Integra LifeSciences : 2021 Annual Report

2021 Annual Report

" Throughout this unpredictable time, Integra colleagues showed tremendous resilience and perseverance in serving our customers and patients."

TO OUR SHAREHOLDERS

By all measures, 2021 was a successful year for Integra LifeSciences. Throughout this unpredictable time, Integra colleagues showed tremendous resilience and perseverance in serving our customers and patients, and in moving our company forward. Our manufacturing facilities remained operational, producing life-saving products and technologies. Our field sales teams continued to ramp up customer visits to support health care providers as surgical procedures resumed. Most importantly, colleagues around the world stayed true to our mission and values and put our customers and patients first.

Our success last year would not have been possible if not for the outstanding contributions of our 3,700 colleagues around the globe.

In 2021, our full-year revenues were more than $1.54 billion, with organic growth exceeding 14% compared to 2020, and 4.6% compared to 2019. We saw strong recovery across most of our product lines despite COVID-19 setbacks, a result of the critical nature of our products - products and solutions that play a crucial role in improving the quality of people's lives.

Codman Specialty Surgical (CSS) revenues grew to $1.025 billion in 2021, representing 15% organic growth fueled by recovery in our neurosurgery and instruments businesses, as well as new product introductions. Our Tissue Technologies revenues were $517 million, representing 12.6% organic growth. This increase was attributed to growth in sales in wound reconstruction, primarily led by Integra® skin and SurgiMend® products in our burn, trauma, and surgical reconstruction markets, as well as demand recovery in our private-label business. Additionally, the ACell business, which we acquired in early 2021, stabilized during the fourth quarter and we are positioned for accelerated growth in 2022.

Sales in our international business also rebounded and grew 15% organically compared to 2020, primarily led by the markets in China and Japan.

THE STRENGTH OF OUR DIVERSIFIED PORTFOLIO

Over the last several years, we have optimized our product and business portfolio, divesting or eliminating low-growth and low-profitability assets as we focused on segments where we have long-term competitive advantages. The business recovery across our geographies and product lines demonstrates the strength of our diversified portfolio.

Last year, the company reached an important inflection point following the completion of the extremity orthopedics divestiture and the acquisition of ACell, a regenerative medical technology company specializing in porcine-based urinary bladder matrix technologies. These key portfolio actions sharpened our focus on two primary business segments: neurosurgery and regenerative tissue technologies, where we have a deep pipeline of new products to sustain market growth and expansion in the coming years.

For example, we launched CereLink® ICP Monitoring System, our next-generation intracranial pressure monitor, in the U.S., Canada, and Europe. This new technology was a key contributor to the growth of CSS last year. Additionally, we continue to benefit from steady product launches over the past few years, particularly in the areas of dural repair, cerebrospinal fluid management and tissue ablation in Japan, Canada and several indirect markets.

We also advanced our clinical programs and regulatory submissions to drive our product pipeline. We began the phased market release of the Aurora® Surgiscope® system for clinical evaluation. Aurora is a novel and proprietary, minimally invasive surgical solution with integrated visualization and surgical capabilities designed specifically for use in neurosurgery. Initial feedback has been encouraging and reinforces our optimism around this product offering. We also launched our MIRROR registry in 2021, which will collect data on the use of Aurora for early surgical intervention in the treatment of intracerebral hemorrhage.

In addition, we announced positive clinical outcomes for PriMatrix® Dermal Repair Scaffold for management of diabetic foot ulcers, demonstrating significant clinical results against the standard of care. Also, in August, we submitted our premarket approval (PMA) application for SurgiMend® PRS Acellular Bovine Dermal Matrix for use as soft tissue support in post-mastectomy breast reconstruction. We continue to work with the FDA as it completes its review of our PMA submission. We firmly believe there is an urgent clinical need for an FDA-approved acellular dermal matrix to help restore quality of life for women following post-mastectomy breast reconstruction.

We also continued to invest in our facility expansion to ensure ongoing product supply and to optimize our manufacturing footprint. We completed a substantial portion of the manufacturing transfer of the Codman portfolio from Johnson & Johnson to our Mansfield, Mass., facility, and we are on track to complete the requisite product transfers to another existing location as we wind down our facility in the south of France by the end of 2022.

REINFORCING OUR CULTURE AND LEADERSHIP

The success we accomplished this past year reflects Integra's competitive strength - our people. Since I started with the company, I have been continually impressed with the dedication and talent of our teams. Their focus on our customers and patients is truly remarkable.

At Integra, diversity and inclusion are not merely words, but a reflection of real values and actions. Despite the storm clouds of the COVID-19 pandemic, we continued to advance our diversity and inclusion efforts through various initiatives. We steadily increased the number of women in senior leadership. Managers continued to develop capabilities by participating in microinequities training, and our employee resource groups - African American Affinity Group, Women of Integra Networks, Veterans Group, Asian American Pacific Islander Network, and Indian American Group - remain actively engaged in nurturing an inclusive workplace. These efforts contributed to Integra's being named in Comparably's Best Diversity Companies of 2021.

We built on the talents of our team when we welcomed Susan Krause to executive leadership as our vice president overseeing global quality. Susan brings extensive leadership experience in all aspects of quality, compliance, design assurance, supplier quality, operations, and manufacturing engineering. We also strengthened our board of directors with the appointment of Shaundra Clay, global vice president of finance at Beam Suntory, Inc. Shaundra is a seasoned senior executive with a proven record of achievement in finance and strategy across diverse industries.

AN EXCITING PATH FORWARD

While we are proud of our many achievements last year, the lingering effects of the COVID-19 pandemic remain and have caused significant supply chain disruptions and staffing shortages in hospitals and in our manufacturing facilities at the start of 2022. While this poses a challenge in the near term, we remain optimistic our recovery will continue as procedures increase. More importantly, the resilience and focus our teams have shown during these uncertain times give me confidence we will navigate through future opportunities and challenges successfully.

There has never been a more exciting time to be at Integra. We have built a solid foundation for sustainable, profitable growth based on four key vectors. First, our product portfolio of neurosurgical and tissue technologies solutions is our core strength, built on years of commercial and operational experience and differentiated technology. Second, our current innovation pipeline provides significant near- to mid-term opportunities to expand our accessible market. Third, we have significant untapped mid- to long-term opportunities to further expand our international scale and leverage our product platforms to provide digitally enabled business propositions. Finally, our solid track record for identifying and integrating synergistic acquisitions will further strengthen our business portfolio. These four catalysts will fuel our growth, now and into the foreseeable future.

I want to thank our board of directors, executive and senior leadership, and Integra colleagues for their warm welcome and for facilitating my transition into the role of CEO. I am thrilled to be leading this organization, with its strong legacy, value-laden culture, and long-term possibilities. Integra has a sound business platform with significant potential. It will be my focus - and honor - to lead our team as we become a driving force in shaping care pathways.

On behalf of the Integra leadership team and our colleagues around the world, thank you for your support. I look forward to working alongside this team as we chart our exciting path forward to deliver even greater outcomes for surgeons and their patients, while building a valued business for our colleagues and shareholders.

Sincerely,

Jan De Witte

President and Chief Executive Officer

FINANCIAL HIGHLIGHTS

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12/30/2016

5-Year IART and Peer Performance

Peer Average

NASDAQ

S&P HC Equip

R1000

IART

01/31/14

3/30/2017

6/30/2017

9/30/2017

12/31/2017

3/31/2018

6/30/2018

9/30/2018

12/31/2019

3/31/2019

6/30/2019

9/30/2019

12/31/2019

3/31/2020

6/30/2020

9/30/2020

12/31/2020

3/31/2021

6/30/2021

9/30/2021

12/31/2021

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A reconciliation of GAAP net income to adjusted earnings per share for the years ended December 31, 2021, 2020, and 2019 is available on our corporate website at:http://investor.integralife.com/financial-information.