IART

• Core Business Positions: The company maintains leading market positions in neurosurgery (specialty surgery segment) and dermal regeneration (tissue reconstruction segment), with a broad portfolio of differentiated products and deep embedded customer relationships that create unique access to hospitals, IDNs, and GPOs. The company notes it is uniquely positioned to navigate evolving CMS reimbursement changes due to its portfolio breadth, deep clinical evidence, predominantly hospital-based business model, and aligned pricing.
• Product Milestones: Primatrix adoption remains strong following its relaunch, with 9 months into launch recovering slightly more than 50% of pre-recall revenue. Manufacturing at the Braintree facility has successfully restarted, with inventory being built to support the commercial relaunch of Surgimen in Q4 2026. The company is advancing a dual PMA strategy for expanded labels for Surgimen and Durazorb for implant-based breast reconstruction, with approvals expected in 2027 (Surgimen early in the year, Durazorb later in the year). MediHoney is on track to return to market in 2027. Work to resolve all warning letter action items is on track to complete by the end of 2026.
• Organizational & Operational Improvements: Recent realignment of the commercial organization and operating model has improved execution, cross-business coordination, and operational efficiency, driving cost savings in Q2 2026 and creating a clear path to future margin expansion. A new chief commercial officer and internal-promoted division leaders have been appointed to increase accountability, speed up decision-making, and expand existing GPO/IDN relationships from specialty surgery into tissue reconstruction and ENT.
• Capital Allocation: Deleveraging remains the top capital allocation priority. Total leverage decreased to 4.1x at the end of Q2 2026, down from 4.5x at year-end 2025, and the company remains on track to approach the upper end of its 2.5-3.5x target leverage range by the end of 2026. The company plans to refinance its outstanding bank debt in H2 2026 if market conditions permit.

• Q3 2026 Guidance: Revenue is expected in the range of $410 million to $425 million, representing 2% to 5.7% reported growth and 1.9% to 5.7% organic growth. Adjusted EPS is expected in the range of $0.53 to $0.61.
• Full-year 2026 Guidance: Organic revenue growth guidance of 0.8% to 3.3% is reaffirmed. Reported revenue guidance is updated to $1.654 billion to $1.695 billion (1.1% to 3.7% reported growth) to reflect the impact of a stronger U.S. dollar. Adjusted EPS guidance of $2.40 to $2.50 is maintained, with the midpoint calling for 60 basis points of gross margin expansion and 100 basis points of adjusted EBITDA margin expansion over 2025. Full-year operating cash flow is expected to improve by approximately $150 million compared to 2025, driven by EBITDA growth, working capital efficiency, and a ~$60 million reduction in cash expenditures for EU MDR compliance and Braintree startup costs.
• 2027 Preliminary Outlook: Top-line growth is expected to accelerate compared to 2026, with management noting that guidance will be officially released in February. EPS growth is expected to outpace sales growth, as incremental interest expense headwinds from the 2026 refinancing will be offset by $10 billion to $15 billion in annualized incremental cost savings from 2026 initiatives, lower remediation and transformation costs, and ongoing operational improvements. Continued improvement in cash flow generation is expected.

1. Specialty Surgery: Total revenue was $309.3 million, representing 1.7% reported growth and 1.6% organic growth year-over-year. This segment contributes 73.8% of total company revenue. Breakdown within the segment: Global neurosurgery delivered 1.9% organic growth, driven by Sirtis Plus, KUSA, and Bactocele; capital equipment sales were down ~1% (double-digit KUSA growth offset by declines in smaller-ticket equipment); Instruments grew low single digits; ENT revenue declined low single digits (growth in Microfrance ENT instruments offset by ongoing pressure in sinus balloons); international markets grew low single digits. 2. Tissue Reconstruction: Total revenue was $109.5 million, down 1.9% on a reported basis and 2% organic year-over-year. This segment contributes 26.2% of total company revenue. Breakdown within the segment: Durazorb delivered positive growth; Primatrix showed encouraging momentum following its relaunch; Integra Skin grew sequentially over Q1 but declined year-over-year due to a large backorder clearance in Q2 2025; Micromatrix declined year-over-year due to new competitive entry; private label sales grew 4.7%; international sales grew low single digits driven by Integra Skin.

• Recent flooding at the company's Cincinnati manufacturing site caused operational disruption, but management does not expect a material impact on 2026 revenue or EPS guidance based on existing inventory, secondary supply sources, and insurance coverage.
• A potential 2026 refinancing of outstanding bank debt is expected to result in higher interest expense in the second half of 2026, but management notes this impact will be fully offset by existing tariff favorability, and future operational improvements will offset any ongoing headwinds beyond 2026.
• ENT segment faces ongoing reimbursement pressure for sinus balloon products, which has offset growth in the instruments line and resulted in low single-digit year-over-year revenue decline, a trend expected to continue for the full year 2026.
• Micromatrix faces increased competition from new entrants in the powder wound care market, leading to year-over-year revenue decline in Q2 2026.
• Final PMA approval for Surgimen and Durazorb, and resolution of all regulatory items at Braintree, remain subject to FDA timing and pre-approval inspection outcomes.
• Full-year 2026 results face uncertainty around the pace of supply chain recovery and second-half operational execution, which drive the difference between the low and high ends of guidance ranges.

Q: Why is full-year EPS guidance maintained despite Q2 adjusted EPS coming in above the guidance range? Is the upside offset by expected new incremental expenses? / A: Q2 EPS beat guidance largely due to 5 cents per share of unanticipated tariff favorability, plus stronger than expected operational execution, while revenue and transformation savings were in line with May guidance. The upside from tariff favorability is being used to offset expected higher interest expense from the planned H2 2026 debt refinancing. No material unexpected operational headwinds are expected in the second half.

Q: What are the growth targets and timeline for the Surgimen relaunch after its Q4 2026 launch? / A: There is strong unmet demand for Surgimen from both legacy and new customers, and current market trends toward xenografts and resorbable synthetics play to the product's strengths. 2026 guidance assumes no meaningful revenue contribution, and share recapture will build over multiple quarters post-launch. Management expects the product to recover ~50% of its historical $40 million annual revenue, similar to the trajectory seen with the successful Primatrix relaunch.

Q: What is the regulatory timeline for the expanded PMA indications for Surgimen and Durazorb for implant-based breast reconstruction? / A: Surgimen's clinical safety and efficacy review is already complete, with an FDA approvable decision already issued; the PMA is only pending a pre-approval inspection of the Braintree facility, which the company will be ready for in 2026, with approval expected early in 2027. For Durazorb, clinical trial enrollment and follow-up are complete, and data analysis is underway; approval is expected later in 2027, and also requires a pre-approval manufacturing inspection. All regulatory timelines are ultimately subject to FDA scheduling.

Q: What are the priorities for the recently updated commercial leadership structure? / A: The change is an internal evolution and succession, not a strategic reset. A specialty surgery leader was promoted to chief commercial officer, with internal candidates promoted to new division president roles, to increase accountability and speed decision-making. The core priority is leveraging the company's existing strong GPO/IDN relationships built in the neurosurgery business to expand penetration into the tissue reconstruction and ENT segments, with no broad Salesforce restructuring planned. Only incremental hiring tied to the Surgimen launch is expected, consistent with original plans.