Earnings call transcript: Integra LifeSciences Q2 2025 beats EPS expectations

Integra LifeSciences Holdings (IART) reported its second-quarter 2025 earnings on July 31, revealing a slight beat on earnings per share (EPS) and a stronger-than-expected revenue performance. The company posted an adjusted EPS of $0.45, surpassing the consensus forecast of $0.44. Revenue reached $415.6 million, exceeding the anticipated $395.04 million. Following the announcement, Integra’s stock saw a significant pre-market increase of 5.5%, reflecting investor optimism. According to InvestingPro analysis, the company currently appears undervalued, with a Financial Health Score of 2.3, indicating FAIR overall condition.

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Key Takeaways

• Integra outperformed revenue expectations with a $415.6 million result.
• Pre-market trading saw Integra’s stock rise by 5.5%.
• The company reported a 29% year-over-year decline in adjusted EPS.
• Integra’s gross margin decreased by 450 basis points to 60.7%.
• The company maintained strong positions in neurosurgery and tissue technology markets.

Company Performance

Integra LifeSciences demonstrated resilience in Q2 2025, with its revenue slightly declining by 0.6% year-over-year but still surpassing market expectations. The company continues to leverage its strong market positions in neurosurgery and tissue technology despite facing challenges such as supply chain constraints. The wound reconstruction market, a major focus for Integra, remains robust, growing at high single to low double digits.

Financial Highlights

• Revenue: $415.6 million, a 0.6% decline year-over-year
• Adjusted EPS: $0.45, a 29% decline year-over-year
• Gross Margin: 60.7%, down 450 basis points
• Operating Cash Flow: $9 million
• Net Debt: $1.59 billion
• Total Leverage Ratio: 4.5x

Earnings vs. Forecast

Integra’s Q2 2025 earnings report showed an EPS of $0.45, slightly above the forecasted $0.44, marking a 2.27% surprise. Revenue also outperformed expectations, coming in at $415.6 million against a $395.04 million forecast, a 5.2% surprise. This performance represents a positive deviation from previous quarters, where the company faced more significant challenges.

Market Reaction

Integra’s stock responded positively to the earnings announcement, with a pre-market increase of 5.5%. The stock’s last trading price was $13.05, up from the previous close of $12.37. This movement is notable as it brings the stock closer to its 52-week low of $11.06, yet still far from the 52-week high of $27.13. InvestingPro data shows the stock has declined over 52% in the past six months, with 10 analysts recently revising their earnings expectations downward for the upcoming period. The positive market reaction reflects investor confidence in the company’s ability to navigate current challenges and capitalize on growth opportunities.

Outlook & Guidance

Integra provided guidance for the full year, projecting revenue between $1.655 billion and $1.680 billion and EPS in the range of $2.19 to $2.29. For Q3, the company anticipates revenue between $410 million and $420 million, with EPS expected to be between $0.40 and $0.45. The company is preparing for product relaunches and continued investment in clinical evidence, aiming to capture market share and drive future growth.

Executive Commentary

CEO Moshe expressed confidence in Integra’s strategic direction, stating, "We are laying the foundation for sustainable growth and profitability." He highlighted the company’s ongoing transformation and progress, adding, "Our transformation is underway, and I’m encouraged by the progress." Moshe also reiterated confidence in maintaining leadership positions, saying, "We remain confident in our leadership positions in neurosurgery and tissue technology."

Risks and Challenges

• Supply Chain Issues: Ongoing constraints could impact production and delivery timelines.
• Market Saturation: Increased competition in key markets may pressure margins.
• Regulatory Changes: Proposed Medicare changes could affect reimbursement rates.
• Economic Conditions: Macroeconomic pressures might influence consumer and healthcare spending.
• Tariff Impacts: Although reduced, tariffs still pose a financial burden.

Q&A

During the earnings call, analysts inquired about the impact of proposed CMS reimbursement changes, to which the company responded with confidence, indicating minimal expected effects. Questions also focused on the company’s ability to recapture lost market share post-supply hold resolution, with executives expressing optimism. Additionally, the reduced tariff impact from $22 million to $13 million was discussed, highlighting the company’s efforts in mitigating external cost pressures.

Full transcript - Integra LifeSciences Holdings (IART) Q2 2025:

Conference Operator: Good day and thank you for standing by. Welcome to the Integra Life Science Second Quarter twenty twenty five Financial Results Call. At this time, all participants are in listen only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone.

You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Chris Ward, Senior Director, Investor Relations. Please go ahead.

Chris Ward, Senior Director, Investor Relations, Integra LifeSciences: Good morning and thank you for joining the Integra Life Sciences’ Second Quarter twenty twenty five Earnings conference call. With me on the call are Melissa Pole, president and chief executive officer, and Leah Knight, chief financial officer. Earlier this morning, we issued a press release announcing our second quarter twenty twenty five 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 and the file named Second Quarter twenty twenty five 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 room. Also in our prepared remarks, we will reference reported inorganic revenue growth. Organic revenue growth excludes the effects of foreign currency acquisition and divestiture. Unless otherwise stated, all disaggregated and franchise level revenue growth rates are based organic performance. Lastly, in our comments today, 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 eight ks filed today with the SEC. With that, I will now turn the call over to Moshe.

Moshe, President and CEO, Integra LifeSciences: Thank you, Chris. Good morning, everyone, and thank you for joining us for our second quarter twenty twenty five earnings call. I would like to start by acknowledging the tremendous work done by our teams across the company to deliver a strong second quarter performance while advancing our priorities. Our transformation is underway, and I’m encouraged by the progress we’re making in establishing the foundation for operational excellence and a culture of continuous improvement that will drive long term performance, consistency, and reliability across our business. Today, I will walk through the progress we’re making on our compliance master plan, provide an update on our operational excellence efforts, and close with an overview of our financial results and updated guidance.

Leah will then take you through the financials and our revised outlook in more detail. Let’s begin with our progress on the compliance master plan. We continue to execute our compliance master plan as a cornerstone of our turnaround. I’m pleased to share that we completed assessments at all of our internal manufacturing sites ahead of our original q three timeline with zero related ship holds identified or initiated since our last earnings call. This is a key milestone in our risk reduction and operational readiness efforts.

We have taken the learnings from our site assessments and have begun remediation planning and execution. Our quality, engineering, and operations teams working closely with the newly formed transformation and program management office have built a detailed risk based execution roadmap that prioritizes efforts aligned with the FDA quality system regulations and previous observations. This office oversees execution of the risk mitigation plan, including resource allocation, timelines, and deliverables. Some of the remediation work will extend into 2026 with continuous improvement becoming a standard element of operating in highly regulated industry. We remain fully committed to transforming our quality management system across our supply chain network and recognize there is still significant work ahead.

We are encouraged by the positive outcomes from recent FDA inspections at two of our facilities not covered by the warning letters. Related to our warning letters, we continue to provide regular updates on our actions committed to the FDA. The progress we’re making in quality compliance supports our advancements towards the operational strength and agility required to execute consistently across our global network. Together, these capabilities are critical to delivering the reliability and performance our stakeholders expect. Moving to operations, we remain focused on strengthening execution across our global network.

We have implemented a new supply chain control tower to drive enhanced visibility, accountability, and performance management throughout our global supply chain. We are making good progress at our Braintree facility, which will support the relaunch of Surgemin and Primetrix. We remain on track to bring the site online in the 2026 and plan to share our relaunch timelines by the end of this year. The facility’s quality management system is on schedule for implementation with equipment installation and qualifications underway. In addition, the site staffing model has transitioned to its long term operating structure, ensuring readiness to resume manufacturing operations.

Turning to our financial performance in the second quarter, we delivered global revenue of $415,600,000 exceeding the high end of our guidance. Reported and organic revenue growth were both down slightly versus the prior year, which was expected and previously communicated during our q one earnings call. This was largely due to the impact of ship holds offsetting healthy mid single digit growth across the portfolio, which underscores continued demand for our differentiated products. Adjusted EPS came in at 45¢ at the top of our guidance range, reflecting strong revenue execution and OpEx management, offset by higher remediation costs. A standout this quarter was Integra Skin.

Through our manufacturing resiliency and yield improvement efforts, we achieved the company’s highest ever production levels in q two and expect to maintain normal revenue run rate through the rest of the year. We are also rebuilding safety stock to improve supply reliability moving forward. As the reimbursement and access dynamic shifts in wound care, we are well positioned with a clear path to restore our full wound reconstruction portfolio. The timing of our Integra Skin production recovery, along with our preparations to restart Primetrix next year, align well with the recent proposed changes for wound care reimbursement in the outpatient and physician office setting. The established clinical evidence across our portfolio strongly supports the opportunity for us to deliver care beyond the acute care setting.

Our continued investments in further clinical evidence will also provide additional support for broader reimbursement. Looking ahead to our financial expectations for the third quarter, we expect revenue between 410,000,000 and $420,000,000, representing approximately eight to 10% reported growth. For the full year, we are updating our revenue guidance to a range of 1,655,000,000.000 to $1,680,000,000. This reflects increased visibility into our ship hold and remediation outlook, including an expectation that we will not experience any material new holds related to the compliance master plan for the remainder of the year. For Q3, we expect adjusted EPS between 40 and 45¢, and we are maintaining our full year EPS guidance range of $2.19 to $2.29 Before turning the call over to Leah, I want to emphasize the long term focus and an initiative we are taking to drive additional shareholder value.

We remain confident in our leadership positions in neurosurgery and tissue technology and the sustained demand in the attractive markets we serve. We are laying the foundation for sustainable growth and profitability through strategic investments and disciplined cost management. This includes enhancing supply chain reliability and executing on our compliance master plan. Additionally, as part of our broader transformation, we are optimizing our operating model to accelerate decision making, strengthen accountability, and enable scalable execution while embedding a culture of continuous improvement. These efforts will allow us to move with greater agility, reduce complexity, and unlock meaningful value in quarters ahead.

Based on our preliminary work in the initial phase of this initiative, we expect to deliver minimum annualized savings of 25 to $30,000,000 over the next twelve to eighteen months by driving out inefficiencies and redundant costs. Optimizing our cost structure is essential to maintaining long term competitiveness, particularly in light of the evolving tariff and macroeconomic environment. This is a foundational first step in a larger strategic initiative to drive sustained margin expansion. I look forward to keeping you updated on this initiative in the coming quarters. With that, I will now turn the call over

Leah Knight, Chief Financial Officer, Integra LifeSciences: to Lia. Thank you, Moshe. Let’s take a more detailed look at our second quarter financial highlights starting on slide five. Total revenues for the quarter were $415,600,000 representing a decline of approximately point 6% on a reported basis and 1.4% on an organic basis compared to the same period last year. Reported revenues included a foreign exchange tailwind of approximately 80 basis points.

Organic revenue performance exceeded our expectations despite supply disruptions related to remediation efforts under our compliance master plan. Adjusted earnings per share for the quarter were 45¢, representing a 29% decline compared to the 2024. On a GAAP basis, we recorded a goodwill impairment charge of approximately $511,000,000 during the quarter. This charge was identified through our goodwill testing and was primarily driven by macroeconomic uncertainties such as tariffs and risk around the supply recovery efforts, which were reflected in the decline of our market capitalization over q two. I want to emphasize that this impairment charge is non cash and reflects accounting requirements under GAAP.

It has no impact on our cash position or liquidity and will not affect our ongoing operations or our ability to execute our strategic priorities. Gross margin for the quarter was 60.7%, down 450 basis points year over year, primarily due to higher operational costs associated with ship hold remediation. Adjusted EBITDA margin was 17.1%, down two ninety basis points, reflecting the decline in gross margin. This was partially offset by disciplined expense management as we continue to prioritize investments in our quality systems and efforts to build operational resilience and execution capabilities. Operating cash flow for the quarter was $9,000,000.

Turning to slide six, let’s review the revenue highlights from our common specialty surgical segment. CSS reported second quarter revenues of $3.00 $4,000,000 reflecting growth of 0.7% on a reported basis and a decline of 0.3% on an organic basis. Global neurosurgery revenues increased 0.3% organically, driven by strong performance in our CUSA platform, the Aurora Surgiscope, Nasal Cranial Stabilization Systems, DuraSeal, BactaSeal, and CereLink monitors. This growth was offset by the impact of shipwills, which particularly affected our advanced energy, dural access and repair, and neuromonitoring franchises. Despite these challenges, demand across the neurosurgery portfolio remains strong with mid single digit growth in products not experiencing supply constraints.

In our ENT business, we remain encouraged by the ongoing integration of Aclaren, which contributed approximately 30,000,000 in revenue this quarter. While we’re pleased with the overall integration progress and prospects for this business, growth for the quarter came in below our expectations. This was primarily due to reimbursement driven market pressure in the sinoplastic balloon segment, as well as timing of capital equipment sales. These headwinds offset double digit growth in Eraford Eustachian tube balloon violation and our TruDee Navigators disposables. Second quarter capital sales grew low single digits, primarily due to acoustic capital sales.

Our global capital funnel remains strong and well positioned to support future growth. In our instruments portfolio, revenue declined low single digits, driven by a difficult comparison in the alternate site channel following strong performance in the prior year. This was partially offset by growth across our acute care business. International performance within CSS declined by low single digits, primarily attributable to the ship holds, which offset strong underlying demand from our international markets, including high single digit growth in China. Moving to our tissue technology segment on slide seven.

Tissue technology revenues were a 111,600,000, down approximately 4% on both a reported and organic basis compared to the prior year. Within wound reconstruction, we saw strong underlying growth across the portfolio, including double digit growth from DuraZorb and IntegraSkin. Growth in IntegraSkin was supported by both continued demand strength and improved production output, while DuraZorb’s performance was driven primarily by sustained market demand. We also saw high single digit growth in Micromatrix and Cycle. However, this growth was offset by the impact of previously announced ship holds, specifically related to MediHoney.

In our private label business, sales declined 5.9% year over year, primarily due to a component supply delay and softer commercial demand experienced by one of our private label partners. International sales in tissue technologies declined low double digits, reflecting strong growth in Integra Skin that was more than offset by the impact of the Meta Honey ship hold. Turning to slide eight. I’ll now review our balance sheet, capital structure, and cash flow. During the second quarter, operating cash flow was $8,900,000 and free cash flow was negative $11,200,000 reflecting our continued capital investments in key infrastructure.

As of June 30, net debt stood at $1,590,000,000 and our consolidated total leverage ratio was 4.5 times, which remains within our current maximum allowable leverage ratio of five times. This ratio extends through the 2026, following the amendment to our credit agreement executed during the second quarter. We fully anticipate being well below our maximum allowable leverage ratio when the amendment expires. We ended the quarter with total liquidity of $1,100,000,000 including $254,000,000 in cash and short term investments, with the remainder available under our revolving credit facility. As a reminder, we plan to use this facility to satisfy the convertible bond maturity in the third quarter.

If you turn to slide nine, I will provide our consolidated revenue and adjusted earnings per share guidance for the third quarter and full year 2025. For the full year, we are updating our revenue guidance to a range of $1,655,000,000 to $1,680,000,000 This updated range reflects a more refined view of the full year impact from ship holds, informed by the progress we’ve made in executing the compliance master plan and the increased visibility that has come with it. When we issued our original guidance, we included a broad range of 90 to $150,000,000 to account for potential shipping impacts related to the compliance master plan. As we have said previously, that range was intentionally wide given the early stage of our plan and the number of unknowns at the time. Since then, we’ve completed our site assessments and now have a clearer picture of the full year impact.

We’ve refined our assessment of ship holds and related remediation for the year to be approximately $100,000,000, which is 30,000,000 more than reported last quarter. This increase is solely due to extended remediation timeline for a few of our previously communicated ship holds. We have not identified any new Compliance Master Plan related ship holds since our first quarter earnings call. Importantly, based on completion of manufacturing site assessments, we do not anticipate any new material ship holds in the second half of the year. The lower end of our updated guidance range reflects extended timelines required to complete remediation efforts already communicated and in progress, while the top end of our range reflects the potential for stronger demand and a more rapid return to market for select products in our portfolio.

Based on this revised outlook, we now expect full year reported revenue growth of approximately 2.8 to 4.3% and organic growth of approximately point six to 2.1%. For the full year 2025, we are maintaining our adjusted EPS guidance in the range of $2.19 to $2.29. This outlook incorporates our updated revenue expectations, remediation costs, ongoing compliance and manufacturing costs, and increased interest expense. These pressures are being offset by disciplined cost management and updated tariff related policy changes and mitigations since our May guidance. For the third quarter, we expect revenues to be in the range of $410,000,000 to $420,000,000 representing reported growth between 7.710.3%.

We expect organic growth between 7.39.9%. Our forecast reflects continued strong global demand for our products, normal second half seasonal sequential improvement, and the benefit of improved production yields for Integra Skin and other supply recoveries. For the third quarter, we expect EPS to be in the range of 40 to 45¢, reflecting the effects of longer remediation and the impact of the earnings. For additional detail, please refer to slide 10, which outlines the key assumptions supporting both our third quarter and full year guidance. I will now turn the call over to Moshe to conclude our prepared remarks.

Moshe, President and CEO, Integra LifeSciences: Thank you, Leah. To close, this quarter was all about focus, execution and momentum. We made real measurable progress in building the foundation for what comes next. While there is more work ahead on transformation of our quality management system, the compliance master plan is proceeding as planned and remediation efforts are underway. At the same time, we’re focused on restoring supply reliability, strengthening operational discipline, and delivering on our financial commitments.

We’re also driving cost efficiencies to restore the earnings power of the business and generate margin expansion, reinforcing our ability to deliver meaningful returns to our shareholders. This marks a significant step in our shift from stabilization to transformation, and the opportunity ahead is exciting. We operate in highly attractive markets with strong fundamentals and durable long term demand for our differentiated portfolio. Our plans for obtaining PMA approval for Surgimen and DoraSorb are underway, unlocking our potential in implant based breast reconstruction. In addition, the proposed Medicare payment and LCD changes will favor evidence backed, cost effective wound reconstruction products, positioning us well for future growth in multiple sites of care.

I remain energized by the significant opportunity to position the company for sustainable growth and long term value creation. The foundational work we’re doing today will allow us to fully realize the value of our portfolio, accelerate growth and drive long term value for our shareholders. Operator, please open the line for questions.

Conference Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, you can press 11 again. Please stand by while we compile the Q and A roster.

Our first question comes from the line of Vic Chopra of Wells Fargo. Your line is now open.

Vic Chopra, Analyst, Wells Fargo: Hey, good morning, thanks for taking the questions. Two for me. First, I would love to get your thoughts around the CMS’ proposed 2026 reimbursement changes aimed to control over utilization and spending on skin substitutes. Can you maybe just remind us what impact this has on Integra and what percentage of your products are exposed? And then I had a quick follow-up, please.

Moshe, President and CEO, Integra LifeSciences: Thank you for your question, Vic. Good morning. Yes, so just want to make sure that I mention, first of all, reminder that majority of our business is in the in hospital setting, in the acute care. And so we don’t see an immediate, a short term impact of these changes. However, long term for sure, we are very encouraged by the changes that they’re proposing, because obviously it’s going to favor the products that are cost effective as well as having strong evidence behind them.

So we are encouraged by that, and long term there’s definitely a lot more opportunity for our wound reconstruction portfolio, as we leverage the clinical evidence that we have been putting behind this product line, as well as continuing to strategize as we move forward into our long range plan, what the longer term opportunity would be for us to be able to leverage the changes that are being proposed. So that’s the way we see the opportunity right now. It’ll be mainly in the future, and we’re building towards it.

Vic Chopra, Analyst, Wells Fargo: Great. Thank you. And then my follow-up question, you know, your Q3 EPS guide, I think, came in below the street, but you maintained your guide for the full year. That implies a pretty significant step up in the fourth quarter. Maybe just walk us through what’s going on there and how we should think about modeling the back half of the year, specifically Q4?

Thank you.

Leah, CFO, Integra LifeSciences: Yeah, so thanks for the question, Vic. So, a couple of things. So, let me talk about a little bit about the revenue step up in the back half and then address specifically the EPS question. So, as you look at our Q3 guide from a revenue perspective, we’re guiding to revenue that is consistent with what we delivered in Q2, and that’s actually very consistent with what we’ve seen in the past in years where we haven’t had, significant supply disruption. As we get into Q4, we are calling a revenue step up of about, $38,000,000 going from Q3 to Q4, that’s driven by two factors, 60% of that is going to be driven by the normal seasonal lift that we see on our business, combined with the very strong momentum that we’ve been seeing on Integra Skin.

The other 40% is going to be driven by the supply recovery, so we’ve talked about chip holds earlier in the year, we do anticipate seeing recovery on some of those items and that will help contribute to the lift that we’re expecting for Q4. And seeing that sort of step up behind a supply recovery is not unusual, we did also see that in Q4 a year ago. So it’s going to be the revenue lift that drives kind of that also the EPS lift that we’re seeing in the back half, We’ll also get beyond some of the headwinds that we saw from a gross margin perspective. That will contribute to overall EPS. And in total EPS for Q4, will be order of magnitude not too different than where we were, a year ago.

Analyst, Jefferies: Thank you.

Conference Operator: Thank you. One moment for our next question. And our next question comes from the line of Matt Taylor of Jefferies. Your line is now open.

Analyst, Jefferies: All right, great. This is Young Lee in for Matt. Thanks for taking our questions. I guess to begin, just on the ship holds and, you know, the the related compliance programs, I mean, it seems like the manufacturing review came in a little bit earlier and better than expected. Wanted to just get a better sense about, know, related to the shuffles, you know, really how much lingers and impacts, can happen in 4Q ’twenty five and exiting the year, and, how much potential risk is there to, 2026?

Leah, CFO, Integra LifeSciences: So thank you for the question. So to your point, and as Moshe shared in her prepared remarks, we’ve seen great progress from a site assessment perspective. We are kind of a little more than halfway through the year at this point. We’ve completed those site assessments, and that has given us greater confidence, in the estimate that we provided. Again, our current estimate is about $100,000,000 of an impact in this year.

That confidence is also supported by the strong execution of our teams. We prioritize the highest work stream areas, first, that’s how we said we would execute, that’s how we did, and that also is contributing to our confidence, coupled with the fact that we didn’t find any, new CMT related holds in Q2. So all of those things are allowing us to identify what we believe the impact for 2025 will be, which is $100,000,000, and at this point aren’t projecting any additional unidentified holds as part of that number. The increase that we are reflecting, this quarter of about 30,000,000 from what we communicated last quarter is purely due to remediation timelines for the holds that were already identified as Q1. So that speaks to basically for the balance of the year, we’ll see a delay in some of the supply recovery, but again as I mentioned, in our second half lift, we do expect Q4 to see a step up in part due to some of those ship holds being released.

As we, from a remediation standpoint, as you talk about 2026, we do see, there will be some carryover remediation work into 2026, but at this point we’re not providing any additional, we’re not providing guidance today on 2026. We’ll do that as part of our Q4 call in February, but from a shift hold perspective, given the greater visibility and clarity that we now have around the CMP, we don’t plan to continue to talk about SHIP hold separately. This will be kind of baked in as part of how we guide going forward now that we have a better view of what’s in front of us.

Moshe, President and CEO, Integra LifeSciences: If I can add a couple of points to Leah’s answer, we have spent and come a long way so far this year in terms of focusing our efforts on mitigating risks and also, work on improving the predictability that we have on our performance. And I think we are at a stage right now, as Leah explained, that we feel comfortable about our line of sight for the rest of the year. Come 2026, my expectation of our entire team is to continue the momentum that we built in Q2 in order to deliver, first of all, our commitments on the second half and then bring in 2026 even a more ramped up accelerated momentum in order for us to be able to reliably predict the results and the expectations that the Street should have of us. So just wanted to make sure that I mentioned that.

Analyst, Jefferies: All right, great. That’s very helpful. And then I guess the follow-up, wanted to, you know, get your view on, you know, basically your ability to win back customers and accounts and, you know, the amount of investment you you might have to, potentially do to do that. You know, how’s the feedback so far from, you know, some of your reps as well as customers and sort of their confidence that after supply shows up, they’ll be able to win back some of these lost customers?

Moshe, President and CEO, Integra LifeSciences: Yeah. Great question. Thank you. When if you’re considering the products that we put on ship holds, we have seen consistently quarter after quarter that once the products come off ship holds, we see the product move. Unless they have been products that get used immediately on a particular case where you may have lost that case.

But for the most part, as we have production and supply available, we have not encountered any problems being able to get that business back. Now, when you talk about products like Primetrix and Surgimen that have been off the market, of course, there’s other substitutes that are being used instead of them. And we have more work to do there once we bring those products into the market, reintroduce them. We are not underestimating the lift that’s going be required for us to gain some of that business back, all of that business back. But we’re very confident.

It’s a very strong market, dollars 800,000,000 market. It’s growing at high single, low double digit. We have a great position with the products that have that clinical support behind them. And we are confident in our ability to be able to do it. It may take us some time, but we are very confident in our ability to be able to take the share

Leah, CFO, Integra LifeSciences: back.

Analyst, Jefferies: All right. Thank you very much. Thank

Conference Operator: you. One moment for our next question. And our next question comes from the line of Robert Marcus of JPMorgan. Your line is now open.

Lily, Analyst, JPMorgan: Hi. This is Lily on for Robbie. Thanks for taking the question. Maybe just starting on revenue growth, the reported range is moving up, but on an organic basis, the midpoint is moving a meaningful step lower. So, can you talk through that a bit?

It sounds like you have better visibility into supply. There shouldn’t be any incremental ship holds. So, what’s driving this step down for the full year? Thank you.

Leah, CFO, Integra LifeSciences: Thanks Lily for the question. So, to your point, from a SHPO, our previous range, did allow for a range of about 90 to 150,000,000 in SHPOs, we’re now at 100, which puts us kind of slightly below our previous top end of the range, and so that was the reason to adjust it down. To your point, in addition to that, we also have reflected about a 25 to $30,000,000 market demand decline expectation, and that is a combination of a few things. It’s the slowdown that we’ve seen, in private label related specifically to, one of our private label partners who is seeing, demand headwinds due to competitive pressures, coupled with the Q2 performance we saw on ENT and while we still believe the back half will, drive higher growth than what we saw in Q2, it won’t entirely overcome that headwind and so that’s factored in as part of that. And then the last piece is just a slightly slower ramp on market recapture for our supply recovery.

Again, part of our ship hold increase is a reflection of loan remediation timelines on some of the recoveries, and so we’ve also put in there an assumption that, we’ll we’ll have slightly slower market recapture on that.

Lily, Analyst, JPMorgan: Got it. That’s helpful. And then just as a follow-up, gross margin came in softer, and you’re pointing to a lower number for the full year as well. So can you talk about the softness in the quarter and what’s changing on a full year basis when tariffs are better than when you last reported and supply should hopefully continue to improve? Thanks again.

Leah, CFO, Integra LifeSciences: Absolutely. So for Q2 gross margins, the decline was driven largely by variances, we were down about four fifty basis points year on year, about 400 basis points of that driven by manufacturing variances, and that’s largely attributable to overhead inefficiencies that we saw related to our ship holds, some under absorption due to the private label volume changes that I mentioned, coupled with tariffs from a year on year perspective. We also saw higher E and O and scrap, again, with the remediation work that’s underway, and that was slightly offset by some favorable mix specifically on Integra Skin with a much stronger performance in Q2 this year versus a year ago. So to your point, we expect our second half gross margins to remain largely flat to what we’ve seen in the first half, as we continue to work through our remediation efforts. On a full year basis we are now projecting gross margins to be down by about 300 basis points versus 2024.

That said, I think it’s also noteworthy that the headwinds we experienced in gross margins for Q2 were offset by much better OpEx management, which allowed us to deliver EBITDA margins that were very consistent with our expectation. And that also will largely be true for the balance of the year. Great. Thank you.

Conference Operator: Thank you. One moment for our next question. And our next question comes from the line of Ryan Zimmerman of BTIG. Your line is now open.

Izzy, Analyst, BTIG: Hi. Good morning, everyone. This is Izzy on for Ryan. Thank you for taking the questions. Just to start with the ENT business, I heard your commentary about how growth in the quarter came in below expectations.

So I was just curious if you could provide a little bit more color around the headwinds that you called out and the expectations for the back half of the year. Additionally, if we think about a little bit longer term, where do you see a sustainable growth rate for the ENT business?

Moshe, President and CEO, Integra LifeSciences: Thank you for the question. Yes, we did have a softer Q2 growth, but it was mainly due to a tough comp, which was last year we had strong capital sales in the same period. We saw strong double digit growth in Era for Eustachian tube balloon dilation as well as the TruD Navigator disposables. On the, balloon sinuplasty side, even though there has been growth volume wise in the market, we have seen increased payer pressure over the last year, and it happens to be varied by geography as well. And our health economics teams are working with our field organization to help them navigate, through that dynamic.

But we remain excited about the addition of Aclaren to our portfolio. We see huge opportunity for us. We’re the only company that has a pediatric indication for the, eustachian tube balloon dilation, and we continue to invest in evidence for it, much like the announcement that you recently saw on the registry, pediatric registry that we have, launched. And, when it comes to the second half of the year, our expectation is mid single digit growth. And moving forward, again, we don’t see any reason to be changing our outlook for this product or for this business as we have had before.

We’re making investments in new products, we’re making investments in clinical evidence, and it’s an important part of our portfolio.

Izzy, Analyst, BTIG: Thank you. That’s helpful. And then just one point of clarification. We saw a couple, recalls come in from the FDA during the quarter. I was just curious if these have been contemplated in guidance and if not, if there’s any impact you could call out that would be great.

Thank you.

Leah, CFO, Integra LifeSciences: Great, thank you. Yes, to do so. So, think what you’re referencing is a recall notice on, Micro Mist and, perforators and those were, products that we were aware of and had contemplated in our guide even as of May. So, yes, that is not new news, from a guidance perspective.

Izzy, Analyst, BTIG: Great, thank you for clarifying. Thank

Conference Operator: you. One moment for our next question. And our next question comes from the line of Richard Newitter of Truth. Your line is now open.

Ravi, Analyst, Truth: Hi, this is Ravi here for Rich. I guess a couple of questions for me here. First, can you kind of remind us as Primatrix and Surgemand, we’re starting to look at them coming back in 2026. Can you just remind us what the revenue contribution from these products was or the growth contribution or the end market kind of contribution was before they went off market?

Leah, CFO, Integra LifeSciences: Certainly. So, 2022 was the last full year before that they went off market and they were about $64,000,000 on an annual basis.

Ravi, Analyst, Truth: Great. And then as they went off market, I mean, that entire kind of $54,000,000 lost or were there products that you had in the portfolio replacing that? Just trying to get a sense in terms of the incrementality of what could potentially come back. Then I guess, the second question is just on a clarin, is that something you’re still having high single digit growth expectations for this year?

Leah, CFO, Integra LifeSciences: So, with respect to Primatrix and Surgemin, when we initially initiated the recall, there was a substitution strategy that allowed for potential growth on Integra skin for Primatrix and then Gentrix for Surgemin. Given some of the production issues that we had with Integra Skin, we did say some initial uptake in terms of substitution, it wasn’t significant. And then as it relates to Gentrix, similarly the nature of the areas in which we could substitute was relatively narrow, so also not a significant amount of substitution or necessarily different either. As it relates to Aclaret, our expectations for full year 2025 is that that business will deliver, or E and T segment will deliver mid single digit growth.

Ravi, Analyst, Truth: Okay, great. And then just my last one, just on the tariffs. I think last quarter was about $0.22 for the year. Kind of the way to think about it now with the kind of delta between last quarter and this quarter, just take that gross margin impact and that’s gonna be the new run rate?

Leah, CFO, Integra LifeSciences: No, no. Yeah, let me step through that because there are a couple of factors to consider. So, to your point, in May we had announced that the tariff assumption reflected in our guidance at that time was about $22,000,000 or 22¢. Our current EPS outlook incorporates an anticipated headwind from tariffs totaling about 13,000,000 or 13¢, with most of that impact expected to materialize in Q4. Beyond this year though, we’re not providing an estimate.

As obviously, we like others are watching an ever changing tariff landscape, and so as that stops moving and we start, understanding a little bit more of the impact to our business, we’ll come back and share expectations for any 2026 impact. That said, we are not standing still. We, you know, as we mentioned in our remarks, we understand that optimizing our cost structure is essential to maintaining long term competitiveness, and the broader margin, improvement initiative that Moshe talked about in her remarks will help us do just that.

Conference Operator: Thank you. I’m showing no further questions at this time. Thank you for your participation in today’s. This does conclude the program. You may now disconnect.

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