UBS Global Healthcare Conference - INTEGRA LIFESCIENCES HOLDINGS CORP

Financial Performance:

• Specialty Surgery division grew 4% YoY; Neurosurgery specifically grew 6.5% (offset by a $7 million flood-related headwind, normalizing growth to 3.5%-4%).
• International Specialty business grew in the high single digits, driven by restored supply availability.
• Tissue Reconstruction saw strong growth in Primatrix (relaunched Q4 2025) and sequential growth in Integra Skin, though overall growth lagged forecasts due to prior supply constraints and competitive share loss.
• Q3 flood at Cincinnati facility caused a $7 million revenue headwind; Q4 impact forecasted between $15 million and $20 million.
• Gross margins expected to remain flat year-over-year; however, this contrasts with prior years of declining margins.
• Free Cash Flow (FCF) trajectory shows significant improvement: $73M (2023) → $25M (2024) → $30M decline (2025) → projected $130M-$140M for current year.
• EPS projected to grow ~5% this year, reversing previous double-digit declines.
• Approximately 75% of capital structure is fixed-rate through 2027; refinancing extended debt maturities and added flexibility.

Guidance and Future Outlook:

• Full recovery and operational restoration of the Cincinnati Mayfield line is targeted for mid-2027 due to specialized equipment lead times.
• Portfolio-wide supply resiliency and product recalls remediation plan expected to conclude by 2027.
• Company aims to return to high single-digit growth run rates in International markets once supply stability is fully established.
• Strategic focus shifts from defensive remediation to offensive commercial growth, including international expansion and new product launches.
• Expectations to bring back 50+ recalled products; remaining two products (including Surgimen) targeted for return by 2027.
• Planned PMA approvals for Surgiman and Durazor to enter the implant-based breast reconstruction market, with approvals expected in 2027.

Business Segments and Product Lines:

• Neurosurgery: Maintains #1 or #2 market share in most sub-segments; procedures are critically necessary and non-electric, providing demand durability.
• Tissue Reconstruction: Portfolio strategy involves educating customers on differentiated use cases for Primatrix vs. Integra Skin to drive optimal outcomes.
• Key Products: Serralink, Sirtisvalves, Bactisil, Durasil, and cranial perforators (Recovery Pathway) showed strong growth; Mayfield line (neurosurgery) faces extended disruption; Primatrix relaunch driving positive momentum.
• Innovation: Continuing investment in catheter category leadership, tissue ablation, and expansion into implant-based breast reconstruction via PMA pathways.

Market and Competitive Landscape:

• Primary end markets (Neurosurgery, Tissue Reconstruction) show stable demand driven by clinical necessity and strong evidence requirements.
• Customers prioritize clinical evidence, product differentiation, supplier reliability, and ease of contracting.
• Consolidation in the Wound Uncertainty Non-Commercial (WUNC) sector is anticipated as smaller vendors with weak evidence-based portfolios struggle with fixed reimbursement rates ($127/sq cm).
• Integra maintains pricing advantage over competitors who face margin compression and wastage issues due to limited product sizing.
• In China, despite Volume-Based Procurement (VBP) pressures, the market remains attractive due to high volumes; local manufacturing facility is operational pending sales approval to mitigate tariffs.

Risks and Challenges:

• Supply Chain: Significant disruption from Cincinnati flood affecting Mayfield line, with full recovery delayed until mid-2027.
• Macroeconomics: Inflationary pressures on wages, material components, and freight (oil); potential impacts from tariffs and interest rate fluctuations.
• Regulatory: Evolving CMS reimbursement outlook in the U.S. and nationalistic pricing approaches (VBP) in China.
• Market Competition: Influx of new competitive entries in wound reconstruction during Integra's supply gap periods.
• Execution Discount: Market skepticism regarding ability to execute growth plans following years of operational challenges.

Management Commentary and Tone:

• Tone is confident and forward-looking, emphasizing the transition from a defensive "turnaround" to an offensive "growth" phase.
• Management highlights the elimination of an "execution discount" as supply chain issues normalize and FCF recovers.
• New Chief Commercial Officer (CCO) role implemented to consolidate commercial/contracting activities, leverage enterprise scale, and streamline GPO negotiations.
• Leadership emphasizes that while macro pressures exist, operational efficiencies and cost mitigation are the primary levers to sustain profitable growth.

Analyst Questions and Answers:

• Q: Contracting Strategy? A: Consolidated approach via CCO to engage GPOs on broader enterprise portfolios (volumes + supply chain) rather than division-specific deals.
• Q: Market Share Leverage? A: Dominant positions in neurosurgery (#1/#2) are leveraged to support entry into fragmented markets.
• Q: Demand Visibility/Reimbursement? A: Procedures are non-electric and stable; minimal impact anticipated from Medicaid cuts or ACA reform.
• Q: Rep Retention? A: Strong retention maintained as supply disruptions were not protracted, preserving key surgeon relationships.
• Q: International Expansion? A: Moving from indirect to direct sales in key markets (e.g., China tier 1+ hospitals); leveraging local manufacturing to offset tariffs and navigate VBP.
• Q: Capital Allocation? A: Balancing supply resilience, innovation (R&D), and SG&A growth to support both divisions without starving one for the other.

Other Key Points:

• Cincinnati flood caused inventory write-offs and fixed asset replacements, all currently in flight.
• Integra Skin saw growth in Q3 but missed forecast due to supply constraints on larger sizes and subsequent competitive encroachment.
• The "Recovery Pathway" (Cranial Perforators) is a key growth driver in Neurosurgery.
• 90% of Tissue Reconstruction business is inpatient; 10% outpatient, where reimbursement dynamics favor Integra's fixed pricing.
• Management expects to fully capitalize on international expansion and PMA approvals as the primary growth engines post-2027.