UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NO. 0-26224

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware

51-0317849

(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)

(I.R.S. EMPLOYER
IDENTIFICATION NO.)

1100 Campus Road

08540

Princeton

New Jersey

(ZIP CODE)

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

Registrant's Telephone Number, Including Area Code: (609) 275-0500

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report:

Securities registered pursuant to Section 12(b) of the Act:


TITLE OF EACH CLASS	TRADING SYMBOL	NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, Par Value $.01 Per Share	IART	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☒

The number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of July ~~27, 2021~~25, 2022 was ~~84,579,542.~~83,504,470.

Table of Contents

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

INDEX


			Page Number
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements			4

Condensed Consolidated Statements of Operations and Comprehensive ~~Income/Loss~~Income for the ~~three~~ Three and ~~six~~ ~~months ended~~ Six Months Ended June 3 0 ~~, 2021~~ 30, 2022 and ~~2020~~2021 (Unaudited)			4

Condensed Consolidated Balance Sheets as of June 30,~~, 2021~~ 2022 and December 31, ~~2020~~2021 (Unaudited)			5

Condensed Consolidated Statements of Cash Flows for the ~~six~~ ~~months ended~~ Six Months Ended June 3 0 ~~, 2021~~ 30, 2022 and ~~2020~~2021 (Unaudited)			6

Condensed Consolidated Statements of Changes in ~~Shareholder's~~Shareholders' Equity for the s ix ~~months ended~~ Six Months Ended June 30,~~, 2021~~ 2022 and ~~2020~~2021 (Unaudited)			7

Notes to Unaudited Condensed Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			32

Item 3. Quantitative and Qualitative Disclosures About Market Risk			4645

Item 4. Controls and Procedures			4645

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			4746

Item 1A. Risk Factors			4746

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4746

Item 4. Mine Safety Disclosures			4746

Item 5. Other Information			4746

Item 6. Exhibits			4746

SIGNATURES			48

~~Exhibit 10.1~~
~~Exhibit 31.1~~
~~Exhibit 31.2~~
~~Exhibit 32.1~~
~~Exhibit 32.2~~
~~EX-101 INSTANCE DOCUMENT~~
~~EX-101 SCHEMA DOCUMENT~~
~~EX-101 CALCULATION LINKBASE DOCUMENT~~
~~EX-101 DEFINITION LINKBASE DOCUMENT~~
~~EX-101 LABELS LINKBASE DOCUMENT~~
~~EX-101 PRESENTATION LINKBASE DOCUMENT~~

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME ~~/ (LOSS)~~

(UNAUDITED)

(Dollars in thousands, except per share amounts)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Total revenue, net	Total revenue, net	$	389,992	$	258,665	$	750,063	$	612,989	Total revenue, net	$	397,815	$	389,992	$	774,453	$	750,063

Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of goods sold	Cost of goods sold	151,267		105,478		297,090		238,954		Cost of goods sold	148,404		151,267		290,973		297,090
Research and development	Research and development	20,121		14,926		42,495		35,742		Research and development	25,589		20,121		49,674		42,495

Selling, general and administrative	Selling, general and administrative	162,552		116,108		319,185		282,060		Selling, general and administrative	160,651		162,552		320,577		319,185
Intangible asset amortization	Intangible asset amortization	4,198		8,073		8,725		15,050		Intangible asset amortization	3,304		4,198		7,198		8,725

Total costs and expenses	Total costs and expenses	338,138		244,585		667,495		571,806		Total costs and expenses	337,948		338,138		668,422		667,495
Operating income	Operating income	51,854		14,080		82,568		41,183		Operating income	59,867		51,854		106,031		82,568

Interest income	Interest income	1,764		2,281		3,512		4,851		Interest income	1,965		1,764		3,342		3,512
Interest expense	Interest expense	(13,149)		(15,682)		(26,078)		(33,434)		Interest expense	(12,236)		(13,149)		(23,891)		(26,078)
Gain (loss) from the sale of business	Gain (loss) from the sale of business	(679)		0		42,197		0		Gain (loss) from the sale of business	—		(679)		—		42,197
Other income, net	Other income, net	5,034		972		9,903		493		Other income, net	1,979		5,034		5,408		9,903
Income before income taxes	Income before income taxes	44,824		1,651		112,102		13,093		Income before income taxes	51,575		44,824		90,890		112,102
Provision for income taxes	Provision for income taxes	9,756		2,020		31,640		4,282		Provision for income taxes	6,787		9,756		13,201		31,640

Net income (loss)		$	35,068	$	(369)	$	80,462	$	8,811
Net income										Net income	$	44,788	$	35,068	$	77,689	$	80,462

Net income per share	Net income per share									Net income per share

Basic		$	0.41	$	(0.00)	$	0.95	$	0.10

Diluted		$	0.41	$	(0.00)	$	0.94	$	0.10

Weighted average common shares outstanding (See Note 13):
Basic	Basic	84,687		84,706		84,593		84,955		Basic	$	0.54	$	0.41	$	0.93	$	0.95
Diluted	Diluted	85,340		84,706		85,324		85,548		Diluted	$	0.54	$	0.41	$	0.93	$	0.94

Comprehensive income (loss) (See Note 14)		28,731		1,095		104,558		$	(17,912)

Weighted average common shares outstanding (See Note 14):										Weighted average common shares outstanding (See Note 14):
Basic										Basic	83,168		84,687		83,400		84,593
Diluted										Diluted	83,622		85,340		83,979		85,324
Comprehensive income (See Note 15)										Comprehensive income (See Note 15)	52,598		28,731		109,630		$	104,558

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

Table of Contents

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands, except per share amounts)


		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	397,414	$	470,166	Cash and cash equivalents	$	447,152	$	513,448
Trade accounts receivable, net of allowances of $6,687 and $6,439		229,823		225,532

Trade accounts receivable, net of allowances of $3,995 and $4,735						Trade accounts receivable, net of allowances of $3,995 and $4,735	237,361		231,831
Inventories, net	Inventories, net	323,618		310,117		Inventories, net	320,208		317,386
Prepaid expenses and other current assets	Prepaid expenses and other current assets	81,527		69,282		Prepaid expenses and other current assets	102,168		91,051
Assets held for sale	Assets held for sale	0		162,105		Assets held for sale	30,525		—
Total current assets	Total current assets	1,032,382		1,237,202		Total current assets	1,137,414		1,153,716
Property, plant and equipment, net	Property, plant and equipment, net	295,759		287,529		Property, plant and equipment, net	302,423		311,703
Right of use asset - operating leases	Right of use asset - operating leases	89,174		83,635		Right of use asset - operating leases	145,135		84,543
Intangible assets, net	Intangible assets, net	1,178,884		989,436		Intangible assets, net	1,082,275		1,145,573
Goodwill	Goodwill	1,015,638		932,367		Goodwill	990,406		1,013,458
Deferred tax assets, net	Deferred tax assets, net	80,086		73,690		Deferred tax assets, net	46,982		56,950
Other assets	Other assets	20,864		11,277		Other assets	48,227		16,440
Total assets	Total assets	$	3,712,787	$	3,615,136	Total assets	$	3,752,862	$	3,782,383
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of borrowings under senior credit facility	Current portion of borrowings under senior credit facility	$	45,000	$	33,750	Current portion of borrowings under senior credit facility	$	50,625	$	45,000
Current portion of borrowings under securitization facility		0		112,500
Current portion of lease liability - operating leases	Current portion of lease liability - operating leases	13,987		12,818		Current portion of lease liability - operating leases	12,743		14,775
Accounts payable, trade	Accounts payable, trade	65,512		54,608		Accounts payable, trade	69,498		61,837

Income taxes payable		17,112		0
Contract liabilities	Contract liabilities	5,890		5,275		Contract liabilities	5,425		5,295
Accrued compensation	Accrued compensation	72,047		76,117		Accrued compensation	69,599		92,656

Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	99,208		94,194		Accrued expenses and other current liabilities	85,403		120,458
Liabilities held for sale	Liabilities held for sale	0		11,751		Liabilities held for sale	2,303		—
Total current liabilities	Total current liabilities	318,756		401,013		Total current liabilities	295,596		340,021
Long-term borrowings under senior credit facility	Long-term borrowings under senior credit facility	823,208		933,387		Long-term borrowings under senior credit facility	819,654		824,257
Long-term borrowings under securitization facility	Long-term borrowings under securitization facility	112,500		0		Long-term borrowings under securitization facility	112,500		112,500
Long-term convertible securities	Long-term convertible securities	562,968		474,834		Long-term convertible securities	565,883		564,426
Lease liability - operating leases	Lease liability - operating leases	95,196		88,118		Lease liability - operating leases	154,029		90,329
Deferred tax liabilities	Deferred tax liabilities	63,447		16,190		Deferred tax liabilities	61,287		45,788

Other liabilities	Other liabilities	161,731		186,727		Other liabilities	82,996		120,258
Total liabilities	Total liabilities	2,137,806		2,100,269		Total liabilities	2,091,945		2,097,579
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock; 0 par value; 15,000 authorized shares; NaN outstanding		0		0
Common stock; $0.01 par value; 240,000 authorized shares; 89,474 and 89,251 issued at June 30, 2021 and December 31, 2020, respectively		895		893
Preferred stock; no par value; 15,000 authorized shares; none outstanding						Preferred stock; no par value; 15,000 authorized shares; none outstanding	—		—
Common stock; $0.01 par value; 240,000 authorized shares; 90,334 and 89,600 issued at June 30, 2022 and December 31, 2021, respectively						Common stock; $0.01 par value; 240,000 authorized shares; 90,334 and 89,600 issued at June 30, 2022 and December 31, 2021, respectively	903		896
Additional paid-in capital	Additional paid-in capital	1,248,555		1,290,909		Additional paid-in capital	1,259,852		1,264,943
Treasury stock, at cost; 4,899 shares and 4,914 shares at June 30, 2021 and December 31, 2020, respectively		(234,461)		(235,141)
Treasury stock, at cost; 6,823 shares and 4,899 shares at June 30, 2022 and December 31, 2021, respectively						Treasury stock, at cost; 6,823 shares and 4,899 shares at June 30, 2022 and December 31, 2021, respectively	(362,880)		(234,448)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(49,963)		(74,059)		Accumulated other comprehensive loss	(13,215)		(45,155)
Retained earnings	Retained earnings	609,955		532,265		Retained earnings	776,257		698,568
Total stockholders’ equity	Total stockholders’ equity	1,574,981		1,514,867		Total stockholders’ equity	1,660,917		1,684,804
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	3,712,787	$	3,615,136	Total liabilities and stockholders’ equity	$	3,752,862	$	3,782,383

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

Table of Contents

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)


		Six Months Ended June 30,					Six Months Ended June 30,
		2021		2020			2022		2021
OPERATING ACTIVITIES:	OPERATING ACTIVITIES:					OPERATING ACTIVITIES:
Net income	Net income	$	80,462	$	8,811	Net income	$	77,689	$	80,462
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization	Depreciation and amortization	58,968		58,826		Depreciation and amortization	59,336		58,968

Non-cash impairment charges	Non-cash impairment charges	2,754		0		Non-cash impairment charges	—		2,754
Deferred income tax (benefit) provision		(4,907)		(401)
Deferred income tax provision (benefit)						Deferred income tax provision (benefit)	7,542		(4,907)
Share-based compensation	Share-based compensation	22,033		8,922		Share-based compensation	13,027		22,033
Amortization of debt issuance costs and expenses associated with debt refinancing	Amortization of debt issuance costs and expenses associated with debt refinancing	3,569		5,551		Amortization of debt issuance costs and expenses associated with debt refinancing	3,392		3,569
Non-cash lease expense	Non-cash lease expense	2,528		1,760		Non-cash lease expense	1,393		2,528
Accretion of bond issuance discount		0		6,780

Loss on disposal of property and equipment	Loss on disposal of property and equipment	86		517		Loss on disposal of property and equipment	732		86
Gain from the sale of business	Gain from the sale of business	(42,197)		0		Gain from the sale of business	—		(42,197)
Change in fair value of contingent consideration and others	Change in fair value of contingent consideration and others	(385)		(708)		Change in fair value of contingent consideration and others	(5,799)		(385)

Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	10,802		95,293		Accounts receivable	(9,632)		10,802
Inventories	Inventories	2,893		(47,041)		Inventories	(17,576)		2,893
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(8,061)		2,191		Prepaid expenses and other current assets	(4,120)		(8,061)
Other non-current assets	Other non-current assets	4,067		6,149		Other non-current assets	6,738		4,067
Accounts payable, accrued expenses and other current liabilities	Accounts payable, accrued expenses and other current liabilities	27,277		(88,671)		Accounts payable, accrued expenses and other current liabilities	(14,556)		27,277

Contract liabilities						Contract liabilities	774		—
Other non-current liabilities	Other non-current liabilities	482		(4,048)		Other non-current liabilities	(8,118)		482

Net cash provided by operating activities	Net cash provided by operating activities	160,371		53,931		Net cash provided by operating activities	110,822		160,371
INVESTING ACTIVITIES:	INVESTING ACTIVITIES:					INVESTING ACTIVITIES:
Purchases of property and equipment	Purchases of property and equipment	(13,309)		(23,736)		Purchases of property and equipment	(18,732)		(13,309)

Proceeds from sale of Extremity Orthopedics business	Proceeds from sale of Extremity Orthopedics business	191,736		0		Proceeds from sale of Extremity Orthopedics business	—		191,736
Proceeds from sale of property and equipment		0		3,302
Cash (paid) provided for business acquisitions, net of cash acquired		(303,910)		0
Acquired in-process research and development		0		(5,000)

Acquired in-process research and development milestone						Acquired in-process research and development milestone	(4,742)		—
Net proceeds from swaps designated as net investment hedges						Net proceeds from swaps designated as net investment hedges	4,909		—
Cash paid for business acquisitions, net of cash acquired						Cash paid for business acquisitions, net of cash acquired	—		(303,910)
Net cash used in investing activities	Net cash used in investing activities	(125,483)		(25,434)		Net cash used in investing activities	(18,565)		(125,483)
FINANCING ACTIVITIES:	FINANCING ACTIVITIES:					FINANCING ACTIVITIES:
Proceeds from borrowings of long-term indebtedness	Proceeds from borrowings of long-term indebtedness	2,200		127,700		Proceeds from borrowings of long-term indebtedness	23,000		2,200
Payments on debt	Payments on debt	(102,200)		(388,500)		Payments on debt	(23,000)		(102,200)
Purchase of option hedge on convertible notes		0		(104,248)
Proceeds from convertible notes issuance		0		575,000

Proceeds from sale of stock purchase warrants		0		44,563
Payment of debt issuance costs	Payment of debt issuance costs	(249)		(20,264)		Payment of debt issuance costs	—		(249)
Purchases of treasury stock	Purchases of treasury stock	0		(100,000)		Purchases of treasury stock	(125,000)		—

Proceeds from exercised stock options	Proceeds from exercised stock options	3,603		3,598		Proceeds from exercised stock options	1,592		3,603
Cash taxes paid in net equity settlement	Cash taxes paid in net equity settlement	(3,844)		(4,397)		Cash taxes paid in net equity settlement	(23,204)		(3,844)

Net cash (used) provided by financing activities		(100,490)		133,452
Net cash used in financing activities						Net cash used in financing activities	(146,612)		(100,490)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(7,150)		121		Effect of exchange rate changes on cash and cash equivalents	(11,941)		(7,150)
Net increase in cash and cash equivalents		(72,752)		162,070

Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(66,296)		(72,752)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	470,166		198,911		Cash and cash equivalents at beginning of period	513,448		470,166
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	397,414	$	360,981	Cash and cash equivalents at end of period	$	447,152	$	397,414

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

Table of Contents

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN ~~SHAREHOLDER'S~~SHAREHOLDERS' EQUITY

(UNAUDITED)

(Dollars in ~~thousands, except per share amounts)~~thousands)


		Six Months Ended June 30, 2021															Six Months Ended June 30, 2022
		Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Equity			Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Equity
		Shares	Amount		Shares	Amount											Shares	Amount		Shares	Amount
Balance, January 1, 2021		89,251	$	893	(4,914)	$	(235,141)	$	1,290,909	$	(74,059)	$	532,265	$	1,514,867
Balance, January 1, 2022																Balance, January 1, 2022	89,600	$	896	(4,899)	$	(234,448)	$	1,264,943	$	(45,155)	$	698,568	$	1,684,804
Net income	Net income	—	—		—	—		—		—		45,394		45,394		Net income	—	—		—	—		—		—		32,901		32,901
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—	—		—		30,432		—		30,432		Other comprehensive income, net of tax	—	—		—	—		—		24,130		—		24,130
Issuance of common stock through employee stock purchase plan	Issuance of common stock through employee stock purchase plan	18	—		—	—		1,127		—		—		1,127		Issuance of common stock through employee stock purchase plan	17	—		—	—		1,078		—		—		1,078
Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	137	1		15	680		(3,222)		—		—		(2,541)		Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	339	4		14	714		(9,758)		—		—		(9,040)
Share-based compensation	Share-based compensation	—	—		—	—		6,098		—		—		6,098		Share-based compensation	—	—		—	—		6,324		—		—		6,324
Adoption of Update No. 2020-06		—	—		—	—		(63,274)		—		(2,772)		(66,046)
Balance, March 31, 2021		89,406	894		(4,899)	(234,461)		1,231,638		(43,627)		574,887		1,529,331
Accelerated shares repurchased																Accelerated shares repurchased	—	$	—	(1,938)	$	(129,152)	$	4,152	$	—	$	—	$	(125,000)
Balance, March 31, 2022																Balance, March 31, 2022	89,956	$	900	(6,823)	$	(362,886)	$	1,266,739	$	(21,025)	$	731,469	$	1,615,197
Net income	Net income	—	—		—	—		—		—		35,068		35,068		Net income	—	—		—	—		—		—		44,788		44,788
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—	—		—	—		—		(6,336)		—		(6,336)		Other comprehensive loss, net of tax	—	—		—	—		—		7,810		—		7,810
Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	68	1		—	0		1,175		—		—		1,176		Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	378	3		—	6		(13,655)		—		—		(13,646)
Share-based compensation	Share-based compensation	—	—		—	—		15,742		—		—		15,742		Share-based compensation	—	—		—	—		6,768		—		—		6,768
Balance, June 30, 2021		89,474	$	895	(4,899)	$	(234,461)	$	1,248,555	$	(49,963)	$	609,955	$	1,574,981
Balance, June 30, 2022																Balance, June 30, 2022	90,334	$	903	(6,823)	$	(362,880)	$	1,259,852	$	(13,215)	$	776,257	$	1,660,917


		Six Months Ended June 30, 2020															Six Months Ended June 30, 2021
		Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Equity			Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Equity
		Shares	Amount		Shares	Amount											Shares	Amount		Shares	Amount
Balance, January 1, 2020		88,735	$	887	(2,865)	$	(119,943)	$	1,213,620	$	(76,401)	$	398,573	$	1,416,736
Balance, January 1, 2021																Balance, January 1, 2021	89,251	$	893	(4,914)	$	(235,141)	$	1,290,909	$	(74,059)	$	532,265	$	1,514,867
Net income	Net income	—	—		—	—		—		—		9,180		9,180		Net income	—	—		—	—		—		—		45,394		45,394
Other comprehensive loss, net of tax		—	—		—	—		—		(28,187)		—		(28,187)
Other comprehensive income, net of tax																Other comprehensive income, net of tax	—	—		—	—		—		30,432		—		30,432
Issuance of common stock through employee stock purchase plan	Issuance of common stock through employee stock purchase plan	13	—		—	—		694		—		—		694		Issuance of common stock through employee stock purchase plan	18	—		—	—		1,127		—		—		1,127
Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	357	2		10	476		(3,217)		—		—		(2,739)		Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	137	1		15	680		(3,222)		—		—		(2,541)
Share-based compensation	Share-based compensation	—	—		—	—		3,781		—		—		3,781		Share-based compensation	—	—		—	—		6,098		—		—		6,098
Share repurchase and equity component of the convertible note issuance, net		—	—		(135)	(7,632)		42,538		—		—		34,906
Accelerated shares repurchased		—	—		(1,304)	(75,407)		(16,961)		—		—		(92,368)
Adoption of Update No. 2016-13		—	—		—	—		—		—		(200)		(200)
Balance, March 31, 2020		89,105	$	889	(4,294)	$	(202,506)	$	1,240,455	$	(104,588)	$	407,553	$	1,341,803
Net loss		—	—		—	—		—		—		(369)		(369)
Other comprehensive income, net of tax		—	—		—	—		—		1,464		—		1,464
Adoption of Update No. 2020-06																Adoption of Update No. 2020-06	—	—		—	—		(63,274)		—		(2,772)		(66,046)
Balance, March 31, 2021																Balance, March 31, 2021	89,406	$	894	(4,899)	$	(234,461)	$	1,231,638	$	(43,627)	$	574,887	$	1,529,331
Net income																Net income	—	—		—	—		—		—		35,068		35,068
Other comprehensive loss, net of tax																Other comprehensive loss, net of tax	—	—		—	—		—		(6,336)		—		(6,336)
Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	84	3		—	(35)		1,282		—		—		1,250		Issuance of common stock for vesting of share based awards, net of shares withheld for taxes	68	1		—	—		1,175		—		—		1,176
Share-based compensation	Share-based compensation	—	—		—	—		4,948		—		—		4,948		Share-based compensation	—	—		—	—		15,742		—		—		15,742
Accelerated shares repurchased		—	—		(621)	(32,685)		32,685		—		—		0
Balance, June 30, 2020		89,189	892		(4,915)	(235,226)		1,279,370		(103,124)		407,184		1,349,096
Balance, June 30, 2021																Balance, June 30, 2021	89,474	$	895	(4,899)	$	(234,461)	$	1,248,555	$	(49,963)	$	609,955	$	1,574,981

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

Table of Contents

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION

General

The terms “we,” “our,” “us,” “Company” and “Integra” refer to Integra LifeSciences Holdings Corporation, a Delaware corporation, and its subsidiaries unless the context suggests otherwise.

In the opinion of management, the June 30, ~~2021~~2022 unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the financial position, statement of changes in ~~shareholder's~~shareholders' equity, results of operations and cash flows of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, ~~2020~~2021 included in the Company’s Annual Report on Form 10-K. The December 31, ~~2020~~2021 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. Operating results for the three and ~~six month~~six-month period ended June 30, ~~2021~~2022 are not necessarily indicative of the results to be expected for the entire year.

The preparation of consolidated financial statements is in conformity with generally accepted accounting principles in the United States ("GAAP") which requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and allowances, net realizable value of inventories, valuation of intangible assets including amortization periods for acquired intangible assets, discount rates and estimated projected cash flows used to value and test impairments of long-lived assets and goodwill, estimates of projected cash flows and depreciation and amortization periods for long-lived assets, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation, valuation of derivative instruments, valuation of contingent liabilities, the fair value of debt instruments and loss contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances. Actual results could differ from these estimates.

Risks and Uncertainties

The Company is subject to risks and uncertainties as a result of the COVID-19 ~~pandemic. During the beginning~~pandemic, including reductions in capital and overall spending by our customers, increased freight costs, decreased availability of ~~2020, the Company's customers diverted resources to treat COVID-19 patients~~certain raw materials used in certain of our products and deferred or canceled elective or non-emergent surgical procedures, all of which impacted hospitals' abilities to meet their obligations, including to the Company. Towards the end of 2020 and during the first half of 2021, procedural volumes relevant to the Company’s products steadily increased and, in some geographic areas, began to approach normalized levels. However, on-going uncertainty persists about the continuing sustainability of those procedural volumes as virus outbreaks constrain healthcare networks. Furthermore, capital markets and economies worldwide have also been negatively impacted by thelabor constraints. The COVID-19 pandemic ~~and it is possible that it could cause a local and/or global economic recession. Such economic disruption~~ has had, and may continue to have, an adverse effect on the ~~Company's~~Company’s business, results of operations, financial condition, and cash flows, and its future impacts remain highly uncertain and unpredictable. Although there was not a material impact to the Company’s consolidated financial statements as ~~customers curtailed~~of and ~~reduced capital~~for the six months ended June 30, 2022, changes in the Company’s assessment about the length and ~~overall spending. Policymakers around~~severity of the ~~globe have responded with fiscal policy actions to support the healthcare industry and the economy~~pandemic, as ~~a whole. The magnitude and overall effectiveness of these actions remains uncertain.~~well as other factors, could result in actual results differing from estimates. The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, duration of the pandemic, including resurgences, new variants or strains, impact of government regulations, the speed and effectiveness of vaccine distribution, vaccine adoption rates and the duration of direct and indirect economic effects of the pandemic, containment measures and ~~containment measures. The Company's future results of operations and liquidity~~other macroeconomic factors which could ~~be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, and the impact of any initiatives~~ cause a local/or programs that the Company may undertake to address financial and operations challenges faced by its customers. During the first half of 2021, the Company's revenues were still impacted due to COVID-19 resurgences and lower surgical procedural volumes, though not to the levels seen in early 2020. As a result, the Company has continued to manage its operating costs in this environment.global economic recession. Even after the COVID-19 pandemic and government responses thereto have subsided, residual economic and other effects may have an impact on the demand for post-pandemic surgery levels that are difficult to predict.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Employee Termination Benefits

The Company incurred restructuring costs related to employee terminations associated with a plant closure and future outsourcing plans for select transactional back office activities in the consolidated statement of operations for the six months ended June 30, 2022. The following table summarizes our restructuring related accrual balances included within accrued expenses and other current liabilities in the consolidated balance sheet for the six months ended June 30, 2022. All balances are expected to be paid within the current fiscal year.


(Dollars in thousands)	Amount
Balance at December 31,2021	$	10,226
Charges:
Cost of Goods Sold	$	1,417
Research and development	133
Selling, general and administrative	1,807
Payments and other adjustments	$	(6,885)
Balance at June 30,2022	$	6,698

Recent Accounting Pronouncements

~~In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments -~~ ~~Credit Losses (Topic 326)~~: Measurement of Credit Losses on Financial Instruments. The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets including trade receivables held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The ASU became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this guidance on January 1, 2020 using a modified retrospective transition method which requires a cumulative-effect adjustment to the opening balance of retained earnings to be recognized on the date of adoption with no change to financial results reported in prior periods. The cumulative-effect adjustment recorded on January 1, 2020 is not material. The adoption of this ASU did not have a significant impact on the Company's consolidated financial statements and related disclosures.

The Company's exposure to credit losses may increase if its customers are adversely affected by changes in healthcare laws, coverage, and reimbursement, economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the COVID-19 pandemic, and other customer-specific factors. Although the Company has historically not experienced significant credit losses, it is possible that there could be an adverse impact due to customer and governmental responses to the COVID-19 pandemic.

~~In August 2018, the FASB issued ASU 2018-14,~~ ~~Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans~~. This guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption was permitted. The Company adopted this guidance during the year ended December 31, 2020. The adoption of this guidance did not have a significant impact on the Company's consolidated financial statements and related disclosures.

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-Use Software~~ (Subtopic 350-40), relating to a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by a vendor (e.g., a service contract). Under this guidance, a customer will apply the same criteria for capitalizing implementation costs as it would for an arrangement that has a software license. The new guidance also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this guidance on January 1, 2020 using a prospective transition method. The adoption of this guidance did not have a significant impact on the Company's consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Income ~~Taxes:~~ Taxes: Simplifying the Accounting for Income Taxes, intended to simplify the accounting for income taxes by eliminating certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for annual periods beginning after December 15, 2020 and interim periods within, with early adoption permitted. The Company adopted ASU ~~No.~~ 2019-12 as of January 1, 2021. Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively. The adoption of this guidance did not have a ~~material~~significant impact on the Company's ~~results or~~consolidated financial ~~position.~~statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This amendment applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. This ASU is effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. In January 2021, the FASB also issued ASU 2021-01, Reference Rate Reform- Scope which clarified certain optional expedients and exceptions to entities that are affected because of the reference rate reform. The amendments in this ASU affect the guidance in ASU 2020-04 and are effective in the same timeframe as ASU 2020-04. The Company currently has contracts that are indexed to LIBOR and are continuing to evaluate the scope of impacted contracts and potential risk. The Company is ~~currently assessing~~also monitoring the developments regarding alternative rates and may amend certain contracts to accommodate those rates if the contract does not already specify a replacement rate. While the notional value of agreements potentially indexed to LIBOR is material, the Company does not expect a material impact ~~that this ASU will have on its~~to the consolidated financial statements and related ~~disclosures.~~disclosures associated with this transition.

~~INTEGRA LIFESCIENCES HOLDINGS CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

In August 2020, the FASB issued ASU 2020-06, Debt- Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and ~~Hedging Contracts~~Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)~~-Accounting~~:Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The guidance simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify. The guidance also simplifies the diluted net income per share calculation in certain areas. The ASU ~~will be~~was effective for annual and interim periods beginning after December 15, 2021, and early adoption iswas permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years using either the modified retrospective or full retrospective method.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

As detailed in Note ~~6 –~~7, Debt, on February 4, 2020, the Company issued $575.0 million aggregate principal amount of its 0.5% Convertible Senior Notes due 2025 (the "2025 Notes"). The 2025 Notes are subject to the guidance included in ASU 2020-06. The Company adopted this guidance on January 1, 2021 using the modified retrospective approach which resulted in a cumulative-effect adjustment that increased (decreased) the following consolidated balance sheet accounts:

~~ADJUSTMENT~~Adjustment

~~CONSOLIDATED BALANCE SHEET CLASSIFICATION~~Consolidated Balance Sheet Classification

~~AMOUNT~~Amount
(in millions)

Deferred tax impact of cumulative-effect adjustment

Deferred tax liabilities

(20.6)

Debt discount reclassification

Long-term convertible securities

89.1

Equity issuance costs reclassification

Long-term convertible securities

(2.5)

Debt discount amortization and equity costs reclassification, net of tax

Retained Earnings

(2.8)

Net impact of cumulative-effect adjustment

Additional paid-in capital

(63.3)

Upon adoption of this ASU 2020-06, the Company’s Convertible Senior Notes were reflected entirely as a liability since the embedded conversion feature will no longer be separately presented within stockholders’ equity. On December 9, 2020, the Company made an irrevocable election under the indenture to require the principal portion of its ~~convertible senior notes~~2025 Notes to be settled in cash and any excess in shares. Following the irrevocable notice, only the amounts settled in excess of the principal will be considered in diluted earnings per share under the “if-converted” method. Upon adoption of ASU 2020-06, the Company’s 2025 Notes were reflected entirely as a liability since the embedded conversion feature will no longer be separately presented within stockholders’ equity. Additionally, from January 1, 2021, the Company is no longer incurring non-cash interest expense for the amortization of debt discount, therefore the interest expense for the 2025 Notes, which is included in the interest expense on the consolidated statements of operations and comprehensive loss, is lower as compared to the fiscal year of 2020.discount.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which updates various codification topics by clarifying or improving disclosure requirements to align with the ~~SEC’s regulations.~~regulations of the U.S. Securities and Exchange Commission (the "SEC"). The ASU ~~will be~~has been effective for the Company for annual and interim periods beginning after January 1, 2021. The Company adopted this standard on the January 1, 2021. The adoption of this guidance did not have a ~~material~~significant impact on the Company's ~~results,~~consolidated financial ~~position or~~statements and related disclosures.

In May 2021, the FASB issued ASU ~~No.~~ 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options which provides guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU No. 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years. The amendment ~~currently has~~had no impact to the Company as the effect will largely depend on the terms of written call options or financings issued or modified in the future.

There are no other recently issued accounting pronouncements that are expected to have any significant effect on the Company's financial position, results of operations or cash flows.

2. ASSETS AND LIABILITIES HELD FOR SALE

On May 20 2022, the Company and certain of its subsidiaries, entered into an agreement to sell its non-core traditional wound care ("TWC") business to Gentell, LLC 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. The transaction includes the sale of the Company's TWC products, such as sponges, gauze and conforming bandages, and certain advanced wound care dressings, such as supportive, calcium alginate, hydrogel, and foam dressings. This transaction is expected to close during the third quarter of 2022, subject to the satisfaction of customary conditions.

The Company considered the assets and liabilities associated with the TWC business to be accounted as held-for-sale as the six criteria under ASC 260 were met during the second quarter of 2022. Upon designation of the assets and liabilities as held for sale, the Company recorded the assets at the lower of their carrying value or their estimated fair value, less estimated costs to sell. Goodwill was allocated to the assets and liabilities held for sale using the relative fair value method of the TWC business to the Company's Tissue Technologies reporting unit. The fair value of the business less costs to sell exceeded the related carrying value.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

2.The TWC business was treated as a single disposal group and presented separately in the condensed consolidated balance sheet as assets and liabilities held for sale as of June 30, 2022. These balances are presented as current assets and liabilities as they are expected to be sold within twelve months. The sale of the TWC business does not represent a strategic shift that will have a major effect on the Company's operations and financial statements.

The major classes of assets and liabilities classified as a held for sale consisted of the following as of June 30, 2022 (dollar amounts in thousands):


Other assets	$	53
Deferred tax assets	178
Prepaid expenses and other current assets	338
Right of use asset - operating leases	1,316
Property, plant, and equipment, net	3,752
Goodwill	5,083
Inventories, net	9,275
Intangible assets, net	10,530
Total assets held for sale	$	30,525
Accrued expenses and other current liabilities	$	102
Current portion of lease liability - operating leases	584
Lease liability - operating leases	742
Deferred tax liabilities	875
Total liabilities held for sale	$	2,303

3. ACQUISITIONS AND DIVESTITURES

Sale of Extremity Orthopedics Business

On January 4, 2021, the Company completed ~~its previously announced~~the sale of its Extremity Orthopedics business to Smith & Nephew USD Limited ("Smith & Nephew"). The transaction included the sale of the Company's upper and lower Extremity Orthopedics product portfolio, including ankle and shoulder arthroplasty and hand and wrist product lines. The Company received an aggregate purchase price of $240.0 million from Smith ~~and~~& Nephew and concurrently paid $41.5 million to the Consortium of Focused Orthopedists, LLC ("CFO") effectively terminating the licensing agreement between Integra and the CFO relating to the development of shoulder arthroplasty products.

~~Assets and liabilities divested consisted of the following as of December 31, 2020 (dollar amounts in thousands):~~


~~Prepaid expenses and other current assets~~	$	~~713~~
~~Right of use asset-operating leases and Other assets~~	~~3,186~~
~~Deferred tax assets~~	~~6,589~~
~~Intangible assets, net~~	~~13,332~~
~~Property, plant and equipment, net~~	~~37,893~~
~~Goodwill~~	~~47,546~~
~~Inventories~~	~~52,845~~
~~Total assets held for sale~~	$	~~162,104~~

~~Other liabilities~~	~~336~~
~~Current portion of lease liability - operating leases~~	~~539~~
~~Accrued compensation~~	~~1,767~~
~~Deferred tax liabilities~~	~~3,440~~
~~Lease liability - operating leases~~	~~5,669~~
~~Total liabilities held for sale~~	$	~~11,751~~

The ~~Divestiture does~~divestiture did not represent a strategic shift that ~~will have~~had a major effect on the Company's operations and financial statements. Goodwill was allocated to the assets and liabilities divested using the relative fair value method of the Extremity Orthopedics business to the Company's Tissue Technologies ~~reporting unit.~~reportable business segment. In connection with the sale, the Company recognized a ~~loss of $0.7~~$41.8 million ~~associated with certain working capital adjustments and gain of $42.2 million that is presented in~~as Gain from the sale of business in the consolidated statement of operations for the ~~three and six months~~year ended ~~June 30,~~December 31, 2021. The ~~net proceeds are subject to adjustments based on changes in~~Company finalized the ~~actual closing~~ net working ~~capital. The purchase price is preliminary pending finalization~~capital and paid an additional $1.3 million to Smith & Nephew as of ~~potential working capital adjustments.~~December 31, 2021.

The Company also entered into a transition services agreement ("TSA") with ~~Smith~~Smith & Nephew which requires the Company to provide certain services on behalf of Smith & Nephew for the duration of the period subsequent to the sale of the business as defined in the ~~agreement.~~TSA. The ~~Company~~Company recognized a payable due to Smith & Nephew of ~~$10.9~~$6.5 million as of June 30, ~~2021,~~2022, which is included in the consolidated balance ~~sheet~~sheets within accrued expenses and other current ~~liabilities respectively.~~liabilities. The TSA includes services such as invoicing and cash collections from customers on behalf of Smith & Nephew. As of June 30, 2022, the Company has concluded the majority of the transition services agreement, pending final payment.

ACell, Inc. Acquisition

On January 20, 2021, the Company acquired ACell, Inc. (the "ACell Acquisition") for ~~an acquisition~~a total purchase price of $306.9 million plus contingent consideration of up to $100 million, ~~that~~which may be payable upon the Company achieving certain revenue-based performance milestones in 2022, 2023 and 2025. The final working capital adjustments of $1.3 million was finalized and paid as of June 30, ~~2021; however certain amounts relating~~2021. Prior to ~~tax related matters have not been finalized. The finalization of these matters may result in changes to goodwill.~~the acquisition, ACell was a privately-held company that offered a portfolio of regenerative products for complex wound management, including developing and commercializing products based on MatriStem Urinary Bladder Matrix, ~~("UBM"),~~ a technology platform derived from porcine urinary bladder extracellular matrix.

Assets Acquired and Liabilities Assumed at Fair Value

The ACell Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination are recognized at their fair values as of the acquisition date.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following table summarizes the ~~preliminary~~final fair values of the assets acquired and liabilities assumed at the acquisition date:


Dollars in thousands	~~Preliminary~~Final Valuation ~~as of June 30, 2021~~		Weighted Average Life
Current assets:
Cash	$	2,726
Trade accounts receivable, net	16,469
Inventories, net	18,299
~~Prepaids~~Prepaid expenses and other current assets	1,498
Total current assets	$	38,992
Property, plant and equipment, net	13,769
Intangible assets	245,000		13-14 years
Goodwill	~~94,298~~94,147
Right of use asset - operating leases	9,259
Deferred tax assets	~~9,768~~7,465
Other assets	148
Total assets acquired	~~411,234~~$	408,780

Current liabilities:
Accounts payable	$	718
Accrued expenses	5,966
Current portion of lease liability - operating leases	1,673
Total current liabilities	$	8,357
Other long-term liability	276
Lease liability - operating leases	7,585
Deferred tax liability	~~64,178~~61,724
Contingent consideration	23,900
Total liabilities assumed	~~104,296~~$	101,842

Net assets acquired	$	306,938

Intangible Assets

The estimated fair value of the developed technology acquired was determined using the multi-period excess earnings method of the income approach, which estimates value based on the present value of future economic benefits. Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each product including net revenues, cost of sales, R&D costs, selling and marketing costs, the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, and competitive trends impacting the asset and each cash flow stream.

The Company used a discount rate of 8.5% to arrive at the present value for the acquired intangible assets to reflect the rate of return a market participant would expect to earn and incremental commercial uncertainty in the cash flow projections. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change. For these and other reasons, actual results may vary significantly from estimated results.

Goodwill

The Company allocated goodwill related to the ACell ~~Acquisition~~acquisition to the Tissue Technologies reportable business segment. Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected synergies of the combined company and assembled workforce. Goodwill recognized as a result of this acquisition is non-deductible for income tax purposes.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Contingent Consideration

As part of the ~~acquisition,~~ACell Acquisition, the Company is required to ~~pay~~make payments to the former shareholders of ACell up to $100 million based on the achievement by the Company of certain revenue-based performance milestones in 2022, 2023, and 2025. TheThe Company used iterations of the Monte Carlo simulation to calculate the fair value of the contingent consideration that considered the possible outcomes of scenarios related to each specific milestone. The Company estimated the fair value of the contingent consideration to be $23.9 million at the acquisition date. The estimated fair value as of June 30, ~~2021~~2022 was $18.1 million. The Company recorded $18.1 million and $23.5 ~~million. This amount is included~~million in other liabilities at June 30, 2022 and June 30, 2021, respectively, in the consolidated balance sheets of the Company. The change in the fair value of the contingent obligation was primarily as a result of changes in estimates related to the timing of achieving these revenue-based performance milestones for each given year.

The Company ~~determines~~determined the acquisition date fair value of contingent consideration obligations using a Monte Carlo simulation, as well as significant unobservable inputs, reflecting the Company’s assessment of the assumptions market participants would use to value these liabilities. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined using the fair value concepts in ASC 820. The resultant most likely payouts are discounted using an appropriate effective annual interest rate. At each reporting date, the contingent consideration ~~obligation will be~~obligations are revalued to estimated fair value and changes in fair value will be reflected as income or expense in our consolidated statement of operations. Changes in the fair value of the contingent considerations may result from changes in discount periods and rates and changes in the timing and amount of revenue estimates.

Deferred Tax Liabilities

Deferred tax liabilities result from identifiable intangible assets’ fair value adjustments. These adjustments create excess book basis over tax basis which is tax-effected by the statutory tax rates of applicable jurisdictions.

~~Pro Forma Results (unaudited)~~

~~Pro forma revenues for the three months ended~~ ~~June 30, 2021 and 2020 were $390.0 million and $269.6 million, re~~spectively. Pro forma revenues for the six months ended June 30, 2021 and 2020 were $754.7 million and $646.9 million, respectively. Pro forma net income and earnings per share are not presented for this acquisition as they are not material.

3.4. REVENUES FROM CONTRACTS WITH CUSTOMERS

Summary of Accounting Policies on Revenue Recognition

Revenue is recognized upon the transfer of control of promised products or services to the customers in an amount that reflects the consideration the Company expects to receive in exchange for those products and services.

Performance Obligations

The Company's performance obligations consist mainly of transferring control of goods and services identified in the contracts, purchase orders, or invoices. The Company has no significant multi-element contracts with customers.

Significant Judgments

Usage-based royalties and licenses are estimated based on the provisions of contracts with customers and recognized in the same period that the royalty-based products are sold by ~~the Company and~~ the Company's strategic partners. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information, and expected sales trends. Differences between actual reported licensee sales and those that were estimated are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been significant.

The Company estimates returns, price concessions, and discount allowances using the expected value method based on historical trends and other known factors. Rebate allowances are estimated using the most likely method based on each customer contract.

The Company's return policy, as set forth in its product catalogs and sales invoices, requires review and authorization in advance prior to the return of product. Upon the authorization, a credit will be issued for the goods returned within a set amount of days from the shipment, which is generally ninety days.

The Company disregards the effects of a financing component if the Company expects, at contract inception, that the period between the transfer and customer payment for the goods or services will be one year or less. The Company has no significant revenues recognized on payments expected to be received more than one year after the transfer of control of products or services to customers.

~~INTEGRA LIFESCIENCES HOLDINGS CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

Contract Asset and Liability

Revenues recognized from the Company's private label business that are not invoiced to the customers as a result of recognizing revenue over time are recorded as a contract asset included in the prepaid expenses and other current assets account in the consolidated balance sheet.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Other operating revenues may include fees received under service agreements. Non-refundable fees received under multiple-period service agreements are recognized as revenue as the Company satisfies the performance obligations to the other party. A portion of the transaction price allocated to the performance obligations to be satisfied in the future periods is recognized as contract liability.

The following table ~~summarizes~~summarized the changes in the contract asset and liability balances for the six months ended June 30, ~~2021:~~2022:

Dollars in thousands

Total

Contract Asset

Contract asset, January 1, ~~2021~~2022

~~7,430~~11,412

Transferred to trade receivable of contract asset included in beginning of the year contract asset

~~(7,430)~~(11,412)

Contract asset, net of transferred to trade receivables on contracts during the period

~~7,952~~10,568

Contract asset, June 30, ~~2021~~2022

~~7,952~~10,568

Contract Liability

Contract liability, January 1, ~~2021~~2022

~~11,961~~11,946

Recognition of revenue included in beginning of year contract liability

~~(2,838)~~$

(3,591)

Contract liability, net of revenue recognized on contracts during the period

~~3,102~~4,347

Foreign currency translation

~~(125)~~(60)

Contract liability, June 30, ~~2021~~2022

~~12,100~~12,642

At June 30, ~~2021,~~2022, the short-term portion of the contract liability of ~~$5.9~~$5.4 million and the long-term portion of ~~$6.2~~$7.2 million ~~were~~is included in ~~accrued expenses and other~~ current liabilities and other liabilities, respectively, in the consolidated balance ~~sheet.~~sheets.

As of June 30, ~~2021,~~2022, the Company is expected to recognize revenue of approximately ~~49%~~43% of unsatisfied (or partially unsatisfied) performance obligations as revenue within twelve months, with the remaining balance to be recognized thereafter.

Shipping and Handling Fees

The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in the cost of goods sold.

Product Warranties

Certain of the Company's medical devices, including monitoring systems and neurosurgical systems, are designed to operate over long periods of time. These products are sold with warranties which may extend for up to two years from the date of purchase. The warranties are not considered a separate performance obligation. The Company estimates its product warranties using the expected value method based on historical trends and other known factors. The Company includes them in accrued expenses and other current liabilities in the consolidated balance sheet.

Taxes Collected from Customers

The Company elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Disaggregated Revenue

The following table presents revenues disaggregated by the major sources of revenues for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (dollar amounts in thousands):


		Three Months Ended June 30, 2021		Three Months Ended June 30, 2020		Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
											Three Months Ended June 30, 2022		Three Months Ended June 30, 2021		Six Months Ended June 30, 2022		Six Months Ended June 30, 2021
Neurosurgery	Neurosurgery	$	202,600	$	141,430	$	391,854	$	326,373	Neurosurgery	$	200,295	$	202,600	$	394,970	$	391,854
Instruments	Instruments	54,237		28,348		106,224		74,845		Instruments	57,568		54,237		110,201		106,224
Total Codman Specialty Surgical	Total Codman Specialty Surgical	256,837		169,778		498,078		401,218		Total Codman Specialty Surgical	257,863		256,837		505,171		498,078

Wound Reconstruction and Care(2)		102,616		56,291		191,314		128,558
Extremity Orthopedics(1)		0		11,162		0		32,634
Wound Reconstruction and Care										Wound Reconstruction and Care	104,894		102,616		199,524		191,314
Private Label	Private Label	30,539		21,434		60,671		50,579		Private Label	35,058		30,539		69,758		60,671
Total Tissue Technologies	Total Tissue Technologies	133,155		88,887		251,985		211,771		Total Tissue Technologies	139,952		133,155		269,282		251,985
Total revenue	Total revenue	$	389,992	$	258,665	$	750,063	$	612,989	Total revenue	$	397,815	$	389,992	$	774,453	$	750,063

~~(1)~~On ~~January 4, 2021,~~May 20 2022, the Company ~~completed its previously announced sale~~and certain of its ~~Extremity Orthopedics~~subsidiaries, entered into an agreement to sell its non-core traditional wound care ("TWC") business. ~~In conjunction with the sale of this business, the Company rebranded the Orthopedics and Tissue Technologies segment as Tissue Technologies in the first quarter of 2021.~~ See Note 2. ~~Acquisitions~~Assets and ~~Divestitures,~~ Liabilities Held for ~~details.~~

~~(2)~~ ~~See Note 2.~~ ~~Acquisitions and Divestitures,~~ ~~for details around the ACell Inc. Acquisition.~~Sale.

See Note ~~15,~~16, Segment and Geographical Information, for details of revenues based on the location of the customer.

4.5. INVENTORIES

Inventories, net consisted of the following:


Dollars in thousands	Dollars in thousands	June 30, 2021		December 31, 2020		Dollars in thousands	June 30, 2022		December 31, 2021
Finished goods	Finished goods	$	180,835	$	180,301	Finished goods	$	164,277	$	162,528
Work in process	Work in process	61,987		53,336		Work in process	72,779		65,323
Raw materials	Raw materials	80,796		76,480		Raw materials	83,152		89,535

Total inventories, net	Total inventories, net	$	323,618	$	310,117	Total inventories, net	$	320,208	$	317,386

At ~~December 31, 2020, $52.8~~June 30, 2022, $9.3 million of inventories, net ~~was~~were presented separately as ~~"Assets~~"assets held for sale" in conjunction with the sale of the ~~Extremity Orthopedics~~TWC business.See Note 2. Assets and Liabilities Held for Sale.

5.6. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Changes in the carrying amount of goodwill for the six-month period ended June 30, ~~2021~~2022 were as follows:

Dollars in thousands Codman Specialty
Surgical Tissue Technologies Total
Goodwill at December 31, 2020 $ 671,975 $ 260,392 $ 932,367
ACell Acquisition 0 94,298 94,298
Foreign currency translation (7,218) (3,809) (11,027)
Goodwill at June 30, 2021 $ 664,757 $ 350,881 $ 1,015,638


Dollars in thousands	Codman Specialty Surgical		Tissue Technologies		Total
Goodwill at December 31, 2021	$	663,428	$	350,030	$	1,013,458
Transfer to assets held for sale(1)	—		(5,083)		(5,083)
Foreign currency translation	(11,822)		(6,147)		(17,969)
Goodwill at June 30, 2022	$	651,606	$	338,800	$	990,406

(1) See Note 2. Assets and Liabilities Held for Sale

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Other Intangible Assets

The components of the Company’s identifiable intangible assets were as follows:


		June 30, 2021								June 30, 2022
Dollars in thousands	Dollars in thousands	Weighted Average Life	Cost		Accumulated Amortization		Net		Dollars in thousands	Weighted Average Life	Cost		Accumulated Amortization		Net
Completed technology	Completed technology	18 years	$	1,125,279	$	(274,287)	$	850,992	Completed technology	18 years	$	1,122,233	$	(336,288)	$	785,945
Customer relationships	Customer relationships	12 years	$	212,572	$	(137,897)	$	74,675	Customer relationships	12 years	$	192,929	$	(140,184)	$	52,745
Trademarks/brand names	Trademarks/brand names	28 years	$	99,319	$	(29,866)	$	69,453	Trademarks/brand names	28 years	$	96,745	$	(32,847)	$	63,898
Codman tradename	Codman tradename	Indefinite	$	166,651	$	—	$	166,651	Codman tradename	Indefinite	$	164,150	$	—	$	164,150
Supplier relationships	Supplier relationships	30 years	$	30,211	$	(15,691)	$	14,520	Supplier relationships	30 years	$	30,211	$	(16,681)	$	13,530
All other	All other	11 years	$	6,473	$	(3,880)	$	2,593	All other	11 years	$	5,859	$	(3,852)	$	2,007
											$	1,612,127	$	(529,852)	$	1,082,275

			$	1,640,505	$	(461,621)	$	1,178,884


		December 31, 2020								December 31, 2021
Dollars in thousands	Dollars in thousands	Weighted Average Life	Cost		Accumulated Amortization		Net		Dollars in thousands	Weighted Average Life	Cost		Accumulated Amortization		Net
Completed technology	Completed technology	19 years	$	896,478	$	(248,088)	$	648,390	Completed technology	18 years	$	1,132,954	$	(307,013)	$	825,941
Customer relationships	Customer relationships	12 years	213,270		(132,838)		80,432		Customer relationships	12 years	211,344		(142,755)		68,589
Trademarks/brand names	Trademarks/brand names	28 years	104,209		(31,767)		72,442		Trademarks/brand names	28 years	98,367		(31,468)		66,899
Codman tradename	Codman tradename	Indefinite	170,226		—		170,226		Codman tradename	Indefinite	167,758		—		167,758
Supplier relationships	Supplier relationships	27 years	30,211		(15,203)		15,008		Supplier relationships	30 years	30,211		(16,192)		14,019
All other ~~(1)~~	All other ~~(1)~~	4 years	6,693		(3,755)		2,938		All other ~~(1)~~	11 years	6,258		(3,891)		2,367
			$	1,421,087	$	(431,651)	$	989,436			$	1,646,892	$	(501,319)	$	1,145,573

~~(1)~~ ~~Prior period amounts were reclassified as it relates to All other within this table to conform to the current period presentation.~~

~~The increase in the Company's identifiable intangible assets at~~At June 30, ~~2021~~2022, $10.5 million of customer relationships, net were presented separately as ~~compared to the year ended December 31, 2020, was primarily driven from intangible assets acquired~~"assets held for sale" in conjunction with the ~~ACell Inc. acquisition.~~ sale of the TWC business. See Note 2, ~~Acquisitions~~2. Assets and ~~Divestitures~~,Liabilities Held for ~~details.~~Sale.

Based on quarter-end exchange rates, amortization expense (including amounts reported in cost of ~~product revenues)~~goods sold) is expected to be approximately ~~$40.6~~$38.4 million for the remainder of ~~2021, $79.1 million in~~ 2022, ~~$78.4~~$76.5 million in 2023, ~~$77.7~~$75.8 million in 2024, ~~$77.7~~$75.8 million in 2025, ~~$77.5~~$75.7 million in 2026, $73.7 million in 2027 and ~~$585.7~~$499.8 million thereafter.

6.7. DEBT

Amendment to the Sixth Amended and Restated Senior Credit Agreement

On February 3, 2020, the Company entered into the sixth amendment and restatement (the "February 2020 Amendment") of its Senior Credit Facility (the "Senior Credit Facility") with a syndicate of lending banks with Bank of America, N.A., as Administrative Agent. The February 2020 Amendment extended the maturity date to February 3, 2025. The Company continues to have the aggregate principal amount of up to approximately $2.2 billion available to it through the following facilities: (i) a $877.5 million Term Loan facility, and (ii) a $1.3 billion revolving credit facility, which includes a $60 million sublimit for the issuance of standby letters of credit and a $60 million sublimit for swingline loans.

On July 14, 2020, the Company entered into an amendment (the "July 2020 Amendment") to the February 2020 Amendment of the Senior Credit Facility to increase financial flexibility in light of the unprecedented impact and uncertainty of the COVID-19 pandemic on the global economy. The ~~July 2020 amendment does not increase the Company’s total indebtedness.~~

~~In connection with the July 2020 amendment, the~~ Company’s maximum consolidated total leverage ratio in the financial covenants (as defined in the Senior Credit Facility) ~~was modified to~~is the following:


Fiscal Quarter						Maximum Consolidated Total Leverage Ratio


~~Execution of July 2020 Amendment through June 30, 2021~~						~~5.50 to 1.00~~
September 30, 2021 through June 30, 2022						5.00 to 1.00
September 30, 2022 through June 30, 2023						4.50 to 1.00
September 30, 2023 and the last day of each fiscal quarter thereafter						4.00 to 1.00

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Borrowings under the Senior Credit Facility bear interest, at the Company’s option, at a rate equal to the following:

i.the Eurodollar Rate (as defined in the amendment and restatement) in effect from time to time plus the applicable rate (ranging from 1.00% to 2.25%), or

ii.the highest of:

1.the weighted average overnight Federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.50%

2.the prime lending rate of Bank of America, N.A. or

3.the one-month Eurodollar Rate plus 1.00%

The applicable rates are based on the Company’s consolidated total leverage ratio (defined as the ratio of (a) consolidated funded indebtedness as of such date less cash that is not subject to any restriction on the use or investment thereof to (b) consolidated EBITDA, ~~as defined by the July 2020 amendment,~~ for the period of four consecutive fiscal quarters ending on such date).

The Company will pay an annual commitment fee (ranging from 0.15% to 0.30%), based on the Company's consolidated total leverage ratio, on the amount available for borrowing under the revolving credit facility.

The Senior Credit Facility is collateralized by substantially all of the assets of the Company’s U.S. subsidiaries, excluding intangible assets. The Senior Credit Facility is subject to various financial and negative covenants and at June 30, ~~2021,~~2022, the Company was in compliance with all such covenants. In connection with the February 2020 Amendment, the Company capitalized $4.6 million of financing costs in connection with modification of the Senior Credit Facility and wrote off $1.2 million of previously capitalized financing costs during the first quarter of 2020. In connection with the July 2020 amendment, the Company expensed $3.3 million of incremental financing costs in connection with the modification of the Senior Credit Facility during the third quarter of 2020.

At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there was ~~$8.8~~$53.8 million and ~~$97.5~~$31.3 million, respectively, outstanding under the revolving ~~credit component~~portion of the Senior Credit Facility at weighted average interest rates of ~~1.5%.~~3.0% and 1.4%, respectively. At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there was ~~$866.3~~$821.3 million and ~~$877.5~~$843.8 million, respectively, outstanding under the Term Loan component of the Senior Credit Facility at a weighted average interest rate of ~~1.5%.~~3.0% and 1.4%, respectively. At June 30, 2022 and December 31, 2021, there was $50.6 million and $45.0 million, respectively of the Term Loan component of the Senior Credit Facility is classified as current on the consolidated balance ~~sheet.~~sheets.

The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit and Term Loan components at June 30, ~~2021~~2022 were ~~$8.6~~$52.5 million and ~~$850.4~~$803.6 million, respectively. These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair value hierarchy. Level 2 inputs represent inputs that are observable for the asset or liability, either directly or indirectly, and are other than active market observable inputs that reflect unadjusted quoted prices for identical assets or liabilities.

Letters of credit outstanding as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 totaled $1.6 million. There were 0no amounts drawn as of June 30, ~~2021.~~2022.

Contractual repayments of the Term Loan component of the Senior Credit Facility are due as follows:


Quarter Ended June 30, 2021		Principal Repayment
Quarter Ended June 30, 2022				Quarter Ended June 30, 2022	Principal Repayment
Dollars in thousands	Dollars in thousands			Dollars in thousands

Remainder of 2021		$	22,500
2022		$	45,000
Remainder of 2022				Remainder of 2022	$	22,500
2023	2023	$	61,875	2023	$	61,875
2024	2024	$	67,500	2024	$	67,500
2025	2025	$	669,375	2025	$	669,375
					$	821,250
		$	866,250

Future interest payments on the term loan component of the Senior Credit Facility based on current interest rates are expected to approximate $12.2 million for remainder of 2022, $23.2 million in 2023, $21.1 million in 2024, and $1.9 million in 2025. Interest is calculated on the term loan portion of the Senior Credit Facility based on LIBOR plus the certain amounts set forth in the Sixth Amended and Restated Credit Agreement. As the revolving credit facility and Securitization Facility can be repaid at any time, no interest has been included in the calculation.

The outstanding balance of the revolving credit component of the Senior Credit Facility is due on February 3, 2025.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Convertible Senior Notes

On February 4, 2020, the Company issued $575.0 million aggregate principal amount of its 0.5% Convertible Senior Notes due 2025 (the "2025 Notes"). The 2025 Notes will mature on August 15, 2025 and bear interest at a rate of 0.5% per annum payable semi-annually in arrears, unless earlier converted, repurchased or redeemed in accordance with the terms of the 2025 Notes. The portion of debt proceeds that was classified as equity at the time of the offering was $104.5 million. The effective interest rate implicit in the liability component was 4.2%. In connection with this offering, the Company capitalized $13.2 million of financing fees.

The 2025 Notes are senior, unsecured obligations of the Company, and are convertible into cash and shares of its common stock based on initial conversion rate, subject to adjustment of 13.5739 shares per $1,000 principal amounts of the 2025 Notes (which represents an initial conversion price of $73.67 per share). The 2025 Notes convert only in the following circumstances: (1) if the closing price of the Company's common stock has been at least 130% of the conversion price during the period; (2) if the average trading price per $1,000 principal amount of the 2025 Notes is less than or equal to 98% of the average conversion value of the 2025 Notes during a period as defined in the indenture; (3) at any time on or after February 20, 2023; or (4) if specified corporate transactions occur. As of June 30, ~~2021,~~2022, none of these conditions existed with respect to the 2025 Notes and as a result the 2025 Notes are classified as long term.

On December 9, 2020, the Company entered into the First Supplemental Indenture to the original agreement dated as of February 4, 2020 between the Company and Citibank, N.A., as trustee, governing the Company’s outstanding 2025 Notes. The Company irrevocably elected (1) to eliminate the Company’s option to choose physical settlement on any conversion of the 2025 Notes that occurs on or after the date of the First Supplemental Indenture and (2) with respect to any Combination Settlement for a conversion of the 2025 Notes, the Specified Dollar Amount that will be settled in cash per $1,000 principal amount of the 2025 Notes shall be no lower than $1,000.

Holders of the Notes will have the right to require the Company to repurchase for cash all or a portion of their Notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of a fundamental change (as defined in the indenture relating to the Notes). The Company will also be required to increase the conversion rate for holders who convert their Notes in connection with certain fundamental changes occurring prior to the maturity date or following delivery by the Company of a notice of redemption.

In connection with the issuance of the 2025 Notes, the Company entered into call transactions and warrant transactions, primarily with affiliates of the initial purchasers of the 2025 Notes (the “hedge participants”). The cost of the call transactions was $104.2 million for the 2025 Notes. The Company received $44.5 million of proceeds from the warrant transactions for the 2025 Notes. The call transactions involved purchasing call options from the hedge participants, and the warrant transactions involved selling call options to the hedge participants with a higher strike price than the purchased call options. The initial strike price of the call transactions was $73.67, subject to anti-dilution adjustments substantially similar to those in the 2025 Notes. The initial strike price of the warrant transactions was $113.34 for the 2025 Notes, subject to customary anti-dilution adjustments.

At December 31, 2020, the carrying amount of the liability component was $485.9 million, the remaining unamortized discount was $89.1 million, and the principal amount outstanding was $575.0 million. On January 1, 2021, the Company adopted ASU 2020-06 using the modified retrospective method. See Note 1, Basis of Presentation, for further details. At June 30, ~~2021~~2022, ~~in conjunction with the adoption of the ASU,~~ the carrying amount of the liability was $575.0 million. The fair value of the 2025 Notes at June 30, ~~2021~~2022 was $~~630.7~~542.1 million. Factors that the Company considered when estimating the fair value of the 2025 Notes included recent quoted market prices or dealer quote. The level of the 2025 Notes is considered as Level 1.

~~On January 1, 2021, the Company adopted ASU 2020-06 using the modified retrospective method. See Note 1,~~ ~~Basis of Presentation,~~ ~~for further details.~~ As a result of the adoption of ~~the~~ ASU 2020-06, the Company recognized only cash interest related to the contractual interest coupon of $1.4 million on the 2025 Notes for both the six months ended June 30, ~~2021. Prior to the adoption, during the six months ended~~2022 and June 30, ~~2020, the Company recognized cash interest of $1.2 million and amortization of the discount on the liability component of $6.8 million for a total interest charge of $8.0 million on the 2020 Notes.~~

~~INTEGRA LIFESCIENCES HOLDINGS CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

2021.

Securitization Facility

During the fourth quarter of 2018, the Company entered into an accounts receivable securitization facility (the "Securitization Facility") under which accounts receivable of certain domestic subsidiaries are sold on a non-recourse basis to a special purpose entity (“SPE”), which is a bankruptcy-remote, consolidated subsidiary of the Company. Accordingly, the assets of the SPE are not available to satisfy the obligations of the Company or any of its subsidiaries. From time to time, the SPE may finance such accounts receivable with a revolving loan facility secured by a pledge of such accounts receivable. The amount of outstanding borrowings on the Securitization Facility at any one time is limited to $150.0 million. The Securitization Facility Agreement ("Securitization Agreement") governing the Securitization Facility contains certain covenants and termination events. An occurrence of an event of default or a termination event under this Securitization Agreement may give rise to the right of its counterparty to terminate this facility. As of June 30, ~~2021,~~2022, the Company was in compliance with the covenants and none of the termination events had occurred.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

On May 28, 2021, the Company entered into an amendment (the "May 2021 Amendment") of the Securitization Facility which extended the maturity date from December 21, 2021 to May 28, 2024. The May 2021 ~~amendment~~Amendment does not increase the Company’s total indebtedness.

At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had $112.5 million ~~respectively,~~ of outstanding borrowings under its Securitization Facility at a weighted average interest rate of ~~1.2%~~2.1% and ~~1.3%~~1.1%, respectively. The fair value of the outstanding borrowing of the Securitization Facility at June 30, ~~2021~~2022 was ~~$110.3~~$110.0 million. These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair value hierarchy. Level 2 inputs represent inputs that are observable for the asset or liability, either directly or indirectly, and are other than active market observable inputs that reflect unadjusted quoted prices for identical assets or liabilities.

7.8. DERIVATIVE INSTRUMENTS

Interest Rate Hedging

The Company’s interest rate risk relates to U.S. dollar denominated variable interest rate borrowings. 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 LIBOR-indexed floating-rate borrowings.

~~INTEGRA LIFESCIENCES HOLDINGS CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

The Company held the following interest rate swaps as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (dollar amounts in thousands):


		June 30, 2021		December 31, 2020							June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021							June 30, 2022		December 31, 2021
Hedged Item	Hedged Item	Notional Amount				Designation Date	Effective Date	Termination Date	Fixed Interest Rate		Estimated Fair Value				Hedged Item	Notional Amount				Designation Date	Effective Date	Termination Date	Fixed Interest Rate		Estimated Fair Value
											Asset (Liability)
1-month USD LIBOR Loan		$	0	$	100,000	March 27, 2017	December 31, 2017	June 30, 2021	1.971	%	$	0	$	(929)
1-month USD LIBOR Loan		300,000		300,000		December 13, 2017	January 1, 2018	December 31, 2022	2.201	%	(9,122)		(12,557)

1-month USD LIBOR Loan		150,000		150,000		December 13, 2017	July 1, 2019	June 30, 2024	2.423	%	(8,692)		(11,502)
																									Asset (Liability)
1-month USD LIBOR Loan	1-month USD LIBOR Loan	200,000		200,000		December 13, 2017	January 1, 2018	December 31, 2024	2.313	%	(11,856)		(16,243)		1-month USD LIBOR Loan	300,000		300,000		December 13, 2017	January 1, 2018	December 31, 2022	2.201	%	681		(5,268)
1-month USD LIBOR Loan	1-month USD LIBOR Loan	75,000		75,000		October 10, 2018	July 1, 2020	June 30, 2025	3.220	%	(7,595)		(9,836)		1-month USD LIBOR Loan	150,000		150,000		December 13, 2017	July 1, 2019	June 30, 2024	2.423	%	1,937		(5,520)
1-month USD LIBOR Loan	1-month USD LIBOR Loan	75,000		75,000		October 10, 2018	July 1, 2020	June 30, 2025	3.199	%	(7,553)		(9,826)		1-month USD LIBOR Loan	200,000		200,000		December 13, 2017	January 1, 2018	December 31, 2024	2.313	%	3,322		(7,421)
1-month USD LIBOR Loan	1-month USD LIBOR Loan	75,000		75,000		October 10, 2018	July 1, 2020	June 30, 2025	3.209	%	(7,541)		(9,783)		1-month USD LIBOR Loan	75,000		75,000		October 10, 2018	July 1, 2020	June 30, 2025	3.220	%	(660)		(5,512)
1-month USD LIBOR Loan	1-month USD LIBOR Loan	100,000		100,000		December 18, 2018	December 30, 2022	December 31, 2027	2.885	%	(7,703)		(10,407)		1-month USD LIBOR Loan	75,000		75,000		October 10, 2018	July 1, 2020	June 30, 2025	3.199	%	(361)		(5,464)
1-month USD LIBOR Loan	1-month USD LIBOR Loan	100,000		100,000		December 18, 2018	December 30, 2022	December 31, 2027	2.867	%	(7,592)		(10,431)		1-month USD LIBOR Loan	75,000		75,000		October 10, 2018	July 1, 2020	June 30, 2025	3.209	%	(485)		(5,494)
1-month USD LIBOR Loan	1-month USD LIBOR Loan	575,000		575,000		December 15, 2020	July 31, 2025	December 31, 2027	1.415	%	3,931		(1,907)		1-month USD LIBOR Loan	100,000		100,000		December 18, 2018	December 30, 2022	December 31, 2027	2.885	%	253		(6,886)
1-month USD LIBOR Loan	1-month USD LIBOR Loan	125,000		125,000		December 15, 2020	July 1, 2025	December 31, 2027	1.404	%	987		(348)		1-month USD LIBOR Loan	100,000		100,000		December 18, 2018	December 30, 2022	December 31, 2027	2.867	%	19		(6,764)
1-month USD LIBOR Loan															1-month USD LIBOR Loan	575,000		575,000		December 15, 2020	July 31, 2025	December 31, 2027	1.415	%	17,938		3,552
1-month USD LIBOR Loan															1-month USD LIBOR Loan	125,000		125,000		December 15, 2020	July 1, 2025	December 31, 2027	1.404	%	4,295		821
																$	1,775,000	$	1,775,000						$	26,939	$	(43,957)

		$	1,775,000	$	1,875,000						$	(62,736)	$	(93,769)

The Company has designated these derivative instruments as cash flow hedges. The Company assesses the effectiveness of these derivative instruments and has recorded the changes in the fair value of the derivative instrument designated as a cash flow hedge as unrealized gains or losses in accumulated other comprehensive loss (“AOCL”), net of tax, until the hedged item affected earnings, at which point any gain or loss was reclassified to earnings. If the hedged cash flow does not occur, or if it becomes probable that it will not occur, the Company will reclassify the remaining amount of any gain or loss on the related cash flow hedge recorded in AOCL to interest expense at that time.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Foreign Currency Hedging

From time to time, the Company enters into foreign currency hedge contracts intended to protect the U.S. dollar value of certain forecasted foreign currency denominated transactions. The Company assesses the effectiveness of the contracts that are designated as hedging instruments. The changes in fair value of foreign currency cash flow hedges are recorded in AOCL, net of tax. Those amounts are subsequently reclassified to earnings from AOCL as impacted by the hedged item when the hedged item affects earnings. If the hedged forecasted transaction does not occur or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. For contracts not designated as hedging instruments, the changes in fair value of the contracts are recognized in other income, net in the consolidated statements of operation, along with the offsetting foreign currency gain or loss on the underlying assets or liabilities.

During the fourth quarter of 2020, the Company entered into foreign currency forward contracts, with a notional amount of ~~$9.7~~$4.2 million, to mitigate the foreign exchange risk related to certain intercompany loans denominated in Canadian Dollar ("CAD") ~~and~~. During the second quarter of 2022, the Company entered into foreign currency forward contract, with a notional amount of $4.2 million, to mitigate the foreign exchange risk related to certain intercompany receivables denominated in Japanese Yen ("JPY"). The contracts are ~~not~~not designated as hedging instruments. The Company recognized a$0.1 million and $0.3 million ~~loss~~losses from the change in fair value of ~~the~~such contracts, which was included in other income, net in the consolidated statement of operations as of June 30, ~~2021. The Company subsequently settled its foreign currency forward contracts associated with the intercompany receivables denominated in JPY during the first quarter of 2021.~~2022 and June 30, 2021, respectively. The fair value of the foreign currency forward contracts ~~denominated in CAD~~ was ~~$0.3~~less than $0.1 million and $0.2 million as of June 30, ~~2021.~~

~~INTEGRA LIFESCIENCES HOLDINGS CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

2022 and December 31, 2021, respectively.

During the second quarter of 2021, the Company entered into a foreign currency swap, with a notional amount of $7.3 million to mitigate the risk from fluctuations in foreign currency exchange rates associated with certain intercompany loan denominated in Japanese Yen ("JPY"). In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another currency at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company subsequently paid down a portion of this swap, bringing the notional amount down to $6.4 million. The change in fair value of the foreign currency swap was ~~not material for the period.~~$1.6 million as of June 30, 2022.

The success of the Company’s hedging program depends, in part, on forecasts of certain activity denominated in foreign currency. The Company may experience unanticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activities during periods of currency volatility. In addition, changes in currency exchange rates related to any unhedged transactions may affect earnings and cash flows.

Cross-Currency Rate Swaps

On October 2, 2017, the Company entered into cross-currency swap agreements to convert a notional amount of $300.0 million equivalent to 291.2 million of Swiss Francs ("CHF") denominated intercompany loans into U.S. dollars. The CHF-denominated intercompany loans were the result of the purchase of intellectual property by a subsidiary in Switzerland as part of an acquisition.

On December 21, 2020, the Company entered into cross-currency swap agreements to convert a notional amount of $471.6 million equivalent to 420.1 million of a CHF-denominated intercompany loan into U.S. dollars. The CHF-denominated intercompany loan was the result of an intra-entity transfer of certain intellectual property rights to a subsidiary in Switzerland completed during the fourth quarter of 2020. The intercompany loan requires quarterly payments of CHF 5.8 million plus accrued interest. As a result, the aggregate notional amount of the related cross-currency swaps will decrease by a corresponding amount.

The objective of these cross-currency swaps is to reduce volatility of earnings and cash flows associated with changes in the foreign currency exchange rate. Under the terms of these contracts, which have been designated as cash flow hedges, the Company will make interest payments in Swiss Francs and receive interest in U.S. dollars. Upon the maturity of these contracts, the Company will pay the principal amount of the loans in Swiss Francs and receive U.S. dollars from the counterparties.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The Company held the following cross-currency rate swaps as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (dollar amounts in thousands):


									June 30, 2021	December 31, 2020		June 30, 2021				December 31, 2020
		Effective Date		Termination Date		Fixed Rate		Aggregate Notional Amount				Fair Value Asset (Liability)

Pay CHF		October 2, 2017		October 2, 2021		1.85%		CHF	48,533	48,533		(2,228)				(4,335)
Receive U.S.$					4.46%		$	50,000	50,000

																																		June 30, 2022			December 31, 2021				June 30, 2022				December 31, 2021
															Effective Date					Termination Date			Fixed Rate			Aggregate Notional Amount									Fair Value Asset (Liability)

Pay CHF	Pay CHF		October 2, 2017		October 2, 2022		1.95%		CHF	145,598	145,598			(4,641)					(11,262)		Pay CHF			October 2, 2017			October 2, 2022				1.95%					CHF		145,598		145,598				(2,557)				(8,283)
Receive U.S.$	Receive U.S.$					4.52%		$	150,000	150,000						Receive U.S.$					4.52%								$		150,000		150,000

Pay CHF	Pay CHF	December 21, 2020		December 20, 2025		3.00%		CHF	408,637	420,137		10,124				(7,843)	Pay CHF					December 21, 2020			December 22, 2025					3.00%				CHF			385,637		397,137			11,919				41
Receive U.S.$	Receive U.S.$				3.98%		$	458,730	471,640					Receive U.S.$					3.98%									$		432,911		445,821

Total	Total											$	3,255				$	(23,441)		Total																						$	9,362			$	(8,242)

On October 4, 2021 in accordance with the termination date, the Company settled a cross-currency swap designated as a cash flow hedge of an intercompany loan with an aggregate notional amount of $50.0 million. The gain recorded by the Company upon the settlement of the swap was not material for the period.

The cross-currency swaps are carried on the consolidated balance sheet at fair value, and changes in the fair values are recorded as unrealized gains or losses in AOCL. For the three and six months ended June 30, 2022, the Company recorded gains of $19.3 million and $25.8 million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation to offset the losses recognized on the intercompany loans. For the three and six months ended June 30, 2021, the Company recorded a loss of $12.9 million and a gain of $30.0 million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation to offset the ~~gains~~gain or losses recognized on the intercompany loans.

For the three and six months ended June 30, ~~2020,~~2022, the Company recorded ~~losses~~gains of ~~$3.4~~$21.1 million and ~~$5.1~~$21.5 million ~~respectively,~~ in ~~other income, net~~AOCL, respectively, related to change in fair value ~~related to~~of the ~~foreign currency rate translation to offset the gains recognized on the intercompany loans.~~

cross-currency swaps. For the three and six months ended June 30, 2021, the Company recorded a loss of $11.0 million and a gain of $29.2 million in AOCL, respectively, related to change in fair value of the cross-currency swaps.

For the three and six months ended June 30, ~~2020,~~2022, the Company recorded ~~a loss~~gains of ~~$2.3~~$2.0 million and ~~a gain~~$3.8 million, respectively, in other income, net included in the consolidated statements of ~~$3.6 million in AOCL, respectively,~~operations related to ~~change in fair value~~the interest rate differential of the cross-currency swaps.

~~INTEGRA LIFESCIENCES HOLDINGS CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

For the three and six months ended June 30, 2021, the Company recorded gains of $1.3 million and $2.5 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps. For the three and six months ended June 30, 2020, the Company recorded gains of $1.5 million and $3.0 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

The estimated gain that is expected to be reclassified to other income, ~~(expense),~~ net from AOCL as of June 30, ~~2021~~2022 within the next twelve months is ~~$7.0~~$3.6 million. As of June 30, ~~2021,~~2022, the Company does not expect any gains or losses will be reclassified into earnings as a result of the discontinuance of these cash flow hedges because the original forecasted transaction will not occur.

Net Investment Hedges

The Company manages certain foreign exchange risks through a variety of strategies, including hedging. The Company is exposed to foreign exchange risk from its international operations through foreign currency purchases, net investments in foreign subsidiaries, and foreign currency assets and liabilities created in the normal course of business. On October 1, 2018, ~~and~~ December 16, 2020 and May 26, 2022, the Company entered into cross-currency swap agreements designated as net investment hedges to partially offset the effects of foreign currency on foreign subsidiaries.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The Company held the following cross-currency rate swaps designated as net investment hedges as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively (dollar amounts in thousands):


											June 30, 2021				December 31, 2020																											June 30, 2022				December 31, 2021
		Effective Date		Termination Date		Fixed Rate		Aggregate Notional Amount			Fair Value Asset (Liability)										Effective Date					Termination Date					Fixed Rate				Aggregate Notional Amount							Fair Value Asset (Liability)

Pay EUR	Pay EUR	October 3, 2018		September 30, 2021		0%		EUR	44,859		$	(864)			$	(1,884)	Pay EUR				October 3, 2018					September 30, 2023					—%				EUR		51,760					5,740				2,503
Receive U.S.$	Receive U.S.$				3.01%		$	52,000						Receive U.S.$									2.57%								$		60,000

Pay EUR	Pay EUR		October 3, 2018		September 30, 2023		0%		EUR	51,760				901						(450)		Pay EUR				October 3, 2018					September 30, 2025				—%					EUR		38,820				4,784			2,147
Receive U.S.$	Receive U.S.$			2.57%			$	60,000			Receive U.S.$								2.19%					$				45,000

Pay EUR		October 3, 2018			September 30, 2025		0%		EUR	38,820					849						92
Pay CHF(1)										Pay CHF(1)			December 16, 2020				December 16, 2027						—%						CHF			222,300				—					(792)
Receive U.S.$	Receive U.S.$		October 3, 2018			September 30, 2025		2.19%		$	45,000									849					92		Receive U.S.$											1.10%						$			250,000

Pay CHF	Pay CHF	December 16, 2020			December 16, 2027			0%		CHF	222,300				3,292						(3,794)		Pay CHF							May 26, 2022				December 16, 2028					—%				CHF		288,210			(1,824)		—
Receive U.S.$	Receive U.S.$			1.10%			$	250,000			Receive U.S.$								1.94%							$		300,000

Total	Total										$	4,178					$	(6,036)			Total																								$	8,700		$	3,858

(1) The following currency swaps designated as a net investment hedge were early settled during the three months ended June 30, 2022.

During the six months ended June 30, 2022, the Company early settled cross-currency swaps designated as net investment hedge with an aggregate notional amount of $250.0 million equivalent to 222.3 million Swiss Franc. The original settlement date was December 16, 2027. As a result of the settlement, the Company recorded a gain of $4.9 million in AOCL. On May 26, 2022, the Company entered into cross-currency swap agreements designated as net investment hedge to replace the following swaps of a notional amount of $300.0 million equivalent to 288.2 million Swiss Franc.

On September 30, 2021, in accordance with the termination date, the Company settled cross-currency swaps designated as net investment hedge with an aggregate notional amount of $52 million equivalent to 44.9 million Euros based on the termination date. As a result of the settlement, the Company recorded a gain of $0.1 million in AOCL.

The cross-currency swaps were carried on the consolidated balance sheet at fair value and changes in the fair values were recorded as unrealized gains or losses in AOCL. For the three and six months ended June 30, 2022, the Company recorded gains of $10.8 million and $12.1 million, respectively, in AOCL related to the change in fair value of the cross-currency swaps. For the three and six months ended June 30, 2021, the Company recorded gains of $0.1 million and $13.7 million, respectively, in AOCL related to the change in fair value of the cross-currency swaps.

For the three and six months ended June 30, ~~2020,~~2022, the Company recorded ~~a loss~~gains of ~~$2.5~~$1.0 million and ~~a gain~~$2.3 million in interest income included in the consolidated statements of ~~$16.4 million, respectively, in AOCL~~operations related to the ~~change in fair value~~interest rate differential of the cross-currency swaps.

For the three and six months ended June 30, 2021, the Company recorded gains of $1.7 million and $3.4 million in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps. For the three and six months ended June 30, 2020, the Company recorded gains of $2.2 million and $4.4 million in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

The estimated gain that is expected to be reclassified to interest income from AOCL as of June 30, ~~2021~~2022 within the next twelve months is ~~$4.5~~$8.5 million.

Counterparty Credit Risk

The Company manages its concentration of counterparty credit risk on its derivative instruments by limiting acceptable counterparties to a group of major financial institutions with investment grade credit ratings, and by actively monitoring their credit ratings and outstanding positions on an ongoing basis. Therefore, the Company considers the credit risk of the counterparties to be low. Furthermore, none of the Company’s derivative transactions are subject to collateral or other security arrangements, and none contain provisions that depend upon the Company’s credit ratings from any credit rating agency.

~~INTEGRA LIFESCIENCES HOLDINGS CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

Fair Value of Derivative Instruments

The Company has classified all of its derivative instruments within Level 2 of the fair value hierarchy because observable inputs are available for substantially the full term of the derivative instruments. The fair values of the interest rate swaps and cross-currency swaps were developed using a market approach based on publicly available market yield curves and the terms of the swap. The Company performs ongoing assessments of counterparty credit risk.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following table summarizes the fair value for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		Fair Value as of					Fair Value as of
Location on Balance Sheet (1):	Location on Balance Sheet (1):	June 30, 2021		December 31, 2020				Location on Balance Sheet(1):	June 30, 2022		December 31, 2021
Dollars in thousands	Dollars in thousands					Dollars in thousands
Derivatives designated as hedges — Assets:	Derivatives designated as hedges — Assets:							Derivatives designated as hedges — Assets:
Prepaid expenses and other current assets	Prepaid expenses and other current assets							Prepaid expenses and other current assets
Cash Flow Hedges	Cash Flow Hedges							Cash Flow Hedges

Interest rate swap(2)								Interest rate swap(2)	4,369		$	—
Cross-currency swap	Cross-currency swap	$	9,206	$	7,623			Cross-currency swap	$	6,122	$	4,900
Net Investment Hedges	Net Investment Hedges							Net Investment Hedges
Cross-currency swap	Cross-currency swap	5,345		5,297				Cross-currency swap	8,472		5,120
Other assets	Other assets							Other assets
Cash Flow Hedges	Cash Flow Hedges							Cash Flow Hedges
Interest rate swap(2)	Interest rate swap(2)	4,918		0				Interest rate swap(2)	24,619		4,373
Cross-currency swap	Cross-currency swap	4,605		0				Cross-currency swap	5,797		—
Net Investment Hedges	Net Investment Hedges							Net Investment Hedges
Cross-currency swap	Cross-currency swap	505		0				Cross-currency swap	7,964		2,104
Total derivatives designated as hedges — Assets	Total derivatives designated as hedges — Assets	$	24,579	$	12,920			Total derivatives designated as hedges — Assets	$	57,343	$	16,497

Derivatives designated as hedges — Liabilities:	Derivatives designated as hedges — Liabilities:							Derivatives designated as hedges — Liabilities:
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities							Accrued expenses and other current liabilities
Cash Flow Hedges	Cash Flow Hedges							Cash Flow Hedges
Interest rate swap(2)	Interest rate swap(2)	$	21,003	$	22,033			Interest rate swap(2)	$	62	$	18,187
Cross-currency swap	Cross-currency swap	2,228		4,335				Cross-currency swap	$	2,558	8,283
Net Investment Hedges	Net Investment Hedges							Net Investment Hedges
Cross-currency swap		864		1,884
Other liabilities	Other liabilities							Other liabilities
Cash Flow Hedges	Cash Flow Hedges							Cash Flow Hedges
Interest rate swap(2)	Interest rate swap(2)	46,651		71,736				Interest rate swap(2)	$	1,987	30,143
Cross-currency swap	Cross-currency swap	8,328		26,728				Cross-currency swap	$	—	4,859
Net Investment Hedges	Net Investment Hedges							Net Investment Hedges
Cross-currency swap	Cross-currency swap	808		9,449				Cross-currency swap	$	7,736	3,366
Total derivatives designated as hedges — Liabilities	Total derivatives designated as hedges — Liabilities	$	79,882	$	136,165			Total derivatives designated as hedges — Liabilities	$	12,343	$	64,838

(1) The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months.

(2) At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the total notional amounts related to the Company’s interest rate swaps were both $1.8 ~~billion and $1.9~~ billion, respectively.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following presents the effect of derivative instruments designated as cash flow hedges and net investment hedges on the accompanying condensed consolidated statement of operations during the three and six months ended June 30, ~~2021~~2022 and ~~2020:~~2021:


Dollars in thousands	Dollars in thousands	Balance in AOCL Beginning of Quarter		Amount of Gain (Loss) Recognized in AOCL		Amount of Gain (Loss) Reclassified from AOCL into Earnings		Balance in AOCL End of Quarter		Location in Statements of Operations	Dollars in thousands	Balance in AOCL Beginning of Quarter		Amount of Gain (Loss) Recognized in AOCL		Amount of Gain (Loss) Reclassified from AOCL into Earnings		Balance in AOCL End of Quarter		Location in Statements of Operations
Three Months Ended June 30, 2021
Three Months Ended June 30, 2022											Three Months Ended June 30, 2022
Cash Flow Hedges	Cash Flow Hedges										Cash Flow Hedges
Interest rate swap	Interest rate swap	$	(53,546)	$	(15,013)	$	(5,823)	$	(62,736)	Interest expense	Interest rate swap	$	2,932	$	20,116	$	(3,891)	$	26,939	Interest expense
Cross-currency swap	Cross-currency swap	(5,029)		(10,969)		(11,635)		(4,363)		Other income (expense),net	Cross-currency swap	(17,703)		21,136		21,268		(17,835)		Other income, net
Net Investment Hedges	Net Investment Hedges										Net Investment Hedges
Cross-currency swap	Cross-currency swap	(429)		88		1,737		(2,078)		Interest income	Cross-currency swap	(2,332)		10,816		978		7,506		Interest income
		$	(59,004)	$	(25,894)	$	(15,721)	$	(69,177)			$	(17,103)	$	52,068	$	18,355	$	16,610
Three Months Ended June 30, 2020
Three Months Ended June 30, 2021											Three Months Ended June 30, 2021
Cash Flow Hedges	Cash Flow Hedges										Cash Flow Hedges
Interest rate swap	Interest rate swap	$	(95,753)	$	(9,988)	$	(3,614)	$	(102,127)	Interest expense	Interest rate swap	$	(53,546)	$	(15,013)	$	(5,823)	$	(62,736)	Interest expense
Cross-currency swap	Cross-currency swap	6,266		(2,322)		(1,899)		5,843		Other income (expense),net	Cross-currency swap	(5,029)		(10,969)		(11,635)		(4,363)		Other income, net
Net Investment Hedges	Net Investment Hedges										Net Investment Hedges
Cross-currency swap	Cross-currency swap	26,946		(2,543)		2,179		22,224		Interest income	Cross-currency swap	(429)		88		1,737		(2,078)		Interest income
		$	(62,541)	$	(14,853)	$	(3,334)	$	(74,060)			$	(59,004)	$	(25,894)	$	(15,721)	$	(69,177)

Dollars in thousands	Dollars in thousands	Balance in AOCL Beginning of Year		Amount of Gain (Loss) Recognized in AOCL		Amount of Gain (Loss) Reclassified from AOCL into Earnings		Balance in AOCL End of Quarter		Location in Statements of Operations	Dollars in thousands	Balance in AOCL Beginning of Year		Amount of Gain (Loss) Recognized in AOCL		Amount of Gain (Loss) Reclassified from AOCL into Earnings		Balance in AOCL End of Quarter		Location in Statements of Operations
Six Months Ended June 30, 2022											Six Months Ended June 30, 2022
Cash Flow Hedges											Cash Flow Hedges
Interest rate swap											Interest rate swap	$	(43,956)	$	61,790	$	(9,105)	$	26,939	Interest expense
Cross-currency swap											Cross-currency swap	(9,688)		21,452		29,599		(17,835)		Other income, net
Net Investment Hedges											Net Investment Hedges
Cross-currency swap											Cross-currency swap	(2,321)		12,125		2,298		7,506		Interest income
												$	(55,965)	$	95,367	$	22,792	$	16,610
Six Months Ended June 30, 2021	Six Months Ended June 30, 2021										Six Months Ended June 30, 2021
Cash Flow Hedges	Cash Flow Hedges										Cash Flow Hedges
Interest rate swap	Interest rate swap	$	(93,769)	$	19,505	$	(11,528)	$	(62,736)	Interest expense	Interest rate swap	$	(93,769)	$	19,505	$	(11,528)	$	(62,736)	Interest expense
Cross-currency swap	Cross-currency swap	(1,073)		29,225		32,515		(4,363)		Other income (expense),net	Cross-currency swap	(1,073)		29,225		32,515		(4,363)		Other income, net
Net Investment Hedges	Net Investment Hedges										Net Investment Hedges
Cross-currency swap	Cross-currency swap	(12,291)		13,661		3,448		(2,078)		Interest income	Cross-currency swap	(12,291)		13,661		3,448		(2,078)		Interest income
		$	(107,133)	$	62,391	$	24,435	$	(69,177)			$	(107,133)	$	62,391	$	24,435	$	(69,177)
Six Months Ended June 30, 2020
Cash Flow Hedges
Interest rate swap		$	(45,146)	$	(61,637)	$	(4,656)	$	(102,127)	Interest expense
Cross-currency swap		177		3,585		(2,081)		5,843		Other income (expense), net
Net Investment Hedges
Cross-currency swap		10,229		16,357		4,362		22,224		Interest income
		$	(34,740)	$	(41,695)	$	(2,375)	$	(74,060)

8.9. STOCK-BASED COMPENSATION

As of June 30, ~~2021,~~2022, the Company had stock options, restricted stock awards, performance stock awards, contract stock awards and restricted stock unit awards outstanding under the Integra LifeSciences Holdings Corporation Fifth Amended and Restated 2003 Equity Incentive Plan (the “2003 Plan”). ~~The 2000 and 2001 Equity Incentive Plans were terminated as of February 19, 2021, and no further awards may be issued under the plans.~~

Stock options issued under the 2003 Plan become exercisable over specified periods, generally within four years from the date of grant for officers and employees, within one year from date of grant for directors which generally expire eight years from the grant date for employees, and from six to ten years for directors and certain executive officers, except in certain instances that result in accelerated vesting due to death, disability, retirement age or change in-control provisions within their grant agreements. The Company values stock option grants using the binomial distribution model. Restricted stock issued under the ~~Plans~~2003 Plan vests over specified periods, generally three years after the date of grant. The vesting of performance stock issued under the ~~Plans~~2003 Plan is subject to service and performance conditions.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Stock Options

As of June 30, ~~2021,~~2022, there were ~~approximately $4.6~~approximately $5.3 million of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately three years. There were ~~149,558~~145,565 stock options granted during the six months ended June 30, ~~2021.~~2022. For the six months ended June 30, ~~2021,~~2022, the weighted average grant date fair value for stock options was ~~$22.59~~$23.15 per option.

Awards of Restricted Stock and Performance Stock

Performance stock and restricted stock awards generally have requisite service periods of three years, except in certain instances that result in accelerated vesting due to death, disability, retirement age provision or change in-control provisions in their grant agreements. Performance stock units are subject to graded vesting conditions based on revenue goals of the Company. The Company expenses the fair value of restricted stock awards on a straight-line basis over the requisite service period. AsAs of June 30, ~~2021,~~2022, there was approximately ~~$32.9~~$40.2 million of total unrecognized compensation costs related to these unvested awards. The Company expects to recognize these costs over a weighted-average period of approximately two years. The Company granted ~~242,464~~363,326 restricted stock awards and ~~176,147~~130,753 performance stock awards during the six months ended June 30, ~~2021.~~2022. For the six months ended June 30, ~~2021,~~2022, the weighted average grant date fair value for restricted stock awards and performance stock units was ~~$68.21~~$64.65 and ~~$68.10~~$65.11 per award, respectively.

The Company also maintains an Employee Stock Purchase Plan (the “ESPP”), which provides eligible employees with the opportunity to acquire shares of common stock at periodic intervals by means of accumulated payroll deductions. The ESPP is a non-compensatory plan based on its terms.

9.10. RETIREMENT PLANS

The Company maintains defined benefit pension plans that cover certain employees in France, Japan, Germany and Switzerland.

Net periodic benefit cost for the Company’s defined benefit pension plans for the three and six months ended June 30, 2022 were $0.3 million and $0.5 million. The components of the net periodic benefit costs other than the service cost component of $0.6 million and $1.3 million for the three and six months ended June 30, 2022 are included in other income, net in the consolidated statements of operations.

Net periodic benefit costs for the Company’s defined benefit pension plans for the three and ~~the~~ six months ended June 30, 2021 were $0.6 million and $1.2 ~~million.~~million . The components of the net periodic benefit costs other than the service cost component of $0.8 million and $1.7 million for the three and six months ended June 30, 2021 are included in other income, ~~(expense), net in the consolidated statements of operations.~~

Net periodic benefit costs for the Company’s defined benefit pension plans for the three and six months ended June 30, 2020 were $1.0 million and $1.9 million, respectively. The components of the net periodic benefit costs other than the service cost component of $0.9 million and $1.9 million for the three and six months ended June 30, 2020, respectively, are included in other income (expense), net in the consolidated statements of operations.

The estimated fair values of plan assets were ~~$33.8~~$34.4 million and ~~$37.8~~$39.9 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The net plan assets of the pension plans are invested in common trusts as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. Common trusts are classified as Level 2 in the fair value hierarchy. The fair value of common trusts is valued at the net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. The investment strategy of the Company's defined benefit plans is both to meet the liabilities of the plans as they fall due and to maximize the return on invested assets within an appropriate risk profile.

Deferred Compensation Plan

The Company maintains a Deferred Compensation Plan in which certain employees of the Company may defer the payment and taxation of up to 75% of their base salary and up to 100% of bonus amounts and other eligible cash compensation.

~~During the first quarter of 2020, employees participating in the Company's deferred compensation plan began to defer their compensation.~~ This deferred compensation is invested in funds offered under this plan and is valued based on Level 1 measurements in the fair value hierarchy. Assets of the Company's deferred compensation plan are included in other current assets and recorded at fair value based on their quoted market prices. The fair value of these assets were ~~$3.2~~$4.3 million and ~~$2.0~~$3.8 million as of June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021. Offsetting liabilities relating to the deferred compensation plan are included in Other liabilities.

~~10.~~11. LEASES AND RELATED PARTY LEASES

The Company leases administrative, manufacturing, research and distribution facilities and vehicles through operating lease agreements. The Company has no finance leases as of June 30, ~~2021.~~2022. Many of the Company's leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common-area or other maintenance costs). For vehicles, the Company has elected the practical expedient to group lease and non-lease components.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Most facility leases include 1 or more options to renew. The exercise of lease renewal options is typically at the Company's sole discretion, therefore, the majority of renewals to extend the lease terms are not included in the Right of Use ("ROU") assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates renewal options and when they are reasonably certain of exercise, the renewal period is included in the lease term.

As most of the Company's leases do not provide an implicit rate, the Company uses a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

Total operating lease expense for the six months ended June 30, ~~2021~~2022 and June 30, ~~2020~~2021 was ~~$10.6~~$10.2 million and ~~$9.7~~$10.6 million respectively, which includes $0.1 million, in related party operating lease expense.

Supplemental balance sheet information related to operating leases were as follows:


Dollars in thousands, except lease term and discount rate	Dollars in thousands, except lease term and discount rate	June 30, 2021			December 31, 2020			Dollars in thousands, except lease term and discount rate	June 30, 2022			December 31, 2021

ROU assets	ROU assets	$	89,174		$	83,635		ROU assets	$	145,135		$	84,543

Current lease liabilities	Current lease liabilities	13,987			12,818			Current lease liabilities	12,743			14,775
Non-current lease liabilities	Non-current lease liabilities	95,196			88,118			Non-current lease liabilities	154,029			90,329
Total lease liabilities	Total lease liabilities	$	109,183		$	100,936		Total lease liabilities	$	166,772		$	105,104

Weighted average remaining lease term (in years):	Weighted average remaining lease term (in years):							Weighted average remaining lease term (in years):

Leased facilities	Leased facilities	11.3 years			11.6 years			Leased facilities	17.9 years			10.4 years
Leased vehicles	Leased vehicles	2.3 years			2.3 years			Leased vehicles	2.1 years			2.1 years

Weighted average discount rate:	Weighted average discount rate:							Weighted average discount rate:
Leased facilities	Leased facilities	5.0		%	4.6		%	Leased facilities	5.2		%	5.1		%
Leased vehicles	Leased vehicles	2.7		%	2.3		%	Leased vehicles	2.7		%	2.6		%

Supplemental cash flow information related to leases for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 were as follows:


Dollars in thousands	Dollars in thousands	June 30, 2021		June 30, 2020		Dollars in thousands	June 30, 2022		June 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	7,019	$	6,728	Operating cash flows from operating leases	$	8,798	$	7,019

ROU assets obtained in exchange for lease liabilities:	ROU assets obtained in exchange for lease liabilities:					ROU assets obtained in exchange for lease liabilities:
Operating leases	Operating leases	$	10,528	$	6,007	Operating leases	$	69,489	$	10,528

Future minimum lease payments under operating leases at June 30, ~~2021~~2022 were as follows:


Dollars in thousands	Dollars in thousands	Related Parties		Third Parties		Total		Dollars in thousands	Related Parties		Third Parties		Total
2021		$	148	$	7,973	$	8,121
2022		296		16,833		17,129
Remainder of 2022								Remainder of 2022	$	148	$	7,824	$	7,972
2023	2023	296		13,945		14,241		2023	296		18,022		18,318
2024	2024	296		11,461		11,757		2024	296		18,008		18,304
2025	2025	296		10,835		11,131		2025	296		16,505		16,801
2026	2026	296		9,553		9,849		2026	296		14,981		15,277
2027								2027	296		14,580		14,876
Thereafter	Thereafter	837		72,887		73,724		Thereafter	246		164,917		165,163
Total minimum lease payments	Total minimum lease payments	$	2,465	$	143,487	$	145,952	Total minimum lease payments	$	1,874	$	254,837	$	256,711
Less: Imputed interest	Less: Imputed interest					36,769		Less: Imputed interest					89,939
Total lease liabilities	Total lease liabilities					109,183		Total lease liabilities					166,772
Less: Current lease liabilities	Less: Current lease liabilities					13,987		Less: Current lease liabilities					12,743
Long-term lease liabilities	Long-term lease liabilities					95,196		Long-term lease liabilities					154,029

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Related Party Leases

The Company leases its manufacturing facility in Plainsboro, New Jersey, from a general partnership that is 50% owned by a corporation whose ~~shareholders~~stockholders are trusts, whose beneficiaries include family members of the Company’s ~~principal stockholder and~~ former director. The term of the current lease agreement is through October 31, 2029 at an annual rate of approximately $0.3 million per year. The current lease agreement also provides (i) a 5-year renewal option for the Company to extend the lease from November 1, 2029 through October 31, 2034 at the fair market rental rate of the premises, and (ii) another 5-year renewal option to extend the lease from November 1, 2034 through October 31, 2039 at the fair market rental rate of the premises.

~~11.~~12. TREASURY STOCK

As of June 30, 2021 and December 31, 2020, there were 4.9 million shares of treasury stock outstanding with a cost of $234.5 million and $235.1 million, respectively, at a weighted average cost per share of $47.86.

On ~~December 7, 2020,~~April 26 2022, the Board of Directors ~~of the Company~~ 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 ~~2022. The Company has $225.0~~2024. This stock repurchase authorization replaces the previous $225 million ~~remaining under~~stock repurchase authorization, of which $100 million remained authorized at the ~~share repurchase~~time of its ~~Common Stock. The price~~replacement, and ~~timing of any future purchases under the share repurchase program will depend~~which was otherwise set to expire 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.

~~During the twelve months ended~~ December 31, ~~2020,~~2022. 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 ~~Company repurchased 2.1~~foregoing.

As of June 30, 2022 and December 31, 2021, there were 6.8 million and 4.9 million shares of ~~Integra’s common~~treasury stock ~~as part~~outstanding with a cost of ~~the previous~~$362.9 million and $234.4 million, at a weighted average cost per share ~~repurchase authorization. The Company utilized $100.0 million~~ of net proceeds from the offering of the Convertible Senior Notes to execute the share repurchase transactions. This included $7.6 million from certain purchasers of the convertible notes in conjunction with the closing of the offering. $53.18 and $47.86, respectively.

On ~~February 5, 2020,~~January 12, 2022, the Company entered into a ~~$92.4~~$125.0 million accelerated share repurchase ("2022 ASR") ~~to complete the remaining $100.0 million of share repurchase. The Company~~and received ~~1.3~~1.48 million shares of Company common stock at inception, ~~of the ASR,~~ which represented approximately 80% of the expected total ~~shares.~~shares under the 2022 ASR. On March 24, 2022, the early exercise provision was exercised by 2022 ASR counterparty. Upon settlement ~~of the ASR in June 2020,~~on March 24, 2022, the Company received an additional ~~0.6~~0.46 million shares determined using the volume-weighted average price of the Company's common stock during the term of the ~~transaction.~~2022 ASR.

~~12.~~13. INCOME TAXES

The following table provides a summary of the Company's effective tax rate:

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Reported tax rate 21.8 % 122.4 % 28.2 % 32.7 %


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Reported tax rate	13.2	%	21.8	%	14.5	%	28.2	%

The Company’s effective income tax rates for the three months ended June 30, 2022 and 2021 were 13.2% and ~~2020 were~~ 21.8% ~~and 122.4%~~, respectively. For the three months ended June 30, ~~2021,~~2022, the primary driver of the lower tax rate is ~~due~~a $4.8 million benefit related to ~~mix of income impacted by the COVID-19 pandemic. For the three months ended June 30, 2020, the primary drivers of the higher~~excess tax ~~rate was lower income impacted by the COVID-19 pandemic and a $3.4 million valuation allowance on certain foreign deferred tax assets.~~benefits from stock compensation.

The ~~Company's~~Company’s effective income tax rates for the six months ended June 30, 2022 and 2021 were 14.5% and ~~2020 were~~ 28.2% ~~and 32.7%~~, respectively. For the six months ended June 30, 2022, the primary driver of the tax rate is a $5.7 million benefit related to excess tax benefits from stock compensation. For the six months ended June 30, 2021, the primary ~~drivers~~driver of the ~~lower~~higher tax rate ~~were mix of income in lower-taxes jurisdictions, offset by~~was the tax impact of the gain on the sale of the Extremity ~~and~~ Orthopedics business which was completed during the first quarter of 2021. ~~For the six months ended June 30, 2020, the primary drivers~~

Changes to income tax laws and regulations, in any of the ~~higher~~ tax ~~rate were lower book income~~jurisdictions in ~~lower-taxed jurisdictions and a $3.4 million valuation allowance on certain foreign deferred tax assets as~~which the Company ~~determined that it was no longer more likely than not that these~~operates, could impact the effective tax rate. Various governments, both U.S. and non-U.S., are increasingly focused on tax reform and revenue-raising legislation. The current U.S. administration has proposed tax reform which, if enacted, may increase the Company’s U.S. federal income tax liability. Further, legislation in foreign ~~deferred tax assets would~~jurisdictions may be ~~realized due~~enacted, in response to the ~~adverse impact~~base erosion and profit-sharing project begun by the Organization for Economic Cooperation and Development ("OECD"). The OECD recently finalized major reform of the ~~COVID-19 pandemic~~international tax system with respect to a global minimum tax rate. Such changes in ~~certain jurisdictions.~~U.S. and non-U.S. jurisdictions could have an adverse effect on the Company’s effective tax rate.

As of June 30, ~~2021,~~2022, the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed to be indefinitely ~~reinvested. Such~~reinvested unless there is a manner under which to remit the earnings with no material tax cost. Material taxes would primarily be attributable to foreign withholding taxes and local income taxes when such earnings are distributed. The Company will repatriate foreign earnings when there is no need for reinvestment overseas and there is no material cost to bring the earnings back to the United States. Reinvestment considerations would include future acquisitions, transactions, and capital expenditure plans. As such, the Company has determined the tax impact of repatriating these foreign earnings would not be material as of June 30, ~~2021. The Company does not anticipate the need to repatriate earnings from foreign subsidiaries as a result of the impact of the COVID-19 pandemic.~~2022.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~13.~~14. NET INCOME PER SHARE

Basic and diluted net income per share was as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
Dollars in thousands, except per share amounts	Dollars in thousands, except per share amounts	2021		2020		2021		2020		Dollars in thousands, except per share amounts	2022		2021		2022		2021
Basic net income per share:	Basic net income per share:									Basic net income per share:

Net income (loss)		$	35,068	$	(369)	$	80,462	$	8,811

Net income										Net income	$	44,788	$	35,068	$	77,689	$	80,462
Weighted average common shares outstanding	Weighted average common shares outstanding	84,687		84,706		84,593		84,955		Weighted average common shares outstanding	83,168		84,687		83,400		84,593

Basic net income per common share	Basic net income per common share	$	0.41	$	(0.00)	$	0.95	$	0.10	Basic net income per common share	$	0.54	$	0.41	$	0.93	$	0.95

Diluted net income per share:	Diluted net income per share:									Diluted net income per share:

Net income (loss)		$	35,068	$	(369)	$	80,462	$	8,811
Net income										Net income	$	44,788	$	35,068	$	77,689	$	80,462

Weighted average common shares outstanding — Basic	Weighted average common shares outstanding — Basic	84,687		84,706		84,593		84,955		Weighted average common shares outstanding — Basic	83,168		84,687		83,400		84,593
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:

Stock options and restricted stock	Stock options and restricted stock	653		0		731		593		Stock options and restricted stock	454		653		579		731
Weighted average common shares for diluted earnings per share	Weighted average common shares for diluted earnings per share	85,340		84,706		85,324		85,548		Weighted average common shares for diluted earnings per share	83,622		85,340		83,979		85,324

Diluted net income per common share	Diluted net income per common share	$	0.41	$	0.00	$	0.94	$	0.10	Diluted net income per common share	$	0.54	$	0.41	$	0.93	$	0.94

Common stock of approximately ~~0.1~~0.2 million ~~and 0.5~~and 0.1 million shares at June 30, 2022, and 2021, ~~and 2020, respectively~~respectively that are issuable through exercise of dilutive securities were not included in the computation of diluted net income per share because their effect would have been anti-dilutive.

Performance Shares and Restricted Units that entitle the holders to approximately 0.5 million shares of common stock are included in the basic and diluted weighted average shares outstanding calculation from their date of issuance because no further consideration is due related to the issuance of the underlying common shares.

Based on the adoption of ASU 2020-06, as the principal amount of the 2025 Notes will be paid in cash and only the conversion spread is settled in shares, the Company will be utilizing the if-converted method and only includes the net number of incremental shares that would be issued upon conversion.

~~14.~~15. ACCUMULATED OTHER COMPREHENSIVE LOSS

Comprehensive income ~~(loss)~~ for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 was as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
Dollars in thousands	Dollars in thousands	2021		2020		2021		2020		Dollars in thousands	2022		2021		2022		2021
Net income (loss)		$	35,068	$	(369)	$	80,462	$	8,811
Net income										Net income	$	44,788	$	35,068	$	77,689	$	80,462
Foreign currency translation adjustment	Foreign currency translation adjustment	1,558		10,433		(5,243)		3,620		Foreign currency translation adjustment	(18,067)		1,558		(23,749)		(5,243)

Change in unrealized loss on derivatives, net of tax		(7,804)		(8,830)		29,111		(30,136)
Change in unrealized gain (loss) on derivatives, net of tax										Change in unrealized gain (loss) on derivatives, net of tax	25,922		(7,804)		55,744		29,111
Pension liability adjustment, net of tax	Pension liability adjustment, net of tax	(91)		(139)		228		(207)		Pension liability adjustment, net of tax	(45)		(91)		(54)		228
Comprehensive income (loss), net		$	28,731	$	1,095	$	104,558	$	(17,912)
Comprehensive income, net										Comprehensive income, net	$	52,598	$	28,731	$	109,630	$	104,558

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Changes in accumulated other comprehensive loss by component between December 31, ~~2020~~2021 and June 30, ~~2021~~2022 are presented in the table below, net of tax:

Dollars in thousands Gains and Losses on Derivatives Defined Benefit Pension Items Foreign Currency Items Total
Balance at January 1, 2021 $ (82,249) $ (5,105) $ 13,295 $ (74,059)
Other comprehensive income (loss) 47,885 228 (5,243) 42,870
Less: Amounts reclassified from accumulated other comprehensive loss 18,774 0 0 18,774
Net current-period other comprehensive income (loss) 29,111 228 (5,243) 24,096
Balance at June 30, 2021 $ (53,138) $ (4,877) $ 8,052 $ (49,963)


Dollars in thousands	Gains and Losses on Derivatives		Defined Benefit Pension Items		Foreign Currency Items		Total
Balance at January 1, 2022	$	(42,981)	$	1,893	$	(4,067)	$	(45,155)
Other comprehensive gain (loss)	72,499		(54)		(23,750)		48,695
Less: Amounts reclassified from accumulated other comprehensive income, net	16,755		—		—		16,755
Net current-period other comprehensive gain (loss)	55,744		(54)		(23,750)		31,940
Balance at June 30, 2022	$	12,763	$	1,839	$	(27,817)	$	(13,215)

For the six months ended June 30, ~~2021,~~2022, the Company reclassified a gain of ~~$25.0~~$22.8 million and a loss of ~~$6.2~~$5.2 million from accumulated other comprehensive loss to other income, ~~(expense),~~ net and interest ~~income.~~income, respectively.

~~15.~~16. SEGMENT AND GEOGRAPHIC INFORMATION

The Company internally manages 2 global reportable segments and reports the results of its businesses to its chief operating decision maker. The 2 reportable segments and their activities are described below.

•The Codman Specialty Surgical segment includes (i) the Neurosurgery business, which sells a full line of products for neurosurgery and neuro critical care such as tissue ablation equipment, dural repair products, cerebral spinal fluid management devices, intracranial monitoring equipment, ~~and~~ cranial stabilization equipment, and solutions for use in minimally invasive neurosurgery and in the management of intracerebral hemorrhages, and (ii) the ~~instruments~~Instruments business, which sells more than 40,000 instrument patterns and surgical and lighting products to hospitals, surgery centers, dental, podiatry, and veterinary offices.

•The Tissue Technologies segment includes a large, complementary portfolio of products to address plastic and surgical reconstructive procedures such ~~offerings~~ as ~~skin~~complex and ~~wound~~traumatic wounds, hernia and abdominal wall repair, ~~bone grafts,~~breast reconstruction, and peripheral nerve ~~and tendon repair products. In conjunction with the sale of the Extremity Orthopedics business, the Company rebranded the Orthopedics and~~repair. The Tissue Technologies segment ~~as Tissue Technologies in the first quarter of 2021.~~has four unique technology platforms, including bovine engineered collagen matrix, bovine dermal matrix, amniotic technology and porcine bladder matrix technology, to address regenerative soft tissue reconstruction procedures.

The Corporate and other category includes (i) various executive, finance, human resource, information systems and legal functions, (ii) brand management, and (iii) share-based compensation costs.

The operating results of the various reportable segments as presented are not comparable to one another because (i) certain operating segments are more dependent than others on corporate functions for unallocated general and administrative and/or operational manufacturing functions, and (ii) the Company does not allocate certain manufacturing costs and general and administrative costs to the operating segment results. Net sales and profit by each reportable segment for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 are as ~~follows :~~follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
Dollars in thousands	Dollars in thousands	2021		2020		2021		2020		Dollars in thousands	2022		2021		2022		2021
Segment Net Sales	Segment Net Sales									Segment Net Sales
Codman Specialty Surgical	Codman Specialty Surgical	$	256,837	$	169,778	$	498,078	$	401,218	Codman Specialty Surgical	$	257,863	$	256,837	$	505,171	$	498,078
Tissue Technologies	Tissue Technologies	133,155		88,887		251,985		211,771		Tissue Technologies	139,952		133,155		269,282		251,985
Total revenues	Total revenues	$	389,992	$	258,665	$	750,063	$	612,989	Total revenues	$	397,815	$	389,992	$	774,453	$	750,063
Segment Profit	Segment Profit									Segment Profit
Codman Specialty Surgical	Codman Specialty Surgical	$	113,996	$	65,256	$	220,774	$	152,491	Codman Specialty Surgical	$	92,196	$	113,996	$	202,356	$	220,774
Tissue Technologies	Tissue Technologies	64,413		28,688		114,424		59,958		Tissue Technologies	61,626		64,413		115,519		114,424
Segment profit	Segment profit	178,409		93,944		335,198		212,449		Segment profit	153,822		178,409		317,875		335,198
Amortization	Amortization	(4,198)		(8,073)		(8,725)		(15,050)		Amortization	(3,304)		(4,198)		(7,198)		(8,725)
Corporate and other	Corporate and other	(122,357)		(71,791)		(243,905)		(156,216)		Corporate and other	(90,651)		(122,357)		(204,646)		(243,905)
Operating income	Operating income	$	51,854	$	14,080	$	82,568	$	41,183	Operating income	$	59,867	$	51,854	$	106,031	$	82,568

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The Company does not allocate any assets to the reportable segments. No asset information is reported to the chief operating decision maker and disclosed in the financial information for each segment.

~~INTEGRA LIFESCIENCES HOLDINGS CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~

The Company attributes revenues to geographic areas based on the location of the customer. Total revenue by major geographic area consisted of the following:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
Dollars in thousands	Dollars in thousands	2021		2020		2021		2020		Dollars in thousands	2022		2021		2022		2021
United States	United States	$	278,186	$	181,850	$	525,979	$	428,702	United States	$	287,347	$	278,186	$	550,698	$	525,979
Europe	Europe	48,437		32,026		94,256		77,922		Europe	46,862		48,437		90,606		94,256
Asia Pacific	Asia Pacific	44,306		33,501		91,601		73,461		Asia Pacific	43,365		44,306		91,082		91,601
Rest of World	Rest of World	19,063		11,288		38,227		32,904		Rest of World	20,241		19,063		42,067		38,227
Total Revenues	Total Revenues	$	389,992	$	258,665	$	750,063	$	612,989	Total Revenues	$	397,815	$	389,992	$	774,453	$	750,063

~~16.~~17. COMMITMENTS AND CONTINGENCIES

In consideration for certain technology, manufacturing, distribution, and selling rights and licenses granted to the Company, the Company has agreed to pay royalties on sales of certain products that it sells. The royalty payments that the Company made under these agreements were not significant for any of the periods presented.

The Company is subject to various claims, lawsuits and proceedings in the ordinary course of the Company's business, including claims by current or former employees, distributors and competitors and with respect to its products and product liability claims, lawsuits and proceedings, some of which have been settled by the Company. In the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material, adverse effect on the Company's financial condition. However, it is possible that the Company's results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies.

The Company accrues for loss contingencies when it is deemed probable that a loss has been incurred and that loss is estimable. The amounts accrued are based on the full amount of the estimated loss before considering insurance proceeds and do not include an estimate for legal fees expected to be incurred in connection with the loss contingency. The Company consistently accrues legal fees expected to be incurred in connection with loss contingencies as those fees are incurred by outside counsel as a period cost.

Contingent Consideration

The Company determined the fair value of contingent consideration during the six month period ended June 30, ~~2021~~2022 and June 30, ~~2020~~2021 to reflect the change in ~~estimates,~~estimate, additions, payments, transfers and the time value of money during the period.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

A reconciliation of the opening balances to the closing balances of these Level 3 measurements for the six months ended June 30, ~~2021~~2022 and June 30, ~~2020~~2021 is as follows (in thousands):

Six Months Ended June 30, 2021 Contingent Consideration Liability Related to Acquisition of:
Arkis Location in Financial Statements Derma Sciences ACell Inc.
(See Note 2) Location in Financial Statements
Short-term Long-term Long-term Long-term
Balance as of January 1, 2021 $ 3,415 $ 11,746 $ 230 $ 0
Additions from acquisition of ACell — — — 23,900
Transfers (3,432) 3,432 — —
Gain (loss) from change in fair value of contingent consideration liabilities 17 $ (402) Research and development — (400) Selling, general and administrative
Balance as of June 30, 2021 $ 0 $ 14,776 $ 230 $ 23,500


Six Months Ended June 30, 2022	Contingent Consideration Liability Related to Acquisition of:
	Arkis				Location in Financial Statements	Derma Sciences		ACell Inc. (See Note 3)				Location in Financial Statements
	Short-term		Long-term			Long-term		Short-term		Long-term
Balance as of January 1, 2022	$	3,691	$	11,408		$	230	$	—	$	21,800
Transfers	0		0			—		4,885		(4,885)
Change in fair value of contingent consideration liabilities	(155)		$	(1,978)	Research and development	—		(4,885)		1,219		Selling, general and administrative
Balance as of June 30, 2022	$	3,536	$	9,430		$	230	$	—	$	18,134

Six Months Ended June 30, 2020 Contingent Consideration Liability Related to Acquisition of:
Arkis Derma Sciences Location in Financial Statements
Long-term Long-term
Balance as of January 1, 2020 $ 14,210 $ 230
Loss from change in fair value of contingent consideration liabilities (708) 0 Research and development
Balance as of June 30, 2020 $ 13,502 $ 230

~~INTEGRA LIFESCIENCES HOLDINGS CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)~~


Six Months Ended June 30, 2021	Contingent Consideration Liability Related to Acquisition of:
	Arkis				Location in Financial Statements	Derma Sciences		ACell Inc. (See Note 3)		Location in Financial Statements
	Short-term		Long-term			Long-term		Long-term
Balance as of January 1, 2021	$	3,415	$	11,746		$	230	$	—
Additions from acquisition of ACell	—		—			—		23,900
Transfers	(3,432)		3,432			—		—
Change in fair value of contingent consideration liabilities	17		(402)		Research and development	—		(400)		Selling, general and administrative
Balance as of June 30, 2021	$	—	$	14,776		$	230	$	23,500

Arkis BioSciences Inc.

On July 29, 2019, the Company acquired Arkis BioSciences Inc. ("Arkis") for an acquisition purchase price of $30.6 million (the "Arkis Acquisition") plus contingent consideration of up to $25.5 million, that may be payable based on the successful completion of certain development and commercial milestones. Arkis was a privately-held company that marketed the ~~CerebroFlo®~~CerebroFlo® external ventricular drainage ~~(EVD)~~ catheter with ~~Endexo®~~Endexo® technology, a permanent additive designed to reduce the potential for catheter obstruction due to thrombus formation.

As part of the acquisition, the Company is required to pay the former shareholders of Arkis up to $25.5 million based on the timing of certain development milestones of $10.0 million and commercial sales milestones of $15.5 million, respectively. The Company used a probability weighted income approach to calculate the fair value of the contingent consideration that considered the possible outcomes of scenarios related to each specified milestone. The Company estimated the fair value of the contingent consideration to be $13.1 million at the acquisition date. The estimated fair value as of June 30, ~~2021~~2022 and June 30, ~~2020~~2021 was ~~$14.8~~$13.0 million and ~~$13.5~~$14.8 million, respectively. The Company recorded ~~$14.8~~$9.4 million and ~~$13.5~~$14.8 million in other liabilities at June 30, ~~2021~~2022 and June 30, ~~2020,~~2021, respectively, and $3.5 million in accrued expenses and other current liabilities at June 30, 2022, in the consolidated balance sheet of the Company.

Derma Sciences

The Company assumed contingent consideration incurred by Derma Sciences, Inc. ("Derma Sciences") related to its acquisitions of BioD and the intellectual property related to Medihoney products. The Company accounted for the contingent liabilities by recording their fair value on the date of the acquisition based on a probability weighted income approach. The Company has already paid $33.3 million related to the aforementioned contingent liabilities. NaN contingent ~~liability~~milestone remains which relates to net sales of ~~Medihoney~~Medihoney™ products exceeding certain amounts defined in the agreement between the Company and Derma Sciences. The potential maximum undiscounted payment amounts to $3.0 million. The estimated fair value as of June 30, ~~2021~~2022 and June 30, ~~2020~~2021 was $0.2 million.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes thereto appearing elsewhere in this report and our consolidated financial statements for the year ended December 31, ~~2020~~2021 included in our Annual Report on Form 10-K.

We have made statements in this report which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking statements are subject to a number of risks, uncertainties and assumptions about the Company and other matters. These forward-looking statements include, but are not limited to, statements related to the Company's expectations regarding the potential impacts of the COVID-19 pandemic on our business, financial condition, and results of operations. These statements should, therefore, be considered in light of various important factors, including, but not limited to, the following: ~~the Company's ability to recover to normalized procedure volume in the midst~~risk of ~~the COVID-19 pandemic; the risk that~~ the COVID-19 pandemic could lead to further material delays and cancellations of, or reduced demand for, procedures; ~~curtailed or~~ delayed capital spending by the Company's customers; disruption and/or higher costs to the ~~Company's~~Company’s supply chain; ~~closures of~~staffing shortages in hospitals; labor impacts in our facilities; delays in gathering clinical evidence; diversion of management and other resources to respond to the COVID-19 outbreak; the impact of global and regional economic and credit market conditions on healthcare spending; the risk that the COVID-19 virus disrupts local economies and causes economies in our key markets to enter prolonged recessions. 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 the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020, and~~2021, under the heading "Risk Factors" in this ~~report.~~report, and in other filings with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or ~~otherwise.~~otherwise, except to the extent required by applicable law.

You can identify these forward-looking statements by forward-looking words such as “believe,” “may,” “might,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,” “should,” “would” and similar expressions in this report.

GENERAL

Integra, headquartered in Princeton, New Jersey, is a world leader in medical technology. The Company was founded in 1989 with the acquisition of an engineered collagen technology platform used to repair and regenerate tissue. Since then, 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 peripheral nerves and tendons. The Company has expanded its base regenerative technology business to include surgical instruments, neurosurgical products and advanced wound care through ~~a combination of several~~ global acquisitions and product development ~~of products internally~~ to ~~further~~ meet the evolving needs of its customers and ~~impact~~enhance patient care.

Integra manufactures and sells medical technologies and products in two reportable business segments: Codman Specialty Surgical ~~and Tissue Technologies. In conjunction with the sale of the Extremity and Orthopedics business, the Company rebranded the Orthopedics~~("CSS") and Tissue Technologies ("TT"). The CSS segment, ~~as Tissue Technologies in the first quarter~~which represents two-thirds of ~~2021. See Note 2.~~ ~~Acquisitions and Divestitures,~~ ~~for details. Our Codman Specialty Surgical products comprise~~our total revenue, consists of ~~specialty surgical implants~~market-leading technologies and instrumentation used for a ~~broad~~wide range of ~~specialties. This segment includes products~~specialties, such as neurosurgery, neurocritical care and ~~solutions for dural access~~otolaryngology. We are the world leader in neurosurgery and ~~repair,~~one of the top three providers in instruments ~~advanced energy, cerebral spinal fluid ("CSF") management and neuro monitoring including market leading product portfolios~~ used in ~~neurosurgery operation suites~~precision, specialty, and ~~critical care units. Codman Specialty Surgical products are sold through a combination of directly employed sales representatives, distributors and wholesalers, depending on the customer call point.~~general surgical procedures. Our Tissue Technologies product portfolios consist of differentiated regenerative technology products for soft tissue repair and tissue regeneration products, and surgical reconstruction. This business also includes private label sales of a broad setTT segment generates about one-third of our ~~regenerative~~overall revenue and focuses on three main areas: complex wound ~~care medicine technologies. Tissue Technologies products are sold through directly employed sales representatives~~surgery, surgical reconstruction, and ~~distributors focused on their respective surgical specialties, and strategic partners.~~peripheral nerve repair.

We have key manufacturing and research facilities located in California, Indiana, Maryland, Massachusetts, New Jersey, Ohio, Puerto Rico, Tennessee, Utah, Canada, China, France, Germany, Ireland ~~Puerto Rico~~ and Switzerland. We ~~also~~ source most of our handheld surgical instruments and dural sealant products through specialized third-party vendors.

Integra is committed to delivering high quality products that positively impact the lives of millions of patients and their families. We focus on four key pillars of our strategy: 1) enabling an execution-focused culture, 2) optimizing relevant scale, 3) advancing innovation and agility, and 4) leading in customer experience. We believe that by sharpening our focus on these areas through improved planning and communication, optimization of our infrastructure, and strategically aligned ~~tuck-in~~ acquisitions, we can build scale, increase competitiveness, and achieve our long-term goals.

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To this end, the executive leadership team has established the following key priorities aligned to the following areas of focus:

Strategic Acquisitions. An important part of the Company's strategy is pursuing strategic transactions and licensing agreements that increase relevant scale in the clinical areas in which Integra competes. ~~In December 2020, Integra entered into a merger agreement to acquire~~During 2021, the Company acquired ACell Inc. ("ACell"), an innovative regenerative medicine company specializing in the ~~manufacture~~manufacturing of porcine urinary bladder extracellular matrices. This acquisition ~~which closed on January 20, 2021, expands our~~not only expanded the Company’s product offering of regenerative ~~technology and~~technologies, but it is ~~complementary~~also expected to ~~Integra’s existing tissue technologies portfolio. The acquisition also supports our~~support the Company’s long-term growth and profitability strategy ~~with~~as this product line has a financial profile similar to Integra’s other regenerative tissue products. ~~In 2021, we are focused on the integration~~All critical components of ACell ~~Inc.,~~have been integrated into ~~our Tissue Technologies business segment, while also continuing~~ the ~~development of regenerative tissue products for complex wound management that will benefit the expanded portfolio.~~Company’s TT segment. See Note 2,3, Acquisitions and Divestitures, to the Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for additional details. In 2022, we continued to advance the development of pioneering neurosurgical technologies from our 2019 acquisitions, Arkis Biosciences, Inc. and Rebound Therapeutics Corporation

Portfolio Optimization and New Product Introductions. We are investing in innovative product development to drive a multi-generational pipeline for our key product franchises. Our product development efforts span across our key global franchises focused on potential for significant returns on investment. ~~We continue to advance the development of pioneering technologies from our 2019 acquisitions, Arkis Biosciences, Inc. and Rebound Therapeutics Corporation.~~ In addition to new product development, we are funding studies to gather clinical evidence to support launches, ensure market access and improve reimbursement for existing products. ~~We continue~~In addition to ~~identify ways of optimizing~~acquisitions and organic reinvestment, we continually look to optimize our portfolio ~~including identifying low-growth, low-margin~~towards higher growth and higher margin businesses. As such, we may opportunistically divest businesses or discontinue products where we see limited runway for future value creation in line with our aspirations due in part to changes in the market, business fundamentals or the regulatory environment.

On May 20, 2022, we entered into an agreement to sell our non-core traditional wound care ("TWC") business to Gentell, LLC for approximately $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. The transaction is expected to close at or around August 31, 2022, subject to the satisfaction of customary conditions. Revenues for the TWC business were approximately $27 million in 2021. See Note 2, Assets and ~~product franchises~~Liabilities Held for ~~discontinuation.~~Sale, to the Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for details. Our portfolio optimization actions over the past two years have allowed us to increase our focus on Integra’s core portfolio of market-leading products in neurosurgery, surgical instrumentation and regenerative tissue and moves us closer to achieving our long-term organic growth and profitability targets.

In January 2021, we completed the sale of our Extremity Orthopedics business to Smith & Nephew USD Limited ("Smith & Nephew"), a subsidiary of Smith & Nephew plc, for approximately $240 million in ~~cash subject to finalization of working capital adjustments.~~cash. This transaction enables us to increase our investments in our core ~~Neurosurgery~~neurosurgery and ~~Tissue Technology~~tissue technologies businesses ~~which will~~and fund pipeline opportunities to expand our addressable markets to strengthen our existing leadership positions in ~~both areas, fund pipeline opportunities to~~these segments and drive future ~~growth and expand our addressable markets.~~growth. See Note 2,3, Acquisitions and Divestitures, to the Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for details.

Commercial Channel Investments.~~With acquisitions, new product introductions and a broad portfolio of products, investing~~ Investing in our sales channels is a core part of our strategy to create specialization and greater focus on reaching new and existing customers and addressing their needs. To support our commercial efforts in Tissue Technologies, we ~~expanded our~~utilize a two-tier specialist model to increase our presence in focused ~~segments. We created~~segments by creating a virtual selling organization to help serve the evolving needs of our customers. In addition, we continue to build upon our leadership brands across our product franchises in both CSS and TT to engage customers through enterprise-wide contracts with leading hospitals, integrated delivery networks and global purchasing organizations in the United States. Internationally, we have increased our commercial resources significantly in key emerging markets and are making investments to support our sales organization and maximize our commercial opportunities. Domestically, we have also increased our TT sales force in the United States to support the expanded regenerative tissue product portfolio that included ACell products. These ~~strong~~ investments in our international and domestic sales channel position us well for expansion and long-term growth. ~~In addition, we continue to build upon our leadership brands across our product franchises to enable us to engage customers through enterprise-wide contracts.~~

Customer Experience.We aspire to be ranked as a best-in-class provider and are committed to strengthen our relationships with all customers. We continue to invest in technologies, systems and processes to enhance the customer experience. ~~Additionally, we~~We also launched ~~new~~ digital tools and programs, resources and virtual product training to drive continued customer familiarity with our growing portfolio of medical technologies globally. In addition, we announced plans to outsource certain transactional back-office finance and customer service activities to enhance customer quality, build scale for future growth, and capture cost efficiencies.

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Clinical and Product Development Activities

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 ~~each area,~~2021, we ~~continue to benefit from products~~ launched ~~over~~our CereLink™ ICP Monitor System in the ~~past several years.~~

~~Within our Codman Specialty Surgical segment, the Company received FDA clearance in 2020 to treat malignant~~U.S. and ~~benign tumors, but~~Europe direct markets. CereLink provides enhanced accuracy, usability and advanced data presentation that provides clinicians with uncompromised, advanced continuous ICP monitoring that until now, has not ~~limited to meningiomas and gliomas, for its CUSA® Clarity Ultrasonic Surgical Aspirator System,~~been available when treating patients with traumatic brain injuries. Through the first ~~and only ultrasonic tissue ablation system~~half of 2022, we have continued the global rollout of Cerelink with ~~this specific indication. The FDA clearance is based on a wealth of peer-reviewed clinical publications and 40 years of surgical cases involving resection of brain and spinal tumors.~~

~~Additionally, the Company continued to reap the benefits of our~~ product launches ~~from the prior year from the Codman Specialty Surgical segment, including our new electrosurgery generator~~in Australia and ~~irrigator system, an innovative customer-centric toolkit for our Certas™ Plus Programmable Valve along with additional shunt configurations. In Japan, we are experiencing strong growth~~Canada, as ~~a result of the successful launch of DuraGen®~~well as several other indirect markets in ~~mid-2019, which is the first and only collagen xenograft approved for use as a dural substitute in the country.~~EMEA. We are focused on the development of core clinical applications in our electromechanical technologies portfolio. In June 2022, we launched the Neutus® EVD system, our first external ventricular drain (“EVD") in China. The Neutus EVD system is manufactured in China by Shanghai Haoju Medical Technology Co., Ltd. under an exclusive distribution arrangement. The device is used in the management of cerebrospinal fluid and is highly complementary to our Bactiseal® catheter and advanced intercranial pressure monitoring products. Also, we ~~updated~~continue to update our CUSA Clarity platform ~~to incorporate a~~by incorporating new ultrasonic handpiece, surgical tips and integrated electrosurgical capabilities. We continue to work with several instrument partners to bring new surgical instrument platforms to the market. ~~This enables us~~

In 2022, we continued to ~~add new instruments with minimal expense and invest in ongoing development, such as our next generation of LED technology with our DUO LED Surgical Headlight System.~~

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~~We advanced~~advance the two early-stage technology platforms we acquired ~~during~~in 2019. Through the acquisition of Arkis Biosciences, ~~acquisition,~~ we added a platform technology, ~~CerebroFlo® external ventricular drainage (EVD)~~CerebroFlo® EVD, catheter with ~~Endexo®~~Endexo® technology, a permanent additive designed to reduce the potential for catheter obstruction due to thrombus formation. The ~~CerebroFlo®~~CerebroFlo EVD Catheter has demonstrated an average of 99% less thrombus accumulation onto its surface, in vitro, compared to a market leading EVD catheter. WeIn 2019, we also acquired Rebound Therapeutics ~~a company that~~Corporation which specialized in a single-use medical ~~devices that enable~~device, known as Aurora Surgiscope, which is the only tubular retractor system designed for cranial surgery with an integrated access channel, camera and lighting. In 2021, we began and continued to conduct a limited clinical launch of the Aurora Surgiscope for use in minimally invasive ~~access with enhanced lighting and visualization to the~~ neurosurgery ~~suite and launched the~~as well as initiated a registry called MIRROR ~~registry~~ to collect data on early surgical intervention using this ~~new device. These new platforms provide us~~same technology platform for the treatment of intracerebral hemorrhages ("ICH"). In the second quarter of 2022, we have continued to execute on our growth initiatives. We launched the Aurora® Evacuator with Coagulation device in the ~~opportunity~~U.S., designed to ~~expand into new, faster growth therapeutic areas such as intracerebral hemorrhage~~be used in conjunction with our Aurora Surgiscope to safely address and ~~minimally invasive neurosurgery.~~evacuate blood in the brain caused by hemorrhagic stroke. 

Within our ~~Tissue Technologies~~TT segment, in the first half of 2022, we ~~recently~~launched NeuraGen® 3D Nerve Guide Matrix, a resorbable implant for repair of peripheral nerve discontinuities and designed to optimize the environment for nerve regeneration to allow for more complete functional recovery. During 2021, we completed one of the largest diabetic foot ulcers ~~(DFU)~~("DFU"), randomized controlled trials ~~(RCTs)~~ of ~~PriMatrix®~~the PriMatrix® Dermal Repair Scaffold for the management of DFU. This multi-center study enrolled more than 225 patients with chronic DFU's over the course of 12-week treatments and 4-week follow-up phases. The results of this study, which was published in the Journal of Wound Care, demonstrated that ~~PriMatrix®~~PriMatrix plus standard of care ~~(SOC)~~("SOC") consisting of sharp debridement, infection elimination, use of dressings and offloading was significantly more likely to achieve complete wound closure compared with SOC alone, with a median number of one application of the product. In 2020, we announced positive clinical and economic data on Integra® Bilayer Wound Matrix ("IBWM") in complex lower extremity reconstruction based on two retrospective studies recently published in Plastic and Reconstructive Surgery, the official journal of the American Society of Plastic Surgeons. As surgeons look for ways to efficiently and effectively repair and close wounds during these challenging times, IBWM helps address the efficiency needed in operating rooms by reducing both the operating time and costs to hospitals and patients.

COVID-19 Pandemic and the Economic Recession

During this global crisis, the Company's focus remained on supporting patients, providing customers with life-saving products, and protecting the well-being of our employees. The rapid and evolving spread of the virus ~~has~~and subsequent variants have resulted in an unprecedented ~~challenge~~challenges to the global healthcare ~~industry, as medical resources were reallocated to fight COVID-19. During the first half of 2020, in~~industry. In response to the pandemic, we acted swiftly by implementing protocols to ensure continuity of our manufacturing and distribution sites around the world and to provide for the safety of our employees. ~~During the second half of 2020, the Company's revenues were still impacted due to COVID-19 resurgences, though not to the levels seen in the first half of 2020.~~

During the first half of 2021, our business segments were well positioned to capitalize on the improving demand driven by the ongoing global market recovery. We saw particularly healthy order activity in products used in neurosurgery, instruments, burn, trauma and surgical reconstruction as markets gradually recovered. Areas such as capital equipment and our international indirect markets are still early in their recovery, but are reporting encouraging trends. We remain confident that the underlying markets in which the Company competes remain attractive ~~over the long term. We also~~and we remain focused on managing the business for the long-term, including preserving full time jobs needed to support the rebound in surgical procedure volumes. The Company's adaptability and resiliency in the face of this unprecedented crisis is made possible in part by prior investments in technology infrastructure and operations, as well as our talented and committed global workforce.long-term.

Capital markets and worldwide economies have also been significantly impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic recession. Any such economic recession could have a material adverse effect on the Company's long-term business as hospitals curtail and reduce capital as well as overall spending. The COVID-19 pandemic and ~~local~~ actions taken by governmental authorities, private businesses and individuals, such as “shelter-in-place” orders and restrictions on travel and access to our customers or temporary closures of our facilities or the facilities ofof our suppliers, disruption and/or higher costs to the Company’s supply chain, staffing shortages in hospitals and ~~their contract manufacturers,~~labor constraints in our facilities, could further ~~significantly~~ impact our sales margins and our ability to ship our products and supply our customers.

While COVID variants continue to contribute to an uncertain business environment, effects resulting from the pandemic such as inflationary pressures and global central bank actions to contain high inflation levels could cause a local and/or global economic recession. Capital markets and worldwide economies have also been significantly impacted and such economic recession could have a material adverse effect on the Company’s long-term business as hospitals reduce capital, as well as overall spending.

Any of these events could negatively impact the number of surgical and medical intervention procedures performed and have a material adverse effect on our business, financial condition, results of operations, or cash flows.

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FDA Matters

We manufacture and distribute products derived from human tissue for which FDA has specific regulations governing human cells, tissues and cellular and tissue-based products or ("HCT/~~Ps.~~Ps"). An HCT/P is a product containing or consisting of human cells or tissue intended for transplantation into a human patient. Refer to Item 1. Business and Item 1A. Risk Factors in our 2021 10-K report for further details around these FDA regulations and their potential effect on the Company's portfolio of morselized amniotic material-based products as well as the impact on consolidated revenues.

On June 22, 2015, the FDA issued an Untitled Letter (the "Untitled Letter") alleging that ~~BioD's~~BioD LLC's morselized amniotic membrane tissue-based products do not meet the criteria for regulation as HCT/Ps solely under Section 361 of the Public Health Services Act ("Section 361") and that, as a result, BioD LLC ("BioD") would need a biologics license to lawfully market those morselized products. Since the issuance of the Untitled Letter, BioD and the Company have made known to the FDA their disagreement with the FDA’s assertion that certain products are more than minimally manipulated. The FDA has not changed its position that certain of the BioD acquired products are not eligible for marketing solely under Section 361. In July 2020, the FDA issued the final guidance document related to human tissue titled, “Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue-Based Products: Minimal Manipulation and Homologous Use” (the ~~“HCT/~~“2020 HCT/P Final Guidance”). ~~This~~The 2020 HCT/P Final Guidance document supersedes the November 2017 guidance by the same title.

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The HCT/P Final Guidance maintains the FDA’s position that products such as the Company’s morselized amniotic membrane tissue-based products do not meet the criteria for regulation solely as HCT/Ps. In addition, in the November 2017 guidance, the FDA articulated a risk-based approach to enforcement and, while some uses for amniotic membrane tissue-based products would have as much as thirty-six months of enforcement discretion, other high risk uses could be subject to immediate enforcement action. The ~~revised final guidance of July~~ 2020 HCT/P Final Guidance maintained this approach and extended the discretionary enforcement period to May 31, 2021.

~~Rather than~~Considering the risk of enforcement action, the Company discontinued the manufacturing of all morselized amniotic membrane tissue-based products prior to May 31, 2021. We no longer distribute these products. As of June 30, ~~2021,~~2022, the Company has not received any further notice of enforcement action from the FDA regarding its morselized amniotic membrane tissue-based products.

~~Revenues from the now discontinued BioD morselized amniotic membrane-based products for the six months ended June 30, 2021 were less than 1.0% of consolidated revenues.~~

On March 7, 2019, TEI Biosciences, Inc. ("TEI"), a wholly-owned subsidiary of the Company received a Warning Letter (the “Warning Letter”), dated March 6, 2019, from the FDA. The warning letter ~~relates~~related to quality systems issues at ~~our~~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 Company submitted its initial response to the FDA Warning Letter on March 28, 2019 and provides regular progress reports to the FDA as to its corrective actions and, since the conclusion of the inspection, has undertaken significant efforts to remediate the observations and continues to do so. 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 ~~warning letter does~~Company provided an initial response to the inspection observations and will continue to provide responses to FDA. The Warning Letter and the 2021 FDA Form 483 do not restrict the Company’s ability to manufacture or ship products or require the recall of any ~~products. Nor does it~~products, nor do they restrict our ability to seek FDA 510(k) clearance of products. The letter states that requests for Certificates to Foreign Governments would not be granted. However, due to our progress reports, the FDA agreed to resume issuing Certificates to Foreign Governments to TEI due to substantial progress and the length of time it takes to resolve the Warning Letter. Additionally, premarket approval applications for Class III devices to which the Quality System regulation violations are reasonably related will not be approved until the violations have been corrected. The TEI Boston facility manufactures extracellular bovine matrix ~~(EBM)~~ products. ~~The Company does not expect to incur material incremental expense for remediation activities.~~ We cannot ~~however,~~ 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. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively manufacturing, marketing and selling our products and could have a material adverse effect on our business, financial condition and results of operations.

Revenues of products manufactured in the TEI Boston facility for the six months ended June 30, ~~2021~~2022 were approximately ~~4.5%~~6.0% of consolidated revenues.

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ACQUISITIONS & DIVESTITURES

Divestiture

On January 4, 2021, the Company completed its ~~previously announced~~ sale of its Extremity Orthopedics business to Smith & ~~Nephew USD Limited.~~Nephew. The transaction included the sale of the Company's upper and lower Extremity Orthopedics product portfolio, including ankle and shoulder arthroplasty and hand and wrist product lines. The Company received an aggregate purchase price of $240.0 million from Smith ~~and~~& Nephew and concurrently paid $41.5 million to the Consortium of Focused Orthopedists, LLC ("CFO"), effectively terminating the licensing agreement between Integra and CFO relating to the development of shoulder arthroplasty products. ~~The Company recognized a gain of $42.2 million in~~In connection with the sale, ~~that is presented in~~the Company recognized a $41.8 million as Gain from the sale of business in the consolidated statement of operations for the year ended ~~June 30,~~December 31, 2021.The Company finalized the net working capital and paid an additional $1.3 million to Smith & Nephew as of December 31, 2021. See Note 2-3, Acquisitions and Divestitures, to the Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for details.

Acquisition

Our growth strategy includes the acquisition of businesses, assets or products lines to increase the breadth of our offerings and the reach of our product portfolios and drive relevant scale to our customers.

On January 20, 2021, the Company acquired ACell, Inc. for an acquisition purchase price of $306.9 million plus contingent consideration obligations of up to $100 million, that may be payable upon achieving certain revenue-based performance milestones in 2022, 2023 and 2025. ACell was a privately-held company that offered a portfolio of regenerative products for complex wound management, including developing and commercializing products based on MatriStem Urinary Bladder Matrix ("UBM"), a technology platform derived from porcine urinary bladder extracellular matrix. See Note 2-3, Acquisitions and Divestitures, to the Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for details.

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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, implement a common ERP system, eliminate duplicative positions, realign various sales and marketing activities, and expand and upgrade production ~~capacity~~capacity for our regenerative technology products. 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. In addition, we announced plans to outsource certain transactional back-office finance and customer service activities to enhance customer quality, build scale for future growth, and capture cost efficiencies. We expect this transition to be completed by the fourth quarter of 2022.

RESULTS OF OPERATIONS

Executive Summary

Net income for the three months ended June 30, ~~2021~~2022 was ~~$35.1~~$44.8 million, or ~~$0.41~~$0.54 per diluted share, as compared to ~~$(0.4)~~$35.1 million or ~~$(0.00)~~$0.41 per diluted share for the three months ended June 30, ~~2020.~~2021. The increase in net income for the three months ended June 30, ~~2021,~~2022, was primarily driven by ~~increase in~~higher revenues ~~due to procedure recovery experienced in the current year as compared to the height of the COVID-19 pandemic in the first half of 2020.~~across most franchises.

Net income for the six months ended June 30, ~~2021~~2022 was ~~$80.5~~$77.7 million, or ~~$0.94~~$0.93 per diluted share, as compared to ~~$8.8~~$80.5 million or ~~$0.10~~$0.94 per diluted share for the six months ended June 30, ~~2020.~~ 2021. The decrease in net income for the six months ended June 30, ~~2021~~2022, was primarily driven by ~~higher revenue relating to surgical procedure recovery for~~ the ~~first half of 2021 and~~ increase in non-operating income in the prior period due to the gain of $42.2 million recognized ~~in the first quarter of 2021~~ as a result of the sale of the Extremity Orthopedics business. Excluding the impact of the gain, net income increased for the six months ended June 30, 2022, driven by higher revenues across most franchises.

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Special Charges

Income before taxes includes the following special charges:

Three Months Ended June 30, Six Months Ended June 30,
Dollars in thousands 2021 2020 2021 2020
Acquisition, divestiture and integration-related charges(1)
$ 10,776 $ 6,542 $ (16,225) $ 12,708
Structural optimization charges 4,409 1,230 8,355 4,471
EU medical device regulation 3,415 884 9,163 3,071
Discontinued product lines charges 303 1,302 336 4,487
Convertible debt non-cash interest expense — 4,250 — 6,780
Expenses related to debt refinancing — — — 2,740
COVID-19 pandemic related charges(2)
— (869) — 3,836
Total $ 18,903 $ 13,339 $ 1,629 $ 38,093


	Three Months Ended June 30,				Six Months Ended June 30,
Dollars in thousands	2022		2021		2022		2021
Acquisition, divestiture and integration-related charges(1)	$	(6,284)	$	10,776	$	(5,710)	$	(16,225)
Structural optimization charges	8,172		4,712		14,492		8,691
EU medical device regulation ("EU MDR")	10,249		3,415		19,762		9,163
Total	$	12,137	$	18,903	$	28,544	$	1,629

(1) The Company completed its sale of its Extremity Orthopedics business and recognized a gain of $42.2 million for the six months ended June 30, 2021 which was partially offset by other acquisition, divestiture and integration-related charges. See Note 2. 3, Acquisitions and Divestitures for details.

~~(2)~~Charges relate to business interruptions and costs associated with the COVID-19 pandemic which impacted the Company's operations globally, partially offset by Coronavirus government relief programs in the prior year.

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The items reported above are reflected in the condensed consolidated statements of operations as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
Dollars in thousands	Dollars in thousands	2021		2020		2021		2020		Dollars in thousands	2022		2021		2022		2021
Cost of goods sold	Cost of goods sold	$	10,724	$	6,300	$	20,903	$	15,607	Cost of goods sold	$	5,131	$	10,724	$	9,661	$	20,903
Research and development	Research and development	2,108		624		7,623		(427)		Research and development	5,538		2,108		9,805		7,623
Selling, general and administrative	Selling, general and administrative	6,563		2,164		18,057		13,394		Selling, general and administrative	2,661		6,563		11,563		18,057
Interest expense(1)		—		4,251		—		9,519
Gain from the sale of business		679		—		(42,197)		—
Gain from the sale of business(1)										Gain from the sale of business(1)	—		679		—		(42,197)
Other income	Other income	(1,171)		—		(2,757)		$	—	Other income	(1,193)		(1,171)		(2,485)		$	(2,757)
Total	Total	$	18,903	$	13,339	$	1,629	$	38,093	Total	$	12,137	$	18,903	$	28,544	$	1,629

~~(1)~~(1 ~~Upon adoption of ASU No. 2020-06, the Company will no longer incur non-cash interest expense for the amortization of debt discount.~~ ) See Note ~~1. Basis of Presentation,~~3, Acquisitions and Divestitures for details.

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. We believe that given our ongoing strategy of ~~seeking~~ acquisitions and divestitures and efforts to optimize our ~~continuing focus on rationalizing our existing~~ manufacturing, distribution, commercial and ~~distribution~~administration infrastructure, ~~and our continuing review of various product lines in relation to our current business strategy,~~ some of the special charges discussed above could recur with similar materiality in the future.

We believe that the separate identification of these special charges provides important supplemental information to investors regarding financial and business trends relating to our financial condition and results of operations. Investors may find this information useful in assessing comparability of our operating performance from period to period, against the business model objectives that management has established, and against other companies in our industry. 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.

Revenues and Gross Margin

The Company's revenues and gross margin on product revenues were as follows:


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
Dollars in thousands	Dollars in thousands	2021			2020			2021			2020			Dollars in thousands	2022			2021			2022			2021
Segment Net Sales	Segment Net Sales													Segment Net Sales
Codman Specialty Surgical	Codman Specialty Surgical	$	256,837		$	169,778		$	498,078		$	401,218		Codman Specialty Surgical	$	257,863		$	256,837		$	505,171		$	498,078
Tissue Technologies	Tissue Technologies	133,155			88,887			251,985			211,771			Tissue Technologies	139,952			133,155			269,282			251,985
Total revenues	Total revenues	$	389,992		$	258,665		$	750,063		612,989			Total revenues	$	397,815		$	389,992		$	774,453		750,063
Cost of goods sold	Cost of goods sold	151,267			105,478			297,090			238,954			Cost of goods sold	148,404			151,267			290,973			297,090
Gross margin on total revenues	Gross margin on total revenues	$	238,725		$	153,187		$	452,973		$	374,035		Gross margin on total revenues	$	249,411		$	238,725		$	483,480		$	452,973
Gross margin as a percentage of total revenues	Gross margin as a percentage of total revenues	61.2		%	59.2		%	60.4		%	61.0		%	Gross margin as a percentage of total revenues	62.7		%	61.2		%	62.4		%	60.4		%

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Three Months Ended June 30, ~~2021~~2022 as Compared to Three Months Ended June 30, ~~2020~~2021

Revenues

For the three months ended June 30, ~~2021,~~2022, total revenues increased by ~~$131.3~~$7.8 million to ~~$390.0~~$397.8 million from ~~$258.7~~$390.0 million for the same period in ~~2020.~~2021, inclusive of a unfavorable foreign currency impact of $10.3 million on revenues. Domestic revenues increased by ~~$96.3~~$9.2 million, or ~~53.0%~~3.3%, to ~~$278.2~~$287.3 million and were ~~71.3%~~72.2% of total revenues for the three months ended June 30, ~~2021~~2022 compared to ~~$181.9~~$278.2 million during the same period in the prior year. International revenues ~~increased~~decreased by ~~$35.0~~$1.4 million or ~~45.6%~~1.2% to ~~$111.8~~$110.5 million for the three months ended June 30, ~~2021~~2022 compared to ~~$76.8~~$111.8 million during the same period in the prior ~~year. The increase in revenues globally were primarily~~ asyear, which is inclusive of a result of the recovery experienced from the COVID-19 pandemic across all franchises compared to the prior year due to rebound in surgical procedure volumes. Foreign exchange fluctuations had a favorable unfavorable foreign currency impact of ~~$6.0 million on revenues for the quarter.~~$10.3 million.

In the ~~Codman Specialty Surgical~~CSS segment, ~~("CSS"),~~ revenues were ~~$256.8~~$257.9 million which was an increase of ~~$87.1~~$1.0 million, or ~~51.3%~~0.4% as compared to the prior-year ~~period.~~period, inclusive of a $9.2 million unfavorable foreign currency impact on revenue. The ~~Neurosurgery and Instrument portfolios increased high-double digits~~increase was as a result of the continued broad demand recovery ~~experienced from~~we have seen across many CSS franchises as well as our ability to maintain pace with customer deliveries. Excluding the ~~COVID-19 pandemic.~~impact of foreign currency, Neurosurgery portfolio grew low single digits primarily driven by sales in advanced energy and CSF management. Sales in our instruments portfolio increased mid single digits as compared to the same period in the prior year.

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In the ~~Tissue Technologies ("TT")~~TT segment, revenues were ~~$133.2~~$140.0 million which was an increase of ~~$44.3~~$6.8 million, or ~~49.8%~~5.1% from the prior-year ~~period. The~~period, inclusive of a $1.1 million unfavorable foreign currency impact on revenue. Sales in our Wound Reconstruction business, increased low single digits, led by Integra® Dermal Matrices and SurgiMend®. Sales in our Private Label ~~portfolios~~business increased ~~high-double~~low double digits ~~as a result of the recovery experienced from the COVID-19 pandemic. Additionally, our TT segment revenue reflect the acquisition of ACell Inc. which was completed on January 20, 2021~~driven by higher customer demand and ~~the sale of the Company's Extremity Orthopedics product portfolio which occurred on January 4, 2021.~~

We continue to closely monitor local, regional, and global COVID-19 surges as well as new variants of the virus for an impact on procedures during Q2 2021 and beyond. The reallocation of hospital resources to treat COVID-19 may continue to cause a financial strain on healthcare systems and reduce procedural volumes. Additionally, the Company does not expect all markets and product lines to improve at the same rate based on the level of recurrence of COVID-19 and its associated impact on the pace of procedure recovery and economic normalization.favorable order timing.

Gross Margin

Gross margin ~~increased to $238.7~~was $249.4 million for the three months ended June 30, ~~2021,~~2022, an increase of ~~$85.5~~$10.7 million from ~~$153.2~~$238.7 million for the samesame period in ~~2020.~~2021. Gross margin as a percentage of revenues ~~increased to 61.2%~~was 62.7% for the ~~second quarter of 2021 from 59.2% in the same period last year. This increase was mainly attributable to our strong revenue recovery from the disruption caused by the COVID-19 pandemic during~~three months ended June 30, 2022 and 61.2% or the same period in 2021. This increase in gross margin was due to higher revenues and a decrease in amortization associated with reduction of inventory step-up amortization in connection with the acquisition of ACell in the prior ~~year, as well as due to favorable U.S. product mix and improved manufacturing utilization.~~year.

~~Operating Expenses~~

The following is a summary of operating expenses as a percent of total revenues:


		Three Months Ended June 30,					Three Months Ended June 30,
		2021		2020			2022		2021
Research and development	Research and development	5.2	%	5.8	%	Research and development	6.4	%	5.2	%

Selling, general and administrative	Selling, general and administrative	41.7	%	44.9	%	Selling, general and administrative	40.4	%	41.7	%
Intangible asset amortization	Intangible asset amortization	1.1	%	3.1	%	Intangible asset amortization	0.8	%	1.1	%
Total operating expenses	Total operating expenses	48.0	%	53.8	%	Total operating expenses	47.6	%	48.0	%

Total operating expenses, which consist of research and development, selling, general and administrative, and amortization expenses, increased by ~~$47.8~~$2.7 million, or ~~34.4%~~1.4% to ~~$186.9~~$189.5 million in the three months ended June 30, ~~2021,~~2022, compared to ~~$139.1~~$186.9 million in the same period in ~~2020.~~2021. The increase in operating expenses compared to the prior year ~~was~~ primarily ~~due to an increase~~reflects increased selling costs associated with higher revenue as well as higher spending for key growth initiatives in research and ~~development, selling, general and administrative costs partially offset by a decrease in amortization expense.~~ development.

The Company continues to ~~manage and~~ prioritize itits operating costs ~~closely given~~to increase organic investments that will drive long-term growth including the ~~continued uncertainty~~support of ~~COVID-19. We also benefited from cost synergies as a result of the ACell Inc. acquisition the sale of the Extremity Orthopedic business.~~new product development and introductions, clinical studies, geographic expansion and targeted U.S. sales channel expansion.

Research and Development

Research and development expenses for the three months ended June 30, ~~2021~~2022 increased by ~~$5.2~~$5.5 million as compared to the same period in the prior year. This increase in spending resulted from additional spending on new product development, clinical studies and spending related to the EU MDR compliance activities.

Selling, General and Administrative

Selling, general and administrative costs ~~increased~~for the three months ended June 30, 2022 decreased by ~~$46.4~~$1.9 million as compared to the same period in the prior year driven ~~primarily due to costs associated with higher employee related costs, higher~~by lower incentive and stock-based compensation ~~increased variable selling costs,~~ as well as ~~increased outside~~lower acquisition related expenses partially offset by normalization of spending ~~as revenue recovered.~~in selling and marketing.

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Intangible Asset Amortization

AAmortization expense (exclu~~mortization expense (excludin~~ding amounts reported in cost of product revenues for technology-based intangible assets) for the three months ended June 30, ~~2021~~2022 was ~~$4.2~~$3.3 million compared to ~~$8.1~~$4.2 million for the same period in prior ~~year primarily due to a reduction in amortization expense associated with intangible assets sold in conjunction with the sale of the Extremity and Orthopedics business during the current~~ year.

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Non-Operating Income and Expenses

The following is a summary of non-operating income and expenses:


		Three Months Ended June 30,					Three Months Ended June 30,
Dollars in thousands	Dollars in thousands	2021		2020		Dollars in thousands	2022		2021
Interest income	Interest income	$	1,764	$	2,281	Interest income	$	1,965	$	1,764
Interest expense	Interest expense	(13,149)		(15,682)		Interest expense	(12,236)		(13,149)
Other income, net						Other income, net	1,979		5,034
Gain (loss) from the sale of business	Gain (loss) from the sale of business	(679)		—		Gain (loss) from the sale of business	—		(679)
Other income, net		5,034		972
Total non-operating income and expense	Total non-operating income and expense	$	(7,030)	$	(12,429)	Total non-operating income and expense	$	(8,292)	$	(7,030)

Interest Income and Interest Expense

Interest income for the three months ended June 30, ~~2021 decreased~~2022 increased by ~~$0.5~~$0.2 million as compared to the same period last year.

~~Interest Expense~~

Interest expense for the three months ended June 30, ~~2021~~2022 decreased by ~~$2.5~~$0.9 million as compared to the same period last year primarily from a lower outstanding borrowing on the Senior Secured Credit Facility.

Other income, net for the three months ended June 30, 2022 decreased by $3.1 million compared to the same period in the prior year primarily due to the elimination of the non-cash interest expense as the result of the adoption ASU 2020-06 and the expenses associated with Amended and Restated Senior Credit Agreement which occurred in the prior period. ~~See Note 1.~~ ~~Basis of Presentation~~ ~~for details in relation to the adoption of ASU 2020-06.~~

~~Other Income, net~~

~~Other income, net for the three months ended June 30, 2021 increased by $4.1 million compared to the same period in the prior year primarily due to~~lower income associated with the transition services agreement from the divestiture of the Extremity Orthopedics ~~business and and higher income from additional cross currency swaps that were entered into during Q4 2020.~~business.

Income Taxes


		Three Months Ended June 30,							Three Months Ended June 30,
Dollars in thousands	Dollars in thousands	2021			2020			Dollars in thousands	2022			2021
Income before income taxes	Income before income taxes	$	44,824		$	1,651		Income before income taxes	$	51,575		$	44,824
Income tax (benefit) expense	Income tax (benefit) expense	9,756			2,020			Income tax (benefit) expense	6,787			9,756
Effective tax rate	Effective tax rate	21.8		%	122.4		%	Effective tax rate	13.2		%	21.8		%

The Company’s effective income tax rates for the three months ended June 30, 2022 and 2021 were 13.2% and ~~2020 were~~ 21.8% ~~and 122.4%~~, respectively.

For the three months ended June 30, ~~2021,~~2022, the primary driver of the ~~lower~~ tax rate is ~~due~~a $4.8 million benefit related to ~~mix of income impacted by the COVID-19 pandemic.~~

~~For the three months ended June 30, 2020, the primary drivers of the higher~~excess tax ~~rate were lower income impacted by the COVID-19 pandemic, in addition to a $3.4 million valuation allowance on certain foreign deferred tax assets.~~benefit from stock compensation.

The effective tax rate may vary from period to period depending on, among other factors, the geographic and business mix of taxable earnings and losses, tax planning and settlements with various taxing authorities. We consider these factors and others, including the Company's history of generating taxable earnings, in assessing our ability to realize tax assets on a quarterly basis.

Six Months Ended June 30, 2022 as Compared to Six Months Ended June 30, 2021

Revenues and Gross Margin

For the six months ended June 30, 2022, total revenues increased by $24.4 million to $774.5 million from $750.1 million for the same period in 2021, inclusive of an unfavorableforeign currency impact of $14.9 million on revenues. Domestic revenues increased by $24.7 million, or 4.7%, to $550.7 million and were 71.1% of total revenues for the six months ended June 30, 2022. International revenues decreased by $0.3 million, or 0.1% to $223.8 million for the six months ended June 30, 2022 compared to $224.1 million during the same period in the prior year.

In the CSS segment, revenues were $505.2 million, which was an increase of $7.1 million, or 1.4% from the prior-year period, inclusive of a $13.4 million unfavorable foreign currency impact on revenue. The Neurosurgery portfolio grew low single digits primarily due to sales in neuromonitoring and CSF management. Sales in our instruments portfolio increased low single digits as compared to the same period in the prior year.

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In the TT segment, revenues were $269.3 million, which was a increase of $17.3 million, or 6.9% from the prior-year period, inclusive of a $1.5 million unfavorable foreign currency impact on revenue. Sales in our Wound Reconstruction business increased low single digits, led by Integra® Dermal Matrices and SurgiMend®. Sales in our Private Label business increased low double digits driven by higher customer demand and favorable order timing.

Gross Margin

Gross margin was $483.5 million for the six months ended June 30, 2022, an increase of $30.5 million from $453.0 million for the same period last year. Gross margin as a percentage of total revenue increased to 62.4% for the six months ended June 30, 2022 from 60.4% in the same period last year. The increase in gross margin percentage was due to higher revenues and a reduction of inventory step-up amortization in connection with the acquisition of ACell in the prior year.

Operating Expenses

The following is a summary of operating expenses as a percent of total revenues:


	Six Months Ended June 30,
	2022		2021
Research and development	6.4	%	5.7	%
Selling, general and administrative	41.4	%	42.6	%
Intangible asset amortization	0.9	%	1.2	%
Total operating expenses	48.7	%	49.5	%

Total operating expenses, which consist of selling, general and administrative expenses, research and development expenses, and amortization expenses, increased by $7.0 million, or 1.9% to $377.4 million in the six months ended June 30, 2022, compared to $370.4 million in the same period in 2021.

The Company continues to prioritize its operating costs to increase organic investments that will drive long-term growth including the support of new product development and introductions, clinical studies, geographic expansion and targeted U.S. sales channel expansion.

Research and Development

Research and development expenses for the six months ended June 30, 2022 increased by $7.2 million as compared to the same period in the prior year. This increase in spending resulted from additional spending on new product development, clinical studies and additional spending due to the EU MDR compliance.

Selling, General and Administrative

Selling, general and administrative costs increased by $1.4 million as compared to the same period in the prior year driven primarily due to higher spending, including selling costs on commissions, investment in sales force expansion, and higher spend for key growth initiatives, offset by lower employee related costs, stock-based compensation and acquisition related costs.

Intangible Asset Amortization

Amortization expense (excluding amounts reported in cost of product revenues for technology-based intangible assets) for the six months ended June 30, 2022 was $7.2 million compared to $8.7 million for the same period in prior year.

We expect total annual amortization expense to be approximately $38.4 million for the remainder of 2022, $76.5 million in 2023, $75.8 million in 2024, $75.8 million in 2025, $75.7 million in 2026, $73.7 million in 2027 and $499.8 million thereafter.

Non-Operating Income and Expenses

The following is a summary of non-operating income and expenses:


	Six Months Ended June 30,
Dollars in thousands	2022		2021
Interest income	$	3,342	$	3,512
Interest expense	(23,891)		(26,078)
Gain from the sale of business	—		42,197
Other income, net	5,408		9,903
Total non-operating income and expense	$	(15,141)	$	29,534

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Interest Income

Interest income for the six months ended June 30, 2022 decreased by $0.2 million as compared to the same period last year.

Interest Expense

Interest expense for the six months ended June 30, 2022 decreased by $2.2 million as compared to the same period last year primarily from a lower outstanding borrowing on the Senior Secured Credit Facility.

Gain from the sale of business

On January 4, 2021, the Company completed its sale of its Extremity Orthopedics business and recognized a gain of $42.2 million for the six months ended June 30, 2021.

Other Income, net

Other income, net for the six months ended June 30, 2022, increased by $4.5 million compared to the same period in the prior year primarily due to lower income associated with the transition services agreement from the divestiture of the Extremity Orthopedics business.

Income Taxes


	Six Months Ended June 30,
Dollars in thousands	2022			2021
Income before income taxes	$	90,890		$	112,102
Income tax (benefit) expense	13,201			31,640
Effective tax rate	14.5		%	28.2		%

The Company’s effective income tax rates for the six months ended June 30, 2022 and 2021 were 14.5% and 28.2%, respectively.

For the six months ended June 30, 2022, the primary driver of the tax rate is a $5.7 million benefit related to excess tax benefits from stock compensation. For the six months ended June 30, 2021, the primary driver of the higher tax rate is the tax impact of the gain on sale of the Extremity Orthopedics business,which closed during the first quarter of 2021.

Additionally, changes to income tax laws and regulations, in any of the tax jurisdictions in which the Company operates, could impact the effective tax rate. Various governments, both U.S. and non-U.S., are increasingly focused on tax reform and revenue-raising legislation. The current U.S. administration has proposed tax reform which, if enacted, would increase the Company’s U.S. federal income tax liability. Further, legislation in foreign jurisdictions may be enacted, in response to the BEPS project begun by the OECD. The OECD recently finalized major reform of the international tax system with respect to a minimum tax rate. Such changes in U.S. and Non-U.S. jurisdictions could have an adverse effect on the Company’s effective tax rate.

While it is often difficult to predict the outcome or the timing of the resolution of a particular matter with the various federal, state, and foreign tax authorities, we believe that our reserves reflect the most probable outcome of known tax contingencies. Settlement of a particular issue would usually require the use of cash. A favorable resolution would be recognized as a reduction to our annual effective tax rate in the year of resolution. The Company's tax reserves are presented in the balance sheet within other liabilities, except for amounts relating to items ~~that~~ we expect to pay in the coming year, which would be classified as current income taxes payable.

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~~Six Months Ended June 30, 2021 as Compared to Six Months Ended June 30, 2020~~

~~Revenues and Gross Margin~~

For the six months ended June 30, 2021, total revenues increased by $137.1 million to $750.1 million from $613.0 million for the same period in 2020. Domestic revenues increased by $97.3 million, or 23%, to $526.0 million and were 70% of total revenues for the six months ended June 30, 2021. International revenues increased by $39.8 million, or 22% to $224.1 million for the six months ended June 30, 2021 compared to $184.3 million during the same period in the prior year. The net increase of $137.1 million was a result of the recovery experienced from the COVID-19 pandemic across all franchises compared to the prior year due to rebound in surgical procedure volumes. Foreign exchange fluctuations had a favorable impact of $11.9 million on revenues for the year.

~~Codman Specialty Surgical revenues were $498.1 million, an increase of $96.9 million, or 24.1% from the prior-year period.~~ ~~The Neurosurgery and Instrument portfolios increased high-double digits as a result of the recovery experienced from the COVID-19 pandemic.~~

Tissue Technologies revenues were $252.0 million, an increase of $40.2 million, or 19.0% from the prior-year period. The Wound Reconstruction and Private Label portfolios increased high-double digits as a result of the recovery experienced from the COVID-19 pandemic. Additionally, our TT segment revenue reflect the acquisition of ACell Inc. which was completed on January 20, 2021 and the sale of the Company's Extremity Orthopedics product portfolio which occurred on January 4, 2021.

~~Gross Margin~~

Gross margin was $453.0 million for the six-month period ended June 30, 2021, an increase of $78.9 million from $374.0 million for the same period last year. Gross margin as a percentage of total revenue decreased to 60.4% for the six months ended June 30, 2021 from 61.0% in the same period last year. The decrease in gross margin percentage was due to increased amortization associated with technology-based intangible assets and inventory step-up amortization in connection with the ACell Inc. acquisition.

~~Operating Expenses~~

~~The following is a summary of operating expenses as a percent of total revenues:~~

Six Months Ended June 30,
2021 2020
Research and development 5.7 % 5.8 %
Selling, general and administrative 42.6 % 46.0 %
Intangible asset amortization 1.2 % 2.5 %
Total operating expenses 49.5 % 54.3 %

Total operating expenses, which consist of selling, general and administrative expenses, research and development expenses, IPR&D expense and amortization expenses, increased by $37.6 million, or 11.3% to $370.4 million in the six months ended June 30, 2021, compared to $332.9 million in the same period in 2020.

~~Selling, General and Administrative~~

Selling, general and administrative costs increased by $37.1 million as compared to the same period in the prior year driven primarily due to costs associated with higher employee related costs, higher incentive and stock-based compensation, increased variable selling costs, as well as increased outside spending as revenue recovered.

~~Intangible Asset Amortization~~

A~~mortization expense (excludin~~g amounts reported in cost of product revenues for technology-based intangible assets) for the six months ended June 30, 2021 was $8.7 million compared to $15.1 million for the same period in prior year primarily due to a reduction in amortization expense associated with intangible assets sold in conjunction with the sale of the Extremity and Orthopedics business during the current year and accelerated amortization expense associated with an intangible asset recorded in the prior year.

~~We expect total annual amortization expense to be approximately $40.6 million for the remainder of 2021, $79.1 million in 2022, $78.4 million in 2023, $77.7 million in 2024, $77.7 million in 2025, $77.5 million in 2026 and $585.7 million thereafter.~~

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~~Non-Operating Income and Expenses~~

~~The following is a summary of non-operating income and expenses:~~

Six Months Ended June 30,
Dollars in thousands 2021 2020
Interest income $ 3,512 $ 4,851
Interest expense (26,078) (33,434)
Gain from the sale of business 42,197 —
Other income, net 9,903 493
Total non-operating income and expense $ 29,534 $ (28,090)

~~Interest Income~~

Interest income for the six months ended June 30, 2021 decreased by $1.3 million as compared to the same period last year primarily due to the settlement of cross-currency swaps designated as net investment hedges during Q4 2020.

~~Interest Expense~~

Interest expense for the six months ended June 30, 2021 decreased by $7.4 million as compared to the same period last year primarily due to the elimination of the non-cash interest expense as the result of the adoption ASU 2020-06 and the expenses associated with Amended and Restated Senior Credit Agreement which occurred in the prior period. ~~See Note 1.~~ ~~Basis of Presentation~~ ~~for details in relation to the adoption of ASU 2020-06.~~

~~Gain from the sale of business~~

~~On January 4, 2021, the Company completed its sale of its Extremity Orthopedics business and recognized a gain of $42.2 million in the first quarter of the current year.~~

~~Other Income, net~~

Other income, net for the six months ended June 30, 2021, increased by $9.4 million primarily due to income associated with the transition services agreement with Smith and Nephew and higher income from additional cross currency swaps that were entered into during Q4 2020.

~~Income Taxes~~

Six Months Ended June 30,
Dollars in thousands 2021 2020
Income before income taxes $ 112,102 $ 13,093
Income tax (benefit) expense 31,640 4,282
Effective tax rate 28.2 % 32.7 %

~~The Company’s effective income tax rates for the six months ended June 30, 2021 and 2020 were 28.2% and 32.7%, respectively.~~

~~For the six months ended June 30, 2021, the primary drivers of the lower tax rate was mix of income in lower-taxed jurisdictions, offset by the tax impact of the gain on~~ ~~sale of its Extremity Orthopedics business~~ which was completed during the first quarter of 2021. For the six months ended June 30, 2020, the primary drivers of the higher tax rate were lower book income in lower-taxed jurisdictions and a $3.4 million valuation allowance on certain foreign deferred tax assets, as the Company determined that it is no longer more likely than not that these foreign deferred tax assets would be realized due to the adverse impact of the COVID-19 pandemic in certain jurisdictions.

The Company expects its effective income tax rate for the full year to be approximately 24.8%, driven primarily by the jurisdictional mix of income and the tax impact of the gain from the sale of its Extremity Orthopedic business, which closed during the first quarter.

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While it is often difficult to predict the outcome or the timing of the resolution of a particular matter with the various federal, state, and foreign tax authorities, we believe that our reserves reflect the most probable outcome of known tax contingencies. Settlement of a particular issue would usually require the use of cash. Favorable resolution would be recognized as a reduction to our annual effective tax rate in the year of resolution. The tax reserves are presented in the balance sheet within other liabilities, except for amounts relating to items we expect to pay in the coming year, which would be classified as current income taxes payable.

GEOGRAPHIC PRODUCT REVENUES AND OPERATIONS

The Company attributes revenues to geographic areas based on the location of the customer. Total revenue by major geographic area consisted of the following:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
Dollars in thousands	Dollars in thousands	2021		2020		2021		2020		Dollars in thousands	2022		2021		2022		2021
United States	United States	$	278,186	$	181,850	$	525,979	$	428,702	United States	$	287,347	$	278,186	$	550,698	$	525,979
Europe	Europe	48,437		32,026		94,256		77,922		Europe	46,862		48,437		90,606		94,256
Asia Pacific	Asia Pacific	44,306		33,501		91,601		73,461		Asia Pacific	43,365		44,306		91,082		91,601
Rest of World	Rest of World	19,063		11,288		38,227		32,904		Rest of World	20,241		19,063		42,067		38,227
Total Revenues	Total Revenues	$	389,992	$	258,665	$	750,063	$	612,989	Total Revenues	$	397,815	$	389,992	$	774,453	$	750,063

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. 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. 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 ~~$96.3~~$9.2 million for the three months ended June 30, ~~2021~~2022 compared to the same period last year. European sales ~~increased~~decreased by ~~$16.4~~$1.6 million for the three months ended June 30, ~~2021~~2022 compared to the same period last year. Sales to customers in Asia Pacific ~~increased~~decreased by ~~$10.8~~$0.9 million for the three months ended June 30, ~~2021.~~2022. The Rest of ~~the~~ World for the three months ended June 30, ~~2021~~2022 increased by ~~$7.8~~$1.2 million compared to the same period last year. The ~~increase~~international revenues were impacted by a $10.3 million unfavorable foreign exchange impact. Sales in ~~revenues globally were primarily~~ ~~as a~~ ~~result of the recovery experienced from the COVID-19 pandemic across all franchises compared~~Japan, China, Canada and Europe continue to ~~the prior year due to rebound in surgical procedure volumes.~~drive international growth.

Domestic revenues increased by ~~$97.3~~$24.7 million for the six months ended June 30, ~~2021~~2022 compared to the same period last year. European sales ~~increased~~decreased by ~~$16.3~~$3.7 million for the six months ended June 30, ~~2021~~2022 compared to the same period last year. Sales to customers in Asia Pacific ~~increased~~decreased by ~~$18.1~~$0.5 million for the six months ended June 30, ~~2021.~~2022. The Rest of ~~the~~ World for the six months ended June 30, ~~2021~~2022 increased by ~~$5.3~~$3.8 million compared to the same period last year. The ~~increase~~international revenues were impacted by a $14.9 million unfavorable foreign exchange impact. Sales in ~~revenues globally were primarily~~ ~~as a~~ ~~result of the recovery experienced from the COVID-19 pandemic across all franchises compared~~Japan, China, Canada and Europe continue to ~~the prior year due to rebound in surgical procedure volumes.~~drive international growth.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

The Company's working capital as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 was ~~$713.6~~$841.8 million and ~~$836.2~~$813.7 million, respectively. 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 ~~$397.4~~$447.2 million and ~~$470.2~~$513.4 million at June 30, ~~2021~~2022 and December 31, ~~2020~~2021 respectively, which are valued based on Level 1 measurements in the fair value hierarchy. At June 30, ~~2021,~~2022, our non-U.S. subsidiaries held approximately ~~$290.8~~$302.6 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. ~~The Company does not anticipate the need to repatriate earnings from foreign subsidiaries as a result of the impact of the COVID-19 pandemic.~~

Cash Flows


	Six Months Ended June 30,
Dollars in thousands	2022		2021
Net cash provided by operating activities	$	110,822	$	160,371
Net cash used in investing activities	(18,565)		(125,483)
Net cash used in financing activities	(146,612)		(100,490)
Effect of exchange rate fluctuations on cash	(11,941)		(7,150)

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Cash Flows

Six Months Ended June 30,
Dollars in thousands 2021 2020
Net cash provided by operating activities $ 160,371 $ 53,931
Net cash used in investing activities (125,483) (25,434)
Net cash (used) provided by financing activities (100,490) 133,452
Effect of exchange rate fluctuations on cash (7,150) 121

~~Cash Flows~~ Provided by Operating Activities

Operating cash flows for the six months ended June 30, 2022 decreased by $49.5 million compared to the same period in 2021. Net income after removing the impact of the gain on sale of business and non-cash adjustments increased for the six months ended June 30, 2022 by approximately $34.4 million as compared to the same period in 2021 primarily due to earnings from higher revenues. The changes in assets and liabilities, net of business acquisitions, decreased cash flows by $46.5 million in 2022 as compared to the increase of $37.5 million for the same period in 2021. The change in 2022 is mainly attributable to increases in inventory and accounts receivable due to higher revenues and decrease in accrued expenses and other current liabilities due to increased payments processed in the quarter. The changes in 2021 were primarily attributable to a reduction in inventories mainly driven by higher revenues in the first half of 2021, an increase in accounts payables, accrued expenses and other current liabilities partially offset by an increase in accounts receivable due to continued collection efforts.

Operating cash flows for the six months ended June 30, 2021 increased by $106.4 million compared to the same period in 2020. Net income after removing the impact of the gain on sale of business and non-cash adjustments increased for the six months ended June 30, 2021 by approximately $32.9 million as compared to the same period in 2020 primarily due to the revenue recovery in the current year as compared to the height of the COVID-19 pandemic in the first half of the ~~2020~~.2020. The changes in assets and liabilities, net of business acquisitions, increased cash flows by $37.5 million in 2021 as compared to the decrease of $36.1 million for the same period in 2020. ~~The increase~~

Cash Flows Used in 2021 is attributable to a reduction in inventories mainly driven by higher revenues in the first half of 2021, an increase in accounts payables, accrued expenses and other current liabilities partially offset by an increase in accounts receivable due to continued collection efforts.Investing Activities

~~Operating cash flows for~~During the six months ended June 30, ~~2020 decreased compared~~2022, the Company paid $18.7 million for capital expenditures to support operations improvement initiatives at a number of our manufacturing facilities and other information technology investments as well as the final $4.7 million payment related to the ~~same period in 2019. Net income after non-cash adjustments decreased~~final developmental milestone for the six months ended June 30, 2020 by approximately $37.7 million compared to the same period in 2019 primarily due to adverse effects of the COVID-19 pandemic. The changes in assets and liabilities, net of business acquisitions, decreased cash flows from operating activities by $36.1 million for the six months ended June 30, 2020 compared to a decrease of $49.8 million for the same period in 2019. The decrease in 2020 is attributable to an increase in inventory to ensure an adequate safety stock of select products as surgical procedures continue to recover from levels experienced in the second quarter. In addition, decreases were also driven by reduced payablesRebound Therapeutics Corporation. This was partially offset by ~~decreases in accounts receivable due to lower revenue and continued collection efforts.~~

~~Cash Flows Used in Investing Activities~~$4.9 million proceeds on cross-currency swaps designated as net investment hedge.

During the six months ended June 30, 2021, we paid a net cash amount of $303.9 million in relation to the acquisition of ACell Inc. and received net proceeds of $191.7 million for the sale of the Extremity Orthopedics business. The Company also paid for $13.3 million capital expenditures to support operations improvement initiatives at a number of our manufacturing facilities and other information technology investments.

~~During~~Cash Flows Used in Financing Activities

Uses of cash from financing activities in the six months ended June 30, ~~2020,~~2022 related to the repurchase of treasury stock of $125.0 million under the 2022 accelerated share repurchase agreement. In addition, the Company had $23.2 million in cash taxes paid ~~$23.7 million~~ for ~~capital expenditures, most~~net equity settlements as a result of ~~which were directed to our facilities located in Mansfield, MA, Boston, MA, Memphis, TN, and Princeton, NJ.~~

~~Cash Flows Used in Financing Activities~~the departure of the former chief executive officer of the Company.

Uses of cash from financing activities in the six months ended June 30, 2021 were repayments of $102.2 million under our Senior Credit Facility and Securitization Facility. In addition, the Company had $3.8 million in cash taxes paid in net equity settlement. These uses were offset by $3.6 million proceeds from the exercise of stock options and $2.2 million borrowings under our Securitization Facility.

Sources of cash from financing activities in the six months ended June 30, 2020 were $515.3 million proceeds from the issuance of Convertible Senior Notes including the call and warrant transactions, $127.7 million borrowing under our Senior Credit Facility and Securitization Facility. These were offset by repayments of $388.5 million on the revolving portion of our Senior Credit Facility and Securitization Facility, $20.3 million debt issuance costs related to the Amended and Restated Senior Credit Agreement and the issuance of Convertible Senior Notes and $100.0 million purchases of treasury stock.

Amended and Restated Senior Credit Agreement, Convertible Senior Notes, Securitization and Related Hedging Activities

See Note 6,7, Debt, to the ~~current period’s condensed consolidated financial statements~~Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a discussion of our Amended and Restated Senior Credit Agreement, ~~Convertible Senior~~the 2025 Notes and Securitization Facility and Note 7,8, Derivative Instruments, to the Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for discussion of our hedging activities. We are forecasting that sales and earnings for the next twelve months ~~sales and earnings~~ will be sufficient to remain in compliance with our financial covenants under the terms of the February 2020 Amendment ~~and July 2020 Amendment~~ to the Senior Credit Facility.

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Share Repurchase Plan

On ~~December 7, 2020,~~April 26, 2022, the Board of Directors authorized the Company to repurchase up to ~~$225~~$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 ~~2022. The Company has~~2024. This stock repurchase authorization replaces the previous $225 million ~~remaining under~~stock repurchase authorization, of which $100 million remained authorized at the ~~share repurchase~~time of its ~~Common Stock. The price~~replacement, and ~~timing of any future purchases under the share repurchase program will depend~~which was otherwise set to expire 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.

~~During the year ended~~ December 31, ~~2020, the Company repurchased 2.1 million shares of Integra’s common stock as~~2022. Purchases may be affected through one or more open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, or a ~~part of our previous share repurchase authorization. The Company utilized $100.0 million of net proceeds from the offering~~combination of the ~~Convertible Senior Notes to execute the share repurchase transactions. This included $7.6 million from certain purchasers of the convertible notes in conjunction with the closing of the offering.~~ foregoing

On ~~February 5, 2020,~~January 12, 2022, the Company entered into a ~~$92.4~~$125.0 million accelerated share repurchase ("2022 ASR") ~~to complete~~and received 1.48 million shares of the ~~remaining $100.0 million of share repurchase. The~~ Company ~~received 1.3 million shares through the ASR,~~common stock at inception, which represented approximately 80% of the expected total shares. On March 24, 2022, the early exercise provision was exercised by 2022 ASR counterparty. Upon settlement ~~of the ASR in June 2020,~~on March 24, 2022, the Company received an additional ~~0.6~~0.46 million shares determined using the volume-weighted average price of the Company's common stock during the term of the ~~transaction.~~2022 ASR.

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See Note 12, Treasury Stock of the Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further details.

Dividend Policy

~~The Company has~~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. 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.

Capital Resources

We believe that our cash and available borrowings under the Senior Credit Facility are sufficient to finance our operations and capital expenditures for the foreseeable future. Our future capital requirements will depend on many factors, including the growth of our business, the timing and introduction of new products and investments, strategic plans and acquisitions, among others. Additional sources of liquidity available to us include short term borrowings and the issuance of long term debt and equity securities.

Off-Balance Sheet Arrangements

We do not have any off–balance sheet financing arrangements during the six months ended June 30, ~~2021~~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.

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Contractual Obligations and Commitments

~~As of June 30, 2021, the Company is obligated~~We will continue to have cash requirements to support seasonal working capital needs and capital expenditures, to pay ~~the following amounts under various agreements:~~

Payments Due by Calendar Year
Dollars in millions Total Remaining 2021 2022-2023 2024-2025 Thereafter
Revolving Credit Facility (1) $ 8.8 $ — $ — $ 8.8 $ —
Term Loan 866.3 22.5 106.9 736.9 —
Securitization Facility (1) 112.5 — — 112.5 —
Convertible Debt (4) 575.0 — — 575.0 —
Interest (2) 40.8 6.3 23.3 11.2 —
Employment Agreements (3) 0.5 0.5 — — —
Operating Leases 146.0 8.1 31.4 22.9 83.6
Purchase Obligations 4.4 1.1 3.3 — —
Other 3.6 0.4 1.1 2.1 —
Total $ 1,757.9 $ 38.9 $ 166.0 $ 1,469.4 $ 83.6
interest, to service debt, and to fund acquisitions. As part of our ongoing operations, we enter into contractual arrangements that obligate us to make future cash payments.

~~(1)~~Our primary obligations include principal and interest payments on revolving portion and The Company may borrow and make payments against the revolving credit portion of its Senior Credit Facility and Securitization Facility from time to time and considers all of the outstanding amounts to be long term based on its current intent and ability to repay the borrowing outside of the next twelve-month period.

~~(2)~~ ~~Interest is calculated on the term loan portion~~Term Loan component of the Senior Credit Facility, ~~based on LIBOR plus the spread paid by the Company. As the revolving credit facility and~~ Securitization Facility ~~can be repaid at any time, no interest has been included in the calculation.~~

~~(3)~~ ~~Amounts shown under Employment Agreements do not include compensation resulting from a change in control.~~

~~(4)~~ ~~On February 4, 2020, the Company issued $575.0 million aggregate principal amount of its of 0.5%~~and Convertible Senior Notes due 2025 (the "2025 Notes"). The 2025 Notes will mature on August 15, 2025 and bear interest at a rate of 0.5% per annum payable semi-annually in arrears, unless earlier converted, repurchased or redeemed in accordance with the terms of the Notes.Securities. See Note 6,7, Debt, to the Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for details. 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 Leasesto the ~~details on~~Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a schedule of our future minimum lease payments. Amounts related to the ~~2025 Notes.~~Company's other obligations, including employment agreements and purchase obligations were not material.

The Company has ~~excluded its~~ contingent consideration obligation related to prior and current year acquisitions ~~from the contractual obligations table above; this liability had a total estimated fair value of $38.5 million~~ ~~at June 30, 2021. This liability has been excluded because the amount to be paid or the potential payment date is not fixed.~~

~~The Company has excluded its~~and future pension contribution ~~obligations from~~obligations. See Note 10, Defined Benefit Plans and Note 17, Commitments and Contingenciesto the ~~table above. This has been excluded because the future amounts~~Notes to ~~be paid and the potential payment dates~~Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for details. The associated obligations are not fixed.

The Company also has ~~excluded the~~a liability for uncertain tax benefits ~~from~~including interest and penalties. See Note 13, Income Taxesto the ~~contractual obligations table above, including i~~Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for details. ~~nterest and penalties, totaling $0.8 million at June 30, 2021. This liability for uncertain tax benefits has been excluded because we~~The Company cannot make a reliable estimate of the period in which the uncertain tax benefits may be realized.

Employee Termination Benefits

The Company incurred restructuring costs related to employee terminations associated with a plant closure and with future outsourcing plans for select transactional back office activities in the consolidated statement of operations for the six months ended June 30, 2022. Restructuring costs were included in accrued expenses and other current liabilities in the consolidated balance sheet for the six months ended June 30, 2022 and year ended December 31, 2021. See Note 1, Basis of Presentation of the Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for additional details.

OTHER MATTERS

Critical Accounting Estimates

The critical accounting estimates included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 have not materially changed.

Recently Issued Accounting Standards

Information regarding new accounting pronouncements is included in Note 1, - Basis of Presentation to the current period’s condensed consolidated financial statements.

4544

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including changes in foreign currency exchange rates and interest rates that could adversely affect our results of operations and financial condition. To manage the volatility relating to these typical business exposures, we may enter into various derivative transactions when appropriate. 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. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, ~~("EUR"),~~ British pounds, ~~("GBP"),~~ Swiss francs, ~~("CHF"),~~ Canadian dollars, Japanese yen, Mexican pesos, Brazilian reais, Australian dollars and Chinese yuan. We manage the foreign currency exposure centrally, on a combined basis, which allows us to net exposures and to take advantage of any natural offsets. To mitigate the impact of currency fluctuations on transactions denominated in nonfunctional currencies, we periodically enter into derivative financial instruments in the form of foreign currency exchange forward contracts with major financial institutions. We temporarily record realized and unrealized gains and losses on these contracts that qualify as cash flow hedges in other comprehensive income, and then recognize them in other income or expense when the hedged item affects net earnings.

From time to time, we enter into foreign currency forward exchange contracts to manage currency exposures for transactions denominated in a currency other than an entity’s functional currency. As a result, the impact of foreign currency gains/losses recognized in earnings are partially offset by gains/losses on the related foreign currency forward exchange contracts in the same reporting period. Refer to Note 7,8, Derivative Instrumentsof the Notes to Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further information.

We maintain written policies and procedures governing our risk management activities. With respect to derivatives, changes in hedged items are generally expected to be completely offset by changes in the fair value of hedge instruments. Consequently, foreign currency exchange contracts would not subject us to material risk due to exchange rate movements, because gains and losses on these contracts offset gains and losses on the assets, liabilities or transactions being hedged.

The results of operations discussed herein have not been materially affected by inflation.

Interest Rate Risk

Cash and Cash Equivalents - We are exposed to the risk of interest rate fluctuations on the interest income earned on our cash and cash equivalents. A hypothetical 100 basis points movement in interest rates applicable to our cash and cash equivalents outstanding at June 30, ~~2021~~2022 would increase interest income by approximately ~~$4.0~~$4.5 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 point.~~ 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. These interest rate swaps fix the interest rate on a portion of our expected LIBOR-indexed floating-rate borrowings. These interest rate swaps were designated as cash flow hedges as of ~~March 31, 2021.~~June 30, 2022. The total notional amounts related to the Company’s interest rate swaps were $1.8 billion with $875.0 million effective as of June 30, ~~2021.~~2022. Based on our outstanding borrowings at June 30, ~~2021,~~2022, a 100 basis points change in interest rates would have impacted interest expense on the unhedged portion of the debt by $1.1 million on an annualized ~~basis.See~~basis. See Note 7,8, Derivative Instruments, for the details of interest rate swaps.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act report is recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission’s~~SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management has designed our disclosure controls and procedures to provide reasonable assurance of achieving the desired control objectives.

~~Table of Contents~~

As required by Exchange Act Rule 13a-15(b), the Company has carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, ~~2021.~~2022. Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, ~~2021~~2022 to provide such reasonable assurance.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In response to business integration activities, the Company has and will continue to further align and streamline the design and operation of the financial control environment to be responsive to the changing business model.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings can be found in Note ~~16.~~17, Commitment and Contingencies.

ITEM 1A. RISK FACTORS

There have been no material changes in the Company's risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~ 2021and subsequent periodic reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as ~~amended.~~amended (the "Exchange Act").

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Information pertaining to our common stock under the repurchase program can be found in Note 11.~~ ~~Treasury Stock~~.Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS


~~Reference is hereby made to the Exhibit Index on page~~ 49.

~~Table of Contents~~

~~SIGNATURES~~

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.~~



		~~INTEGRA LIFESCIENCES HOLDINGS CORPORATION~~

~~Date:~~	~~July 29, 2021~~	~~/s/ Peter J. Arduini~~
		~~Peter J. Arduini~~
		~~President and Chief Executive Officer~~
		~~(Principal Executive Officer)~~

~~Date:~~	~~July 29, 2021~~	~~/s/ Carrie L. Anderson~~
		~~Carrie L. Anderson~~
		~~Executive Vice President, Chief Financial Officer, and Treasurer~~
		~~(Principal Financial Officer)~~

~~Date:~~	~~July 29, 2021~~	~~/s/ Jeffrey A. Mosebrook~~
		~~Jeffrey A. Mosebrook~~
		~~Senior Vice President, Finance~~
		~~(Principal Accounting Officer)~~

~~Table of Contents~~


Exhibits



*10.1						Amendment No. 3 to Receivables Financing Agreement and Reaffirmation of Performance Guaranty, dated as of May 28, 2021, by and among, Integra Receivables LLC, Integra LifeSciences Sales LLC, as Servicer, PNC Bank, National Associations, as Administrative Agent, PNC Capital Markets LLC, as Structuring Agent, Committed Lender and Group Agent, and certain lenders and group agents that are parties thereto from time to time; Amendment No. 2 to Receivables Financing Agreement and Reaffirmation of Performance Guaranty, dated as of July 17, 2020, and Amendment No. 1 to Receivables Financing Agreement and Reaffirmation of Performance Guaranty, dated as of March 29, 2019, in each case by and among, Integra Receivables LLC, Integra LifeSciences Sales LLC, as Servicer, PNC Bank, National Associations, as Administrative Agent, Committed Lender and Group Agent, Mizuho Bank, Ltd., as Committed Lender and Group Agent and PNC Capital Markets LLC, as Structuring Agent, and certain lenders and group agents that are parties thereto from time to time.

*31.1						Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*31.2						Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*32.1						Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*32.2						Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*†101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*†101.SCH						XBRL Taxonomy Extension Schema Document

*†101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

*†101.DEF						XBRL Definition Linkbase Document

*†101.LAB						XBRL Taxonomy Extension Labels Linkbase Document

*†101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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*			Filed herewith
#			Indicates a management contract or compensatory plan or arrangement.
†			The financial information of Integra LifeSciences Holdings Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 filed on July 27, 2022 formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations and Comprehensive Income, (ii) the Condensed Consolidated Balance Sheets, (iii) Parenthetical Data to the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, is furnished electronically herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		INTEGRA LIFESCIENCES HOLDINGS CORPORATION

Date:	July 27, 2022	/s/ Jan De Witte
		Jan De Witte
		President and Chief Executive Officer
		(Principal Executive Officer)

Date:	July 27, 2022	/s/ Carrie L. Anderson
		Carrie L. Anderson
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Date:	July 27, 2022	/s/ Jeffrey A. Mosebrook
		Jeffrey A. Mosebrook
		Senior Vice President, Finance
		(Principal Accounting Officer)

† The financial information of Integra LifeSciences Holdings Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 filed on July 29, 2021 formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations and Comprehensive Income, (ii) the Condensed Consolidated Balance Sheets, (iii) Parenthetical Data to the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, is furnished electronically herewith.


			Payments Due by Calendar Year
Dollars in millions	Total		Remaining 2021		2022-2023		2024-2025		Thereafter

Revolving Credit Facility (1)	$	8.8	$	—	$	—	$	8.8	$	—
Term Loan	866.3		22.5		106.9		736.9		—
Securitization Facility (1)	112.5		—		—		112.5		—
Convertible Debt (4)	575.0		—		—		575.0		—
Interest (2)	40.8		6.3		23.3		11.2		—
Employment Agreements (3)	0.5		0.5		—		—		—
Operating Leases	146.0		8.1		31.4		22.9		83.6

Purchase Obligations	4.4		1.1		3.3		—		—
Other	3.6		0.4		1.1		2.1		—
Total	$	1,757.9	$	38.9	$	166.0	$	1,469.4	$	83.6