Integra LifeSciences Holdings Corporation Stock

Thank you. All right, great. We're going to get started here. First of all, I'd like to welcome Integra LifeSciences and Stuart Essig to the stage here. We're going to unpack the story. There's been a lot of developments in the company, and so I'm looking forward to the conversation. One thing, there is the disclaimer readout that I have to do. Go to the Morgan Stanley website. You'll find it there.So, maybe to start us off, Stuart, since returning as CEO, where have you focused your attention and what progress gives you the most confidence today that Integra will be successful over the long term?

So I've been in the role now 5 months. It's been very interesting. I've focused most of my time on working with our quality and operations people to make sure we continue to develop supply. We had a long period of time with quite a number of supply challenges because of some of the quality issues in one of our sites, but we've been in the last 3 quarters bringing most of our products back, and I probably spend 70%, 80% of the time with the ops group.

Okay, great. And what are the biggest changes you've seen across the company that allows you to say, all right, the consistency of the business is coming back and you feel like you have that predictability rebuilding?

So we had close to 25 years of really quite extraordinary growth both organically and from acquisitions. But in the last 4 or 5 years, we've struggled with some of our quality system issues. What I'm really happy to see is that a lot of the work that we set out to do 3 years ago has been completed. So we have been working with a compliance master plan to basically harmonize the manufacturing sites. We have 17 manufacturing sites as a company.

And so we've been putting in place common quality metrics and initiatives across all our sites. To the extent that we had out of compliance activities, we've been working very hard to repair them. We've literally gone to the bottom of every one of our sites, brought in external consultants, former FDAs. And in the last 2 or 3 years, we've had a number of very successful FDA audits. We've had our notified body in all of our sites every year. And so we're just making good traction.

We've said that on our warning letters, we'll have by the end of this year, all of our responses submitted. We began producing SurgiMend, which is the third product that we wanted to bring back to market in our new Braintree site, and we've got manufacturing in the second quarter, and we expect to launch that in the fourth quarter.

So lots of operational progress, still plenty more to go. But the reality is I haven't spent particularly that much time with our commercial team because they've done great. They've held the business together through a period of great turmoil. And what I did say when I returned is we have a really nice opportunity to go back on the offensive.

We promoted a couple of our leaders into divisional president roles. We've put both of our divisions under one common Chief Commercial Officer. And so we're in the process of getting synergies across our businesses as opposed to just within our two divisions. So lots of change, but I think mostly change for the good.

Yes. Okay. Great. I mean that's very helpful to table set folks.. But I also think what's also investors are looking for important indicators, right, whether it's KPIs or milestones. So what should they look out for over the next few quarters that you think are some of those leading indicators on the progress being made?

So we've had 3 quarters in a row now where we haven't had any major upsets in our manufacturing or inability to supply product.

Yeah.

And we have also reduced dramatically our spending on compliance. We've reduced dramatically our spending on European Union EU MDR program, and we have completed or nearly completed the construction of our Braintree facility. What that means is our cash flow has increased significantly throughout the year, and when you think about the #1 financial metric I'd look at over the next 4 quarters is the growth in our operating cash flow and our free cash flow.

Okay, great. Well, look, I want to dive into the portfolio opportunities and competitive positioning. You touched a little bit about the strength of the commercial sales force keeping the business, as intact. I guess on the supply reliability and product availability, as that improves, what do you think are the biggest opportunities to translate those commercial relationships that the commercial team has done such a great job of holding on to into growth across the portfolio?

Sure. So our portfolio is roughly 2/3 neurosurgery and related products, and 1/3 the tissue reconstruction products. And the dynamics are different in the two parts of the business. On the neurosurgery side, although we have had, throughout the last 2 or 3 years, periods of inability to supply product, they've generally been only a few months at a time, which meant we really did not have a significant impact on our market share.

We're now in the process of having most of those products back in stock. We've really starved our international business, so we have a nice opportunity to bring some of those products back internationally that we unfortunately didn't have inventory for. And so it is, to some extent, just executing on our commercial strategy and having enough product to deliver, but in our segments -- our different components of our neurosurgery business, we're #1 or #2 in each of the categories, and they're products that have been used by neurosurgeons for years, and so to the extent we've gotten product back in the market, we've taken our market share back.

We have a number of new products that we're in the process of launching or will be launching in 2027 in the neuro side of the business. We launched our Aurora Surgiscope, which is a very interesting product for use in minimally invasive neurosurgery. And we have in 2027 a product that we call Liberties, which is essentially an anti-clog catheter that can be used both in external ventricular drainage as well as in hydrocephalus devices.

In both of those areas, we're the market leader, but these are new products that can have a major impact on limiting clogging and therefore limiting explants. A lot of hydrocephalus in children, typically they have their shunts exchanged every 2 or 3 years. So the longer you can have a child avoid the surgery, the better the outcome for the patient.

So on the neuro side, there's both new products as well as simply driving market share internationally that can seriously impact the business.

On the tissue side, we've had a number of challenges with product that unavailability. In prior years, we had challenges with our Integra Skin, which is our leading product in terms of availability. By the second quarter of last year, we had, for the most part, product back in stock, and we've been able to return to market with that product to market shares previously roughly in line with where we were before some of these product shortages.

We also relaunched a product called PriMatrix, which was out of the market for 2 years, and we believe we've taken back roughly 50% of our pre-quality system revenue. So, again, we have the broadest range of tissue repair, skin substitutes. The sales force is trained to sell across the range, and we're now back for the first time in 2 and a half years having all of the products available for the reps.

But we have to earn our share back, and it's a really competitive market, a little bit different than neuro. There's 10, 20, 30 companies with skin substitutes. I think we have the broadest range, but we've got places where we've lost business and we've got to go earn it back.

Okay. And you started touching on that this a little bit, but where do you believe Integra has its strongest competitive advantages, and how do those competitive advantages support the company's long-term growth potential?

So, we have such a broad product line and such a balanced product line that it's unusual if we don't have some business in any major hospital in the U.S. But there are big chunks of our portfolio that are not in some of these hospitals. And because of the way we've been structured with these two divisions, we've really gotten minimal leverage between the two divisions.

We have plus or minus 25 individuals who focus on enterprise, which means selling directly to IDNs and GPOs. And we really have not leveraged the sheer breadth of our portfolio in those big accounts. And so that's a big focus for us in the next 12 to 24 months which is just leveraging our presence in a number of really significant accounts and making sure we're selling across the portfolio.

The other strength we have as a company from a technology perspective is our tissue reconstruction products. So we have, again, the broadest array of technologies. We have a synthetic product that we're bring that we've brought to market in the in the hernia repair area and it has the potential to with the PMA that we're working on, to go into breast reconstruction. I would say, and we take those tissue products also into our neuro division.

So our DuraGen product, our dura grafting product, we're the market leader. It's sold through our neuro sales force, but it's manufactured in the same facilities as our wound care care products. So I think leveraging across the two divisions, leveraging in our customers, and then and driving international. We've gone from about 20% to 30% international as a company.

And some of the better, larger companies are 40%, 50%. And it's just about penetration. It's just about being present in the market and having the sales and marketing infrastructure to drive. And we've grown a lot, but there's still plenty of room to grow.

Okay. And in there, you talked a little bit about leveraging existing hospital relationships across the portfolio. As you think about the combination of neurosurgery and tissue reconstruction, what is the biggest opportunity to create value from that combination?

I think it's just the ability to negotiate hospital-wide deals across our portfolio. And in some hospitals, we're the major player in tissue recon and we have no presence in surgical instruments. It's really just about selling across the portfolio.

Yes, Yes. Using that mind share that you already have within the hospital across. Okay. So as you think about investors are always concerned around top line growth trajectory and understanding that. How should investors think about the tissue reconstruction portfolio in particular and the growth trajectory that it's on over the near term and midterm?

So I would distinguish between our short-term guidance where we've been relatively conservative because of the number of product availability issues that we've had as we go through this journey from a corporate quality system perspective. But if you go back before 2024, we were growing our overall business at 4% to 5%, our neuro and surgical business slightly below that, and our tissue business somewhat above that, mid-single digits.

If you look at our competitors in tissue, they've grown a lot faster than that. And I really think it does have to do with the last 3 or 4 years of product availability. So, I think longer term, there's every reason to believe we can get back to at a minimum, our prior performance, which was mid to high single digits on tissue.

Okay, great. There's been a lot of noise in the marketplace within the wound care market. The recent CMS reimbursement changes are shaping the way that the outpatient wound care market is operating. What opportunities does that create across your tissue reconstruction portfolio?

So, broadly speaking, plus or minus 90% of our tissue products are sold into acute. So, whether it's the hospital or the surgery center or wound care center, we never really had a big presence in the physician office, and therefore, we never had a significant reimbursement for our products. The issues with reimbursement that drove CMS to change the way in which products were priced principally had to do with the amniotic tissue products and from our perspective, those prices have been driven down 80%, 90%.

And we've basically never raised our prices to those very high levels. That means that the physicians who were benefiting from these high prices really have no reason to do the procedures in their offices and we expect those to be driven back into the wound care centers, into the adjacent surgery centers to the hospital, where we're the strongest. So we we priced our products essentially in line with what the new CMS ruling is. And again, 80%, 90% of our sales fall into a DRG, not a direct reimbursement from CMS.

Okay, great. That's helpful. We talked about some of the products not being available, supply chain issues, et cetera. As you're preparing for SurgiMend in particular to relaunch, what are the key priorities and what will define a successful return to the market?

So SurgiMend is a surgical mesh that is approved as a surgical mesh without any specific label. We have completed a PMA, all the modules, except for the manufacturing module on SurgiMend in order to get a breast reconstruction indication. We expect to have that that audit by the FDA sometime in 2027. And that will open up the ability for our sales force to sell into plastic and reconstructive surgery.

The market now is dominated by a product sold by Allergan. It's an $800 million product. And we see a lot of potential to penetrate that market. Our data in our PMA demonstrates some real utility of the product when compared with others, and we have many loyal customers who would like to see the product back on the market.

Similarly, our DuraSorb product, which is a resorbable polymer mesh, it is still on the market, it's been on the market for about 3 or 4 years, it's been growing at double digit, and we've also been doing a PMA clinical trial for that. We would expect to submit that data sometime in 2027. And so we're hoping to be the first company in breast reconstruction to have we have two PMA products available. There's a lot of interest in this at FDA. There's a lot of interest in the clinical community. Women's health is a big topic and breast reconstruction in oncology is a huge opportunity for us.

Okay. Great. And folks love analogs, and I'm sure you do as well, but there's lessons learned from relaunches. And as I think about PriMatrix and the proof points that you've seen through that relaunch, as well as the lessons learned, what data can you share with us so that we can think about appropriately categorizing that SurgiMend relaunch?

So the rough guidance that we've given on the SurgiMend relaunch, and it really is just an analog with what's happened with our PriMatrix product, is we were able to earn back in 3 quarters roughly half of the revenue that we had prior to the stop ship.

And so, we're essentially guiding to probably follow that trajectory. What we did learn is to spend the bulk of our time with our traditional customers in a relatively small number of accounts to be sure that they are getting the adequate inventory, that they're getting the adequate support, and then we open up the the market to more of our sales reps and more accounts.

So I think you'll see a very, steady launch of SurgiMend. We're not going to rush it out into the market. We'll go back to the users who've been, who were dedicated to it. And then as we, as our sales reps learn how to sell it again, we'll start to open it up to other accounts.

Great. Why don't we switch gears a bit and talk about the P&L growth and the leverage that you're planning on getting in the business and seeing that improve. As you look at 2026, what are some of the things, what are the key factors that could drive performance towards the high or the low end of your guidance range and where do you have the greatest areas of confidence within the business?

So the biggest opportunities in the back half of the year is going to be having adequate supply on the neuro side of the business of a number of our products that have been on the market, but we continue to sell more than we can make. In particular, the international market will provide some upside for us in the event we're able to meet the demand internationally for the products from a neuro perspective.

On the tissue side of the product, and the tissue side of the business, it depends on the extent to which we're able to continue to regain accounts with the Integra Skin, and continue to drive market share with PriMatrix. The good news is we really don't have supply issues now on our tissue side of the business, so it's up to our sales force to drive the revenue.

So I think international and tissue have the greatest potential for upside, and they probably have the greatest potential for downside, and on average we think we're doing the right things.

Okay, great. Let's look beyond 2026. What is a more normal growth and earnings profile look like? And what are the proof points? What gives you confidence, the ability to reach that?

So again, if you go back before 2024, so 3.5 years ago, we were generating roughly mid-single-digit, top-line growth. We were generating a 65% and north gross margin, and we had operating margins in the mid-20s. With the work that we've done in our quality system, we probably -- and with tariffs, there's probably a 2.5 -- sorry, 250 basis point, somewhat permanent impact on our gross margin.

So that we will have to get back through process improvements, through efficiencies, but difference between back in 2024 and now, the tariffs are meaningful and the quality systems and costs associated with -- that do provide some impact on gross margin, but that's roughly a 250% improvement from where we are right now.

So this set of activities basically cost us 500 basis points on the gross margin, and roughly 250 of them will be in our rearview mirror in the coming 18 months.

On the EBITDA side and on the earning side, we put into place what was called the transformation about a year and a half ago. We've taken roughly $35 million to $40 million out of our operating expenses and some out of cost of goods. And we've said we probably have another $10 million to $15 million that we can take out of the P&L going forward.

So there's definitely -- I talked a little bit about how we've consolidated some of the back office facilities, activities in our divisions. We've done quite a number of things to just make our G&A more effective. So there's room in our operating expenses to drive margins and we think we can get our operating margins back into the mid-20s. The other one, as I mentioned before, cash flow.

Prior to 2024, we were generating plus or minus $200 million a year of operating cash flow, and we don't see any reason we shouldn't be able to run the business that way once we're through a number of the changes that we've made.

Okay. Yes, I mean, I guess there is the improvements that you expect in some of the cost-out initiatives, but there's also, as the revenue growth comes online, there's increased leverage within the system. How do you expect that operating leverage, in addition to your cost actions and the business mix, also importantly, to translate into EBITDA growth and margin expansion over time?

Well, I think we've, I talked a little bit about the margin expansion. I think our general guidance have been that we expect to grow our earnings per share in excess of our revenue growth. I don't think we've been that specific. And we do have some headwinds as you go into 2027, including refinancing our debt and also the incremental tariff expense that we'll have in 2027 versus 2026. I think longer term, it's about running the business more effectively and driving the top line.

Yes. And look, I think for you guys, it's always important to be balanced around growth and cost discipline. How are you thinking about that balance of being, again, prudent on cost, but also making the necessary investments to support commercial execution and future growth?

So we certainly have not invested as much as we'd like to in our R&D line. We have been cautious in the last few years because of our need to really invest in our existing product lines. On the other hand, we've had in development a number of critical products on the neurosurgery side. I talked about it.

And on the on the tissue side, it's really been about generating clinical evidence. We have invested heavily in both our clinical affairs activities as well as in generating evidence for all of our products. And I do think Integra has been a leader in generating clinical papers, peer-reviewed publications, multi-center trials. That's been a real strength of ours over the last 25 years, and I think the data that we've got on our products, it's going to be hard to beat.

Okay. Perfect. Well, I want to shift to the last topic, which is capital allocation and portfolio innovation. And you've given us a lot of great information around what the pipeline looks like. One thing you alluded to in some of your previous comments was around the company's debt, and plans to refinance it in the second half of this year.

Can you give us a bit of an update on where it stands today, how folks should think about the timeline for the process to be completed, and how they should think about the impact of that to the earnings trajectory of the company going forward?

Sure. So, Integra has always operated with debt on the balance sheet. It is one of the ways that we grew was by doing acquisitions and then using the synergies and the growth in our business to pay down the debt and then for many years we were doing quite a number of acquisitions as part of our growth story.

In the 2 or 3 years where we've had these challenges, it wasn't really that our debt went up, but our EBITDA was challenged. And so our EBITDA, is now going in the right direction, and we emerged from 2025 with our debt to EBITDA at 4.5, we emerged from the first quarter of 2026 with our debt to EBITDA at 4.1, and we've said that in our forward looking guidance we expect to be just a little bit above our target range of 2.5 to 3.5x debt to EBITDA.

So that's a combination of paying down debt and generating cash flow and also just generating the EBITDA so that, we're more in our target range. Our debt, our whole debt package, as it were, will become current in the first quarter of 2027. It terminates at the beginning of 2028, and so we don't want our bank facility to go current. So what we've said is in the back half of this year, and we're in the back half of this we expect to refinance the whole debt package and we're going to do it in the bank market and the debt markets.

We have no need or desire to do anything in the equity or equity linked markets. And I think we've indicated indicated that given where rates are, we're somewhere between 100 and 200 basis points above our current rate, and our current rate is in the low 5s.

Okay. That's helpful. And you touched a little bit on the journey that the leverage ratio has been on over the last few years. How do you think about the pace of deleveraging towards the bottom end of that target range that you mentioned of 2.5 to 3.5x versus reinvestment in growth for the future?

So, first of all, our commitment to both our equity and our debt investors is to get our debt level in the 2.5 to 3.5x. So to the extent we're generating cash flow, it's going to go down, it's going to go to paying down debt. Also, while the company has grown quite successfully through M&A over the years, we're we're not eager to do M&A until we're in a position where we feel like the challenges that we've had in our operations are really settled down.

And so, we haven't been on a hunt for deals for a while now and we're unlikely to be in the coming months. That being said, longer term, we've grown, we've done quite well by acquiring products that were under-marketed, by acquiring products that we could drive through a larger sales force.

That's been a a good recipe for us.

In terms of organic growth, it's sometimes hard to see the amount of organic growth we've had in our business, but putting it in context, in our tissue products, we've gone from nothing 25 years ago to well over $400 million, and that's all organic growth. And we've grown the businesses that we've acquired as well. So we'll continue to invest in product development.

As I said earlier, it's probably more on the clinical side on tissue, and it's more in continuing to innovate in devices on the neuro side but we are a developer of products and we've generated some really dynamic products and we intend to continue to do so.

Okay, perfect. I mean, look, I think you've touched on a lot of the innovation and portfolio development, which you expect to be contributors to Integra's future growth, I do think it's kind of helpful for folks to understand the capital allocation strategy today.

But down the road, and you walked through where it is in the near term, but down the road, how do you expect that to evolve? Reinvestment, portfolio development, M&A, what do you think is kind of the future of the steady state capital allocation strategy for the company?

Well, over the years, we have kept debt in the 2.5 to 3.5 range. To the extent we had excess cash flow, we bought back stock, we bought back a lot of stock over the years, and intermittently we did M&A, and we've been active in the capital market, so if we see a larger deal, our largest deal was roughly $1 billion. We bought Johnson & Johnson's neurosurgical business, Codman. We did that deal with all debt, and then shortly thereafter, we did an equity deal at a very attractive price to get our balance sheet back to the target ratio. So we're not shy in issuing shares, and we're not shy in buying back shares.

And similarly, we've been an active user of the debt capital market. So we have a view of having a balanced investment in organic growth as well as in acquisitions.

Perfect. Well, look, we just have a couple minutes left, so maybe if there's a couple of things you would like investors to keep in mind over the next 12 to 18 months, obviously significant progress against the challenges that have been faced by the business over the last few years, but what messages do you want to leave investors with that to look out for, again, that next 12 to 18 months, next time we're on stage again next year?

Yes, what I would say is the message that I have been trying to provide to both investors and our employees is, first, we've got a strategy that works. We're not going to change the strategy. We need to focus on customers and patients and employees and frankly spend all of our effort getting our reputation where it has traditionally been with our customers, which is as an innovator and as a collaborator.

And so it is really about, getting back on our front foot. And I think we're at the point now where we have enough confidence in our return to normalcy that we're telling our commercial team that we're on the go. So I think watch our cash flow over the next 12 months, watched our momentum with our sales force and watch that we continue to run the business in a way that doesn't have as many hiccups as it did 2, 3 years ago.

Okay. Perfect. Well, look, you've given us a lot of important detail on the business and the progress being made. We're looking forward to seeing that continued progress, and we'll see you next year again.

Thank you. Thanks for inviting us to your conference, and thanks to folks in the audience for listening to our story.

Thank you. Good day and thank you for standing by. Welcome to the Integra Life Sciences Second Quarter 2026 Financial Results. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star-1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star-1-1 again.

And I'd like to hand the conference over to your speaker today, Chris Ward, Senior Director of Investor Relations.

Good morning, and thank you for joining the Integral Life Sciences Second Quarter 2026 Earnings Conference Call. Joining me on the call are Stuart Essek, Chairman, President, and Chief Executive Officer, and Leah Knight, Chief Financial Officer. We received a press release this morning announcing our second quarter 2026 financial results. Release and earnings presentation we referenced during the call are available in Integralife.com under Investors, Events and Presentations. Look for the file named Second Quarter 2026 Earnings Call Presentation. Before we begin, I want to remind you that many statements made during this call may be considered forward-looking. Factors that cause actual results to differ materially are discussed in the company's Exchange Act Reports filed with the SEC.

These factors are also detailed in the release. Also in our prepared remarks, we will reference reported and organic revenue growth. Organic revenue growth excludes the effects of foreign currency, acquisitions, and divestitures. Unless otherwise stated, all disaggregated and franchise-level revenue growth rates are based on organic performance. Lastly, our comments today will include certain non-GAAP financial measures. Reconciliations of non-GAAP financial measures are included in today's press release, which is an exhibit to Integra's current report on Form 8K filed today with the SEC.

With that, I will now turn the call over to Stuart. Thank you, Chris, and good morning to everyone on the line. We are encouraged by our second quarter results. We delivered on our commitments, achieved important milestones, and advanced our key priorities across the business. As a result, we are operating with greater consistency and strengthening our foundation for long-term growth. Revenue for the second quarter was $419 million, up 27 million sequentially, and in line with our May guidance. Adjusted earnings per share were above the high end of our guidance range, driven by our improved operating execution and favorable tariff dynamics in the quarter.

We are reaffirming our full-year organic revenue growth outlook and adjusted EPS guidance as our underlying operating expectations for the year remain unchanged. We are updating our reported revenue outlook to reflect the impact of foreign exchange. Leah will provide additional color on our guidance. Turning to our business segments, specialty surgery remains a core strength of the company. We hold the leading position in neurosurgery, supported by a broad portfolio of differentiated products, longstanding customer relationships, and clinical interventions that are deeply embedded in the daily practice of neurosurgeons. Importantly, our leading positions in neurosurgery and instruments provide unique access to hospitals, IDNs, and GPOs, strengthening our enterprise commercial footprint and offering further growth opportunities across our broader portfolio. ENT remains an important emerging growth opportunity for Integra.

We continue to invest in the pipeline and are confident in our commercial team's ability to drive meaningful growth contributions as the business and portfolio continue to develop. Tissue reconstruction, we maintain a strong market position anchored by Integra Skin, our flagship product and the market leader in dermal regeneration. The franchise is built on the broadest product portfolio available, including Integra Skin, Primatrix, AmnioXcel, Micromatrix, and Durazorb. This drives market success. leadership in complex wound reconstruction, particularly in the hospital setting. Looking more broadly at the market, we believe Integra Life Sciences is uniquely positioned within the evolving reimbursement landscape. The combination of the breadth of our portfolio, deep clinical evidence, a predominantly hospital-based business model, and pricing aligned with both hospital and outpatient reimbursement dynamics is difficult. to replicate. As the market continues to adjust to the recent CMS reimbursement changes, we believe these strengths make us one of the best positioned companies in wound reconstruction.

We are also encouraged by the continued adoption of Primatrix following its relaunch. Strong customer adoption reinforces our confidence in both the value of this product and our ability to successfully bring important products back to the market. Building on that momentum, we have successfully restarted manufacturing at our Braintree facility, marking an important opportunity for operational milestone for the company. We are now building inventory to support the commercial relaunch of Surgimen 510K product in the fourth quarter. While the relaunch of Surgimen represents an important near-term milestone, our broader objective is to expand the opportunity for both Surgimen and Durazorb through our dual PMA strategy and implant-based breast reconstruction. We are advancing toward an expanded label for Surgimen, which we expect in 2027, with Durazorb expected later that same year. Once approved, Surgimend and Durazorb would provide both biologic and synthetic solutions with the first two PMA indications for implant-based breast reconstruction, expanding surgeon choice and further strengthening one of Integra's key competitive advantages, the breadth of our portfolio.

Combined with our established presence in complex wound reconstruction, and our commercial capabilities, we believe this strategy positions us well for long-term growth in this market. Beyond our portfolio initiatives, we have begun to realize the benefits of the broader changes we have made in how the company operates. By better aligning our commercial organization, operating model, and transformation initiatives around the common set of priorities, we are improving execution and enhancing coordination across the business. Together, these efforts are creating a more efficient organization and have contributed to cost savings in the second quarter. As we continue to improve supply reliability and operational performance, we see a clear path to further margin improvement in the coming years. That same focus on disciplined execution is reflected in our approach to capital allocation. De-leveraging continues to be our top priority.

We exited the second quarter of 2026 at 4.1 times total leverage, down from 4.5 times at year end. we remain on track to approach the upper end of our target leverage range by the end of 2026. Overall, we are advancing important milestones, improving how we operate, and strengthening the foundation for sustainable growth. We remain focused on creating long-term value for customers, shareholders, and employees. With that, let me turn the call over to Leah for additional detail on our results and outlook.

Thank you Stuart. Good morning everyone. I want to begin by thanking our team for their continued strong execution in the second quarter. Turning to slide five, I will cover our second quarter financial results. Our second quarter revenues were $419 million, representing 0.8% growth on a reported basis and 0.7% growth on an organic basis. These results build on the progress we have made over the past year and they reflect the steadier, more predictable performance we are now delivering quarter to quarter. Adjusted EPS for the quarter was 56 cents, an increase of 24% compared to the prior year. Relative to our May guidance, revenue delivery and transformation savings were in line with our expectations, and stronger overall operational execution drove performance to the high end of our guidance range.

In addition, we benefited from $0.05 per share of tariff favorability versus our May guidance, which contributed to our adjusted EPS performance above the high end of our guidance range. Gross margin for the quarter was 61.3%, up approximately 60 basis points from 60.7% in the prior year, reflecting efficiencies achieved across manufacturing operations and lower remediation spending. Adjusted EBITDA margin was 18.7%, up approximately 160 basis points versus 17.1% in Q2 2025, reflecting the benefits of the gross margin drivers I just discussed, together with contributions from our recent margin improvement initiatives. Cash flows from operations totaled $22.8 million in the second quarter and capital expenditures were $12.3 million. Turning to slide six, we will take a deeper dive into our specialty surgeries revenue highlights for the second quarter. Specialty surgery revenue was $309.3 million, representing 1.7% growth on a reported basis. On an organic basis, revenue grew 1.6% compared to the prior year.

Global neurosurgery delivered 1.9% organic growth driven by Sirtis Plus, KUSA, and Bactocele, as supply reliability and fulfillment have continued to improve. Sales of capital equipment were down approximately 1% as double-digit growth in KUSA was offset by a decline in smaller ticket capital equipment during the period. We remain confident in the hospital capital environment and maintain a positive outlook for capital for the year. Instruments grew low single digits, benefiting from order timing relative to the first quarter. We continue to expect growth for the full year. In ENT, revenue declined low single digits reflecting continued growth in microfrance ENT instruments, offset by ongoing pressures and sinus balloons. Revenue in our international markets grew low single digits as improving supply is strengthening our ability to meet customer demand.

Moving to our tissue reconstruction segment on slide 7. Tissue reconstruction revenues were $109.5 million, down 1.9% on a reported basis and down 2% on an organic basis compared to the prior year. Within moon reconstruction, we continue to see positive growth contributions from Dorozerb and encouraging momentum following the relaunch of Prime Matrix. While Integra's skin grew sequentially over the first quarter, it was down year over year as the second quarter of 2025 benefited from a significant backorder clearance for the product. matrix also declined in the quarter versus the prior year. For the first half of the year, wound reconstruction was approximately flat versus 2025, and its performance remains within the range of outcomes contemplated in our full-year guidance. During the second quarter, private label sales grew 4.7%. Finally, international sales and tissue reconstruction grew low single digits driven by Integra Skin.

If you turn to slide 8, I will provide a brief update on our balance sheet, capital structure, and cash flow. Operating cash flow for the second quarter was $22.8 million compared to $8.9 million in the prior year. Our second quarter operating cash flow also reflects an $11 million final milestone payment related to the SEIA acquisition. For the first half of 2026, operating cash flow increased $35 million compared to 2025, and we remain on track to deliver an approximate $150 million improvement in operating cash flow for the year, driven by EBITDA growth, working capital efficiency, and an approximate $60 million increase in operating cash flow. reduction in cash expenditures related to EU MDR compliance and Braintree startup costs. Free cash flow for the quarter was $10.5 million, with a free cash flow conversion rate of 24%. As of June 30th, net debt was $1.6 billion and our consolidated total leverage ratio was 4.1 times within our current maximum allowable leverage of 5 times. Reducing our leverage and continued debt repayment remain our top capital allocation priorities for 2026.

We will continue to reduce our leverage over the course of the year and expect to approach the upper end of our target leverage range of 2.5 to 3.5 times by the end of 2026. The company had total liquidity of approximately $496 million, including approximately $274 million in cash and short-term investments, with the remainder available under our revolving credit facility. Turning to slide 9, I will provide our consolidated revenue and adjusted earnings per share guidance for the third quarter and full year 2026. Before I begin, I would like to note that two weeks ago there was flooding in the Cincinnati area that has resulted in operational disruption at our manufacturing site. We responded immediately implementing our business continuity plans. Based on our latest assessment of the inventory available at our distribution centers, our secondary supply sources, and our insurance coverage, we do not expect the event to have a material impact on our revenue or EPS guidance for 2026. For the third quarter, we expect revenues to be in a range of $410 million to $425 million, representing reported growth of 2% to 5.7% and organic growth of 1.9% to 5.7%.

Turning to the full year 2026, we are reaffirming our organic revenue growth guidance range of 0.8% to 3.3%, reflecting our expectation for a second half revenue increase driven by normal seasonality and continued improvement in supply. We are updating our reported revenue outlook to a range of $1.654 to $1.695 billion and reported growth of 1.1% to 3.7% to reflect the FX impact of a stronger U.S. dollar relative to our prior guidance assumption. Turning now to adjusted earnings per share guidance for the third quarter and full year. For the third quarter, we expect adjusted earnings per share in a range of 53 to 61 cents. full year we are maintaining our adjusted earnings per share guidance range of $2.40 to $2.50. The midpoint of our guidance range continues to reflect gross margin and adjusted EBITDA margin expansion over 2025 of 60 and 100 basis points respectively, as our underlying operating assumptions are unchanged. Lastly, we continue to evaluate opportunities to optimize our capital structure, and we expect to refinance our outstanding bank debt in the second half of 2026 if market conditions permit. While we now anticipate some higher interest expense in the second half of the year due to both the current rate environment and a potential refinancing, we expect those impacts to be offset by tariff favorability.

We continue to expect to deliver earnings within our 2026 adjusted EPS guidance range and do not expect the higher interest expense to alter our broader earnings trajectory. Looking beyond 2026, we expect to offset potential interest expense headwinds through ongoing operational improvements and cost savings initiatives. For your reference, we have included the key assumptions underlying our third quarter and full year guidance as well as the key modeling inputs on slide 10. With that, I will turn the call back to Stuart. Thank you, Leah.

Before we move to Q&A, let me close with a few thoughts. The second quarter was another step forward for Integra. We delivered on our commitments, advanced important milestones across the business, and continued to improve the way we operate. We are seeing the benefits of stronger execution and improved supply reliability. The organization is more aligned, and we continue to make meaningful progress on the opportunities future growth, including the Surgimen relaunch and our PMA strategy in implant-based breast reconstruction. As I spend time with our customers, I am increasingly excited about what lies ahead. We still have work to do, but I believe we are building real momentum and positioning Integra well for a strong future.

What gives me confidence is the talent and dedication of our team at Integra. I want to thank our employees for their resilience, commitment to the business, and the way they continue to support our purpose every day. Their focus and perseverance are central to the progress we are making and to the future we are building. Thank you for your continued interest in Integra. Operator, please open the line for questions.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. One moment for questions. Our first question comes from Vic Chopra with BMO Capital Markets. He may proceed.

Morning, Stuart. Hi, Leah. This is Anton on for Vic. Thanks for taking our questions. Leah, maybe I'll start with you. Second quarter EPS is going to be consensus by $0.08, but the guide was held intact. Can you talk a little bit more about what's driving the reaffirmed full-year EPS outlook? despite the 3 cent organic outperformance? Is it just conservatism? Was there some spend anticipated in the second quarter that shifted to later this year? Is there some kind of incremental expense headwind you're expecting in the second half? Yes.

Yes, certainly. Thanks, Anton, for the question. So, yes, to your point, our adjusted EPS was 56 cents. We were 4 cents above the our entire guidance range 8 cents above the midpoint, to your point. Notably, we were also 24% above our prior year EPS. Relative to our May guidance, what you saw is revenue delivery and transformation savings were absolutely in line with our expectations. We did see stronger performance from an operational execution perspective, which contributed to EPS being at the high end of the guide. In addition, though, we saw tariff favorability of about five cents per share.

So that's what drove us above the high end of our guide for the quarter. And to your point, in the second half, what we are now doing is that the upside that we saw from tariff favorability, which we had communicated in May, we have right-sized our tariff estimates or assumptions, continue to believe our tariff exposure for the year will be about 10 cents. And what we had as protection for any additional tariff changes, we are now using to mitigate an expectation of higher interest expense in the second half as a result of a planned refinancing transaction. So to your point, we do not expect any operational headwinds to offset some of the upside that we saw, but we do expect to see interest expense headwinds.

All right, great. I appreciate that, Colorado. And Stuart, you've appointed a new chief commercial officer and are going on commercial offense. Just looking at the business, where is the organization under index today? Call points, GPO penetration, geographic coverage, etc. And what are the areas that you're targeting to reinvigorate a commercial engine over the next 12 to 18 months?.

Thanks. Let me start with very positive notes news, which is our supply situation is improving and has improved dramatically. And that is allowing our organization to be more proactive to go on the offense. The new divisional and commercial structures have been implemented, including our new chief commercial officer and also new division leaders reporting into that role. So the focus is on accountability, faster decision-making, stronger ownership. broader enterprise contracting and deeper customer and hospital engagement. I want to reiterate enterprise. We have a really good set of relationships with GPOs and IDNs, which have really been built around our neuro business. business, and specialty surgery. But that leaves a lot of opportunity to expand those relationships into tissue reconstruction and ENT. And it's just a natural thing to add those products to our national account contracts.

So our Our focus is on better deployment, coordination, using the current organization more effectively, The only real increase we expect in Salesforce is going to be – towards surge amend as it ramps, and that will be consistent with the original plan for surge amend as it begins to grow. So what we don't see is a broader strategy reset. There's not a Salesforce restructuring. It's really just a way of reinforcing our positioning with customers.

Thank you. Our next question comes from Ryan Zimmerman with VTIG. You may proceed.

Good morning, Stuart, Leah. This is Izzy on for Ryan. Thanks for taking the question. Stuart, I just want to start with you. You know, it's been a couple months since you have stepped back into the CEO role here at Integra. And I was curious what you have seen in that time that has kind of been in line with your expectations and if there has been anything that maybe you didn't expect.

So, first of all, I'm very happy with what I found. I would say all of our focus as a leadership team is on improving execution. needs a strategic reset. We've got strong market positions. We participate in really attractive in markets. specialty surgery end markets like neuro and ENT and plastic and reconstructive surgery. And our products are clinically important. They're used in critical situations for patients' life and well-being. Our leadership team and the continuity in our leadership team is supporting execution, accountability, consistent progress. So I really haven't seen a need for a reset.

What I do see is an opportunity to continue to invest in our organization and drive simplification and.

accountability. Got it, thank you. And I think to the question prior to me Stuart, you mentioned that SurgiMend is expected to come back prior or in line with prior expectations. I was hoping you could maybe quantify that a little bit more ahead of that fourth quarter launch and maybe some of the expectations into.

Thanks for taking the question. Sure. So first, let me talk a little bit about how we've been doing in the market pre-surgement. You know, we sell Durazarb into... into the market with again, a separate smaller sales force. We've been driving Durazorb share and growth consistently in the double digits. So we continue with that sales organization, to be asked when are we going to get Surge Your Mind relaunched and how quickly we can bring it to market. So we have real confidence in the demand for that product from legacy customers as well as new customers. The market mix in terms of demand for tissue has been moving from human tissue to xenograft and to resorbable synthetics.

And that really plays to our Surgimen portfolio and our Durazor portfolio. So we expect share recapture to build up. over multiple quarters with surger men. And I would remind you that our 2026 guidance does not assume any meaningful surger men contribution. We do expect to launch it in the fourth quarter. And then we expect a modest recovery. I think I would say something to the effect of 50% of its historical performance of $40 million. And in line with our Primatrix launch, which has been going very well and where we seem to be driving. relatively quickly about 50% of the legacy revenues.

Thank you. Our next question comes from Ravi Misra with Truist Securities. You may proceed.

Hi, good morning. Thank you for taking the question. So just on the revenue guide, So can you maybe talk about what gets you to the high end or the low end of the 3Q guide? And while we're at it, 2027 kind of consensus has growth acceleration, on the top line. Just curious, you know, with all these products coming to market, potential indication expansion for your tissue and surgemand, Are you comfortable with where the street sits? Thanks, and I have one follow-up.

Certainly. Thanks for the question, Robbie. So, to your first part of your question regarding our 2026 guide, high and low. So, as you heard, we are reaffirming our full-year organic revenue growth guidance of 0.8 to 3.3%. We did update our reported revenue range just to reflect We get to the high end of that guide through stronger supply reliability, stronger seasonal demand, as well as faster realization of our cost savings. The low end reflects a more measured pace of supply recovery as well as second half executions. So that's the high and the low. To your question on 2027, as you know, we do not provide 2027 guidance during this call.

We'll do that officially in February, but I can give you a way to think about performance in 2027. So on the top line through revenue, we do expect to see growth in 27 versus 26, but like the approach we took in 2026, we're going to continue to be very prudent with respect to our assumptions on the pace of supply as well as share recovery throughout the year. From an EPS perspective, we do expect to be able to offset the incremental interest expense headwind that I talked about earlier as a result of a second half 26 refinancing through additional cost savings. When we talked about our 2026 initiatives earlier, we indicated that not only were we going to be able to offset the incremental interest expense headwind, but we also indicated that we were going to be able to offset the incremental interest expense headwind. they going to deliver the 25 to 30 million in cost savings that we projected for 26, but on an annualized basis, they would deliver an incremental 10 to 15 million dollars in 2027. Additionally, we expect to see remediation and transformation costs come down as we continue to strengthen our quality, as well as stable our supply, and all of these things together should allow us to see EPS growth faster than the rate of sales growth. And then finally, on cash flow, we expect to see continued improvement.

of the cash flow generation as we work to improve our overall quality of earnings. Great. Thank you very much. Super helpful, Culler. And then just one last follow-up for me. Just in ENT, I think your performance was a little bit better than we expected. Still a year-over-year decline, I think. But can you talk about the outlook here? I mean, you know, around the reimbursement headwinds in a Clarence and then maybe how elective procedures are shaping up in this space. Thanks a lot.

Certainly. So, from an A&T perspective, to your point, Q2 did decline, low single digits. We did continue to see growth on the Microfrance Instruments part of the business, but that was more than offset by the continued reimbursement pressures that you mentioned on the Sinus Balloons part of the business. as part of our Q1 results that we did expect ANT to be down on a four-year basis. And that continues to hold true and is reflected in our guide at this point in time. Our focus going forward will be to focus on innovation in order to drive growth in ENT in the long term. And where we see those kind of more innovative segments are in navigated systems as well as e-station tubes. To your point on procedures, You know, and I'll talk broadly because, you know, as we look across the business, Overall, procedural demand has remained generally consistent with our expectations during the quarter. The majority of our business, if you remember, is in trauma and acute care versus truly elective procedures.

And so while there may be varying impacts across procedures as well as end markets, right now we can't see any specific evidence that we're seeing any unusual impacts from whether it be ACA subsidies or any other sort of insurance enrollment trends. And so we believe the procedures and care settings that we operate in provide some protection for us and haven't seen any real impacts.

Thank you. Our next question comes from Lawrence Beagleson with Wells Fargo. You may proceed.

Hi, good morning. This is Ross Osborne for Larry. So starting off, I realize Integris again had a tough comp, but ignoring the prior year, how would you rate the level of demand you're seeing today and how should we think about contribution to next year?.

Yes. So for Q2, we did see a decline in wound reconstruction. There were two parts to that. It was driven by Integra Skin as well as Micromatrix. To your question specifically on Integra Skin, revenue was actually up sequentially as you look Q2 versus Q1. And so the performance versus a year ago was really due to kind of that tough year ago comp driven by backorder clearance that we saw in Q2 2025. And so from an Integra Skin perspective, we've expect to build on the momentum that we've seen in terms of sequential revenue lift through the balance of the year. And then as it relates to micromatrix, the decline there reflects increased competition based on new entrants in the powder form.

In total, wind reconstruction through the first half was about flat, and that is consistent with what's currently contemplated in our guidance.

Okay, great. And then, what's the latest on MediHoney, and how should we think about that as a growth contributor in 27?.

Yes, why don't I grab MetaHoney? First of all, we continue to advance the work to bring MetaHoney back to market in 2027. We are including nothing in our 2026 guidance for MetaHoney. And we'll continue to move forward with an expectation of bringing the product back to market in 2027. It's in significant demand, and so we're confident in our ability to regain share over time as we bring the product back.

Thanks for taking our questions. Thank you. Our next question comes from Travis Feed with Bank of America. You may proceed.

This is Rae on for Travis. Thanks for taking our questions. Just to build on the previous question on wound reconstruction, how should we be thinking about performance in the second half now with the return of Primatrix and DuraPair strength building? And then with Sjogermann, I appreciate that the contribution in 2026 is not as material, but maybe more into 2027. When can we expect the wound reconstruction business as a whole to return to more sustainable strength?.

So let me take a crack. First, our relaunch of Primatrix is going, I would say, exceptionally well. Our numbers are in line with our expectation, and we're seeing significant early signs of customer relaunch. Approximately nine months into the relaunch, the revenues recovered to slightly more than 50% of the pre-recall levels, and Prime Matrix continues to increase sequentially quarter over quarter. I would say one of the upsides our recovery is that not only are we winning back prior customers, but our Commercial team has been identifying additional opportunities based on many of the learnings that we had while the products were off the market. Let me take a second on Surgimend. Braintree is actively manufacturing Surgimend, and we consider that a key operational milestone for Integra.

Our near-term focus is building inventory to support a phased and disciplined Q4 relaunch with sufficient inventory expected for the launch. We will have a controlled launch. market relaunch, applying what we've learned from Primatrix to the way we relaunch the product, and we'll start by engaging the historical highest volume users and the KOLs first. Braintree was built with a quality system designed to meet the regulatory standards and again we are not assuming any meaningful Surgimen contribution in 2026.

Got it, thank you. I guess on Surgimen, maybe just to build and looking into 2027, I appreciate that you've the FDA has cleared the PMA contingent on a successful inspection. Is there a window frame in which we can expect the FDA inspection to occur? Have you maybe submitted a request for them to come visit? How should we be thinking about the timeline for breast reconstruction?.

Yes, let me open the question a little bit more broadly to Surgimend and Durazorb, both of which are working their way into the future. toward a PMA label. So first, let me talk about Surgimen. So as you acknowledge, the clinical safety and efficacy review is complete, and we have an approvable decision. decision from FDA already in place. So the PMA is now pending a successful pre-approval inspection at Braintree, which we will be ready for this year. For Durazorb, enrollment and follow-up are complete and data analysis is underway. So that's moving on a slower timeframe than Surgimend. And like Surgimend, It will, the PMA will also require a manufacturing facility pre-approval inspection.

Obviously, always timing for any approval is up to the FDA, but we're expecting approval for surge amend earlier in the year 2027 and later in the year for Durazorb. I'll remind you, all of our Warning letter action items are expected to be implemented by the end of 2026, but any inspection and approval timing ultimately remains subject to the FDA.

Thank you very much. Thank you. Our next question comes from Robert Marcus with JPMorgan. You may proceed.

Hi, thanks for the question. This is Alan on for Robbie. I joined a little bit late. So sorry if this has been asked already, but. You know, when I look at your performance down the piano this quarter, I definitely saw much better control. I think we've been seeing that on a good. trajectory recently, but when we think about, you know, the trajectory for the balance of the year, how should we think about, you know, balancing continued SG&A controls with, you know, your efforts to get some of these new products back online?.

Yes. So let me take that, Alan. Thank you for the question. So in terms of cadence of the year of how we deliver against our guide, what you'll see is, you know, we talked about from a revenue lens, you know, Q1, we saw a step up from Q1 to Q2 of about $27,000. million dollars. That's exactly kind of what we laid out as part of our May guidance. Our Q3 guide keeps Q2 and Q3 about flat. And then we'll see another step up in Q4 of about $25 million. So that's the cadence we described in May. It's how we've been executing through Q2 and how we continue to expect execute through the balance of the year.

On the cost side of the equation, if you recall, when we instituted or implemented the initiatives that were going to drive $25 to $30 million of savings this year, what we said is the actions and activities had been implemented as of Q1, but we would realize an acceleration of those savings as we move throughout the year. And so that's going to be the driver to be able to drive additional leverage from an SG&A perspective for each quarter as we move forward from Q3 on for the balance of the year. And because it's tied to those initiatives, right, the very strategic part of our transformation in terms of operating model, how we're building new ways of working, we can do that while also making sure that we execute flawlessly against the planned launches for Surgimen as well as executing against the.

remainder of our remediation commitment. Got it. Thanks. And I heard your answer on the impact of ACA subsidies, how you're kind of insulated from that, but just curious on the CapEx side of the equation. And again, sorry if you've already answered the question, but just generally the health of the broader CapEx market.

So our capital market, yes. So our capital business, we saw strong growth in CUSA for the quarter. That performance was offset by some of our smaller ticket kind of capital equipment. But overall, we still believe our funnel remains healthy and the broader market remains healthy.

for capital. Thank you. Our next question comes from Jason Bedford with Raymond James and Associates. You may proceed.

Hi, this is Elena for Jason. Thanks for taking my question. I have one on guidance. Do you expect 3Q organic growth to be an acceleration from the first top levels? What gives you confidence in this guide, especially given the top prior year comp? And can you talk about the moving pieces?.

that contributes to growth? Yes, so let me level set because a year ago in Q3, we actually had experienced two supply interruptions that actually drove performance down for that quarter. So as we now lap that period, we actually have an easier comp, if you will, Q3 26 versus 25. So that describes part of the performance that we expect to deliver and what's currently reflected in the guide. But in addition to that, right, As we move through the year, what was also communicated is, you know, we continue to have supply improvements. We continue to see momentum across parts of our business, particularly in neurosurgery, and expect to see more momentum in tiger skin, and as we already discussed, with the return of surgeons in Q4. That in and of itself for the quarter will not be a material contribution. It still marks a very significant milestone in terms of getting that product back into the market.

Okay, thank you. And I also had a question on the leadership changes and could you please share more on why is now the right time for this change and what are the priorities for these businesses going forward?.

Sure. So, leadership change is really reflected only in the commercial organization, and it really reflects a succession process. So, our success Our neuro leader, our specialty surgery leader, was promoted to chief commercial officer. And in each of the divisions, we promoted new division presidents. But in each case, they came from inside our business. business and come with significant knowledge and following within our organization. We bring together the leadership of the two divisions, which then allows us to coordinate our enterprise activity where we see a lot of opportunity to leverage our GPO and IDN presence that is really on the surgical side drive it into the tissue recon and ENT side so I wouldn't think of this as a significant change in leadership as opposed to an evolution of leadership where we're getting even more opportunity to leverage our internal leaders throughout the commercial part of the business.

Okay, thank you. Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

I'm Rei Tan, and I'm part of the med tech research team here at Bank of America. It's my pleasure to be hosting Integra here today. From Integra, we have Lea Knight, CFO. Welcome, Lea, and thank you for coming.

Thank you, Rei. We appreciate the opportunity to be here with you.

Great. I guess to start, you announced Stuart's return to the CEO seat a week ago. Could we maybe walk through the nature of this transition, what it means for the company going forward? And should we expect any change in terms of strategic focus?

Certainly. So as you mentioned, last week as part of our earnings, we announced the fact that Mojdeh Poul and the Board came to a mutual decision for her to step down as CEO. And now Stuart occupies the position of both Chairman and CEO. As part of that, Stuart has been abundantly clear around those areas that will continue to be focus areas that will not change. First, all the work that's going on with respect to our transformation. We've been engaging in a lot of work for the past 2 years to build up our operational capability to strengthen our quality management systems. That work continues. It will move forward. Those are initiatives led by Mojdeh Poul, but they had the approval of the Board, and Stuart has also given it his full force in backing.

One of the areas of opportunity, though, as we move forward, that will be a focus area for Stuart is our ability to take more offense when it comes to driving commercial strategy and moving into a phase of accelerating growth. And so that's where he sees the opportunity going forward. That will be his focus area. The other area, though, that remains unchanged is where our focus is as a business. So right now, we're focused in neurosurgery, tissue reconstruction, ENT. Those markets will continue to underpin our strategy as we move forward.

As a reminder, they represent a total addressable market size of $9 billion. We operate in niche spaces with durable demand, and we compete at levels where we're one or two in most of our spaces. So those things will remain unchanged.

Awesome. You kind of touched on the things needed to get the company back on the offensive. What are maybe some internal metrics that give you the confidence volatility meaningfully declines as you move through 2026 and beyond? Where do you -- you touched on where you see more work to be done, but maybe we could double-click on that.

Yes. I think the first proof point in terms of giving us confidence are our Q1 results. As we reported last week, we were able to deliver both revenue and EPS above the high end of our guide, which I think reflects some of the improvements that we're making as part of our transformation plan. But the other things we look to inside of our company that gives us confidence that we can sustain those are things like we look at the level of supply disruptions, right? And we've seen less in terms of number and magnitude of those. We look at things like some of the capabilities that we stood up in terms of our supply chain control tower, which is essentially a dashboard of metrics that we use to gauge the overall health of the business and it's helped improve visibility so we can get in front of issues and mitigate them more quickly.

We look at some of the yield improvements that we've been able to drive, which has helped ensure better supply availability so that we're more consistently meeting demand. We also look at things like as a med tech company, it's not unusual that we get -- are subject to external regulatory audits. And as we continue to have more of those and have less observations in terms of number and magnitude, it's another clear indicator. And the final point on that, I would mention is cash flow, right? So that's been another source of challenge for us, but we've seen meaningful cash flow improvement as part of our Q1 results, and we expect that to continue. And so as we measure all of these indicators, what we're seeing, in fact, is it is helping to lower the volatility, which is going to be the key to allow us to perform more consistently from a growth perspective.

Great. Talking about Q1, on your earnings call, you mentioned that you don't expect to expand your commercial sales force in the near future. Could you maybe walk us through how you plan to optimize your existing sales force to drive growth in both existing products but -- and also in the recent and upcoming launches?

Yes. I think it's important to remember that as we've been managing through the challenges that we've experienced as of late, we've been very clear that we have a supply issue, not a demand issue. And our sales force has been a source of strength for us, and we expect it to continue to be as we continue to drive growth on this business. We know they have deep, trusted relationships with our surgeons. We know we have clinical -- strong clinical differences in terms of our product and product differentiation. And the opportunity that we have is to make sure that we can consistently get supply in the hands of our sales force so that we can meet demand and drive growth. And so that's the opportunity in front of us.

The other things that we're going to do to help drive that growth efficiently, right, because it doesn't mean we have to scale up or reduce to be clear, right? So we can accomplish these things without changing necessarily the size of our sales force, is bring products back to market that are currently off market, right? As we broaden the portfolio, we also have an ability to create scale and leverage in higher growth, taking advantage of how market dynamics have changed since we've been out of some of these spaces, specifically in outpatient wound. There are changes in the reimbursement landscape that our sales force have an opportunity to help take advantage of to drive growth. And then finally, bringing to bear analytical tools that help drive our commercial strategies more efficiently are all ways that we see growing without necessarily changing the size of our sales force.

Awesome. That's a nice segue into a question on Braintree with the supply issues. What measures have been implemented to ensure that the Braintree facility avoids shortfalls seen with Boston -- the Boston facility? And as Braintree comes online, how should we think about production sequencing and ramping?

So for perspective, our Boston facility and the issues that we saw happen there -- happened there through an accumulation of gaps in our quality management system that were further compounded by the physical limitations of that site. So what do I mean, right? That site was a building that had like 4 or 5 levels that from a manufacturing standpoint meant we had to do parts of the process on one level and then move it to another level, right? As you can imagine, a very inefficient flow. The Braintree facility that we stood up is a world-class tissue manufacturing facility designed, right, to drive efficiency and flow of the manufacturing process and avoid the challenges that we saw with the physical limitations at the -- at our Boston site.

We've also invested in completely revamping our quality management system. So now that we have this new manufacturing design and process flow, we have a quality management system to complement. We've brought technology to bear, so we no longer have some of the manual processes that existed in Boston. We have subjected the entire process to a very rigorous validation protocol to make sure that we can withstand the scrutiny and the complexity of our manufacturing processes. We've invested in placing new leadership and talent in that site.

And that's important because what we're playing for here is not just bringing back our SurgiMend 510(k) product, but we also have to be able to sustain manufacturing of a PMA level product, which requires more manufacturing complexity. And so we needed to make sure we had the leadership in place to make that happen. But that said, we were on track for operationalizing the site in June. So very excited about that. That will allow us to build inventory in Q3, and it will support our Q4 launch of SurgiMend back into the market.

Awesome. You touched on it briefly in the previous answer and also in your opening the SurgiMend relaunch. The SurgiMend growth rate was outpacing the market before being pulled. What has changed in the category while SurgiMend was absent? And how might those changes impact your reentry strategy?

Yes. So you're right, there's been a lot of changes. But in sum, what I would say are the changes that we're seeing playing out in the market are much more favorable to our position. So this isn't a situation where we're chasing a market that's moved away from us. This is absolutely us reentering a market that's moving towards us. What does that mean? Market size? So what we've seen is there's been the market for surgical matrices and breast reconstruction is an $800 million market. It's growing at double digits. It means we have a bigger kind of arena within which to compete, so more opportunity. There's been a favorable shift in terms of mix and usage in the market.

So a movement away from human ADM as a matrix to xenografts as well as resorbable synthetics. And those are areas that play exactly to our portfolio with SurgiMend and DuraSorb. We've also seen a change in how procedures are being performed and the nature of those changes does require larger sizes, which also plays well to our portfolio. Right now, it's our understanding that we continue to expect to be first and second in terms of getting a PMA label in implant-based breast reconstruction, which is really important because it means we become the only company that can promote in that space. And then the last thing I would note is from a DuraSorb perspective, we have been able to stay relevant and in front of our customer base, even though we haven't had SurgiMend on the market because of DuraSorb, right?

And so that provides an opportunity to reconnect with our customers once SurgiMend is back in the market, but it also creates the portfolio play that I was referencing earlier. So our approach to returning to market is going to be phased and disciplined. We'll start in Q4 with SurgiMend coming back on market. We're going to focus on some of our key users from the past, but then we'll expand that once we get PMA label for SurgiMend and DuraSorb in 2027, and that will give us the ability to promote and really drive growth across both of those brands.

Great. Lots to look forward to. Maybe turning to something that has already returned to the market. On PriMatrix, how has the launch been going? And how do you see adoption progressing throughout this year?

So we're really excited about PriMatrix. As a reminder, we relaunched that brand in Q4 of 2025. It had been off the market for a little over two years at that point. In Q4, it was much more of a controlled launch. And since then, we've expanded the launch in Q1, and we're really excited about the progress. So it's been performing consistent with expectations.

We're seeing prior users come back, which has been important in terms of driving ultimate share recovery and growth. For transparency, as we have these conversations, we have prior users that are excited about having us back on shelf and they've been waiting because they understand the clinical differentiation that our products bring. But we've had others to say, hey, look, we need you to continue to demonstrate that you're going to show up and sustainably be there to meet our needs. But we are open to both dialogues, both conversations because we've been able to show that because our products do have differentiation, do perform differently, we found ways to get in and gain access and while we're at it, drive growth across the entirety of the portfolio that we have in terms of wound reconstruction, which includes Integra Skin, it includes our UBM platform. So very excited about what we see to date. We think we can leverage those learnings as we move forward and return SurgiMend to the market.

Great. On share recovery, as you reenter with SurgiMend, PriMatrix and Durepair, how are you thinking about leveraging price as a factor for accelerating the adoption?

Yes. So we understand that as we had to return all these products back to market, part of it is rebuilding trust with our customers and reeducating them on the clinical difference of our products. And we do have strong clinical differences that help support differentiated outcomes that are valuable to our customers. And so for competitive reasons, I can't get into speaking about price specifically, but what I can share is because of those clinical differences, because our products are trusted, we don't believe we have to meaningfully change price in order to get back on shelf and regain share.

Great. On wound care reimbursement, probably a topic of much discussion. What impacts have you seen materializing in the market with CMS reimbursement changes now in effect for almost half a year? How do you see these dynamics translating into opportunities for Integra?

Yes. So there are a lot of opportunities here, but it's probably worth me stepping through some of the dynamics that are maybe unique to our business. First, approximately 90% of our business is based in the inpatient acute setting. Reimbursement in that setting happens under a DRG, and there haven't been any changes to that structure. Our performance in that part of our business continues to be strong, and we're excited about what we saw in Q1 for the products in wound reconstruction, we saw double-digit growth. So that business remains strong and healthy. There's 10% of our business that actually does take place in the outpatient setting.

And even on that part of the business, we are not seeing the disruption that others have seen in that space. If anything, we're seeing indications of positive growth in that space. And I think the reasons why are because of the unique characteristics of our portfolio. What that means is -- we have the product, price, size and science, right, to remain viable as treatment alternatives in that space. We have a broad portfolio offers treatment options to the physicians. From a price perspective, we were already priced in line with the current reimbursement rate of $127 per square centimeter. It means we haven't had to change our price. We haven't had to change our margins.

From a size perspective, we have multiple sizes across the products in our portfolio. It means we don't have the wastage issues that others are dealing with. And from a science perspective, we have products that are backed by strong clinical evidence, and that helps to ensure that physicians are getting their desired outcomes when they use our products.

And so all those features mean we remain viable in terms of our product offerings in the outpatient setting. While we know there are a lot of other competitive products that can't be viable given the changes in the reimbursement landscape. So there's a little bit of wait and see here, right? Because if procedures for skin substitutes stay in the outpatient setting, it means we are now one of a lot less products that can remain viable in that space. So there's opportunity for us there. If procedures move to what I'll call inpatient adjacent spaces like ASCs or wound clinics, we already have a huge engine and channel access there because of our inpatient business that we can also take advantage of. So that's where we see the opportunities. Again, some of this is a wait and see because we don't know how the market is going to evolve, but we're excited either way.

Sounds good. We've talked about a broad portfolio. When looking at your portfolio, where do you see growth coming from? Does tissue reconstruction become more central to the growth algorithm over time? Or does neurosurgery remain the primary growth driver going forward?

The answer is see both. So we see growth across both parts of our division. That said, we do see faster growth happening in tissue reconstruction. And that's through a couple of -- that's for a couple of reasons. One, as we are strengthening our supply reliability, we have better inventory in the right places to consistently meet demand, that will be a driver of growth. Additionally, we're bringing more of our products back to market. So as I mentioned earlier, SurgiMend back to market. So as I mentioned earlier, SurgiMend relaunches in Q4 of this year. That will be a driver of growth in 2026.

We are pursuing the regulatory pathway that I mentioned earlier, which is getting a PMA label on SurgiMend and DuraSorb, which we expect to get in '27, that will continue that growth. So we're very excited about that part of the portfolio. On the specialty surgery side of the business, we do also have innovation in the pipeline that will help further support our category leadership in catheters as well as minimally invasive surgery and neurosurgical procedures. And so that also represents growth on the horizon for that part of our business.

Great. Digging a little deeper into the segments. In ENT, the balloon sinuplasty segment continues to face pressures, while other areas like AERA and TruDi continue to grow. How are you thinking about recovering the balloon Sinuplasty segment?

Yes. So to your point, through our Q1 results, we did continue to see headwinds on balloon Sinuplasty business due to reimbursement challenges. There are headwinds that we faced in 2025, and we knew that they were headwinds that would continue into 2026. And we do have efforts through our health economics teams to help mitigate and the impact of some of those headwinds. But the real opportunity to get this business back to growth lies in the more innovative segments of the business, specifically our navigation systems and our Eustachian tubes.

Those are areas that have been growing in the past that we believe will get to a size that will allow us to offset some of the headwinds that we're seeing in balloon sinuplasty and ultimately get ENT back to a kind of a mid-single to high single-digit growth trajectory.

Great. I guess on capital allocation, how should we be thinking about capital allocation across your portfolio?

Yes. So from a capital allocation perspective, our priority right now remains debt repayment with a focus of driving our leverage down to our targeted range of 2.5 to 3.5x. Right now for 2026, we believe by the end of this year, we'll be able to get it just outside of that targeted range, so just outside the upper end of that targeted range, but we'll remain focused as we move forward in 2027 to make sure that we're operating within that.

As we get beyond that, we do see eventually an opportunity to return inorganic growth to our strategy through M&A, but it will only be after we have stabilized our operations, after we've demonstrated an ability to drive cash flows back up to where we're accustomed to. This business used to generate operating cash flows in excess of $200 million. Once those things are done, that's when we'll -- it will be safe to kind of pursue more of an inorganic strategy.

Great. You kind of answered my next question. But I guess to double-click on that, when the time comes for adding inorganic growth back into your strategy or your toolkit, what deal profile would make the most sense for Integra?

Yes. So from a deal profile, clearly, we're going to look for those opportunities that drive accretive growth from an ROIC perspective. We're going to -- as I mentioned earlier, we remain focused in ENT, neurosurgery and tissue recon. So we're going to look in spaces that build on our market leadership in those areas or near adjacencies. And then from a size perspective, we're going to look for something that's like a tuck-in size, midsize where we can leverage our scale to create value faster.

Sounds good. On tariffs, on your earnings call, you mentioned you now expect a $0.10 benefit from tariffs. Can you walk us through that benefit? Where did it come from? And how do you expect tariffs to impact subsequent quarters going forward?

Certainly. So the $0.10 benefit that we realized in Q1 was a function of two things. One, we recorded a refund related to tariffs that we paid in the prior year. That was about $0.03 of it. And then because IEEPA tariffs were ruled unlawful, we didn't incur about $0.07 of tariff expense that we had expected to occur. So that $0.10 is relative to our guide. On a full year basis, we now expect tariff impacts to be about $0.10 to EPS. Our previous guidance had indicated an expectation of $0.32. So that $0.22 differential breaks into two elements: the $0.10 that we realized in Q1, which we adjusted our full year guide for.

And the $0.12 difference reflects what could be a benefit for the rest of the year if there were no more changes in tariff policy moving forward. But I think as we all understand, there's a lot that's still changing in terms of the tariff landscape. It's still very early in the year. So we didn't reflect that as part of our guide. And as we move through the year and understand some of those changes, we'll update as appropriate.

Great. Just to follow up on guidance. You've guided to $25 million to $30 million of savings in 2026 through initiatives like COGS improvement and third-party spend reductions. Where are you in this -- where are you in these initiatives? And how much has been realized so far? And how should we think about margin expansion beyond 2026?

Yes. So we had announced our plans around pursuing a margin enhancement strategy in last year. And pursuant to that, we have identified $25 million to $30 million of cost savings initiatives that are fully implemented at this point. And so really, we're just using the balance of the year to realize those benefits. The initiatives themselves were focused in both our cost of goods sold area, so driving manufacturing efficiencies, yield improvements, operating model changes in structure, along with efficiencies in SG&A. And in SG&A, we focus on driving down third-party costs, also driving operating model efficiencies through structure there, too. And so those are in place and fully reflected and contemplated in the guidance that we provided.

Great. On cash conversion, like you mentioned, free cash flow inflected meaningfully in recent quarters and returned to positive in the third quarter of 2025. What structural changes drove that improvement? And how should we be thinking about sustainability within free cash flow going forward?

Yes. So absolutely a focus area for us. We committed in terms of operating cash flow to drive improvement of $150 million, which would bring our operating cash flow for the year to $200 million. And that meant free cash flow goal of about $140 million versus being negative in the prior year, to your point. Drivers of that are improved EBITDA year-over-year, improvement in working capital, but also we have some several large expenditures around EU MDR compliance and Braintree start-up costs that will come down meaningfully this year, right, because we are getting Braintree operational.

And so those are kind of the big drivers from an operating cash flow perspective. From a CapEx perspective, to get to free cash flow, we are also seeing a reduction in CapEx because -- in the previous two years, we made investments around Braintree. We made investments to drive capacity expansion at our sites. We made investments to do asset refresh at our sites. Now that we're beyond that, those investments, we're bringing -- we're intentionally bringing our CapEx down to more normalized levels. So those will be the drivers.

Awesome. And to touch on deleveraging priorities, you exited 2025 with a consolidated total leverage ratio of 4.5x, and we're able to bring that down to 4.1x in Q1. How do you plan on bringing -- continuing to bring that down even further to your target range of 2.5 to 3.5x? And how are you thinking about pacing debt paydown relative to reinvestment in growth?

Yes. So there's a lot there. So in terms of our leverage, to your point, yes, we exited Q1 at 4.1x. We had headroom up against kind of our upper limit of about one turn. We expect to hold that throughout the year. And what will happen is we do -- our debt max will step down through the year, but we'll still keep about a turn of cushion against that. It will be driven by the same initiatives I just talked about that are going to drive cash flow generation will be the enablers to allow us to drive our leverage down.

And so while we are making investments from an operations, quality management system, supply chain perspective, we're being very intentional that those are our priorities, debt pay down to make sure we're getting overall leverage down is as well, and we're going to maintain that posture until we get back into our target range, which at this point, we do believe we will -- that will happen in 2027.

Awesome. As we're coming up on time, I just want to turn it to see if you had any closing remarks.

No. So thank you again for the opportunity to be here. I think we're at an exciting point with respect to our transformation. And it feels good to see evidence that the transformation is working. We saw that play out in terms of our Q1 results. We are seeing lower volatility in the business, which gives us confidence that we can execute against our full year guide. And quite frankly, I'm excited about the opportunity to prove that out as our kind of leaders across Integra. It feels good to be in a place where we're starting to get some traction. We still have a lot of work to do, right? So as much progress as we've made, there's still a fair amount of work ahead of us, but we're looking forward to it.

Sounds great. Looking forward to it. Thank you so much.

Thank you.

Good day, and welcome to Integra LifeSciences First Quarter 2026 Financial Results. [Operator Instructions] Also note, this call is being recorded. I would now like to turn the call over to Chris Ward, Senior Director of Investor Relations. Please go ahead.

Good morning, and thank you for joining the Integra LifeSciences First Quarter 2026 Earnings Conference Call. Joining me on the call are Stuart Essig, Chairman, President and Chief Executive Officer; and Lea Knight, Chief Financial Officer. This morning, we issued 2 press releases, the first announcing the CEO transition and other organizational changes and the second announcing our first quarter 2026 financial results. The releases and earnings presentation that we will reference during the call are available at integralife.com under Investors, Events and Presentations and a file named First Quarter 2026 Earnings Call Presentation.

Before we begin, I want to remind you that many statements made during this call may be considered forward-looking. Factors that could cause actual results to differ materially are discussed in the company's Exchange Act reports filed with the SEC. Also in our prepared remarks, we will reference reported and organic revenue growth. Organic revenue growth excludes the effects of foreign currency, acquisitions and divestitures. Unless otherwise stated, all disaggregated and franchise level revenue growth rates are based on organic performance. Lastly, our comments today will include certain non-GAAP financial measures. Reconciliations of non-GAAP financial measures are included in today's press release, which is an exhibit to Integra's current report on Form 8-K filed today with the SEC. And with that, I will now turn the call over to Stuart.

Thank you, Chris. Before we turn to the quarter, I want to address the leadership change that we announced this morning. As you have seen from our announcement, I have stepped back into the role as President and CEO and will retain my current role as Chairman. I want to thank Mojdeh Poul for her leadership and for the meaningful progress made during her tenure. Under her leadership, the company advanced a number of important initiatives, including enterprise-wide portfolio and program prioritization, risk-based approach to quality remediation work, operations resiliency improvements and the more recent transformation and business process optimization efforts.

Those efforts matter, and they are progressing well, and we remain fully committed to them. As I step back into the CEO role, my focus will be on strengthening the culture of the organization while increasing our customer and commercial focus. We want to be more connected to our customers, more aligned with the field, more collaborative across functions and clearer and faster in our execution. We are building on the important work already underway while improving how we work together and how quickly we make things happen.

We remain committed to the quality, compliance, capacity and transformation work underway across the company. That work is progressing well and remains central to how we improve performance and build a stronger Integra.

As we also announced this morning, Mike McBreen has been appointed Chief Commercial Officer. Some of you already know Mike well. He is exceptionally well suited for this role with more than 30 years of commercial experience in the medical technology industry. This newly created role is an important part of how we move forward, and Mike will help drive the next phase of our commercial organization. This move reflects the importance we place on making sure the commercial organization has a strong voice at the leadership table and that customer and market-facing priorities are fully represented in how we operate and make decisions.

This is not about changing direction in the commercial organization. It is about raising its profile, strengthening leadership support around it and better positioning us to succeed.

Our commercial teams have many strengths, and Mike's expanded role is intended to help us build on that momentum, sharpen execution and support stronger coordination across the market-facing parts of the business. This appointment also reflects something broader that matters deeply to me as I return to the CEO role. I want to make sure we are developing the next layer of leadership across the company and giving strong leaders the opportunity to take on larger responsibilities.

Mike's new role as CCO supports that objective and will allow me to devote more direct time and attention to the areas that still require the greatest focus.

This is the kind of leadership model that I want to reinforce across Integra, one that is customer-centered, commercially aware, collaborative, accountable and focused on helping the organization succeed. We want our support functions and leadership teams working in a way that enables the business, supports the field and drives results. That is a cultural tone we intend to reinforce.

I also want to be clear that I'm not stepping in as a transitional CEO. I am assuming this role with a long-term commitment and deep familiarity with the company and its operations. I have served Integra in various capacities as CEO, Executive Chairman and Chairman for almost 30 years. Over the past 2 years, I have been actively involved in key initiatives as Executive Chairman, including active oversight of key operational and quality matters.

These included the implementation of the Compliance Master Plan, the Integra Skin capacity expansion, the initiation of the Braintree facility program and direct communication with investors about the company's progress and path forward. I know this company deeply. I understand what it takes to run it, and I have a clear view of what I believe it will take to move Integra forward from here. So the message today is straightforward. The important work already underway is continuing. It's going well, and it remains central to building a stronger Integra. At the same time, we are sharpening our focus on culture, customers and commercial execution at the top of the organization. I remain confident in both the progress we've made and the opportunity ahead. It is an honor and a privilege to lead this fine organization once again.

With those important announcements in mind, I'd like to now turn to our results on Slide 4. We had a very strong first quarter, and the team demonstrated what it can achieve as we continue to improve product availability. For the first quarter, we delivered total revenue of $392 million and adjusted earnings per share of $0.54, both above the high end of our guidance ranges. Based on our first quarter performance and the strengthening of our foundation, we are maintaining our 2026 revenue guidance of $1.66 billion to $1.7 billion and updating our adjusted earnings per share guidance to a range of $2.40 to $2.50. Lea will now walk through our first quarter results and guidance in more detail.

Thank you, Stuart. Good morning, everyone. I'd like to first thank our team for their contributions to our first quarter results. We delivered strong revenue and adjusted earnings per share in the quarter, reflecting solid product demand, improving supply execution and remediation and the continued positive impact of our transformation. These results were made possible by the foundational work we have implemented over the past year, setting us up for better visibility and execution against our commitments. We are seeing that work translate into more consistent, predictable performance, exactly what we set out to achieve.

Turning to Slide 5, I will cover our first quarter financial results. Our first quarter revenues were $392 million, representing an increase of 2.4% on a reported basis and an organic increase of 1.3%, reflecting continued strong demand for our portfolio, improved supply, increased visibility and strong performance in tissue reconstruction. Adjusted EPS for the quarter was $0.54 compared to $0.41 in the prior year, primarily due to revenue growth, favorable product mix and savings driven by our recent transformation activities. We also saw a $0.02 net tariff benefit driven by the anticipated IEPA refund, partially offset by non-IEPA tariffs expensed in the period.

Gross margin for the quarter was 64.1%, up 190 basis points from the prior year, reflecting favorable product mix, IEPA tariffs and reductions in remediation costs. Adjusted EBITDA margin was 19.4%, up 280 basis points versus Q1 2025, with the above-name factors impacting gross margins with additional benefits from our recent transformation. Cash flows from operations totaled $9.8 million in the first quarter and capital expenditures were $14.8 million. Before transitioning to our segment performance, you likely noticed in this morning's earnings press release that we are renaming our global business segments. Codman Specialty Surgical will now be called Specialty Surgery, and Tissue Technologies will now be called Tissue Reconstruction. Our product brand names will remain unchanged. Turning to Slide 6. We'll take a deeper dive into our Specialty Surgery revenue highlights for the first quarter.

Specialty Surgery revenues was $283 million, up 0.9% on a reported basis, including a 140 basis point benefit from foreign exchange. On an organic basis, revenue was down 0.6% compared to the prior year. Global Neurosurgery delivered 1.9% organic growth, supported by broad demand strength, including Certas Plus, CUSA and BactiSeal, and we expect supply reliability and fulfillment to continue to improve. Sales of capital equipment grew low single digits, benefiting from continued capital funnel strength, including double-digit growth in CUSA and CereLink. Instruments posted a high single-digit decline, primarily due to order timing, which can vary quarter-to-quarter. We do expect growth for the full year.

In ENT, revenue declined low single digits, reflecting strong growth in MicroFrance ENT instruments, offset by continued pressure in sinus balloons and commercial disruption impacts in other products. Revenue in our international markets declined low single digits as continued demand was offset by supply timing in the first quarter.

Moving to our Tissue Reconstruction segment on Slide 7. Tissue Reconstruction revenues were $109 million, representing 6.7% growth on a reported and 6.4% on an organic basis compared to the prior year. The strong growth was partially offset by the impact of MediHoney, where we recorded sales for MediHoney in the first quarter of 2025 prior to the recall. In the first quarter, sales within our wound reconstruction franchise increased 6.2%. This robust performance was primarily fueled by double-digit growth in Integra Skin, mid-double-digit growth in DuraSorb and the PriMatrix launch.

These results include a favorable comparison on Integra Skin, but also underscore the momentum we are seeing in our Wound Reconstruction business, and we remain highly optimistic about the continued growth in this segment.

I'd like to now spend a few moments discussing the recent changes in Medicare reimbursement for skin substitutes. I want to provide clarity on what these changes mean and what they don't mean for our business. In the first quarter, CMS implemented several important changes to Medicare reimbursement rates and related billing rules for skin substitutes in the outpatient wound reconstruction market. Currently, approximately 90% of our Wound Reconstruction revenue is generated from the inpatient market.

The inpatient market is not impacted by these changes. We remain excited by and confident about the inpatient market and the strength of our portfolio and market position. We do believe over time, the updated reimbursement framework will level the economic playing field and create upside opportunities for us.

Our portfolio is priced in line with the new reimbursement rate with multiple size options available and supported by strong clinical evidence. We are already seeing increased demand from physicians for education and clarity on appropriate product selection, sizing and clinical considerations. Our market access and commercial teams are actively engaging customers as they adapt to the new reimbursement landscape, and we are seeing early indicators of incremental volume opportunities.

Overall, we remain confident in our differentiated position in wound reconstruction, where we have the optimal portfolio to address a wide range of clinical needs and the economic value to compete effectively in both inpatient and outpatient markets. During the first quarter, private label sales increased 7.1%. This growth was primarily driven by a favorable comparison to the prior year.

Finally, international sales in tissue reconstruction declined high single digits, reflecting double-digit growth in Integra Skin, which was offset by MediHoney.

If you turn to Slide 8, I will provide a brief update on our balance sheet, capital structure and cash flow. Operating cash flow for the first quarter, which is historically our lowest quarter of the year, was $9.8 million, a $21 million improvement over the first quarter of 2025. This positive trend aligns with our full year expectation of an approximate $150 million increase in operating cash flow compared to 2025, driven by improvements in EBITDA, working capital and significantly reduced expenditures related to EU MDR compliance and the start-up costs for the Braintree facility. Free cash flow for the quarter was negative $5 million with a free cash flow conversion rate of negative 12.1%. As of March 31, net debt was $1.6 billion, and our consolidated total leverage ratio was 4.1x within our current maximum allowable leverage of 5x. We expect to continue reducing our leverage over the course of the year, approaching the upper end of our target leverage range of 2.5 to 3.5x by the end of 2026.

The company had total liquidity of approximately $488 million, including approximately $266 million in cash and short-term investments, with the remainder available under our revolving credit facility.

Turning to Slide 9. I will provide our consolidated revenue and adjusted earnings per share guidance for the second quarter and full year 2026. For the second quarter, we expect revenues to be in the range of $410 million to $425 million, representing reported growth of minus 1.3% to positive 2.3% and organic growth of a range of minus 1.5% to positive 2.1% -- turning to the full year 2026. We are maintaining our revenue and organic growth guidance of $1.66 billion to $1.7 billion and 0.8% to 3.3%, respectively. We expect reported revenue growth in a range of 1.6% to 4.1%, which continues to reflect an approximate 80 basis point annual foreign exchange tailwind.

The first half revenue at the midpoint of our guidance of approximately $809 million gives us confidence in our full year expectations. We anticipate a sequential increase in revenues as we progress through the year with an approximate $26 million step-up in the second quarter, driven by normal seasonality, supply improvement and instrument order timing. We then expect modest sequential growth in the third quarter and a further increase in the fourth quarter. This cadence is consistent with our typical seasonal pattern and underscores the improving stability and predictability of our revenue trends.

Turning to adjusted earnings per share guidance for the second quarter and full year. For the second quarter, we expect adjusted earnings per share in the range of $0.44 to $0.52, representing approximately 6% growth at the midpoint. For the full year, we are updating our adjusted earnings per share guidance by $0.10 to a range of $2.40 to $2.50 as a result of favorable tariff outcomes in the first quarter relative to our February guidance.

Our operational expectations for the year remain unchanged from our original full year guidance. At the midpoint of our updated guidance range, we now expect gross margins and adjusted EBITDA margins to improve 60 basis points and 100 basis points, respectively, compared to 2025. For your reference, we have included the key assumptions underlying our second quarter and full year guidance as well as the key modeling inputs on Slide 10. With that, I will now turn the call back to Stuart.

Thank you, Lea. Before moving to Q&A, I would like to highlight our key takeaways from the first quarter. We are pleased with the performance as we saw strong growth for tissue reconstruction and several of our key products within Specialty Surgery. We continue to execute our foundational and systemic transformation plan to drive consistent durable performance over the long term.

We are looking forward to starting production at our Braintree facility by the end of June and relaunching SurgiMend by the end of the year, while we continue to advance the PMA strategy for both SurgiMend and DuraSorb for implant-based breast reconstruction. Together, these products will strengthen our position in the large and growing $800 million implant-based breast reconstruction market with a biologic as well as a resorbable synthetic solution, representing a meaningful future growth opportunity. We remain confident in our ability to deliver on our 2026 financial commitments, and are equally excited about the longer-term opportunities ahead for Integra.

With a strong position in attractive specialized markets, a more capable and aligned organization and a pipeline of clinical evidence and new products, I am excited about this opportunity to lead Integra again. And I believe the company is well positioned to create significant value for all of our stakeholders. With that, operator, please open the line for questions.

[Operator Instructions] First question comes from Matt Taylor with Jefferies.

Stuart, welcome back, and I'd love to hear a little bit more about why this is the right time for this transition. And any differences in your approach versus prior management in terms of how to execute on the significant priorities you have in this compliance plan and the recovery of the products that have been out of the market.

Thank you, Matt, and I am excited to be back speaking with the analysts again. I think by my count, this is my 57th earnings call. So hopefully, I can do as well as we did a few years ago. Let me first talk about Mojdeh.Mojdeh's decision to step down was mutual between her and the Board. We had differences in certain strategic topics, but the transformation initiatives that we put in place remain the right ones and they're going to continue.

All the initiatives taken under Mojdeh's tenure were approved by me as well as the full Board, and they continue unchanged. I really do appreciate Mojdeh's contributions, and I'm confident with the transition and how it will move smoothly. Going forward, my focus is on execution and going on the offense commercially as we're in a stronger position to meet customer needs. I'm also excited about Mike McBreen's role stepping into the Chief Commercial Officer's role, so we can present a consistent face to customers. Do you have a follow-up, Matt?

Yes. Maybe just on a different topic. You provided some color on the call for Q2 and the phasing here. I just wanted to better understand key assumptions around the step-up in revenue through the year? And then what's weighing on earnings in Q2 and how that evolves through the second half as well?

Yes. Certainly. Thanks for the question, Matt. So to your point, Q1, we had a very good quarter. We were pleased to see a lot of the foundational work that we've been doing to strengthen our quality management system, improve supply reliability is really translating into more consistent execution. To your point around Q2, right, and how we move through the year, we do expect a sequential step-up as we move from Q1 into Q2. That will be driven by some of the normal seasonality that we see coupled with improving supply reliability as well as some instrument order timing.

As we move from Q2, we expect Q3 to be fairly consistent with Q2, which is where we've been in prior years, the exception being a year ago where we did have some unique supply interruptions. But we do expect Q3 to be in line with Q2, and then we'll see a further step-up in Q4, which again is consistent with some of our historical patterns.

I think the other part of your question related to kind of profitability in Q2 relative to what we actualized in Q1. And a lot of that is driven by expectations that we have for how gross margins will move throughout the balance of the year. So let me step through that.

On a full year basis, we are now expecting gross margins to be about 62.5%. In Q2, we'll see gross margins below that. We'll see a little bit of a step-up in Q3 in gross margins and then Q4 will step up even more meaningfully to be above that full year average. The variability that we see in gross margins are largely driven by evolving assumptions in terms of tariffs as well as manufacturing variances that will have an impact and create that variation quarter-to-quarter. So hopefully, that addresses your profitability question. But if not, let me know.

Yes, I'll just summarize by saying -- I'm just going to summarize by saying it's steady as she goes on the transformation. We're well on our way and things are improving. And we're confident enough that we can start what I think of as doubling down on our commercial folks being able to go out and speak with customers and be confident that they've got supply in many of our products.

Our next question comes from Jayson Bedford with Raymond James & Associates.

Welcome back, Stu. Maybe just to tag on the last question, what is the status of the Compliance Master Plan? And is there a way to kind of level set us on what products are on ship fold and when you'd expect these products to come off?

Yes. So let me start, Jayson, on that. As we've mentioned, right, we've been making very good progress through the Compliance Master Plan. We've completed our site assessments. We've been doing our mediation work, which is well underway. We mentioned that, that remediation work would continue into 2026. And we're pleased with the results that we're seeing to date.

As I mentioned, we see improving supply availability, which has allowed us to more consistently meet demand, which is a driver of some of the execution that we saw in Q1, and it will be a driver of how we deliver against our full year outlook. At this point, our full year guide right now doesn't assume a meaningful contribution from returning products back to the market that aren't already on the market. So that does not become a big feature, if you will, or element in terms of driving our full year performance.

Okay. That's helpful. Maybe just as a second question here. I appreciate the increased focus on the commercial side of the business. I guess the question is, does this involve expanding the size of the sales team?

So the answer is no. We, in the last several quarters, had the opportunity with the transformation to ensure that our sales teams were focused, had the right staffing and we're focused on the right customers. It does not imply an increase in sales headcount, and it doesn't imply a decrease in sales headcount.

What it really is, is about coordination of how we present ourselves to our customers and having that centralized under one individual to make sure our divisions are presenting themselves consistently. One of the real advantages that Integra has with our neuro business or our Codman business is that it is so present in most hospitals that it gives us access to many hospitals that wound care companies can't always get into.

So the opportunity to drive collaboratively our 2 divisions, use the relationships we have on the Codman side to continue to drive our hospital-based wound care business into the sites. And then furthermore, we have GPO relationships with almost every major GPO, again, from our Codman business and particularly with the changes going on with wound care reimbursement, having access to the hospital market and the GPO market is going to be critical.

Our next question comes from Ryan Zimmerman with BTIG.

Stuart, welcome back. I want to ask about a few different things. Stuart, there's no question, I think you know the company, you have the history to -- given your tenure with the company. But as you think about the composition of Integra today, the segments you're in, the businesses you're in, do you view every single one of them as the right ones? Is there a portfolio optimization that you see that needs to be done, whether that's expanding into certain markets, leaving certain markets? I'm just curious kind of as you sit here today, kind of what your view of the portfolio of the company is.

All right. Thank you, Ryan. First of all, it's nice to be working with you again. I think you and I are dating ourselves. You may be one of the few analysts on this call who actually covered the company when I was CEO last. And if you go back to when I retired as CEO in 2012, one of the things we did shortly thereafter is a major portfolio review. And at the time, we concluded we couldn't be in the top 1, 2 or 3 spots in orthopedics, and we spun off our spine business to our shareholders, and we sold our Extremity business.

Subsequent to that, we've done a number of divestitures, typically smaller ones, one of a commodity wound care line, and we exited all of our dental disposable business. So I want to be clear, Integra is always looking at the portfolio and always trying to make sure that we've got the right products to be able to be competitive.

So then to answer your question, at the moment, I like the markets we're in. For the most part, they're niche markets. We have opportunity to be in the top 1, 2 or 3, particularly in neuro, ENT and in surgical wound care. And so I'm not expecting any portfolio movements in the near future. Again, like always, we'll look at individual product lines.

And if they're not profitable, we can discontinue them or harvest them. But I like the mix. We're in very defensible markets, and we have an opportunity to grow, particularly as we get our product availability back to where it used to be.

Understood. Appreciate that. And Lea, very pointed comments on outpatient wound care. I appreciate clarifying the exposure to the outpatient side of things relative to inpatient. When you sit here today and given what we're seeing in the wound care market, particularly on the outpatient side, it sounds as though you're going to kind of let things settle and kind of come to you as it may on the outpatient side, where you see opportunity.

But I'm just curious, as you think about what Bob has in his portfolio and the scale you need to bring to compete in outpatient wound, appreciating that you're not going to hire sales forces to focus on that. I guess what is your view of kind of how you capitalize on the outpatient wound opportunity as the market kind of settles out? And what do you need to do to become bigger in that market if that's truly what you guys want to pursue?

Yes. So thanks for the question, Ryan. A couple of things. So to your point around our portfolio and maybe what makes us unique and from our perspective, creates the opportunity for us to drive upside on that part of our business. As you know, across our portfolio, we have a couple of things. We have product price, size and science that work to our advantage. From a product perspective, we have a broad portfolio that offers clinicians choices in terms of how they treat patients.

From a price perspective, our product has already been priced at levels that are in line with the new reimbursement rates of $127 per square centimeter.

So we haven't had to change our pricing nor have we seen any impact on our margins as it relates to this outpatient space. From a size perspective, we have multiple sizes, including small sizes that allows us to minimize some of the wastage that others have been experiencing in this evolving landscape.

And then from a science perspective, our portfolio is backed by strong clinical evidence that lends itself to building confidence in terms of delivering the desired outcomes. And so for us, what that means in short is right now, we're evaluating what's happening in terms of changes in where these where treatment is occurring. To the extent it remains in the outpatient setting, the position of our portfolio allows us to play there, recognizing that there will be other competitors that can no longer play in that space, right? So we remain viable in ways that competition won't. To the extent we see procedures or volumes moving in the inpatient setting, where 90% of our business already is, we believe we're also well positioned to take advantage of that, right? You saw in our results across wound reconstruction, if we just look at the products that are in that space, we delivered low double-digit growth in Q1, right?

So we're well positioned to take advantage of demand as it flows into the inpatient setting should that happen. So there's a little bit of a wait and see, Ryan, right? We're going to see kind of how the market evolves. But we do think we're well positioned from a product portfolio perspective, along with kind of the strength that we already have in inpatient. And then again, as that market evolves, if we need to pivot to continue to capture it, we'll make those necessary changes.

Our next question comes from Lawrence Biegelsen with Wells Fargo.

This is actually Ross Osborn on for Larry. So going back to guidance, you guys had a nice revenue beat in the quarter. How should we view the reiteration of revenue guidance for the year? Is this conservatism? Or are there incremental headwinds we should be thinking about since you established guidance at the beginning of the year?

So no, to your point, we were pleased with how this year started. We saw solid demand across much of the portfolio, along with an improving supply reliability outlook that drove what you saw in terms of our Q1 performance above the high end of our guide. That said, we are still early in the year, and there's still more work to do. If you look through the first half, our guide is exactly where we expected it to be. So at this point, we believe maintaining a balanced and disciplined approach in terms of our full year guidance is both prudent and appropriate.

Okay. That makes sense. And then how is adoption of CUSA trended for the surgical market? And what types of procedures are you seeing traction since your clearance last year?

I'm sorry, Rob, can you repeat the first half of that question? How is the adoption of what?

CUSA since the surgical clearance, I think, in November of last year.

CUSA Okay. Got it.

So how is the adoption of CUSA -- and then the second part of the question was?

Yes. Just what types of procedures you're seeing initial traction with?

So from a Q1 perspective, overall performance across our business was largely in line, certainly in our tissue reconstruction side of the business, but we did see upside, specifically in the neurosurgery side of the business, and that upside was driven in part by CUSA. So demand for us there continues to remain strong, and we're pleased with kind of how that product is performing along with how we expect it to contribute on a full year basis.

One thing I'll add, over the last 3 or 4 months, I visited Integra's sales team in Japan and Korea and India. And in those markets, CUSA is very in demand for gynecology, for liver surgery and increasingly for cardiosurgery. And so the opportunity to drive those into the U.S. market where we have clearances now is a big opportunity for our U.S.-based sales force. It's -- there's published papers internationally. There's key opinion leaders internationally. And so we have confidence the product is going to work well when those clinicians in the U.S. have it available to them.

Our next question comes from Robbie Marcus with JPM.

This is Alan on for Robbie. I had one question just on the products that you're expecting to bring back to market as we look at the back half of the year and into 2027. I think you've been off the market for a decent amount of time now. So what gives you confidence that you're going to be able to -- or I guess, like what are your expectations for share recapture once you get these products back onto the market and your ability to both recapture share and get back on the offensive?

Yes. So a couple of things. So one, from a full year guide perspective, I do want to be clear on this. Our guide does not require or rely on bringing back to market products that currently are off in a meaningful way, right? So we do have obviously assumed the -- what we've already announced as a return to market assumption around SurgiMend. That will come back in Q4. But again, it's not necessarily a material contributor to our full year guide. To your point, we are being very thoughtful, right, around how we approach that return to market. We're leveraging the learnings from PriMatrix and Durepair. If you recall, we brought them back in Q4 of 2025 after having been off the market for over 2 years. And we're excited about the uptake that we're starting to see for both of those products.

We continue to get good positive feedback from physicians as we started to recapture some of our prior users.

And so that relaunch in Q4 of 2025 and the continued demand that we're seeing for those products as we move into 2026 is absolutely informing how we're thinking about the SurgiMend relaunch. We understand this is going to be a multi-quarter journey in order to get back our share. But we also know that the market dynamics for both PriMatrix and SurgiMend have changed meaningfully since they were both in the market last, right? And so this isn't just about getting our shelf space back.

We believe there's additional upside opportunities that we can take advantage of.

For PriMatrix, it's because of what's happening in the evolving outpatient wound setting. And for SurgiMend, it's the opportunity that exists in terms of implant-based breast reconstruction and the work we're doing to secure our PMA. So we're excited about the outlook on both. But again, as it relates to 2026, does not require a meaningful contribution from the return of SurgiMend to the market.

Got it. And then I just wanted to follow up a question previously on earnings and the earnings cadence, right? I think relative to expectations, you -- and your own guidance, you came in close to $0.10 above the top end of the range. And it sounds like tariffs should potentially be a tailwind to the balance of the year as well.

So when we think about the delta between that proved outlook, the better performance you got in first quarter and the benefit from the tariff rebate and the fact that you only raised the guide by $0.10, should we think of that those manufacturing variances you talked about as being the primary driver of that shortfall? Or is there anything else that you would think that you should call out that we should be aware of?

Yes. Yes, certainly. So let me step through that because you asked a number of questions in there. First, in terms of our EPS performance for Q1, -- we did perform above the high end of our guide. It was driven by a couple of factors. It was driven by stronger-than-expected revenue, along with the $0.10 benefit from tariffs that we talked about. And in addition to that, also some margin improvement that is reflective of the transformation efforts that we have underway.

So all 3 contributed to that result. It's worth noting because even ex tariffs, we performed close to the high end of our guide. To your point on tariffs and expectation for the balance of the year, we did adjust our full year EPS outlook by that same $0.10 to reflect the benefits that have been realized as it relates to tariffs.

We also outlined our tariff assumptions as part of the earnings deck, so you can see what we're assuming for the balance of the year. It is possible that we'll continue to see additional favorability as it relates to tariffs as we move throughout the year.

We have not reflected possible benefits in our full year updated adjusted EPS at this point. It's still very early in the year. There's still a lot we expect to unfold when it comes to tariff policy. And so as that unfolds, we'll update appropriately.

Our next question comes from Ravi Misra with Truist Securities.

Just on -- 2 questions for me. So first, just on PMA timing in breast recon and just kind of commercialization prospects, assuming you get those, could you provide some more detail? And then I have a follow-up.

Sure. So first of all, SurgiMend is expected to be ready for pre-approval inspection in the second half of 2026 following our Braintree restart. The actual PMA approval timing depends on the FDA review process, which obviously is not in our control. We do expect SurgiMend's PMA to be approved sometime in 2027, and we expect approval for DuraSorb shortly thereafter in the same year, so also 2027.

Our view of implant-based breast reconstruction surgery as a long-term growth opportunity is very impactful, and we expect meaningful contribution beginning in 2027 and beyond. And again, just to reiterate, there's no contribution from the PMAs in our 2026 guidance.

Great. And then just, I guess, another one on the tissue recon business and wound recon, kind of what you're seeing in the inpatient setting. That growth that you kind of disclosed, is that a function of really market and procedures going into inpatient or more so you capturing more share disproportionately in the quarter?

Yes. Thanks. So overall, across our tissue reconstruction business, we grew kind of high single digits. And then if you look at just the products that are in wound reconstruction, that's where I cited earlier, we were up low double digits. From a year-on-year perspective, we did benefit from a favorable comparison based on supply availability for Integra Skin. So that is a function of the performance that we're seeing. We do continue to see strong underlying demand in terms of procedures in that space that has continued through 2026.

So I'll just add 2 points in terms of the way in which the selling process works. So first of all, as it relates to Integra Skin, because of our issues with manufacturing over the last few years, it's been tough for our sales team to open new accounts. Their objective is to make sure that the existing accounts are well stocked with our products, so they're available for surgery.

As the sales force develops greater confidence in our ability to manufacture, and they should be getting that confidence based on production in the last few quarters, they'll be more comfortable bringing the product to new customers and ensuring that additional customers feel confident using the product.

So there is a time frame over which -- we've got to get our sales force comfortable and we've got to get customers comfortable for availability. But that should and will increase over time. Similarly, one of the exciting things about bringing PriMatrix back is -- and this is really anecdotal, but I've heard from a number of our salespeople that bringing PriMatrix back into certain accounts has also driven growth in our other wound care products.

The ability to go into a hospital with a "new product" and for some hospitals, it is new because it hasn't been there for a few years. It provides an entree for our sales team to talk about our other products. And again, our strategy over the years has been to have the broadest portfolio of surgical reconstruction products for wound care. that allows our reps to not be in particular, selling one thing. Rather, it's collaborative with the surgeon, it's consultative, and we don't -- we can offer them lots of different choices for the particular wound that they're treating. It gives our reps a lot of credibility with customers.

Our next question comes from Joanne Wuensch with Citi.

Stu, great to have you back. I had a question. The tax rebate -- sorry, tariff rebates, forgive me. I'm going to assume that went into gross margins, but there is still a fair amount of leverage on SG&A and R&D. Was there anything onetime in there? Or is there anything that we can sort of take as a base case and leverage forward?

Yes. So let me step through that. So to your point, gross margins for the quarter were 64.1%. It was up 190 basis points versus a year ago. Tariffs did benefit that performance. But even ex tariffs, our gross margins would have been up 140 basis points year-on-year. And that performance was driven in large part by lower remediation costs as well as lower manufacturing variances versus what we saw a year ago. And that's where, as I gave the cadence earlier about gross margins and performance throughout the year, we will see variability as we move throughout the year from Q1 to Q2 through the back half of the year. That is a function of how manufacturing variances will play out along with tariff impacts.

Again, full year basis, we expect gross margins to be 62.5%. Q2 will be below that. We'll see a slight step-up in Q3 and then Q4 will be above the full year average to get us back to 62.5% -- so that should address your profitability question. If not, let me know. I do want to be clear on one part, and this goes back to the tariff question I got before.

The adjustment we made in our full year outlook, again, reflects just the tariff benefit we realized in Q1. There's been no change to the underlying operational performance of the business. We're holding to that commitment that we made back in February as it relates to operational dynamics. We're excited about the performance that we saw in Q1.

We think that gives us confidence in terms of our ability to perform against the full year guide. So whether it be top line or bottom line operationally, we remain committed to the full year guide that we communicated from earlier this year.

Our next question comes from Travis Steed with Bank of America.

I guess to build on Ryan's question previously, Integra has been an acquisitive company over the last 20 or so years and acquisitions were part of your strategy last time as CEO. How are you thinking about continuing to add to the business either in the markets that you're currently in or expanding into other markets when would that make sense? And when it does, what kind of opportunities would you be looking at?

Okay. A couple of points there. First, in the near term, -- our #1 priority is debt reduction and returning our leverage ratio to the target 2.5 to 3.5x levels. And we'll get there by reducing debt and also driving EBITDA. In the meantime, we're focused on our organic growth drivers, and we're strengthening our R&D processes, and we're increasing program management and execution discipline.

I'd mentioned we brought aboard a highly experienced Chief Technology Officer in Q1 to help us accelerate innovation with greater focus, speed and impact. But we will continue to grow through a combination of impactful organic and inorganic levers. As we get our ratio back in order, we will start to look at acquisitions again, but they will always be close to home.

We like the markets that we're in, neuro, ENT and then tissue reconstruction, and that's where you'll see any acquisitions that we do. But I want to be clear, while acquisitions have been a great contributor over the years to Integra, our focus at this moment is on debt paydown and frankly, execution.

Got it. That makes sense. And then just one follow-up. Regarding order timing in instruments and supply timing and general weakness in international markets, how much of that is related to normal seasonality? And how much is related to more macro events like the Middle East conflict or inflation? And if it was -- if the impact from macro-related things was seen in the quarter, how much of that was seen? And how should we think about the rest of the year?

Yes, there was a lot in that question. So let me throw it. As it relates to kind of some of the macro events that are playing out, we didn't see any material impact to our business in the first quarter as it relates to developments in the Middle East conflict. Our direct revenue exposure in that region is modest.

And so based on what we know today, we do not expect to realize a material impact. But obviously, we're going to continue to monitor and see how that unfolds.

As it relates specifically to instruments because you asked about that, it's typical for us to see some variability quarter-to-quarter in that part of the business, and that's what I was referencing in my remarks regarding an expectation of a sequential step-up in Q2 due to instrument order timing. So on a full year basis, though, we do expect that business to get back to low single-digit growth.

Thank you. This does conclude the question-and-answer session, and you may now disconnect. Everyone, have a great day.

Good day, and welcome to the Integra LifeSciences Fourth Quarter 2025 Financial Results. [Operator Instructions] This call may be recorded.

I would now like to turn the call over to Chris Ward, Senior Director of Investor Relations. Please go ahead.

Good morning, and thank you for joining the Integra LifeSciences Fourth Quarter 2025 Earnings Conference Call. With me on the call are Mojdeh Poul, President and Chief Executive Officer; and Lea Knight, Chief Financial Officer. Earlier this morning, we issued a press release announcing our fourth quarter 2025 financial results. The release and corresponding earnings presentation, which we will reference during the call, are available at integralife.com under Investors, Events and Presentations in the following fourth quarter 2025 earnings call presentation.

Before we begin, I want to remind you that many of the statements made during this call may be considered forward-looking. Factors that could cause actual results to differ materially are discussed in the company's Exchange Act reports that are filed with the SEC and in the release. Also in our prepared remarks, we will reference reported and organic revenue growth. Organic revenue growth excludes the effects of foreign currency, acquisitions and divestitures. Unless otherwise stated, all disaggregated and franchise level revenue growth rates are based on organic performance. Lastly, in our comments today, we will reference certain non-GAAP financial measures. Reconciliations of non-GAAP financial measures can be found in today's press release, which is an exhibit to Integra's current report on Form 8-K filed today with the SEC.

And with that, I will now turn the call over to Mojdeh.

Good morning, everyone, and thank you for joining us for our Fourth Quarter 2025 Earnings Call. Before I review our 2025 performance and outline our priorities for 2026, I want to briefly acknowledge the recent Supreme Court decision and the administration's announcement regarding new Section 122 tariffs. While these are meaningful developments, there remains substantial uncertainty around the implementation and timing. As a result, our 2026 full year and first quarter guidance do not incorporate these tariff changes. We are actively monitoring the situation, and Lea will provide more details and context in her remarks.

In the fourth quarter, we advanced our transformation, continued to deliver for our customers and patients and met our financial commitments with revenue of $435 million and adjusted earnings per share of $0.83, both above the midpoint of our guidance range. This performance builds on a year of meaningful operational and strategic progress. During the year, we further strengthened our quality management system, advanced our compliance master plan and progressed execution of our risk-based remediation plan while maintaining constructive engagement with the FDA on our warning letter commitments and routine inspections.

We also improved supply reliability, enhanced our execution capabilities and delivered significant outcomes in key supply chain resiliency efforts. Additionally, we advanced our in China for China strategy, completing submission of our initial regulatory requirements. These accomplishments supported by our portfolio prioritization and disciplined capital allocation are reinforcing the foundation for future growth and innovation. I want to thank our employees for their significant contributions throughout 2025. Their efforts and steadfast focus on our purpose and our customers have been instrumental in solidifying our foundation and positioning us well for the opportunities ahead.

Throughout 2025, we took several important steps to strengthen our company. We welcomed 6 new leaders to our executive leadership team, adding depth and capabilities that collectively represent decades of global med tech experience, supporting our focus on quality, execution and long-term growth. We improved our quality and manufacturing organizations and established operating mechanisms that are driving disciplined execution. We created a transformation and program management office that is focusing the organization on our most important priorities and driving greater accountability across the company.

We also launched a supply chain control tower, providing daily visibility into key operational metrics and performance across our global network. These mechanisms are already translating into improved operational performance. Our manufacturing resiliency efforts are delivering meaningful yield and supply improvements in Integra Skin and in rebuilding safety stock across critical product lines. We also completed the early relaunch of PriMatrix and Durepair through a dual sourcing strategy with strong reception from our customers. In parallel, we continued our investment and progress in innovation and clinical evidence. We launched the MAYFIELD Ghost in the U.S. and received an expanded indication for CUSA Clarity in cardiac surgery.

We also advanced key clinical evidence programs in support of our wound care portfolio growth and are seeing a meaningful early start in the AERA pediatric registry part of our ENT business. As part of the next phase of our transformation, we have put in place a new operating model to reduce complexity and improve efficiency, alignment and accountability. Some of the changes associated with the implementation of this new model have impacted our team members. We care deeply about our people and do not take these decisions lightly. These changes are necessary to deliver consistently for our customers and their patients while ensuring the long-term growth, profitability and success of our company. We remain disciplined in balancing the investments required to strengthen our foundation with improved profitability and cash flow, enabling us to reduce our balance sheet leverage in 2026.

If you turn to Slide 5, you'll see how our long-term value creation model is defined by 2 parallel reinforcing horizons. As we look to 2026, we are focused on 4 strategic imperatives that guide our priorities, actions and resource allocation. These are delivering best-in-class quality, driving supply chain reliability, accelerating growth and igniting innovation. Delivering quality and supply chain reliability have been and will continue to be the focus of the first horizon of our transformation while accelerating growth and innovation define Horizon 2. Both horizons are critically important for our longer-term sustainable growth, profitability and value creation. Importantly, these 2 horizons are not binary. We are executing priority programs that support both horizons.

While Horizon 1 remains focused on strengthening quality, supply chain reliability and execution discipline, we are also selectively investing in targeted growth and innovation initiatives that support our growth acceleration in Horizon 2. We will accelerate growth in Horizon 2 by innovating and expanding category leadership where we have clear differentiation and by investing in opportunities that are aligned with our portfolio prioritization. We will continue to build our new product pipeline, advance clinical evidence and pursue category expansion to drive sustainable growth into the future. A growth priority for us this year is to bring our key products back to the market.

We remain on track to have the new Braintree manufacturing facility online by the end of June with equivalent qualification and validation progressing as planned. Once operational, Braintree will support the build-out of the inventory to enable the return of SurgiMend to the market in the fourth quarter of 2026. Further, upon receipt of PMA approvals for both SurgiMend and DuraSorb, we will have a compelling portfolio of biologic and synthetic products that can capture a meaningful share of the large and growing market for implant-based breast reconstruction.

We have additional growth opportunities in outpatient wound care following the CMS reimbursement changes that went into effect on January 1 of this year. These changes have created a level and economically rational playing field in the outpatient setting. Our portfolio was already aligned to the new reimbursement levels and along with our strong clinical evidence and presence in hospital-based care, we are now uniquely well positioned to broaden our reach across all sites of care.

Lastly, but importantly, impactful innovation and clinical evidence generation remains central to our growth strategy. We are strengthening R&D processes, program management and execution discipline. Portfolio prioritization is directing investments towards a focused set of high-growth, high-margin opportunities where we have a clear right to win. To accelerate innovation with greater focus, speed and impact, we recently added a Chief Technology Officer role to our executive leadership team. Teshtar Elavia joined Integra in February as the Chief Technology Officer and brings us more than 20 years of med tech R&D experience, most recently as Vice President of R&D at Becton Dickinson.

Looking ahead, we see continued demand for our products and our future innovations. As we further strengthen our quality management system, supply reliability remains the main driver of performance predictability for us. The progress achieved in 2025 gives us confidence for the year ahead, and we are excited about Integra's long-term growth and value creation prospects.

With that, I will now turn the call over to Lea.

Thanks, Mojdeh. We'll begin with our full year financial results, starting with Slide 6. Full year 2025 revenue was $1.635 billion, representing 1.5% growth on a reported basis and a 0.7% organic decline. The full year contribution from the Acclarent acquisition was a key contributor to reported growth while we manage quality remediation work and supply constraints that affected organic growth performance throughout the year. Despite these operational impacts, demand across the portfolio remains strong. For the full year 2025, we delivered double-digit growth in CereLink, MAYFIELD Capital, Aurora, DuraSorb programmable valves and 6 pressure valves.

We also achieved above-market growth in DuraGen and Jarit instruments, demonstrating the meaningful value our technologies bring to customers and the effectiveness of our commercial teams. Full year gross margin was 61.9%, down 260 basis points year-over-year, reflecting tariffs, supply pressures and incremental costs associated with our compliance master plan. These same factors weighed on profitability with adjusted EBITDA margin of 19.4%, down 60 basis points and adjusted EPS of $2.23 compared to $2.56 in 2024. Disciplined cost management actions helped mitigate some of the impact on both adjusted EBITDA and adjusted EPS. Cash flow from operations for the full year was $50.4 million. Capital expenditures totaled $81.4 million.

During the year, we invested in manufacturing infrastructure to improve supply reliability. We also continued funding 2 major initiatives, construction of the Braintree facility and supporting EU MDR compliance. These projects accounted for about $97 million in cash outlays. As investments in these programs wind down and we see improved working capital and adjusted EBITDA, we expect to see a meaningful improvement in free cash flow beginning in 2026.

On Slide 7, I will cover our fourth quarter financial results. Our fourth quarter revenues were $435 million, representing a decrease of 1.7% on a reported basis and an organic decline of 2.5%, reflecting a particularly strong prior year comparison that was factored in our guidance. We saw a $33 million sequential increase in revenue from the third quarter due to improved supply and seasonality. Adjusted EPS for the quarter was $0.83 compared to $0.97 in the prior year, which benefited from lower net interest expense and absence of tariffs and a more favorable adjusted effective tax rate in Q4 2024. Gross margin for the quarter was 61.7%, down 350 basis points from the prior year, reflecting increased costs associated with remediation and our compliance master plan, tariffs and an unfavorable product mix. Adjusted EBITDA margin was 24%, up 30 basis points versus Q4 2024, with the above-name factors impacting gross margins being offset by disciplined cost management. Cash flows from operations totaled $11.8 million in the fourth quarter and capital expenditures were $17.2 million.

Turning to Slide 8. We'll take a deeper dive into our CSS revenue highlights for the fourth quarter. Global Neurosurgery delivered 1.4% organic growth, supported by broad demand across the portfolio and strong performance in international. Growth was led by double-digit performance in CereLink, MAYFIELD Capital and Aurora with above-market contributions from BactiSeal, DuraGen and CUSA. Our capital business grew in the low double digits, benefiting from strong pipelines and disciplined commercial execution.

Instruments posted low single-digit growth, consistent with market trends. In ENT, revenue grew 2.2%. AERA and TruDi navigated disposables experienced double-digit growth, while MicroFrance ENT instruments saw mid-single-digit gains. However, these positive results were partly offset by continued reimbursement headwinds affecting sinuplasty balloons. International markets remained a meaningful contributor to the CSS business with high single-digit growth led by double-digit performance in China and Canada. Overall demand indicators across our global markets remain strong.

Moving to our Tissue Technologies segment on Slide 9. Tissue Technologies revenues were $111.6 million, down 12.8% on both a reported and organic basis compared to the prior year. Fourth quarter sales in our wound reconstruction franchise declined 21.4%, reflecting the previously communicated remediation efforts for MediHoney and a tough comparison with last year's record Integra Skin revenue, which benefited from significant backorder clearance in the fourth quarter of 2024. In private label, sales were up 20.1% year-over-year due in part to improved partner orders and timing. Finally, international sales in Tissue Technologies declined by low double digits, reflecting Integra Skin lapping its strongest revenue quarter last year following backorder clearance and the impact of MediHoney.

If you turn to Slide 10, I will provide a brief update on our balance sheet, capital structure and cash flow. During the quarter, operating cash flow was $11.8 million, driven by restructuring costs and an increase in working capital due to revenue collection timing in the period. Free cash flow was negative $5.4 million and free cash flow conversion was minus 8.5% for the quarter. As of December 31, net debt was $1.6 billion, and our consolidated total leverage ratio was 4.5x within our current maximum allowable leverage of 5x. We expect to remain within our allowable leverage through 2026. We expect to see meaningful deleveraging, which will allow us to approach the upper end of our target leverage range of 2.5x to 3.5x by the end of 2026. The company had total liquidity of approximately $516 million, including approximately $264 million in cash and short-term investments, with the remainder available under our revolving credit facility.

Turning to Slide 11. I will provide our consolidated revenue and adjusted earnings per share guidance for the first quarter and full year 2026. I will also provide perspective on the treatment of tariffs in our guidance considering the recent Supreme Court ruling and subsequent response from the administration. For the first quarter, we expect revenues to be in the range of $375 million to $390 million, representing reported growth of minus 2% to positive 1.9%. This includes an approximate 140 basis point tailwind from foreign exchange. We expect organic growth to range from minus 3.4% to positive 0.5%. First quarter revenue guidance reflects an approximate $10 million headwind, primarily due to MediHoney and order timing.

Turning to the full year 2026. We expect revenues to be in the range of $1.66 billion to $1.7 billion, reflecting modest top line growth expectations. This equates to reported revenue growth of 1.6% to 4.1%, reflecting an approximate 80 basis point foreign exchange tailwind and organic growth of 0.8% to 3.3%. Regarding the quarterly revenue progression through 2026, the sequential step down from the fourth quarter into the first quarter reflects a quarterly cadence that is consistent with what we've experienced in recent years, particularly following a strong fourth quarter growth. We continue to see solid underlying demand across the portfolio, while organic growth is still impacted by supply. As the year progresses, we expect revenue to build supported by normal seasonality, continued share recapture and supply recovery.

Turning to adjusted earnings per share and tariff treatment in our guidance. On Friday, the U.S. Supreme Court ruled that the tariffs imposed under the International Emergency Economic Powers Act, IEEPA, were unlawful. For context, the company paid approximately $20 million in tariffs in 2025, of which an estimated $16 million was imposed under IEEPA authority. Following the ruling, the administration announced that it is imposing a new global tariff under Section 122 of the Trade Act. Given the continued uncertainty regarding implementation details, potential exemptions and any subsequent trade actions, the ultimate impact of these measures remains unclear.

Accordingly, the company's guidance continues to reflect the tariff assumptions in place prior to developments this past week and does not contemplate the recovery of any amounts paid prior to the Supreme Court ruling. We expect first quarter adjusted earnings per share of $0.37 to $0.45. This includes an approximate $0.07 impact from tariffs. Also worth noting that we expect the benefits of the operating model changes to materialize beginning in the second quarter.

For the full year, we expect adjusted earnings per share in the range of $2.30 to $2.40. Full year earnings per share reflect an approximate $0.32 impact of tariffs, offset by the execution of our margin improvement initiatives and ongoing operational improvements, resulting in gross margins that are expected to be approximately flat with the prior year and EBITDA margin improvement of approximately 40 basis points. For your reference, we have included the key assumptions underlying our first quarter and full year guidance as well as key modeling inputs on Slide 12.

With that, I will turn the call back to Mojdeh.

Thank you, Lea. In closing, as we look ahead in 2026, our focus remains on continuing to strengthen the foundation of the business. We will continue to advance quality, improve supply reliability and drive consistent execution across the organization. At the same time, we are being deliberate in positioning the company for what comes next. As we return key products to the market, recapture share and sharpen our approach to innovation and portfolio prioritization, we are laying the groundwork to support accelerated growth over time. With strong positions in attractive end markets, our focus in 2026 will remain on delivering quarter-to-quarter consistency while building the foundation for sustainable growth and value creation.

With that, operator, please open the lines for questions.

[Operator Instructions] Our first question comes from Ravi Misra with Truist Securities.

I guess 2 questions for me upfront. First, just on the free cash flow generation and improvement. It's a little bit weaker than I think we thought what we were looking for on kind of the prior expectations. Can you just help tease that out a little bit and what you're kind of contemplating in 2026? And then secondly, just on the Tissue Technologies business, a lot of stuff just going on, still lingering in the air here around CMS changes and how companies are reacting to that. Can you maybe talk about what you're seeing in the field here early on in the first quarter?

So I'll start, and thank you for the question, Ravi. In terms of free cash flow for the quarter, to your point, free cash flow was negative $5 million. A lot of that driven by timing of collections in the period. So that explains about 2/3 of that. The other 1/3 is driven by restructuring costs associated with the transformation and the model changes that Mojdeh referenced in her remarks. Perhaps more importantly, though, as we move into 2026, we do expect to see a much improved cash flow profile. We're going to experience reduced cash outlays associated with some of our key initiatives that I talked about, namely EU MDR compliance along with Braintree. And for reference, to put it in context, for 2026, we're expecting operating cash flow to be north of $200 million, which is about $150 million improvement over 2025 landed, about half of that $150 million is driven by EU MDR and Braintree cost reductions. And then the other half is driven by improved working capital profile, lower CapEx and better EBITDA for the year.

Yes, Ravi, this is Mojdeh, and thanks for your question. To answer your second question, the changes, the reimbursement changes, yes, there are changes that are happening in the market and where they actually are going to land remains to be seen. We're continuing to monitor. But suffice it to say that, again, a reminder, our business is 90% in the acute care setting. And also one thing to keep in mind is the pricing that we have for our products are well within the new reimbursement range. So we do not expect to see any negative impact on our business as a result of the changes.

One of the things that we're hearing though from the market, and we're seeing in the market is that the customers are really curious about better understanding the dynamics and the changes and our health economics teams are being asked by some of our major customers to actually sit down and educate them on what the changes are, which is a great opportunity for us because, if anything, the changes are very much aligned with the strategy that we've had for this product category, which is investment in clinical evidence, health economics as well as then being able to represent our full portfolio across the entire sites of care. So obviously, the anticipation is that this market is going to shrink because of the reimbursement pricing significantly being reduced. And who are the players that are going to remain in the market remains to be seen as to how much they can economically absorb because of this significant reduction in the reimbursement rate.

Our next question comes from Robbie Marcus with JPMorgan.

This is Allen on for Robbie. Just to start off, I wanted to ask on your assumptions behind growth for both CSS and Tissue Tech, both for the fourth quarter and for the full year, just how you're thinking about that in the context of the full company guide.

Yes, certainly. So from a Q4 standpoint, let me first start by saying how excited we are about the performance of the business in Q4. As I mentioned in my remarks, we delivered a sequential step-up of about $33 million versus Q3, which we believe is evidence of the strength of the underlying demand for our portfolio. Within that, as you look at CSS and Tissue, both delivered revenue that were largely in line with our expectations. CSS delivered a low single-digit growth, which is on top of a very tough comp from the prior year. If you recall, in Q3 of 2024, we experienced a supply interruption. Q4 benefited from strong backorder clearance. And so we were lapping that on that business. And despite that, we saw double-digit growth across parts of the CSS portfolio, namely CereLink, MAYFIELD Capital and Aurora and high single-digit growth in CUSA. So strong performance within and overall, given the comp that we saw versus 2024.

In Tissue, similarly, we saw declines in that business in Q4, again, not unanticipated. Once again, we were facing a MediHoney remediation headwind for Q4 of 2025, coupled with Integra Skin facing a very strong comp again. So we saw a strong backorder clearance on Integra Skin in Q4 of 2024 and in '25, we comped that, which describes the performance for tissue. As we move into 2026, I think as we talk about kind of growth expectations across both of those businesses, I think it's important for me to kind of ground you in how we approach guidance for this year.

We're very intentionally -- our guide intentionally reflects the demonstrated progress that we've made in terms of the remediation work that we've conducted all year long. It assumes a measured ramp for any products that -- as we return them back to market. And it assumes that supply from products not already in market will be layered in over time. And it, quite frankly, allows for prudence, right, as we continue to improve our capability, improve overall visibility. With that, the growth expectations for both CSS and Tissue are below market, but not driven by demand, definitely a reflection of supply. So for CSS, we're expecting a low -- flat to low single-digit growth on that business. And for Tissue Tech, we're expecting low to mid-single-digit growth during the course of 2026.

Got it. And you kind of touched upon my follow-up question there, but just the health of the underlying markets and the demand you're seeing both from a procedure and capital standpoint just to kick off the year, has it remained relatively healthy? And what are you assuming for the balance of the year?

Yes. So to that end, exactly, the growth expectations aren't a reflection of demand. We do continue to see strong demand across both parts of the business as evidence of what we saw in our performance in Q4. And then even on Tissue Tech, as we exited Q4, we continue to see strong momentum on that business specific to Integra Skin that we expect to drive kind of the full year growth expectation that I articulated.

[Operator Instructions] Our next question comes from Vik Chopra with Wells Fargo.

This is Namrata on for Vik. I have 2 questions. So first, with Braintree expected to resume mid-2026, and SurgiMend relaunching in Q4. What are some of the key milestones you're focused on to ensure a strong return to market?

Thank you for your question. We remain on track with the operationalization of the Braintree by the end of June of this year. And the milestones that are remaining is mainly process validations that are required before we get to the inventory build. So we remain on track for that. And those are going to continue until the plant is going to get operationalized.

That's helpful. I have one other question. So for PriMatrix and Durepair, these have been historically very solid contributors. So what's your outlook for the recovery and ramp in 2026?

So to your point, we relaunched Durepair and PriMatrix early, about 12 months ahead of plan. So we relaunched them in Q4 of 2025. Early read on both are -- they're performing really well in terms of customer reception as we're getting back into market. So we're looking at that and continuing to build on that as we move throughout the year. And as part of our guidance strategy, assuming kind of a measured ramp as we build back, but using the learnings coming from that relaunch as we plan for the SurgiMend relaunch that will happen in Q4 of this year. So excited about the early read and the opportunity to make both of those products a strong contributor to our overall performance this year.

Our next question comes from Travis Steed with BofA Securities.

This is Ray on for Travis. Just a follow up on Allen's question. What is the status of the MediHoney remediation efforts? Is it still excluded from the guide? Or has it been baked in for Q1 and 2026?

Yes. Thank you for your question. We do not have -- we haven't accounted for any revenues for MediHoney for this year in our numbers. We have been remediating that product. It's one of those products that the remediation has continued into 2026. We obviously love to have these things go a lot faster, but we're taking our time to do it right. We want to make sure when we bring the product back to the market, we have a safe and quality product for our customers. So we are diligently working on that. If we get to pull the time line up, that would be upside for us. But we don't have anything accounted for it in our guide at this point in 2026.

Makes sense. And then just one on the Tissue Technology organic growth. How much did the low double-digit decline internationally contribute to the decline there? I know you mentioned it's partly due to MediHoney, but is there any additional color you can give? Has there been any material change in international market dynamics? And how should we be thinking about China going forward?

Yes. So in terms of the international component of Tissue Tech, not as significant a driver. Our international business is primarily CSS. As you look within the Tissue Tech performance, the decline of 12.8%. Absent MediHoney, the decline would have been about 6%, and that's largely driven by Integra Skin. And again, that driver was the prior year comp, right, strong backorder clearance in Q4 of 2025. Going forward, right, as we exit Q4, we continue to see strong growth on Integra Skin, consistent with the expectations that we have for performance on the brand for the full year. So not concerned about that as we move forward. To your second question about, I think, China and as part of the international portfolio, we saw strong performance in double-digit performance in China and Canada for our international business, and we expect that to continue to be a strong growth contributor in 2026 and as we move forward.

Thank you. That concludes the question-and-answer session, and you may now disconnect. Everyone, have a great day.

Welcome, everyone. I'm Robbie Marcus, the med tech analyst at JPMorgan. Very happy to introduce Integra LifeSciences' CEO, Mojdeh Poul, will give a presentation followed by some Q&A.

All right. Thank you, Robbie. I appreciate it. Good morning, everyone, and thank you for being here. I want to also thank JPMorgan for the opportunity to present here. And my first JPMorgan conference with Integra. I've been in the role now for a year, a little over a year. So these are forward-looking statements. You can find them on our website and at your leisure, please take the time to review them. But it's a pleasure to be here to be talking about Integra. For those of you who are not familiar with our company, we are a global med tech company. We serve highly specialized markets with differentiated portfolio that helps restore patients' lives every day. We are very well embedded within the neuro market, the neurosurgery market, where we are having #1 or 2 position in every category that we serve in that market. And in our Tissue Technologies business where we have -- where we treat complex wounds and surgical reconstruction, the physicians and surgeons choose our products consistently because of the performance that they provide as well as the patient outcomes that they get when they use our products.

We are going through an extensive and significant transformation throughout the last year, and it continues into this year. I will talk a little bit about it with you, but we are a very established organization with solid financial foundation. Over the last 12 months, we have done about $1.6 billion in revenue with attractive margins, as you can see. A little bit about our markets. If you look at our markets globally, the potential opportunity for them is about $9.1 billion, growing at mid-single digits. Part of our portfolio is in markets that are growing high -- mid- to high-single digit, i.e., the wound reconstruction portfolio and then parts of our business in mid-single digit. The segments that we operate in are 2, it's Codman Specialty Surgical. We did about $1.1 billion over the last 12 months in that business, and Tissue Technologies, which we did about $0.5 billion over the last 12 months.

We, as I said, serve very highly specialized markets. Our portfolios and brands are very well known, and they're supported by decades of clinical use as well as the trusted relationships and partnerships that we have with healthcare providers across the globe. Our products are not nice-to-have in procedures. Our products are must-have in procedures. We serve and treat brain surgeries, brain tumors, traumatic brain injuries. On the Tissue Technology side of our business. We treat burns. We are used in many surgical procedures, i.e., hernia repair. So our procedures are a must in the markets that we serve. As you know, there's many trends across the healthcare that not only us, but also the rest of the med tech is dealing with. Some of these are positive. Some of them could be negative, but we see most of these as opportunities for us. Obviously, aging population. And as a result, because of that aging population, there's a growing demand for the therapies and treatments that help address the disease states that are caused by that demographics.

We see growing adoption of new -- adoption of new therapies and new products as healthcare providers try to provide better care and more cost effective care to their patients. Shift of the procedures outside the hospital is another trend that we're dealing with. And then it comes to changing reimbursement. It's always going on, and it's no surprise. We will talk about it a little bit later. We see some of that change in 1 of our -- 1 piece of our portfolio, which was kind of, again, considered to be positive for us as -- it's the reimbursement trends are going more towards rewarding the companies and products and therapies that are clinically as well as economically effective. And then, obviously, there's opportunities in international markets for expansion and growth.

All of the governments, whether you're developed or developing countries continue to have patient access to care as well as cost and quality of care as being high priority for them. And then obviously, we're dealing with the geopolitical drivers to keep us on our toes as we operate our organizations. So why do we think we have the right to win in these markets? There's many reasons why we believe we are well positioned to succeed and benefit from the trends in the market. We consider our commercial execution to be a key strength for us. Our sales organizations are trusted and relied upon by our customers. We have very strong brand equity across the healthcare organ industry in general. We are very established in neurosurgery. We -- as I mentioned earlier, and we have deep scientific expertise in complex wound reconstruction. And that is all the way from product and technology all the way to manufacturing know-how in this space.

And then clinically differentiated portfolio. I already talked about the fact that our products have been used in decades in clinical uses. Many pieces of our portfolio are supported by solid clinical evidence. And as you will see later, we continue to invest in this clinical evidence as we continue to expand the penetration and share for our products. So as you can see, both in terms of the healthcare trends, market trends as well as our differentiations to win, this is why we believe that there is a great opportunity for Integra to continue to deliver and create value into the long term. As I said, over the last year, we have been going through a significant transformation in the company, to improve our operational performance as well as being able to deliver consistent performance going forward. And this transformation, obviously, is critical for success. But 1 of the things that drives all of us, me and the rest of my colleagues at Integra and what inspires us really is the purpose that we have to restore lives and the vision that we have, which is to advance transformational care, deliver impactful innovation and enrich life's moments.

In order to deliver on the vision that I talked about, we have developed a robust plan. The plan that we have put forward for our organization to execute against diligently is structured in 2 horizons. The first horizon is all about building a sustainable foundation in order to drive consistent, reliable performance for the organization well into the future. The Horizon 2 is all about accelerating growth. And the strategic imperatives that we have put forward for ourselves, there's 4 of them, which is delivering best-in-class quality, driving supply chain reliability, accelerating growth as well as igniting innovation. And as I mentioned, the transformation that we're going through is really critical in the success for us to deliver on these strategic imperatives and as a result, bring our vision to life. That transformation is necessary for us to be able to excel and be able to consistently deliver to our financial commitments over the long term. So we're diligently working on this plan. And 1 of the things that I wanted to mention is that this Horizon 1 and 2 is not binary. It's not that we're not going to do any work on innovation as we're in Horizon 1 or that we're not going to do any foundational continuous improvement work in Horizon 2.

Rather, we have to be able to -- what I say to my team, we have to be able to walk and chew gum. So what we have done actually, last year, we have gone through a very extensive portfolio prioritization exercise upon which we have made our capital allocation decisions for the coming year and the years to come in the long-range plan. And we have created room in Horizon 1 to be able to invest through innovation and clinical evidence in those parts of our portfolio, consistent with our portfolio prioritization that are in high-growth, high-margin spaces to ensure that as we transition into Horizon 2, we can benefit from some of that growth acceleration that's going to kick in to be able to execute our initiatives in Horizon 2.

I'm going to go a little bit deeper in Horizon 1. As I said, it's all about building a sustainable foundation. I have talked about this. This transformation we're going through is foundational and it's systemic. It's all about -- it's very intentional, it's discipline, its execution focused. And there are several categories and areas that we're focused on. The first 1 should not be any surprise to you all. We have been talking about them at every earnings call in the conferences that we have. But quality is a key area, supply chain reliability is another one. And finally, execution. And in quality front, as you all know, we have been engaged in a thorough effort in transforming our quality management system through our compliance master plan. We're proceeding very well on that one. And then when it comes to supply chain, we are all about optimizing our supply chain planning. We're about driving manufacturing excellence as well as ingraining continuous improvement into our processes so that we can continue to improve our process capability and predictability. And then finally, we're ingraining execution excellence in everything that we do in the company.

So the improved outcomes that we're going after, we have a series of, obviously, internal metrics that we're going after to ensure that we are on the right track. Some of those metrics are obviously product quality consistency. It's customer service. They're delivering the products that the customers want on time and in full to our customers. It's better inventory management and working capital management that ultimately translates into the cash flow improvements. We are working on productivity improvements, yield improvements, COGS improvements, all of those are going to result in gross margin and profitability improvements. And ultimately, as you can see, when you go through this list of key imperatives for us that we're delivering on, hand-in-hand they all are going to help us with better prioritization, focus, execution and ultimately consistent delivery of performance in the long term for the company.

So that brings us to Horizon 2. As I said, the Horizon 1 work is extremely important in building the foundation for Horizon 2, and that's what you see in the bottom left of the chart. As some of you who follow us have been able to gather from our performance in 2025, we had many challenges in terms of product holds, supply constraints. And for us, that supply chain resiliency and quality improvements are the table stakes in order to be able to really meet the demand that's out there for our products. In 2025, we were not able to fully meet the demand that was out there for our products, both in the U.S. as well as internationally. So that is the #1 thing that we have to do in terms of driving growth for the company. The next thing is we have several products that have been out of the market for several years now, and we are returning those products to the market. That's another lever for our growth and PriMatrix and Durepair are the 2 products that we launched back in Q4.

Actually, we brought those into the market a year earlier that we had planned through a dual sourcing supply strategy as part of our supply resiliency initiative. And we are looking forward to bringing our state-of-the-art manufacturing facility in Braintree, Massachusetts, online by the end of June and launching the SurgiMend product into the market in Q4. The next lever of growth that we see for us is the positive changes that have happened recently in the skin substitute reimbursement area. I will cover that in another slide by itself, but we see that certainly as positive for Integra and our broad portfolio.

Clinical evidence generation is key for us, especially when it comes to our Tissue Technologies business as it relates to broadening the applicability of our products across the size of care as well as getting new indications for the products that we already have in our bag. So we're looking forward to the continued investment in growth, that's going to come as a result of those investments. And then new product introduction. As I said, through the portfolio prioritization work that we've done, we have created room to invest in key categories within Neurosurgery and ENT to continue to bring innovations to the market. That's going to fuel our growth. And last, but certainly not least, we want to get into ultimately new technologies as well as new adjacent spaces that we can continue to build on the strong portfolio and brand equity that we have.

Traditionally, our innovation has always come through M&A. We're going to change that. We want to make sure that we advance our innovation capabilities so that we can grow through organic innovation as well as obviously, opportunistically and at the right time, continue to be able to bring in organic options to augment and strengthen our portfolio and strengthen our growth trajectory. So hopefully, as you can see, with the work that we're doing in Horizon 1 and Horizon 2, we are very diligently working on executing on all of this in order to be able to deliver to the potential that we believe this company has that we will be able to drive towards. So we're excited about that.

Now a click down on the changes that are happening on the reimbursement front. So as of January 1, there was a major change in reimbursement that happened on the skin substitute market in outpatient setting, which was basically going to a uniform payment of $127 per square centimeter for the products and that is a major change. And we see this as being a positive change for us. First of all, we applaud CMS for this change because it really levels the playing field when it comes to pricing, reimbursement and clinical use across the sites of care outside the hospital. And when it comes to the business aspects of it in terms of pricing, we see this as positive because our pricing is actually within the new reimbursement rate, and we should be able to now obviously, our products always were clinically attractive to the market. Now they're also going to be economically attractive. So it's a positive for us.

We have -- we don't see any revenue downside as a result of price or margin compression because of the reasons that I mentioned. As a matter of fact, we see this as potentially positive for us as we expect some of the volume is going to shift from physician offices back to other sites of care where our broad portfolio should be able to address. But overall, we're very encouraged by the direction that CMS is taking in terms of reimbursement changes as well as the discussions that continue to happen on the local coverage side, even though they were withdrawn in December as well as some of the pending discussions that are happening on differentiated payments based on the regulatory status of the product line. So those are all positive for us. And they're very much aligned with the broad clinically differentiated and economically viable portfolio that we have in our skin substitute category which really is uniquely well positioned across the size of care because of this change right now. And -- to close, I wanted to reemphasize the reasons why we are excited about the great potential that this company has to perform at the levels that it's expected to be performing at. We serve favorable markets. They're high-value markets. We have favorable sector dynamics. We have -- we're playing in spaces where innovation and clinical differentiation matters and that's what we have in our products and portfolio.

We're fixing the foundation to address some of the challenges that we have had over the last couple of years in a foundational and systemic way so that we can see sustainable results and we're committed to achieving long-term growth and the predictability and profitability that the organization is capable of delivering and we haven't been able to deliver. But our commitment is to get to organic growth that's at least in line with the market and sustainable margin improvement. We launched our margin expansion plan, the Phase 1 of it last -- late last year, and we're progressing very well, and we're committed to continuing to deliver on that margin expansion. And ultimately, we are excited about being able to create value for patients, customers and the shareholders. So with that, and before I pass it on to Robbie for the Q&A section, I also wanted to announce that we had mentioned that we will have an Investor Day in 2026. It will be in the second half of 2026, and we look forward to be able to build upon what you see here as a high-level overview of our plan and the trajectory and the timing of some of these initiatives and we're going to be seeing the outcomes of them. So with that, I'll pass it on to Robbie. Thank you, everyone.

Well, great. Like you said, it's been almost exactly a year, plus or minus a week or 2.

A year and a week.

Yes. So maybe as you think this first year, you came into Integra with a lot on your plate. What do you think has gone well over the past year? And what are some of the projects you're still working to improve?

Yes. So I would say what has gone well has been, obviously, the addition of some of the new folks into the leadership team to drive some of the most critical elements of this plan, which is the quality supply chain resiliency, innovation and building the execution engine and capabilities that we need within the company. So I'm pretty excited about that. We have gone through establishing the program management office, driving execution and doing very thorough prioritization of our initiatives, putting in place the individuals that are driving the change that's required in supply chain and quality. So I think the progress that we have made has been mainly in that front. The portfolio prioritization also that we've gone through. But quality and compliance master plan, we are on track with -- internally with the plans that we have put in place for ourselves. We completed the site assessments ahead of the schedule by quarter. We have a solid plan for remediation that's going into 2026. So I am very proud of the work we have done a ton of work to establish ourselves for the execution of the plan that you saw here, and I'm excited about that. We're taking it on into '26.

If I look at 2025, there were a number of new quality issues that popped up. So maybe you could spend a little more time on exactly are these quality issues at 1 plant? Or are they across the organization? And talk about some of the processes and actions you're taking to prevent any further quality issues. And I guess I'll add on, are you expecting any further potential quality issues?

Yes. So the way that we're approaching the quality management system transformation and compliance master plan is that we're looking -- we're taking a holistic look across our manufacturing and supply footprint. And so when a quality issue in terms of the site assessments, for example, that we have been performing, if there was a quality issue that we came to, we do a left and right to try to see, could that particular quality issue exists elsewhere. And then we stop, we remediate and then we continue with the progress. So in that sense, I would say the site assessments that we've done gave us that visibility as to what is the size of the -- and the amount of work that we have ahead of us. And then we took that -- those outcomes, and we prioritize them in a risk-based fashion in terms of our remediation plan, which is really being managed under the oversight of the program management office to ensure that we stay on track. But we are a lot more thorough in terms of understanding if a particular quality issue exists across the board and we tackle it that way.

And as you enter 2026 here, how do you feel about your confidence in the remediation time lines you've provided? What's the line of sight to getting over the finish line?

Yes. So as I said, the remediation work is going on into 2026. But as I said, we have a pretty good execution plan. We're delivering on that. I would say -- by the end of this year, and as we get into 2027, we should have -- we should be in a lot better position in terms of majority of that remediation work being behind us.

You haven't preannounced here, but Lea, you pointed to a wide range of outcomes in the guidance. We're backing into an implied 1% to 6% organic growth in the fourth quarter. Any comments on where in that range you ended up or how you feel about the fourth quarter?

So yes, so for -- to your point, we do not, as a practice, provide preannounce or provide guidance for the next year as part of this particular conference. But I just want to make sure I understand the question. The wide guide with respect to the guide that we provided on our earnings call was $420 million to $440 million top line with an EPS guide of $0.79 to $0.84, right, is essentially what you're referencing.

Yes. We were trying to back into fourth quarter specifically.

Yes. Yes. And so here's what I can comment on in terms of the -- when we provided the guide, the factors that drove kind of why the guide was what it was, was driven by some dynamics that we saw play out in Q3 where we did have some supply chain interruptions that impacted our Q3 results. And as we address those and fixed those, we knew there would be spillover implications into Q4, and so that's contemplated in the guide along with an elongation of some of our remediation time lines for some of the products that had been on hold earlier in the year and timing shifts that impacted when we would be able to bring those back. So those variables are what contributed to kind of the width of the guide.

And you haven't provided 2026 guidance yet, which we'll get on the earnings call, but you had tentatively pointed to a return to growth in 2026. The Street has you at around positive 3% growth. Are you still confident in a return to growth? And any thoughts on how the Street sits?

Certainly, to your point, yes, we did communicate an expectation of modest revenue growth in 2026 coupled with modest earnings growth. I think what we've seen very clearly in 2025 is that we continue to have very strong demand signals, which is an underlying contributor to kind of that confidence and we know that we do expect tailwinds as we bring more of our products that were on hold in 2025 back into the market until 2026. That will be a driver to returning this business to growth. That said, we also based on what we saw in 2025 that we still have more work to do on the supply side of the equation. And so the guide also reflects some prudence in order for us to do the work to make sure we're strengthening our supply resiliency such that we can sustainably deliver growth going forward.

Again, maybe if we focus on 2026, just high level. You have -- margins took a step down in 2025 from some of these issues. You have a couple of moving parts. You have tariffs in 2026, a full year. You have the lingering integration of an acquisition from last year. You also should have improving margins, hopefully, as some of these products come off remediation. So how should we think about some of these cross currents? And how you think about margins moving forward?

Yes. So in 2026, along with our expectation of modest earnings improvement. That happens because we do see as a benefit from our margin expansion program, which was a commitment to deliver $25 million to $30 million of savings in 2026, a mechanism to help offset some of the headwinds that we know will impact us. You mentioned tariffs as an example. We do expect a full year implementation of tariffs. We do have some tariff mitigations that we are putting into place that will mitigate some of that. But that margin expansion program, it will be the mechanism to offset the rest of it and help drive that margin expansion that I mentioned. As an aside, 1 other element to that, as we think about kind of the remediation and the work that we're doing under the compliance master plan, which was a driver as to why our margins -- our gross margins were down versus 2024. We expect that not to deteriorate any further in 2026. So to Mojdeh's point, we still have work to do. The remediation continues in 2026. But incrementally, we shouldn't see an impact on our gross margins as a result of that.

Let's fast forward to the future. Let's say, later in 2026, supply remediation is behind you, the Braintree facility is up and running. SurgiMend and PriMatrix, some of these products that were impacted are back on the market now in full supply. How are you thinking about recouping share? I think that's 1 of the questions investors struggle with a lot, just given it hasn't been 1 quarter, 2 quarter, it's been a number of quarters and a lot of surgeons perhaps have moved on. Some others have been waiting. So how are you thinking about it? How are you incentivizing the sales force? And how do you plan to grade them on the relaunch?

Yes. So some of the some of the learnings that we're getting as we launched PriMatrix in Q4, obviously, it's going to inform preparation for the launch of the SurgiMend as well as we bring it to the market. But we are cognizant of the fact that it's been a while. So it's going to take us -- it's not going to be an immediate thing. We expect there's going to be a ramp, but we are very, very much focused on driving a launch strategy and plan that will put our best foot forward to be able to regain the share, but we would have to gauge it as we go on. And I think PriMatrix should be a good case for that as we watch the trajectory of gaining some of that share back. The 1 other thing I was going to say, the market is also there. Yes, we have been out of the market for a while, but the market dynamics are also different. And the reimbursement change that I talked about, that's an opportunity for us as well. That didn't maybe necessarily exist before. So we are -- we -- it's just not bringing those products to the market in the static fashion, it's also what's happening in the market and how we leverage that with the clinical evidence and the strength that we have portfolio.

The other thing that I was going to say and it's more of a qualitative thing, Robbie. It's amazing to me after being a year and going in the job, going and visiting customers and all that. It's amazing, even though these products have been out of the market for such a long time, that they talk about how nothing else in the market has the product handling, the flexibility and the strength balance and the patient outcomes that they were seeing with some of our products that have been off the market. So I think we are putting our best foot forward, but we realize that it's going to take us a while to gain that share back. I don't know if you want to make any additional comments.

No, no, I think that's spot on. I think your insights regarding PriMatrix are true with SurgiMend as well in terms of the market dynamics changing.

You acquired a Acclarent from Johnson & Johnson in 2024. It's over a year now. How has that deal trended versus your model and speak to the integration and how you're seeing that progress since closing on it?

Yes, certainly. So to your point, we did -- the acquisition was effective in April of 2024. I think from an integration perspective, it has been progressing really well in terms of the commercial side of the organization, the sales reps as we've begun to integrate systems and processes that has been progressing as expected. From a performance standpoint, to your point, I think in the first year of 2024, we saw performance very consistent with what we had communicated and expected. As we moved into 2025 and as we shared on a number of our earnings calls, we did see some dynamics play out that were unanticipated with respect to the balloon sinoplasty part the business, where we did see declines on the business driven by some reimbursement dynamics that were playing out in the market. That said, the other parts of the business, namely are eustachian tube and TruDi navigation business, which represent the innovation parts of the business, we saw really strong growth. And in some instances a growth that outpaced expectations. On the whole, through our kind of Q3 results, the performance for ENT was not what we had anticipated. But we absolutely do see a pathway to get back to that. We will have to address and we have plans in place to address what's happening in the reimbursement landscape on the balloon sinoplasty. We have innovation that we're bringing in that space to also help address that. Meanwhile, we're continuing to move forward aggressively with the innovations that are in market, like I mentioned, on [indiscernible] as well as TruDi.

Those fixes, particularly on the innovation side, are those further out? Or are those something we could see near term in 2026?

You talking about the reimbursement.

You talked about innovations to help address some of the issues, the reimbursement.

Yes. So it's '26, '27 time frame.

Yes, late '26, early '27.

Over these years, with the quality issues I'm wondering how is employee culture. One of the ways you can look at that is employee turnover. People are very happy, they keep saying, what's turnover looked like? .

Yes. So we're not seeing anything that's out of the norm of the -- or the historical retention or attrition rates for the company. Actually, our teams are very, very engaged. Integra has a very resilient organization. They're pulling through. They want to deliver to that purpose. I mean it's very real. It's very real that they are driven by that purpose of restoring lives. And we haven't had -- other than in the Wound Care side of the business where we took the product off the market where we saw some increased attrition, we haven't had any attrition that has been outside the norms for the company, very engaged team, very resilient driving forward.

Last year, you were able to adjust some of the covenant terms related to your debt. You can always -- you can lower your leverage by growing the top line, you can grow -- decrease your leverage by having your margins go up. But obviously, we don't want to do both at the same time. Talk about where you stand in terms of your leverage, your plans to reduce that and what we should be expecting over the next 12 months in 2026?

Yes, great question. So in -- as of Q3, our leverage was 4.3x. Right now, we -- as we -- and in Q3, we also demonstrated stronger cash flow trajectory and movement progress. As we move into 2026, we expect that to continue. So the key is to unlock improving our overall leverage picture is absolutely supported by an expectation of continued improvement in supply reliability as we move throughout 2026. So seeing those products that are in market continue to perform and bringing back our other products, key driver, strong working capital, cost management as well as working capital controls.

We saw evidence of cost management in Q3. That discipline is continuing well into 2026 to help drive that working capital. We know there's an opportunity around inventory that will help drive that. And then we also are getting behind -- we have several large capital expenditures that we had to make over the past couple of years that we're now done with. So we won't see that cash flow things like investments in standing up Braintree, that we won't have to have investments to that degree in 2026. Our investments in EU MDR, Again, that won't happen in 2026 to the same degree. And so those become the unlocks to drive debt paydown and leverage to come down.

Is there a debt leverage ratio you're willing to commit to, to exit 2026 at?

So not at the time as far as, again, part of our guidance for 2026, we'll do that in our Q4 call in February. But directionally, what I can share is our goal -- our stated goal in the past is to manage this business within 2.5 to 3.5x. By the time we exit 2026, we should be kind of approaching certainly the top end of that range.

Integra has been, I guess, since COVID, pretty much in a cost containment mode for most of those years. Hopefully, things will get better soon, and the top line will grow and margins will expand. But how are you thinking about some of the investments you might have underinvested in or not invested in to help contain these costs over the past 5, 6, 7 years. And so when things do improve, how much more spending is there to catch up? Maybe asked another way, when things do start to improve, might there be some under expansion in margin as investments start to take place that haven't happened?

Yes. No. So it's interesting. So if you look at this business just 3 years ago, our EBITDA margins were in the mid-20s, right, versus kind of what you saw in the slide today. So what that says to me is there's an opportunity to actually improve our margins by getting some of these onetime costs that contributed to what happened out and then reprioritize where we place our investments. So in short, I think from a cost kind of reduction perspective, we know we had a number of onetime costs attributable to the remediation work, attributable to compliance master plan. We can get those out of the P&L. That will drive margin improvement. We have opportunities in terms of the continuous improvement initiatives, the gross margin expansion initiatives that Mojdeh walked through in our presentation today, those will drive margins up. And then we also know there's opportunity to streamline our operating model in the ways that we work. So we can improve gross margins. But even on the OpEx level, we can streamline, drive leverage in that area and redeploy that into the investments that will fuel our innovation and growth for the long term.

The 1 other thing I was going to say, Robbie, is that that's why we went through the whole portfolio prioritization because the resources, it doesn't matter whether you're in tough times or not. There's never enough resources to do everything you want to do. So we want to be very intentional as to how we allocate our capital so that we invest in the areas that need to be invested in, and that's why the prioritization is so important because we can funnel the investment from putting bets in everything to a few things that are going to really have oversized opportunity for us. So that's another way where we're moving forward anyway. We're going to be a lot more deliberate about where we put our funds in order to get accelerated growth as opposed to just putting all our chips everywhere and get a mediocre growth moving forward.

Unfortunately, we're out of time. Thanks for a great discussion. Thank you, everybody, for joining today.

Thanks.

Thanks.

Thank you very much for joining us this morning. I am Joanne Wuensch, the Medical Technology Analyst here at Citibank and thrilled to have the management of Integra LifeSciences join us.

One of the first questions when we were putting these together that came to me is that both of you are relatively new. And I'd love if you could just sort of give us a state of the union of what you've learned since you've arrived, what surprised you positively and what you're like, "Hey, I didn't expect that."

Yes. Thank you so much for having us, Joanne, first of all, and I get started, and then I'll pass it on to Lea, but I would say one of the things that really got me attracted to the opportunity to begin with was the portfolio that we have. The strength of our portfolio, the brand equity that we have, we play in attractive markets. We have niche positions that are really specialize and the physicians really rely on our portfolio. So that's what my due diligence had told me before joining the company.

And one of the things that I found out, as I have interactions with the customers, I see that every day about what they appreciate about our product, about our portfolio. So the strength of our portfolio and attractiveness of the market we play in, certainly has played out.

I would say on the other side, when it comes to improvements and the opportunities for us, one of the things that has been -- that has been a little bit deeper and broader than I had anticipated, is the operational and the operational challenges that we've had and execution challenges that we've had.

And as you look at the priorities that we've been talking about over the entire year, it's really about quality management system transformation we're going after, and it's really about supply chain operations and execution. So those are the reasons why we have been full force going after making our quality systems, our operations, as well as our execution more robust. So that's a little bit about what I have observed so far.

Yes. So -- and I'd echo a lot of what Mojdeh has shared, I think since I came on board as well, right, a number of challenges that we've had to face that we didn't see coming, which kicked off kind of the compliance master plan and the work there. But through it, the resilience of our team, right, and how they stepped up in those moments. You think about a year ago, the rallying around the challenges we saw in Q3 and being able to get our products back on the market for the most part in Q4.

You see the work that has continued this year and our ability to improve productivity on Integra Skin significantly our ability to bring back to market PriMatrix and Durepair almost a year earlier. So the individuals and collective teamwork required to drive that and make it happen despite everything else that's still going on has been admirable. It's been a culture that has been inviting and one that makes me proud to be part of. So that's kind of my pleasant surprise.

So we've been talking about the Boston facility months, I feel, maybe it's longer. Where are you on the remediation? And what is the path forward from here?

Yes. So with the Boston facility, obviously, we started the Braintree facility, which is really a greenfield state-of-the-art manufacturing facility that we're putting up. And as we talked about it, we -- the plant is going to be up and running by the end of June 2026.

The work that remains still has to do with the equipment and the process validations. And also completing the documentation of our quality management system in Braintree, which is going to take us up to the point where we will be ready for production and then, we would have to obviously build inventory and hopefully getting surge in the market by Q4 of next year. So that's the work that has been going on, and we have been so far on track and looking forward to operationalizing it by June 2026.

And then at that stage, do you close the older facility?

All the facility is already closed.

Already closed.

Yes. We -- all the employees and everyone has been already switched to Braintree.

And this happened before either of you arrived, you got the cleanup of it. But is there -- when you take a look, we'll call it, Monday morning quarterbacking, do you say, "Aha, this is what went wrong, so we make sure that doesn't happen again?"

I would say the "Aha" is about having put in place a harmonized quality management system across our global footprint. I think that's one thing that had not happened, where you had different companies that collectively made up Integra. Everybody had their own quality management system, but we have not harmonized.

And when you don't have the harmonized quality management system, if something comes up, you don't systemically address it across the entire supply chain. So I think that is really the "Aha", and that's what the compliance master plan that we initiated middle of 2024. That's what it's meant to do, and that's what we're on track of delivering and we're making good progress on.

Having watched Integra or covered it also, but mostly watched also for almost 2 decades. The company has evolved through a fair amount of M&A. Is it safe to say that part of the lack of harmonization was that as things came in, they may not have been integrated into sort of a global plan? Or is that the wrong way to think about it?

Yes. I think for sure, in terms of the quality management system, that's true. I think there are many things that we have done very well during those acquisitions. I would say, on the commercial side, the integration on the commercial side of the businesses, as well as -- I know a lot of the companies from my past experience is what usually breaks down is the ERP because you don't -- most of the companies don't immediately integrate IT systems.

But Integra has done a good job of that. At least everybody is on the same ERP. So I think there's elements that we've done really well, but there's elements that we could have stood even in the case of the supply chain that we would take the best practices to make sure they're applied. And that's what we're doing now to ensure that -- our supply chain is robust end-to-end our quality management systems are. So that's some of the work that we're doing now.

And my sense, as guidance has been lowered throughout the year, is that, it's like a box when you keep opening it, you discover new things. Is that the right interpretation? And are you -- do you feel like you're near the end of finding new things? You feel like you've scrubbed all the corners and been like, okay, we're in good shape here?

Yes. So I would say, obviously, we're committed to getting to a point where we meet demand because the demand for our products are strong. It's just the challenges that we've had has been on the supply side and some of the things that we had put on hold in the process throughout the year.

And I would say, we're getting to the point where we will be able to build into our guide as we talked about some of the disruptions that may come either through supply or the quality management work that we're still doing. But our commitment to coming back to meeting demand is definitely there. In terms of the trajectory as to when we get there, we will obviously share that when we share the long-range plan. At the Investor Day, we plan on having an Investor Day next year. We haven't set a date yet, but we will be covering that at that point.

And when we think about Braintree coming online in June of '26, what are the milestones that you're going to be sharing with investors for us to follow your path?

Yes. So I think from now until the time that the plant is up and running, it's really, as I said, continuous running the qualifications for manufacturing and processes and finalizing the documentation. So really, they all go up until the time -- they're built into the time line that we have provided.

So there's really not going to be any hard to stop. I would say that we are on a weekly basis, getting updates on the progress. And should anything change, we will be providing input. But at this point, we're still sticking with the June 2026.

Excellent. PriMatrix and Durepair are currently being relaunched. What it goes into relaunching a product? And why are these two the ones that are going out at this stage and what's important about them?

Yes. So as part of building, as I mentioned, we're working very in a foundational systemic way when it comes to supply chain optimization and strengthening our supply chain. So dual sourcing is one of those things that we are doing foundationally in the right places where it makes sense in order to be able to build resiliency across our supply chain.

So with PriMatrix and Durepair, we had an opportunity through collaboration with a partner with a third-party supplier to bring those two products into the market quicker and not necessarily through Braintree to get ahead of it and bring it on, which we actually launched both of the products in the beginning of October of this year, which is really nearly a year ahead of time.

So -- and we're having pretty good traction and reception on both of those products, which really validates some of the things I have been hearing about as I joined the company and I was meeting with the surgeons and physicians where they talk about they miss these products in their bags because the way they handle, the way their outcome -- their patient outcomes have been delivered with these products, they're missing them. So we're actually doing pretty well with PriMatrix and Durepair, both of them since their launch in early October.

If you're using these products now, what are they not using? What is it replacing?

If they're using the PriMatrix and Durepair. So there's many, many products that they have been using on the PriMatrix side, the market and the companies that play or a significant number of them, obviously. So there's many competitors that are using. But again, what we're hearing from the customers is that they were missing these products for the properties that they have, the way they handle the strengths, the handleability of the product.

Yes. The market is fairly fragmented, and there is a lot of trial that tends to happen. And I think to Mojdeh's point, while we're learning when our products were off the market, is that customers -- in some instances, they've trained on PriMatrix as an example.

And that's what they're familiar with. That's what they know that works, and that's why they want it back are interested in having back because in the midst of doing their trial, they didn't find a competitive offering that met their need completely. And so that's the opportunity that we're tapping into as we relaunch these products.

Yes. What I'm really -- what I'm really trying to get at, and maybe it's just obvious at this stage is, I think some of the investor concern was when these products are off the market, others will come in and fill the gap. And therefore, the demand for them will be lower. But I'm not hearing you say that.

Yes. So it remains to be seen, as I said, the early indication on PriMatrix has been very positive. So it's actually exceeded our expectation as we launch the product. And we're going to be continuing to watch it, right? Because there's a lot to be learned about how PriMatrix gets the share back that we have lost over time.

And then also as we build the learnings through that into the launch of SurgiMend. But what we are hearing is that the customers that we have approached, which have been the loyal users of PriMatrix, they're thrilled to have it back. it's early indication. We're going to continue to watch it for the fourth quarter. And obviously, we're going to build those expectations into the guide that we will bring in February for next year.

And how do you think about the ENT franchise? You've built it out through acquisition. Can you discuss the products in that portfolio and how it's growing?

Yes. So the portion of the portfolio is balloon sinuplasty, which is the lower growth part of the portfolio, and that was a known thing at the time of the acquisition. That, that's in the lower growth spaces. And we are challenged in that segment a little bit with the reimbursement and prior authorization and so on and so forth.

So we've been working with our health economics teams, with the payers, as well as our customers to help them with a more successful prior authorization process as they go through it. So we put a lot of time and effort into that. We're putting time and effort into continued publications and clinical evidence that we bring forward, as well as ensuring that our product development road map is so that our products are competitive, and we are in the price points that are allowing us to play successfully in the market. So that's the balloon sinuplasty side.

But the high-growth segments of that portfolio is growing very strongly, high single digit, low double digit. And that's the eustachian tube dilation products and a couple of things about that part of the business. We are the only company that has an indication for pediatrics 8+.

And we just recently launched a registry to accumulate obviously, clinical data to further substantiate for reimbursement, appropriate reimbursement levels and build evidence for it. And then also with the new product introductions and developments that we're working on, the TrueD product itself, and also the TrueD navigated handhelds are doing also very good. So -- the -- hopefully, they strengthen the growth of the growth part of the portfolio is going to be over taking the growth of the balloon sinuplasty side.

But those are the work that we're doing. And ultimately, at the right time in the future that we have opportunities for also bolt-ons for this product line, obviously. But at this point, we're -- we're focused on executing and delivering.

Well, that was a question for later on, but since you opened the door, Integra has been built through M&A. And it's a hard pause since you've been dealing with the newness of both of your positions, the newness of the compliance master plan, et cetera, et cetera. At what stage does the company go back to M&A?

Yes. So our focus is really, as you said, quality management systems, supply resiliency, as well as execution excellence and bringing down our leverage is #1 priority, reinvestment beyond that reinvestment in growth. Obviously, is going to be Q1, but we have a lot of focus on the cash flow and cash flow improvements in order to be able to bring down our leverage. So those are our key priorities. I don't know, Lea, if you want to?

Yes. And to put a final point on that, to Mojdeh's point, we expect those to continue to be our priorities through the end of 2026 in terms of focus on debt reduction and leverage improvement. And so I would look to do some of the acquisitions that Mojdeh talk at a point beyond that.

So specifically to debt coverage, that your goal for the end of 2026. Is that what I heard? Or?

No. So it's a focus now, right? Number one priority now today. And the biggest part of how we execute on that is driving improved operational cash flow, and we saw evidence of that in our Q3 results. We continue to expect to see momentum in that regard in terms of improving cash flow management throughout Q4 and into 2026, driven by our ability to drive better supply reliability, bring our products back to market, improve EBITDA, but also through very aggressive working capital management discipline that we've instituted across the organization.

So looking critically around CapEx and investments, certainly, as we bring Braintree online, that's a sizable kind of CapEx investment that we no longer have to make as an example. Instituting critical controls around AR, AP, inventory management are also part of that. And then coupled with the margin expansion program that we talked about in our July call, Phase 1 of which is going to be implemented in 2026. And so all of those things will be contributing factors as to how we accomplish that and drive leverage down.

How should we think about the private label business today and then going forward?

So the private label business, we actually have had a pretty good business in that in the sense that it has been growing decently. It's been -- it hasn't been necessarily dilutive. And in terms of the profitability has been pretty profitable for us because of the fact that we don't have a lot of SG&A that's associated with it.

We have had challenges this year because of the fact that one of our partners, they are having challenges with their product and share position with their customers. So as such, they have been modulating the orders that they put through us as they reduce their inventory. So we've been impacted by that. As we move forward, hopefully, they are going to be stabilizing more as their demand stabilizes. And we do have good partnerships with a few of our partners that have been long-term partners with us.

So it's a strong business for us when -- in terms of both not being dilutive on the growth side and also being accretive on the margin, Lea, if you want to make any additional comments, but we've had a couple of bumps this year because of that one partner.

How many partners do you have?

So for competitive reasons, we don't disclose the number of partners that we work.

With than a breadbox, more than a dozen, less than 5. Any way to gate this?

Yes, again. So I think relative to the size of our portfolio, again, not -- it's about probably bigger than breadbox.

Okay. That's fine. On the third quarter call, you discussed that you had completed a portfolio review. And why was this the right time to do the portfolio review? And what was the outcome of it?

Well, I think the timing is -- it's a responsible thing to do for any leadership team and especially as a new leader coming in, to make sure that you understand the role each part of your portfolio plays in your performance and your future is really, really important. So there's no better time than now to do it.

And the reason why -- the main reason why is because I wanted to make sure that we have an aligned understanding of the role each part of our portfolio play so that Lea and I have a better view as we do capital allocation because we want to make sure that we put the resources behind those priorities that drive the most value creation for the company in the long term.

And in the process, we also have to understand what parts of our portfolio are not aligned because either they're dilutive in terms of growth or margin or they're not strategically aligned or they're in a competitive position where there's -- we don't have the right to win or whatever have you, because we need to then line those up for ultimately, over time, potentially sunsetting them, the SKU rationalizing them, simplifying them. So it's guiding a lot of the work that we are going to be driving as we roll out our LRP.

And can you share which ones you were, like, let's lean into this and others you're like, not so much.

Yes. Well, more to come as we bring our long-range plan forward, but -- there are clear areas that are focus areas for us on the growth side of it, which is IBBR, we're pursuing PMAs, tissue technology, wound care is going to continue to be a focus for us. Beyond that, in the sense of the neurosurgery business, we're going to be very interested in adjacent areas that we have strength in, brand equity and the right to win.

But more to come when we roll out the LRP. But in terms of parts of our portfolio to sunset over time and all of that, we are still in the midst of deciding at what point those are going to happen. And again, we'll bring that forward as we talk '26 and beyond.

Can we talk a little bit about tissue technologies. And can you remind us the products that you have in there? And what's really working for you and what may not be so much?

Yes. So we are in wound care, obviously, wound reconstruction as well surgical reconstruction, which the key part of the growth for the future that we are putting our bets on is implant-based breast reconstruction, which SurgiMend is ultimately a product that we're getting in a PMA for that indication. So that's an area of focus for us.

And then on the wound side, obviously, we have burns and wound reconstruction where you need tissue enforcement that's being used where we have Integra Skin, PriMatrix and several other products. We have products, obviously, our UBM products that are being used also for other indications.

So we believe and we know that we are -- we have the broadest portfolio across the tissue technologies business that any player in the market has today and with the changes that are happening on the CMS side in terms of payment, it's going to be a significant upside for us. Moving forward.

Yes, we also have DuraSorb, which is a synthetic, right? So as we -- and we're pursuing a PMA strategy for that. So as we think about growth opportunities in implant-based breast reconstruction, we come with a portfolio that includes both the biologic device as well as a synthetic device, which we think is fundamental to being able to capture share meaningfully in that space.

And how fast do you think the market is growing versus what you think you can deliver?

So specific to IBBR. So right now, we size that market at about $800 million market. It's growing at high single digit, actually low double-digit growth. And so again, for us, we have to get SurgiMend back on the market. We have to get the PMAs, but we do think there is meaningful opportunity for us to outperform the market as we grab share.

What launches are on the calendar for next year?

So it's going to be the continuation, obviously, of the full year of launch of PriMatrix and Durepair. We also hopefully, we will bring -- are bringing back by the Q4 of next year, SurgiMend 510(k) is going to be another one. And I believe we have a launch also in the Acclarent arena that's due to come towards the end of the year. Am I missing something? No.

Prior to the recall and some of the manufacturing discussions, we spent a fair amount of time talking about implant-based breast reconstruction. Is that still on the table? Or is that -- how should I think about as potentially a contributor?

Specific to 2026? Or you're talking about beyond?

I'll take any year. You tell me.

Yes, I'll take that. So absolutely, right? So that goes to what we were just talking about in terms of how our portfolio is positioned, SurgiMend, as well as DuraSorb and the PMAs we're pursuing. That gives us license to penetrate that space more deeply than what we can right now because we have an ability to promote once we get those in place.

And so for us, SurgiMend, we announced the planned return to market time line is Q4 2026 for our 510(k). And again, expect to be well positioned to get a PMA subject to kind of FDA PAI inspection shortly thereafter. And so -- and then DuraSorb, similar time line. And absolutely, as part of the LRP or Investor Day that we'll come forward with in 2026, that will be a core part of our growth strategy.

You talked about a program for savings. And I think the amount that you target is $25 million to $30 million for next year. Where does the savings come from? And does it come out of the system and remain out? Or is this an annual depletion? How should I think about some of your internal cost structure?

So our Phase I program right now, we have identified $25 million to $30 million of savings to be delivered in 2026, identified in a couple of areas within our cost of goods sold, so within our gross margin area, there are opportunities in terms of driving enhanced productivity in terms of driving site efficiencies that will contribute to that. And stronger procurement category management to help mitigate some of the inflationary headwinds that we see on price.

From an OpEx perspective, we expect to see benefits from a simplified operating model. along with better third-party cost management as we look at contingent workers as we look at consultants, that becomes a part of that. Category management will also play a role there as well. And then also looking at kind of our support structure and how we can position that to better enable the business will all be key contributors.

Yes. And the thinking is this is -- that's what we talked about. This is the Phase 1 of our journey on margin improvement plan because part of this is going to -- the way we're approaching it especially on the supply chain side and manufacturing and operations is going to be continuous improvement.

We should be able to deliver continuous improvement year-over-year. We should expect to do that when it comes to COGS improvement, when it comes to yield improvements. And those are the sets of disciplines we're trying to establish within the supply chain that would allow us to build that culture of continuous improvement year-over-year. So this is just the Phase I. But...

To that end, from a long-term perspective, I mean, you think just what, 2 to 3 years ago, right, profitability in our business was in a different place, right? And since that time, we've made investments in compliance master plan, we've made investments in remediation. Those costs begin to go away, right, as we strengthen our QMS, as we strengthen our supply chain, and that will be a vehicle to drive improved profitability, coupled with all of the things that Mojdeh talked about. So we do see an opportunity from a profitability perspective for the business to exceed where it was in the recent past.

What do you think investors are missing at this stage? And what do you think -- I'm going to ask a different question. You're focusing on too much.

I think the investors want to see consistent delivery of results. I think that -- I think for the most part, everybody knows we're significantly undervalued. I mean that's not lost to anyone. And I think they do see the opportunity, but I think they just -- they want to see delivery of consistent results, I would say, for a few quarters.

Yes, I agree. They want to see the stabilization of our operations, and they want to see kind of that return to growth trajectory. And I'd love to be able to get to a point where we continue to talk about all the exciting things, right? And I don't have to talk about so much on remediation in terms of -- to your point around where do we spend too much time. It's probably there necessarily so because of the moment we're in. But I think given kind of the trajectory that we're on, I do see in the not-too-distant future and ability to be able to talk about those exciting things, which will bring forward as part of our Investor Day.

When are you planning your Investor Day?

We haven't announced yet.

Firs, second half?

Coming soon.

Okay. Well, so when we meet this time next year, what do you think we will be talking about? And what do you think we won't be talking about?

I think we're going to be talking a lot about the leverage of the growth opportunities moving forward and less about when this is going to be behind you and this is going to be behind you. I'm really hopeful there's a lot to be optimistic about this business. What we are doing in terms of building the strength, I keep on talking about our approach is systemic and foundational because we want to establish the company in a way that you will be -- we will be able to deliver sustainable, predictable results consistently moving into the future so that we can focus on the growth and the opportunities that are in the markets that we play in and fully leveraging the strength of the portfolios that we have.

We haven't been able to do that in the last 2 years. We haven't been able to fully leverage the strength of the portfolio and the commercial excitement that there is out there about our products. And we're going to be able to talk about that.

And I'll add on to that selfishly. I hope the conversation is, Lea, you've improved your overall balance sheet strength, leverage is down, cash flow generation, free cash flow conversion is looking really strong. Remind us, how did you do that again?

I look forward to that conversation. Mojdeh and Lea, thank you so much for joining us today. Have a great day.

Good day, and welcome to the Integra LifeSciences Third Quarter 2025 Financial Results. [Operator Instructions] As a reminder, this call may be recorded. I would like to turn the call over to Chris Ward, Senior Director, Investor Relations. Please go ahead.

Good morning, and thank you for joining the Integra LifeSciences Third Quarter 2025 Earnings Conference Call. With me on the call this morning are Mojdeh Poul, President and Chief Executive Officer; and Lea Knight, Chief Financial Officer. Earlier this morning, we issued a press release announcing our third quarter 2025 financial results.

The results and corresponding earnings presentation, which we will reference during the call, are available at integralife.com under Investors, Events and Presentations and a file named Third Quarter 2025. Before we begin, I want to remind you that many of the statements made during this call may be considered forward-looking.

Factors that could cause actual results to differ materially are discussed in the company's Exchange Act Reports that were filed with the SEC and in the release. Also in our prepared remarks, we will reference reported and organic revenue growth. Organic revenue growth excludes the effects of foreign currency, acquisitions and divestitures.

Unless otherwise stated, all disaggregated and franchise level revenue growth rates are based on organic performance. Lastly, in our comments today, we will include certain non-GAAP financial measures. Reconciliations of non-GAAP financial measures can be found in today's press release, which is an exhibit to Integra's current report on Form 8-K filed today with the SEC.

And with that, I will now turn the call over to Mojdeh.

Good morning, everyone, and thank you for joining us for our third quarter 2025 earnings call. During today's call, I will begin with an overview of our third quarter results. I will then discuss our progress on our three key priorities, which will position us for sustainable long-term success. Lastly, I will provide updated 2025 guidance, after which Lea will review our financials in more detail.

Since our second quarter earnings call, we have made meaningful progress on our Compliance Master Plan, moved ahead with our plans to improve operational and execution excellence and reintroduced PriMatrix and Durepair ahead of schedule. We saw continued healthy demand across our portfolio, offset by two supply interruptions in our CSS business, which led to growth below expectations for the quarter.

Disciplined spend control allowed us to deliver strong operating income and improved operating cash flow performance despite the top line results. In the third quarter, we delivered revenue of $402 million, representing organic growth of approximately 5% year-over-year, but below our guidance range. Adjusted EPS for the quarter was $0.54, exceeding the top end of our guidance range.

This reflects our ability to offset top line pressure through improved operational efficiency and disciplined cost management. Our third quarter revenue shortfall underscores the work still ahead to achieve greater execution consistency, which remains a critical transformation imperative for us.

We have been taking a systemic and foundational approach to strengthening our supply chain to allow us to reliably meet demand and drive predictable growth. We have made progress realizing that building a robust supply chain is going to take time. Looking forward, we remain focused on our three key priorities: executing our Compliance Master Plan to strengthen our quality systems, driving operational and execution excellence and delivering on our financial commitments.

Starting with our first priority, which is executing our Compliance Master Plan, we have made good progress and remain fully committed to transforming and improving our quality management system. During the third quarter, we continued to execute our remediation plans under the oversight of our transformation and program management office, ensuring disciplined prioritization, effective resource allocation and consistent progress tracking.

We have maintained active constructive engagement with the FDA and have delivered steady progress on our warning letter commitments and routine inspections. As previously stated, while our remediation work will extend beyond 2025, we are establishing a firm foundation for supply chain excellence and resilience. Our second priority is driving operational and execution excellence.

Since our appointment in April, Valerie Young, our Corporate Vice President of Global Supply Chain, has been implementing a comprehensive plan to establish a robust end-to-end supply chain for Integra capable of delivering consistently reliable performance. Val is strengthening her leadership team by bringing on new highly experienced talent and is driving a culture of accountability, discipline and continuous improvement.

While it will take time for our supply chain capabilities to fully mature, we are already seeing measurable progress and expect continued improvement over the coming quarters. I would like to highlight three examples of such progress, Integra Skin production improvements, Braintree facility progress and our strategic approach to dual sourcing.

In the case of Integra Skin, we have proven that focused planning and disciplined execution deliver results. Since January, Integra Skin manufacturing yields have improved by more than 50% and inventory levels have increased by 2.5x. These improvements in Integra Skin demonstrate the effectiveness of our approach and the progress we are making towards greater operational reliability across the enterprise.

In the case of the Braintree facility, we continue to make good progress and are on track to resume production in June of 2026, in line with our previous issued timeline. This facility will produce SurgiMend, PriMatrix and Durepair, with initial production focused on SurgiMend to build inventory ahead of its planned relaunch in the fourth quarter of 2026. Finally, in the case of strategic dual sourcing, in order to enhance our manufacturing flexibility and resilience, we have entered into a new third-party supply agreement for PriMatrix and Durepair.

As a result of this agreement, I'm pleased to share that we recently relaunched both products in the fourth quarter of this year, almost a year ahead of previously expected timelines. Most importantly, this dual sourcing strategy gives us the opportunity to return these critical products to the physicians and patients who rely on them. Before moving to our third priority, I would like to highlight the appointment of Dr. Raymond Turner as our Corporate Vice President and Chief Medical Officer, reporting directly to me.

Ray is a Board-certified neurosurgeon, fellowship trained in endovascular neurosurgery. He's also an accomplished executive with extensive experience in the MedTech industry, having held Chief Medical Officer positions for Siemens Endovascular Robotics and Johnson & Johnson Cerenovus businesses. We welcomed Ray to our team last month.

He's leading our worldwide medical and clinical affairs organizations, including clinical research, clinical trial operations, evidence generation and medical safety and communications. His extensive medical and clinical experience and expertise are already proving to be significant assets as we strengthen our focus on building robust clinical evidence and delivering innovative solutions to transform patient care.

Now turning to our third priority, which is delivering on our financial commitments. Earlier on this call, we reviewed our third quarter financial results. Now I would like to take this opportunity to talk about the steps we are taking to position our company for long-term growth. We recently completed a portfolio prioritization process that will guide our capital and resource allocation decision.

Our longer term goal is to shift our product mix towards higher growth, more profitable categories to drive accelerated growth and performance. This disciplined approach is reflected in how we are investing in high-growth segments of our portfolio. As an example, we're progressing the PMAs for SurgiMend and DuraSorb in implant-based breast reconstruction, positioning us to become a key player in this high-growth $800 million market.

As the proposed CMS reimbursement changes continue favoring evidence-based cost-effective products, we also see additional investment opportunities in clinical evidence to expand our reach in outpatient wound care settings, driving sustainable profitable growth. Finally, to drive long-term profitability and create room for investment in growth, last quarter, we announced the initial phase of our margin expansion initiative, which is progressing well.

We expect the program to yield $25 million to $30 million of cost reduction in 2026 through initiatives focused on COGS improvement, third-party spend reduction and operating model efficiencies. Not only will these initiatives support our longer term margin expansion goals, they will also leave us well-positioned to offset any potential headwinds that may arise from a cost perspective, for example, tariffs.

Moving to 2025 guidance; we are revising our full year 2025 revenue and adjusted EPS guidance to a range of $1.62 billion to $1.64 billion and $2.19 to $2.24, respectively. Our new guidance reflects our lower-than-expected revenue in the third quarter, coupled with updated assumptions for the fourth quarter.

We remain confident in our plans and ability to deliver the foundational transformation required to improve our performance and delivery of consistently reliable results. Looking ahead, we will continue to balance near-term execution with investments that strengthen our foundation for sustainable growth.

Now I would like to turn it over to Lea, who will provide more specifics on our third quarter results and share additional details on our revised guidance. Lea?

Thank you, Mojdeh. Let's take a more detailed look at our third quarter financial highlights, starting on slide 5. Total revenues for the quarter were $402 million, representing 5.6% reported growth and 5% organic growth compared to the same period last year. Reported revenues included a foreign exchange tailwind of approximately 60 basis points.

Revenue performance was below our expectations due to two supply interruptions in our CSS business, coupled with insufficient safety stock levels for the impacted products. Adjusted earnings per share for the quarter were $0.54, representing 32% growth compared to the third quarter of 2024.

Gross margin for the quarter was 62.9%, down 10 basis points versus the prior year, reflecting increased remediation costs, investments in the Compliance Master Plan and tariffs, mostly offset by favorable product mix from stronger sales in higher-margin products in Neurosurgery and Wound Reconstruction. Adjusted EBITDA margin was 19.5%, an increase of 330 basis points versus the prior year, driven by revenue growth due to improved inventory availability and disciplined cost management.

Operating cash flow for the quarter was $41 million, a significant improvement over the first half of this year. Turning to slide 6; let's review the revenue highlights from our Codman Specialty Surgical segment. CSS reported third quarter revenues of $292.6 million, reflecting growth of 8.1% on a reported basis and 7.1% on an organic basis. We are pleased that demand remains strong in the global neurosurgery market. Our revenues in neurosurgery increased 13.3%.

This outsized growth was driven by strong performance of Certas Plus, DuraGen, CereLink and Mayfield Capital in addition to a favorable prior year comp. Our ENT business was roughly flat for the quarter. We continue to be impacted by reimbursement pressure in the Sinuplasty Balloon segment and the timing of capital equipment purchases. These dynamics continue to weigh on overall ENT growth despite growth in our newer products.

The AERA Eustachian Tube Balloon Dilation and TruDi Navigated disposables both delivered solid growth. We remain focused on continuing new product development, driving commercial execution and engaging with payers to address reimbursement challenges. Of note, in Q3, we initiated enrollment in the Acclarent AERA Pediatric Registry, a prospective multicenter observational registry evaluating the real-world use of the AERA Eustachian Tube Balloon Dilation system in children.

The data generated from this study will provide valuable real-world insights and support broader efforts to improve reimbursement pathways and clinical adoption. We continue to invest in our ENT offering and are taking a disciplined approach to managing and growing the business. In our Instruments portfolio, revenue declined 7.6%, driven by a tough comparison in the alternate site channel following strong performance in the prior year.

Turning to the results in our International business. Revenue grew 14.6%, driven by strong demand across key markets and the renewed availability of certain products that were not available in the prior year. This rebound reflects the strength of our global commercial execution ability and the resilience of the underlying demand for our products. Our international growth was led by China with an approximate 24% year-over-year increase fueled by stronger supply, further geographic expansion and deeper market penetration.

Other strategic markets also delivered low double-digit growth. While part of the growth reflects lapping last year's ship hold, we are encouraged by the sustained demand signals. We remain focused on expanding access, improving supply reliability and driving adoption of our differentiated technologies globally.

Moving to our Tissue Technologies segment on slide 7; Tissue Technologies revenues were $109.5 million, down approximately 0.5% on a reported basis and 0.3% on an organic basis compared to the prior year. Within Wound Reconstruction, we saw strong underlying growth across the portfolio, including approximately 50% growth from DuraSorb and approximately 25% growth from Integra Skin.

Growth in Integra Skin was supported by both continued demand strength and improved production output and availability, while DuraSorb's performance was again driven by sustained market demand. The positive growth in Wound Reconstruction was offset by the negative impact of MediHoney. In our Private Label business, sales declined 12.6%, primarily due to the softer commercial demand experienced by our private label partners.

International sales in Tissue Technologies grew low double digits, reflecting double-digit growth in Integra Skin and our UBM portfolio, partially offset by the impact of MediHoney. Turning to slide 8; I'll now review our balance sheet, capital structure and cash flow. During the third quarter, operating cash flow was $40.9 million and free cash flow was $25.8 million, reflecting our continued capital investments in key infrastructure.

As of September 30, net debt was $1.57 billion, and our consolidated total leverage ratio was 4.3x, which remains within our current maximum allowable leverage ratio of 5x. We ended the quarter with total liquidity of $550 million, including $268 million in cash and short-term investments, with the remainder available under our revolving credit facility. During the third quarter, we satisfied the convertible bond maturity using our revolver.

During 2026, we plan to increase and extend the proportion of fixed rate debt in our capital structure. If you turn to slide 9, I will provide a consolidated revenue and adjusted earnings per share guidance for the fourth quarter and full year 2025. For the fourth quarter, we expect revenues in the range of $420 million to $440 million, representing a reported decline between approximately 5% and 0.6% and an organic decline between approximately 6% and 1.4%.

Our fourth quarter outlook reflects normal seasonality and updated market assumptions for ENT and private label as well as remediation and supply improvement timelines. For the full year 2025, we expect revenues of $1.62 billion to $1.64 billion, representing reported growth of approximately 0.6% to 1.8% and an organic decline of approximately 1.6% to 0.4%.

We estimate an approximate 260 basis point decline in gross margin for the year, including approximately 200 basis points due to investments in remediation and the Compliance Master Plan. Our gross margin outlook also reflects an approximate 60 basis point headwind from tariffs. Our tariff assumptions align with the most recent formal tariff rates and reciprocal tariffs on record from the relevant jurisdictions.

For the fourth quarter, we expect adjusted EPS of $0.79 to $0.84 and for the full year between $2.19 to $2.24 per share. Our adjusted EPS guidance assumes continued disciplined cost management and investments in operational stability and longer term growth. Finally, on slide 12, we've summarized our key guidance considerations, including assumptions for tariffs, FX rates, tax rates and share count.

I will now turn the call over to Mojdeh to conclude our prepared remarks.

Thank you, Lea. To close, I want to emphasize our focus on strengthening our foundation through improved compliance and quality, operational excellence and continued strong commercial execution. The actions we are taking will drive measurable progress towards improved reliability, consistency and performance.

We have successfully relaunched PriMatrix and Durepair ahead of schedule through our dual sourcing strategy and are on track to begin production of SurgiMend in Braintree by June 2026, with the launch expected in the fourth quarter. Our cost saving initiatives are underway with $25 million to $30 million in savings expected in 2026. As we look ahead, we are highly confident about the future of Integra.

Our entire organization is fully committed and working every day to deliver on our purpose to restore life. With our differentiated portfolio, holistic transformation strategy and robust plans, we are well-positioned to deliver long-term sustainable growth, improved margins and ultimately, strong returns for the shareholders.

Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Vik Chopra with Wells Fargo.

I have two. The first one, your Q4 guidance is below Street expectations. Would just love to get some more color around some of the puts and takes for the fourth quarter, especially around the supply headwinds? And then I had a follow-up, please.

Certainly. Thanks, Vik, for the question. So to your point, Q4 guide currently reflects a pull down from a midpoint of about $26 million versus our previous guide. It's made up of three factors. We did update our assumptions for ENT and private label based on kind of the market impacts that we saw in Q3. So we've reflected that in Q4.

We've also reflected updated CMP remediation timing, including the delay of some products return to market. And then finally, it reflects updated assumptions regarding our production rates and supply improvement following the Q3 supply interruption. So while we've resolved that interruption, we are expecting performance in Q4 to be lower than what we previously assumed in our Q4 guide.

Great. And then my follow-up question, I'm just curious if there's an opportunity to grow your top line in 2026 and how we should think about gross margin stabilization and profitability.

Vik, this is Mojdeh. Thank you for your question. Before I let Lea review some of our thoughts about 2026, I wanted to provide some context around the work that we've been engaged in doing this year, which is really foundationally systemically strengthening our quality, reliability and overall execution across our business.

And we're in the midst of a significant transformation of our quality and operations across the entire 14-site manufacturing footprint, and it will take time to embed. There's going to be some variability going quarter from quarter-to-quarter as we execute our remediation but we are going to be committed to the three priorities that we've been bringing forward at every earnings call.

We're going to carry on those priorities into next year because we believe those are the foundation for us to be able to deliver consistency in performance and driving growth in 2026 and beyond. And with that, I'll let Lia comment.

Yeah. So to that end, as we look ahead, there will be both headwinds and tailwinds that we'll need to factor into the 2026 guide. And we look forward to doing that and sharing those details as part of our fourth quarter call in February. That said, we do currently anticipate modest revenue growth in 2026.

And we're going to approach next year with the discipline that Mojdeh referenced. We're going to be balancing investment as well as cost management, while at the same time, staying focused on operational execution as well as earnings performance.

Our next question comes from Joanne Wuensch with Citi.

This is actually [ Anthony ] on for Joanne. On the private label headwinds, I know it was a headwind last quarter as well. Is it the same private label partner that's experiencing these issues? And then if you could just maybe talk about your visibility into the private label business right now.

Thank you for the question. Yes, we expect growth to continue being impacted in Q4 for private label. It's primarily the same private label partner and the same challenge that they have in the market in terms of their share position. And as their share position is challenged, they reduced the order rates that they have to us. So it's the same exact one.

And in terms of our visibility going forward, again, as part of our 2026 guide, we'll update our thinking with respect to that. Right now, we would anticipate private label growth in the kind of low single to mid-single-digit trajectory.

Okay. And then can you talk about this quarter what was going on with MediHoney? I know it was pressured.

Yes. MediHoney, we are currently undergoing remediation for that product under the Compliance Master Plan. And we realize it's been a key part of the Tissue Technologies business and the strength that we have in other parts of the Tissue Technologies, as Lea mentioned in the prepared remarks, we have strong growth in Integra Skin, DuraSorb.

We have strong growth in Integra Skin. So we are able to balance some of the shortfall because of the MediHoney being off the market, but we are diligently working on the remediation efforts.

Our next question comes from Ryan Zimmerman with BTIG.

Just real quick, just to go back, I mean, you had said in 2Q that there was no additional material ship hold expected. And so I just want to understand like the timeline of when this kind of popped up either with MediHoney, but you also called out, I think, some ship hold in CSS too. So if you could specify what those products were in CSS and whether that was factored into the prior guidance before?

Yeah. Certainly, Ryan. So a couple of things. So as you remember, coming out of Q2, we had strong performance. And we saw that performance continue through July, which is when we provided our Q3 guidance and performance at that level is performing consistent with that expectation.

The two supply interruptions that I referenced that impacted the CSS business occurred in August in a timeframe which we still had an ability to be able to close that gap. And so we did see a rebound in September, but we just weren't able to close all of the gap by the end of the quarter. Important to note, and I mentioned it previously, but important to note that we have since addressed the interruption and resumed production in the impacted areas.

So while it does affect kind of our go-forward ramp, those issues have been resolved. In terms of MediHoney, because you did mention that specifically, that wasn't a factor with respect to our performance versus guide in Q3. MediHoney was recalled earlier in the year. So we had already removed that from our guide as of the July conversation.

Okay. That's helpful, Lea. And then the second question, kind of a two-part question. But Mojdeh, you talked about kind of product review, portfolio review. And so I'm curious what that means for existing products. I mean you talked about moving into higher growth areas.

But when you look at the portfolio in total, I mean, do you see opportunities to prune, to divest? And I ask that in the context of like Acclarent and the performance you've seen with Acclarent maybe not meeting the expectations that you previously had in your deal model? And what are your updated assumptions, if I may, for Acclarent now based on the updated guidance?

Thank you, Ryan. I hope I can remember all the questions. Somebody may have to prompt me. But on the portfolio prioritization, the key purpose behind it is to manage our portfolio for optimal performance. And the outcome of that portfolio prioritization process is going to guide our capital and resource allocation decisions, and it has started to do that actually where we're going to be spending most of our resources towards the most important portfolios and programs for the company.

Now the ultimate goal is to shift our portfolio toward higher-growth segments where we are in attractive markets, we are leaders. We have the right to win. And it also -- this disciplined approach would allow us to make sure that we will have continuous and consistent growth long-term into the future. As we have done this work, there is no predetermined areas for us that I would say we would want to divest at this point.

But there are opportunities that we're seeing in terms of the SKU rationalization and in terms of streamlining the portfolio, simplifying some parts of our portfolio. But that's the work to be done, and we continue to drive that portfolio prioritization to guide our capital allocation decisions. Now when you're talking about Acclarent, we have one part of the business, which is balloon sinuplasty has been challenged because of the payer challenges.

And that has been consistent over the last couple of quarters. And it's the issue that our teams are working very closely with the health economics team that we have, helping the customers as well as conversations with the payers to try to address that. But we knew that actually, at the time of the acquisition, it was known that that's the slower -- growth part of the portfolio. The other parts of the portfolio are progressing very well.

We had very healthy growth, low single -- low double-digit growth for both AERA as well as TruDi products. And we have quite a good pipeline of clinical evidence as well as new products that are going to augment and drive the growth of this portfolio forward. So we still believe it's an attractive market. The balloon sinuplasty part of it is challenged, but the other parts of the business are growing very strongly. I think I got all of the questions.

I think you did.

All right. In terms of expectations, you said.

Yeah, what are your new market or assumptions for Acclarent?

Yes. The assumptions for the Q4, we continue to project flat. And for the next year, we will come to you when we have the guidance that we bring forward in 2026.

Our next question comes from Richard Newitter with Truist Securities.

This is Ravi here for Rich. I guess I kind of want to prod on gross margin a little bit, pretty strong in third quarter, at least given the revenue shortfall. So can you help us kind of think about -- is this a function of some of the changes that you've been making in terms of the remediation efforts or restructuring or should we be thinking about it more so that with some of the way you're running production so tightly, you might have some issues around safety stock if demand picks up, but longer term, as production gets to normal, maybe this gross margin benefit ebbs a little bit. So any color on that would be appreciated. And I have a follow-up.

Certainly. And thank you for the question. So from a gross margin perspective, on a full year basis, we're continuing to pace in terms of gross margin performance similar to what we communicated in the last call. So we said we'd be roughly around down 250 basis points year-on-year. We're pacing in kind of that similar path.

For Q3, we did see slightly better performance than we had anticipated and does have a lot to do with our ability to manage more efficiently. Some of the cost headwinds that we have been experiencing related to the remediation work that's underway. So where we're able to manage more efficiently from an E&O or a scrap perspective, we're seeing the benefit of that reflected in Q3.

And as we continue to move through kind of these remediation phases, we would expect a lot of those onetime headwind costs to come out of gross margins as we move forward. And then from a year-on-year perspective, we were about 10 basis points down. We did see the impact again of the remediation and Compliance Master Plan costs, coupled with tariffs as a headwind.

That was largely offset by what I mentioned earlier, which is kind of improvement in E&O and scrap and then also better product mix with Tissue Tech brands performing stronger from a mix perspective and helping to drive improvement in overall gross margins.

Great. And I guess my follow-up kind of goes down that Tissue Tech pathway. Talking about PriMatrix and Durepair coming back ahead of schedule. Can you maybe help put some figures around that? Like what kind of revenue do you expect that you didn't ahead of schedule? And then kind of where do you see the growth ramp for those products or kind of how do you look at the growth for those products?

So PriMatrix and Durepair, prior to pulling from the market in 2023, we're performing around the kind of $25 million to $30 million. And so the work we're doing now as we bring those products back to market is to get back our share. And given that we've been out of the market for a number of years, we know that there's -- it's going to take time to do that.

But we're excited about the reception that we're getting from our customers based on this kind of advanced relaunch of those products. And we'll continue to leverage that as we move forward in terms of determining kind of the full path forward. Mojdeh, did you want to?

Yes. I just wanted to call this out because this is part of the intentional strategy that we have to strengthen the resiliency of our manufacturing and supply chain. So this dual sourcing strategy that the team pulled through during this year is quite exciting for us because we've been hearing from physicians and patients and customers that they're missing these products in the market, and we're happy to be bringing them ahead of time to the customers and to the patients who need them. But we're quite excited about the opportunity to launch it almost a year earlier.

Our next question comes from Robbie Marcus with JPMorgan.

This is Lilia on for Robbie. Maybe just to dig into the fourth quarter guidance a little bit more. EPS guidance still points to a pretty sizable step-up in the fourth quarter. So can you just help us bridge that?

I appreciate that supply should continue to get better, but what's giving you the confidence and visibility in that sort of improvement in margins exiting the year, especially off of now a lower revenue base for the fourth quarter? And just generally, what gives you the confidence that this is the appropriate base for revenues and EPS that you can be and raise off of?

Certainly, thanks for the question, Lilia. So to the first part of your question regarding the EPS step-up in Q4. So right now, at the midpoint, we are expecting about a $0.26 step-up, but it's largely explained by the $33 million step-up in revenue that we're also forecasting as reflected in the guide. So that will drive sort of that performance.

From a revenue perspective, as we look at the step-up and how we get from the low to the high, at the low end going from Q3 to Q4, that step-up requires the normal seasonality that we see on the business. It's about $18 million higher than what we delivered in Q3. And it's consistent with what we've seen kind of historically in Q4 versus Q3.

From -- at the midpoint, it requires the seasonality plus some lift from the supply -- the Q3 supply interruption that we talked about. And again, as a reminder, we have addressed those issues. We've resumed production. So we do anticipate additional or higher revenue performance from those products in Q4 versus Q3.

And then at the high end, it reflects kind of everything I talked about at the mid-end, plus allows for additional improvements in terms of performance against demand for products that we just reintroduced like PriMatrix and Durepair, along with other products that we have in the portfolio based on improved supply. So I think I got most of your questions. Let me know if I didn't hit one.

Yeah, that covers all of them. And just as a follow-up, it was nice to see a return to positive free cash flow in the quarter. So can you talk a bit about how sustainable you think that is? What level should we be thinking about for the full year? And is just the right level of conversion to be working off of?

Yeah. So we were excited as well to your point, operating cash flow for the quarter was $41.9 million. Free cash flow was $25.7 million and free cash flow conversion was 61.9%. And we do continue to expect to see strong free cash flow conversion numbers as we move through the end of this year as well as throughout 2026.

In general, we also, with that performance, expect to see our leverage position stay fairly flat through the end of this year, but then we'll see more meaningful improvement on a leverage -- overall leverage outlook as we move throughout each quarter in 2026. Our focus right now remains on decreasing leverage as well as debt and the strongest contributor to that are our expectations on performance for EBITDA contribution as we move forward.

Our next question comes from Matthew Taylor with Jefferies.

This is [ Matt ] on for Matt Taylor. I wanted to follow up quickly on another question related to PriMatrix and Durepair. And as you look to get back into the market and try and regain share, I know you mentioned that there is a lot of interest in having your product out in the market. But when it comes to executing, can you talk about how much or the magnitude of price concessions that you're willing to take in order to regain that share?

So for competitive reasons, we wouldn't discuss certain pricing strategy. I think right now, again, as we mentioned, for PriMatrix and Durepair, as we reenter, right, we're being thoughtful and approach. We're working with our customers.

We haven't assumed any significant material impact in 2025 as a result of relaunch, but we're using that as an opportunity to position ourselves for stronger performance in 2026. So we look forward to sharing expectations with respect to that as part of our 2026 guide conversation in February.

There are no further questions at this time. This does conclude the program. You may now disconnect. Everyone, have a great day.

Good morning, everyone, and welcome to Day 3 of the Morgan Stanley Global Healthcare Conference. Thanks so much, everyone, for joining. Patrick Wood, I run the U.S. Medtech team, most importantly and excitedly disclaimers, morganstanley.com/researchdisclosures. It's a great website. I really recommend everyone go for fun. What is fun though is obviously having the Integra team here. So thanks Mojdeh and Lea for joining.

Thank you for having us.

Really appreciate it. I guess maybe starting with like it's been, what, a little over a year?

No. No. It's been -- I'm in my 9th month now -- 9 months. Yes.

So yes, that's right. So it's the start of the year. And have how you felt things have gone? I mean everyone has the perception of what something will be before they get inside. Like how has it been relative to your expectations?

Yes. Yes. So many of the things that to begin with that got me attracted to the company in terms of the strength, I get to experience it firsthand in my interactions with the with the customers. And quite frankly, the demand that's out there continues to be out there for our products.

So the fact that we have leadership position in attractive markets, we have strong brand equity and commercial execution. And we have a team that really lives every day the purpose that we're all about, which is restoring patients' lives. But more importantly, I see tremendous opportunity for us for continued growth across any of the platforms of neurosurgery and Tissue Technologies and ENT, both within the U.S. and internationally, and both through organic growth and innovation. And ultimately, when we're ready in the future, potential additional inorganic opportunities for us.

So those are all on the positive side, the things that I'm getting to experience. Now on the other side, what I realized early on in the role is that the operational and execution challenges that we have are deeper than I had anticipated. So the good news is that they're fixable. So we have been very focused throughout 2025 on 3 key priorities, which is to drive implementation of our compliance master plan to continue to drive operational and execution excellence and also to deliver on our financial commitments.

Some of the work that we've completed actually in that regard is we obviously strengthened the leadership teams in quality and operations. We stood up the transformation program management office to help us with prioritization and execution excellence. And we also put up the -- setup supply chain control power in order to be able to get the visibility on the key operational metrics and then also be able to drive into the future, a culture of accountability and continuous improvement.

So and last but not least, we are making great progress on the compliance master plan. We finished the site assessments that we had planned ahead of time. And we're kind of gearing up to get into '20 -- well, we're not done in 2025, but we're laying the foundation to also get into gear with 2026.

To be fair, I think I've never heard an incoming executive say that the compliance things were easier than they expected. There's always -- I mean it's always more of a challenge in that way. Yes. I mean on that side, like a lot of our companies have challenges on that side. The FDA is a tough task master, if you like. How do you find the right people to get into place? Because looking for a lot of quality and supply chain people, how do you find that experience in filling those roles?

Yes. We have actually had pretty good track record in being able to attract really strong talent from strong backgrounds within the medical device and also some pharma industry, with some of the changes within the FDA, we've been able to get some folks, that used to be former FDA folks. So we actually have had a pretty good opportunities, bringing talent on board. So that hasn't been an issue for us. And we've been investing a lot, especially on the side of the quality and compliance.

You both had different backgrounds. I'd love to say how you both would characterize the overall culture of Integra relative to prior experience and what it's like as a place to work and what you think is the defining attributes of the company are.

Yes. So I would say what I mentioned earlier on, people really are committed to the purpose of the company. It drives them. The purpose there is to restore patients' lives. It speaks to them. That's what they come to work every day about, very resilient team. They're very proud of working with their counterparts with their colleagues. I've never had people say, I actually enjoy working with my colleague because they're talented. They're going in the same direction that I'm going.

So I would say it's a great culture in terms of the team being committed to driving the priorities forward. Now we have needed to do a lot of prioritization to make sure that people are aligned in the same direction. Because when you get cultures like that, people tend to want to help everyone. People want to take on everything. So we have been very focused on driving prioritization across the enterprise to align the efforts on the most important things for the company, short and long term.

Does that resonate with you, Lea?

Yes, absolutely. So I've been with Integra for about 2 years now and absolutely agree with how Mojdeh characterized her experiences from a culture perspective. I think for my own, I've seen all of those things. I've also been able to witness kind of in this moment, right, where we're dealing with a number of challenges across the business, how individuals and teams have stepped up to help fill the void and drive us forward.

I think to Mojdeh's point, what's happening now is we're prioritizing kind of the highest priority things first, the things that are going to have the most impact. I think that's what's going to make the difference in terms of us getting to where we need to be.

Obviously, you guys have a lot of internal focus, but you're also a large company that's externally focused. So I'd love to hear like what are you hearing from your customers? How do you think the health of the health care system is at the moment, patient volumes, just the broader ecosystem with when you operate, how would you characterize it?

One of the things that has struck me since I've joined the company, is the resilience of the demand that's out there for our product, which really speaks to the clinical value that our products bring to the physicians. And in the cases where we have been out of the market for a short period of time due to some ship holds and all that, we see the adoption and retention come right back.

So -- and obviously, our sales organization, they have a broad portfolio that's still relevant to the customers. We're constantly in front of them. We help them out through some of those internal supply challenges, and that continues to build trust and confidence with the customers.

On the neurosurgery side, obviously, we're supported by some of the demographic shifts, whether it's aging population or increasing neurological conditions. And also, obviously, the technology and the surgical advancements continue to make available more options for treatment. So that's also a tailwind.

The -- on the side of the Tissue Technologies, we have demand. We see the demand as being stable, and we have really a lot of opportunity for growth, both through innovation as well as advancing clinical evidence that gets us beyond even the acute care setting into the broader sites of care.

And then on the ENT side, we see procedure demand improvements, both on the adult side as well as pediatric side. But the nature of the fact that these are minimally invasive procedures, the more attractive anyway, so they increase access and improve adoption. So the dynamics are pretty positive.

And moving forward, for the longer-term growth, we have just completed a portfolio prioritization, a full thorough portfolio assessment of our portfolio in the process of strategic planning and long-range planning process. And moving forward, our capital allocation decisions are going to be made based on that prior position.

It's going to guide where we're going to put our resources in order to ultimately, over a period of time, we shift the mix of our portfolio that's in high-growth spaces to a higher degree. And that would provide us the opportunity to have sustainable growth into the future and create value for the shareholders.

We all love our children equally. Apart from me, I despise them all equally. Other than that, you must have preconceptions about neuro and ENT and things like that before joining. Was one of the 3 or were any of them different versus what you were expecting as end markets as -- were there things that surprised you in the neuro portfolio, that kind of thing?

No, no, honestly, as I said, I'm just amazed. I mean several of our products have been in the market for a while, but it's amazing to me the loyalty of the surgeons in every interaction that I have, people talk about the quality of the products, the difference that they make in terms of addressing specific patient needs for them.

So in many of the markets that we're in to take newer surgery in any of the categories you look at, you're #1 or 2 position. So nothing that I would say has surprised me except that I have never seen such strong loyalty across the portfolio, which is great. And that's one of the reasons why I'm doing it because I think we have the platform to build upon.

And I'd say in terms of the portfolio prioritization and the portfolio assessment that we've done, what we want to do moving into the -- as we move into 2026 and beyond, we want to make sure that we make our portfolio, we set up our portfolio to work for us, right, both in terms of optimization of it for growth, and optimization of it and along the other work that we're doing on the margin side, profitability of it.

So the first step for us is let's optimize the way that our portfolio is working for us which is really look at the capital allocation decisions we've been making to support it. And then beyond that, it's going to be, yes, maybe there's opportunities for us to exit some parts of the portfolio later on or bring tuck-in acquisitions at the time we're ready for it, but the first phase is, let's get it to work for us to optimize it.

Yes. Okay. Just to put a finer point on it, the work that we've done with respect to the portfolio prioritization, has actually confirmed in a lot of respects that there are products in each of these 3 markets, right, tissue, neurosurgery as well as AMT that will deliver kind of those high growth outcomes. So to your point on loving your children equally, maybe not totally across the board, but certainly within the absolutely our assets across each of those 3 that will help drive our future.

Yes. Yes. Every part of the portfolio has a role to play. So you can't expect the same thing from every piece of the portfolio and you have to make choices. Nobody likes the delay program, somebody likes the cost programs, but you have to do it in order to be able to make a meaningful impact in the direction of the portfolio in the company.

And to allocate attention and resources.

Exactly.

I mean on the high level update, maybe for the remediation in the CMP side of things, reminder, there's obviously a lot going on, but where are we at today? And how far through that process?

Yes. Compliance master plan has been a top priority for us. And we have been making great progress. The compliance master plan work streams are on track. We're continuing with them. The site assessments that we had conducted in all of our facilities were supposed to be done by the end of Q3, we completed them by the end of Q2, which really provided us more visibility to the work streams and the remediation that we have ahead of us.

And we've taken that -- those filings a very thorough prioritization of that remediation work, and we've begun execution under the program management office oversight and rhythm. And that prioritization and oversight on execution is something that we bringing new. We didn't have that before. So I think that's going to help us to continue to make progress.

The remediation work is critical for us, not just in terms of regulatory compliance. Obviously, that's a big piece of it. But it's also critical as we try to drive consistency and sustainability in our quality systems across our network of sites and then also to be able to build in place manufacturing and reliability.

Some of this remediation is going to go into 2026, but the work that we're doing is going to set us up well for continuing to improve in terms of our visibility ahead. as well as continuing to, in the future, deliver more predictable, reliable performance.

People are always critical in these kind of things. I know Valerie joined you guys relatively recently. What went into the selection of her and like how to she fit into this plan?

Yes. Early on, we were looking to fill the position, it was very evident that we needed a seasoned executive that had deep experience in operations and also would be good at driving cultural change and also bringing accelerate progress into what we're trying to accomplish here at Integra. And also, we were looking for somebody that had worked for in large organizations that have had complex global supply chain.

So she brings with her -- Valerie brings with her a track record of having led supply chain transformations over the years and bring operational excellence and put it in place which are exactly the things that we need at Integra. As I told you, she initiated early on in her role, supply chain control tower. And so we're seeing the culture change that's coming along with it in terms of accountability and continuous improvement.

I have known her for years and I have seen what she can do and what she can deliver and I'm confident in her ability to be able to make significant impact in Integra, moving into the future.

I mean supply chain and operations is a partner with finance in a very real way. Lea, how are you thinking about COGS and OpEx savings and the cost base of the business ultimately going forward?

Yes. So as you would have heard in our Q2 call, we announced an initial cost reduction initiative that's kind of the first phase of a longer-term margin expansion program. And this first phase is targeting about $25 million to $30 million to be identified over the next 12 to 18 months aimed at, again, addressing -- moving us back from a profitability perspective to where we need to be and also mitigating some of the headwinds that we know will be happening in terms of first full year of tariffs full year impact of tariff implications as well as inflationary pressures that we're seeing on the business.

So to your point, as we look at this, yes, we're targeting areas within COGS because we know there's opportunities to go after productivity improvements, yield improvements, targeting areas in terms of OpEx that will address third-party spend. It will address operating model efficiencies, right? And how are we structured and whether or not it's optimized to drive the growth and profitability that we ultimately want to deliver.

And along the way, we're embedding a very strong discipline around OpEx management to help ensure that we not only drive it, but we maintain it going forward.

It sounds like it's a COGS efficiency and like an external agent supplier efficiency kind of a measure rather than big internal cuts. Is that a fair assumption?

Well, so as part of the focus, it's -- yes, the initial focus in this first 12 to 18 months period will be primarily in COGS as well as third-party spend. But there will -- we are also looking at operating model efficiencies and whether or not we're structured to execute on the kind of portfolio prioritization work that we're doing.

I would say workflow efficiencies, how the functions do handoffs in terms of our -- also processes, the processes and procedures, not just in operations, bets in every function. So how do we become more efficient in terms of the way that we conduct the work every day and how do we increase agility and speed in decision-making. And so it's as Lea said, it's phases and there's opportunities everywhere that we will be going after as we come upon them.

I guess those savings also then help you reinvest internally in the control of the supply wagon. So it's like a good flywheel to kind of keep running.

Absolutely.

I mean in relation, you mentioned earlier the customer retention side. Have you noticed a difference between the products that have been off the market longer versus those who have been like off the market for a shorter period time? Is there any kind of difference?

Yes. So the ones that are on the market for a short period of time, as I said, we see a pretty good bounce back. We see the demand being there even afterwards. On the products that have been off the market like SurgiMend and PriMatrix, obviously, it's going to be more challenging for us. It's going to require for us to be very focused in execution and it's going to take time to get some of that share back.

But what we're also hearing from the clinicians every day is that they have used these products in the past, they know these products, and they still to this day prefer these products to the alternatives that they're having to go back to. You take SurgiMend, for example, it's been known for -- first of all, it was growing faster than the category before it went off the market.

And we -- it has -- it plays a critical role in procedures and the physicians are saying, you know what, not -- it's not in the market, we actually -- it reinforces our preference for the product because we know we're missing it. The same thing goes with PriMatrix. We hear the similar kind of feedback.

So these products are not only just -- not only differentiated, but they also serve a purpose, a certain purpose in certain patient settings. And I think as we bring them back to the market, we're going to continue to be focused on supply reliability, making sure that we launch them with adequate and healthy supply and continue to drive clinical support as well as drive commercial excellence in order to be able to gain our share back, and we're confident that we'll be able to over a period of time.

I guess you've got the base business, but then there's also your pipeline. How are you guys thinking things like DuraSorb and how are you thinking about the balance of bringing new PMAs and things like that to market relative to the work that's going and getting back to the market?

Yes. So both are obviously priorities for us. So we're a compliance master plan and the regulatory efforts that go towards the PMAs are both important, and we're not trading off one for the other. One of the things that I would say, the PMAs are critically important for us strategically, especially in the implant-based breast reconstruction market, $800 million market growing in high single digits.

And along our strategy has been a dual approach where we have SurgiMend, which is a biologic matrix as well as DurSorb, which is synthetic -- and we are pursuing PMAs for both of them. And to this date, no other company has the indication -- PMA indication. For SurgiMend, we have obtained an approvable status, which means that the clinical safety and efficacy have already been established for the product.

So all we have to complete is going to be the GMP inspection, which is closely tied to bringing Braintree online. And so we would be ready for a PAI, preapproval inspection in 2026. We can't speak to when FDA is going to show up for that, but we should be ready for that inspection post -- for that inspection post readiness in operations.

We also are pursuing the permit, obviously, and it's going on track for the result. And those are both important PMAs for us, and nobody has the indication so.

Obviously, when you joined your R&D team would have given you some insight into what the broader pipeline looks like. Obviously, no company will ever say what's in there for competitive reasons and what's in the pipeline coming up. But is it relatively well distributed between the divisions? Is there anything you can tell us about the forward look of where the R&D dollars are being disproportionately spending?

Yes. So I would say that right now, a lot of our efforts are on the remediation side as well. So we have that third leg that's going on. So I would say the investments in terms of capital and future growth, partly is the life cycle management, which is the remediation work, which needs to be done, but then you have the R&D investment, and you have clinical evidence.

Because, for example, when you look at Tissue Technologies, our mix of investment is higher on the clinical evidence than it is on actual products versus, say, new surgery. But I would say it's fair to say the innovation and new product opportunities we're looking at are going to be in category-leading part of our portfolio because we want to continue to build on that leadership and that's both in the neurosurgery side as well as the ENT side as well. And in the future, obviously, we have opportunities with tuck-in acquisitions. We will be ready. Right now, our focus is on execution and bringing down our leverage. Yes.

How should we -- this is really to you, Lea, but how should we think about the growth algorithm, I guess, midterm maybe potentially in '26? You're in an unenviable position because there's so many moving parts. I mean, it's true for every business, but it's always challenging. If you're in our shoes, are there any key puts and takes or things that you think we should keep it online as we think about next year and midterm in general?

Yes. So point well taken, there are very many moving parts certainly if we look ahead to 2026. And we are still very much early in our planning process for 2026. So I can't get into a lot of specifics, but certainly can share some directional thinking. So on the top line, we certainly expect to see growth in '26 over '25 as we continue to do the work to strengthen our quality management system as we continue to put ourselves in a position to reestablish supply reliability and, quite frankly, give our commercial teams an opportunity there to get back on offense.

We also fully expect to see a benefit in '26 versus '25 from a comparison perspective due to ship holds, right? '25 representing a peak year impact from ship holds, we would expect to see, again, a benefit in '26 versus that. On the bottom line, to my point earlier around the work we're doing around margin expansion, right? And that work being a profitability initiative that will help us not on drive profit but also mitigate some of that we know will happen in 2026.

So as I mentioned earlier, full year impact of tariffs as well as other inflationary pressures. So those are some of the puts and takes that we're evaluating. In general, though, we are encouraged by the momentum that we're seeing in the business, and we look forward to coming back in our normal course to share our 2026 guide, which would be part of our Q4 call.

Yes, of course. You touched on capital allocation in general. How should we think about the convertible note leverage and the leverage structure of the business?

Yes. So our converts actually matured in the middle of August of this year, and we did satisfy that maturity, leveraging our revolver, which was our plan. And if we didn't have any other instruments in place, that would have meant the additional debt on our revolver would have incurred an interest rate of about 6% to 7%, somewhere in that range.

Fortunately, at the same time that we entered into the converts in 2020, we also entered into interest rate swap agreements that also became effective when we convert matured and what that allows us to do is to take up to $900 million of our debt and fix it at a rate of 3.5% through 2027. So we're mitigating some of that otherwise potential headwind.

So we'll continue to look to construct our balance sheet in a very strong and flexible way as we move forward. And certainly, as we look forward to getting into kind of longer-term financial instruments that will be consistent with that objective. In the interim, we remain compliant with our debt covenants, and we expect to do so. And then as it relates to capital allocation and priorities, our focus is in the near term, get reduction.

Makes some sense. Maybe flipping back on the some of the product side. Thinking of Integra Skin, how are you thinking about getting the production levels up and supplying the market and working your way through that? And from a production standpoint, how do you think that applies to other lines and priorities within the portfolio?

Yes. Yes. There's a lot of efforts that are going on, on the production side. In general, I would say the buckets of investments that we've been making, and it goes back to really middle of last year, it's about capacity, the CapEx they were investing more. And we are building where needed redundancies and resilience into our supply chain and value streams and also operational efficiencies and yield improvements and so on and so forth.

So I think the poster child for that is actually Integra Skin plays a critical role in our portfolio, $200 million -- almost a $200 million business with very attractive gross margins. And that -- we have been on a journey on improving the production of that product since the last year. And we're pretty pleased with where we are.

Over the last couple of quarters, we've been -- production has been able to meet demand. We've been able to deliver strong growth but it hasn't been just by chance. We have been very deliberate in terms of building redundancies in that supply chain, expanding capacity and improving yields.

And that work is going on across the entire operation, and it's an opportunity that you can -- we are taking and replicating. It could be different elements of it, for different product lines. But nonetheless, when we talk about building operational discipline, improving efficiencies in the operations and investing in our operations to make ourselves the operations more stable and provide more steady supplier products to the customers. That's a great example. And we're going to -- we're replicating across the operations.

I mean maybe sticking on wound care. I've looked at that industry for a long time, but it's been the volatility on the U.S. side for how it's being reimbursed, how it's been thought about. You get -- from us externally, get the feeling like there's not necessarily a clear vision maybe from CMS and it goes backwards and forwards.

I'm not exactly sure what to do with it. How do you view the broad wound care landscape? Is there an idealized structure you think for how these products should be reimbursed? Do you think the proposals will then get delayed? Like how do you feel about the construct as a whole as it is?

Yes, certainly very dynamic and continuously evolving, but we see as positive because obviously, it's in the favor, it's going in the favor and the direction of products that have clinical evidence and cost-effectiveness evidence and it's also better for the patients.

So I think what the payers and the providers -- the payers and the policymakers are doing, clearly, want to improve access, increase the access to care as well as the consistency of the care that's delivered across the different sites and also be able to reward those companies and those products that are backed by clinical evidence.

We actually see that positive. And if the changes in terms of Medicare rules and LCDs go into affect indeed, it's going to be actually an opportunity for us, a growth opportunity for us because we have a broad portfolio of products that have evidence backing as well as cost effectiveness. And it allows us to -- right now, most of our business is obviously in the acute care setting, but this provides us an opportunity to grow our business in outpatient settings like ACs and wound clinics.

And we're actually excited about that. And we're making investments in clinical evidence in order to be able to continue to demonstrate the effectiveness and clinical effectiveness as well as cost-effectiveness not just in the acute care setting where we have good established reimbursement, but also across the sites of care.

The fun thing about the market is there are a few larger players, but there's also a massive tail of companies who probably don't have the ability to invest in those trials and that evidence. And so you're kind of hitting at like -- do you see this like a broad consolidation across acute maybe even chronic and just like a consolidation of the players down towards a handful of winners including yourselves?

Yes. Well, I think there's definitely going to be shifts in the sites of care. So because the detected incentives, something is going to happen. So we're thinking there is going to be shifts remain to be seen. There's also going to be depending on where they all commit numbers and in terms of reimbursement and so on and so forth, it's going to also be different as to how many people are going to stay in the game, how many people are going to bow out. But there's a lot that remains to be seen in terms of the dynamics of the market. I don't know if Lea, you have any additional comments?

We were talking before we got up on stage. You guys do a lot of these meetings, meet with a lot of investors. And it's probably the same question over and over again. But I'm willing to bet there's a bunch of stuff for you internally that is a big focus, but doesn't get asked. Do you know what I mean, like it doesn't get the focus, that you feel like there's a mismatch between the focus externally and internally? Like what are you surprised you don't get asked about more? Or alternatively, are there things you get asked about constantly but they're just nowhere near the kind of priority that the external market seems to think that they are. Does the question make some sort of sense?

Good question.

Yes, I can start. Maybe just do a compare and contrast. Certainly, having been in this forum like a year ago, right? Clearly, everything is around operations and kind of that moment we're in strengthening our quality management is on the launch of the CMP, everything became operationally focused. And so you got away from talking about the exciting kind of the foundation of what we do, the impacts that we have on patients, where we see opportunities for growth that are still very much there, right?

They're still very much the exciting part of who we are and what we have an opportunity to deliver on. But you kind of understood, right, in that moment, right, there's very real reasons why that was the topic of conversation. I think you flash forward a year, we're still talking about this stuff, but it's starting to move in that direction where we're now talking about those things that represent growth opportunities for the future. We're talking about the rich clinical evidence that we have on the wound construction parts of our portfolio. So it's starting to get energy off of that. It becomes an exciting conversation to be part of.

Yes. Yes. I would say a lot of the external focus is on the -- more of the challenges that we are facing, we have been facing not a lot of emphasis on the opportunity ahead of us for the company, which I think there's tremendous opportunity for us. As I said, the challenges we have in operations execution and quality, they're fixable. So we need to fix them and the opportunities that we have ahead of us is significant.

Potentially next year, an ability to go more on offense if you like, in terms of the story. Is that fair?

Yes. That's it. Yes. That's fair. That's it.

Well, we look forward to it. Thanks.

Thank you. Thank you.

Really appreciate it. Thanks for having us.