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What changed in INTEGRA LIFESCIENCES HOLDINGS CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of INTEGRA LIFESCIENCES HOLDINGS CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+471 added−436 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-22)

Top changes in INTEGRA LIFESCIENCES HOLDINGS CORP's 2023 10-K

471 paragraphs added · 436 removed · 274 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

80 edited+60 added−58 removed72 unchanged
Biggest changeThese trainings are now mandatory for all new Integra hires. • We regularly provide educational content and resources to aid our colleagues as they build cultural competency and inclusive leadership skills Gender Diversity We believe that our company is stronger and will deliver strong operating results, when we build diverse teams and leverage broad perspectives to meet the needs of our shareholders, customers, colleagues, and communities we serve.
Biggest changeWe believe our company is stronger when we build diverse teams and leverage broad perspectives. Diverse teams meet the needs of our shareholders, customers, colleagues and communities we serve. Our commitment to diversity and inclusion starts at the top with our Board of Directors and Chief Executive Officer.
AccuDrain ® , AmnioExcel ® , Aquasonic ® , Auragen ® , Aurora ® Surgiscope ® , Bactiseal ® , BioDFence ® , BioDOptix ® , Brainet ® , Budde ® , Buzz™, CereLink ® , CerebroFlo ® EVD Catheter with Endexo ® Technology, Codman ® , Codman Accu-Flo ® , Codman Bicol ® , Codman ® Certas ® Plus, Codman ® Hakim ® Programmable valve, Codman Holter ® , Codman ICP Express ® , Codman Microsensor ® , Codman VersaTru ® , Codman VPV ® , Contour-Flex ® , Cranioplastic ®, CRW ®, CRW Precision™, Ctherm™, CUSA ® , Cytal ® , DirectLink ® , DuraGen ® , DuraSeal ® , DuraSorb ®, Gentrix ® , HeliCote ® , HeliPlug ® , HeliTape ®, HeliMend ® , Helistat ® , Helitene ® , Hermetic™, Hy-Tape ® , Integra ® , IntegraLink ®, Isocool ® , Jarit ® , Lead-Lok™, Licox ® , LimiTorr™, Luxtec ®, Mayfield ® , MatriStem UBM™, MediHone y® , MicroFrance ® , MicroMatrix ®, Miltex ® , Mischler™, MoniTorr ICP™, Natus ® , NeuraGen ® , NeuraWrap™, Nicolet ® , Omnigraft ® , Omni-Tract ® , OSV II ® , Padgett ® , PriMatrix ® , Pureflow™, Q-Snor™, Redmond™, Revize™, Ruggles ® , Signacreme ® , SurgiMend ® , TCC-EZ ® , TenoGlide ® , TissueMend ® , Ultra VS™, VersaTru ® , Xtrasorb ®, zRIP™, and the Integra logo are some of the material trademarks of Integra LifeSciences Corporation and its subsidiaries.
AccuDrain ® , AmnioExcel ® , Aquasonic ® , Auragen ® , Aurora ® Surgiscope ® , Bactiseal ® , BioDFence ® , BioDOptix ® , Brainet ® , Budde ® , Buzz™, CereLink ® , CerebroFlo ® EVD Catheter with Endexo ® Technology, Codman ® , Codman Accu-Flo ® , Codman Bicol ® , Codman ® Certas ® Plus, Codman ® Hakim ® Programmable valve, Codman Holter ® , Codman ICP Express ® , Codman Microsensor ® , Codman VersaTru ® , Codman VPV ® , Contour-Flex ® , Cranioplastic ®, CRW ®, CRW Precision™, Ctherm™, CUSA ® , Cytal ® , DirectLink ® , DuraGen ® , DuraSeal ® , DuraSorb ®, Gentrix ® , HeliCote ® , HeliPlug ® , HeliTape ®, HeliMend ® , Helistat ® , Helitene ® , Hermetic™, Hy-Tape ® , Integra ® , IntegraLink ®, Isocool ® , Jarit ® , Lead-Lok™, Licox ® , LimiTorr™, 10 Luxtec ®, Mayfield ® , MatriStem UBM™, MediHone y® , MicroFrance ® , MicroMatrix ®, Miltex ® , Mischler™, MoniTorr ICP™, Natus ® , NeuraGen ® , NeuraWrap™, Nicolet ® , Omnigraft ® , Omni-Tract ® , OSV II ® , Padgett ® , PriMatrix ® , Pureflow™, Q-Snor™, Redmond™, Revize™, Ruggles ® , Signacreme ® , SurgiMend ® , TCC-EZ ® , TenoGlide ® , TissueMend ® , Ultra VS™, VersaTru ® , Xtrasorb ®, zRIP™, and the Integra logo are some of the material trademarks of Integra LifeSciences Corporation and its subsidiaries.
These include the FDA Quality System Regulations which cover the procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of medical devices; the FDA's general prohibition against promoting products for unapproved or 'off-label' uses; the Medical Device Reporting regulation, which requires that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; and the Reports of Corrections and Removals regulation, which require manufacturers to report recalls and field corrective actions to the FDA if initiated to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act.
These include the FDA Quality System Regulations which cover the procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of medical devices; the FDA's general prohibition against promoting products for unapproved or 'off-label' uses; the Medical Device Reporting regulation, which requires that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; and the Reports of Corrections and Removals regulation, which require manufacturers to report recalls and field corrective actions 13 to the FDA if initiated to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act.
Human Cells, Tissues and Cellular and Tissue-Based Products Integra, through its wholly-owned subsidiary BioD LLC ("BioD"), is involved with the recovery, processing, storage, transportation and distribution of donated amniotic tissue. The FDA has specific regulations governing HCT/Ps. An HCT/P is a product containing, or consisting of, human cells or tissue intended for transplantation into a human patient.
Human Cells, Tissues and Cellular and Tissue-Based Products Integra, through its wholly-owned subsidiary BioD LLC (“BioD”), is involved with the recovery, processing, storage, transportation and distribution of donated amniotic tissue. The FDA has specific regulations governing HCT/Ps. An HCT/P is a product containing, or consisting of, human cells or tissue intended for transplantation into a human patient.
The American Association of Tissue Banks ("AATB") has issued operating standards for tissue banking. Compliance with these standards is a requirement in order to become an AATB-accredited tissue establishment. In addition, some states have their own tissue banking regulations. We are licensed or have permits for tissue banking in California, Delaware, Illinois, Maryland, New York, Oregon, and Tennessee.
The American Association of Tissue Banks (“AATB”) has issued operating standards for tissue banking. Compliance with these standards is a requirement in order to become an AATB-accredited tissue establishment. In addition, some states have their own tissue banking regulations. We are licensed or have permits for tissue banking in California, Delaware, Illinois, Maryland, New York, Oregon, and Tennessee.
Moreover, after clearance/approval is given, if the product is shown to be hazardous or defective, the FDA and foreign regulatory agencies have the power to withdraw the clearance or approval, as the case may be, or require us to change the device, its manufacturing process or its labeling, to supply additional proof of its safety and effectiveness or to recall, repair, replace or refund the cost of the medical device.
Moreover, after clearance/approval is given, if the product is shown to be hazardous or defective, the FDA and foreign regulatory agencies have the power to withdraw the clearance or approval, as the case may be, or require us to change the device, its manufacturing process or its labeling, to supply additional proof of its safety and effectiveness or to recall, repair, 11 replace or refund the cost of the medical device.
GOVERNMENT REGULATION AND COMPLIANCE We are a manufacturer and marketer of medical devices and Human Tissue and Cell Based Products ("HCT/Ps") and therefore are subject to extensive regulation by the FDA, the Center for Medicare Services of the U.S. Department of Health and Human Services, other federal governmental agencies and, in some jurisdictions, by state and foreign governmental authorities.
GOVERNMENT REGULATION AND COMPLIANCE We are a manufacturer and marketer of medical devices and Human Tissue and Cell Based Products ("HCT/Ps") and therefore are subject to extensive regulation by the FDA, the Center for Medicare Services of the U.S. Department of Health and Human Services ("HHS"), other federal governmental agencies and, in some jurisdictions, by state and foreign governmental authorities.
Our wound reconstruction sales representatives call on surgeons doing procedures in limb salvage, trauma, wound reconstruction and burns, chronic wounds primarily in the inpatient wound care clinic setting. We also have a dedicated surgical reconstruction sales team focused on plastic and reconstructive surgery and hernia procedures with differentiated products. Finally, we have a distributor network focused on biologics.
Our wound reconstruction sales representatives call on surgeons doing procedures in limb salvage, trauma, wound reconstruction and burns, and chronic wounds primarily in the inpatient wound care clinic setting. We 7 also have a dedicated surgical reconstruction sales team focused on plastic and reconstructive surgery and hernia procedures with differentiated products. Finally, we have a distributor network focused on biologics.
These unique product designs are used for neurosurgical and reconstructive surgical applications, as well as dermal regeneration, including the healing of chronic and acute wounds, tendon and nerve repair. Our regenerative 6 technology platform includes our legacy Integra ® Dermal Regeneration Template ("IDRT") products and complementary technologies that we have acquired.
These unique product designs are used for neurosurgical and reconstructive surgical applications, as well as dermal regeneration, including the healing of chronic and acute wounds, tendon and nerve repair. Our regenerative technology platform includes our legacy Integra ® Dermal Regeneration Template ("IDRT") products and complementary technologies that we have acquired.
Although we continuously strive to maintain full compliance with respect to all applicable global environmental, health and safety laws and regulations, we could incur substantial costs to fully comply with future laws and regulations, and our operations, business or assets may be negatively affected. Furthermore, global environmental, health and safety compliance is an ongoing process.
Although we continuously strive to maintain full compliance with respect to all applicable global 14 environmental, health and safety laws and regulations, we could incur substantial costs to fully comply with future laws and regulations, and our operations, business or assets may be negatively affected. Furthermore, global environmental, health and safety compliance is an ongoing process.
Our financial information may be viewed, including the information contained in this report, and other reports we file with the SEC, on the Internet, without charge as soon as reasonably practicable after we file them with the SEC, in the “SEC Filings” page of the Investor Relations section of our website at www.integralife.com .
Our financial information may be viewed, including the information contained in this report, and other reports we file with the SEC, on the Internet, without charge as soon as reasonably practicable after we file them with the SEC, in the “SEC Filings” page of the Investor Relations section of our website at investor.integralife.com .
With thousands of surgical instrument products, including specialty surgical instruments, we call on the central sterile processing unit of hospitals and acute care surgical centers. Additionally, through a strong U.S. distribution model, we serve the needs of hundreds of medical offices.
With thousands of surgical instrument products, including specialty surgical instruments, we call on the central sterile processing unit of hospitals and acute care surgical centers. Additionally, through a strong U.S. distribution model, we can serve the needs of hundreds of medical offices.
Our Environmental Health and Safety ("EH&S") organizational structure incorporates both workplace EH&S coordinators and compliance teams. We have developed an Incident Procedure Policy and General Safety Rules that guide our colleagues to improve our workplace environment, improve safety, and reduce risk and costs.
Our Environmental Health and Safety ("EH&S") organizational structure incorporates both 16 workplace EH&S coordinators and compliance teams. We have developed an Incident Procedure Policy and General Safety Rules that guide our colleagues to improve our workplace environment, improve safety, and reduce risk and costs.
Similar anti-bribery laws exist in many of the countries in which we sell our products outside the U.S., as well as the United States Foreign Corrupt Practices Act (which addresses the activities of U.S. companies in foreign markets).
Similar anti-bribery laws exist in many of the countries in which we sell our products outside the U.S., as well as the United States Foreign Corrupt Practices Act (the “FCPA”) which addresses the activities of U.S. companies in foreign markets.
Examples of HCT/Ps include bone, ligament, skin and cornea. Some HCT/Ps fall within the definition of a biological product, medical device or drug regulated under the FD&C Act.
Examples of HCTPs include bone, ligament, skin and cornea. Some HCT/Ps fall within the definition of a biological product, medical device or drug regulated under the FD&C Act.
In the European Economic Area ("EEA"), which is comprised of the 27 member states of the European Union plus Norway, Iceland and Liechtenstein, medical devices need to comply with specific requirements.
In the European Economic Area ("EEA"), which is comprised of the 27 member states of the European Union (the "EU") plus Norway, Iceland and Liechtenstein, medical devices need to comply with specific requirements.
The GDPR also requires companies processing personal data of individuals residing in the EU to comply with EU privacy and data protection rules. 12 Please refer to “Item 1A.
The GDPR also requires companies processing personal data of individuals residing in the EU to comply with EU privacy and data protection rules. Please refer to “Item 1A.
Significant new regulations, a ban of our products, or a movement away from bovine-derived products because of an outbreak of BSE could have a material, adverse effect on our current business or our ability to expand our business. See “Item 1A. Risk Factors – Risks Related to our Regulatory Environment " of this Annual Report on Form 10-K. Postmarket Requirements.
Significant new regulations, a ban of our products, or a movement away from bovine-derived products because of an outbreak of BSE could have a material, adverse effect on our current business or our ability to expand our business. See “Item 1A. Risk Factors – Risks Related to our Regulatory Environment " of this Annual Report on Form 10-K.
Because our electromechanical products and instruments address significant needs in surgical procedures and limit uncertainty for surgeons, we continue to invest in approvals for new indications and next generation improvements to our market-leading products. We have several active programs focused on life cycle management and innovation for capital and disposable products in our portfolio.
Because our electromechanical products and instruments address significant needs in surgical procedures and limit uncertainty for surgeons, we continue to invest in registrations, clearances, and approvals for new indications and next generation improvements to our market-leading products. We have several active programs focused on life cycle management and innovation for capital and disposable products in our portfolio.
In the U.S., we are subject to laws and regulations pertaining to healthcare fraud and abuse, including anti-kickback laws and physician self-referral laws that regulate the means by which companies in the health care industry may market their products to hospitals and health care professionals and may compete by discounting the prices of their products.
Other regulations Anti-Bribery Laws . In the U.S., we are subject to laws and regulations pertaining to healthcare fraud and abuse, including anti-kickback laws and physician self-referral laws that regulate the means by which companies in the health care industry may market their products to hospitals and health care professionals and may compete by discounting the prices of their products.
All Integra manufacturing facilities participate in the Medical Device Single Audit Program and are audited annually for compliance with the Quality System for US FDA, Canada, Australia, Brazil, and Japan. Medical device regulations also are in effect in many of the countries in which we do business outside the U.S.
The majority of Integra manufacturing facilities participate in the Medical Device Single Audit Program and are audited annually for compliance with the Quality System for US FDA, Canada, Australia, Brazil, and Japan. Medical device regulations also are in effect in many of the countries in which we do business outside the U.S.
Among other things, these laws restrict, and in some cases can prevent, U.S. companies from directly or indirectly selling goods, technology or services to people or entities in certain countries. In addition, these laws require that we exercise care in our business dealings with entities in and from foreign countries. Hazardous materials .
Among other things, these laws restrict, and in some cases can prevent, U.S. companies from directly or indirectly selling goods, technology or services to people or entities in certain countries. In addition, these laws require that we exercise care in our business dealings with entities in and from foreign countries.
Employee Engagement & Wellbeing We regularly seek employee feedback and sentiment about our workplace through global engagement surveys conducted on a bi-annual basis. After each survey is complete, we share detailed results with senior management and all employees within each department.
Employee Engagement and Wellbeing We regularly seek employee feedback and sentiment about our workplace through global engagement surveys conducted on at least a bi-annual basis. After each survey is complete, we share detailed results with senior management and all employees within each department.
After a device is cleared or approved for commercial distribution, numerous regulatory requirements apply.
Postmarket Requirements . After a device is cleared or approved for commercial distribution, numerous regulatory requirements apply.
In addition to several skills-based trainings 15 available (technical, sales, leadership ability) to all employees, managers may recommend external job-specific development programs to employees. These programs are paid for directly by Integra. Employee Health and Safety: Integra is committed to providing a safe environment for all employees and visitors.
In addition to several skills-based trainings available (technical, sales, leadership ability) to all employees, managers may recommend external job-specific development programs to employees. These programs are paid for directly by Integra. Employee Health and Safety: We are committed to providing a safe environment for all employees and visitors.
Codman Specialty Surgical The Codman Specialty Surgical business consists of a broad portfolio of market-leading brands, such as Codman ® , DuraGen ® , DuraSeal ® , CUSA ® , Mayfield ® ,Bactiseal ® , and Certas ® Plus,which are used for the management of multiple disease states, including brain tumors, traumatic brain injury, hydrocephalus and other neurological conditions.
The CSS business consists of a broad portfolio of market-leading brands, such as Codman ® , DuraGen ® , DuraSeal ® , CUSA ® , Mayfield ® ,Bactiseal ® , and Certas ® Plus,which are used for the management of multiple disease states, including brain tumors, traumatic brain injury, hydrocephalus and other neurological conditions.
Section 361 of the Public Health Service Act ("Section 361") authorizes the FDA to issue regulations to prevent the introduction, transmission or spread of communicable disease.
Section 361 of the Public Health Service Act (“Section 361”) authorizes the FDA to issue regulations to prevent the introduction, transmission or spread of communicable disease.
The manufacturer may also be subject to significant regulatory fines or penalties. We also are required to register with the FDA as a medical devic e manufacturer and any devices we manufacture and distribute pursuant to clearance or approval by the FDA are subject to pervasive and continuing regulation by the FDA and certain state agencies.
The manufacturer may also be subject to significant regulatory fines or penalties. 12 We also are required to register with the FDA as a medical device manufacturer and any devices we manufacture and distribute pursuant to clearance or approval by the FDA are subject to pervasive and continuing regulation by the FDA and certain state agencies.
Under HIPAA, the Department of Health and Human Services has issued regulations, including the HIPAA Privacy, Security and Breach Notification Rules, to protect the privacy and security of protected health information used or disclosed by covered entities including health care providers and their business associates, as well as covered subcontractors.
Under HIPAA, the HHS has issued regulations, including the HIPAA Privacy, Security and Breach Notification Rules, to protect the privacy and security of protected health information used or disclosed by covered entities including health care providers and their business associates, as well as covered subcontractors.
These laws range from comprehensive medical device approval and Quality System requirements for some or all of our medical device products to simpler requests for product data or certifications. Under the European Union Medical Device Directive, medical devices must meet the Medical Device Directive standards and receive 10 CE Mark Certification prior to marketing in the EEA.
These laws range from comprehensive medical device approval and Quality System requirements for some or all of our medical device products to simpler requests for product data or certifications. Under the MDD, medical devices must meet the MDD standards and receive CE Mark Certification prior to marketing in the EEA.
The Company has expanded its base regenerative technology business to include surgical instruments, neurosurgical products and advanced wound care through global acquisitions and product development to meet the evolving needs of its customers and enhance patient care. Integra products are sold in more than 130 countries through a direct sales force as well as distributors and wholesalers.
We have expanded our base regenerative technology business to include surgical instruments, neurosurgical products and advanced wound care through global acquisitions and product development to meet the evolving needs of our customers and enhance patient care. Integra products are sold in more than 130 countries through a direct sales force as well as distributors and wholesalers.
Our competition for TT includes Smith & Nephew plc, Organogenesis Holdings Inc., MiMedx Group, Inc., Allergan PLC, Becton Dickinson and Company, and Axogen, Inc. We compete with many additional companies who partially participate in soft tissue reconstruction of complex wounds, peripheral nerve repair and surgical reconstruction.
Our competitors for TT include Smith & Nephew plc, Organogenesis Holdings Inc., MiMedx Group, Inc., Allergan PLC, Becton Dickinson and Company, and Axogen, Inc. We compete with additional companies who partially participate in soft tissue reconstruction of complex wounds, peripheral nerve repair and surgical reconstruction.
Risk Factors" under the heading Risks Related to our Regulatory Environment 5 and under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - General - FDA Matters" of this Annual Report on Form 10-K.
See Item 1A. Risk Factors, under the heading Risks Related to our Regulatory Environment and under Item 7. General Management's Discussion and Analysis of Financial Condition and Results of Operations - FDA Matters of this Annual Report on Form 10-K for further discussion.
The Medical Device Directive, Medical Device Regulation, ISO 9000 series and ISO 13485 are recognized international quality standards that are designed to ensure that we develop and manufacture quality medical devices. Other countries are also instituting regulations regarding medical devices or interpreting and enforcing existing regulations more strictly.
The MDD, MDR, ISO 9000 series and ISO 13485 are recognized international quality standards that are designed to ensure that we develop and manufacture quality medical devices. Other countries are also instituting regulations regarding medical devices or interpreting and enforcing existing regulations more strictly.
Founded in 1989 with the acquisition of an engineered collagen technology platform used to repair and regenerate tissue, Integra LifeSciences Holdings Corporation common stock trades on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “IART.” Integra has developed numerous product lines from this technology for applications ranging from burn and deep tissue wounds to the repair of dura mater in the brain, as well as nerves and tendons.
Founded in 1989 with the acquisition of an engineered collagen technology platform used to repair and regenerate tissue, our common stock trades on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “IART.” We have developed numerous product lines from this technology for applications ranging from burn and deep tissue wounds to the repair of dura mater in the brain, as well as nerves and tendons.
Eligibility for non-salary benefits such as salary continuance, life insurance, health insurance, and similar benefits, follows local regulations and practices. Integra is a pay-for-performance company committed to fair pay.
Eligibility for non-salary benefits such as salary continuance, life insurance, health insurance, and similar benefits, follows local regulations and practices. We are a pay-for-performance company committed to fair pay.
Postmarket requirements are also followed globally where our products are registered and approved. These foreign jurisdictions have similar requirements to the FDA which include reporting requirements such as adverse events and recalls. Other regulations Anti-Bribery Laws .
Postmarket requirements are also followed globally where our products are registered and approved. These foreign jurisdictions have similar requirements to the FDA which include reporting requirements such as adverse events and recalls.
In general, our first quarter usually has lower revenues than the preceding fourth quarter, the second and third quarters have higher revenues than the first quarter, and the fourth quarter revenues are the highest in the year. The main exceptions to this pattern occur because of material acquisitions as well as impacts of the COVID-19 pandemic.
In general, our first quarter usually has lower revenues than the preceding fourth quarter, the second and third quarters have higher revenues than the first quarter, and the fourth quarter revenues are the highest in the year. The main exceptions to this pattern occur because of material acquisitions.
Our health and wellbeing programs differ by country and typical benefits include comprehensive health insurance, disability coverage, workplace accommodations, parental leave and other leaves of absence based on health or life events (e.g., bereavement), employee assistance programs, fitness reimbursement, and flu shots.
We are committed to improving the quality of life of our employees and their families. Our health and wellbeing programs differ by country and typical benefits include comprehensive health insurance, disability coverage, workplace accommodations, parental leave and other leaves of absence based on health or life events (e.g., bereavement), employee assistance programs, fitness reimbursement, and flu shots.
Our product development efforts are focused on core clinical applications in cerebrospinal fluid ("CSF") management, neuro-critical care monitoring, minimally invasive instruments and electrosurgery and ultrasonic medical technologies, as well as our ambition to transform the standard of care in neurosurgery with product advancements in MIS and ICH. Our lighting franchise is among the most dynamic in the industry.
Our product development efforts are focused on core clinical applications in cerebrospinal fluid ("CSF") management, neuro-critical care monitoring, minimally invasive instruments and electrosurgery and ultrasonic medical technologies, as well as our ambition to transform the standard of care in neurosurgery with product advancements in minimally invasive surgery ("MIS") and the surgical management of intracerebral hemorrhage ("ICH").
FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS Financial information about our geographical areas is set forth in our financial statements Note 16, Segment and Geographic Information , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K).
FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS Financial information about our geographical areas is set forth in our financial statements Note 16, Segment and Geographic Information , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K). AVAILABLE INFORMATION We are subject to the informational requirements of the Exchange Act of 1934.
The PMA process, which is reserved for new devices that are not substantially equivalent to any predicate device and for high-risk devices or those that are used to support or sustain human life, may take several years and requires the submission of extensive performance and clinical information.
The PMA process, which is reserved for new devices that are not substantially equivalent to any predicate device and for high-risk devices (i.e., Class III devices) that are used to support or sustain human life or which present a potential, unreasonable risk of illness or injury, may take several years and requires the submission of extensive performance and clinical information.
In 2019, we also acquired Rebound Therapeutics Corporation ("Rebound Therapeutics"), a company that specialized in single-use medical device, known as Aurora Surgiscope, which is the only tubular retractor system designed for cranial surgery with an integrated access channel, camera and lighting.
Rebound Therapeutics specializes in a single-use medical device, known as the Aurora Surgiscope, which is the only tubular retractor system designed for cranial surgery with an integrated access channel, camera and lighting.
Vision We aspire to continue to be a worldwide leader in neurosurgery and reconstructive surgery with a portfolio of leading businesses that delivers outstanding customer experiences through innovation, execution and teamwork to positively impact the lives of millions of patients and their families.
Vision We aspire to continue to be a worldwide leader in neurosurgery and reconstructive surgery with a portfolio of leading businesses that delivers outstanding customer experiences through innovation, execution and teamwork to positively impact the lives of millions of patients and their families. Strategy Following the completion of our strategic refresh in 2023, we refocused our strategies around five pillars.
Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 16, Segment and Geographic Information to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K).
We include financial information regarding our reportable business segments and certain geographic information under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 16, Segment and Geographic Information to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K).
The growth in this business in the recent years has been fueled by geographic expansion and new product registrations in markets, such as China, Japan, and Europe, which we expect to continue in the near-to-long term. In 2022, we made progress to several enhancements to our CUSA Clarity Tissue Ablation System.
The growth in this business in recent years has been fueled by geographic expansion and new product registrations in markets, such as China, Japan, and Europe, which we expect to continue in the near-to-long term.
The process of obtaining a Section 510(k) clearance generally requires the submission of performance data and often clinical data, which in some cases can be extensive, to demonstrate that the device is “substantially equivalent” to a device that was on the market before 1976 or to a device that has been found by the FDA to be “substantially equivalent” to such a pre-1976 device, a predecessor device is referred to as “predicate device.” As a result, FDA clearance requirements may extend the development process for a considerable length of time.
The process of obtaining a Section 510(k) clearance generally requires the submission of performance data and may require clinical data, which in some cases can be extensive, to demonstrate that the device is “substantially equivalent” to another device that is currently marketed under a 510(k); a device that is referred to as “predicate device.” As a result, FDA clearance requirements may extend the development process for a considerable length of time.
On August 18, 2022, the Company, after consultation with the FDA and other regulatory authorities outside of the United States, initiated an immediate voluntary global product removal of all CereLink ® intracranial pressure monitors. See Item 1A. Risk Factors, under the heading Risks Related to our Regulatory Environment and under Item 7.
On August 18, 2022, the Company, after consultation with the FDA and other regulatory authorities outside of the United States, initiated an immediate voluntary global product removal of all CereLink® intracranial pressure monitors.
In addition, in some cases, the FDA may require additional review by an advisory panel, which can further lengthen the process.
In the case of a PMA, the FDA may require additional review by an advisory panel, which can further lengthen the process.
Obtaining these approvals and clearances can take up to several years and may involve preclinical studies and clinical trials. The FDA also may require a post-approval clinical study as a condition of approval. To perform clinical trials for significant risk devices in the U.S. on an unapproved product, we are required to obtain an Investigational Device Exemption from the FDA.
The FDA also may require a post-approval clinical study as a condition of approval. To perform clinical trials for significant risk devices in the U.S. on an unapproved product, we are required to obtain an IDE from the FDA.
These regulations govern the introduction of new medical devices and HCT/Ps, the observance of certain standards with respect to the design, manufacture, testing, labeling, promotion and sales of the products, the maintenance of certain records, the ability to track devices, the reporting of potential product defects, the import and export of products, and other matters. 8 United States Food and Drug Administration Our products are subject to extensive regulation particularly as to safety, efficacy and adherence to FDA Quality System Regulation, and related manufacturing standards.
These regulations govern the introduction of new medical devices and HCT/Ps, the observance of certain standards with respect to the design, manufacture, testing, labeling, promotion and sales of the products, the maintenance of certain records, the ability to track devices, the reporting of potential product defects, the import and export of products, and other matters.
Our global commercial network includes clinical specialists, a large direct global sales force and strategic partnerships and distributors that serve hospitals, integrated health networks, group purchasing organizations, clinicians, surgery centers and health care providers.
Our global commercial network includes clinical specialists, a large direct global sales force and strategic partnerships and distributors that serve hospitals, integrated health networks, group purchasing organizations, clinicians, surgery centers and health care providers. Outside the U.S., we have a combination of direct and indirect sales channels in international markets to sell certain product lines.
Tissue Technologies The Tissue Technologies segment consists of five unique regenerative technology areas - highly engineered bovine collagen, bovine dermis, porcine urinary bladder, human amniotic tissue, and resorbable synthetic mesh.
Tissue Technologies Our TT segment focuses on three main areas: complex wound surgery, surgical reconstruction, and peripheral nerve repair and consists of five unique regenerative technology areas - highly engineered bovine collagen, bovine dermis, porcine urinary bladder, human amniotic tissue, and resorbable synthetic mesh.
Depending on the product line, we compete based on our products' features, strength of our sales force or distributors, sophistication of our technology and cost effectiveness of our solution. RESEARCH AND DEVELOPMENT STRATEGY Our research and development activities focus on identifying unmet surgical needs and addressing those needs with innovative solutions and products.
Depending on the product line, we compete based on our products' features, strength of our sales force or distributors, sophistication of our technology and cost effectiveness of our solution.
Medical Device Regulations Unless an exemption applies, the FDA requires that a manufacturer introducing a new medical device or a new indication for use of an existing medical device obtain either a Section 510(k) premarket notification clearance or a PMA, before introducing it into the U.S. market.
Medical Device Regulations The FDA requires that a manufacturer obtain 510(k) clearance or a PMA for a variety of reasons, such as introducing a new medical device or new indication for use of an existing medical device, before introducing it into the U.S. market. The type of marketing authorization is generally linked to the classification of the device.
Medical device products are subject to rigorous FDA and other governmental agency regulations in the United States and similar regulations of foreign agencies abroad.
United States Food and Drug Administration Our products are subject to extensive regulation particularly as to safety, efficacy and adherence to FDA Quality System Regulation, and related manufacturing standards. Medical device products are subject to rigorous FDA and other governmental agency regulations in the United States and similar regulations of foreign agencies abroad.
Our work to combine our bactiseal antimicrobial technology with the Endexo anti-occlusive technology obtained through our 2019 acquisition of Arkis continues to progress for both a silicone-based hydrocephalus and EVD project.
Our work to combine our Bactiseal® antimicrobial technology with the Endexo anti-occlusive technology continues to progress for both a silicone-based hydrocephalus and EVD project. Throughout 2023, we continued to advance our innovation from the Rebound Therapeutics Corporation ("Rebound Therapeutics"), which was acquired in 2019.
Our research, development and manufacturing processes involve the controlled use of certain hazardous materials. We are subject to country-specific, federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials and certain waste products.
We are subject to country-specific, federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials and certain waste products. We believe that our environmental, health and safety procedures for handling and disposing of these materials comply with the standards prescribed by the controlling laws and regulations.
For reasons of quality assurance, availability, or cost effectiveness, certain components and raw materials are available only from a sole supplier. Our practice is to maintain sufficient inventory of components so that our production will not be significantly disrupted even if a particular component or material is not available for a period of time.
We have established long-term supply contracts with many of our suppliers and our practice is to maintain sufficient inventory of components so that our production will not be significantly disrupted even if a particular component or material is not available for a period of time.
Integra has compliance procedures in place for compliance with Employee Health & Safety laws, driven by a centrally led organizational structure that ensures proper implementation, which is essential to our overall business objectives.
We have compliance procedures in place for compliance with Employee Health & Safety laws, driven by a centrally led organizational structure that ensures proper implementation, which is essential to our overall business objectives. In addition, we are subject to numerous federal, state, foreign and local laws relating to safe working conditions, environmental protection and fire hazard control, among others.
Commercial launch is expected in the first quarter of 2023. We continue to update our CUSA Clarity platform by incorporating new ultrasonic handpiece and integrated electrosurgical capabilities. We continue to work with several instrument partners to bring new surgical instrument platforms to the market. We are focused on the development of core clinical applications in our electromechanical technologies portfolio.
Our lighting franchise is among the most dynamic in the industry. We are focused on the development of core clinical applications in our electromechanical technologies portfolio. We continue to update our CUSA Clarity platform by incorporating new ultrasonic handpiece and integrated electrosurgical capabilities. In 2022, we made progress to several enhancements to our CUSA Clarity Tissue Ablation System.
We anticipate new product introductions and new clinical indications will continue to contribute to the growth of the segment. In 2022, we launched NeuraGen ® 3D Nerve Guide Matrix, a resorbable implant for repair of peripheral nerve discontinuities and engineered to create an optimized environment for nerve regeneration.
Additionally, in 2022 we launched NeuraGen 3D Nerve Guide Matrix, a resorbable implant for repair of peripheral nerve discontinuities and engineered to create an optimized environment for nerve regeneration. Following the completion of design control activities in 2022, we launched both Cytal and MicroMatrix in Europe in 2023.
In the event of this type of accident, we could be held liable for damages 11 and face a liability that could exceed our resources.
However, risk of accidental releases or injury from these materials is possible. These risks are managed to minimize or eliminate associated business impacts. In the event of this type of accident, we could be held liable for damages and face a liability that could exceed our resources.
They also may complicate our clinical research activities, as well as product offerings that involve transmission or use of clinical data.
They also may complicate our clinical research activities, as well as product offerings that involve transmission or use of clinical data. HUMAN CAPITAL Our people are our greatest asset and we view human capital management and the strength of our employees as integral to the long-term success of our business.
AVAILABLE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, (the “Exchange Act"). In accordance with the Exchange Act, we file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission, ("the SEC").
In accordance with the Exchange Act, we file annual reports on Form 10K, quarterly reports on Form 10Q, current reports on Form 8-K, and any amendments to those reports, proxy statements and other information with the Securities and Exchange Commission, ("the SEC").
During 2022, we completed the acquisition of Surgical Innovation Associates, Inc. ("SIA"), which is seeking approval by the U.S Food and Drug Administration ("FDA") of the PMA application for its core technology, DuraSorb, for use in IBBR. We have a specialized sales organization composed of directly employed sales representatives, as well as specialty distributors, organized based upon their call point.
Following our acquisition of SIA in 2022, we have also sought to expand our IBBR product offerings and in June 2023 we completed enrollment in the DuraSorb U.S. IDE clinical study for two-stage breast reconstruction. We have a specialized sales organization composed of directly employed sales representatives, as well as specialty distributors, organized based upon their call point.
The device is used in the management of cerebrospinal fluid and is highly complementary to our Bactiseal ® catheter and advanced intercranial pressure monitoring products. In the third quarter of 2021, we launched our CereLink ICP Monitor System in the U.S. and Europe and continued the global rollout in the first half of 2022.
The 9mm Surgiscope received 510(k) clearance from the FDA in the fourth quarter of 2023. 9 In the third quarter of 2021, we launched our CereLink ICP Monitor System in the U.S. and Europe and continued the global rollout in the first half of 2022.
The regulatory process for obtaining product approvals and clearances can be onerous and costly. The FDA requires, as a condition to marketing a medical device in the U.S., that we secure a Premarket Notification clearance pursuant to Section 510(k) of the Federal Food, Drug and Cosmetic Act (the "FD&C Act"), or an approved PMA application (or supplemental PMA application).
The regulatory process for obtaining product approvals and clearances can be onerous and costly. Under the Federal Food, Drug and Cosmetic Act (the "FD&C Act"), authorization to commercially distribute a new medical device in the U.S. is generally obtained in one of two primary ways.
Risk Factors – We are subject to requirements relating to information technology which could adversely affect our business” of this Annual Report on Form 10-K for additional discussion of the risks accompanying compliance with data privacy and cybersecurity laws and regulations .
Risk Factors – Failure to comply with laws relating to the confidentiality of sensitive personal information or standards related to the transmission of electronic health data, may require us to make significant changes to our products, or incur penalties or other liabilities ” of this Annual Report on Form 10-K for additional discussion of the risks accompanying compliance with data privacy and cybersecurity laws and regulations .
Integra was the first company to receive a FDA claim for regeneration of dermal tissue and is a world leader in regenerative technology. Because regenerative technology products represent a fast-growing, high-margin opportunity for us, we allocate a large portion of our research and development budget to these projects.
We were the first company to receive an FDA claim for regeneration of dermal tissue and are a world leader in regenerative technology.
Each function or division appoints survey administrators who work with their respective teams to understand the feedback and establish action items. We believe this process enables us to monitor employee engagement and create a continuously improving, satisfying work environment for our employees. We are committed to improving the quality of life of our employees and their families.
We are incorporating employee survey results into our corporate strategies – across company, division and function levels – and have further used this employee feedback to modify corporate programs and initiatives. We believe this process enables us to monitor employee engagement and create a continuously improving, satisfying work environment for our employees.
HUMAN CAPITAL Workforce Demographics As of December 31, 2022, we had approximately 3,722 regular full and part time employees and 874 contingent, subcontracted, and outsourced partners. 70% of our employees are located in the United States, 21% in Europe, 2% in Latin America and Canada and 7% in Asia Pacific which includes Australia and New Zealand.
Approximately 70% of our employees are located in the United States, 21% in Europe, 2% in Latin America and Canada and 7% in Asia Pacific which includes Australia and New Zealand. Diversity and Inclusion A diverse workforce and an inclusive culture and work environment is a business priority and a key to our long-term success.
The extended laparoscopic tip was launched in the U.S. to enhance laparoscopic liver procedures. In addition, a single-sided bone tip received 510(k) clearance. Commercial launch is expected in the first quarter of 2023. We continue to update our CUSA Clarity platform by incorporating new ultrasonic handpiece and integrated electrosurgical capabilities.
The extended laparoscopic tip was launched in the U.S. to enhance laparoscopic liver procedures. In addition, a single-sided bone tip received 510(k) clearance from the FDA. Commercial launch was completed successfully in early 2023. In August 2023, we launched a modified 23 kHz CUSA Electrosurgery Module (CEM) for Clarity handpieces that can be used with additional electrosurgery generators.
Integra is currently pursuing pre-market approval for implant-based breast reconstruction with our Surgimend product. In 2022, we acquired SIA, which is also pursuing a pre-market approval for IBBR. By offering two distinct product solutions, we believe we have the opportunity to build a leading position in the market.
IDE clinical study for two-stage breast reconstruction; the primary follow-up period is one year after device implantation. By offering two distinct product solutions, we believe we have the opportunity to build a leading position in the IBBR market. We hope to obtain FDA approvals in 2025.
The type of marketing authorization is generally linked to the classification of the device. The FDA classifies medical devices into one of three classes (Class I, II or III) based on the degree of risk the FDA determines to be associated with a device and the level of regulatory control deemed necessary to ensure the device’s safety and effectiveness.
The FDA classifies medical devices into three classes based on risk. Regulatory control increases from Class I (lowest risk) to Class III (highest risk). The FDA generally must clear or approve the commercial sale of new medical devices in Classes II and III.
Diversity and Inclusion A diverse workforce and an inclusive culture and work environment is a business priority and a key to our long-term success. Our commitment to diversity and inclusion starts at the top with our Board of Directors and CEO. At all levels of the Company, we focus on attracting, retaining, and developing our diverse talent.
At all levels of the Company, we focus on attracting, retaining, and developing our diverse talent.
Our collagen manufacturing capability, combined with our history of innovation, including our launch of NeuraGen 3D, provides us with strong platform technologies for multiple indications.
Our collagen manufacturing capability, combined with our history of innovation, including our launch of NeuraGen 3D, provides us with strong platform technologies for multiple indications. 8 In the second quarter of 2023, after consultation with the FDA, The Company initiated a voluntary global recall of all products manufactured at the Boston facility, including Primatrix®, Surgimend®, Revize™, and TissueMend™, distributed between March 1, 2018 and May 22, 2023.
In the third quarter of 2021, we filed the PMA application for a specific indication for SurgiMend in the use of post-mastectomy breast reconstruction, for which we hope to obtain FDA approval in 2024. COMPETITION Our competitors for CSS are Medtronic, Inc., Stryker Corporation, Becton Dickinson and Company, and B. Braun Medical, Inc.
In the third quarter of 2021, we filed a PMA application for a specific indication for Surgimend® in the use of post-mastectomy breast reconstruction. In 2022, we acquired SIA, which is also PMA for DuraSorb with IBBR, and in June 2023 we completed enrollment in the DuraSorb U.S.
General Management's Discussion and Analysis of Financial Condition and Results of Operations - FDA Matters of this Annual Report on Form 10-K for further discussion. In 2022, we continued to advance the early-stage technology platforms we acquired in 2019. Through the acquisition of Arkis Biosciences, Inc.
Shipments resumed in international markets with a limited release in the third quarter of 2023. See Item 1A. Risk Factors, under the heading Risks Related to our Regulatory Environment and under Item 7. General Management's Discussion and Analysis of Financial Condition and Results of Operations - FDA Matters of this Annual Report on Form 10-K for further discussion.
BUSINESS SEGMENTS Integra currently manufactures and sells our products and technologies in the following two global reportable business segments: Codman Specialty Surgical and Tissue Technologies. We include financial information regarding our reportable business segments and certain geographic information under "Item 7.
Information on our website is not incorporated by reference herein and is not part of this Annual Report on Form 10-K. BUSINESS SEGMENTS We currently manufacture and sell our medical technologies and products in the following two reportable business segments: Codman Specialty Surgical and Tissue Technologies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unsuccessful in our acquisition strategy, we may be unable to meet our financial targets and our financial performance could be materially and adversely affected. These risks may be heightened in cases where the majority of the former businesses’ operations, employees and customers are located outside the U.S.
Biggest changeThese risks may be heightened in cases where a substantial portion of an acquired businesses’ operations, employees or customers are located outside the U.S. Any one or all of these factors could complicate the integration of acquired employees and operations, increase operating costs or lower anticipated financial performance. Many of these factors are also outside of our control.
We believe that these factors are most likely to affect the following products that we sell: • our collagen-based products and bovine-based products, such as the Integra Dermal Regeneration Template and wound matrix products, the DuraGen ® family of products, our Absorbable Collagen Sponges, PriMatrix ® and SurgiMend products; • our products made from silicone, such as our neurosurgical shunts and drainage systems and hemodynamic shunts; • products which use many different specialty parts, electrical components, or chemicals from numerous suppliers, such as our intracranial monitors, shunts, catheters, tissue ablation, and headlights; • our biosynthetic products, including the DuraSeal sealant system and DuraSorb biosynthetic mesh scaffold; • products which are amniotic tissue-based • products which are porcine tissue-based; • products that use medical grade leptospermum honey, such as our Medihoney products; and • our TCC-EZ ® total contact cast system products.
We believe that these factors are most likely to affect the following products that we sell: • our collagen-based products and bovine-based products, such as the Integra Dermal Regeneration Template and wound matrix products, the DuraGen ® family of products, our Absorbable Collagen Sponges, PriMatrix ® and SurgiMend products; • our products made from silicone, such as our neurosurgical shunts and drainage systems and hemodynamic shunts; 23 • products which use many different specialty parts, electrical components, or chemicals from numerous suppliers, such as our intracranial monitors, shunts, catheters, tissue ablation, and headlights; • our biosynthetic products, including the DuraSeal sealant system and DuraSorb biosynthetic mesh scaffold; • products which are amniotic tissue-based • products which are porcine tissue-based; • products that use medical grade leptospermum honey, such as our Medihoney products; and • our TCC-EZ ® total contact cast system products.
For example: • third-party payors of hospital services and hospital outpatient services, including Medicare, Medicaid, private and public health insurers and foreign governmental health systems, annually revise their payment methodologies, which can result in stricter standards for reimbursement of hospital charges for certain medical procedures or the elimination of reimbursement; • several foreign countries have implemented reforms of their respective healthcare sectors in an effort to reduce healthcare spending, including restricting funding to only those medical technologies and procedures with proven effectiveness, increasing patient co-payments and providing for payback measures.
For example: 19 • third-party payors of hospital services and hospital outpatient services, including Medicare, Medicaid, private and public health insurers and foreign governmental health systems, annually revise their payment methodologies, which can result in stricter standards for reimbursement of hospital charges for certain medical procedures or the elimination of reimbursement; • several foreign countries have implemented reforms of their respective healthcare sectors in an effort to reduce healthcare spending, including restricting funding to only those medical technologies and procedures with proven effectiveness, increasing patient co-payments and providing for payback measures.
If we are unable to develop additional commercially viable products, our future prospects could be materially and adversely affected. 21 One or more of these factors could vary unpredictably, and such variations could have a material, adverse effect on our competitive position. We may not be able to adjust our contemplated plan of development to meet changing market demands.
If we are unable to develop additional commercially viable products, our future prospects could be materially and adversely affected. One or more of these factors could vary unpredictably, and such variations could have a material, adverse effect on our competitive position. We may not be able to adjust our contemplated plan of development to meet changing market demands.
Currently, we source bovine fetal hides from the U.S. and purchase tendon from the U.S. and New Zealand. New Zealand has 25 never had a case of BSE. We received approval in the U.S., the EU, Japan, Taiwan, China, Argentina as well as other countries for the use of New Zealand-sourced tendon in the manufacturing of our products.
Currently, we source bovine fetal hides from the U.S. and purchase tendon from the U.S. and New Zealand. New Zealand has never had a case of BSE. We received approval in the U.S., the EU, Japan, Taiwan, China, Argentina as well as other countries for the use of New Zealand-sourced tendon in the manufacturing of our products.
We 20 may not be able to identify suitable acquisition candidates in the future, obtain acceptable financing or consummate any future acquisitions. Certain potential acquisitions are subject to antitrust and competition laws, which laws could impact our ability to pursue strategic acquisitions and could result in mandated divestitures.
We may not be able to identify suitable acquisition candidates in the future, obtain acceptable financing or consummate any future acquisitions. Certain potential acquisitions are subject to antitrust and competition laws, which laws could impact our ability to pursue strategic acquisitions and could result in mandated divestitures.
To compete effectively, we depend, in part, on our ability to maintain the proprietary nature of our technologies and manufacturing processes, which includes the ability to obtain, protect and enforce patents on our technology and to protect our 27 trade secrets. We own or have licensed patents that cover aspects of some of our product lines.
To compete effectively, we depend, in part, on our ability to maintain the proprietary nature of our technologies and manufacturing processes, which includes the ability to obtain, protect and enforce patents on our technology and to protect our trade secrets. We own or have licensed patents that cover aspects of some of our product lines.
For those foreign customers who purchase our products in U.S. dollars, currency fluctuations between the U.S. dollar and the currencies in which those 28 customers do business may have a negative impact on the demand for our products in foreign countries where the U.S. dollar has increased in value compared to the local currency.
For those foreign customers who purchase our products in U.S. dollars, currency fluctuations between the U.S. dollar and the currencies in which those customers do business may have a negative impact on the demand for our products in foreign countries where the U.S. dollar has increased in value compared to the local currency.
Our information systems require an ongoing commitment of significant resources to maintain, protect, and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving systems and regulatory standards, the increasing need to protect patient and customer information, and changing customer 29 patterns.
Our information systems require an ongoing commitment of significant resources to maintain, protect, and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving systems and regulatory standards, the increasing need to protect patient and customer information, and changing customer patterns.
Our patents, however, may not provide us with any significant competitive advantage. Others may challenge our patents and, as a result, our patents could be narrowed, invalidated or rendered unenforceable. Competitors may develop products similar to ours that our patents do not cover.
Our patents, however, may not 30 provide us with any significant competitive advantage. Others may challenge our patents and, as a result, our patents could be narrowed, invalidated or rendered unenforceable. Competitors may develop products similar to ours that our patents do not cover.
Damage to our manufacturing, distribution, development and/or research facilities because of fire, extreme weather conditions, natural disaster, power loss, communications failure, geopolitical disruption, unauthorized entry or other events, such as a flu or other health epidemic, such as COVID-19, could significantly disrupt our operations, the operations of suppliers and critical infrastructure and delay or prevent product manufacture and shipment during the time required to repair, rebuild or replace the damaged facilities.
Damage to our manufacturing, distribution, development and/or research facilities because of fire, extreme weather conditions, natural disaster, power loss, communications failure, geopolitical disruption, unauthorized entry or other events, such as a flu or other health epidemic, could significantly disrupt our operations, the operations of suppliers and critical infrastructure and delay or prevent product manufacture and shipment during the time required to repair, rebuild or replace the damaged facilities.
In addition, we are subject to laws and regulations that govern the means by which companies in the healthcare industry may market their products to healthcare professionals and may compete by discounting the prices of their products, including for example, the federal Anti-Kickback Statute, the federal False Claims Act, the federal Health Insurance Portability and Accountability Act of 1996, state law equivalents to these federal laws that are meant to protect against fraud and abuse and analogous laws in foreign countries.
We are subject to laws and regulations that govern the means by which companies in the healthcare industry may market their products to healthcare professionals and may compete by discounting the prices of their products, including for example, the federal Anti-Kickback Statute, the federal False Claims Act, the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), state law equivalents to these federal laws that are meant to protect against fraud and abuse and analogous laws in foreign countries.
Governmental health systems have revised and continue to consider revisions of healthcare budgets, which could result in stricter standards for implementing certain medical procedures, increased scrutiny of medical devices, and downward pricing pressure; 19 • Medicare, Medicaid, private and public health insurer and foreign governmental cutbacks could create downward pricing pressure on our products; • in the U.S., Medicare and Medicaid coverage as well as commercial payor coverage determinations could reduce or eliminate reimbursement or coverage for certain of our wound matrix, amniotic, surgical reconstruction and advanced wound dressing products as well as other products in most regions, negatively affecting our market for these products, and future determinations could reduce or eliminate reimbursement or coverage for these products in other regions and could reduce or eliminate reimbursement or coverage for other products; • there has been a consolidation among healthcare facilities and purchasers of medical devices in the U.S., some of whom prefer to limit the number of suppliers from whom they purchase medical products, and these entities may decide to stop purchasing our products or demand discounts on our prices; • in the U.S., we are party to contracts with group purchasing organizations, which negotiate pricing for many member hospitals, require us to discount our prices for certain of our products and limit our ability to raise prices for certain of our products, particularly surgical instruments; • there is economic pressure to contain healthcare costs in domestic and international markets, and, regardless of the consolidation discussed above, providers generally are exploring ways to cut costs by eliminating purchases or driving reductions in the prices that they pay for medical devices, or increasing clinical or economic evidence thresholds for product formularies; • there are proposed and existing laws, regulations and industry policies in domestic and international markets regulating the sales and marketing practices and the pricing and profitability of companies in the healthcare industry; • proposed laws or regulations may permit hospitals to provide financial incentives to doctors for reducing hospital costs, will award physician efficiency, and will encourage partnerships with healthcare service and goods providers to reduce prices; and • there have been initiatives by third-party payors and foreign governmental health systems to challenge the prices charged for medical products that could affect our ability to sell products on a competitive basis.
Governmental health systems have revised and continue to consider revisions of healthcare budgets, which could result in stricter standards for implementing certain medical procedures, increased scrutiny of medical devices, and downward pricing pressure; • Medicare, Medicaid, private and public health insurer and foreign governmental cutbacks could create downward pricing pressure on our products; • in the U.S., Medicare and Medicaid coverage as well as commercial payor coverage determinations could reduce or eliminate reimbursement or coverage for certain of our wound matrix, amniotic, surgical reconstruction and advanced wound dressing products as well as other products in most regions, negatively affecting our market for these products, and future determinations could reduce or eliminate reimbursement or coverage for these products in other regions and could reduce or eliminate reimbursement or coverage for other products; • there has been a consolidation among healthcare facilities and purchasers of medical devices in the U.S., some of whom prefer to limit the number of suppliers from whom they purchase medical products, and these entities may decide to stop purchasing our products or demand discounts on our prices; • in the U.S., we are party to contracts with group purchasing organizations, which negotiate pricing for many member hospitals, require us to discount our prices for certain of our products and limit our ability to raise prices for certain of our products, particularly surgical instruments; • there is economic pressure to contain healthcare costs in domestic and international markets, and, regardless of the consolidation discussed above, providers generally are exploring ways to cut costs by eliminating purchases or driving reductions in the prices that they pay for medical devices, implementing national and provincial tender pricing, as recently implemented in China, or increasing clinical or economic evidence thresholds for product formularies; • there are proposed and existing laws, regulations and industry policies in domestic and international markets regulating the sales and marketing practices and the pricing and profitability of companies in the healthcare industry; • proposed laws or regulations may permit hospitals to provide financial incentives to doctors for reducing hospital costs, will award physician efficiency, and will encourage partnerships with healthcare service and goods providers to reduce prices; and • there have been initiatives by third-party payors and foreign governmental health systems to challenge the prices charged for medical products that could affect our ability to sell products on a competitive basis.
Some of the factors that may cause these fluctuations include: • economic conditions worldwide, which could affect the ability of hospitals and other customers to purchase our products and could result in a reduction in elective and non-reimbursed operative procedures; • the impact of acquisitions, our ability to integrate acquisitions, and our restructuring activities including portfolio rationalization, and divestitures; • risks related to COVID-19 and other epidemics or similar widespread health concerns; • expenditures for major initiatives, including acquired businesses and integrations thereof and restructuring; • the timing of significant customer orders, which tend to increase in the fourth quarter coinciding with the end of budget cycles; • increased competition for a wide range of customers across all our product lines in the markets our products are sold; • market acceptance of our existing products, as well as products in development; • retention of current employees and recruiting of new employees in light of market competition for talent and relevant skills; • the timing of regulatory approvals as well as changes in country-specific regulatory requirements; • changes in the exchange rates between the U.S. dollar and foreign currencies of countries in which we do business; • changes in the variable interest rates of our debt instruments which could impact debt service requirements; • potential backorders, lost sales and expenses incurred in connection with product recalls or field corrective actions; • disruption of our operations and sales resulting from extreme weather conditions or natural disasters that damage our manufacturing, distribution, or infrastructure of those facilities, or the suppliers and service providers for those facilities; • our ability to manufacture and ship our products efficiently or in sufficient quantities to meet sales demands; • changes in the cost or decreases in the supply of raw materials and services, including sterilization, energy, steel and honey; • the timing of our research and development expenditures; • reimbursement for our products by third-party payors such as Medicare, Medicaid, private and public health insurers and foreign governmental health systems; • the ability to maintain existing distribution rights to and from certain third parties; • the ability to maintain business if or when we opt to convert such business from distributors to a direct sales model; • the ability of our commercial sales representatives to obtain sales targets in a reasonable time frame; 18 • the impact of changes to our sales organization, continued channel expansion, including increased specialization; • peer-reviewed publications discussing the clinical effectiveness of the products we sell; • inspections of our manufacturing facilities for compliance with Quality System Regulations (Good Manufacturing Practices), which could result in Form 483 observations, warning letters, injunctions or other adverse findings from the FDA or from equivalent regulatory bodies, and corrective actions, procedural changes and other actions that we determine are necessary or appropriate to address the results of those inspections, any of which may affect production and our ability to supply our customers with our products; • changes in regulations or guidelines that impact the sales and marketing practices for products that we sell; • the increased regulatory scrutiny of certain of our products, including products which we manufacture for others, could result in removal from the market or involve field corrective actions that could affect the marketability of our products; • enforcement or defense of intellectual property rights; • changes in tax laws, or their interpretations; and • the impact of goodwill and intangible asset impairment charges if future operating results of the acquired businesses are significantly less than the results anticipated at the time of the acquisitions.
Some of the factors that may cause these fluctuations include: • economic conditions worldwide, which could affect the ability of hospitals and other customers to purchase our products and could result in a reduction in elective and non-reimbursed operative procedures; • the impact of acquisitions, our ability to integrate acquisitions, and our restructuring activities including portfolio rationalization, and divestitures; • expenditures for major initiatives, including acquired businesses and integrations thereof and restructuring; • the timing of significant customer orders, which tend to increase in the fourth quarter coinciding with the end of budget cycles; • increased competition for a wide range of customers across all our product lines in the markets our products are sold; • market acceptance of our existing products, as well as products in development; • retention of current employees and recruiting of new employees in light of market competition for talent and relevant skills; • the timing of regulatory approvals as well as changes in country-specific regulatory requirements; • changes in the exchange rates between the U.S. dollar and foreign currencies of countries in which we do business; • changes in the variable interest rates of our debt instruments which could impact debt service requirements; • potential backorders, lost sales and expenses incurred in connection with product recalls or field corrective actions; • disruption of our operations and sales resulting from political instability, war, insurrections, extreme weather conditions, the outbreak of disease, natural disasters, or other events outside our control that damage our manufacturing, distribution, or infrastructure of those facilities, or the suppliers and service providers for those facilities; • our ability to manufacture and ship our products efficiently or in sufficient quantities to meet sales demands; • changes in the cost or decreases in the supply of raw materials and services, including sterilization, energy, steel and honey; • the timing of our research and development expenditures; • reimbursement for our products by third-party payors such as Medicare, Medicaid, private and public health insurers and foreign governmental health systems; • risks related to epidemics or similar widespread health concerns; • the ability to maintain existing distribution rights to and from certain third parties; • the ability to maintain business if or when we opt to convert such business from distributors to a direct sales model; • the ability of our commercial sales representatives to obtain sales targets in a reasonable time frame; 18 • the impact of changes to our sales organization, continued channel expansion, including increased specialization; • peer-reviewed publications discussing the clinical effectiveness of the products we sell; • inspections of our manufacturing facilities for compliance with Quality System Regulations (Good Manufacturing Practices), which could result in Form 483 observations, warning letters, injunctions or other adverse findings from the FDA or from equivalent regulatory bodies, and corrective actions, procedural changes and other actions that we determine are necessary or appropriate to address the results of those inspections, any of which may affect production and our ability to supply our customers with our products; • changes in regulations or guidelines that impact the sales and marketing practices for products that we sell; • the increased regulatory scrutiny of certain of our products, including products which we manufacture for others, could result in removal from the market or involve field corrective actions that could affect the marketability of our products; • enforcement or defense of intellectual property rights; • changes in tax laws, or their interpretations; and • the impact of goodwill and intangible asset impairment charges if future operating results of the acquired businesses are significantly less than the results anticipated at the time of the acquisitions.
We expect that additional state and federal health care reform measures will be adopted in the future, including those initiatives affecting coverage and reimbursement for our products, any of which could limit the amounts that federal and state governments will pay for health care products and services, which could adversely affect the growth of the market for our products or demand for our products, or result in additional pricing pressures.
We expect that additional state and federal and 27 foreign health care reform measures will be adopted in the future, including those initiatives affecting coverage and reimbursement for our products, any of which could limit the amounts that federal and state governments will pay for health care products and services, which could adversely affect the growth of the market for our products or demand for our products, or result in additional pricing pressures.
If we fail to obtain a required license or are unable to design our products so as not to infringe on the proprietary rights of others, we may be unable to sell some of our products, and this potential inability could have a material, adverse effect on our revenues and profitability.
If we fail to obtain a required license or are unable to design our products so as not to infringe on the proprietary rights of others, we may be unable to sell some of our products, and this potential inability could have a material, adverse effect on our revenues and profitability and cash flows.
In addition, we may have to institute proceedings regarding our competitors’ promotional practices or defend proceedings regarding our promotional practices. Legal proceedings are costly, and, even if we prevail, the cost of the legal proceedings could affect our profitability. In addition, litigation is time-consuming and could divert management's attention and resources away from our business.
In addition, we may have to institute proceedings regarding our competitors’ promotional practices or defend proceedings regarding our promotional practices. Legal proceedings are costly, and, even if we prevail, the cost of the legal proceedings could affect our profitability and cash flows. In addition, litigation is time-consuming and could divert management's attention and resources away from our business.
Between January 1, 2020 and December 31, 2022, we have acquired two businesses at a total cost of approximately $358.4 million which amount includes our acquisition of ACell, Inc. in January 2021 for $306.9 million and our acquisition of Surgical Innovation Associates, Inc. for $51.5 million in December 2022.
Between January 1, 2021 and December 31, 2023, we have acquired two businesses at a total cost of approximately $358.4 million which amount includes our acquisition of ACell, Inc. in January 2021 for $306.9 million and our acquisition of Surgical Innovation Associates, Inc. for $51.5 million in December 2022.
After a device is placed on the market, numerous regulatory requirements apply, which require manufacturers to follow, among other things, design, testing, production, control, documentation and other quality assurance procedures during the manufacturing process; labeling regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; and medical device reporting regulations that require us to report to FDA or similar governmental bodies in other countries if our products may have caused or contributed to a death or serious injury or malfunction in a way that would be reasonably likely to contribute to death or serious injury if the malfunction were to recur.
Both before and after a device is placed on the market, numerous regulatory requirements apply, which require manufacturers to follow, among other things, design, testing, production, control, documentation and other quality assurance procedures during the manufacturing process; labeling regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; and medical device reporting regulations that require us to report to FDA or similar governmental bodies in other countries if our products are ineffective or may have caused or contributed to a death or serious injury or malfunction in a way that would be reasonably likely to contribute to death or serious injury if the malfunction were to recur.
Our supply chain and our cost of goods also may be negatively impacted by unanticipated price increases due to factors such as global economic disruptions, electronic component shortages, fear of future or ongoing pandemics, inflation, including wage inflation, recessionary conditions and geopolitical events, including the war in Ukraine, all of which are beyond our control or the control of our suppliers.
Our supply chain and our cost of goods also may be negatively impacted by unanticipated price increases due to factors such as global economic disruptions, electronic component shortages, fear of future or ongoing pandemics, inflation, including wage inflation, recessionary conditions and geopolitical events, including the wars in Ukraine and Israel, all of which are beyond our control or the control of our suppliers.
Recalls of any of our products may divert managerial and financial resources and have an adverse effect on our financial condition and results of operations. A recall could harm our reputation with customers and consumers which could reduce the sales of our products.
Recalls of any of our products may divert managerial and financial resources and have an adverse effect on our financial condition and results of operations and cash flows. A recall could harm our reputation with customers and consumers which could reduce the sales of our products.
As a result, hospitals and other customers could reduce budgets or put all or part of their budgets on hold or close their operations, which could have a negative effect on our sales, particularly the sales of capital equipment such as our ultrasonic surgical aspirators, neuromonitors and cranial stabilization products, or result in a reduction in elective and non-reimbursed procedures.
As a result, hospitals and other customers could reduce budgets or put all or part of their budgets on hold or close their operations, which could have a negative effect on our sales, particularly the sales of capital equipment such as our ultrasonic surgical aspirators, neuro monitors and cranial stabilization products, or result in a reduction in elective and non-reimbursed procedures.
Our business and results of operations have been and may continue to be adversely impacted by changes in macroeconomic conditions, including inflation, rising interest rates and the accessibility of capital markets.
Our business and results of operations have been and may continue to be adversely impacted by changes in macroeconomic conditions, including inflation, rising interest rates, bank failures and the accessibility of capital markets.
Our competitive position depends on our ability to achieve market acceptance for our products, develop new products, implement marketing plans, secure regulatory approval for products under development, demonstrate clinical and economic effectiveness, obtain and maintain reimbursement coverage and funding under third-party payors and foreign governmental health systems, obtain patent protection and produce products consistently in sufficient quantities to meet demand.
Our competitive position depends on our ability to achieve market acceptance for our products, develop new products, enhance existing products, implement marketing plans, secure regulatory approval for products under development and maintain previously-obtained approvals, demonstrate clinical and economic effectiveness, obtain and maintain reimbursement coverage and funding under third-party payors and foreign governmental health systems, obtain patent protection and produce products consistently in sufficient quantities to meet demand.
RISKS RELATED TO OUR REGULATORY ENVIRONMENT The adoption of healthcare reform in the U.S. and initiatives sponsored by other governments may adversely affect our business, results of operations and/or financial condition. Our operations may be substantially affected by potential fundamental changes in the global political, economic and regulatory landscape of the healthcare industry.
The adoption of healthcare reform in the U.S. and initiatives sponsored by other governments may adversely affect our business, results of operations and/or financial condition. Our operations may be substantially affected by potential fundamental changes in the global political, economic and regulatory landscape of the healthcare industry.
With respect to bovine, among other products, our dermal regeneration products, duraplasty products, wound care products, bone void fillers, nerve and tendon repair products and certain other products, contain material derived from bovine tissue. In 2022, 43.3% of our revenues derived from products containing material derived from bovine tissue.
With respect to bovine, among other products, our dermal regeneration products, duraplasty products, wound care products, bone void fillers, nerve and tendon repair products and certain other products, contain material derived from bovine tissue. In 2023, 43.4% of our revenues derived from products containing material derived from bovine tissue.
As a result, we may need to record impairment c harges or accelerate amortization on certain trade names or technology-related intangible assets in the future.
As a result, we may need to record impairment charges or accelerate amortization on certain trade names or technology-related intangible assets in the future.
Third parties may attempt to breach our systems and may obtain data relating to patients, proprietary or sensitive information. As a result of the COVID-19 pandemic, we may face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities.
Third parties may attempt to breach our systems and may obtain data relating to patients, proprietary or sensitive information. We may face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities.
We are subject to stringent domestic and foreign medical device regulations and oversight and any adverse action may adversely affect our ability to compete in the marketplace and our financial condition and business operations.
RISKS RELATED TO OUR REGULATORY ENVIRONMENT We are subject to stringent domestic and foreign medical device regulations and oversight and any adverse action may adversely affect our ability to compete in the marketplace and our financial condition and business operations.
Our leverage and debt service obligations could adversely affect our business. Our leverage and debt service obligations could adversely affect our business. As of December 31, 2022, our total consolidated external debt was approximately $1.5 billion (See Item 7.
Our leverage and debt service obligations could adversely affect our business. Our leverage and debt service obligations could adversely affect our business. As of December 31, 2023, our total consolidated external debt was approximately $1.4 billion (See Item 7.
Certain of our products are derived from bovine or porcine tissue sources. As a result, we may experience difficulties in processing and producing our bovine and porcine tissue products at scale, including problems related to yields, quality control and assurance, tissue availability, adequacy of control policies and procedures and availability of skilled personnel.
As a result, we may experience difficulties in processing and producing our bovine and porcine tissue products at scale, including problems related to yields, quality control and assurance, tissue availability, adequacy of control policies and procedures and availability of skilled personnel.
We cannot predict what impact ongoing uncertainty regarding federal and state health reform proposals, including the implementation or repeal of the ACA, judicial review and interpretation of the ACA and other healthcare laws, instability of the insurance markets, changes in the U.S. administration and policy, an expansion in government’s role in and/or additional proposals and/or changes to the U.S. health care system or its legislation will have on our customer’s purchasing decisions and/or reimbursement which could have a material adverse effect on our business.
We cannot predict what impact ongoing uncertainty regarding federal and state health reform proposals, instability of the insurance markets, changes in the U.S. administration and policy, an expansion in government’s role in and/or additional proposals and/or changes to the U.S. health care system or its legislation will have on our customer’s purchasing decisions and/or reimbursement which could have a material adverse effect on our business.
Our future effective tax rate could be unfavorably affected by numerous factors including a change in, or the interpretation of, tax rules and regulations in the jurisdictions in which we operate (including changes in legislation currently being considered), a change in our geographic earnings mix, and/or to the jurisdictions in which we operate, or a change in the measurement of our deferred taxes.
Our future effective tax rate could be unfavorably affected by numerous factors including a change in, or the interpretation of, tax rules and regulations in the jurisdictions in which we operate (including changes in legislation currently being considered), the expiration of or disputes 29 about certain tax agreements in a particular jurisdiction, a change in our geographic earnings mix, and/or to the jurisdictions in which we operate, or a change in the measurement of our deferred taxes.
Furthermore, governments and other third-party payors around the world facing tightening budgets could move to further reduce the reimbursement rates or the scope of coverage offered, which could adversely affect sales of our products.
Furthermore, governments and other third-party payors around the world facing tightening budgets could move to further reduce the reimbursement rates or the scope of coverage offered, which could adversely affect sales of our products. RISKS RELATING TO OUR BUSINESS Our operating results may fluctuate.
We may be involved in lawsuits relating to our intellectual property rights and promotional practices, which may be expensive. To protect or enforce our intellectual property rights, we may have to initiate or defend legal proceedings, such as infringement suits or opposition proceedings, against or by third parties.
We may be involved in lawsuits relating to our intellectual property rights and promotional practices, which may be expensive. The medical device industry is characterized by extensive intellectual property litigation and to protect or enforce our intellectual property rights, we may have to initiate or defend legal proceedings, such as infringement suits or opposition proceedings, against or by third parties.
Violations of these laws are punishable by criminal and civil sanctions, including, but not limited to, in some instances civil and criminal penalties, damages, fines, and exclusion from participation in federal and state healthcare programs, including Medicare and Medicaid.
Violations of these laws are punishable by criminal and civil sanctions, including, but not limited to, in some instances civil and criminal penalties, damages, fines, and exclusion from participation in federal and state healthcare programs, including Medicare and Medicaid. Our international operations are subject to the provisions of the U.S.
Additionally, the COVID-19 pandemic, together with general macroeconomic conditions, have led to disruptions in the global supply chain, primarily through a lack of availability of raw materials and electronic components.
Additionally, the impact of the COVID-19 pandemic and its aftermath on general macroeconomic conditions has led to disruptions in the global supply chain, primarily through a lack of availability of raw materials and electronic components.
Additionally, we have observed a reduction in both inbound and outbound transportation capacity as a result of port closures and delays associated with the pandemic, which is causing longer lead times in receiving raw materials, as well as increased freight costs.
Additionally, we have observed a reduction in both inbound and outbound transportation capacity as a result of port closures, shipping lane disruptions and delays since the Coronavirus Disease ("COVID-19") pandemic, all of which is causing longer lead times in receiving raw materials, as well as increased freight costs.
Our insurance may not be renewed at a cost and level of coverage comparable to that then in effect. 22 Economic and political instability around the world could adversely affect the ability of hospitals, other customers, suppliers and distributors to access funds or otherwise have available liquidity, which could reduce orders for our products or interrupt our production or distribution or result in a reduction in elective and non-reimbursed operative procedures.
Economic and political instability around the world could adversely affect the ability of hospitals, other customers, suppliers and distributors to access funds or otherwise have available liquidity, which could reduce orders for our products or interrupt our production or distribution or result in a reduction in elective and non-reimbursed operative procedures.
If we, or third parties on whom we rely, fail to maintain or protect our information systems and data integrity effectively, we could lose existing customers, have difficulty attracting new customers, suffer backlash from negative public relations, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data privacy breach, or suffer other adverse consequences.
If we, or third parties on whom we rely, fail to maintain or protect our information systems and data integrity effectively, we could lose existing customers, have difficulty attracting new customers, suffer backlash from negative public relations, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data privacy breach, or suffer other adverse consequences. 31 We have programs, processes (including ongoing improvements) and technologies in place to prevent, detect, contain, respond to and mitigate security related threats and potential incidents.
If we are unable to achieve or maintain all of the resulting savings or benefits to our business or other unforeseen events occur, our business and results of operations may be adversely affected. We may have significant product liability exposure and our insurance may not cover all potential claims.
If we are unable to achieve or maintain all of the resulting savings or benefits to our business or other unforeseen events occur, our business and results of operations may be adversely affected.
Our business and operations are subject to risks related to climate change. The long-term effects of global climate change present both physical risks (from the increased frequency of extreme weather conditions or natural disasters) and transition risks (from regulatory requirements or technology changes).
We may not be able to maintain insurance on acceptable terms or at all. 28 Our business and operations are subject to risks related to climate change. The long-term effects of global climate change present both physical risks (from the increased frequency of extreme weather conditions or natural disasters) and transition risks (from regulatory requirements or technology changes).
Additional sanctions, export restrictions, and potential countermeasures within Russia may lead to greater uncertainty and geopolitical shifts in Asia that could cause additional adverse impacts on global supply chains and our business, results of operations, financial condition and cash flows.
Materials like palladium and neon, which are both dependent on Russian supply, are part of broader semiconductor shortages in industry. Additional sanctions, export restrictions, and potential countermeasures within Russia may lead to greater uncertainty and geopolitical shifts in Asia that could cause additional adverse impacts on global supply chains and our business, results of operations, financial condition and cash flows.
In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Significant judgment is required in determining our worldwide provision for income taxes.
We are subject to income taxes in the U.S. and many foreign jurisdictions and are commonly audited by various tax authorities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Significant judgment is required in determining our worldwide provision for income taxes.
The third parties with whom we have entered into agreements might terminate these agreements for a variety of reasons, including developing other sources for the products that we supply. Termination of our most important relationships could adversely affect our expectations for the growth of private-label products.
The third parties with whom we have entered into agreements might terminate these agreements for a variety of reasons, including developing other sources for the products that we supply.
In the event of such an accident or contamination, we could be held liable for any damages that result and any related liability could exceed the limits or fall outside the coverage of our insurance and could exceed our resources. We may not be able to maintain insurance on acceptable terms or at all.
In the event of such an accident or contamination, we could be held liable for any damages that result and any related liability could exceed the limits or fall outside the coverage of our insurance and could exceed our resources and could have a material impact on our operations and cash flows.
If such a decline, rate change or circumstance were to materialize, we may record an impairment of these intangible assets that could be material to the financial statements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates” of this report.
If such a decline, rate change or circumstance were to materialize, we may record an impairment of these intangible assets that could be material to the financial 22 statements.
Our products, development activities and manufacturing processes are subject to extensive and rigorous regulation by numerous government agencies, including the FDA and comparable foreign agencies, as discussed in “Part 1, Item 1.
Our medical devices and technologies, development activities and manufacturing processes are subject to extensive and rigorous regulation by numerous government agencies, including the FDA and comparable foreign agencies, as discussed in “Part 1, Item 1. Business – Government Regulation” of this Annual Report on Form 10-K.
Our operating results have fluctuated in the past and can be expected to do so from time to time in the future.
Our operating results, including components of operating results such as gross margin and operating expenses, may fluctuate from time to time. Our operating results have fluctuated in the past and can be expected to do so from time to time in the future.
Any disruptions in our operations, the financial markets, or the overall economy, including as a result of COVID-19, may adversely affect the availability and cost of credit to us and/or our ability to comply with our existing obligations. Changes in the calculation and or complete replacement of LIBOR could have an impact on our business.
Any disruptions in our operations, the financial markets, or the overall economy, may adversely affect the availability and cost of credit to us and/or our ability to comply with our existing obligations. GLOBAL PUBLIC HEALTH CONCERNS Public health crises, such as the COVID-19 pandemic, have had, and could in the future have, a negative effect on our business.
Expenditures for European Union Medical Device Regulation compliance activities amounted to $45.1 million for the year ended December 31, 2022 and we anticipate incurring additional expenditures in connection with our on-going efforts to obtain certification for our products under the European Medical Device Regulation.
Complying with the requirements of these regulations may require us to incur significant expenditures. Expenditures for EU MDR compliance activities amounted to $46.6 million for the year ended December 31, 2023 and we anticipate incurring additional expenditures in connection with our on-going efforts to obtain certification for our products under the European Medical Device Regulation.
We have in place policies and procedures for compliance that we believe are at least as stringent as those set forth in the AdvaMed Code of Ethics which was developed by AdvaMed, a trade association that represents the medical device industry, and which is intended to represent best practices with respect to medical device companies' interactions with healthcare providers.
Moreover, our failure to comply with domestic or foreign laws could result in various adverse consequences, including possible delay in approval or refusal to approve a product, recalls, seizures, and withdrawal of an approved product from the market. 26 We have in place policies and procedures for compliance that we believe are at least as stringent as those set forth in the AdvaMed Code of Ethics which was developed by AdvaMed, a trade association that represents the medical device industry, and which is intended to represent best practices with respect to medical device companies' interactions with healthcare providers.
Any potential product liability claims could exceed the amount of our insurance coverage or may be excluded from coverage under the terms of the policy.
Any potential product liability claims could exceed the amount of our insurance coverage or may be excluded from coverage under the terms of the policy. Our insurance may not be renewed at a cost and level of coverage comparable to that then in effect.
All of these factors could cause a reduction to our earnings per share, decrease or delay the expected accretive effect of the transaction, and negatively impact the price of our common stock. Our future financial results could be adversely affected by impairments or other charges.
All of these factors could cause a reduction to our earnings per share, decrease or delay the expected accretive effect of the transaction, and negatively impact the price of our common stock. Our global business exposes us to operational and economic risks.
Moreover, in response to our claims against other parties, those parties could assert counterclaims against us. RISKS RELATED TO GLOBAL OPERATIONS If any of our facilities or those of our suppliers were damaged and/or our manufacturing or business processes interrupted, we could experience lost revenues and our business could be seriously harmed.
If any of our facilities or those of our suppliers were damaged and/or our manufacturing or business processes interrupted, we could experience lost revenues and our business could be seriously harmed.
Public health crises, such as the COVID-19 pandemic, have had, and could in the future have, a negative effect on our business. 17 Our global operations and interactions with healthcare systems, providers and patients around the world expose us to risks associated with public health crises, including epidemics and pandemics such as COVID-19.
Our global operations and interactions with healthcare systems, providers and patients around the world expose us to risks associated with public health crises, including epidemics and pandemics.
The industry and market segments in which we operate are highly competitive, and we may be unable to compete effectively with other companies. There is intense competition among medical device companies. We compete with established medical technology companies in many of our product areas. Competition also comes from early-stage companies, universities, research institutions and other non-profit entities.
We compete with established medical technology companies in many of our product areas. Competition also comes from early-stage companies, universities, research institutions and other non-profit entities.
GENERAL RISK FACTORS Cyber-attacks or other disruptions to our information technology systems could adversely affect our business. We are increasingly dependent on sophisticated information technology for our infrastructure and to support business decisions.
Moreover, in response to our claims against other parties, those parties could assert counterclaims against us. RISKS RELATED TO CYBERSECURITY AND DATA PRIVACY Cyber-attacks or other disruptions to our information technology systems could adversely affect our business. We are increasingly dependent on sophisticated information technology for our infrastructure and to support business decisions.
Failure to comply with applicable regulations could result in future product recalls, injunctions preventing the shipment of products or other enforcement actions that could have a material adverse effect on our business. We also are subject to the European Medical Device Regulation, which was adopted by the European Union (“EU”) as a common legal framework for all EU member states.
Failure to comply with applicable regulations could result in future product recalls, injunctions preventing the shipment of products or other enforcement actions that could have a material adverse effect on our business.
These initiatives include price regulation, competitive pricing, coverage and payment policies, comparative effectiveness of therapies, technology assessments and managed-care arrangements. The adoption of some or all of these initiatives could have a material, adverse effect on our financial condition and results of operations.
The adoption of some or all of these initiatives could have a material, adverse effect on our financial condition and results of operations.
Continued concerns about the systemic impact of potential long-term and wide-spread recession and geopolitical issues, including the war in Ukraine, have contributed to increased market volatility and diminished expectations for economic growth in the world.
These highly competitive and constrained supply chain conditions are increasing our cost of sales, which has and may continue to adversely impact our profitability. 17 Continued concerns about the systemic impact of potential long-term and wide-spread recession and geopolitical issues, including wars and acts of terrorism, have contributed to increased market volatility and diminished expectations for economic growth in the world.
Foreign Corrupt Practices Act and local anti-bribery and other laws regarding interactions with healthcare professionals, and product registration requirements. Among other things, these laws restrict, and in some cases prevent, U.S. companies from directly or indirectly selling goods, technology or services to people or entities in certain countries.
Among other things, these laws restrict, and in some cases prevent, U.S. companies from directly or indirectly selling goods, technology or services to people or entities in certain countries. In addition, these laws require that we exercise care in structuring our sales and marketing practices and effecting product registrations in foreign countries.
We are also subject to regulations that may apply to certain of our products that are Drug/Device Combination products or are considered to be subject to pharmaceutical regulations outside the U.S.
To varying degrees, each of these agencies monitors and enforces our compliance with laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of our medical devices. We are also subject to regulations that may apply to certain of our products that are Drug/Device Combination products or are considered to be subject to pharmaceutical regulations outside the U.S.
For example, the Organization for Economic Co-operation and Development, a global policy forum, is developing a global tax framework that, if implemented, includes a global minimum tax rate of 15%. Taxes could also significantly increase due to changes in accounting guidance.
For example, the Organization for Economic Co-operation and Development, a global policy forum, released model rules related to a new 15% global minimum tax regime. Several of the jurisdictions that we operate in have already adopted these rules, which could impact the amount of taxes that we pay. Taxes could also significantly increase due to changes in accounting guidance.
We are exposed to a variety of risks relating to our international sales and operations. We generate significant revenues outside the U.S. in multiple foreign currencies, and in U.S. dollar-denominated transactions conducted with customers who generate revenue in currencies other than the U.S. dollar.
Exchange rate fluctuations and foreign currency hedges could adversely affect our financial results. We generate significant revenues outside the U.S. in multiple foreign currencies, and in U.S. dollar-denominated transactions conducted with customers who generate revenue in currencies other than the U.S. dollar.
Our medical device products are subject to reporting requirements and recalls, even after receiving regulatory clearance, approval or certification, which could harm our reputation, business and financial results.
Since these laws, regulations and ultimate enforcement continue to evolve, we cannot predict with certainty, what, if any, impact, changes to them may have on our business or our customers. Our medical device products are subject to reporting requirements and recalls, even after receiving regulatory clearance, approval or certification, which could harm our reputation, business and financial results.
Any one or all of these factors could increase operating costs or lower anticipated financial performance. Many of these factors are also outside of our control. In addition, dispositions of certain key products, technologies and other rights, including pursuant to conditions imposed on us to obtain regulatory approvals, may affect our business operations.
If we are unsuccessful in our acquisition strategy, we may be unable to meet our financial targets and our financial performance could be materially and adversely affected. In addition, dispositions of certain key products, technologies and other rights, including pursuant to conditions imposed on us to obtain regulatory approvals, may affect our business operations.
Congress also drafts and introduces, from time to time, legislation that could significantly change the statutory provisions governing the regulation of medical devices.
These initiatives include price regulation, competitive pricing, coverage and payment policies, comparative effectiveness of therapies, technology assessments and managed-care arrangements. For example, Congress also drafts and introduces, from time to time, legislation that could significantly change the statutory provisions governing the regulation of medical devices.
In addition, a cyber-related attack could result in other negative consequences, including damage to our reputation or competitiveness, remediation or increased protection costs, litigation or regulatory action. Environmental, social and corporate governance (ESG) issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.
In addition, a cyber-related attack could result in other negative consequences, including damage to our reputation or competitiveness, remediation or increased protection costs, litigation or regulatory action.
Although we believe that our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different 26 from our historical income tax provisions and accruals. The results of an audit or litigation could have a material, adverse effect on our financial statements in the period or periods for which that determination is made.
Although we believe that our tax estimates are reasonable, tax authorities may disagree with certain positions we have taken and the final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals.
The implementation for Class I products occurred on May 26, 2021 and the EUDAMED Database was implemented on May 26, 2022. Under this regulation, companies that wish to manufacture and distribute medical devices in EU member states must meet certain quality system, and safety requirements as well as ongoing product monitoring responsibilities.
Under the EU MDR, companies that wish to manufacture and distribute medical devices in EU member states must meet certain quality system, and safety requirements as well as ongoing product monitoring responsibilities. Companies must also obtain a “CE” marking (i.e., a mandatory conformity marking for certain products sold within the European Economic Area) for their products.
For a description of our use of derivative financial instruments, see Note 6, Derivative Instruments to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K). Our international operations subject us to laws regarding sanctioned countries, entities and persons, customs, import-export, laws regarding transactions in foreign countries, the U.S.
For a description of our use of derivative financial instruments, see Note 6, Derivative Instruments to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K). Our future financial results could be adversely affected by impairments or other charges.
While we have no manufacturing, distribution or direct material suppliers in the region, we are closely monitoring the potential raw material or supplier impact in both Russia and Ukraine. Materials like palladium and neon, which are both dependent on Russia supply, are part of broader semiconductor shortages in industry.
The Russia-Ukraine conflict and resulting sanctions and export restrictions are creating barriers to doing business in Russia and adversely impacting global supply chains. While we have no manufacturing, distribution or direct material suppliers in the region, we are closely monitoring the potential raw material or supplier impact in both Russia and Ukraine.
ITEM 1A. RISK FACTORS GLOBAL CHALLENGES AND MACROECONOMIC CONDITIONS The continuing worldwide macroeconomic and geopolitical uncertainty may adversely affect our business and prospects. Global economic disruptions, including the COVID-19 pandemic, have continued to impact the global supply chain, primarily through constraints on raw materials and electronic components.
Global economic disruptions have continued to impact the global supply chain, primarily through constraints on raw materials and electronic components.
There is an increasing focus from certain investors, customers, consumers, employees and other stakeholders concerning ESG matters. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow.
Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow.
Competition for these persons in our industry is intense, and we may not be able to successfully recruit, train or retain qualified personnel. We are experiencing increasing challenges in building and retaining our workforce in certain markets, where pressure from inflation and competition have exacerbated turnover and retention trends continuing from the COVID-19 pandemic.
Competition for these persons in our industry is intense, and we may not be able to successfully recruit, train or retain qualified personnel. In addition, we recognize that attracting, retaining and developing a diverse workforce is a critical success factor for our business.
Both of these acquisitions added products to our complex wound management and plastic and reconstructive surgery product portfolios, respectively, and provides additional growth opportunities for our TT segment. We may be unable to continue to implement our growth strategy and it may ultimately be unsuccessful.
Both of these acquisitions added products to our complex wound management and plastic and reconstructive surgery product portfolios, respectively, and provides additional growth opportunities for our TT segment. 20 In December 2023, we entered into a definitive agreement to acquire Acclarent from Johnson & Johnson, for $275.0 million in cash, subject to customary purchase price adjustments, and a cash payment of $5.0 million upon the achievement of a regulatory milestone.
In addition, the FDA or other foreign governmental agencies may implement enforcement actions in connection with a recall which could impair our product offerings and be harmful to our business and financial results. Certain of our products contain materials derived from animal sources and may become subject to additional regulation.
Certain of our products contain materials derived from animal sources and may become subject to additional regulation. Certain of our products are derived from bovine or porcine tissue sources.
Removed
These highly competitive and constrained supply chain conditions are increasing our cost of sales, which has and may continue to adversely impact our profitability.
Added
ITEM 1A. RISK FACTORS GLOBAL CHALLENGES AND MACROECONOMIC CONDITIONS The continuing worldwide macroeconomic and geopolitical uncertainty may adversely affect our business and prospects. Geopolitical instability and other macroeconomic factors, including inflation, supply chain disruptions, interest rate and foreign currency rate fluctuations, and volatility in the capital markets could negatively impact our business, financial condition, and results of operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also have repair centers in Ohio, Australia, France, Japan, China and Germany, and field service presence in Canada, Dubai, India, Italy, Netherlands, Singapore, Thailand and United Kingdom. Our manufacturing facilities are registered with the FDA. Our facilities are subject to FDA inspection to ensure compliance with Quality System regulations.
Biggest changeWe also have repair centers in United States, Canada, Australia, France, Japan, China and Germany, and field service presence covering regions within Europe, Asia Pacific and Latin America with direct teams based in the United States, Canada, France, Germany, Austria, Switzerland, Korea, Taiwan, India, Italy, Belgium, Luxembourg, Netherlands, Singapore, Thailand, Australia, New Zealand, and United Kingdom.
ITEM 2. PROPERTIES As of December 31, 2022, we lease approximately 166,991 square feet of space in Princeton, NJ, where we house our principal headquarters, sales operations, and support functions.
ITEM 2. PROPERTIES As of December 31, 2023, we lease approximately 166,991 square feet of space in Princeton, NJ, where we house our principal headquarters, sales operations, and support functions. This lease expires in 2035.
This lease expires in 2035. 30 We have key manufacturing and research facilities located in California, Indiana, Maryland, Massachusetts, New Jersey, Ohio, Puerto Rico, Tennessee, Utah, France, Germany, Ireland and Switzerland. Our instrument procurement operations are located in Germany. Our primary distribution centers are located in Kentucky, Nevada, Australia, Belgium, Canada, Italy, Japan, and China.
Our segments utilize key manufacturing and research facilities located in California, Indiana, Maryland, Massachusetts, New Jersey, Ohio, Illinois, Puerto Rico, Tennessee, Utah, France, Germany, Ireland, and Switzerland. Our instrument procurement operations are located in Germany. Our primary distribution centers are located in Kentucky, Nevada, Australia, Belgium, Canada, Italy, Japan, and China.
In addition, we lease several smaller facilities to support additional administrative, assembly, and distribution operations. Third parties own and operate the facilities in Nevada, Kentucky, Japan and Belgium. We own facilities in Saint Aubin Le Monial, France, Rietheim-Weilheim, Germany and Ohio and we lease all of our other facilities.
In addition, we lease several smaller facilities to support additional administrative, assembly, and distribution operations. We own facilities in Saint Aubin Le Monial, France, Rietheim-Weilheim, Germany and Ohio and we lease all of our other facilities.
For further information regarding the status of FDA inspections, see the Item 1. Business –Government Regulation and Compliance Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – FDA Matters in this Annual Report on Form 10-K.
Management's Discussion and Analysis of Financial Condition and Results of Operations – FDA Matters" in this Annual Report on Form 10-K.
Added
Our manufacturing facilities are registered with the FDA. Our facilities are subject to FDA inspection to ensure compliance with Quality System regulations. For further information regarding the status of FDA inspections, see the "Item 1. Business –Government Regulation and Compliance" and "Item 7.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS Information pertaining to legal proceedings can be found in Note 15, Commitment and Contingencies , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K). ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS Information pertaining to legal proceedings can be found in Note 15, Commitments and Contingencies , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K). ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurities Authorized for Issuance under Equity Compensation Plan The information required by this item regarding our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K.
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plan The information required by this item regarding our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K. 35 Stock Performance Graph The graph below compares the five-year total return to stockholders on our common stock with the return of the Standard & Poor’s (S&P) 500 Stock Index and the S&P Healthcare Equipment Index for the five years ended December 31, 2023.
On January 26, 2023, the Company entered into a $150 million accelerated share repurchase ("2023 ASR") and received 2.1 million shares of the Company common stock at inception of the 2023 ASR, which represented approximately 80% of the expected total shares of under the 2023 SAR.
On January 26, 2023, the Company entered into a $150 million accelerated share repurchase ("January 2023 ASR") and received 2.1 million shares of common stock at inception of the January 2023 ASR, which represented approximately 80% of the expected total shares under the January 2023 ASR.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information, Holders and Dividends Our common stock trades on The Nasdaq Global Select Market under the symbol “IART.” The number of stockholders of record as of February 21, 2023 was approximate ly 779, which includes stockholders whose shares were held in nominee name.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information, Holders and Dividends Our common stock trades on The Nasdaq Global Select Market under the symbol “IART.” The number of stockholders of record as of February 27, 2024 was approximate ly 749, which includes stockholders whose shares were held in nominee name.
Sale of Registered Securities There were no sales of registered securities during the years ended December 31, 2022, 2021 or 2020.
Sales of Unregistered Securities There were no sales of unregistered securities during the years ended December 31, 2023 , 2022 or 2021. 34 Sale of Registered Securities There were no sales of registered securities during the years ended December 31, 2023 , 2022 or 2021.
On March 24, 2022, the early exercise provision was exercised by 2022 ASR counterparty. Upon settlement on March 24, 2022, the Company received an additional 0.46 million shares determined using the volume-weighted average price of the Company's common stock during the term of the 2022 ASR.
On October 18, 2023 the early exercise provision was exercised by the August 2023 ASR counterparty. The Company received an additional 0.9 million shares determined using the volume-weighted average price of the Company's common stock during the term of the August 2023 ASR.
Any future determinations to pay cash dividends on our common stock will be at the discretion of the Board and will depend upon our financial condition, results of operations, cash flows and other factors deemed relevant by the Board. Sales of Unregistered Securities There were no sales of unregistered securities during the years ended December 31, 2022, 2021 or 2020.
Any future determinations to pay cash dividends on our common stock will be at the discretion of the Board and will depend upon our financial condition, results of operations, cash flows and other factors deemed relevant by the Board.
Issuer Purchases of Equity Securities On January 12, 2022, the Company entered into a $125.0 million accelerated share repurchase ("2022 ASR") and received 1.48 million shares of the Company common stock at inception of the 2022 ASR, which represented approximately 80% of the expected total shares under the 2022 ASR.
On August 15, 2023, the Company entered into a $125 million accelerated share repurchase ("August 2023 ASR") and received 2.3 million shares of the common stock at inception of the August 2023 ASR, which represented approximately 80% of the expected total shares under the August 2023 ASR.
The Company’s cumulative shareholder return is based on an investment of $100 on December 31, 2017 and is compared to the cumulative total return of the S&P indices mentioned above over the period with a like amount invested. Note: The stock price performance shown on the graph above is not indicative of future price performance.
The Company’s cumulative shareholder return is based on an investment of $100 on December 31, 2018 and is compared to the cumulative total return of the S&P indices mentioned above over the period with a like amount invested. Measurement points are the last trading day of each respective fiscal year.
Purchases may be affected through one or more open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, or a combination of the foregoing.
The Company may utilize various methods to effect any repurchases, including open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, including accelerated share repurchases, or a combination of the foregoing, some of which may be effected through Rule 10b5-1 plans.
On April 26, 2022, the Board of Directors authorized the Company to repurchase up to $225.0 million of the Company’s common stock. The program allows the Company to repurchase its shares opportunistically from time to time. The repurchase authorization expires in December 2024.
The program authorized in July 2023, which expires on December 31, 2025, allows the Company to repurchase its shares opportunistically from time to time.
Removed
This stock repurchase authorization replaces the previous $225 million stock repurchase authorization, of which $100 million remained authorized at the time of its replacement, and which was otherwise set to expire on December 31, 2022.
Added
Issuer Purchases of Equity Securities The following table provides information about purchases by the Company during the quarter ended December 31, 2023 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act.
Removed
The remaining repurchase transactions are expected to be completed in the first half of 2023. 31 For the year ended December 31, 2021, there were no repurchases of the Company’s common stock as part of the share repurchase authorization.
Added
Subject to applicable law, share repurchases may be made from time to time in open market transactions, privately negotiated transactions including accelerated share repurchase agreements, or pursuant to instruments and plans complying with Rule 10b5-1 under the Exchange Act, among other types of transactions and arrangements.
Removed
Stock Performance Graph The graph below compares the five-year total return to stockholders on our common stock with the return of the Standard & Poor’s (S&P) 500 Stock Index and the S&P Healthcare Equipment Index.
Added
Issuer purchases of equity securities Period Total number of shares purchased by month Average price paid per share Total number of shares purchased by month as part of publicly announced repurchase programs (1) Approximate dollar value of shares that may yet be purchased under the plans or program 10/01/23 - 10/31/23 928,485 $ 37.17 928,485 $ 100,000,000 11/01/23 - 11/30/23 — $ — — 100,000,000 12/01/23 - 12/31/23 — $ — — 100,000,000 928,485 $ 37.17 928,485 (1) On July 18, 2023, the Board of Directors authorized a stock repurchase program, which expires on December 31, 2023, to repurchase up to $225 million of the Company’s outstanding common stock, effective as of the close of trading on September 23, 2022.
Added
As of December 31, 2023, $100.0 million remained unused under this program. The program does not obligate the Company to acquire a minimum amount of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.
Added
The settlement of the January ASR agreement was completed in two separate transactions on April 26, 2023 and May 4, 2023, where the Company received an additional 0.30 million and 0.31 million shares respectively, determined using the volume-weighted average price of the Company's common stock during the term of the January 2023 ASR.
Added
On August 16, 2022, the Inflation Reduction Act of 2022 (the “Act”) was signed into law. The Act implemented a new excise tax of 1% on the net share repurchases made by the Company effective for share repurchases performed January 1, 2023, or after. The Company accrued $2.5 million of excise tax related to the two ASR agreements during 2023.
Added
On July 18, 2023, the Board of Directors authorized a new $225 million share repurchase program, replacing the existing $225 million program authorized in April 2022, of which $100 million remained authorized as of the year ended December 31, 2023 .
Added
The price and timing of any future purchases under the share repurchase program will depend on factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, dividends, economic and market conditions and stock price, and such repurchases may be discontinued at any time.
Added
Note: The stock price performance shown on the graph above is not indicative of future price performance.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [ Reserved] 32 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 46 Item 8. Financial Statements and Supplementary Data 48 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 48 Item 9A. Controls and Procedures 49 Item 9B.
Biggest changeItem 6. [ Reserved] 36 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 36 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 51 Item 8. Financial Statements and Supplementary Data 52 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 52 Item 9A. Controls and Procedures 53
Removed
Other Information 49 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 49 PART III

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

95 edited+72 added−62 removed60 unchanged
Biggest changeIn the TT segment, revenues were $538.1 million, which was an increase of $20.9 million, or 4.0% as compared to the prior-year period.. Excluding the impact of foreign currency of $3.8 million and the divestiture impact of TWC of $10.2 million, the TT segment revenues in the third quarter increased by $34.9 million.
Biggest changeThe increase was driven primarily by growth in dural access & repair, CSF management, as well as instruments. 42 In the TT segment, revenues were $482.6 million, which was a decrease of $55.5 million, or 10.3% as compared to the prior-year period, inclusive of a $0.4 million unfavorable foreign currency impact on revenue, a $16.3 million decrease that impacts both domestic and international revenues related to the divestiture of the TWC business, and a $9.8 million increase related to the SIA acquisition.
We consider these factors and others, including our history of generating taxable earnings, in assessing our ability to realize deferred tax assets. Our effective tax rate could vary from year to year depending on, among other factors, tax law changes, the geographic and business mix and taxable earnings and losses.
Our effective tax rate could vary from year to year depending on, among other factors, tax law changes, the geographic and business mix and taxable earnings and losses. We consider these factors and others, including our history of generating taxable earnings, in assessing our ability to realize deferred tax assets.
Our primary obligations include principal and interest payments on revolving portion and Term Loan component of the Senior Credit Facility, Securitization Facility and Convertible Securities. See Note 5 , Debt , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for details.
Our primary obligations include principal and interest payments on the revolving portion and Term Loan component of the Senior Credit Facility, Securitization Facility and Convertible Securities. See Note 5 , Debt , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for details.
Because of this uncertainty, actual results could differ from these estimates. 43 Inventories Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value. At each balance sheet date, we evaluate ending inventories for excess quantities, obsolescence or shelf-life expiration.
Because of this uncertainty, actual results could differ from these estimates. Inventories Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value. At each balance sheet date, we evaluate ending inventories for excess quantities, obsolescence or shelf-life expiration.
Payments that would be recognized as contingent consideration in a business combination are expensed when probable in an asset acquisition. Refer to Note 4, Acquisitions and Divestitures to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for details.
Payments that would be recognized as contingent consideration in a business combination are recognized when probable in an asset acquisition. Refer to Note 4, Acquisitions and Divestitures to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for details.
Such taxes would primarily be attributable to foreign withholding taxes and local income taxes when such earnings are distributed. GEOGRAPHIC PRODUCT REVENUES AND OPERATIONS The Company attributes revenues to geographic areas based on the location of the customer.
Such taxes would primarily be attributable to foreign withholding taxes and local income taxes when such earnings are distributed. 44 GEOGRAPHIC PRODUCT REVENUES AND OPERATIONS The Company attributes revenues to geographic areas based on the location of the customer.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 32 The following discussion and analysis provides information management believes to be relevant to understanding our financial condition and results of operations.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information management believes to be relevant to understanding our financial condition and results of operations.
The Company also leases some of our manufacturing facilities and office buildings which have future minimum lease payments associated. See Note 11, Leases and Related Party Leases , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for a schedule of our future minimum lease payments.
The Company also leases some of our manufacturing facilities and office buildings which have required future minimum lease payments. See Note 11, Leases and Related Party Leases , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for a schedule of our future minimum lease payments.
FDA Matters On August 18, 2022, the Company, after consultation with the FDA and other regulatory authorities outside of the United States, initiated an immediate voluntary global product removal of all CereLink intracranial pressure monitors as a result of customer reports about monitors whose pressure readings were out of range.
FDA Matters On August 18, 2022, we, after consultation with the FDA and other regulatory authorities outside of the United States, initiated an immediate voluntary global product removal of all CereLink intracranial pressure monitors as a result of customer reports about monitors whose pressure readings were out of range.
The Company's assessment of the recoverability of goodwill is based upon a comparison of the carrying value of goodwill with its estimated fair value. Key assumptions used to estimate the fair value of goodwill include the Company's discounts rate and forecasted operating results. The Company had goodwill on the balance sheet of $1 billion as of December 31, 2022.
The Company's assessment of the recoverability of goodwill is based upon a comparison of the carrying value of goodwill with its estimated fair value. Key assumptions used to estimate the fair value of goodwill include the Company's discounts rate and forecasted operating results. The Company had goodwill on the balance sheet of $1.1 billion as of December 31, 2023.
As of December 31, 2022 , the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed to be indefinitely reinvested unless there is a manner under which to remit the earnings with no material tax cost.
As of December 31, 2023, the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed to be indefinitely reinvested unless there is a manner under which to remit the earnings with no material tax cost.
As of December 31, 2022, the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed to be indefinitely reinvested unless there is a manner under which to remit the earnings with no material tax cost.
As of December 31, 2023, the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed to be indefinitely reinvested unless there is a manner under which to remit the earnings with no material tax cost.
As a result, currency fluctuations between the U.S. dollar and the currencies in which those customers do business could have an impact on the demand for the Company's products in foreign countries.
As a result, currency fluctuations between the U.S. dollar and the currencies in which those customers do business could have an impact on the demand for our products in foreign countries.
An impairment loss is measured as the excess of the asset's carrying value over its fair value, calculated using discounted future cash flows. The computed impairment loss is recognized in the period that the impairment occurs. 45 As of December 31, 2022, the Company has $1.1 billion of identifiable intangible assets, net on the balance sheets.
An impairment loss is measured as the excess of the asset's carrying value over its fair value, calculated using discounted future cash flows. The computed impairment loss is recognized in the period that the impairment occurs. As of December 31, 2023, the Company has $1.1 billion of identifiable intangible assets, net on the balance sheets.
For a full understanding of financial condition and results of operations, it should be read together with the selected consolidated financial data and our financial statements with the related notes appearing elsewhere in this report. The discussion focuses on our financial results for the year ended December 31, 2022 and 2021.
For a full understanding of financial condition and results of operations, it should be read together with the selected unaudited consolidated financial data and our financial statements with the related notes appearing elsewhere in this report. The discussion focuses on our financial results for the year ended December 31, 2023 and 2022.
These efforts are expected to continue and while we expect a positive impact from ongoing restructuring, integration, and manufacturing transfer and expansion activities, such results remain uncertain. In support of our continued focus on product margins during 2022, we closed a manufacturing facility located in France and began the transfer of production to the Company’s existing Switzerland facility .
These efforts are expected to continue and while we expect a positive impact from ongoing restructuring, integration, and manufacturing transfer and expansion activities, such results remain uncertain. In support of our continued focus on product margins we closed a manufacturing facility located in France in 2022, and transferred production to our existing Switzerland facility.
In connection with the sale, the Company recogniz ed $0.6 million as a gain from the sale of business in the consolidated statement of operations for year ended December 31, 2022. The transaction is subject to final working capital adjustments.
In connection with the sale, the Company recognized $0.6 million as a gain from the sale of business in the consolidated statement of operations for the fiscal year ended December 31, 2022. The transaction is subject to final working capital adjustments.
Cash Flows Used in Investing Activities During the year ended December 31, 2022, we paid $42.3 million for capital expenditures to support operations improvement initiatives at a number of our manufacturing facilities and other information technology investments, $51.5 million to acquire SIA, as well as the $4.7 million payment related to the final developmental milestone for Rebound Therapeutics Corporation.
During the year ended December 31, 2022, we paid $42.3 million for capital expenditures to support operations improvement initiatives at a number of our manufacturing facilities and other information technology investments, $51.5 million to acquire SIA, as well as the $4.7 million payment related to the final developmental milestone for Rebound Therapeutics Corporation.
At December 31, 2022, our non-U.S. subsidiaries held approximately $229.8 million of cash and cash equivalents that are available for use outside the U.S. The Company asserts that it has the ability and intends to indefinitely reinvest the undistributed earnings from its foreign operations unless there is no material tax cost to remit the earnings into the U.S.
At December 31, 2023, our non-U.S. subsidiaries held approximately $246.9 million of cash and cash equivalents that are available for use outside the U.S. The Company asserts that it has the ability and intends to indefinitely reinvest the undistributed earnings from its foreign operations unless there is no material tax cost to remit the earnings into the U.S.
Founded in 1989 with the acquisition of an engineered collagen technology platform used to repair and regenerate tissue, Integra LifeSciences Holdings Corporation common stock trades on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “IART.” Integra has developed numerous product lines from this technology for applications ranging from burn and deep tissue wounds to the repair of dura mater in the brain, as well as nerves and tendons.
Founded in 1989 with the acquisition of an engineered collagen technology platform used to repair and regenerate tissue, our common stock trades on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “IART.” We have developed numerous product lines from this technology for applications ranging from burn and deep tissue wounds to the repair of dura mater in the brain, as well as nerves and tendons.
See Note 4, Acquisitions and Divestitures, to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for additional details.
See Note 4, Acquisitions and Divestitures , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Form 10-K) for details.
Local economic conditions, regulatory compliance or political considerations, the effectiveness of our sales representatives and distributors, local competition and changes in local medical practice all may combine to affect our sales into markets outside the U.S. Domestic revenues increased by $37.3 million for the year ended December 31, 2022 compared to the same period last year.
Local economic conditions, regulatory compliance or political considerations, the effectiveness of our sales representatives and distributors, local competition and changes in local medical practice all may combine to affect our sales into markets outside the U.S. Domestic revenues decreased by $26.1 million for the year ended December 31, 2023 compared to the same period last year.
We cannot give any assurances that the FDA will be satisfied with our response to the Warning Letter or as to the expected date of the resolution of the matters included in the letter. Until the issues cited in the letter are resolved to the FDA’s satisfaction, the FDA may initiate additional regulatory action without further notice.
We cannot give any assurances that the FDA will be satisfied with our response to the issues identified by the FDA or as to the expected date of the resolution of such issues. Until the issues cited by the FDA are resolved to the FDA’s satisfaction, the FDA may initiate additional regulatory action without further notice.
Through the acquisition of Arkiss, we added a platform technology, CerebroFlo EVD, which is a catheter with Endexo technology, a permanent additive designed to reduce the potential for catheter obstruction due to thrombus formation. The CerebroFlo EVD Catheter has demonstrated an average of 99% less thrombus accumulation onto its surface, in vitro, compared to a market leading EVD catheter.
("Arkis") we added a platform technology, CerebroFlo® external ventricular drainage ("EVD"), catheter with Endexo® technology, a permanent additive designed to reduce the potential for catheter obstruction due to thrombus formation. The CerebroFlo EVD catheter has demonstrated an average of 99% less thrombus accumulation onto its surface, in vitro, compared to a market leading EVD catheter.
Any future determinations to pay cash dividends on our common stock will be at the discretion of the Board and will depend upon our financial condition, results of operations, cash flows and other factors deemed relevant by the Board.
Our Senior Credit Facility limits the amount of dividends that we may pay. Any future determinations to pay cash dividends on our common stock will be at the discretion of the Board and will depend upon our financial condition, results of operations, cash flows and other factors deemed relevant by the Board.
Risk Factors for a discussion of the factors that could cause actual results to differ materially from those projected in these statements. The following information concerning our business, results of operations and financial condition should also be read in conjunction with the information included under Item 1. Business, Item 1A. Risk Factors and Item 15. Financial Statements and Supplementary Data.
Please refer to “Special Note Regarding Forward-Looking Statements” and Item 1A. Risk Factors for a discussion of the factors that could cause actual results to differ materially from those projected in these statements. The following information concerning our business, results of operations and financial condition should also be read in conjunction with the information included under Item 1.
These assumptions were developed with the assistance of a third-party valuation expert. 44 Acquired IPR&D is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. The Company uses the income approach to determine the fair value of developed technology and IPR&D acquired in a business combination.
Acquired IPR&D is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. The Company uses the income approach to determine the fair value of developed technology and IPR&D acquired in a business combination.
Operating Expenses The following is a summary of operating expenses as a percent of total revenues: Years Ended December 31, 2022 2021 Research and development 6.5 % 6.0 % Selling, general and administrative 39.6 % 41.3 % Intangible asset amortization 0.9 % 1.1 % Total operating expenses 47.0 % 48.4 % Total operating expenses, which consist of research and development, selling, general and administrative, and intangible asset amortization expenses, decreased by $16.0 million or 2.1% to $731.4 million in 2022, compared to $747.4 million in the prior year.
Operating Expenses The following is a summary of operating expenses as a percent of total revenues: Years Ended December 31, 2023 2022 Research and development 6.8 % 6.5 % Selling, general and administrative 42.6 % 39.6 % Intangible asset amortization 0.8 % 0.9 % Total operating expenses 50.2 % 47.0 % Total operating expenses, which consist of research and development, selling, general and administrative, and intangible asset amortization expenses, increased by $41.8 million or 5.7% to $773.2 million in 2023, compared to $731.4 million in the prior year.
See Note 8, Treasury Stock , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for further details. Dividend Policy We have not paid any cash dividends on our common stock since our formation. Our Senior Credit Facility limits the amount of dividends that we may pay.
Share Repurchase Plan See Note 8, Treasury Stock , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for further details of our share repurchase programs. Dividend Policy We have not paid any cash dividends on our common stock since our formation.
As of December 31, 2022, our reserve for inventory obsolesce is 6% of total inventory on our consolidated balance sheets. The Company capitalizes inventory costs associated with certain products prior to regulatory approval, based on management's judgment of probable economic benefit.
As of December 31, 2023, our reserve for inventory excess and obsolescence is 9% of total inventory on our consolidated balance sheet. The Company capitalizes inventory costs associated with certain products prior to regulatory approval, based on management's judgment of probable economic benefit.
The key areas of judgement relating to the valuation of the contingent consideration are the inputs to the Monte-Carlo model including revenue-adjusted discount rate, counterpart discount rate, revenue volatility and forecasted revenue, earnings before income taxes and fixed costs.
The key areas of judgement relating to the valuation of the contingent consideration are the inputs to the Monte-Carlo model including revenue-adjusted discount rate, counterpart discount rate, revenue volatility and forecasted revenue, earnings before income taxes and fixed costs. These assumptions were developed with the assistance of a third-party valuation expert.
The items reported above are reflected in the consolidated statements of operations as follows: Years Ended December 31, Dollars in thousands 2022 2021 Cost of goods sold $ 11,722 $ 32,334 Research and development 21,882 17,487 Selling, general and administrative 20,584 31,013 Gain from the sale of business (644) (41,798) Other (income) expense (4,174) (5,611) Total 49,370 33,425 We typically define special charges as items for which the amounts and/or timing of such expenses may vary significantly from period to period, depending upon our acquisition, divestiture, integration and restructuring activities, and for which the amounts are non-cash in nature, or for which the amounts are not expected to recur at the same magnitude.
(2) This includes inventory write-offs and idle capacity charges. 41 The items reported above are reflected in the consolidated statements of operations as follows: Years Ended December 31, Dollars in thousands 2023 2022 Cost of goods sold $ 63,182 $ 11,722 Research and development 18,490 21,882 Selling, general and administrative 53,979 20,584 Gain from the sale of business — (644) Other (income) expense (865) (4,174) Total 134,786 49,370 We typically define special charges as items for which the amounts and/or timing of such expenses may vary significantly from period to period, depending upon our acquisition, divestiture, integration and restructuring activities, and for which the amounts are non-cash in nature, or for which the amounts are not expected to recur at the same magnitude.
Amended and Restated Senior Credit Agreement, Convertible Senior Notes, Securitization and Related Hedging Activities See Note 5, Debt , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for a discussion of our Amended and Restated Senior Credit Agreement, the 2025 Notes and Securitization Facility and Note 6, Derivative Instruments to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for discussion of our hedging activities.
The Company also had $5.5 million proceeds from the exercise of stock options. 46 Amended and Restated Senior Credit Agreement, Convertible Senior Notes, Securitization and Related Hedging Activities See Note 5, Debt , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for further details of our Amended and Restated Senior Credit Agreement, the 2025 Notes and Securitization Facility and Note 6, Derivative Instruments to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for further details of our hedging activities.
Income before taxes includes the following special charges: Years Ended December 31, Dollars in thousands 2022 2021 Acquisition, divestiture and integration-related charges (1) $ (18,849) $ (11,712) Structural optimization charges 23,072 20,762 EU medical device regulation 45,147 24,375 Total 49,370 33,425 (1) See Note 4, Acquisitions and Divestitures of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for details.
Income before taxes includes the following special charges: Years Ended December 31, Dollars in thousands 2023 2022 Acquisition, divestiture and integration-related charges (1) $ 25,173 $ (18,849) Structural optimization charges 23,020 23,072 Boston recall expenses (2) 40,034 EU medical device regulation 46,559 45,147 Total 134,786 49,370 (1) See Note 4, Acquisitions and Divestitures of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for details.
Additional sources of liquidity available to us include short term borrowings and the issuance of long term debt and equity securities. 42 Off-Balance Sheet Arrangements We do not have any off–balance sheet financing arrangements during the year-ended December 31, 2022 that have or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our interests.
Off-Balance Sheet Arrangements We do not have any off–balance sheet financing arrangements during the year-ended December 31, 2023 that have or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our interests.
Total revenue by major geographic area consisted of the following: Years Ended December 31, Dollars in thousands 2022 2021 United States $ 1,126,810 $ 1,089,526 Europe 170,903 191,327 Asia Pacific 176,477 182,034 Rest of World 83,476 79,561 Total Revenues $ 1,557,666 $ 1,542,448 The Company generates significant revenues outside the U.S., a portion of which are U.S. dollar-denominated transactions conducted with customers that generate revenue in currencies other than the U.S. dollar.
Total revenue by major geographic area consisted of the following: Years Ended December 31, Dollars in thousands 2023 2022 United States $ 1,100,730 $ 1,126,810 Europe 165,221 170,903 Asia Pacific 193,096 176,477 Rest of World 82,526 83,476 Total Revenues $ 1,541,573 $ 1,557,666 We generate significant revenues outside the U.S., a portion of which are U.S. dollar-denominated transactions conducted with customers that generate revenue in currencies other than the U.S. dollar.
The warning letter related to quality systems issues at TEI's manufacturing facility located in Boston, Massachusetts. The letter resulted from an inspection held at that facility in October and November 2018 and did not identify any new observations that were not already provided in the Form 483 that followed the inspection.
The letter resulted from an inspection held at that facility in October and November 2018 and did not identify any new observations that were not already provided in the Form 483 that followed the inspection.
Divestiture On August 31, 2022, the Company completed the sale of its TWC business to Gentell for $28.8 million, which consists of $27.8 million in cash plus $1.0 million in contingent consideration which may be received upon achieving certain revenue-based performance milestones two years after the closing date.
(“Gentell”) for $28.8 million, which consists of $27.8 million in cash plus $1.0 million in contingent consideration which may be received upon achieving certain revenue-based performance milestones two years after the closing date.
We also continued to advance the development of pioneering neurosurgical technologies with the expansion our product offering of regenerative technologies from our 2021 ACell acquisition.
We also continued to advance the development of pioneering neurosurgical technologies with the expansion of our product offerings.
Of the total federal net operating loss carryforwards, $60.9 million expire through 2037 and $18.6 million have an indefinite carryforward period. Regarding the foreign net operating loss carryforwards, $16.4 million have an indefinite carryforwa rd period. The state net operating loss carryforwards expire in 2036.
Of the total federal net operating loss carryforwards, $55.8 million expire through 2037 and $8.9 million have an indefinite carryforward period. Regarding the foreign net operating loss carryforwards, $81.0 million expire through 2028 and $17.4 million have an indefinite carryforward period. The state net operating loss carryforwards expire in 2036.
Determining the fair value of these intangible assets, acquired as part of a business combination requires the Company to make significant estimates.
The Company allocates any excess purchase price over the fair value of the net tangible and intangible assets acquired to goodwill. Determining the fair value of these intangible assets, acquired as part of a business combination requires the Company to make significant estimates.
Employee Termination Benefits The Company incurred employee termination costs on restructuring activities associated with a closure of a manufacturing facility located in France, outsourcing plans for select transactional back office activities, and executive reorganization in the consolidated statement of operations for the year ended December 31, 2022.
Employee Termination Benefits The Company incurred employee termination costs on sales force restructuring activities in the consolidated statement of operations for the year ended December 31, 2023. In 2022, the Company incurred employee termination costs on restructuring activities associated with the closure of the manufacturing facility in France.
See Note 4, Acquisitions and Divestitures of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for details. 36 OPTIMIZATION AND INTEGRATION ACTIVITIES As a result of our ongoing acquisition strategy and significant growth in recent years, we have undertaken cost-saving initiatives to consolidate manufacturing operations, distribution facilities and transfer activities, eliminate duplicative positions, realign various sales and marketing activities, and expand and upgrade production capacity for our regenerative technology products.
OPTIMIZATION AND INTEGRATION ACTIVITIES As a result of our ongoing acquisition strategy and significant growth in recent years, in 2023 we have undertaken cost-saving initiatives to consolidate manufacturing operations, distribution facilities and transfer activities, eliminate duplicative positions, realign various sales and marketing activities, and expand and upgrade production capacity for our regenerative technology products.
The comparison of fiscal 2021 to 2020 has been omitted from this Form 10-K, but can be referenced in our Form 10-K for the fiscal year ended December 31, 2021—“Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” filed with the SEC on February 24, 2022.
The comparison of fiscal 2022 to 2021 has been omitted from this Form 10-K, but can be referenced in our Form 10-K for the fiscal year ended December 31, 2022—“Item 7.
The transfer completed in the fourth quarter of 2022. In 2022, we outsourced certain transactional back-office finance and customer service activities to enhance customer quality, build scale for future growth, and capture cost efficiencies. This transition also completed in the fourth quarter of 2022.
In addition to closing the manufacturing facility, we outsourced certain transactional back-office finance and customer service activities to enhance customer quality, build scale for future growth, and capture cost efficiencies.
In 2019, we also acquired Rebound Therapeutics which specialized in a single-use medical device, known as Aurora Surgiscope, which is the only tubular retractor system designed for cranial surgery with an integrated access channel, camera and lighting.
Rebound Therapeutics specializes in a single-use medical device, known as the Aurora Surgiscope, which is the only tubular retractor system designed for cranial surgery with an integrated access channel, camera and lighting. The 9mm Surgiscope received 510(k) clearance from the FDA in the fourth quarter of 2023.
This increase is inclusive of an unfavorable foreign currency impact of $37.9 million, as well as a $10.2 million decrease that impacts both domestic and international revenues, related to the divestiture of the TWC business. Excluding the impacts of these items, domestic revenues increased by $41.6 million, or 3.8%. International revenues increased by $21.7 million or 4.8%.
This decrease is inclusive of an unfavorable foreign currency impact of $6.8 million, as well as a $16.3 million decrease that impacts both domestic and international revenues, related to the divestiture of the TWC business. This also includes an increase of $9.8 million related to the SIA acquisition.
Research and Development Research and development expenses for the year ended December 31, 2022 increased by $8.1 million as compared to the prior year. This increase in spending resulted from additional spending on new product development, clinical studies and spending related to the EU Medical Device Regulation compliance activities.
Research and Development Research and development expenses for the year ended December 31, 2023 increased by $3.0 million as compared to the prior year. This increase in spending resulted from expenses related to the SIA acquisition, new product development and clinical studies.
Working capital consists of total current assets less total current liabilities as presented in the consolidated balance sheets. Cash and Marketable Securities The Company had cash and cash equivalents totaling approximately $456.7 million and $513.4 million at December 31, 2022 and 2021, respectively, which are valued based on Level 1 measurements in the fair value hierarchy.
Cash and Marketable Securities The Company had cash and cash equivalents totaling approximately $276.4 million and $456.7 million at December 31, 2023 and 2022, respectively, which are valued based on Level 1 measurements in the fair value hierarchy.
See Note 4, Acquisitions and Divestitures , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for details. ACell Inc.
DuraSorb sales are reported within Integra’s TT segment as part of its Wound Reconstruction and Care franchise. See Note 4, Acquisitions and Divestitures , to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for details. 40 Acclarent Inc.
Non-Operating Income and Expenses The following is a summary of non-operating income and expenses: Years Ended December 31, Dollars in thousands 2022 2021 Interest income $ 11,917 $ 6,737 Interest expense (49,594) (50,395) Gain from sale of business 644 41,798 Other income, net 12,007 19,307 Total non-operating income and expense $ (25,026) $ 17,447 Interest Income Interest income for the year ended December 31, 2022 increased by $5.2 million as compared to the same period last year primarily due to higher interest rates in 2022 compared to 2021.
We expect total annual amortization expense to be approximately $82.7 million in 2024, $82.7 million in 2025, $82.5 million in 2026, $80.6 million in 2027, $79.0 million in 2028 and $481.2 million thereafter. 43 Non-Operating Income and Expenses The following is a summary of non-operating income and expenses: Years Ended December 31, Dollars in thousands 2023 2022 Interest income $ 17,202 $ 11,917 Interest expense (51,377) (49,594) Gain from sale of business — 644 Other income, net 3,718 12,007 Total non-operating income and expense $ (30,457) $ (25,026) Interest Income Interest income for the year ended December 31, 2023 increased by $5.3 million as compared to the same period last year primarily due to higher interest rates.
The CSS segment, which represents approximately two-thirds of our total revenue, consists of market-leading technologies and instrumentation used for a wide range of specialties, such as neurosurgery, neurocritical care and otolaryngology. We are the world leader in neurosurgery and one of the top three providers in instruments used in precision, specialty, and general surgical procedures.
We manufacture and sell medical technologies and products in two reportable business segments: Codman Specialty Surgical (“CSS”) and Tissue Technologies (“TT”). The CSS segment, which represents approximately two-thirds of our total revenue, consists of market-leading technologies and instrumentation used for a wide range of specialties, such as neurosurgery, neurocritical care and otolaryngology.
CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES Our discussion and analysis of financial conditions and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
See Note 2, Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for further details. 47 CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES Our discussion and analysis of financial conditions and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
These increases are inclusive of $4.4 million related to the divestiture of the TWC business. European sales decreased by $20.4 million for the year ended December 31, 2022 compared to the same period last year. Sales to customers in Asia Pacific decreased by $5.6 million for the year ended December 31, 2022 compared to the same period last ye ar.
European sales decreased by $5.7 million for the year ended December 31, 2023 compared to the same period last year. Sales to customers in Asia Pacific increased by $16.6 million for the year ended December 31, 2023 compared to the same period last ye ar.
Our deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their basis for income tax purposes, and the temporary differences created by the tax effects of capital loss, net operating loss and tax credit carryforwards.
It is also possible that changes in facts and circumstances could cause us to either materially increase or reduce the carrying amount of our tax reserves. 50 Our deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their basis for income tax purposes, and the temporary differences created by the tax effects of capital loss, net operating loss and tax credit carryforwards.
RESULTS OF OPERATIONS Executive Summary Net income for the year ended December 31, 2022 was $180.6 million, or $2.16 per diluted share, compared to $169.1 million, or $1.98 per diluted share for the year ended December 31, 2021.
RESULTS OF OPERATIONS Executive Summary Net income for the year ended December 31, 2023 was $67.7 million, or $0.84 per diluted share, compared to $180.6 million, or $2.16 per diluted share for the year ended December 31, 2022. The decrease in net income for the year ended December 31, 2023, was primarily driven by impacts from the Boston recall.
These out-of-range readings have occurred at a low incidence rate and at a limited number of sites; however, out of an abundance of caution, the Company removed all CereLink monitors from the field.
These out-of-range readings have occurred at a low incidence rate and at a limited number of sites; however, out of an abundance of caution, we removed all CereLink monitors from the field. We submitted a traditional 510(k) premarket notification to the FDA on September 15, 2023 and received 510(k) clearance on February 4th, 2024 from the FDA.
At December 31, 2022, we had net operating loss carryforwards of $79.5 million for federal income tax purposes, $75.5 million for foreign income tax purposes and $37.9 million for state income tax purposes to offset future taxable income. The federal net operating loss carryforwards increased during 2022 due to the acquisition of SIA.
At December 31, 2023, we had net operating loss carryforwards of $64.7 million for federal income tax purposes, $98.4 million for foreign income tax purposes and $19.2 million for state income tax purposes to offset future taxable income. The federal net operating loss carryforwards decreased during 2023 due to usage during the year.
The increase in inventory is due to a build up of safety stock due to supply chain challenges. The increase in accounts receivable is due to increased sales as well as a decrease in days sales outstanding. Operating cash flows for the year ended December 31, 2021 increased by $108.6 million compared to the same period in 2020.
The increase in inventory is due to a build up of safety stock due to supply chain challenges. The increase in accounts receivable is due to increased sales as well as a increase in days sales outstanding.
The change in the fair value of sales-based payments is based upon future revenue estimates and increases or decreases as revenue estimates or expectation of timing of payment charges. The estimates used to determine the fair value of the contingent consideration liability are subject to significant judgment and actual results are likely to differ from the amounts originally recorded.
The change in the fair value of sales-based payments is based upon future revenue estimates and increases or decreases as revenue estimates or expectation of timing of payment charges.
In addition, there was a decrease in amortization expense as a result of intangible assets sold with the TWC divestiture. We may discontinue certain products in the future as we continue to assess the profitability of our product lines.
Intangible Asset Amortization Amortization expense (excluding amounts reported in cost of product revenues for technology-based intangible assets) in 2023 was $12.4 million compared to $13.9 million in 2022, a decrease resulting from intangible assets sold with the TWC divestiture. We may discontinue certain products in the future as we continue to assess the profitability of our product lines.
Cash Flows Year Ended December 31, Dollars in thousands 2022 2021 Net cash provided by operating activities $ 264,469 $ 312,427 Net cash used in investing activities (58,580) (161,443) Net cash used (provided) by financing activities (251,953) (98,226) Effect of exchange rate fluctuations on cash (10,723) (9,476) Net increase (decrease) in cash and cash equivalents $ (56,787) $ 43,282 Cash Flows Provided by Operating Activities Operating cash flows for the year ended December 31, 2022 decreased by $48.0 million compared to the same period in 2021.
Short Term Investments The Company had short term investments totaling approximately $32.7 million at December 31, 2023 and $0.0 million at December 31, 2022. 45 Cash Flows Years Ended December 31, Dollars in thousands 2023 2022 Net cash provided by operating activities $ 139,955 $ 264,469 Net cash used in investing activities (94,178) (58,580) Net cash used (provided) by financing activities (229,925) (251,953) Effect of exchange rate fluctuations on cash 3,889 (10,723) Net increase (decrease) in cash and cash equivalents $ (180,259) $ (56,787) Cash Flows Provided by Operating Activities Operating cash flows for the year ended December 31, 2023 decreased by $124.5 million compared to the same period in 2022 .
In addition, the Company had $24.6 million in cash taxes paid in net equity settlements as a result of the departure of the former chief executive officer of the Company . The Company also had repayments of $148.6 million under our Senior Credit Facility and Securitization Facility offset by $40.8 million borrowings under our Senior Credit Facility and Securitization Facility.
The Company also had repayments of $148.6 million under our Senior Credit Facility and Securitization Facility offset by $40.8 million borrowings under our Senior Credit Facility and Securitization Facility.
We have made statements in this report which constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those set forth under Item 1A.
These forward-looking statements are subject to a number of risks, uncertainties and assumptions about the Company and other matters. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those set forth under Item 1A. Risk Factors.
In the CSS segment, revenues were $1,019.6 million which was a decrease of $5.7 million, or 0.6% as compared to the prior-year period. This increase is inclusive of a $34.1 million unfavorable foreign currency impact on revenue. Excluding the impact of foreign currency, the CSS segment revenues increased $28.4 million as compared to the prior year period.
The increase in international revenues was primarily driven by our Asia Pacific region including China, Japan, and Australia. In the CSS segment, revenues were $1,059.0 million which was an increase of $39.4 million, or 3.9% as compared to the prior-year period. This increase is inclusive of a $6.4 million unfavorable foreign currency impact on revenue.
The Company also paid for $48.0 million capital expenditures to support operations improvement initiatives at a number of our manufacturing facilities and other information technology investments. 41 Cash Flows (Used in) Provided by Financing Activities Uses of cash from financing activities for the year ended December 31, 2022 primarily related to the purchase of treasury stock of $125.0 million under the 2022 accelerated share repurchase agreement that was completed in the first quarter of 2022.
The Company also had $4.3 million proceeds from the exercise of stock options. Uses of cash from financing activities for the year ended December 31, 2022 primarily related to the purchase of treasury stock of $125.0 million under the 2022 accelerated share repurchase agreement that was completed in the first quarter of 2022.
In 2021, the Company incurred employee termination costs on restructuring activities associated with the closure of the manufacturing facility in France. Restructuring costs were included in a ccrued expenses and other current liabilities in the consolidated balance sheet for the year ended December 31, 2022 and 2021.
Restructuring costs were included in accrued expenses and other current liabilities in the consolidated balance sheet for the year ended December 31, 2023 and 2022.
On October 28, 2021 the FDA initiated an inspection of the facility and at the conclusion of the inspection issued a FDA Form 483 on November 12, 2021 (the "2021 Form 483"). The Company provided an initial response to the inspection observations and will continue to provide responses to FDA.
We submitted our initial response to the 2019 Warning Letter on March 28, 2019 and provide regular progress reports to the FDA as to its corrective actions. On October 28, 2021, the FDA initiated an inspection of the facility and at the conclusion of the inspection, issued an FDA Form 483 on November 12, 2021 (the "2021 Form 483").
We provide this information to investors so that they can analyze our operating results in the same way that management does and to use this information in their assessment of our core business and valuation of Integra. 37 Revenues and Gross Margin Our revenues and gross margin on product revenues were as follows: Years Ended December 31, Dollars in thousands 2022 2021 Segment Net Sales Codman Specialty Surgical $ 1,019,564 $ 1,025,232 Tissue Technologies 538,102 517,216 Total revenues 1,557,666 1,542,448 Cost of goods sold 587,355 597,808 Gross margin on total revenues $ 970,311 $ 944,640 Gross margin as a percentage of total revenues 62.3 % 61.2 % Revenues For the year ended December 31, 2022, total revenues increased by $15.2 million, or 1.0%, to $1,557.7 million from $1,542.4 million during the prior year.
Revenues and Gross Margin Our revenues and gross margin on product revenues were as follows: Years Ended December 31, Dollars in thousands 2023 2022 Segment Net Sales Codman Specialty Surgical $ 1,058,993 $ 1,019,564 Tissue Technologies 482,580 538,102 Total revenues 1,541,573 1,557,666 Cost of goods sold 656,838 587,355 Gross margin on total revenues $ 884,735 $ 970,311 Gross margin as a percentage of total revenues 57.4 % 62.3 % Revenues For the year ended December 31, 2023, total revenues decreased by $16.1 million, or 1.0%, to $1,541.6 million from $1,557.7 million during the prior year.
Gain from the sale of businesses On August 31, 2022, the Company completed its previously announced sale of its TWC business to Gentell and recognized $0.6 million as a gain from the sale of the business f or the year ended December 31, 2022 .
Gain from the Sale of Businesses On August 31, 2022, the Company completed the sale of its TWC business to Gentell and recognized a gain of $0.6 million million. Other Income, Net Other income, net for the year ended December 31, 2023 decreased by $8.3 million, primarily due to lower Transition Service Agreement ("TSA") income from our recent divestitures.
New Product Introductions and Research and Development Updates We continue to invest in collecting clinical evidence to support the Company's existing products and new product launches, and to ensure that we obtain market access for broader and more cost-effective solutions. In 2022, we made progress to several enhancements to our CUSA Clarity Tissue Ablation System.
Information on our website is not incorporated by reference herein and is not part of this Annual Report on Form 10-K. New Product Introductions and Research and Development Updates We continue to invest in collecting clinical evidence to support our existing products and new product launches, and to ensure that we obtain market access for broader and more cost-effective solutions.
In addition, the Company had $4.8 million in cash taxes paid in net equity settlements. These uses were offset by $6.8 million proceeds from the exercise of stock options and $25.5 million borrowings under our Senior Credit Facility and Securitization Facility.
In addition, the Company had $5.9 million in cash taxes paid in net equity settlements related to the vesting of annual grants. The Company also had repayments of $110.6 million under our Senior Credit Facility (as defined below) and Securitization Facility offset by $165.1 million borrowings under our Senior Credit Facility and Securitization Facility.
The Company reviews goodwill for impairment in the third quarter every year in accordance with ASC Topic 350, Intangibles - Goodwill and Other ("ASC Topic 350"), and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.
The Company reviews goodwill for impairment in the third quarter every year in accordance with ASC Topic 350, Intangibles - Goodwill and Other ("ASC Topic 350"), and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. 49 In the second quarter of 2023, due to the Boston recall, as well as the associated drop in the Company's stock price in that quarter, the Company elected to perform a quantitative analysis, using a combination of a discounted cash flow method and guideline public company method for its TT reporting unit.
As a result of several acquisitions from 2021 through 2022, our financial results for the year ended December 31, 2022 may not be directly comparable to those of the corresponding prior-year perio ds.
As a result of acquisitions in 2022, our financial results for the year ended December 31, 2023 may not be directly comparable to those of the corresponding prior-year perio ds. See Note 4, Acquisitions and Divestitures, of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for a further discussion.
Interest Expense Interest expense for the year ended December 31, 2022 decreased by $0.8 million as compared to the same period last year primarily from a lower outstanding borrowing on the Senior Secured Credit Facility partially offset by increased interest rates.
Interest Expense Interest expense for the year ended December 31, 2023 increased by $1.8 million as compared to the same period last year primarily due to incremental borrowing on the revolver in the second half of 2023.
SIA was a privately-held company whose core technology, DuraSorb is a fully resorbable scaffold of a globally accepted polymer, cleared for use in hernia repair, abdominal wall, and other soft tissue reinforcement. DuraSorb sales will be reported within Integra’s TT segment as part of its Wound Reconstruction and Care franchise.
On June 28, 2023, we announced the completion of patient enrollment in the DuraSorb U.S. IDE clinical study for two-stage breast reconstruction. Prior to our acquisition, SIA was a privately-held company whose core technology, DuraSorb, is a fully resorbable scaffold of a globally accepted polymer, cleared for use in hernia repair, abdominal wall, and other soft tissue reinforcement.
The Company has expanded its base regenerative technology business to include surgical instruments, neurosurgical products and advanced wound care through global acquisitions and product development to meet the evolving needs of its customers and enhance patient care. Integra manufactures and sells medical technologies and products in two reportable business segments: Codman Specialty Surgical ("CSS") and Tissue Technologies ("TT").
We have expanded our base regenerative technology business to include surgical instruments, neurosurgical products and advanced wound care through global acquisitions and product development to meet the evolving needs of our customers and enhance patient care. Our products are sold in more than 130 countries through a direct sales force as well as distributors and wholesalers.
The Rest of the World for the year ended December 31, 2022 increased by $3.9 million compared to the same period last year.
Operating cash flows for the year ended December 31, 2022 decreased by $48.0 million compared to the same period in 2021.
This increase was driven primarily by low single digits growth in both our Neurosurgery and Instruments portfolios as compared to the same period in the prior year. The increase in our Neurosurgery portfolio was driven primarily by growth in advanced energy and CSF management, partially offset by the voluntary recall of the CereLink ICP monitoring system.
Excluding the impact of foreign currency, the CSS segment revenues increased $45.8 million as compared to the prior year period. This increase was driven primarily by mid single digit growth in both our Neurosurgery and Instruments portfolios as compared to the same period in the prior year.
The Company determi nes the fair value of acquired intangible assets based on detailed valuations that use certain information and assumptions provided by management. The Company allocates any excess purchase price over the fair value of the net tangible and intangible assets acquired to goodwill.
The estimates used to determine the fair value of the contingent consideration liability are subject to significant judgment and actual results are likely to differ from the amounts originally recorded. 48 The Company determi nes the fair value of acquired intangible assets based on detailed valuations that use certain information and assumptions provided by management.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+4 added−3 removed8 unchanged
Biggest changeBased on our outstanding borrowings at December 31, 2022, a 100 basis points change in interest rates would have impacted interest expense on the unhedged p ortion of the debt b y $1.1 million o n an annualized basis.
Biggest changeThe total notional amounts related to the Company’s interest rate swaps were $1.5 billion with $0.8 billion effective as of December 31, 2023. Based on our outstanding borrowings at December 31, 2023, a 100 basis points change in interest rates would have impacted interest expense on the unhedged portion of the debt by $1.6 million on an annualized basis.
We do not hold or issue derivative instruments for trading or other speculative purposes. 46 Foreign Currency Exchange and Other Rate Risks We operate on a global basis and are exposed to the risk that changes in foreign currency exchange rates could adversely affect our financial condition, results of operations and cash flows.
We do not hold or issue derivative instruments for trading or other speculative purposes. Foreign Currency Exchange and Other Rate Risks We operate on a global basis and are exposed to the risk that changes in foreign currency exchange rates could adversely affect our financial condition, results of operations and cash flows.
A hypothetical 100 basis points movement in interest rates applicable to our cash and cash equivalents outstanding at December 31, 2022 would increase interest income by approximately $5.1 million on an annual basis. No significant decrease in interest income would be expected as our cash balances are earning interest at rates of approximately one basis points.
A hypothetical 100 basis points movement in interest rates applicable to our cash and cash equivalents outstanding at December 31, 2023 would increase interest income by approximately $2.8 million on an annual basis. No significant decrease in interest income would be expected as our cash balances are earning interest at rates of approximately one basis points.
We are subject to foreign currency exchange risk with respect to cash balances maintained in foreign currencies. Debt - Our interest rate risk relates primarily to U.S. dollar LIBOR-indexed borrowings. We use interest rate swap derivative instruments to manage our earnings and cash flow exposure to changes in interest rates.
We are subject to foreign currency exchange risk with respect to cash balances maintained in foreign currencies. 51 Short-Term Investments- We are exposed to the risk of interest rate fluctuations on the interest income earned on our short-term investments.
Removed
These interest rate swaps fix the interest rate on a portion of our expected LIBOR-indexed floating-rate borrowings.
Added
A hypothetical 100 basis points movement in interest rates applicable to our short-term investments outstanding at December 31, 2023 would increase or decrease interest income by approximately $0.3 million on an annual basis. Debt - The Company’s interest rate risk relates to U.S. dollar denominated variable interest rate borrowings.
Removed
The Company held the following interest rate swaps as of December 31, 2022 (dollar amounts in thousands): Hedged Item Notional Amount Designation Date Effective Date Termination Date Fixed Interest Rate Estimated Fair Value Assets (Liabilities) 1-month USD LIBOR Loan 150,000 December 13, 2017 July 1, 2019 June 30, 2024 2.423 % 5,012 1-month USD LIBOR Loan 200,000 December 13, 2017 January 1, 2018 December 31, 2024 2.313 % 8,380 1-month USD LIBOR Loan 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.220 % 1,831 1-month USD LIBOR Loan 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.199 % 1,905 1-month USD LIBOR Loan 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.209 % 1,970 1-month USD LIBOR Loan 100,000 December 18, 2018 December 30, 2022 December 31, 2027 2.885 % 4,252 1-month USD LIBOR Loan 100,000 December 18, 2018 December 30, 2022 December 31, 2027 2.867 % 4,153 1-month USD LIBOR Loan 575,000 December 15, 2020 July 31, 2025 December 31, 2027 1.415 % 23,742 1-month USD LIBOR Loan 125,000 December 15, 2020 July 1, 2025 December 31, 2027 1.404 % 5,467 $ 1,475,000 $ 56,712 47 These interest rate swaps were designated as cash flow hedges as of December 31, 2022.
Added
The Company uses interest rate swap derivative instruments to manage earnings and cash flow exposure resulting from changes in interest rates. These interest rate swaps apply a fixed interest rate on a portion of the Company's expected SOFR-indexed borrowings.
Removed
The total notional amounts related to the Company’s interest rate swaps were $1.5 billion and with $775.0 million effective as of December 31, 2022.
Added
In connection with the March 2023 Amendment to the Senior Credit Facility, the Company amended its interest rate from LIBOR to SOFR-indexed interest. In March 2023, the Company entered into a basis swap where the Company receives Term SOFR and pays daily compounded SOFR to convert the portfolio of swaps from daily compounded SOFR to term SOFR.
Added
See Note 6, Derivative Instruments to the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Annual Report on Form 10-K) for a detail of current interest rate swap derivative instruments. These interest rate swaps were designated as cash flow hedges as of December 31, 2023.

Other IART 10-K year-over-year comparisons