What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-10-23 compared with 2026-07-29 · 135 added, 136 removed, 331 unchanged (45% of the section changed)

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All statements other than statements of historical fact contained in this Quarterly Report, including, but not limited to, statements regarding our future business, operational and financial performance and the Company’s expectations and plans with respect to market opportunity, business and operational performance, strategic initiatives, capabilities, resources , manufacturing capabilities, product development, product availability and regulatory approvals, including our plans, production capability, and anticipated operational timelines for the Company’s manufacturing facility in Braintree, Massachusetts (“the Braintree facility”), our expectations regarding the Compliance Master Plan (“the CMP”) implementation, engagement and efficacy, 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, tariff refunds, anticipated impact of the flooding event at our Cincinnati, Ohio manufacturing facility, financial condition and results of operations, our expected returns to shareholders, and our sales efforts, are forward-looking statements.

or other countries on our business, tariff refunds, the impact of the flooding event at our Cincinnati, Ohio manufacturing facility and our efforts to restore operations, 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.

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potential difficulties, delays and disruptions in manufacturing, distribution or sale of products;

the Company's ongoing assessment of the flooding event at its Cincinnati, Ohio manufacturing facility, related financial impacts, recovery efforts, potential asset impairments, unforeseen costs and insurance recoveries;

difficulties or delays, including unexpected costs and the availability of insurance coverage and recoveries, related to the Company’s Cincinnati facility recovery efforts;

the failure of the Company’s suppliers, vendors, and other third parties to meet contractual, regulatory and other obligations;

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trends toward health care cost containment;

difficulties in controlling expenses, including costs to procure and manufacture the Company’s products;

the ability of the Company to successfully manage leadership and organizational changes

and the impact of changes in management or staff levels;

difficulties in controlling expenses, including costs to procure and manufacture the Company’s

the ability of the Company to successfully manage leadership and organizational changes and the impact of changes in management or staff levels;

the impact of goodwill and intangible asset impairment charges if future operating results of acquired businesses are significantly less than the results anticipated at the time of the acquisitions;

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

Our Tissue Reconstruction segment generates about 30% of our overall revenue and focuses on wound reconstruction and private label.

Our Tissue Reconstruction segment generates about 30% of our overall revenue and focuses on soft tissue reinforcement, wound reconstruction and corporate partnerships.

We have key manufacturing and research facilities located in California, Maryland, Massachusetts, New Jersey, Ohio, Puerto Rico, Tennessee, Utah, France, Germany, Ireland, Israel and Switzerland.

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OUR PRODUCTS, SERVICES AND TECHNOLOGIES

We were the first company to receive an FDA claim for regeneration of dermal tissue and are a world leader in regenerative technology.

We were the first company to receive FDA approval for regeneration of dermal tissue and are a world leader in regenerative technology.

We have developed numerous product lines from this technology for applications ranging from burn and deep tissue wounds to the repair of dura mater in the brain, as well as nerves and tendons.

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Our product portfolio represents a continuum of care from pre-operative, to the neurosurgery operating room, to the neuro-critical care unit and post-care for both adult and pediatric patients suffering from brain tumors, brain injury, cerebrospinal fluid pressure complications and other neurological conditions.

This portfolio features leading brands such as Codman®, Duraseal®, CUSA®, Mayfield® and Duragen®.

This portfolio features leading brands such as Codman®, DuraSeal®, CUSA®, Mayfield®, Aurora® and DuraGen®.

We offer leading technologies in dural repair, ultrasonic tissue ablation, intracranial pressure (“ICP”) monitoring, hydrocephalus management, and cranial stabilization systems, while providing a rich research and development pipeline for growth.

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Our specialty instrumentation portfolio includes a catalog of surgical headlamps, surgical instruments, as well as after-market service.

With thousands of surgical instrument products, comprised of a comprehensive portfolio of reusable and disposable instruments, including forceps, retractors, scissors, and curettes, tailored for neurosurgery and spine surgery including specialty surgical instruments, we call on the central sterile processing unit of hospitals and acute care surgical centers.

With a comprehensive portfolio of thousands of surgical instrument products tailored for neurosurgery and spine surgery, including reusable and disposable instruments such as forceps, retractors, scissors, and curettes, we call on the central sterile processing unit of hospitals and acute care surgical centers.

Additionally, through a strong U.S.

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TISSUE RECONSTRUCTION

Our Tissue Reconstruction segment develops and markets a broad portfolio of tissue products and technologies primarily focused on wound reconstruction and care and private label.

Our Tissue Reconstruction segment develops and markets a broad portfolio of tissue products and technologies primarily focused on soft tissue reinforcement, wound reconstruction and care and corporate partnerships.

This segment serves a diverse range of specialties, including plastic and reconstructive surgery, general surgery, and wound management.

Wound Reconstruction Solutions:

We currently utilize five unique technology platforms consisting of highly engineered bovine collagen (derived from bovine sources for structural support), bovine dermis (acellular dermal tissue for natural integration), porcine urinary bladder (extracellular matrix for cellular repopulation), human amniotic tissue (allografts as a wound cover), and resorbable synthetic mesh (biodegradable materials for temporary reinforcement).

These technologies address clinical needs in treating acute wounds such as burns, chronic wounds including diabetic foot ulcers, and surgical tissue repair applications such as hernia reinforcement, tendon protection, and peripheral nerve repair.

We currently utilize three unique technology platforms consisting of highly engineered bovine collagen (derived from bovine sources for structural support), porcine urinary bladder (extracellular matrix for cellular repopulation), and human amniotic tissue (allografts as a wound cover).

These technologies address clinical needs in acute wounds such as burns, chronic wounds including diabetic foot ulcers, tendon protection, and peripheral nerve repair.

The goal is to support the body’s wound healing process by providing scaffolds that create a wound environment that facilitates cellular invasion and revascularization.

These products are often used in hospital settings, wound care clinics, or outpatient procedures.

We offer a continuum of advanced solutions for plastic and reconstructive surgery, complex hernias, and general surgery, including devices for implantation to reinforce soft tissue where weakness exists and for surgical repair of damaged or ruptured soft tissue membranes.

Soft Tissue Solutions:

We utilize bovine dermis (acellular dermal tissue for natural integration) and resorbable synthetic mesh (biodegradable materials for temporary reinforcement) across our soft tissue solutions portfolio.

These technologies include devices for implantation to reinforce soft tissue where weakness exists and for surgical repair of damaged or ruptured soft tissue membranes and offer a continuum of advanced solutions in plastic and reconstructive surgery and general surgery, including hernia repair.

These products provide structural support and promote tissue integration to address areas of tissue weakness.

They are bioresorbable or acellular to minimize long-term foreign body reactions and reduce complications like adhesions or infections.

Private Label :

Corporate Partnerships :

We offer extensive expertise in collagen biomaterials for other medical technology companies that sell to end markets primarily in spine, surgical and wound care.

In the third quarter of 2026, we renamed our Private Label business to Corporate Partnerships.

We manufacture a broad set of our tissue and wound care technologies that are available for private label distribution by our customers, produce raw materials that can be integrated into our customers’ production processes, and have the expertise to design, develop and manufacture products to meet the specific needs of our customers.

RESEARCH AND DEVELOPMENT STRATEGY

An important part of Integra’s growth strategy is introducing new products to strengthen and expand our portfolio through clinical evidence to support regulatory approval and strong reimbursement of our product portfolio around the world, including new indications for existing technologies.

Our research and development activities focus on identifying unmet surgical needs and addressing those needs with innovative solutions and products.

An important part of Integra’s growth strategy is introducing new products to strengthen and expand our portfolio with clinical evidence to support regulatory approval and strong reimbursement of our product portfolio around the world, including new indications for existing technologies.

Our research and development activities focus on identifying unmet needs and addressing those needs with innovative solutions and products.

Investment in research and development is critical to driving our future growth.

Our research and development efforts are focused on the further development and improvement of our existing products, the design and development of new innovative medical technologies, and regulatory compliance across all our business segments.

We apply our core competency in tissue reconstruction to innovate products for neurosurgical, wound applications, plastic surgery, and reconstructive surgery and we have extensive R&D development programs for our core platforms of electromechanical technologies.

Additionally, we conduct projects and clinical studies to generate effectiveness and health economic evidence.

We apply our core competency in tissue reconstruction to innovate products for neurosurgical, wound applications, tissue reinforcement, plastic surgery, and reconstructive surgery and we have extensive R&D development programs for our core platforms of electromechanical technologies.

Additionally, we conduct clinical studies to generate effectiveness and health economic evidence.

The Company has continued its investments in clinical education as a key value driver to leverage its global footprint, enhanced digital content, and strengthened its clinical network.

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The growth in this business in recent years has been fueled by geographic expansion and new product registrations in markets, such as China, Japan, and Europe, which we expect to continue in the near-to-long term.

We have several active programs focused on life cycle management and innovation for capital and disposable products in our portfolio.

Our product development efforts are focused on core clinical applications in cerebrospinal fluid (“CSF”) 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 (“MIS”) and the surgical management of intracerebral hemorrhage (“ICH”).

We continue to advance the CerebroFlo® external ventricular drainage (“EVD”), a catheter with Endexo® technology.

The Endexo polymer in polyurethane is a permanent additive which has shown to be effective in reducing platelet adhesion in-vitro, reducing thrombus accumulation in-vitro and in vivo, and reducing the clinical incidence of thrombus formation.

In vitro evaluations and in vivo animal evaluations do not necessarily predict the clinical performance of the SureFlo EVD Catheter with respect to thrombus formation.

The incidence of thrombus formation on polyurethane containing Endexo polymer in other medical devices and/or tissues systems does not necessarily predict the clinical performance of the SureFlo EVD Catheter for

the intended use of CSF external drainage and monitoring.

The CerebroFlo EVD catheter has demonstrated an average of 99% less thrombus accumulation onto its surface, in vitro, compared to a market leading EVD catheter.

Our work to combine our Bactiseal antimicrobial technology with the Endexo anti-occlusive technology continues to progress for both a silicone-based hydrocephalus and EVD product.

We also continue to advance the Aurora® Surgiscope, which is the only tubular retractor system designed for cranial surgery with an integrated access channel, camera and lighting.

The 15mm x 60mm and 15mm x 80mm Aurora Surgiscope System version received 510(k) clearance from the FDA in 2025.

In July 2025, we announced the inaugural enrollment of the first patient in the AERA Pediatric Registry, a prospective, multi-center observational registry evaluating the real-world use of the AERA Eustachian Tube Balloon Dilation System in children.

This marks the focused effort to measure the ongoing 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.

In September 2025, the Mayfield® Ghost Base Unit Post launched in the U.S., which is designed to help provide clear visualization of anatomical structure and to support surgical accuracy and patient positioning.

Throughout the first half of 2026, we introduced the Mayfield Ghost Base Unit Post to markets in Europe, Asia, Australia, and New Zealand.

In November 2025, we received 510(k) clearance for the use of the CUSA Clarity system for cardiac surgeries, used for the debridement of unwanted tissue in cardiac surgeries, including valve replacement and repair.

We have several active programs focused on innovation for capital and disposable products in our portfolio.

Our new product development efforts are focused on core clinical applications in cerebrospinal fluid (“CSF”) 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 (“MIS”) and the surgical management of intracerebral hemorrhage (“ICH”).

We continue to advance development of next-generation hydrocephalus and external ventricular drainage (“EVD”) products that combine anti-occlusive and antimicrobial technologies in a single platform.

By addressing two of the most significant causes of device complications, occlusion and infection, these innovations have the potential to improve reliability and continuity of care for patients requiring cerebrospinal fluid management.

We believe this combination represents the first integrated anti-occlusive and antimicrobial platform of its kind in hydrocephalus and EVD management.

In July 2025, we announced the enrollment of the first patient in the AERA Pediatric Registry, a prospective, multi-center observational registry evaluating the real-world use of the AERA Eustachian Tube Balloon Dilation System in children with

obstructive Eustachian tube dysfunction.

The registry is designed to capture safety and effectiveness outcomes for up to 300 pediatric patients and represents an important investment in clinical evidence generation to support the broader adoption of innovative ENT therapies.

By expanding the body of evidence for pediatric patients, we aim to help improve treatment options for a population with significant unmet clinical needs while further strengthening our leadership position in Eustachian tube dilation.

In September 2025, we launched the Mayfield® Ghost Base Unit Post in the U.S.

and expanded its availability to Europe, Asia, Australia and New Zealand during the first half of 2026.

The system is designed to enhance visualization, support surgical accuracy and optimize patient positioning.

In November 2025, we received FDA 510(k) clearance for the use of the CUSA Clarity® system in cardiac surgery, including valve repair and replacement procedures, expanding the clinical applications of the platform into a new surgical specialty.

Tissue Products and Technologies .

Our tissue 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.

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

Our tissue technology development program applies our expertise in bioengineering to a range of biomaterials including natural materials such as purified collagen, processed 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, plastic and reconstructive, and general surgery applications, as well as for wound management and dermal regeneration.

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

Our collagen manufacturing capability, combined with our history of innovation, provides us with strong platform technologies for multiple indications.

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

We expect PMA approval for SurgiMend in 2027.

We are also pursuing a PMA for DuraSorb for use in implant-based breast reconstruction.

We completed enrollment for the DuraSorb U.S.

investigational device exemption clinical study for two-stage breast reconstruction in June 2023, completed treatment in 2024, completed patient 1-year follow up in 2025, and we continue to advance the PMA application.

We expect PMA approval for DuraSorb later in 2027.

We continue to advance PMA applications towards approvals for SurgiMend® and DuraSorb® in two stage implant-based breast reconstruction, representing important opportunities to expand our reconstructive surgery portfolio.

We are targeting potential FDA approval for SurgiMend in 2027.

For DuraSorb, we have completed enrollment, treatment and one-year patient follow-up in our U.S.

breast reconstruction study and continue to progress the PMA application, with potential approval anticipated later in 2027.

In 2024, we acquired the product rights for Durepair® Dural Regeneration Matrix, a suturable dural graft which complements our portfolio of dural grafts and sealants, and subsequently launched the product for commercial sale in the U.S.

in October 2025.

EUROPEAN UNION MEDICAL DEVICE (“EU MDR”) REGULATION UPDATES

EUROPEAN UNION MEDICAL DEVICE REGULATION (“EU MDR”) UPDATES

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

In recent years, we received EU MDR certification in our Specialty Surgery segment for Hakim Programmable Valves, Certas Plus with and without Bactiseal catheters, Surgical Patties and Strips, DuraSeal Dural and Xact, CUSA Clarity, DuraGen Suturable, Cranial Drills and Perforators, as well as IDRT, BioPatch, MicroMatrix, and Cytal in our Tissue Reconstruction segment.

In recent years, we received EU MDR certification in our Specialty Surgery segment for Hakim Programmer and VPV System, Certas Plus valves (with and without Bactiseal catheters), CHPV & Accessories, Surgical Patties and Strips, DuraSeal Dural, DuraSeal Xact Sealant System, DuraSeal Extended Tip Applicator, CUSA Clarity (Tubing Sets, Tips, CEM Nosecones, Console, Handpieces), Codman Bactiseal EVP Catheters, Codman Shunts with Bactiseal, DuraGen Dural/Suturable Graft Matrix, DuraGen Plus Graft Matrix, Cranial Drills and Perforators, as well as IDRT, BioPatch, MicroMatrix, and Cytal in our Tissue Reconstruction segment.

We do not currently anticipate any significant disruption to our commercial activities in Europe related to EU MDR.

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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 manufactured extracellular bovine matrix products in our Tissue Reconstruction segment that were sold both in wound reconstruction and care and surgical reconstruction franchises, and in private label channels.

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

The 2019 Warning Letter resulted from an inspection held at the Boston 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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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 planned to restart the manufacture of PriMatrix and SurgiMend at its Boston facility.

The restart of the manufacturing of SurgiMend 510k product will occur at the Company’s new tissue manufacturing facility in Braintree, Massachusetts (the “Braintree transition”).

The restart of the manufacturing of SurgiMend 510k product has commenced at the Company’s new tissue manufacturing facility in Braintree, Massachusetts (the “Braintree transition”).

In addition, the Company entered into a new third-party agreement, which facilitated the relaunch of PriMatrix, as well as Durepair Dural Regeneration Matrix in 2025, ahead of previously disclosed timelines.

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In the fourth quarter of 2025, we approved a restructuring initiative to improve the Company’s operational performance by strengthening the stability and resilience of our supply chain, strengthening global commercial capabilities and advancing our prioritization and execution discipline.

We expect to incur aggregate restructuring costs associated with this initiative of approximately $12.3 million related to severance and other employee costs.

We have incurred aggregate restructuring costs associated with this initiative of approximately $12.3 million related to severance and other employee costs.

The costs will be incurred as specific actions required as part of the initiative are identified and approved and are expected to continue through the end of 2026.

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During 2025, we incurred $8.5 million of restructuring costs related to this initiative.

In the six months ended June 30, 2026, we incurred an additional $3.8 million in restructuring related expenses, consistent with the previously announced plans.

In addition, we incurred costs related to executive restructuring activities during the six months ended June 30, 2026, which were separate from the previously announced plans.

In the nine months ended September 30, 2026, we incurred an additional $3.8 million in restructuring related expenses, consistent with the previously announced plans.

In addition, we incurred costs related to executive restructuring activities during the nine months ended September 30, 2026, which were separate from the previously announced plans.

CINCINNATI FACILITY FLOOD DAMAGE

On July 17, 2026, our manufacturing facility in Cincinnati, Ohio sustained flood damage as a result of severe weather conditions.

The flooding caused damage to portions of the facility, equipment, inventory and other assets and resulted in operational disruptions at the site.

We responded immediately to the event and implemented our business continuity plans to support ongoing customer service and operational continuity.

We are continuing to assess the full extent of the damage and finalize remediation and recovery plans.

Based on our current assessment, including available inventory at our distribution centers and our insurance coverage, we do not currently expect the event to have a material adverse effect on our operations or financial condition.

However, our evaluation of the full financial impact of the event remains ongoing, including the ultimate costs of remediation and restoration, the amount of any potential asset impairments, and the timing and extent of insurance recoveries.

We maintain insurance coverage for property damage and business interruption losses and are actively working with our insurance carriers to assess available coverage and potential recoveries.

While we believe the event may result in insurance recoveries, the amount and timing of any such recoveries cannot be assured.

For additional information regarding the flood damage to the Cincinnati facility, see Note 17.

Subsequent Events .

On July 17, 2026, widespread flash flooding affected the Cincinnati, Ohio area, which caused damage to our Cincinnati facility, equipment, inventory, and other assets and has resulted in operational disruption to the site.

The facility manufactures and supports several products within our Specialty Surgery portfolio.

The operational disruption of the Cincinnati site, partially mitigated by our efforts to fulfill some customers’ orders with inventory on-hand and leverage alternate capabilities across our supply chain, reduced revenues by approximately $7 million for the three months ended September 30, 2026.

During the three months ended September 30, 2026, we incurred costs associated with the restoration of the facility of approximately $22.2 million, primarily due to the write off of unsalvageable inventory and fixed assets as well as the cost of external service providers used for our clean-up efforts.

We maintain insurance coverage for damage to our facilities and inventory, as well as business interruption insurance to mitigate the adverse impact of lost revenues and remediation costs arising from the disruption of its operations.

We are in the process of reviewing these coverages with our insurance carrier.

The recoveries under our property damage and business interruption claims are anticipated to mitigate a substantial portion of the financial impact associated with this event and subsequent disruption of the facility’s operations until it returns to full manufacturing capacity, which is expected to occur during the second quarter of 2027.

During the three months ended September 30, 2026, we received an initial payment from our insurance carrier of $10.0 million, net of our deductible, and recognized a receivable of $11.4 million for claims on costs incurred to date that have been approved by our insurance carrier.

Any reimbursement of costs incurred has been recorded as a reduction of those expenses.

These amounts also include a contingent gain of $4.9 million recorded to other income reflecting the fair value of fixed assets damaged in the flooding over their net book values.

We have not recognized any recoveries for lost revenues, which would be presented as other income, and are actively engaged with our insurance carrier to determine amounts recoverable.

RESULTS OF OPERATIONS

Executive Summary

For the three and six months ended June 30, 2026, net income (loss) was $4.5 million and $(0.1) million, or $0.06 and $(0.00) per diluted share, as compared to net losses of $(484.1) million and $(509.4) million, or $(6.31) and $(6.65) per diluted share, for the three and six months ended June 30, 2025.

The improvement in net income (loss) for the three and six months ended June 30, 2026 was primarily attributable to the goodwill impairment charge recognized in the prior year.

For the three and nine months ended September 30, 2026, net income was $14.9 million and $14.7 million, or $0.19 and $0.19 per diluted share, as compared to net losses of $(5.4) million and $(514.8) million, or $(0.07) and $(6.72) per diluted share, for the three and nine months ended September 30, 2025.

The improvement in net income for the three and nine months ended September 30, 2026 was primarily attributable to the goodwill impairment charge recognized in the prior year, as well as other operational challenges that adversely affected results in the prior-year periods.

Special Charges

Income before taxes includes the following special charges :

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

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

Dollars in thousands 2026 2025 2026 2025

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Structural optimization charges 5,742 11,052 22,559 27,659

Cincinnati Flood (2)

Braintree transition (3)

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Total $ 14,826 $ 28,975 $ 63,792 $ 106,834

(1) This includes adjustments for contingent consideration liabilities.

(1) This includes adjustments for contingent consideration liabilities and the settlement of litigation with the former security holders of Acell.

Refer to Note 15.

Commitments and Contingencies for additional information.

(2) This primarily includes inventory and fixed asset write-offs, clean up and remediation costs incurred, and the offset of insurance recoveries for costs incurred.

Insurance recoveries related to business interruption losses for revenue are not included in Special Charges.

(3) 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 June 30, Six Months Ended June 30,

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

Dollars in thousands 2026 2025 2026 2025

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

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

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

Dollars in thousands 2026 2025 2026 2025

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Gross margin as a percentage of total revenues 51.0 % 51.5 % 52.9 % 50.9 %

Three Months Ended June 30, 2026 as Compared to Three Months Ended June 30, 2025

Three Months Ended September 30, 2026 as Compared to Three Months Ended September 30, 2025

Revenues and Gross Margin

For the three months ended June 30, 2026, total revenues increased by $3.2 million to $418.8 million from $415.6 million for the same period in 2025, representing low-single digit growth compared to the same period in the prior year.

For the three months ended September 30, 2026, total revenues increased by $9.1 million to $411.2 million from $402.1 million for the same period in 2025, representing low-single digit growth compared to the same period in the prior year.

In the Specialty Surgery segment, revenues were $304.1 million, which represents an increase of $11.5 million, or 4% as compared to the prior-year period.

Excluding the impact of foreign currency of $0.8 million, the increase in revenue is primarily driven by Neurosurgery and Surgical Instruments, offset by decreases in our ENT Solutions business.

Growth across the Neurosurgery business was partially offset by the impact of the flooding event at our Cincinnati manufacturing facility, which reduced revenues by approximately $7 million.

In the Tissue Reconstruction segment, revenues were $107.1 million which represents a decrease of $2.4 million, or 2% as compared to the prior-year period.

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The decrease in Integra Skin sales was primarily due to the clearance of backorders in the prior-year period.

Gross margin was $219.7 million for the three months ended June 30, 2026, an increase of $10.4 million from $209.3 million for the same period in 2025.

Gross margin as a percentage of revenues was 52.5% for the three months ended June 30, 2026 and 50.4% for the same period in 2025.

The increase in gross margin is primarily attributable to a reduction in costs associated with the Braintree remediation, lower costs related to quality and operational issues, and improved manufacturing performance compared to the same period in the prior year.

Gross margin was $209.9 million for the three months ended September 30, 2026, an increase of $2.9 million from $207.0 million for the same period in 2025.

Gross margin as a percentage of revenues was 51.0% for the three months ended September 30, 2026 and 51.5% for the same period in 2025.

Operating Ex penses

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

Three Months Ended June 30,

Three Months Ended September 30,

Research and development 5.3 % 5.6 %

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Intangible asset amortization 0.9 % 0.9 %

Goodwill Impairment — % 123.0 %

Total operating expenses 46.4 % 48.5 %

Total operating expenses, which consist of research and development, selling, general and administrative, and amortization expenses, decreased by $521.5 million, or 72.2%, to $200.5 million in the three months ended June 30, 2026, compared to $722.0 million in the same period in 2025, mainly driven by the goodwill impairment charge in the second quarter of the prior year.

Total operating expenses, which consist of research and development, selling, general and administrative, and amortization expenses, decreased by $4.3 million, or 2.2%, to $191.0 million in the three months ended September 30, 2026, compared to $195.2 million in the same period in 2025.

Research and Development

Research and development expenses for the three months ended June 30, 2026 decreased by $2.7 million as compared to the same period in the prior year, primarily attributable to reduced spending in EU MDR.

Research and development expenses for the three months ended September 30, 2026 decreased by $0.6 million as compared to the same period in the prior year, primarily attributable to reduced spending in EU MDR.

Selling, General and Administrative

Selling, general and administrative costs for the three months ended June 30, 2026 decreased by $7.5 million as compared to the same period in the prior year, primarily due a reduction in Acclarent integration costs and reduced spending in EU MDR.

Selling, general and administrative costs for the three months ended September 30, 2026 decreased by $3.7 million as compared to the same period in the prior year, primarily due to reduced spending on EU MDR and cost saving initiatives across the organization in the current 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 June 30, 2026 was $3.8 million, consistent with the same period in the prior year.

Amortization expense (which does not include amounts reported in cost of product revenues for technology-based intangible assets) for the three months ended September 30, 2026 was $3.8 million, consistent with 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 June 30,

Three Months Ended September 30,

Dollars in thousands 2026 2025

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Interest Income

Interest income for the three months ended June 30, 2026 decreased by $0.4 million as compared to the same period in the prior year.

Interest income for the three months ended September 30, 2026 was $5.0 million, consistent with the same period in the prior year.

Interest Expense

Interest expense for the three months ended June 30, 2026 increased by $2.0 million as compared to the same period in the prior year primarily due to higher interest rates on the borrowings under the revolving credit facility component of the Senior Credit Facility as compared to the interest rates on the 2025 Notes, which was repaid in August 2025.

Interest expense for the three months ended September 30, 2026 increased by $0.2 million as compared to the same period in the prior year.

Other Income (Expense), net

Other income (expense), net for the three months ended June 30, 2026 changed by $6.1 million as compared to the same period in the prior year, primarily driven by higher income on our cross currency swap contracts.

Other income (expense), net for the three months ended September 30, 2026 changed by $15.6 million as compared to the same period in the prior year, primarily due to higher income on our cross-currency swap contracts, a gain contingency related to insurance recoveries associated with the flooding event at our Cincinnati manufacturing facility, and a gain recognized in connection with the Fortis litigation matter.

For additional information regarding our cross-currency swap arrangements, see Note 6.

Derivative Instruments .

Three Months Ended June 30,

Three Months Ended September 30,

Dollars in thousands 2026 2025

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Effective tax rate 5.2 % 20.8 %

The Company’s effective income tax rates for the three months ended June 30, 2026 and 2025 were 5.5% and 8.8%, respectively.

The 2026 effective tax rate was primarily impacted by tax benefits associated with returns filed in certain foreign jurisdictions, as well as the jurisdictional mix of income, including its impact on the Company’s net Controlled Foreign Corporation tested income (“NCTI”) inclusion, formerly referred to as Global Intangible Low Taxed Income (“GILTI”).

The 2025 effective tax rate was primarily impacted by a partially non-deductible goodwill impairment charge, NCTI, and additional taxes related to global minimum tax requirements in certain foreign jurisdictions, partially offset by tax benefits from operating losses in certain jurisdictions.

The Company’s effective income tax rates for the three months ended September 30, 2026 and 2025 were 5.2% and 20.8%, respectively.

The 2026 effective tax rate was primarily driven by the jurisdictional mix of income, partially offset by tax expense associated with returns filed in certain jurisdictions.

The effective tax rate may vary from period to period due to factors including the geographic and business mix of taxable earnings and losses, tax planning activities, and settlements with taxing authorities.

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

The OBBBA includes several tax law changes, including extensions of certain 2017 Tax Cuts and Jobs Act provisions, immediate expensing of certain research and development costs, and changes to interest expense deduction limitations.

The OBBBA includes several tax law changes, including permanent extensions of certain 2017 Tax Cuts and Jobs Act provisions, immediate expensing of certain research and development costs, and changes to interest expense deduction limitations.

The Company continues to monitor tax legislation enacted by foreign jurisdictions in response to the Organization of Economic Cooperation and Development’s (“OECD”) Pillar Two global minimum tax framework.

Pillar Two generally provides for a 15% minimum tax on large multinational companies on a jurisdiction-by-jurisdiction basis, with certain provisions effective beginning in 2024.

Six Months Ended June 30, 2026 as Compared to Six Months Ended June 30, 2025

Nine Months Ended September 30, 2026 as Compared to Nine Months Ended September 30, 2025

Revenues and Gross Margin

For the six months ended June 30, 2026, total revenues increased by $12.4 million to $810.7 million from $798.3 million for the same period in 2025, representing low-single digit growth compared to the same period in the prior year.

For the nine months ended September 30, 2026, total revenues increased by $21.5 million to $1,221.9 million from $1,200.3 million for the same period in 2025, representing low-single digit growth compared to the same period in the prior year.

In the Specialty Surgery segment, revenues were $896.5 million, an increase of $19.3 million, or 2% from the prior year period.

Excluding the impact of foreign currency of $4.5 million, the increase in revenue is primarily driven by Neurosurgery, offset by decreases in our Surgical Instrument and ENT Solutions business.

Excluding the impact of foreign currency of $4.1 million, the increase in revenue is primarily driven by Neurosurgery and Surgical Instruments, offset by decreases in our ENT Solutions business.

Growth across the Neurosurgery business was partially offset by decreases in DuraGen revenues and by the impact of the flooding event at our Cincinnati manufacturing facility, which reduced revenues by approximately $7 million.

In the Tissue Reconstruction segment, revenues were $325.3 million, an increase of $2.2 million, or 1% from the prior year period.

This is primarily attributable to growth in Primatrix and Durasorb, offset by the impact of quality and operational issues associated with Medihoney.

Gross margin was $436.7 million for the six months ended June 30, 2026, an increase of $33.0 million from $403.8 million for the same period in 2025.

Gross margin as a percentage of total revenue increased to 53.9% for the six months ended June 30, 2026 from 50.6% in the same period in 2025.

This is primarily attributable to growth in Primatrix and DuraSorb, offset by decreases in Cytal and MicroMatrix.

Gross margin was $646.6 million for the nine months ended September 30, 2026, an increase of $35.8 million from $610.8 million for the same period in 2025.

Gross margin as a percentage of total revenue increased to 52.9% for the nine months ended September 30, 2026 from 50.9% in the same period in 2025.

The increase in gross margin is primarily attributable to higher revenues and a reduction in costs associated with the Braintree remediation.

Operating Expenses

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

Six Months Ended June 30,

Nine Months Ended September 30,

Research and development 5.7 % 6.2 %

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Total operating expenses 48.8 % 93.9 %

Total operating expenses, which consist of selling, general and administrative expenses, research and development expenses, and amortization expenses, decreased by $526.0 million, or 56.4% to $406.0 million in the six months ended June 30, 2026, compared to $931.9 million in the same period in 2025, primarily driven by goodwill impairment recorded in the second quarter of the prior year.

Total operating expenses, which consist of selling, general and administrative expenses, research and development expenses, and amortization expenses, decreased by $530.2 million, or 47.0% to $596.9 million in the nine months ended September 30, 2026, compared to $1,127.2 million in the same period in 2025, primarily driven by goodwill impairment recorded in the second quarter of the prior year.

Research and Development

Research and development expenses for the six months ended June 30, 2026 decreased by $4.0 million as compared to the same period, primarily attributable to reduced spending in EU MDR.

Research and development expenses for the nine months ended September 30, 2026 decreased by $4.5 million as compared to the same period, primarily attributable to reduced spending in EU MDR.

Selling, General and Administrative

Selling, general and administrative costs decreased by $10.7 million as compared to the same period in the prior year, primarily due a reduction in Acclarent integration costs and reduced spending in EU MDR.

Selling, general and administrative costs decreased by $14.5 million as compared to the same period in the prior year, primarily due to reduced spending on EU MDR and cost saving initiatives across the organization in the current year.

The decrease was partially offset by a larger favorable contingent consideration adjustment recognized in the prior year period.

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, 2026 was $7.5 million, consistent with the same period in the prior year.

Amortization expense (excluding amounts reported in cost of product revenues for technology-based intangible assets) for the nine months ended September 30, 2026 was $11.3 million, compared to $11.2 million for the same period in the prior year.

We expect total annual amortization expense to be approximately $26.7 million for the remainder of 2026, $106.1 million in 2027, $102.5 million in 2028, $97.2 million in 2029, $91.1 million in 2030, $88.1 million in 2031 and $357.1 million thereafter.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Dollars in thousands 2026 2025

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Interest Income

Interest income for the six months ended June 30, 2026 decreased by $0.8 million as compared to the same period in the prior year.

Interest income for the nine months ended September 30, 2026 decreased by $0.7 million as compared to the same period in the prior year.

Interest Expense

Interes t expense for the six months ended June 30, 2026 increased by $5.6 million as compared to the same period in the prior year primarily due to higher interest rates on the borrowings under the revolving credit facility component of the Senior Credit Facility as compared to the interest rates on the 2025 Notes, which was repaid in August 2025.

Interes t expense for the nine months ended September 30, 2026 increased by $5.8 million as compared to the same period in the prior year primarily due to higher interest rates on the borrowings under the revolving credit facility component of the Senior Credit Facility as compared to the interest rates on the 2025 Notes, which was repaid in August 2025.

Other Income (expense), net

Other income (expense), net for the six months ended June 30, 2026, increased by $10.8 million as compared to the same period in the prior year, primarily driven by higher income on our cross currency swap contracts.

Other income (expense), net for the nine months ended September 30, 2026, increased by $26.3 million as compared to the same period in the prior year, primarily due to higher income on our cross-currency swap contracts, a gain contingency related to insurance recoveries associated with the flooding event at our Cincinnati manufacturing facility, and a gain recognized in connection with the Fortis litigation matter.

For additional information regarding our cross-currency swap arrangements, see Note 6.

Derivative Instruments .

Six Months Ended June 30,

Nine Months Ended September 30,

Dollars in thousands 2026 2025

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Effective tax rate 18.2 % 9.3 %

The Company’s effective income tax rates for the six months ended June 30, 2026 and 2025 were 105.7% and 9.2%, respectively.

The 2026 effective tax rate was primarily impacted by a tax expense related to a shortfall from stock-based compensation due to market conditions, partially offset by a tax benefit from returns filed in certain foreign jurisdictions.

The Company’s effective income tax rates for the nine months ended September 30, 2026 and 2025 were 18.2% and 9.3%, respectively.

The 2026 effective tax rate was primarily impacted by the jurisdictional mix of income and tax benefits in certain foreign jurisdictions.

The 2025 effective tax rate was primarily impacted by a partially non-deductible goodwill impairment charge.

GEOGRAPHIC PRODUCT REVENUES AND OPERATIONS

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Total revenue by major geographic area consisted of the following:

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

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

Dollars in thousands 2026 2025 2026 2025

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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 June 30, 2026 and December 31, 2025 was $860.6 million and $703.6 million, respectively.

The Company’s working capital as of September 30, 2026 and December 31, 2025 was $860.9 million and $703.6 million, respectively.

The increase in working capital is driven by the 2026 amendment of our Securitization Facility, which resulted in the reclassification of borrowings from current liabilities to long-term liabilities.

Cash and Marketable Securities

The Company had cash and cash equivalents totaling approximately $214.4 million and $235.0 million at June 30, 2026 and December 31, 2025, respectively, which are valued based on Level 1 measurements in the fair value hierarchy .

At June 30, 2026, our non-U.S.

The Company had cash and cash equivalents totaling approximately $252.3 million and $235.0 million at September 30, 2026 and December 31, 2025, respectively, which are valued based on Level 1 measurements in the fair value hierarchy .

At September 30, 2026, our non-U.S.

subsidiaries held approximately $182.9 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 $59.7 million and $28.7 million, respectively, at June 30, 2026 and December 31, 2025.

Six Months Ended June 30,

Nine Months Ended September 30,

Dollars in thousands 2026 2025

Net cash provided by (used in) operating activities $ 32,605 $ (2,338)

Net cash provided by operating activities $ 128,582 $ 38,568

Net cash used in investing activities (68,377) (73,156)

Net cash provided by financing activities 7,479 14,238

Net cash (used in) provided by financing activities (38,809) 3,993

Effect of exchange rate fluctuations on cash (4,183) 16,406

Cash Flows Provided by or Used in Operating Activities

Operating cash flows for the six months ended June 30, 2026 increased by $34.9 million compared to the same period in 2025.

Within operating cash flows, net income less non-cash adjustments increased for the six months ended June 30, 2026 by approximately $49.0 million, primarily due to the reduced impact of quality and operational issues in the current year compared to the prior period, as well as lower spending on EU MDR compliance and Braintree transition.

The changes in assets and liabilities for the six months ended June 30, 2026, net of business acquisitions, decreased cash flows by $56.8 million, mainly attributable to a decrease in accrued expenses and other current liabilities, due to payment of SIA contingent consideration, and an increase in other current assets.

This is partially offset by improved customer collections.

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.

Operating cash flows for the nine months ended September 30, 2026 increased by $90.0 million compared to the same period in 2025.

Within operating cash flows, net income less non-cash adjustments increased for the nine months ended September 30, 2026 by approximately $91.2 million, primarily due to the reduced impact of quality and operational issues in the current year compared to the prior period, as well as lower spending on EU MDR compliance and Braintree transition.

The changes in assets and liabilities for the nine months ended September 30, 2026, net of business acquisitions, decreased cash flows by $19.6 million, mainly attributable to a decrease in accrued expenses and other current liabilities, due to payment of SIA contingent consideration, and an increase in other current assets.

This is partially offset by improved customer collections and lower inventory balances, which included the impact of inventory write-offs associated with the Cincinnati flooding event.

The changes in assets and liabilities for the nine months ended September 30, 2025, net of business acquisitions, decreased cash flows by $18.4 million, mainly attributable to increases in inventory.

Cash Flows Used in Investing Activities

Uses of cash from investing activities for the six months ended June 30, 2026 were $31.0 million purchases of short term investments and $27.2 million paid for capital expenditures to support improvement initiatives at a number of our manufacturing facilities and other technology investments.

There were no sources of cash from investing activities for the six months ended June 30, 2026.

Uses of cash from investing activities during 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 purchases of 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 for the nine months ended September 30, 2026 were $37.4 million paid for capital expenditures to support improvement initiatives at a number of our manufacturing facilities and other technology investments, and $31.0 million purchases of short term investments.

There were no sources of cash from investing activities for the nine months ended September 30, 2026.

Uses of cash from investing activities during the nine months ended September 30, 2025 were $64.2 million paid for capital expenditures to support improvement initiatives at a number of our manufacturing facilities, and other technology investments, $8.5 million related to purchases of short-term investments, and $0.4 million related to the settlement of our net investment hedges.

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

Cash Flows Provided by Financing Activities

Uses of cash from financing activities in the six months ended June 30, 2026 related to the repayments of $60.5 million under our Senior Credit Facility and Securitization Facility.

Uses of cash from financing activities in the nine months ended September 30, 2026 related to the repayments of $126.5 million under our Senior Credit Facility and Securitization Facility.

In addition, the Company paid $6.8 million related to payment of SIA contingent consideration, $1.8 million in cash taxes for net equity settlements, and $0.3 million in debt issuance costs.

Sources of cash from financing activities for the six months ended June 30, 2026 were $75.9 million of proceeds from borrowings of long term indebtedness and $0.8 million related to the proceeds from employee stock purchases.

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.

Sources of cash from financing activities for the nine months ended September 30, 2026 were $95.8 million of proceeds from borrowings of long term indebtedness and $0.8 million related to the proceeds from employee stock purchases.

Uses of cash from financing activities in the nine months ended September 30, 2025 related to the repayments of $69.8 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 $2.6 million in cash taxes paid 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.

Sources of cash from financing activities for the nine months ended September 30, 2025 were $671.0 million of proceeds from borrowings of long-term indebtedness and $1.0 million related to the proceeds from the exercise of stock options.

Tariffs and Macroeconomic Environment

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On April 20, 2026, the CBP launched an online portal referred to as the Consolidated Administration and Processing of Entries (“CAPE”) that can be used to facilitate the submission and processing of IEEPA tariff refund requests.

As of June 30, 2026, the Company had submitted IEEPA tariff refund claims of $17.6 million, consisting of $16.7 million submitted through Phases 1 and 2 of CAPE and $0.9 million submitted through formal protests filed outside CAPE, all of which remain subject to CBP review and validation prior to the issuance of refunds.

As of September 30, 2026, the Company had submitted IEEPA tariff refund claims of $17.6 million, consisting of $16.7 million submitted through Phases 1 and 2 of CAPE and $0.9 million submitted through formal protests filed outside CAPE, all of which remain subject to CBP review and validation prior to the issuance of refunds.

The Company expects the remaining amount will be received through Phase 3 of CAPE and through vendor refunds.

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These adjustments relate to the legal right to receive a refund of IEEPA tariffs previously imposed on the Company without appropriate authority.

During the six months ended June 30, 2026, the Company received cash refunds of $0.5 million, which reduced the receivable balance.

During the nine months ended September 30, 2026, the Company received cash refunds of $16.2 million, which reduced the receivable balance, and recognized cash interest receipts of $0.7 million associated with those refunds.

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

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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 June 30, 2026, the Company was in compliance with all such covenants.

Our Consolidated Total Leverage Ratio was 4.10, with the covenant requirement at 5.00 at the end of June 30, 2026.

The Senior Credit Facility is subject to various financial and negative covenants and, at September 30, 2026, the Company was in compliance with all such covenants.

Our Consolidated Total Leverage Ratio was 3.80, with the covenant requirement at 4.75 at the end of September 30, 2026.

As outlined in the table in Note 5.

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

Debt, the covenant requirement will drop from 4.75 to 4.50 for the fiscal quarter ended December 31, 2026.

Dividend Policy

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements during the six months ended June 30, 2026 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 nine months ended September 30, 2026 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, 2025 did not materially change in the six months ended June 30, 2026.

The critical accounting estimates discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 did not materially change in the nine months ended September 30, 2026.

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