc.

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The 2019 Warning Letter was related to quality systems issues at TEI’s manufacturing facility located in Boston, Massachusetts (the “Boston facility”).

The Boston facility manufactures extracellular bovine matrix products in our TT segment that are sold both in wound reconstruction and care and in private label channels.

The Boston facility manufactured extracellular bovine matrix products in our TT segment that were sold both in wound reconstruction and care and surgical reconstruction franchises, and in private label channels.

The letter resulted from an inspection held at that facility in October and November 2018 and did not identify any new observations that were not already provided in the Form 483 that followed the inspection.

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On October 28, 2021, the FDA initiated an inspection of the facility and at the conclusion of the inspection, issued an FDA Form 483 on November 12, 2021 (the “2021 Form 483”).

We provided an initial response to the inspection observations.

On March 1, 2023, the FDA commenced an inspection of the Boston facility and issued an FDA Form 483 at the conclusion of this inspection (the “2023 Form 483”).

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The Company has submitted periodic responses to the FDA for both the 2023 Form 483 and the 2023 Warning Letter.

We are committed to resolving the matters identified in the warning letters and Form 483s and are continuing our significant efforts to remediate the observations.

We are committed to resolving the matters identified in the warning letters and Form 483s and are continuing significant efforts to remediate the observations.

Although the warning letters do not restrict the Company’s ability to seek FDA 510(k) clearance of products, PMAs for Class III devices to which the quality system regulation violations are reasonably related will not be approved until the violations have been addressed.

Following its assessment of the results of a third-party audit of the Boston facility, the Company announced in the second quarter of 2024 that it no longer plans to restart the manufacture of PriMatrix and SurgiMend at its Boston facility and will, instead, restart manufacturing of these products at its new tissue manufacturing at the Braintree facility.

In addition, the Company also plans to manufacture Durepair Dural Regeneration Matrix at the Braintree facility.

The Company anticipates the Braintree facility to be operational with FDA approval in the first half of 2026.

The Company anticipates the Braintree facility to be operational in 2026.

We cannot give any assurances that the FDA will be satisfied with our response to the issues identified by the FDA in any of the foregoing Form 483s or warning letters or as to the expected date of the resolution of such issues.

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As a result of both audits by regulatory agencies as well as our own reviews of the Company’s quality management system, we are in the process of implementing the CMP, a systematic and holistic approach to improving our quality management system across our manufacturing and supply network.

The primary objectives of the CMP are to remediate quality system gaps, harmonize the quality management system across the Company, and enhance the quality culture at the Company.

The primary objectives of the CMP are to remediate quality system gaps, harmonize the quality management system and enhance the quality culture across the Company.

The Company has completed baseline audits across all manufacturing facilities, conducted CMP training, and has made significant progress in its prioritized work streams.

RESULTS OF OPERATIONS

Executive Summary

Net loss for the three months ended March 31, 2025 was $(25.3) million, or $(0.33) per diluted share, as compared to net loss of $(3.3) million or $(0.04) per diluted share for the three months ended March 31, 2024.

The decrease in net income for the three months ended March 31, 2025, was primarily driven by the impact of quality and operational issues on revenue and associated costs.

Net loss for the three and six months ended June 30, 2025 was $(484.1) million and $(509.4) million, or $(6.31) and (6.65) per diluted share, as compared to net loss of $(12.4) million and $(15.7) million, or $(0.16) and $(0.20) per diluted share for the three and six months ended June 30, 2024.

The decrease in net income for the three and six months ended June 30, 2025, was primarily driven by goodwill impairment charges of $511.4 million.

Special Charges

Income before taxes includes the following special charges :

Three Months Ended March 31,

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

Dollars in thousands 2025 2024 2025 2024

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Boston recall / Braintree transition (1)

13,630 14,698 28,440 23,742

Total $ 35,218 $ 50,968 $ 77,859 $ 81,198

(1) This primarily includes idle capacity charges, inventory write offs, site transfer costs, quality remediation costs, right of use and fixed asset impairments.

(1) This primarily includes idle capacity charges, site transfer costs, quality remediation costs, right of use and fixed asset impairments.

The items reported above are reflected in the condensed consolidated statements of operations as follows:

Three Months Ended March 31,

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

Dollars in thousands 2025 2024 2025 2024

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The Company’s revenues and gross margin on product revenues were as follows:

Three Months Ended March 31,

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

Dollars in thousands 2025 2024 2025 2024

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Gross margin as a percentage of total revenues 50.4 % 54.0 % 50.6 % 55.0 %

Three Months Ended March 31, 2025 as Compared to Three Months Ended March 31, 2024

Three Months Ended June 30, 2025 as Compared to Three Months Ended June 30, 2024

Revenues and Gross Margin

For the three months ended March 31, 2025, total revenues increased by $13.8 million to $382.7 million from $368.9 million for the same period in 2024.

Excluding the impacts of the Acclarent acquisition and foreign currency impact, revenues declined low single digits compared to the same period in the previous year, driven by impacts from quality and operational issues.

In the CSS segment, revenues were $280.7 million which was an increase of $24.2 million, or 9% as compared to the prior-year period, inclusive of $29.1 million related to the Acclarent acquisition.

Excluding the impact of the Acclarent acquisition, the Neurosurgery portfolio decreased low single digits, primarily driven by a decline in Dural Access and Repair, Advanced Energy and Neuro Monitoring, offset by strong performance in our Instrument business.

In the TT segment, revenues were $102.0 million which was a decrease of $10.4 million, or 9% as compared to the prior-year period.

This is primarily attributable to declines in Integra Skin and our private label business due to production and supply challenges, partially offset by growth in MicroMatrix & Cytal, and Durasorb.

Gross margin was $194.4 million for the three months ended March 31, 2025, a decrease of $12.4 million from $206.8 million for the same period in 2024.

Gross margin as a percentage of revenues was 50.8% for the three months ended March 31, 2025 and 56.1% for the same period in 2024.

For the three months ended March 31, 2025, gross margins were impacted by expenses associated with quality and operational issues.

For the three months ended March 31, 2024, gross margins were impacted by expenses associated with the Boston recall, as well as additional manufacturing expenses across our manufacturing sites.

For the three months ended June 30, 2025, total revenues decreased by $2.6 million to $415.6 million from $418.2 million for the same period in 2024.

This represents a low single digit decline compared to the same period in the prior year, primarily driven by impacts from quality and operational issues.

In the CSS segment, revenues were $304.0 million which represents an increase of $2.2 million, or 1% as compared to the prior-year period.

Excluding the impact of foreign currency of $3.1 million, the decrease in revenue is primarily driven by the impact of quality and operational issues, offset by strong performance in CSF Management, specifically Certas Plus and Bactiseal.

In the TT segment, revenues were $111.6 million which represents a decrease of $4.8 million, or 4% as compared to the prior-year period.

This is primarily attributable to the impact of quality and operational issues and decreases in private label revenues.

This is partially offset by growth in Integra Skin.

Gross margin was $209.3 million for the three months ended June 30, 2025, a decrease of $16.6 million from $225.9 million for the same period in 2024.

Gross margin as a percentage of revenues was 50.4% for the three months ended June 30, 2025 and 54.0% for the same period in 2024.

For the three months ended June 30, 2025, gross margins were impacted by quality and operational issues, which affected both revenue and expenses, as well as higher manufacturing costs.

For the three months ended June 30, 2024, gross margins were impacted by Boston impairment charges and Acclarent inventory step-up.

Operating Ex penses

The following is a summary of operating expenses as a percent of total revenues:

Three Months Ended March 31,

Three Months Ended June 30,

Research and development 6.5 % 7.1 %

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Intangible asset amortization 0.9 % 0.9 %

Goodwill Impairment 123.0 % — %

Total operating expenses 173.7 % 54.7 %

Total operating expenses, which consist of research and development, selling, general and administrative, and amortization expenses, increased by $7.1 million, or 3.5%, to $209.9 million in the three months ended March 31, 2025, compared to $202.9 million in the same period in 2024.

Total operating expenses, which consist of research and development, selling, general and administrative, and amortization expenses, increased by $493.1 million, or 215.4%, to $722.0 million in the three months ended June 30, 2025, compared to $228.9 million in the same period in 2024, primarily driven by goodwill impairment booked in the current year.

Research and Development

Research and development expenses for the three months ended March 31, 2025 decreased by $2.2 million as compared to the same period in the prior year, primarily attributable to lower spend on EU MDR and other research and development projects.

Research and development expenses for the three months ended June 30, 2025 decreased by $2.8 million as compared to the same period in the prior year, primarily attributable to lower spend on EU MDR and other research and development projects.

Selling, General and Administrative

Selling, general and administrative costs for the three months ended March 31, 2025 increased by $15.7 million as compared to the same period in the prior year, primarily driven by Acclarent commercial costs.

Selling, general and administrative costs for the three months ended June 30, 2025 decreased by $15.6 million as compared to the same period in the prior year, primarily driven by Acclarent acquisition costs incurred in prior year.

Intangible Asset Amortization

Amortization expense (which does not include amounts reported in cost of product revenues for technology-based intangible assets) for the three months ended March 31, 2025 was $3.7 million compared to $10.1 million for the same period in the prior year.

The decrease is primarily due to the impairment of customer relationship intangible related to our Boston facility, which was recorded during the three months ended March 31, 2024.

Amortization expense (which does not include amounts reported in cost of product revenues for technology-based intangible assets) for the three months ended June 30, 2025 was $3.8 million compared to $3.7 million for the same period in the prior year.

Non-Operating Income and Expenses

The following is a summary of non-operating income and expense:

Three Months Ended March 31,

Three Months Ended June 30,

Dollars in thousands 2025 2024

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Interest expense (21,042) (18,651)

Other expense, net (144) (610)

Other income (expense), net (1,946) 1,437

Total non-operating income and expense $ (18,278) $ (12,156)

Interest Income

Interest income for the three months ended March 31, 2025 decreased by $0.6 million as compared to the same period in the prior year .

Interest income for the three months ended June 30, 2025 decreased by $0.3 million as compared to the same period in the prior year .

Interest Expense

Interest expense for the three months ended March 31, 2025 increased by $5.2 million as compared to the same period in the prior year primarily due to the expiration of interest rate swap derivative instruments with a notional value of $350.0 million during 2024 that are no longer hedging interest expense in 2025.

Interest expense for the three months ended June 30, 2025 increased by $2.4 million as compared to the same period in the prior year primarily due to higher borrowing rates, which includes the impacts of interest rate swaps that have expired and are no longer hedging interest expense in 2025.

Other Expense, net

Other expense, net for the three months ended March 31, 2025 decreased by $0.5 million compared to the same period in the prior year, primarily driven by foreign exchange impact.

Three Months Ended March 31,

Other expense, net for the three months ended June 30, 2025 increased by $3.4 million compared to the same period in the prior year, primarily driven by foreign exchange impact.

Three Months Ended June 30,

Dollars in thousands 2025 2024

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Effective tax rate 8.8 % 18.3 %

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 U.S.

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.

The Company’s effective income tax rates for the three months ended June 30, 2025 and 2024 were 8.8% and 18.3%, respectively.

For the three months ended June 30, 2025, the Company’s effective tax rate was primarily driven by the goodwill impairment charge, as a portion of the charge is non-deductible for tax, as well as the inclusion of Global Intangible Low Taxed Income (“GILTI”) and additional taxes to meet the global minimum tax in certain foreign jurisdictions;

offset by federal, state, and international tax benefits generated from operating losses in certain jurisdictions.

For the three months ended June 30, 2024, the higher tax rate is primarily driven by lower book income.

The effective tax rate may vary from period to period depending on, among other factors, the geographic and business mix of taxable earnings and losses, tax planning and settlements with various taxing authorities.

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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.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes a number of significant provisions, including the permanent extension of certain expiring provisions of the 2017 Tax Cuts and Jobs Act;

as well as changes to the capitalization of research and development expenses, accelerated depreciation, and limitations on interest expense deductions.

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

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The Company’s tax reserves are presented in the balance sheet within other liabilities, except for amounts relating to items that we expect to pay in the coming year, which would be classified as current income taxes payable.

Six Months Ended June 30, 2025 as Compared to Six Months Ended June 30, 2024

Revenues and Gross Margin

For the six months ended June 30, 2025, total revenues increased by $11.2 million to $798.3 million from $787.0 million for the same period in 2024.

This represents low single digit growth compared to the same period in the prior year, primarily driven by sales related to Acclarent, offset by impacts from quality and operational issues.

In the CSS segment, revenues were $584.6 million, an increase of $26.4 million, or 5% from the prior period.

Excluding the impact of foreign currency of $1.1 million, the increase is primarily due to the timing of the Acclarent acquisition completed in the second quarter in the prior year, offset by the impact of quality and operational issues.

In the TT segment, revenues were $213.6 million, a decrease of $15.2 million, or 7% from the prior-year period, primarily attributable to the impact of quality and operational issues and decreases in private label revenues.

This is partially offset by growth in Micromatrix, Cytal, and Integra Skin.

Gross margin was $403.8 million for the six months ended June 30, 2025, a decrease of $29.0 million from $432.8 million for the same period in 2024.

Gross margin as a percentage of total revenue decreased to 50.6% for the six months ended June 30, 2025 from 55.0% in the same period in 2024.

For the six months ended June 30, 2025, gross margins were impacted by quality and operational issues, which affected both revenue and expenses, as well as higher manufacturing costs.

For the six months ended June 30, 2024 gross margins were impacted by Boston impairment charges and Acclarent inventory step-up.

Operating Expenses

The following is a summary of operating expenses as a percent of total revenues:

Six Months Ended June 30,

Research and development 6.5 % 7.2 %

Selling, general and administrative 45.3 % 45.9 %

Intangible asset amortization 0.9 % 1.8 %

Goodwill Impairment 64.1 % — %

Total operating expenses 116.8 % 54.9 %

Total operating expenses, which consist of selling, general and administrative expenses, research and development expenses, and amortization expenses, increased by $500.1 million, or 115.8% to $931.9 million in the six months ended June 30, 2025, compared to $431.8 million in the same period in 2024, primarily driven by goodwill impairment booked in the current year.

Research and Development

Research and development expenses for the six months ended June 30, 2025 decreased by $5.0 million as compared to the same period, primarily attributable to lower spend on EU MDR and other research and development projects.

Selling, General and Administrative

Selling, general and administrative costs increased by $0.1 million as compared to the same period in the prior year.

Intangible Asset Amortization

Amortization expense (excluding amounts reported in cost of product revenues for technology-based intangible assets) for the six months ended June 30, 2025 was $7.5 million compared to $13.8 million for the same period in the prior year.

The decrease is driven by the impairment of customer relationship intangible related to our Boston facility of $7.1 million, which was recorded in the first quarter of 2024.

We expect total annual amortization expense to be approximately $53.7 million for the remainder of 2025, $107.2 million in 2026, $106.2 million in 2027, $102.6 million in 2028, $97.3 million in 2029, $91.3 million in 2030 and $445.8 million thereafter.

Non-Operating Income and Expenses

The following is a summary of non-operating income and expenses:

Six Months Ended June 30,

Dollars in thousands 2025 2024

Interest income $ 9,130 $ 10,098

Interest expense (39,857) (32,275)

Other (expense) and income, net (2,090) 827

Total non-operating expense $ (32,817) $ (21,350)

Interest Income

Interest income for the six months ended June 30, 2025 increased by $1.0 million as compared to the same period in the prior year due to increased investments.

Interest Expense

Interes t expense for the six months ended June 30, 2025 increased by $7.6 million as compared to the same period in the prior year primarily due to higher borrowing rates, which includes the impacts of interest rate swaps that have expired and are no longer hedging interest expense in 2025.

Other (Expense) and Income, net

Other (expense) and income, net for the six months ended June 30, 2025, decreased by $2.9 million as compared to the same period in the prior year, primarily driven by foreign exchange impact.

Six Months Ended June 30,

Dollars in thousands 2025 2024

Income before income taxes $ (560,988) $ (20,415)

Income tax (benefit) expense (51,622) (4,732)

Effective tax rate 9.2 % 23.2 %

The Company’s effective income tax rates for the six months ended June 30, 2025 and 2024 were 9.2% and 23.2%, respectively.

For the six months ended June 30, 2025, the Company’s effective tax rate was primarily driven by the goodwill impairment charge, as a portion of the charge is non-deductible for tax, as well as the inclusion of GILTI and additional taxes to meet the global minimum tax in certain foreign jurisdictions;

offset by federal, state, and international tax benefits generated from operating losses in certain foreign jurisdictions.

For the six months ended June 30, 2024, the higher tax rate is primarily driven by lower book income and a $1.7 million shortfall from stock-based compensation.

GEOGRAPHIC PRODUCT REVENUES AND OPERATIONS

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Total revenue by major geographic area consisted of the following:

Three Months Ended March 31,

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

Dollars in thousands 2025 2024 2025 2024

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Local economic conditions, regulatory compliance or political considerations, the effectiveness of our sales representatives and distributors, local competition and changes in local medical practice all may combine to affect our sales into markets outside the U.S.

Domestic revenues increased by $26.0 million for the three months ended March 31, 2025 compared to the same period in the prior year.

European sales decreased by $6.3 million for the three months ended March 31, 2025 compared to the same period in the prior year.

Sales to customers in Asia Pacific decreased by $4.4 million for the three months ended March 31, 2025 .

Sales to customers in the Rest of World for the three months ended March 31, 2025 decreased by $1.5 million compared to the same period in the prior year .

The increase in domestic revenues for the three months ended March 31, 2025 is primarily the result of the Acclarent acquisition, partially offset by a decline in sales of Integra Skin and our private label business.

The decrease in international revenues for the three months ended March 31, 2025 was the result of a decline in sales of Dural Access & Repair, Advanced Energy and Neuro Monitoring.

The decrease in domestic revenues for the three months ended June 30, 2025 was primarily the result of the impact of quality and operational issues.

The increase in international revenues for the three months ended June 30, 2025 was the result of strong performance in CSF Management.

The increase in domestic revenues for the six months ended June 30, 2025 was primarily related to Acclarent, offset by the impact of quality and operational issues.

The decrease in international revenues for the six months ended June 30, 2025 was also the result of the impact of quality and operational issues.

LIQUIDITY AND CAPITAL RESOURCES

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Working capital consists of total current assets less total current liabilities as presented in the consolidated balance sheets.

The Company’s working capital as of March 31, 2025 and December 31, 2024 was $188.8 million and $159.6 million, respectively.

The Company’s working capital as of June 30, 2025 and December 31, 2024 was $213.0 million and $159.6 million, respectively.

Cash and Marketable Securities

The Company had cash and cash equivalents totaling approximately $239.1 million and $246.4 million at March 31, 2025 and December 31, 2024, respectively, which are valued based on Level 1 measurements in the fair value hierarchy .

At March 31, 2025, our non-U.S.

The Company had cash and cash equivalents totaling approximately $217.9 million and $246.4 million at June 30, 2025 and December 31, 2024, respectively, which are valued based on Level 1 measurements in the fair value hierarchy .

At June 30, 2025, our non-U.S.

subsidiaries held approximately $180.0 million of cash and cash equivalents that are available for use outside the U.S.

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Short Term Investments

The Company had short term investments, primarily consisting of time deposits, which are valued based on Level 1 measurements in the fair value hierarchy, totaling approximately $34.2 million at March 31, 2025 compared to $27.2 million at December 31, 2024.

Three Months Ended March 31,

The Company had short term investments, primarily consisting of time deposits, which are valued based on Level 1 measurements in the fair value hierarchy, totaling approximately $35.7 million at June 30, 2025 compared to $27.2 million at December 31, 2024.

Six Months Ended June 30,

Dollars in thousands 2025 2024

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Net cash used in investing activities (57,568) (376,163)

Net cash used in financing activities 35,377 358,676

Net cash provided by financing activities 14,238 264,928

Effect of exchange rate fluctuations on cash 17,207 (6,088)

Cash Flows Provided by or Used in Operating Activities

Operating cash flows for the three months ended March 31, 2025 decreased by $27.0 million compared to the same period in 2024.

Within operating cash flows, net income less non-cash adjustments decreased for the three months ended March 31, 2025 by approximately $25.7 million as compared to the same period in 2024 due to the impact of quality and operational issues on revenue and associated costs.

The changes in assets and liabilities for the three months ended March 31, 2025, net of business acquisitions, decreased cash flows by $24.7 million, mainly attributable to decreases in accrued expenses and other current liabilities due to payment of employee bonuses.

The changes in assets and liabilities for the three months ended March 31, 2024, net of business acquisitions, decreased cash flows by $23.4 million, mainly attributable to increases in inventory, and decreases in other current liabilities and accounts receivable.

Operating cash flows for the six months ended June 30, 2025 decreased by $58.5 million compared to the same period in 2024.

Within operating cash flows, net income less non-cash adjustments decreased for the six months ended June 30, 2025 by approximately $38.2 million as compared to the same period in 2024 due to the impact of quality and operational issues on revenue and associated costs.

The changes in assets and liabilities for the six months ended June 30, 2025, net of business acquisitions, decreased cash flows by $42.7 million, mainly attributable to increases in inventory and prepaid expenses and other current assets.

The changes in assets and liabilities for the six months ended June 30, 2024, net of business acquisitions, decreased cash flows by $22.4 million, mainly attributable to increases in prepaid and other current assets and inventory, and decreases in other non current liabilities.

Cash Flows Used in Investing Activities

Uses of cash from investing activities for the three months ended March 31, 2025 were $28.9 million paid for capital expenditures to support improvement initiatives at a number of our manufacturing facilities, and other technology investments, as well as $7.0 million related to short term investments.

There were no sources of cash from investing activities for the three months ended March 31, 2025.

Uses of cash from investing activities during the three months ended March 31, 2024 related to $38.5 million related to short term investments, and $15.5 million paid for capital expenditures to support operations improvement initiatives at a number of our manufacturing facilities and other information technology investments.

There were no sources of cash from investing activities during the three months ended March 31, 2024.

Cash Flows Provided by or Used in Financing Activities

Uses of cash from financing activities in the three months ended March 31, 2025 related to the repayments of $15.2 million under our Senior Credit Facility and Securitization Facility, as well as $2.6 million related to payment of contingent consideration in connection with our acquisition of Arkis.

In addition, the Company had $2.1 million in cash taxes paid for net equity settlements.

Sources of cash from financing activities for the three months ended March 31, 2025 were $54.4 million of proceeds from borrowings of long term indebtedness and $1.0 million related to the proceeds from the exercise of stock options.

Uses of cash from financing activities in the three months ended March 31, 2024 related to the repayments of $15.1 million under our Senior Credit Facility and Securitization Facility.

Uses of cash from investing activities for the six months ended June 30, 2025 were $49.1 million paid for capital expenditures to support improvement initiatives at a number of our manufacturing facilities, and other technology investments, as well as $8.5 million related to short term investments.

There were no sources of cash from investing activities for the six months ended June 30, 2025.

Uses of cash from investing activities during the six months ended June 30, 2024 were $282.0 million related to the Acclarent acquisition, $49.0 million related to short term investments, and $45.2 million paid for capital expenditures to support operations improvement initiatives at a number of our manufacturing facilities and other information technology investments.

There were no sources of cash from investing activities during the six months ended June 30, 2024.

Cash Flows Provided by Financing Activities

Uses of cash from financing activities in the six months ended June 30, 2025 related to the repayments of $31.1 million under our Senior Credit Facility and Securitization Facility, as well as $16.5 million related to payments of Arkis and SIA contingent consideration.

In addition, the Company paid $3.9 million in debt issuance costs and $2.4 million in cash taxes for net equity settlements.

Sources of cash from financing activities for the six months ended June 30, 2025 were $67.3 million of proceeds from borrowings of long term indebtedness and $1.0 million related to the proceeds from the exercise of stock options.

Uses of cash from financing activities in the six months ended June 30, 2024 related to the repayments of $105.6 million under our Senior Credit Facility and Securitization Facility, $50.0 million related to the repurchase of treasury stock of under the share repurchase agreements, and $11.9 million related to payment of SIA contingent consideration.

In addition, the Company had $3.2 million in cash taxes paid for net equity settlements.

Sources of cash from financing activities for the three months ended March 31, 2024 were $370.5 million of proceeds from borrowings of long-term indebtedness and $6.4 million related to the proceeds from the exercise of stock options.

Sources of cash from financing activities for the six months ended June 30, 2024 were $429.3 million of proceeds from borrowings of long-term indebtedness and $6.4 million related to the proceeds from the exercise of stock options.

Tariffs and Macroeconomic Environment

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Tariffs could result in an increase in certain product costs or have adverse impacts on, among other things, demand for our products and supply chains.

Any tariff costs will be reported within our cost of goods sold and will be capitalized in inventory and recognized as those products are sold.

Particularly, the U.S.

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In China, which accounts for approximately 5 percent of our total revenue, roughly half of the products we sell are manufactured in the United States.

Any tariffs paid have been capitalized in inventory and will be recognized in our cost of goods sold as those products are sold.

During the six months ended June 30, 2025, the Company paid approximately $5.4 million of tariffs on imported goods.

Of this amount, $1.1 million was recognized in cost of goods sold in the consolidated statements of operations.

The overall macroeconomic and geopolitical environment, including tariffs or changes in trade policies, slower economic growth or recession, market volatility and inflation, and uncertainty regarding all of the foregoing, pose risks that could impact our business, results of operations, financial condition and cash flows.

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For additional information on the risks that tariffs pose to the Company, please see Part II, Item 1A.

“Risk Factors” of this Quarterly Report and Part I, Item 1A.

“Risk Factors” of this Quarterly Report on Form 10-Q and of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 and Part I, Item 1A.

“Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Credit Agreement, Convertible Senior Notes, Securitization and Related Hedging Activities

Debt , to the Notes to Unaudited Condensed Consolidated Financial Statements (Part I, Item 1 of this Quarterly Report) for a discussion of our Credit Agreement, the 2025 Notes and Securitization Facility and Note 7.

Debt , to the Notes to Unaudited Condensed Consolidated Financial Statements (Part I, Item 1 of this Quarterly Report) for a discussion of our Senior Credit Facility, 2025 Notes, and Securitization Facility and Note 7.

Derivative Instruments , to the Notes to Unaudited Condensed Consolidated Financial Statements (Part I, Item 1 of this Quarterly Report) for discussion of our hedging activities.

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.

Our Consolidated Total Leverage Ratio was 4.30, with the covenant requirement at 5.00 at the end of March 31, 2025.

The Senior Credit Facility is subject to various financial and negative covenants and, at June 30, 2025, the Company was in compliance with all such covenants.

Our Consolidated Total Leverage Ratio was 4.53, with the covenant requirement at 5.00 at the end of June 30, 2025.

As outlined in the table in Note 6.

Debt, the covenant requirement will drop from 5.00 to 4.25 for the fiscal quarter ended December 31, 2025.

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.

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.

Based on the Company’s current financial projections and assuming the successful implementation of management’s plans to mitigate the risks and uncertainties regarding the impact of tariffs on the Company’s future results of operations described in Note 1.

Basis of Presentation , management believes the Company will maintain compliance with its financial covenants and the Company’s existing cash, projected operating cash flows, and available borrowing capacity under its revolving credit facility component of the Senior Credit Facility (as defined in Note 6.

Debt ) are adequate to meet its operating needs, liabilities and commitments over the next twelve months from the issuance of the accompanying interim unaudited condensed consolidated financial statements.

Debt, the covenant requirement will drop from 5.00 to 4.75 for the fiscal quarter ended September 30, 2026.

The 2025 Notes are scheduled to mature on August 15, 2025.

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Capital Resources

We believe that our cash, cash equivalents, short term investments and available borrowings under the Senior Credit Facility are sufficient to finance our operations, capital expenditures and potential repayment of the 2025 Notes for the next twelve months and foreseeable future.

We believe that our cash, cash equivalents, short term investments and available borrowings under the Senior Credit Facility are sufficient to finance our operations, capital expenditures and repayment of the 2025 Notes for the next twelve months and foreseeable future.

Our future capital requirements will depend on many factors, including the growth of our business, the timing and introduction of new products and investments, strategic plans and acquisitions, and the potential impact of tariffs on our cost of goods sold and consumer demand for our products, among others.

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements during the three months ended March 31, 2025 that have or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our interests.

We do not have any off-balance sheet financing arrangements during the six months ended June 30, 2025 that have or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our interests.

Contractual Obligations and Commitments

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The preparation of these financial statements requires us 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.

The critical accounting estimates discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 did not materially change in the three months ended March 31, 2025.

The critical accounting estimates discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 did not materially change in the six months ended June 30, 2025.

Recently Issued Accounting Standards

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis