Q4 2024 Integra LifeSciences Holdings Corp Earnings Call

February 25, 2025

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Speaker Change: This conference is being recorded I would now like to hand, the conference over to your Speaker today, Chris Ward Senior director of Investor Relations. Please go ahead.

Good day, and thank you for standing by welcome to the Integra Lifesciences fourth quarter 'twenty 'twenty four financial results.

At this time all participants are in a listen only mode.

Speaker Change: Good morning, and thank you for joining the Integra Lifesciences fourth quarter 2024 earnings Conference call. Joining me on the call. This morning are multiple president and Chief Executive Officer, and Lee <unk> Chief Financial Officer.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone you will then hear an automated message is fighting your hand is raised to withdraw your question. Please press star one again please.

Speaker Change: This morning, we issued a press release announcing our fourth quarter and full year of 2024 financial results.

Speaker Change: The release and corresponding earnings presentation, which we will reference during the call are available in Integra lives dot com under investors events and presentations in a file named fourth quarter 2024 earnings call presentation.

Speaker Change: Please be advised that today's conference is being recorded I would now like to hand, the conference over to your Speaker today, Chris Ward Senior director of Investor Relations.

Please go ahead.

Speaker Change: Before we begin I want to remind you that many of the statements made during this call may be considered forward looking factors.

Yeah.

Speaker Change: Good morning, and thank you for joining the Integra Lifesciences fourth quarter 2024 earnings conference call.

Speaker Change: Factors that could cause actual results to differ materially are discussed in the company's exchange Act reports filed with the SEC and in the release.

Speaker Change: Joining me on the call. This morning are multiple president and Chief Executive Officer, and Chief Financial Officer.

So in our prepared remarks, we will reference reported an organic revenue growth.

Speaker Change: This morning, we issued a press release announcing our fourth quarter full year 2024 financial results.

Speaker Change: <unk> revenue growth excludes the effects of foreign currency acquisitions and divestitures.

Speaker Change: Lease and corresponding earnings presentation, which we will reference during the call are available in Integra life Dot com under investors events and presentations and a final named fourth quarter 2024 earnings call presentation.

Speaker Change: Unless otherwise stated all this aggregated and franchise level revenue growth rates are based on organic performance.

Speaker Change: Lastly, our comments today will include certain non-GAAP financial measures.

Speaker Change: Reconciliations of non-GAAP financial measures can be found in today's press release, which is an exhibit to Integra current report on form 8-K filed today with the SEC.

Speaker Change: Before we begin I want to remind you that many of the statements made during this call maybe considered forward looking factors.

Speaker Change: Factors that could cause actual results to differ materially are discussed in the company's exchange Act reports.

Moshe: With that I will now turn the call over to Moshe.

Speaker Change: With the SEC and in the release.

Moshe: Thank you Chris.

Morning, everyone and thank you for joining us today before we begin I want to take a moment to recognize and thank our employees around the world over the past several months our teams have navigated challenges with dedication and resilience staying focused on delivering for our customers and patients.

Speaker Change: Our prepared remarks, we will reference reported an organic revenue growth.

Speaker Change: <unk> revenue growth excludes the effects of foreign currency acquisitions and divestitures.

Speaker Change: Unless otherwise stated all disaggregated and franchise level revenue growth rates are based on it.

Speaker Change: Lastly, our comments today will include certain non-GAAP financial measures.

Their hard work as reflected in our fourth quarter results is what makes it into the company. It is today and I am truly grateful for their commitment.

Speaker Change: Reconciliations of non-GAAP financial measures can be found in today's press release, which is an exhibit to integrity current report on form 8-K filed today with the SEC.

Speaker Change: I'm delighted to be here for my first earnings call as President and CEO of Integra Lifesciences.

Moshe: With that I'll turn the call over to Moshe.

Speaker Change: Before we dive into our results I want to take a few minutes to introduce myself share what excites me about integra and offer some initial thoughts on our opportunities and challenges.

Moshe: Thank you Chris.

Moshe: Morning, everyone and thank you for joining us today before we begin I want to take a moment to recognize and thank our employees around the world over.

Speaker Change: I joined Integra last month after nearly 30 years in Med Tech industry, most recently, leading to IMS Global health care business.

Moshe: In the past several months our teams have navigated challenges with dedication and resilience staying focused on delivering for our customers and patients.

Speaker Change: Over the years I have gained deep experience in business strategy and transformation innovation operations and commercial excellence.

Moshe: Their hard work as reflected in our fourth quarter results is what makes it into the company. It is today and I am truly grateful for their commitment.

Speaker Change: More importantly, I've had the privilege of leading teams through complex challenges and that is exactly what I'm doing here at Integra.

Speaker Change: I'm delighted to be here for my first earnings call as President and CEO of Integra Lifesciences.

Speaker Change: Before we dive into our results I wanted to take a few minutes to introduce myself share what excites me about integra and offer some initial thoughts on our opportunities and challenges.

Speaker Change: Let me tell you why I'm excited about joining integra and.

Speaker Change: I'm drawn to our company's mission highly committed workforce differentiated product portfolio and leadership position in highly specialized market.

Speaker Change: I joined Integra last month after nearly 30 years in Med Tech industry, most recently, leading to BMS Global health care business.

Speaker Change: I see tremendous opportunities to drive growth and innovation, but I also recognize the near term challenges ahead.

Speaker Change: Over the years I have deep experience in business strategy and transformation innovation operations and commercial excellence.

Speaker Change: Our recent performance has not met expectations.

Speaker Change: We have critical areas that need to be improved and I'm fully committed to make it and those improvements.

Speaker Change: More importantly, I've had the privilege of leading teams still complex challenges and that is exactly what I'm doing here at Integra.

Speaker Change: Since joining I've spent time listening and learning.

Speaker Change: Have had conversations with our customers employees and investors and have visited a number of our manufacturing sites is discussions have provided me with valuable insights into our strength and where we need to improve and here's what I know Integra has a strong foundation upon which to build a bright future.

Speaker Change: Let me tell you why I'm excited about joining integra.

Speaker Change: I'm drawn to our company's mission highly committed workforce.

Speaker Change: Initiated product portfolio and leadership position in highly specialized market.

Speaker Change: I see tremendous opportunities to drive growth and innovation, but I also recognize the near term challenges ahead.

Speaker Change: Our differentiated portfolio is highly relied upon by surgeons and it is profitable we operate in attractive markets and the demand for our products remains strong.

Our recent performance has not met expectations.

Speaker Change: We have critical areas that need to be improved and I'm fully committed to making those improvements.

Speaker Change: I have no doubt that with the right focus on execution, we can unlock significant value.

Speaker Change: Since joining I've spent time listening and learning I have had conversations with our customers employees and investors and have visited a number of our manufacturing sites is discussions have provided me with valuable insights into our strengths and what do we need to improve and here's what I know integra.

Speaker Change: That said, we have operational challenges to address.

Speaker Change: Quality manufacturing and supply chain improvements remain our top priority.

Speaker Change: They must stabilize our operations and strengthen our quality systems to ensure we reliably meet growing customer demand.

As a strong foundation upon which to build a bright future.

Speaker Change: Once we do that well.

Speaker Change: Our differentiated portfolio is highly relied upon by surgeons and it is profitable.

Speaker Change: We will be in a better position to serve our customers regain momentum and accelerate growth in key markets.

Speaker Change: We operate in attractive markets and the demand for our products remains strong.

Speaker Change: We are already making meaningful progress for the last six months, we have been executing on an enterprise wide compliance masterplan to ensure systemic and sustainable improvement to integra is manufacturing processes and global quality management system. They have prioritized that initiated the 10 work streams of the complain.

Speaker Change: I have no doubt that with the right focus on execution, we can unlock significant value.

Speaker Change: That said, we have operational challenges to address.

Speaker Change: Quality manufacturing and supply chain improvements remain our top probably like.

Speaker Change: They must stabilize our operations and strengthen our quality systems to ensure we reliably meet growing customer demand.

Speaker Change: This master plan building a framework that is consistent with industry standard quality system regulation.

Speaker Change: To develop this framework and governing model, we are partnering with third party consulting firms that bring extensive expertise and quality management system improvement.

Once we do that.

Speaker Change: It will be in a better position to serve our customers regain momentum and accelerate growth in key markets.

Speaker Change: We have committed significant resources to support not only remediation efforts for the FDA form 480, threes and wandering letter observations, but also implementation of compliance Mastercard.

Speaker Change: The address manufacturing processes and global quality management system, we have prioritized that initiated the 10 work streams of the complaints Master plan building a framework that is consistent with industry standards quality system regulation.

Speaker Change: These resources will allow us to sustain the improvements long term across the company.

Speaker Change: I have already spent a great deal of time with our quality and operations teams and have been encouraged by both the comprehensiveness of their plans and their commitment to execute them there.

Speaker Change: This framework and governing model, we are partnering with third party consulting firms that bring extensive expertise and quality management system improvement.

Speaker Change: Their efforts have begun to bear fruit for example, as expected in the fourth quarter, we successfully cleared many of the third quarter ship holds.

Speaker Change: We have committed significant resources to support not only remediation efforts for the F. D. A form 43 and widening letter observations, but also implementation of compliance Mastercard.

Speaker Change: Beyond compliance we are investing in our future.

Speaker Change: We are making facility equipment upgrades to enhance quality resilience and capacity. So we can better deliver for our customers.

Speaker Change: These resources will allow us to sustain the improvements long term across the company.

Speaker Change: In the fourth quarter, we were able to ramp up production of Integra skin and our collagen manufacturing center.

Speaker Change: I have already spent a great deal of time without quality and operations teams and have been encouraged by both the comprehensiveness of their plans and their commitment to execute them.

Speaker Change: Additionally, we hit key milestones towards bringing our Braintree facility online in the first half of 2026, which will allow us to restart production of <unk> and prime metrics.

Speaker Change: Efforts have begun to bear fruit for example, as expected in the fourth quarter, we successfully cleared many of the third quarter ship holds.

Speaker Change: We are confident in our ability to regain share and drive growth with these differentiated products.

Speaker Change: Beyond compliance we are investing in our future.

Speaker Change: We are also advancing our dual PMA clinical strategy for <unk> and <unk> to capitalize on the opportunity in the attractive implant based breast reconstruction market.

Speaker Change: We're making a facility equipment upgrades to enhance quality resilience and capacity. So we can better deliver for our customers.

Speaker Change: In the fourth quarter, we were able to ramp up production of Integra skin and our collagen manufacturing center. Additionally.

Speaker Change: Additionally, we continue to make progress in driving our global expansion our strategy, including the continued market uptake of Sterling.

Speaker Change: Additionally, we hit key milestones toward bringing our Braintree facility online in the first half of 2026, which would allow us to restart production of search a man and prime metrics.

Speaker Change: We expanded our international commercial footprint in Brazil, India, Korea, and China, leveraging key products and strengthening our global presence.

Speaker Change: We are confident in our ability to regain share and drive growth with these differentiated products.

Speaker Change: Additionally, we continue to build our in China for China manufacturing capability to better serve this important market.

Speaker Change: We are also advancing our dual PMA clinical strategy for <unk> and <unk> to capitalize on the opportunity in the attractive implant based breast reconstruction market.

Speaker Change: We have also strengthened our leadership put recent appointments, we appointed a new chief quality, and regulatory officer, and new Chief quality officer and strength in many leadership roles at our manufacturing sites to enhance our operational focus and execution capabilities.

Speaker Change: Additionally, we continue to make progress in driving our global expansion strategy, including the continued market uptake of Sterling.

Speaker Change: Also as previously announced our board has established a new standard quality committee to reinforce oversight and accountability.

Speaker Change: Expanded our international commercial footprint in Brazil, India, Korea, and China, leveraging key products and strengthening our global presence.

Speaker Change: Looking ahead, our priorities are clear, we will continue executing our compliance master plan and work to resolve our outstanding FDA warning letters.

Speaker Change: Additionally, we continue to build our in China for China manufacturing capability to better serve this important market.

Speaker Change: We'll remain laser focused on reliable delivery of products to our customers and we'll continue building trust with our investors through transparency and consistent execution.

Speaker Change: We have also strengthened our leadership put recent appointments, we appointed a new chief quality and regulatory officer, a new chief quality officer and strength in many leadership roles at our manufacturing sites to enhance our operational focus and execution capabilities also as previously announced our board.

Speaker Change: Ultimately our goal is to deliver strong sustainable growth earnings and cash flow performance.

Speaker Change: By strengthening our operations, improving our quality systems and driving meaningful innovation, we will fully capitalize on our market, leading portfolio and drive long term value for our customers employees and shareholders.

Speaker Change: It has established a new stunning quality committee to reinforce oversight and accountability.

Speaker Change: Looking ahead, our priorities are clear.

Speaker Change: Continue executing our complaints master plan and work to resolve our outstanding SBA one thank you letters.

Speaker Change: Turning to our financial results total revenue for the fourth quarter was $443 million representing year over year reported growth of 11, 5% and landing within our guidance range.

Speaker Change: We will remain laser focused on reliable delivery of products to our customers and we'll continue building trust with our investors.

Speaker Change: Transparency and consistent execution.

Speaker Change: Ultimately our goal is to deliver strong sustainable growth earnings and cash flow performance.

Speaker Change: Revenue increased by approximately $62 million over the third quarter driven in part by supply chain recovery clearance of ship holds and the ramp up of Integra skin production.

Our fourth quarter performance reflects continued strong growth across many parts of our portfolio and the successful integration of accurate.

Speaker Change: Fourth quarter adjusted EPS was <unk> 97.

Speaker Change: Turning to our financial results total revenue for the fourth quarter was $443 million representing year over year reported growth of 11.5%.

Speaker Change: Which was above our guidance range.

Speaker Change: Since joining integra last month I have gained a better understanding of our quality and operational challenges through my own diligence and discussions with our team and our customers.

Speaker Change: Lending within our guidance range.

Speaker Change: Revenue increased by approximately $62 million over the third quarter driven in part by supply chain recovery clearance of ship holds and the ramp up of Integra skin production.

Speaker Change: We still have substantial work ahead of us as we execute our compliance masterplan strengthened our quality systems and improve our operations.

Speaker Change: While I continue to assess the business, we have elected to use a wider than typical revenue guidance range for 2025.

Speaker Change: Our fourth quarter performance reflects continued strong growth across many parts of our portfolio and the successful integration of accurate.

Speaker Change: First quarter revenues are forecasted to be between 375 and $385 million representing reported growth in the range of approximately one 6% to four 4% with organic growth expected in the range of approximately negative $6 two to negative three five.

Speaker Change: Fourth quarter, adjusted EPS was <unk> 97, which was above our guidance range.

Speaker Change: We still have substantial work ahead of us as we execute our compliance masterplan strengthen our quality systems and improve our operations.

Speaker Change: 5%.

For 2025 full year revenues are projected to be between $1 65, and $1 $72 billion.

Speaker Change: While I continue to assess the business, we have elected to use a wider than typical revenue guidance range for 2025.

Speaker Change: We expect adjusted EPS for the first quarter to be in the range of 40 to 45 cents.

Speaker Change: For the full year, we anticipate adjusted EPS to be between $2 41.

Speaker Change: First quarter revenues are forecasted to be between 375 and $385 million representing reported growth in the range of approximately one six to four 4% with organic growth expected in the range of approximately negative 6.2 to negative three.

Speaker Change: And $2.51.

Speaker Change: With that I'll turn the call over to Leah, who will provide more details on our financial results and guidance.

Leah: Thanks, Moshe we'll begin with our full year financial results starting with slide five.

Speaker Change: 5%.

Leah: Our 2024 revenues were $1 six $1 billion, representing four 5% growth on a reported basis and a decline of one 3% on organic basis.

Speaker Change: For 2025 full year revenues are projected to be between $1 65, and $1 $72 billion.

Speaker Change: We expect adjusted EPS for the first quarter to be in the range of 40 to 45 said for the full year, we anticipate adjusted EPS to be between $2 41.

Leah: 2020 for organic revenue growth was impacted by approximately $90 million and supply challenges can quality related product holds which more than offset the mid single digit growth. We saw on the product portfolio with stable supply.

Speaker Change: And $2.51.

Speaker Change: With that I'll turn the call over to Leah, who will provide more details on our financial results and guidance.

Leah: Our net organic decline was offset by an approximate $95 million revenue contribution from the Clarient acquisition to drive before 5% reported revenue growth.

Leah: Most of them will begin with our full year financial results starting with slide five.

Leah: 2024 revenues were $1 six $1 billion, representing four 5% growth on a reported basis and a decline of one 3% on an organic basis.

Leah: We saw above market growth across many parts of our portfolio. This year in areas unaffected by supply challenges.

Leah: This continues to give us confidence in the durable strength of our differentiated portfolio.

Leah: 2020 for organic revenue growth was impacted by approximately $90 million and supply challenges from quality related product towards which more than offset the mid single digit growth. We saw on the product portfolio with stable supply.

Leah: And our CFS business, we delivered performance at or above mid single digits inclusive disposable service plus programmable valve Georgian and Mayfield capital sorry.

Leah: <unk> E V D catheters posted double digit growth results, while fairly monitors also contributed significant growth.

Leah: Our net organic decline was offset by an approximate $95 million revenue contribution from the Clarient acquisition to drive the four 5% reported revenue growth.

Leah: And tissue technologies, our wound reconstruction franchise, we have a number of products in our portfolio that delivered double digit growth, including our UBM portfolio tours or an amnio excel.

We saw above market growth across many parts of our portfolio. This year are in areas unaffected by supply challenges.

Leah: Our adjusted EPS for the year was $2 56 down 17, 4% versus 2023.

Leah: This continues to give us confidence in the durable strength of our differentiated portfolio.

Leah: And our CFS business, we delivered performance at or above mid single digits inclusive disposable service plus programmable valve Georgian Mayfield capital sorry.

Leah: A reduction in EPS was mainly due to supply challenges during the year, along with additional investments and compliance Master plan, partially offset by spending reductions implemented during the year.

Leah: <unk> E V D catheters posted double digit growth results well thoroughly monitors also contributed significant growth.

Leah: Looking at the middle of the P&L, our gross margins were 64, 5% for the year down 160 basis points versus 2023 due to supply challenges and the second half investments in the complaint masterplan.

Leah: Turning to adjusted EBITDA, our full year adjusted EBITDA margin was 20% down 400 basis points compared to 2023.

Leah: Our adjusted EPS for the year was $2.56 down 17, 4% versus 2023.

Leah: Our adjusted EBITDA margin performance reflects the impact of the supply challenges implementation of our compliance masterplan and spending reductions while we maintained investments in key strategic priorities throughout the year.

Leah: A reduction in EPS was mainly due to supply challenges during the year along with additional investments and then clients Master plan, partially offset by spending reductions implemented during the year.

Leah: Operating cash flow for the full year was $129 $4 million with a free cash flow conversion of 12, 7%.

Leah: Looking at the middle of the P&L, our gross margins were 64, 5% for the year down 160 basis points versus 2023 due to supply challenges and the second half investments in our compliance Master plan.

Leah: Our operating cash flow and free cash flow conversion rate decline versus 2023, as we invested in manufacturing infrastructure.

Leah: Turning to adjusted EBITDA, our full year adjusted EBITDA margin was 20% down 400 basis points compared to 2023.

Leah: Food supply reliability.

Leah: On slide six I will cover our fourth quarter financial results.

Leah: Our adjusted EBITDA margin performance reflects the impact of the supply challenges implementation of the compliance masterplan and spending reductions while we maintained investments in key strategic priorities throughout the year.

Leah: Our fourth quarter revenues were $443 million, representing an increase of 11, 5% on a reported basis and organic growth of three 5%.

Leah: We saw a $62 million sequential step up in revenue driven by clearance of the third quarter shipping holds the return of Integra skin to historical revenue levels and typical seasonality.

Leah: Operating cash flow for the full year was $129 $4 million, but the free cash flow conversion of 12, 7%.

Leah: Our operating cash flow and free cash flow conversion rate decline versus 2023, as we invested in manufacturing infrastructure to improve supply reliability.

Leah: Our adjusted EPS for the quarter was 97, five up 9% compared to 2023 and above our guidance range.

Leah: Our adjusted EPS includes a 10 cent benefit from a 325 basis point reduction in the 2024 adjusted tax rate.

Leah: On slide six I will cover our fourth quarter financial results.

Leah: Our fourth quarter revenues were $443 million, representing an increase of 11, 5% on a reported basis and organic growth of three 5%.

Leah: Looking at the middle of the P&L gross margins were 65, 2% for the fourth quarter up 50 basis points versus 2023, primarily due to favorable revenue mix.

Leah: We saw a $62 million sequential step up in revenue driven by clearance of the third quarter shipping holds the return of Integra skin to historical revenue levels and typical seasonality.

Leah: For the fourth quarter, our adjusted EBITDA margin was 23, 7% down 160 basis points compared to 2023.

Leah: Our adjusted EPS for the quarter was 97 nine.

Leah: Year on year margin decline reflects favorable gross margins offset by a modest temporary impact from order to cash cutover for Mclaren integration and the timing of certain operating expenses.

9% compared to 2023 and above our guidance range.

Leah: Our adjusted EPS includes a 10 cent benefit from a 325 basis point reduction in the 2024 adjusted tax rate.

Leah: Operating cash flow for the fourth quarter was $57 million with a free cash flow conversion of 28, 8%.

Leah: Looking at the middle of the P&L gross margins were 65, 2% for the fourth quarter up 50 basis points versus 2023, primarily due to favorable revenue mix.

Leah: Turning to slide seven we will take a deeper dive into our CFS revenue highlights for the fourth quarter.

Leah: For the fourth quarter, our adjusted EBITDA margin was 23, 7% down 160 basis points compared to 2023.

Leah: Reported fourth quarter revenues in CFS were $314 $7 million, an increase of 15, 8% on a reported basis and four 1% on organic basis from the prior year.

Leah: Year on year margin decline reflects favorable gross margins offset by a modest temporary impact from the order to cash cutover for my claret integration and the timing of certain operating expenses.

Leah: Our claims reported growth was driven by the Claret acquisition integration performance largely in line with our expectations.

Leah: Operating cash flow for the fourth quarter was $57 million with a free cash flow conversion of 28, 8%.

Leah: Global sales of Neurosurgery grew five 1% on an organic basis as we were able to clear a majority of the shipping hold experienced in the third quarter and delivered growth in line with the market.

Leah: Turning to slide seven we will take a deeper dive into our CFS revenue highlights for the fourth quarter.

Leah: At the segment level CSF management grew low double digits, primarily driven by strong performance of our <unk> and.

Leah: Reported fourth quarter revenues in CFS were $314 $7 million, an increase of 15, 8% on a reported basis and four 1% on organic basis from the prior year.

Leah: And the <unk> plus product lines, reflecting the continued strength of our differentiated solutions for the treatment of hydrocephalus.

Leah: And neuro monitoring revenue increased by high single digits fueled by strong sales of our Sterling ICP monitor and our backfill and throughput flow <unk> catheters, we continued to reinforce our leadership position in ICP monitoring and drainage catheters.

Leah: Our reported growth was driven by the Claret acquisition integration performance largely in line with our expectations.

Leah: Global sales of Neurosurgery grew five 1% on organic basis, as we were able to clear a majority of the shipping hold experienced in the third quarter and delivered growth in line with the market.

Leah: In advanced energy, we experienced low single digit growth, primarily driven by Coosa disposable.

Leah: At the segment level CSF management grew low double digits, primarily driven by strong performance of our practices.

Leah: Lastly, in our dural access and repair franchise, we saw a low single digit decline largely due to the third quarter recall of our Paddington strips.

Leah: <unk> plus product lines, reflecting the continued strength of our differentiated solutions for the treatment of hydrocephalus.

Leah: The decline was partially offset by robust performance from durgin door seal and Mayfield, which continued to generate strong demand.

Leah: And neuro monitoring revenue increased by high single digits fueled by strong sales of our Sterling ICP monitor and our Brazil and cerebral float <unk> catheters, we continued to reinforce our leadership position in ICP monitoring and drainage catheters.

Leah: Our capital sales grew mid single digits, reflecting the strong funnels for our capital business.

Leah: And instruments growth was approximately flat for the quarter as robust sales in hospitals were offset by decreases in alternative site sales due to order timing.

Leah: In advanced energy, we experienced low single digit growth, primarily driven by Coosa disposable.

Leah: Shifting to international sales were down low single digits as we cleared our shipping holds in international markets later than in the U S.

Leah: Lastly, in our dural access and repair franchise, we saw a low single digit decline largely due to the third quarter recall of our Paddington strips.

Leah: Moving to our tissue technologies segment on slide eight.

Leah: <unk> was partially offset by robust performance from Durgin, Doorsill, and Mayfield, which continued to generate strong demand.

Leah: Tissue technologies grew 2% on both a reported and organic basis compared to the prior year.

Leah: Fourth quarter sales in the wound reconstruction franchise increased by eight 2% driven by double digit growth in tourism or our UBM portfolio and amnio Excel. We remain excited by the robust growth, we're seeing in tours or which remains ahead of our deal model and the double digit growth we have seen from our UBM portfolio.

Leah: Our capital sales grew mid single digits, reflecting the strong funnels for our capital business.

Leah: And instruments growth was approximately flat for the quarter was robust sales in hospitals were offset by decreases in alternative site sales due to order timing.

Leah: Shifting to international sales were down low single digits as we cleared our shipping holds in international markets later than in the U S.

Leah: We also delivered mid single digit growth in Integra skin.

Leah: We remain encouraged by the broad strength and resilience of our wound reconstruction portfolio, which underscores the long term growth potential of this business.

Leah: Moving to our tissue technologies segment on slide eight.

Leah: Tissue technologies grew 2% on both a reported and organic basis compared to the prior year.

Leah: And private label sales were down 16% versus last year due to component supply delays.

Leah: Fourth quarter sales in the wound reconstruction franchise increased by eight 2% driven by double digit growth in doors or our UBM portfolio and amnio Excel. We remain excited by the robust growth, we're seeing in tours or which remains ahead of our deal model and the double digit growth we have seen from our UBM portfolio.

Leah: Finally international sales and tissue technologies were down low double digits due to longer inventory recovery timelines on integra skin.

Leah: If you turn to slide nine I will provide a brief update on our balance sheet capital structure and cash flow.

Leah: During the quarter operating cash flow was $57 million and free cash flow was $21 $1 million, reflecting increased investment in capex.

Leah: We also delivered mid single digit growth in Integra skin, we remain encouraged by the broad strength and resilience of our wound reconstruction portfolio, which underscores the long term growth potential of this business.

Leah: Free cash flow conversion was 28, 8% for the quarter.

Leah: And private label sales were down 16% versus last year due to component supply delays.

Leah: As of December 31, net debt was $1 $5 billion and our consolidated total leverage ratio was four times.

Leah: International sales in tissue technologies were down low double digits due to longer inventory recovery timelines on integrity skin.

Leah: Our current Max leverage ratio under our debt covenant of five times through the third quarter of 2025.

Leah: If you turn to slide nine I will provide a brief update on our balance sheet capital structure and cash flow.

Leah: The company had total liquidity of $1 $2 billion, including $273 million in cash and short term investments and the remainder available under our revolving credit facility.

Leah: During the quarter operating cash flow was $57 million and free cash flow was $21 $1 million, reflecting increased investment in capex.

On slide 10, I will provide our consolidated revenue and adjusted earnings per share guidance for the first quarter and full year 2025.

Leah: Free cash flow conversion was 28, 8% for the quarter.

Leah: As of December 31, net debt was $1 $5 billion and our consolidated total leverage ratio was four times.

Leah: First quarter revenues are forecasted to be between $375 million to $385 million representing reported growth in the range of 1.6 to four 4% and includes an approximate 60 basis point headwind versus the prior year from FX.

Leah: Our current Max leverage ratio under our debt covenant of five times through the third quarter of 2025.

Leah: The company had total liquidity of $1 $2 billion, including $273 million in cash and short term investments and the remainder available under our revolving credit facility.

Leah: We expect organic growth in the range of minus six 2% to minus three 5%.

Leah: Our forecast reflects continued strong global demand for our products, primarily offset by approximately $10 million of quality related shipping holds carried over from 2024, and an incremental $8 million to $10 million in quality related chip holds already identified in the first quarter as part of our compliance Maastricht.

Leah: On slide 10, I'll provide our consolidated revenue and adjusted earnings per share guidance for the first quarter and full year 2025.

Leah: First quarter revenue.

Leah: It'd be between $375 million to $385 million, representing reported growth in the range of one six to four 4% and includes an approximate 60 basis point headwind versus the prior year from FX.

Leah: Plan.

Leah: Our first quarter guidance also reflects a slower production ramp for integra skin.

Leah: We returned integra skin to historical run rates in Q4, and experienced some ketchup or scheduled maintenance and equipment upgrades combined with the lower than historical safety stock will likely result in some supply constraints that may prevent us from fully meeting demand in Q1.

Leah: We expect organic growth in the range of minus six 2% to minus three 5%.

Leah: We have planned improvements that are progressing well and we are optimistic about returning integra skin to normal production levels in 2025.

Leah: For the full year 2025 revenues are forecasted to be in the range of 165 to $1 $72 billion, reflecting continued demand for our differentiated portfolio and a full year of a current revenue offset by potential for supply disruption from the execution of our complaints.

Leah: Yeah.

Leah: Our first quarter guidance also reflects a slower production ramp for integra skin, while we returned integra skin to historical run rates in Q4 and experienced some catch up or scheduled maintenance and equipment upgrades combined with the lower than historical safety stock will likely result in some supply constraints that may prevent us from fully.

Our plan.

Leah: We expect full year reported revenue growth of two four to six 5% <unk>.

Leah: Meeting demand in Q1.

Leah: Including an approximate 50 basis point FX headwind and then organic growth of approximately 1% to 5%.

Leah: We have planned improvements that are progressing well and we are optimistic about returning integra skin to normal production levels in 2025.

Leah: We expect to see a sequential increase in revenue performance as the year unfolds, primarily driven by demand growth clearance of our current quality related holds and normal seasonality. Additionally, we expect to see a sequential increase from improvement in integra skin production and resolution of the private label component supply issues in the <unk>.

Leah: For the full year 2025 revenues are forecasted to be in the range of $1.65 billion to $172 billion, reflecting continued demand for our differentiated portfolio and a full year of of claret revenue offset by potential for supply disruption from the execution of the compliance.

Leah: Uh huh.

Leah: Masterplan.

Leah: Turning to adjusted earnings guidance for the first quarter, we expect adjusted EPS to be 40 to 45.

Leah: We expect full year reported revenue growth of two four to six 5%.

Leah: Driven by supply challenges and incremental investments in our compliance masterplan.

Leah: Including an approximate 50 basis point FX headwind and then organic growth of approximately 1% to 5%.

Leah: Full year, we expect our adjusted EPS to be in the range of $2 41 to.

Leah: To $2 51 per share, reflecting the revenue growth of the business an approximate 70 basis point decrease in gross margin from investments in our compliance Masterplan and an approximate 300 basis point increase in our adjusted tax rate versus 2024.

Leah: Yeah.

Leah: Our adjusted EPS guidance also reflects our plans for careful cost management to maintain key investments while managing profitability.

Leah: Turning to adjusted earnings guidance for the first quarter, we expect adjusted EPS to be 40 to 45.

Leah: Driven by supply challenges and incremental investment clients Masterplan.

Leah: For your reference we've included the key assumptions underlying our first quarter.

Leah: Your guidance as well as key modeling inputs on slide 11.

Leah: Full year, we expect our adjusted EPS to be in the range of $2.41.

Moshe: With that I will turn the call back to Moshe.

Leah: The $2 51 per share, reflecting the revenue growth of the business an approximate 70 basis point decrease in gross margin from investments in our compliance Masterplan and an approximate 300 basis point increase in our adjusted tax rate versus 2024.

Moshe: Thank you Leah please turn to slide 12.

Moshe: As we conclude our prepared remarks, I want to take a moment to reflect on where we stand and where we're headed integra.

Moshe: Integra is built on a strong foundation, our market leading portfolio talented team and commitment to delivering innovative solutions for our customers and their patients.

Leah: Our adjusted EPS guidance also reflects our plans for careful cost management to maintain key investments while managing profitability.

Moshe: While we acknowledge the operational challenges we are facing we are actively addressing them with urgency discipline and focused execution.

Leah: For your reference we've included the key assumptions underlying our first quarter and your guidance as well as key modeling inputs on slide 11.

Moshe: We are making meaningful progress in stabilizing operations strengthening quality systems, and ensuring supply chain reliability at the same time, we remain committed to investing in innovation manufacturing infrastructure and global expansion to better serve our customers and drive sustainable long term growth.

Moshe: With that I will turn the call back to Moshe.

Moshe: Thank you Leah please turn to slide 12.

Speaker Change: As we conclude our prepared remarks, I want to take a moment to reflect on where we stand and where we're headed integra.

Speaker Change: Integra is built on a strong foundation, our market leading portfolio talented team and commitment to delivering innovative solutions for our customers and their patients.

Moshe: Looking ahead, our priorities are clear.

Moshe: Executing on our compliance masterplan driving operational excellence and delivering sustainable financial performance, we will continue to operate with transparency accountability and a relentless focus on execution.

Speaker Change: While we acknowledge the operational challenges we are facing we are actively addressing them with urgency discipline and focused execution.

Speaker Change: We are making meaningful progress in stabilizing operations.

Moshe: I am confident we will navigate these challenges and seize the opportunities ahead.

Speaker Change: <unk> and quality systems, and ensuring supply chain reliability at the same time, we remain committed to investing in innovation manufacturing infrastructure and global expansion to better serve our customers and drive sustainable long term growth.

Moshe: By staying disciplined we will unlock integra full potential and create lasting value for our customers employees and shareholders.

Moshe: Thank you for your time today I look forward to keeping you updated on our progress in the months ahead. Operator. Please open the lines for questions. Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: Looking ahead, our priorities are clear.

Speaker Change: Executing on our compliance masterplan, driving operational excellence and delivering sustainable financial performance.

Speaker Change: We will continue to operate with transparency accountability and a relentless focus on execution.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: I am confident we will navigate these challenges and seize the opportunities ahead.

Speaker Change: Staying disciplined we will unlock integra full potential and create lasting value for our customers employees and shareholders.

Speaker Change: And our first question comes from Matt Taylor of Jefferies. Your line is open.

Speaker Change: For your time today I look forward to keeping you updated on our progress in the months ahead. Operator. Please open the lines for questions. Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Matt Taylor: Hi, Good morning, Thank you for taking the question.

Matt Taylor: I wanted to just ask about the issues that you talked about with Integra skin and some of the ship holds 25.

Matt Taylor: No that you can all baked in from.

Matt Taylor: Our conservatism in your guidance for <unk>.

Matt Taylor: Where those problems and I wanted to know how you approach thinking.

Speaker Change: Please standby, while we compile the Q&A roster.

Matt Taylor: Thinking about the risk of further things happening throughout the year.

Matt Taylor: They're worried about how de risked is your guidance now that huge because these assumptions.

Speaker Change: And our first question comes from Matt Taylor of Jefferies. Your line is open.

Matt Taylor: Yeah. So Matt. Thank you for the question and you hit on a couple of things, but maybe I'll talk about the guidance approach first and then we'll talk about and type of skin. So from a guidance perspective as you heard in the remarks, we are taking a wider approach to the guide as you look at the top end.

Matt Taylor: Hi, Good morning, Thank you for taking the question.

Matt Taylor: So I wanted to just ask you about the issues that you talked about with Integra skin and then some of the ship hold and 25.

Matt Taylor: Hum.

Matt Taylor: And or the high end of the guide you're assuming mid single digit growth compared to 2024, which is consistent with kind of the color or frame that we've provided before it also includes a full year of our claret contributions and it does assume an impact from additional shipping holds at the top end and the assumption is a.

Matt Taylor: Conservatism in your guidance for.

Matt Taylor: For those problems and I wanted to know how you approach.

Thinking about the risk of further things happening throughout the year.

Matt Taylor: Other words, how de risked is your guidance now that you've.

Matt Taylor: With these assumptions.

Matt Taylor: Yeah. So Matt. Thank you for the question and you hit on a couple of things, but maybe I'll talk about the.

Matt Taylor: $60 million impact beyond what we know today.

Matt Taylor: At the mid point of the range, we've assumed shipping homes of about $90 million beyond what we know today and at the low end of our guide we've assumed shipping holds of about $120 million beyond what we know today. So that's how we're baking in the potential for shipping holds recognizing.

Matt Taylor: The guidance approach first and then we'll talk about and type of skin. So from a guidance perspective as you heard in the remarks, we are taking a wider approach to the guide.

Matt Taylor: As you look at the top end or the high end of the guide you're assuming mid single digit growth compared to 2024, which is consistent with kind of the color or frame that we've provided before it also includes a full year of claret contributions and it does assume an impact from additional shipping holds at the top.

Matt Taylor: That it's tough for us at this point to pinpoint exactly when they'll happen, but but wanted to reflect kind of that thinking in the guide.

Matt Taylor: For Integra skin.

Matt Taylor: The assumption is a $60 million impact beyond what we know today.

Matt Taylor: Yes.

Matt Taylor: Well on Integra skin wild with return to historical run rates in Q4 of our planned maintenance shut down along with the fact that we have lower than historical levels and safety safety stock loan likely prevent us from being able to meet demand in Q1, we expect the production constraints to do.

Matt Taylor: At the mid point of the range, we've assumed shipping hold of about 90 million beyond what we know today and at the low end of our guide we've assumed shipping hold of about $120 million beyond what we know today. So that's how we're baking in the potential for shipping holds recognizing.

Speaker Change: Manish as we go throughout the year, starting with Q2 as some of the capacity and resiliency projects that we have going on for Integra skin come online. We started those projects middle of last year, and we may see some variability quarter to quarter, but overall by year end, we should be able to be at run rate than not.

Matt Taylor: That it's tough for us at this point to pinpoint exactly when they'll happen, but but wanted to reflect kind of that thinking in the guide.

Matt Taylor: For Integra skin, Yeah, Michelle yes.

Speaker Change: Well on Integra skin was returned to historical run rates in Q4.

Really allow us to meet demand, but also to replenish our safety stock.

Speaker Change: Our planned maintenance shut down along with the fact that we have lower than historical levels of safety stock will likely prevent us from being able to meet demand in Q1.

Speaker Change: Okay great.

Speaker Change: Let some others jump in thanks for the color.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: We expect the production constraints to diminish as we go throughout the year, starting with Q2 as some of the capacity and resiliency project mix that we have going on for Integra skin come online. We started those projects middle of last year, and we may see some variability quarter to quarter, but overall.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Victor <unk> of Wells Fargo. Your line is open.

Speaker Change: Oh, Hey, good morning, and thanks for taking the questions two for me.

Speaker Change: Maybe just talk about some of your key strategic initiatives as you think about taking the helm in 2025.

Speaker Change: By year end, we should be able to be a run rate that not only allow us to meet demand, but also to replenish our safety stock.

Speaker Change: And can we expect an update to the MRP and then I had a follow up please.

Speaker Change: Okay, Hi, Vic.

Speaker Change: Thank you for the question so the priorities for us in 2025 number one is operational excellence and I put in that both the execution on the compliance Master plan as well as some of the supply resiliency and capacity manufacturing capacity are programs that we have going on so that is for.

Speaker Change: Okay, great. Thanks, I'll, let some others jump in thanks for the color.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Okay.

Epic Chopra: Our next question comes from Epic Chopra of Wells Fargo. Your line is open.

Epic Chopra: Oh, Hey, good morning, and thanks for taking the questions two for me.

Speaker Change: And for most of the highest priority for us and secondly, I would say continuing to grow in our core continuing to grow in our core and maintaining our leadership position in the market in the in the U S as well as growing internationally, we have a lot of great opportunities internationally that the team is building upon and that's.

Epic Chopra: Maybe just talk about some of your key strategic initiatives as you think about taking that helped make 2025.

Epic Chopra: And can we expect an update to the L. RP and then I had a follow up please.

Epic Chopra: Okay.

Epic Chopra: Thank you for the question so the priorities for us in 2025 number one is operational excellence and I put in that both the execution on the compliance Master plan as well as some of the supply resiliency and capacity manufacturing capacity programs that we have going on so that is.

Speaker Change: Gonna be quite important for us to continue to win on all core and then I would say lastly, one of the most important things that we're what we're gonna be working on them putting focus on is to build our muscles in bringing a differentiated not new products into the market on time and in full so those are some of the some of the key priority.

Epic Chopra: First and foremost of the highest priority for us.

Epic Chopra: Secondly, I would say continuing to grow in our core continuing to grow in our core and maintaining our leadership position in the market.

Speaker Change: That I'm driving as far as the long range plan is concerned as you can imagine over the last couple of months I have been engaging with internal and external stakeholders really learning about the business markets opportunities challenges and I would.

Epic Chopra: In the in the U S as well as growing internationally, we have a lot of great opportunities internationally that the team is building upon and that's going to be quite important for us to continue to win on all core and then I would say lastly, one of the most important things that we're what we're gonna be working on them, putting a focus on is too.

Speaker Change: Think that them that assessment is going to continue throughout the end of the year. So I won't need much of the year in order to work with our leadership team as we bring forward a new L. R. P M and we need to take the time, it's really important for us to take the time to ensure that DLR Pea that we bring forward is gonna be informed.

Epic Chopra: Build our muscles in bringing differentiated new products into the market on time and in full so those are some of the some of the key priorities that I'm driving as far as the long range plan is concerned as you can imagine over the last couple of months I have been engaging with internal and external stakeholders.

Speaker Change: By internal external realities and at the same time reflect the market opportunities. So I would need much of 2025 are in order to do that so it's too early to provide a specific date at this point.

Epic Chopra: Really learning about the business markets opportunities challenges and I would.

Speaker Change: Understood. Thank you for that comprehensive answer my follow up question was regarding the potential tariffs on Mexico, and Canada apologies. If this has been asked I was bouncing around on some calls but can you just tell us how much of your manufacturing is coming from either Mexico, or Canada, and how much flexibility do you have to move production elsewhere and to take price to offer.

Epic Chopra: Thank them that assessment is going to continue throughout the end of the year. So I won't need much of the year in order to work with our leadership team as we bring forward a new L. R. P M and we need to take the time, it's really important for us to take the time to ensure that DLR Pea that we bring forward is gonna be informed.

Speaker Change: Second he tariff impact thank you.

Epic Chopra: By internal external realities and at the same time reflect the market opportunities. So I would need much of 2025 are in order to do that so it's too early to provide a specific date at this point.

Speaker Change: Yes, so obviously as we all know the final outcomes of the tariffs are still uncertain, we do not have any manufacturing facilities in China, Mexico, and Canada, obviously, we're putting good manufacturing facility in China, but it would be to serve China. So in China for China, but we don't have any manufacturer.

Speaker Change: Understood. Thank you for that comprehensive answer I had my follow up question was regarding the potential tariffs on Mexico and Canada.

Speaker Change: Facilities in those countries today.

Speaker Change: Apologies. If this has been asked I was bouncing around on some calls but can you just tell us how much of your manufacturing is coming from either Mexico, or Canada, and how much flexibility do you have to move production elsewhere and to take price to offset any tariff impact. Thank you.

Speaker Change: However, we do source products and components from those countries.

Speaker Change: And we continue to monitor the advancement of the developments and we're also actively assessing them.

Speaker Change: How the impact will be on our business under different scenarios and we're also formulating plans to be able to offset any negative impacts should those tariffs materialized, but we will provide updates once the administration has made a final decision on tariffs.

Speaker Change: <unk> facilities in those countries today.

Speaker Change: Okay.

Speaker Change: However, we do source products and components from those countries.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: And we continue to monitor the advanced in the process.

Speaker Change: Our next question comes from Robbie Marcus of Jpmorgan. Your line is open.

Speaker Change: The developments and we're also actively assessing.

Speaker Change: Oh great.

Speaker Change: And thank you for taking the questions two for me.

Speaker Change: How the impact will be on our business under different scenarios and we're also formulating plans to be able to offset any negative impacts should those tariffs materialized, but we will provide updates once that the administration has made a final decision on tariffs.

Speaker Change: First I wanted to ask it.

Speaker Change: What's sort of the thinking.

Speaker Change: Thinking of why.

Speaker Change: You're you're baking in future ship holds in 2025 beyond what you know today I mean, what what's the rationale for expecting more quality issues.

Speaker Change: <unk> point and.

Speaker Change: Thank you.

Speaker Change: Okay.

Or are there any you're expecting its unusual to see future ship holds at this point given the timelines that we've had with remediation. So let me start there and I have one follow up.

Speaker Change: Our next question comes from Robbie Marcus of Jpmorgan. Your line is open.

Robbie Marcus: Oh, great good morning.

And thank you for taking the questions two for me.

Speaker Change: Certainly thank you Robby so if you remember when we launched the compliance masterplan in the middle of last year. What we shared was it was a systemic holistic approach and strengthening our quality management system and that is part of that we were going to do an assessment across the entirety of our manufacturing network, both internal as well as extra.

Firstly I wanted to ask it.

Robbie Marcus: What sort of.

Robbie Marcus: Thinking of why you.

Robbie Marcus: Joe you are baking in future ship holds in 2025 beyond what you know today I mean, what what's the rationale for expecting more quality issues.

Speaker Change: And that work will take us.

Robbie Marcus: <unk> point and.

Speaker Change: Through the end of 2025 to complete the assessment.

Robbie Marcus: Or are there any you're expecting.

Speaker Change: And that while we were in this assessment phase we did have the potential for supply disruption to occur.

Robbie Marcus: It's unusual to see future ship holds at this point given the timelines that we've had with remediation. So let me start there and I have one follow up.

Speaker Change: Not that we were aware of any specifically, but just understanding the work that was to be done what we had already observed in terms of internal audit as well as observations we've gotten from external regulatory agencies, all kind of inform the thinking of our approach and the potential for some supply disruptions. So that was the primary driver.

Matt Taylor: Certainly thank you Robby so if you remember when we launched the compliance Master plan in the middle of last year. What we shared was it was a systemic holistic approach and strengthening our quality management system and that is part of that we were going to do an assessment across the entirety of our manufacturing network, both internal as well as.

Speaker Change: And you know, we're a quarter and what what we've talked about for Q R. Sorry, we're two months into 2025, well we've talked about in our guide for Q1 reflects what we know about today, but again, because there's more work to be done there's the risk of potential disruption going forward.

External and that work will take us through.

Matt Taylor: Through the end of 2025 to complete the assessment.

While we were in this assessment phase, we did have the potential for supply disruption to occur.

Matt Taylor: Not that we were aware of any specifically, but just understanding the work that was done what we had already observed in terms of internal audit as well as observations we've gotten from external regulatory agencies, all kind of inform the thinking of our approach and the potential for some supply disruptions. So that was the primary driver.

Speaker Change: Got it okay.

Speaker Change: Follow up I wanted to ask on cash flow at spin.

Speaker Change: Sub 20% free cash flow conversion in the past two years I didn't see or hear a specific number of conversion rate for 2025.

Matt Taylor: And you know, we're a quarter and what what we've talked about for Q R. Sorry, we're two months into 2025, well we've talked about in our guide for Q1 reflects what we know about today, but again, because there's more work to be done there is the risk of potential disruption going forward.

Speaker Change: So how do we think about both the conversion and the absolute dollars of free cash flow assumed in 2025 banks.

Speaker Change: Certainly.

Speaker Change: Yeah. So we expect operating cash flow and free cash flow to sequentially improve in 2025, principally on lower acquisition or integration costs Capex will remain consistent so 25, Capex will remain fairly consistent with 2024 as we continue to build out of <unk>.

Matt Taylor: Got it okay.

Matt Taylor: Follow up I wanted to ask on cash flow it's been.

Sub 20% free cash flow conversion in the past two years I didn't see or hear a specific number conversion rate for 2025.

Speaker Change: Rain tree continue some of the investments.

Speaker Change: And capacity that Moshe referenced in her remarks earlier.

Matt Taylor: So how do we think about both the conversion and the absolute dollars of free cash flow assumed in 2025.

Speaker Change: As you convert that to kind of what what you can expect happened on a free cash flow conversion perspective from.

Speaker Change: From a trailing 12 months, we would expect a step up kind of once we lap Q3 of 2024. So expect kind of in Q4 of 2025 is when we'll see a step up of free cash flow conversion above that 20% that you referenced and then as it relates to.

Matt Taylor: Certainly.

Matt Taylor: Yeah. So we expect operating cash flow and free cash flow to sequentially improve in 2025, principally on lower acquisition or integration cost Capex will remain consistent so 25, capex will be remain fairly consistent with 2024.

Speaker Change: Your overall leverage you Didnt ask about this but I'll point out as well we were into 2024 at four O. We expect leverage to be flat to slightly down by the end of 2025, but seeing more much more notable improvement in leverage as we go into 2026.

Matt Taylor: We continue to build out of Braintree continue some of the investments.

Moshe: And capacity that Moshe referenced in her remarks earlier.

Moshe: As you convert that to kind of what what you can expect happened on a free cash flow conversion perspective from.

Speaker Change: Appreciate it thank you very much.

Moshe: From a trailing 12 months, we would expect a step up kind of once we lap Q3 of 2024. So expect kind of in Q4 of 2025 is when we will see a step up of free cash flow conversion above that 20% that you referenced and then as it relates to.

Speaker Change: Thank you.

Speaker Change: Okay.

Our next question comes from Ryan Zimmerman of <unk>. Your line is open.

Ryan Zimmerman: Oh good morning, Thanks for taking our question.

Ryan Zimmerman: I wanted to talk about a clearer from for a minute here and just understand kind of where you're at.

Moshe: Your overall leverage you Didnt ask about this but I'll put that as well we were into 2024 at four O. We expect leverage to be flat to slightly down by the end of 2025, but seeing more much more notable improvement in leverage as we go into 2026.

Ryan Zimmerman: And what I mean by that is is kind of how you're thinking about the contribution.

Ryan Zimmerman: A clearer to the business in 2025.

Ryan Zimmerman: Now that I guess, you'll be lapping kind of after the first quarter and we are correct me if I'm wrong on that but how youre thinking about that growth profile going forward.

Speaker Change: Appreciate it thank you very much.

Moshe: Thank you.

Moshe: Okay.

Ryan Zimmerman: And what you can do to enhance them.

Speaker Change: Our next question comes from Ryan Zimmerman of <unk>. Your line is open.

Ryan Zimmerman: Yeah.

Ryan Zimmerman: So thank you Ryan you are correct. So after the first quarter, we will be fully organic on the acquiring business.

Ryan Zimmerman: Oh good morning, Thanks for taking our question.

Speaker Change: I don't want to talk about a clearer from for a minute here and just understand kind of where you're at in the process and what I mean by that is.

Ryan Zimmerman: As you heard in our remarks, we were very pleased with kind of the success of the integration to date.

Ryan Zimmerman: How you're thinking about the contribution.

Ryan Zimmerman: We expect growth for clearance in 2025 to align to our business expectations for that business as well as the deal model, which is high single digit growth.

Ryan Zimmerman: Have a clearer to the business in 2025.

Ryan Zimmerman: Now that.

Ryan Zimmerman: I guess, you'll be lapping kind of after the first quarter and we are correct me if I'm wrong on that but how youre thinking about that growth profile going forward.

Ryan Zimmerman: And we continue to see strong growth opportunities in E N T.

Ryan Zimmerman: For the Clariant business improved principle, we are excited to see the synergies that we've been able to drive with our micro for France N T instruments business and we would expect that to continue in 2025 as well.

Ryan Zimmerman: And what you can do to enhance that.

Ryan Zimmerman: Yeah.

Ryan Zimmerman: So thank you Ryan you are correct. So after the first quarter, we will be fully organic on the acquired business.

Ryan Zimmerman: Okay, and then for you P&L related question.

Speaker Change: As you heard in our remarks, you were very pleased with kind of the success of the integration to date.

Speaker Change: The 70 basis points of step down in margins is that inclusive.

Speaker Change: We expect growth for clarity in 2025 to align to our business expectations for that business as well as the deal model, which is high single digit growth.

Ryan Zimmerman: Yes.

Ryan Zimmerman: The increased shipping old that youre alluding to in the second part of the question is just how do you think about managing the middle of the P&L.

Speaker Change: And we continue to see strong growth opportunities in E N T.

Ryan Zimmerman: Text of some of these dynamics continuing meaning.

Speaker Change: For the acquired business in principle, we are excited to see the synergies that we've been able to drive with our micro for France N T instruments business and we would expect that to continue in 2025 as well.

Ryan Zimmerman: Could we see you.

Ryan Zimmerman: Pulled back expenses meaningfully do you have.

Ryan Zimmerman: Have to again provide incremental.

Speaker Change: I guess retention for the sales force just just wanted to understand kind of how you're thinking about managing the P&L in the context of kind of what you've contemplated for 25.

Speaker Change: Okay, and then for you P&L related question.

Speaker Change: The 70 basis points of step down in margins is that inclusive of I guess the step the increased shipping old that youre alluding to and and the second part of the question is just how do you think about managing the middle of the P&L you know.

Ryan Zimmerman: Yeah.

Ryan Zimmerman: So to your first point on margins, yes within the 70 basis point decline that we're calling versus 'twenty 'twenty four it does consider the additional shipping holds as well as our remediation efforts as we.

Speaker Change: In the context of some of these dynamics continuing.

Ryan Zimmerman: We continue to execute against the compliance masterplan so.

Speaker Change: It.

Could we see you.

Ryan Zimmerman: So we will see additional levels of scrap will see additional underutilization at some sites, but again, it's contemplated within the frame of that 70 basis points.

Speaker Change: Pull back expenses meaningfully.

Speaker Change: Have to again provide you know incremental.

Speaker Change: I guess retention for the sales force just just wanted to understand kind of how you're thinking about managing the P&L in the context of kind of what you've contemplated for 25.

Ryan Zimmerman: From an Opex perspective to your point, we are taking a very careful approach to managing our operating expenses this year, especially given the potential for additional shipping Hulk, we're striking a balance between our discretionary spending as well as those essential investments. We know we will need to make to align both.

Speaker Change: Yeah.

Speaker Change: So to your first point on margins, yes within the 70 basis point decline that we're calling versus 2024. It does consider the additional shipping holds as well as our remediation efforts as we.

Ryan Zimmerman: You know delivery.

Ryan Zimmerman: Delivery of our current earnings as well as our long term goals. So right now as we've designed kind of the P&L and how we're managing to that were pacing towards the lower end of our range to be able to to.

Speaker Change: Continue to execute against the compliance Masterplan so.

Speaker Change: So we will see additional levels of scrap will see additional underutilization at some sites, but again, it's contemplated within the frame of that 70 basis points.

Ryan Zimmerman: Manage that risk.

Speaker Change: From an Opex perspective to your point, we are taking a very careful approach to managing our operating expenses this year, especially given the potential for additional shipping Hulk, we're striking a balance between our discretionary spending as well as those essential investments. We know we will need to make to align both.

Speaker Change: Lower end of your EPS range or I'm, sorry, correct your EBIT margin okay.

Speaker Change: Thank you Yep Yep, lower lower end of our guidance range.

Speaker Change: Thank you.

Speaker Change:

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: You know delivery.

Speaker Change: Delivery of our current earnings as well as our long term goals. So right now as we've designed kind of the P&L and how we're managing to that were pacing towards the lower end of our range to be able to to manage that risk.

Our next question comes from Richard <unk> of career Securities. Your line is open.

Richard: Hi, excuse me. Thank you for taking my questions first one just following up I think with Robbie's question earlier. So you have a placeholder in there for additional <unk>.

Speaker Change: Lower end of your EPS range or I'm sorry.

Speaker Change: Paul disruption.

Speaker Change: I think to the tune of $120 million in the year. It was really the <unk> outlook.

Speaker Change: Your EBITDA margin okay.

Speaker Change: It seems to be bearing the brunt of.

Speaker Change: Yep Yep, lower lower end of our guidance range.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: The guided below consensus at least were below us so I'm just trying to get a sense.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: You are saying that you said.

Our next.

Speaker Change: Big ramp.

Speaker Change: Question comes from Richard <unk> of <unk> Securities. Your line is open.

Speaker Change: After the <unk> and Theres a place holder for additional.

Speaker Change: Disruption.

Speaker Change: Oh excuse me thank you for taking the questions.

Speaker Change: That could materialize in the back half or you captured all of that or most of that in the <unk> slash first half.

First one just following up I think it was robby's question earlier, so you have a placeholder in there for additional.

Speaker Change: Yeah. So let me let me step through that so within Q1, we have two headwinds related to ship holds first is the carryover from 2020 for order of magnitude about $10 million second our new ship holds identified as we've continued to work under the compliance Master plan, which is about $8 million to $10 million. So.

Speaker Change: Ship hold disruption.

Speaker Change: I think to the tune of $120 million in the year. It was really the <unk> outlook.

Speaker Change: It seems to be bearing the brunt.

Speaker Change: Yeah.

Speaker Change: Sure.

Speaker Change: The guided below consensus at least were below us so I'm just trying to get a sense.

Speaker Change: Youre, saying that you said.

Speaker Change: Total in Q1, it reflects about call it $18 million to $20 million of ship holds we expect those ship holds to be resolved are remediated by the second half. So youll see some progressive improvement in Q2, but principally remediated by the second half so on an annual impact the impact of what.

Speaker Change: Big ramp.

Speaker Change: After the <unk> and Theres a place holder for additional.

Speaker Change: Disruption.

Speaker Change: Could materialize in the back half or you captured all of that or most of that in the <unk> slash first half.

Speaker Change: What we know today, which is impacting Q1, we expect it to be about $27 million.

Speaker Change: With the got the way. The guide is structured is that the high end. In addition to that $27 million. It allows for an incremental $60 million and ship holds and at the low end of the guide it allows for an incremental $120 million of ship holds.

Total in Q1, it reflects about call it $18 million to $20 million of ship holds we expect those ship holds to be resolved or remediated by the second half. So youll see some progressive improvement in Q2, but principally remediated by the second half so on an annual impact the impact of what.

Speaker Change: Okay. That's helpful color. Thank you for that and then look I know I know you guys are are dealing with a lot with kind of what you have in hand, with all the regulatory and private label items, but.

Speaker Change: We know today, which is impacting Q1, we expect it to be about $27 million.

Speaker Change: Just curious.

Speaker Change: Is there any any view on how we should be prepared for you to think about deals on.

Speaker Change: With the got in the way. The guide is structured is that the high end. In addition to that $27 million. It allows for an incremental $60 million.

Speaker Change: On the near to intermediate term horizon, or just you know really just head down fixing fixing the items that you can right now with the organic core business digesting, our claret getting that to work and build builder.

Speaker Change: Chip holds and at the low end of the guide it allows for an incremental $120 million of ship holds.

Speaker Change: Okay. That's helpful color. Thank you for that and then look I know I know you guys are are dealing with a lot with kind of what you have in hand.

Speaker Change: Or are you going to try to be opportunistic.

Speaker Change: [noise] themselves. Thank you.

Speaker Change: So thank you for the question returned so M&A has been and will continue to be a and it's a growth strategy part of our growth strategy moving forward than we have it.

Speaker Change: And with all the regulatory.

Speaker Change: Private label items, but.

Speaker Change: Just curious.

Speaker Change: Is there any any view on how we should be prepared for you to think about deals on.

Speaker Change: Really robust process in evaluating M&A opportunities and assessing their strategic fit and value creation thesis, having said all of that our focus really this year is to execute.

Speaker Change: On the near to intermediate term horizon at or just you know really just head down fixing fixing the items that you can right now with the organic core business digesting, the claret getting that to work and build builder.

Speaker Change: Execute our compliance Master plan and.

Speaker Change: Continue with our manufacturing capacity and resiliency programs and also bring down our leverage so those are the key focus that we have this year.

Speaker Change: Or are you going to try to be opportunistic as they present themselves.

Speaker Change: So thank you for the question Richard So M&A has been and will continue to be a and it's a growth strategy part of our growth strategy moving forward than we have it.

Thank you.

Speaker Change: Our next question comes from Steve Lichtman of Oppenheimer <unk> Company. Your line is open.

Speaker Change: Thank you good morning, I get so Moshe and we are in private label what is your visibility level on getting components supply up to where it needs to be in the second half of the year and your confidence in not losing customer demand and in the interim.

Speaker Change: Execute our compliance Master plan and.

Speaker Change: Continue with our manufacturing capacity and resiliency programs and also bring down our leverage so those are the key focus that we have this year.

Speaker Change: Yeah, so maybe a little bit of a background. So because we did see volatility in terms of our private label results in Q4, but we you know historically our revenue from private label has been a bit variable so that volatility or variability is not entirely new.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Steve Lichtman of Oppenheimer <unk> Company. Your line is open.

Steve Lichtman: Thank you good morning, I get so motor and we are in private label what is your visibility level on getting components supply up to where it needs to be in the second half of the year and your competence in and not losing customer demand and in the interim.

Speaker Change: In general across the year, we would expect that private label business to grow at mid single digit rates.

Speaker Change: That said, we did have an issue in Q4 with respect to a component the delay from a supplier that many companies faced as well so including us.

Speaker Change: At this point, we anticipate that that component delay will be resolved by the second half of 2025, and we'll be able to resume the business at that point.

Steve Lichtman: Yeah, so maybe a little bit of a background. So because we did see volatility in terms of our private label results in Q4, but we you know historically our revenue from private label has been a bit variable so that volatility or variability is not entirely new.

Speaker Change: For full year 2025 that probably means the business is flat to low single digits, but beyond that we'd expected to resume in the mid single digit growth trajectory.

Steve Lichtman: In general across the year, we would expect a private label business to grow at mid single digit rates.

Speaker Change: Got it. Thank you and then I guess, a similar question on Integra skin supply since I've taken a bit longer than expected can you talk to what you're hearing from customers in your commercial organization gives you confidence that the demand will be there once.

Steve Lichtman: That said, we did have an issue in Q4 with respect to a component the delay from a supplier that many companies faced as well so including us.

Steve Lichtman: At this point, we anticipate that that component delay will be resolved by the second half of 2025, and we'll be able to resume the business at that point.

Speaker Change: You're fully up and running on Integra skin.

Speaker Change: Yes, so Steve I can tell you that since.

Steve Lichtman: For full year 2025 that probably means the business is flat to low single digits, but beyond that would expect it to resume at the mid single digit growth trajectory.

Speaker Change: Since I have joined I hear repeatedly from the surgeons and the customers that I have met that and the product is is that there's a few products exactly like it out there in the market. So the demand for Integra skin is extremely extremely high and there is a need.

Steve Lichtman: Got it thanks, and then I guess, a similar question on Integra skin supply since I've taken a bit longer than expected can you talk to what you're hearing from customers in your commercial organization gives you confidence that the demand will be there once.

Speaker Change: For it in the market, we hear that every day and we are confident that when we get back and we have sufficient supply that we can get the get back into those indications, they're they're unique products and that that serves the entire complex one.

Steve Lichtman: You're fully up and running on Integra skin.

Steve Lichtman: Yes, so Steve I can tell you that soon.

Steve Lichtman: Since I have joined I hear repeatedly from the surgeons and the the customers that I have met that are that the product is is that there's a few products exactly like it out there in the market. So the demand for Integra skin is extremely extremely high and there is a need.

Speaker Change: Our procedures and.

Speaker Change: It's it's very much in demand.

Speaker Change: Got it I appreciate the color. Thank you.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Our next question comes from Craig Bijou of Banc of America Securities. Your line is open.

Steve Lichtman: For it in the market, we hear that every day and we are confident that when we get back and we have sufficient supply that we can get the get back into those indications, they're they're unique products and that that serves the entire complex one.

Speaker Change: Good morning, and thanks for taking the questions a couple of follow ups here one on integra skin.

Speaker Change: I guess I just wanted to understand a little bit more why.

Speaker Change: Production is back to normal I think that was the goal of Q4 and it sounds like he might have gotten there.

Steve Lichtman: Our procedures and.

Steve Lichtman: It's it's very much in demand.

Speaker Change: But then I think you guys mentioned scheduled maintenance and updates so presumably you would have had visibility into into those.

Steve Lichtman: Got it I appreciate the color. Thank you.

Steve Lichtman: Thank you.

Steve Lichtman: Yeah.

Steve Lichtman: Okay.

Speaker Change: When when you talk to us less so.

Craig Bijou: Our next question comes from Craig Bijou of Banc of America Securities. Your line is open.

Just wanted to understand if there's something else that happened in the production line that may have caused a little bit of the delay that you are talking about.

Craig Bijou: Good morning, and thanks for taking the questions a couple of follow ups here one on integra skin.

Speaker Change: Yeah.

Speaker Change: Yeah, so as we as we explain its really the planned maintenance, we we have maintenance shutdowns twice a year as it's required to do our equipment calibration any preventative maintenance do you have to do on the line. So that's the that's the scheduled thing I think that the thing that complicated the the factor.

Craig Bijou: I guess I just wanted to understand a little bit more why.

Craig Bijou: Production is back to normal I think that was the goal of Q4 and it sounds like you might have gotten there.

Craig Bijou: But.

Craig Bijou: And then I think you guys mentioned scheduled maintenance and updates so presumably you would have had visibility into into those.

Speaker Change: Little bit for US is the fact that we're not too our full safety stock levels.

Speaker Change: When when you talk to us less so.

Speaker Change: That has has been the one that has caused us to that prevents us from being able to meet demand most likely in Q1. However, we have a comprehensive set of projects that we're working on unencumbered on screen manufacturing and to address the capacity and resiliency.

Speaker Change: Just wanted to understand if there's something else that happened in the production line that may have caused a little bit of a delay that youre talking about.

Speaker Change: Yeah.

These projects span anywhere from yield improvements to equipment upgrades to.

Speaker Change: Optimizing the utilization of the three facilities that we have that manufacturing integra skin. So some of our investments in these initiatives started really back in middle of last year, and we should be able to see the impact of those coming online as we go throughout the year starting in Q2.

Speaker Change: Little bit for US is the fact that we're not too our full safety stock levels. I think that has has been the one that has caused us to that prevents us from being able to meet demand and most likely in Q1. However, we have a comprehensive set of projects that we're working on an integral skin manufacturing.

Craig Bijou: And so Craig just.

Craig Bijou: Add on to that.

Craig Bijou: Sorry, just to add onto that.

Speaker Change: And to address the capacity and resiliency.

Craig Bijou: As you project through the end of 2025, the difference between 2025 and 2020 for 2024, we were managing to get back to historical revenue run rates in 2025, we'll get beyond that is not only.

Speaker Change: These projects span anywhere from yield improvements to equipment upgrades to you're optimizing the utilization of the three facilities that we have that manufacturer integra skin. So some of our investments in these initiatives started really back in middle of last year and we should be.

Craig Bijou: On a full year basis be able to meet demand, but also be able to reestablish our safety stock and so until we get to that safety stock point, that's where we will see quarter to quarter variability, but on a full year basis do you expect that to hold normal demand.

Speaker Change: Be able to see the impact of those coming online as we go throughout the year starting in Q2.

Craig Bijou: And so Craig just to add on to that.

Craig Bijou: Got it okay. That's helpful.

Speaker Change: Sorry, just to add onto that.

And then I recognize that a Clinton has gone very well since you guys brought it brought it aboard.

Speaker Change: As you project through the end of 2025 the difference between 2025 and 2024 2024, we were managing to get back to historical revenue run rates in 2025, we'll get beyond that is not only.

Craig Bijou: A good one I believe the guidance is for seven for 97 million and 24 and it kind of came in at 95. So just wanted to understand.

Craig Bijou: What that what that Delta is a $2 million difference I recognize it's small and then is there any reason to think.

Speaker Change: On a full year basis be able to meet demand, but also be able to reestablish our safety stock and so until we get to that safety stock point, that's where we will see quarter to quarter variability, but on a full year basis do you expect that to hold.

Craig Bijou: It sounds like you still believe you can get to the high single digit growth rate in 'twenty five but.

Craig Bijou: Any any other comments on maybe the cadence of that growth or anything.

Speaker Change: On the demand.

Speaker Change: Got it okay. That's helpful.

Craig Bijou: Anything else on on your confidence of getting to the Clinton group.

Speaker Change: And then I recognize that a Clinton has done very well since you guys brought it brought to the board.

Craig Bijou: Yeah.

Craig Bijou: Yeah, So just to backtrack when we initially acquired a clarient we our initial guide for that business was $80 million.

Speaker Change: But I I did one I believe the guidance for <unk> for 97 million in 'twenty, four and accounting and it came in at 95, So just wanted to understand.

Craig Bijou: And then if you recall as we actualized Q2, and Q3, we were trending above that.

Speaker Change: What that what that Delta is at $2 million difference I recognize it's small and then is there any reason to think.

Craig Bijou: In Q4, we did adjust guidance up on the business to be at I think it was closer to about 95 ish million and we were just a few million off of that that's largely attributable in Q4, we actually migrated our Clarence ERP environment from their existing one two hour Oracle.

Speaker Change: It sounds like you still believe you can get to the high single digit growth rate in 'twenty five but.

Speaker Change: Any any other comments on maybe the cadence of that growth or anything.

Speaker Change: Anything else on on your confidence of getting to the client growth.

Speaker Change: Yeah.

Craig Bijou: And so we did have a little bit of I'll call. It operational disruption as a result of that that has a relatively minor impact on the business.

Speaker Change: Yeah, So just to backtrack when we initially acquired a clearer we our initial guide for that business was $80 million.

Speaker Change: And then if you recall as we actualized Q2, and Q3, we were trending above that.

Craig Bijou: So we don't expect that to repeat as I mentioned earlier I think in response to Ryan's question, we do anticipate for 2025 and Claire will grow at high single digits, just consistent with our expectations and our deal model.

Speaker Change: And Q4, we did adjust guidance up on the business to be at I think it was closer to about 95 ish million and we were just a few million off of that that's largely attributable in Q4, we actually migrated our Clarence ERP environment from their existing one two hour Oracle.

Craig Bijou: Okay. Thanks for taking the questions.

Craig Bijou: Yep. Thank you.

Craig Bijou: Do you.

Craig Bijou: Yeah.

Craig Bijou: Okay.

Joanne Wuensch: And our next question comes from Joanne Wuensch with Citi. Your line is open.

Speaker Change: And so we did have a little bit of I'll call. It operational disruption as a result of that that has a relatively minor impact on the business.

Joanne Wuensch: Good morning, and thank you so much for taking the questions I'll just take the two upfront I'm I'm curious.

Speaker Change: So we don't expect that to repeat as I mentioned earlier I think in response to Ryan's question, we do anticipate for 2025 and Claire will grow at high single digits, just consistent with our expectations and our deal model.

Joanne Wuensch: The recovery pathway for private label and how you think about that returning to sort of positive growth over time, and then second of all given where your first quarter is in your full year guide it would imply a pretty steep ramp over the remaining three quarters. If you could sort of just sort of level set us on how we should think about that ramp that would be great.

Speaker Change: Okay. Thanks for taking the questions.

Speaker Change: Yep. Thank you.

Speaker Change: Yeah.

Joanne Wuensch: Thank you so much.

Speaker Change: Okay.

Joanne Wuensch: Yeah. So let me start with the cadence question or the Q1, Yeah revenue cadence question. Given you know some of the supply disruptions that happened in 2024 and the concentration in certain quarters. When you look at our organic growth.

Speaker Change: And our next question comes from Joanne Wuensch with Citi. Your line is open.

Joanne Wuensch: Good morning, and thank you so much for taking the questions I'll just take the two upfront I'm I'm curious.

Joanne Wuensch: The recovery pathway for private label and how you think about that returning to sort of positive growth over time.

Joanne Wuensch: Year on year, it's there's noise in it right. So it is more instructive I think to think about our revenue cadence in terms of absolute revenue that will deliver a quarter to quarter.

Joanne Wuensch: Then second of all.

Joanne Wuensch: Where are your first quarter is in your full year guide it would imply a pretty steep ramp over the remaining three quarters. If you could sort of just sort of level set us on how we should think about that ramp that would be great. Thank you. So much.

Joanne Wuensch: Q1, as I mentioned does reflect kind of the headwinds of the shipping hold it reflects does it decline on integra skin due to production variability as well as the private label.

Joanne Wuensch: Conant supply delay as we get out of Q1 and move into Q2 from an absolute revenue perspective, we do expect a step up drip.

Joanne Wuensch: Driven in part by some remediation against the existing shipping hold also driven by higher Integra skin production.

Joanne Wuensch: Q2, Q3 will then be kind of at slightly above Q2 levels.

Joanne Wuensch: And then in Q4, we would expect to kind of our typical seasonal step up and that's kind of the the glide path. If you will that allows you to get to the guide considerations that I shared earlier.

Joanne Wuensch: Q1, as I mentioned does reflect kind of the headwinds of the shipping hold it reflects does it decline on integra skin due to production variability as well as the private label component supply delay as we get out of Q1 and move into Q2 from an absolute revenue perspective, we do.

Joanne Wuensch: From a going back to your original question around private label as I mentioned because of the dynamic that we saw in Q4 was specifically related to a component supply delay and we do have line of sight to when that supply of delay will be resolved, we don't anticipate any kind of long term or permanent negative impacts to the busy.

Joanne Wuensch: We expect a step up.

Joanne Wuensch: Driven in part by some remediation against the existing shipping hold also driven by higher Integra skin production.

Joanne Wuensch: Q2, Q3 will then be kind of at slightly above Q2 levels.

Joanne Wuensch: <unk> as a result.

And then in Q4, we would expect to kind of our typical seasonal step up and that's kind of the glide path. If you will that allows you to get to the guide considerations that I shared earlier.

Thank you.

Yeah.

Speaker Change: Our next question comes from Jayson Bedford of Raymond James and Associates. Your line is open.

Joanne Wuensch: From a going back to your original question around private label as I mentioned because of the dynamic that we saw in Q4 was specifically related to a component supply delay and we do have line of sight to when that supply delay will be resolved, we don't anticipate any kind of long term or permanent.

Good morning, just a couple of quick ones here.

Speaker Change: On private label the component delayed did you quantify the impact in the fourth quarter.

Speaker Change: We did not.

Speaker Change: Would you care to.

Negative impacts to the business as a result.

Speaker Change:

Speaker Change: Yes.

Speaker Change: Yeah, no order of magnitude its about $5 million.

Joanne Wuensch: Thank you.

Speaker Change: Okay.

Joanne Wuensch: Yeah.

Speaker Change: Just to wrap up on the ship hold impact on revenue.

Speaker Change: Our next question comes from Jason Bedford of Raymond James and Associates. Your line is open.

Speaker Change: So the high end assumes roughly $87 million in ship hold impact, meaning the $27 million I think you identified plus an incremental 60, and we can apply similar math for the mid and low end of the guide is that fair.

Jason Bedford: Good morning, just a couple of quick ones here.

Jason Bedford: On private label the component delayed did you quantify the impact in the fourth quarter.

Speaker Change: That's fair.

Jason Bedford: We did not.

Speaker Change: Thank you and just last one if I can timeline on brain triggers it still first half 'twenty six.

Jason Bedford: Yeah.

Jason Bedford: Would you care to.

Does it matter at all.

Speaker Change: Sure.

Speaker Change: Yeah. So we were pleased with the progress that we're making in Braintree and the construction is completed and we're in the process of installing and qualifying equipment and we're on track for.

Jason Bedford: Yeah, the order of magnitude its about $5 million.

Jason Bedford: Okay.

Jason Bedford: To wrap up on the ship hold impact on revenue.

Jason Bedford: So the high end assumes roughly $87 million in ship hold impact, meaning that the $27 million I think you identified plus an incremental 60, and we can apply similar math for the mid and low end of the guide is that fair.

Speaker Change: Zooming production in first half of 2026, and we have a rigorous project management process that we've put in place to ensure that we stay on timelines.

Speaker Change: Great. Thank you.

Jason Bedford: That's fair.

Speaker Change: Thank you. This concludes the question and answer session and today's conference call. Thank you for participating and you may now disconnect.

Jason Bedford: Thank you and just last one if I can timeline on brain triggers it still first half 'twenty six.

Jason Bedford: Sure.

Jason Bedford: Yeah. So we're we're pleased with the progress that we're making in Braintree and the construction is completed and we're in the process of installing and qualifying equipment and we're on track for.

Jason Bedford: Assuming production in first half of 2026, and we have a rigorous project management process that we've put in place to ensure that we stay on timelines.

Speaker Change: Great. Thank you.

Speaker Change: Thank you. This concludes the question and answer session and today's conference call. Thank you for participating and you may now disconnect.

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Hum.

Q4 2024 Integra LifeSciences Holdings Corp Earnings Call

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