Integra LifeSciences Holdings Corporation Q3 FY2025 earnings call

• Progressed on Compliance Master Plan to strengthen quality systems, with remediation plans executed under oversight. - Implemented operational and execution excellence efforts, including Valerie Young's work on supply chain. - Appointed Dr. Raymond Turner as Corporate Vice President and Chief Medical Officer. - Completed portfolio prioritization to guide capital and resource allocation towards higher growth, more profitable categories. - Margin expansion initiative progressing, expecting $25M-$30M cost reduction in 2026 through COGS improvement, third-party spend reduction, and operating model efficiencies.

Codman Specialty Surgical (CSS) reported third quarter revenues of $292.6 million, reflecting 8.1% reported growth and 7.1% organic growth. International business revenue grew 14.6% due to strong demand and renewed availability of certain products. Tissue Technologies segment had revenues of $109.5 million, down 0.5% reported and 0.3% organic, with growth in Integra Skin (approx 50%) and DuraSorb (approx 25%) offsetting the impact of MediHoney which was under remediation.

• Revised full year 2025 revenue to $1.62 billion to $1.64 billion and adjusted EPS to $2.19 to $2.24. - Q4 2025 revenue guidance: $420 million to $440 million (reported decline 5% to 0.6%, organic decline 6% to 1.4%). - Q4 adjusted EPS guidance: $0.79 to $0.84. - Full year gross margin expected to decline ~260 basis points, including ~200 basis points from remediation and Compliance Master Plan investments and ~60 basis points from tariffs.

• Two supply interruptions in CSS business led to growth below expectations. - Reimbursement pressure in ENT, particularly in Sinuplasty Balloon segment. - Impact of tariffs on gross margin. - Ongoing remediation challenges for products like MediHoney affecting Tissue Technologies segment performance.

Q: Can you help with gross margin color, especially in relation to remediation efforts?

A: Full year gross margin pacing similar to prior guidance. Q3 saw better than anticipated performance due to efficient management of E&O and scrap, offsetting remediation and tariff headwinds. Onetime headwind costs from remediation expected to come out of gross margins as remediation phases progress.

Q: How sustainable is the return to positive free cash flow?

A: Operating cash flow was $41.9 million in Q3, free cash flow $25.7 million. Expect strong free cash flow conversion moving forward, with leverage position expected to stay flat in 2025 and improve in 2026 as EBITDA contribution improves.