10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2015

or

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

For the transition period from              to  

COMMISSION FILE NO. 0-26224

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE	51-0317849
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)	(I.R.S. EMPLOYER IDENTIFICATION NO.)
311 ENTERPRISE DRIVE PLAINSBORO, NEW JERSEY	08536
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)	(ZIP CODE)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (609) 275-0500

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o  (Do not check if a smaller reporting company)	Smaller reporting company	o

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

The number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of July 29, 2015 was 33,163,415.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

INDEX

	Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2015 and 2014 (Unaudited)	3
Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014 (Unaudited)	4
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 (Unaudited)	5
Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 4. Mine Safety Disclosures	41
Item 5. Other Information	41
Item 6. Exhibits	42
SIGNATURES	44
Exhibit 2.1
Exhibit 2.2
Exhibit 2.3
Exhibit 10.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 99.1
Exhibit 99.2
Exhibit 99.3
Exhibit 99.4
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(In thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Total revenue, net	$	244,078		$	231,351		$	477,743		$	446,410
Costs and expenses:
Cost of goods sold	86,539			86,976			173,261			169,359
Research and development	13,891			13,745			26,447			26,312
Selling, general and administrative	126,590			115,253			240,654			223,591
Intangible asset amortization	3,104			2,985			6,639			6,018
Total costs and expenses	230,124			218,959			447,001			425,280
Operating income	13,954			12,392			30,742			21,130
Interest income	8			58			13			120
Interest expense	(5,471		)	(5,382		)	(10,963		)	(10,524		)
Other (expense) income, net	(919		)	118			397			435
Income before income taxes	7,572			7,186			20,189			11,161
Income tax expense	2,574			2,361			6,807			4,130
Net income	$	4,998		$	4,825		$	13,382		$	7,031
Basic net income per common share	$	0.15		$	0.15		$	0.41		$	0.22
Diluted net income per common share	$	0.15		$	0.15		$	0.40		$	0.21
Weighted average common shares outstanding (See Note 10):
Basic	33,032			32,398			32,884			32,336
Diluted	33,939			32,804			33,644			32,796
Comprehensive income (loss) (See Note 11)	$	12,325		$	4,752		$	(3,418	)	$	7,957

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

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands)

	June 30, 2015			December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	131,296		$	71,994
Trade accounts receivable, net of allowances of $6,447 and $6,184	134,546			131,918
Inventories, net	241,835			237,114
Deferred tax assets	58,173			58,663
Prepaid expenses and other current assets	42,397			29,632
Total current assets	608,247			529,321
Property, plant and equipment, net	215,460			209,986
Intangible assets, net	440,583			459,459
Goodwill	357,022			363,888
Deferred tax assets	5,689			5,603
Other assets	10,893			10,368
Total assets	$	1,637,894		$	1,578,625
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Borrowings under senior credit facility	$	7,500		$	3,750
Convertible securities	2,903			—
Accounts payable, trade	58,197			34,060
Deferred revenue	4,303			5,176
Accrued compensation	40,019			40,943
Accrued expenses and other current liabilities	42,831			42,096
Total current liabilities	155,753			126,025
Long-term borrowings under senior credit facility	429,375			413,125
Long-term convertible securities	214,358			213,121
Deferred tax liabilities	94,701			91,623
Other liabilities	31,984			30,409
Total liabilities	926,171			874,303
Commitments and contingencies
Stockholders’ equity:
Preferred stock; no par value; 15,000 authorized shares; none outstanding	—			—
Common stock; $0.01 par value; 60,000 authorized shares; 42,012 and 41,644 issued at June 30, 2015 and December 31, 2014, respectively	420			416
Additional paid-in capital	790,371			779,555
Treasury stock, at cost; 8,903 shares at June 30, 2015 and December 31, 2014	(367,121		)	(367,121		)
Accumulated other comprehensive loss	(40,288		)	(23,488		)
Retained earnings	328,341			314,960
Total stockholders’ equity	711,723			704,322
Total liabilities and stockholders’ equity	$	1,637,894		$	1,578,625

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

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Six Months Ended June 30,
	2015			2014
OPERATING ACTIVITIES:
Net income	$	13,382		$	7,031
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	31,159			29,164
Non-cash impairment charges	409			600
Deferred income tax	1,648			(503		)
Amortization of debt issuance costs	1,060			1,243
Non-cash interest expense	3,744			3,433
Loss on disposal of property and equipment	38			378
Change in fair value of contingent consideration	239			(998		)
Share-based compensation	5,616			8,302
Excess tax benefits from stock-based compensation arrangements	(3,501		)	(1,164		)
Changes in assets and liabilities, net of business acquisitions:
Accounts receivable	(4,480		)	106
Inventories	(9,875		)	(17,367		)
Prepaid expenses and other current assets	(7,314		)	(2,832		)
Other non-current assets	(1,806		)	(1,846		)
Accounts payable, accrued expenses and other current liabilities	19,613			4,848
Deferred revenue	(805		)	188
Other non-current liabilities	615			(2,952		)
Net cash provided by operating activities	49,742			27,631
INVESTING ACTIVITIES:
Purchases of property and equipment	(22,013		)	(20,691		)
Sale of property and equipment	1,438			—
Cash used in business acquisition, net of cash acquired	—			(235,000		)
Proceeds from working capital purchase price adjustment	1,831			—
Net cash used in investing activities	(18,744		)	(255,691		)
FINANCING ACTIVITIES:
Borrowings under senior credit facility	35,000			235,000
Repayments under senior credit facility	(15,000		)	—
Principal payments under capital lease obligations	(396		)	(245		)
Proceeds from exercised stock options	7,345			8,317
Excess tax benefits from stock-based compensation arrangements	3,501			1,164
Net cash provided by financing activities	30,450			244,236
Effect of exchange rate changes on cash and cash equivalents	(2,146		)	370
Net change in cash and cash equivalents	59,302			16,546
Cash and cash equivalents at beginning of period	71,994			120,614
Cash and cash equivalents at end of period	$	131,296		$	137,160

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

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

General

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

In the opinion of management, the June 30, 2015 unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K. The December 31, 2014 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. Operating results for the three- and six-month periods ended June 30, 2015 are not necessarily indicative of the results to be expected for the entire year.

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

Certain amounts from the prior year’s financial statements have been reclassified in order to conform to the current year’s presentation.

Recently Issued Accounting Standards

In April 2014, the FASB issued amendments to guidance for reporting discontinued operations and disposals of components of an entity. The amended guidance requires that a disposal representing a strategic shift that has (or will have) a major effect on an entity’s financial results or a business activity classified as held for sale should be reported as discontinued operations. The amendments also expand the disclosure requirements for discontinued operations and add new disclosures for individually significant dispositions that do not qualify as discontinued operations. The amendments are effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014 (early adoption is permitted only for disposals that have not been previously reported). The new guidance is effective for Integra prospectively for all disposals (or classifications as held for sale) of components of an entity that occur after January 1, 2015 and will be in effect for the spin-off of the spine business in the Company's third quarter 2015 results.

In May 2014, the FASB issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB deferred for one year the effective date of the new revenue standard, but early adoption will be permitted. The new standard will be effective for the Company on January 1, 2018. The Company is in the process of evaluating the impact of this standard on its financial statements.

In June 2014, the FASB issued Update No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (Topic 718). The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This update is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. The implementation of the amended guidance is not expected to have a material impact on the consolidated financial position or results of operations.

In August 2014, the FASB issued Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendment requires management to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around management’s plan to alleviate these doubts are required. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2016. The implementation of the amended guidance is not expected to have an impact on current disclosures in the financial statements.

In April 2015, the FASB issued Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendment requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The new standard is limited to the presentation of debt issuance costs and does not affect the recognition or measurement of debt issuance costs. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2015. The implementation of the amended guidance is not expected to have a material impact on the consolidated results of operations and will result in a reclassification of the debt issuance costs from other long-term assets to long-term debt when adopted.

There are no other recently issued accounting pronouncements that are expected to have a material effect on the financial position, results of operations or cash flows.

2. BUSINESS ACQUISITIONS

Metasurg

On December 5, 2014, the Company acquired certain assets of Koby Ventures II, L.P. dba Metasurg ("Metasurg") for an aggregate purchase price of $27.6 million (including working capital and purchase price adjustments of $0.4 million). The purchase price consists of an initial cash payment to Metasurg of $26.5 million, a separate purchase price adjustment cash payment of $0.4 million, and contingent consideration with an acquisition date fair value of $0.7 million. The potential maximum undiscounted contingent consideration of $38.5 million is based on reaching certain sales levels for acquired products from April 1, 2015 through June 30, 2016. The fair value of this liability is based on future sales projections of the Metasurg product under various potential scenarios and weighting the probability of these outcomes for the twelve-month period ended December 31, 2015. At the date of the acquisition, the cash flow projection was discounted using an internal rate of return of 19.9%. These fair value measurements were based on significant inputs not observed in the market and thus represented a Level 3 measurement.

Metasurg develops intuitive implant systems for the foot and ankle market and sells almost entirely in the U.S. market. The acquired foot and ankle products will enhance the Company's lower extremities market position.

The Company recorded revenue for Metasurg of approximately $1.7 million and $3.3 million in the condensed consolidated statements of operations for the three- and six-month period ended June 30, 2015. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been fully integrated into the Company's operations.

The Company adjusted the preliminary purchase price allocation during the quarter ended June 30, 2015 to reflect the $0.4 million working capital and purchase price adjustment. The following summarizes the preliminary allocation of the purchase price as of June 30, 2015 based on the fair value of the assets acquired and liabilities assumed:

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

	Preliminary Purchase Price Allocation
	(Dollars in thousands)
Inventory	$	4,800
Property, plant, and equipment	1,246
Intangible assets:			Wtd. Avg. Life:
Technology product rights	20,590		8 - 14 Years
In-process research and development	190		Indefinite
Goodwill	732
Net assets acquired	$	27,558

MicroFrance

On October 27, 2014, the Company acquired all outstanding shares of Medtronic Xomed Instrumentation, SAS ("MicroFrance") from Medtronic, Inc. ("Medtronic") as well as certain assets of Medtronic for $60.1 million in cash (including working capital and purchase price adjustments of $1.5 million, of which $0.8 million was recorded against goodwill). MicroFrance specializes in manual ear, nose, and throat ("ENT") surgical instruments and designs, manufactures, and sells reusable handheld instruments to ENT and laparoscopy surgical specialists around the world. The acquired ENT instruments fill a portfolio gap for the Company with clear growth opportunities through market adjacencies and provides for increased scale and reach in the international market.

The Company recorded revenue for MicroFrance of approximately $6.3 million and $12.1 million in the condensed consolidated statements of operations for the three- and six-month period ended June 30, 2015. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been fully integrated into the Company's operations.

The Company adjusted the preliminary purchase price allocation during the quarter ended March 31, 2015 to reflect the $1.5 million working capital and purchase price adjustments. The following summarizes the final allocation of the purchase price as of June 30, 2015 based on the fair value of the assets acquired and liabilities assumed:

	Final Purchase Price Allocation
	(Dollars in thousands)
Cash	$	2,195
Inventory	3,155
Prepaid expenses	620
Property, plant, and equipment	3,675
Other current assets	5,025
Intangible assets:			Wtd. Avg. Life:
Trade name	11,990		20 Years
Technology	4,580		15 - 16 Years
Customer relationships	18,130		12 - 16 Years
Goodwill	16,607
Total assets acquired	65,977
Accounts payable and other liabilities	5,910
Net assets acquired	$	60,067

Confluent Surgical, Inc.

On January 15, 2014, the Company acquired all outstanding shares of Confluent Surgical, Inc., ("Confluent Surgical") - including its surgical sealant and adhesion barrier product lines - from Covidien Group S.a.r.l, ("Covidien") for an aggregate purchase price of $255.9 million. The purchase price consists of an initial cash payment to Covidien of $231.0 million upon the closing of the transaction, a separate prepayment of $4.0 million made under a transitional supply agreement with an affiliate of Covidien, and contingent consideration with an acquisition date fair value of $20.9 million. The potential maximum undiscounted contingent consideration of $30.0 million consists of $25.0 million upon obtaining certain U.S. governmental approvals and $5.0 million upon obtaining certain European governmental approvals, both related to the completion of the transition of the Confluent Surgical business to the Company.

8

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The transitional supply agreement secures the supply of the acquired products from an affiliate of Covidien until the earlier of (i) the time that the transition of the Confluent Surgical business as discussed above is complete, or (ii) the fifth anniversary of the effective date of the agreement (the agreement also contains an option to extend for another two years by providing written notice at least 180 days prior to the end of the initial five-year period). This agreement contains financial incentives to the affiliate of Covidien for the timely supply of products each fiscal quarter through the third anniversary of the agreement. The prices paid under the supply agreement are essentially flat through the third anniversary of the agreement, and then increase significantly each of the following three years. The Company also entered into a transition services agreement with an affiliate of Covidien at the closing for services such as customer service, accounting and information technology management, clinical and regulatory affairs, manufacturing transition services, and other functions.

This acquisition complements the Company's global neurosurgery growth strategy aimed at providing a broader set of solutions for surgical procedures in the head.

The Company recorded revenue for Confluent Surgical of approximately $18.9 million and $36.6 million in the condensed consolidated statements of operations for the three- and six-month periods ended June 30, 2015 and $14.1 million and $32.4 million for the three- and six-month periods ended June 30, 2014. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been fully integrated into the Company's operations.

The Company adjusted the preliminary purchase price allocation during the quarter ended June 30, 2014 to reduce deferred tax liabilities by $12.4 million. This adjustment offset goodwill and was the result of the Company analyzing and revising its tax positions in certain jurisdictions. The following summarizes the final allocation of the purchase price as of June 30, 2015 based on the fair value of the assets acquired and liabilities assumed:

	Final Purchase Price Allocation
	(Dollars in thousands)
Inventory deposit	$	4,000
Fixed assets	438
Intangible assets:			Wtd. Avg. Life
Technology product rights	239,800		3 - 20 Years
Other	400		Less than 1 year
Deferred tax assets - long term	12
Goodwill	105,331
Total assets acquired	349,981
Contingent supply liability	5,891
Other	731
Deferred tax liabilities - long term	87,464
Net assets acquired	$	255,895

Subsequent to the acquisition date, a regulatory event occurred that resulted in the full-impairment of one of the acquired technology product rights of $0.6 million. This event was not known, or knowable, at the time of the acquisition and therefore the impairment has been included in the Company's cost of sales.

The Company accounted for the contingent supply liability by recording its fair value as a liability on the date of the acquisition based on a discounted cash-flow model. This contingent supply liability relates to contractual quarterly incentive payments that will be made to an affiliate of Covidien if certain supply minimums under the transitional supply agreement are met.

The Company accounted for the contingent consideration by recording its fair value as a liability on the date of the acquisition. The contingent consideration relates to the Company's obtaining certain U.S. and European regulatory approvals. At the date of the acquisition, both of these milestones were valued using a discount rate of 2.2%, which is equivalent to the cost of debt for the estimated time horizon, and an overall probability of occurring of 95%. Accordingly, on January 15, 2014 the Company recorded a $20.9 million liability representing the initial fair value estimate of the probability weighted contingent consideration that management believes will be paid between early 2017 and late 2018. Depending on the expected timing of the estimated payments, the acquisition date fair value of the probability adjusted payments could have been $0.3 million higher or $0.4 million lower. These fair value measurements were based on significant inputs not observed in the market and thus represented a Level 3 measurement. The contingent consideration is re-measured to fair value at each reporting date until the contingency is resolved, and those changes in fair value are recognized in earnings.

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The goodwill recorded in connection with these acquisitions is based on (i) expected cost savings, operating synergies and other benefits expected to result from the combined operations, (ii) the value of the going-concern element of the existing businesses (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately), and (iii) intangible assets that do not qualify for separate recognition such as an assembled workforce. The acquisitions generated a combination of deductible and non-deductible goodwill.

Contingent consideration

The Company increased the fair value of contingent consideration during the six-month period ended June 30, 2015 to reflect the change in the time value of money during the period. A reconciliation of the opening balances to the closing balances of these Level 3 measurements is as follows (in thousands):

			Location in Statement of Operations
Balance as of January 1, 2015	$	22,008
Loss from increase in fair value of contingent consideration liabilities	239		Selling, general and administrative
Fair value at June 30, 2015	$	22,247

The entire contingent consideration balance was included in Other liabilities at June 30, 2015 and December 31, 2014.

Pro Forma Results

The following unaudited pro forma financial information summarizes the results of operations for the three and six months ended June 30, 2014 as if the acquisitions completed by the Company during 2014 had been completed as of January 1, 2013. The pro forma results are based upon certain assumptions and estimates, and they give effect to actual operating results prior to the acquisition and adjustments to reflect (i) the change in interest expense, depreciation expense, and intangible asset amortization, (ii) certain external expenses related to the acquisition as if they were incurred on January 1, 2013 that will not be recurring in the post-acquisition periods, and (iii) income taxes on the aforementioned adjustments at the Company’s statutory rate. No effect has been given to other cost reductions or operating synergies. As a result, these pro forma results do not necessarily represent results that would have occurred if the acquisition had taken place on the basis assumed above, nor are they indicative of the results of future combined operations.

	Three Months Ended June 30, 2014		Six Months Ended June 30, 2014
	(In thousands, except per share amounts)
Total revenue	$	241,801	$	467,310
Net income	$	7,009	$	12,581
Net income per share:
Basic	$	0.22	$	0.39

3. INVENTORIES

Inventories, net consisted of the following:

	June 30, 2015		December 31, 2014
	(In thousands)
Finished goods	$	146,912	$	150,483
Work in process	54,707		50,166
Raw materials	40,216		36,465
	$	241,835	$	237,114

4. GOODWILL AND OTHER INTANGIBLE ASSETS

In the first quarter of 2015 the Company revised its reportable segments in connection with the realignment of its portfolio. Specifically, the Company integrated the five existing business divisions into three global divisions, no longer focusing on international as a separate reportable segment but managing each business globally. The change in reportable segments resulted in the Company's requirement to reallocate existing goodwill to the new reportable segments based on the relative-fair-value of

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

the Company's four underlying reporting units. With the reportable segments now being managed at a global level, goodwill previously assigned to the EMEA, LAPAC, and Private Label reporting units was reallocated to the new global reporting units. The Company estimated the fair value of the reporting units using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty. Inputs used to fair value the Company's reporting units are considered inputs of the fair value hierarchy. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement. The key assumptions impacting the valuation included the following:

• The reporting unit's financial projections, which are based on management's assessment of regional and macroeconomic variables, industry trends and market opportunities, and the Company's strategic objectives and future growth plans.

• The projected terminal value for the reporting unit, which represents the present value of projected cash flows beyond the last period in the discounted cash flow analysis. The terminal value reflects the Company's assumptions related to long-term growth rates and profitability, which are based on several factors, including local and macroeconomic variables, market opportunities, and future growth plans.

• The discount rate used to measure the present value of the projected future cash flows is set using a weighted-average cost of capital method that considers market and industry data as well as the Company's specific risk factors that are likely to be considered by a market participant. The weighted-average cost of capital is the Company's estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise.

Based on the Company's fair value calculations, with the exception of the Spine reporting unit, given the excess of the Specialty Surgical Solutions Instruments, Specialty Surgical Solutions Neurosurgery, and Orthopedics and Tissue Technologies estimated fair value over their carrying value after the reallocation of goodwill, management concluded that any future goodwill impairment is not likely. The Company's allocation of goodwill to the Spine reporting unit has been impaired during the first quarter of 2015 as a result of the carrying value of its goodwill exceeding the implied fair value. Refer to Note 12 - Segment and Geographic Information for more information on the change in reportable segments.

Changes in the carrying amount of goodwill for the six months ended June 30, 2015 were as follows:

	Specialty Surgical Solutions			Orthopedics and Tissue Technologies			Spine			Total
	(In thousands)
Goodwill, gross	$	281,829		$	81,650		$	409		$	363,888
Accumulated impairment losses	—			—			—			—
Goodwill at December 31, 2014	281,829			81,650			409			363,888
MicroFrance working capital and purchase price adjustments	(828		)	—			—			(828		)
Metasurg working capital and purchase price adjustment	—			263			—			263
Goodwill impairment charge	—			—			(409		)	(409		)
Foreign currency translation	(4,451		)	(1,441		)	—			(5,892		)
Balance, June 30, 2015	$	276,550		$	80,472		$	—		$	357,022

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

	June 30, 2015
	Weighted Average Life	Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Completed technology	18 years	$	344,406	$	(72,393	)	$	272,013
Customer relationships	12 years	159,548		(91,621		)	67,927
Trademarks/brand names	34 years	43,221		(15,814		)	27,407
Trademarks/brand names	Indefinite	48,484		—			48,484
Supplier relationships	27 years	34,721		(11,522		)	23,199
All other (1)	4 years	2,721		(1,168		)	1,553
		$	633,101	$	(192,518	)	$	440,583

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

	December 31, 2014
	Weighted Average Life	Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Completed technology	18 years	$	345,082	$	(62,920	)	$	282,162
Customer relationships	12 years	162,031		(87,653		)	74,378
Trademarks/brand names	34 years	44,520		(15,755		)	28,765
Trademarks/brand names	Indefinite	48,484		—			48,484
Supplier relationships	27 years	34,721		(10,809		)	23,912
All other (1)	4 years	4,810		(3,052		)	1,758
		$	639,648	$	(180,189	)	$	459,459

⁽¹⁾  At June 30, 2015 and December 31, 2014, all other included in-process research and development ("IPR&D") of $1.4 million in both periods, which was indefinite-lived.

During the six months ended June 30, 2014, the Company recorded an impairment charge of $0.6 million in cost of goods sold related to technology assets acquired from Confluent Surgical that will no longer be sold resulting from a regulatory event that occurred after the acquisition date.

Based on quarter-end exchange rates, annual amortization expense (including amounts reported in cost of product revenues, but excluding any possible future amortization associated with acquired in-process research and development) is expected to approximate $31.9 million in 2015, $29.7 million in 2016, $27.6 million in 2017, $27.3 million in 2018 and $26.5 million in 2019. Identifiable intangible assets are initially recorded at fair market value at the time of acquisition using an income or cost approach.

5. DEBT

Amended and Restated Senior Credit Agreement

On December 19, 2014, the Company entered into an amendment to the amended and restated credit agreement (the "Senior Credit Facility") which modified covenants to permit the distribution and/or dividend by the Company of its spine business to the Company's public stockholders. The intent of the amendment was to permit the Company to consummate the spine business spin-off transaction.

On July 2, 2014, the Company entered into the Senior Credit Facility with a syndicate of lending banks, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association, as Syndication Agent and HSBC Bank USA, National Association, Royal Bank of Canada, Citizens Bank, National Association, DNB Capital LLC, Credit Agricole-Corporate and Investment Bank and TD Bank, N.A., as Co-Documentation Agents. The Company's Senior Credit Facility was originally amended and restated on August 10, 2010, and that agreement was then amended on June 8, 2011, May 11, 2012, and June 21, 2013, as previously disclosed.

The 2014 amended and restated Senior Credit Facility created an aggregate principal amount of up to $900.0 million available to the Company through the following facilities:

i. a $750.0 million revolving credit facility (increased from $600.0 million), which includes a $60.0 million sublimit for the issuance of standby letters of credit and a $60.0 million sublimit for swingline loans, and

ii. a $150.0 million term loan facility.

The Senior Credit Facility allows the Company to further increase the size of either the revolving credit facility or the term loan facility, or a combination thereof, by an aggregate of $200.0 million with additional commitments. The July 2014 amended and restated Senior Credit Facility extended the maturity date of the prior facility from June 8, 2016 to July 2, 2019.

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

i. the Eurodollar Rate (as defined in the amendment and restatement) in effect from time to time plus the applicable rate (ranging from 1.00% to 1.75%), or

ii. the highest of:

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

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

3. the one-month Eurodollar Rate plus 1.00%.

The applicable rates are based on the Company’s consolidated total leverage ratio (defined as the ratio of (a) consolidated funded indebtedness less cash in excess of $40.0 million that is not subject to any restriction of the use or investment thereof to (b) consolidated EBITDA) at the time of the applicable borrowing.

The Company will also pay an annual commitment fee (ranging from 0.15% to 0.30%, based on the Company’s consolidated total leverage ratio) on the daily amount by which the revolving credit facility exceeds the outstanding loans and letters of credit under the credit facility.

The Senior Credit Facility is collateralized by substantially all of the assets of the Company’s U.S. subsidiaries, excluding intangible assets. The Senior Credit Facility is subject to various financial and negative covenants and at June 30, 2015 the Company was in compliance with all such covenants. In connection with the modification of the 2014 amendment and restatement of the Senior Credit Facility, the Company capitalized $3.2 million of incremental financing costs, and expensed $0.3 million of previously capitalized financing costs.

On July 2, 2014, the Company borrowed $422.0 million under the Senior Credit Facility consisting of a $150.0 million term loan and $272.0 million under its revolving credit facility. The Company used the funds to repay the balance of its previous Senior Credit Facility. The outstanding borrowings have one, two, three, six months, or, if available, twelve months interest periods.

At June 30, 2015 and December 31, 2014, there was $286.9 million and $266.9 million outstanding under the revolving credit component of the Senior Credit Facility at a weighted average interest rate of 2.0% and 1.7%, respectively. At June 30, 2015, there was approximately $463.1 million available for borrowing under the Senior Credit Facility. The Company considers the balance to be long-term in nature based on its current intent and ability to repay the borrowing outside of the next twelve-month period.

At June 30, 2015 there was $150.0 million outstanding under the term loan component of the Senior Credit Facility at a weighted average interest rate of 1.8%. Contractual repayments of the term loan do not begin until September 30, 2015 and are due as follows:

Year Ended December 31,	Principal Repayment
	(In thousands)
2015	$	3,750
2016	9,375
2017	13,125
2018	15,000
2019	108,750
	$	150,000

The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit facility and term loan components at June 30, 2015 was approximately $269.1 million and $143.0 million, respectively. These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair value hierarchy. Level 2 inputs represent inputs that are observable for the asset or liability, either directly or indirectly and are other than active market observable inputs that reflect unadjusted quoted prices for identical assets or liabilities.

2016 Convertible Senior Notes

On June 15, 2011, the Company issued $230.0 million aggregate principal amount of its 1.625% Convertible Senior Notes due in 2016 (the “2016 Notes”). The 2016 Notes mature on December 15, 2016, and bear interest at a rate of 1.625% per annum payable semi-annually in arrears on December 15 and June 15 of each year. The portion of the debt proceeds that was classified as equity at the time of the offering was $43.2 million, an equivalent of that amount is being amortized to interest expense using the effective interest method through December 2016. The effective interest rate implicit in the liability component is 5.6%.

At June 30, 2015, the carrying amount of the liability component was $217.3 million, the remaining unamortized discount was $12.7 million, and the principal amount outstanding was $230.0 million. The fair value of the 2016 Notes at June 30, 2015 was approximately $285.8 million. At December 31, 2014, the carrying amount of the liability component was $213.1 million, the remaining unamortized discount was $16.9 million and the principal amount outstanding was $230.0 million. The fair value of

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

the liability of the 2016 Notes was determined using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2.

The 2016 Notes are senior, unsecured obligations of the Company, and are convertible into cash and, if applicable, shares of its common stock based on an initial conversion rate, subject to adjustment of 17.4092 shares per $1,000 principal amount of 2016 Notes (which represents an initial conversion price of approximately $57.44 per share). The Company will satisfy any conversion of the 2016 Notes with cash up to the principal amount of the 2016 Notes pursuant to the net share settlement mechanism set forth in the indenture and, with respect to any excess conversion value, with shares of the Company’s common stock. The 2016 Notes are convertible only in the following circumstances: (1) if the closing sale price of the Company’s common stock exceeds 150% of the conversion price during a period as defined in the indenture; (2) if the average trading price per $1,000 principal amount of the 2016 Notes is less than or equal to 98% of the average conversion value of the 2016 Notes during a period as defined in the indenture; (3) at any time on or after June 15, 2016; or (4) if specified corporate transactions occur. The issue price of the 2016 Notes was equal to their face amount, which is also the amount holders are entitled to receive at maturity if the 2016 Notes are not converted. As of March 31, 2015, certain conversion features were triggered due to the announced spin-off of the Company's subsidiary, SeaSpine Holdings Corporation, which allowed the holders to convert all or any of the 2016 Notes subject to certain conditions. The 2016 Notes were convertible through June 10, 2015 and as of the close of the conversion window, 2,903 note holders provided notice to convert. The Company has classified the cash settlement of the conversion into short-term as of June 30, 2015. The remainder of the debt has continued to be classified as long-term as the conversion window has closed.

In connection with the issuance of the 2016 Notes, the Company entered into call transactions and warrant transactions, primarily with affiliates of the initial purchasers of such notes (the “hedge participants”). The initial strike price of the call transaction is approximately $57.44 per share, subject to customary anti-dilution adjustments. The initial strike price of the warrant transaction is approximately $70.05 per share, subject to customary anti-dilution adjustments. Refer to Note 14 - Subsequent Events for more information on the change in the conversion price as a result of the SeaSpine Separation.

Convertible Note Interest

The interest expense components of the Company’s convertible notes are as follows (net of capitalized interest amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands)
2016 Notes:
Amortization of the discount on the liability component	$	1,885	$	1,766	$	3,744	$	3,433
Cash interest related to the contractual interest coupon	824		837		1,669		1,639
Total	$	2,709	$	2,603	$	5,413	$	5,072

6. DERIVATIVE INSTRUMENTS

Interest Rate Hedging

The Company’s interest rate risk relates to U.S. dollar denominated variable LIBOR interest rate borrowings. The Company uses an interest rate swap derivative instrument entered into on August 10, 2010 with an effective date of December 31, 2010 to manage its earnings and cash flow exposure to changes in interest rates by converting a portion of its floating-rate debt into fixed-rate debt beginning on December 31, 2010. This interest rate swap expires on August 10, 2015.

The Company designates this derivative instrument as a cash flow hedge. The Company records the effective portion of any change in the fair value of a derivative instrument designated as a cash flow hedge as unrealized gains or losses in accumulated other comprehensive income (“AOCI”), net of tax, until the hedged item affects earnings, at which point the effective portion of any gain or loss will be reclassified to earnings. If the hedged cash flow does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time.

The Company expects that approximately $0.2 million of pre-tax losses recorded as net in AOCI related to the interest rate hedge could be reclassified to earnings prior to the date of expiration.

Foreign Currency Hedging

From time to time the Company enters into foreign currency hedge contracts intended to protect the U.S. dollar value of certain forecasted foreign currency denominated transactions. The Company records the effective portion of any change in the fair value

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

of foreign currency cash flow hedges in AOCI, net of tax, until the hedged item affects earnings. Once the related hedged item affects earnings, the Company reclassifies the effective portion of any related unrealized gain or loss on the foreign currency cash flow hedge to earnings. If the hedged forecasted transaction does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time.

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

There were no contracts outstanding as of June 30, 2015.

Counterparty Credit Risk

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

Fair Value of Derivative Instruments

The Company has classified all of its derivative instruments within Level 2 of the fair value hierarchy because observable inputs are available for substantially the full term of the derivative instruments. The fair value of the foreign currency forward exchange contracts related to inventory purchases is determined by comparing the forward rate as of the period end and the settlement rate specified in each contract. The fair value of the interest rate swaps was developed using a market approach based on publicly available market yield curves and the terms of the related swap. The Company performs ongoing assessments of counterparty credit risk.

The following table summarizes the fair value and presentation for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014:

	Fair Value as of
Location on Balance Sheet (1):	June 30, 2015		December 31, 2014
	(In thousands)
Derivatives designated as hedges — Liabilities:
Interest rate swap — Accrued expenses and other current liabilities (2)	$	161	$	898
Total Derivatives designated as hedges — Liabilities	$	161	$	898

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

⁽²⁾  At June 30, 2015 and December 31, 2014, the notional amount related to the Company’s sole interest rate swap was $90.0 million and $97.5 million, respectively. In the next twelve months, the Company expects to reduce the notional amount by the entire $90.0 million.

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following presents the effect of derivative instruments designated as cash flow hedges on the accompanying condensed consolidated statements of operations during the three and six months ended June 30, 2015 and 2014:

	Balance in AOCI Beginning of Quarter			Amount of Loss Recognized in AOCI- Effective Portion			Amount of Loss Reclassified from AOCI into Earnings-Effective Portion			Balance in AOCI End of Quarter			Location in Statements of Operations
	(In thousands)
Three Months Ended June 30, 2015
Interest rate swap	(527		)	(7		)	(373		)	(161		)	Interest (expense)
	$	(527	)	$	(7	)	$	(373	)	$	(161	)
Three Months Ended June 30, 2014
Interest rate swap	(2,097		)	(60		)	(444		)	(1,713		)	Interest (expense)
	$	(2,097	)	$	(60	)	$	(444	)	$	(1,713	)
	Balance in AOCI Beginning of Quarter			Amount of Loss Recognized in AOCI- Effective Portion			Amount of Loss Reclassified from AOCI into Earnings-Effective Portion			Balance in AOCI End of Quarter			Location in Statements of Operations
	(In thousands)
Six Months Ended June 30, 2015
Interest rate swap	(898		)	(25		)	(762		)	(161		)	Interest (expense)
	$	(898	)	$	(25	)	$	(762	)	$	(161	)
Six Months Ended June 30, 2014
Interest rate swap	(2,439		)	(169		)	(895		)	(1,713		)	Interest (expense)
	$	(2,439	)	$	(169	)	$	(895	)	$	(1,713	)

The Company recognized no gains or losses resulting from ineffectiveness of cash flow hedges during the six months ended June 30, 2015 and 2014.

7. STOCK-BASED COMPENSATION

As of June 30, 2015, the Company had stock options, restricted stock awards, performance stock units, contract stock awards and restricted stock unit awards outstanding under three plans, the 2000 Equity Incentive Plan (the “2000 Plan”), the 2001 Equity Incentive Plan (the “2001 Plan”), and the 2003 Equity Incentive Plan (the “2003 Plan,” and collectively, the “Plans”).

Stock options issued under the Plans become exercisable over specified periods, generally within four years from the date of grant for officers, directors, and employees, and generally expire eight years from the grant date for employees, and from eight to ten years for directors and certain executive officers. Restricted stock issued under the Plans vests over specified periods, generally three years after the date of grant. The vesting of performance stock, issued under the Plans, is subject to service and performance conditions.

Stock Options

As of June 30, 2015, there were approximately $2.4 million of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately two years. There were 77,347 stock options granted during the six months ended June 30, 2015.

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Awards of Restricted Stock, Performance Stock and Contract Stock

Performance stock, restricted stock and contract stock awards generally have requisite service periods of three years. Performance stock units are subject to graded vesting conditions and the Company expenses their fair value over the requisite service period. The Company expenses the fair value of restricted stock and contract stock awards on a straight-line basis over the vesting period or requisite service period, whichever is shorter. As of June 30, 2015, there were approximately $18.4 million of total unrecognized compensation costs related to these unvested awards. The Company expects to recognize these costs over a weighted-average period of approximately two years. The Company granted 146,300 restricted stock awards/stock units and 64,930 performance shares during the six months ended June 30, 2015.

The Company has no formal policy related to the repurchase of shares for the purpose of satisfying stock-based compensation obligations.

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

8. TREASURY STOCK

On October 28, 2014, the Board of Directors terminated the October 2012 authorization and authorized up to $75.0 million of its outstanding common stock through December 2016. The Company has not repurchased any of its outstanding shares of common stock during the six-month periods ended June 30, 2015 and 2014. As of June 30, 2015, there remained $75.0 million available for repurchases under this authorization.

9. INCOME TAXES

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Reported tax rate	34.0	%	32.9	%	33.7	%	37.0	%

The Company’s effective income tax rates for the three months ended June 30, 2015 and 2014 were 34.0% and 32.9%, respectively. The primary drivers of the higher tax rate for the three months ended June 30, 2015 were a tax expense of $0.4 million for nondeductible costs relating to the spine spin-off transaction and a tax expense of $0.4 million relating to foreign tax returns filed during the quarter.

The Company's effective income tax rates for the six months ended June 30, 2015 and 2014 were 33.7% and 37.0%, respectively. The primary drivers of the overall tax rate for the six months ended June 30, 2014 were a tax expense of $1.1 million relating to foreign and state income tax audit settlements and a tax expense of $0.3 million relating to a change in state filing positions.

The Company expects its effective income tax rate for the full year to be approximately 32%, resulting largely from nondeductible spine spin-off costs and audit settlements offset by the release of uncertain tax positions, as well as the jurisdictional mix of pretax income in U.S.-based operations relative to foreign operations. This estimate could be revised in the future as additional information is presented to the Company.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. NET INCOME PER SHARE

Basic and diluted net income per share was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands, except per share amounts)
Basic net income per share:
Net income	$	4,998	$	4,825	$	13,382	$	7,031
Weighted average common shares outstanding	33,032		32,398		32,884		32,336
Basic net income per common share	$	0.15	$	0.15	$	0.41	$	0.22
Diluted net income per share:
Net income	$	4,998	$	4,825	$	13,382	$	7,031
Weighted average common shares outstanding — Basic	33,032		32,398		32,884		32,336
Effect of dilutive securities:
2016 Convertible notes	477		—		268		—
Stock options and restricted stock	430		406		492		460
Weighted average common shares for diluted earnings per share	33,939		32,804		33,644		32,796
Diluted net income per common share	$	0.15	$	0.15	$	0.40	$	0.21

At June 30, 2015 and 2014, the Company had 1.1 million and 1.4 million of outstanding stock options, respectively. The Company also has warrants outstanding relating to its 2016 Notes at June 30, 2015 and 2014 and the Company's 2016 Notes are convertible to common shares in certain circumstances (see Note 5). Stock options, restricted stock, warrants and the excess conversion value of the 2016 Notes are included in the diluted earnings per share calculation using the treasury stock method, unless the effect of including such items would be anti-dilutive.

For the three months ended June 30, 2015 and 2014, 0.1 million and 0.2 million, respectively, of anti-dilutive stock options were excluded from the diluted earnings per share calculation. For the six months ended June 30, 2015 and 2014, a minimal amount and 0.2 million, respectively, of anti-dilutive stock options were excluded from the diluted earnings per share calculation. The effect of outstanding warrants were anti-dilutive because the strike price of the warrants exceeded the Company’s average stock price for the periods presented.

For the three and six months ended June 30, 2015, the potential excess conversion value on the 2016 Notes was included in the Company's dilutive share calculation because the average stock price for the three and six months ended June 30, 2015 exceeded the conversion price. The potential excess conversion value of the 2016 Notes were anti-dilutive because the conversion price exceeded the Company's stock price for the three and six months ended June 30, 2014; therefore, these amounts have been excluded from the diluted earnings per share calculation.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(In thousands)
Net income	$	4,998		$	4,825		$	13,382		$	7,031
Foreign currency translation adjustment	7,166			(234		)	(17,227		)	585
Change in unrealized gain on derivatives, net of tax	209			219			420			414
Pension liability adjustment, net of tax	(48		)	(58		)	7			(73		)
Comprehensive income (loss)	$	12,325		$	4,752		$	(3,418	)	$	7,957

Changes in Accumulated Other Comprehensive Loss by component between December 31, 2014 and June 30, 2015 are presented in the table below, net of tax:

	Gains and (Losses) on Cash Flow Hedges			Defined Benefit Pension Items			Foreign Currency Items			Total
	(In thousands)
Beginning balance	$	(512	)	$	(906	)	$	(22,070	)	$	(23,488	)
Other comprehensive (loss) income before reclassifications	(14		)	7			(17,227		)	(17,234		)
Amounts reclassified from accumulated other comprehensive income	434			—			—			434
Net current-period other comprehensive income (loss)	420			7			(17,227		)	(16,800		)
Ending balance	$	(92	)	$	(899	)	$	(39,297	)	$	(40,288	)

The reclassification adjustments out of Accumulated Other Comprehensive Loss during the three and six months ended June 30, 2015 were as follows:

Three Months Ended June 30, 2015
Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Affected Line Item in the Statement where Net Income (Loss) is Presented
	(In thousands)
Gains and losses on cash flow hedges
Interest rate swap	$	(373	)	Interest (expense)
	160			Tax (expense) or benefit
	$	(213	)	Net of tax
Six Months Ended June 30, 2015
Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Affected Line Item in the Statement where Net Income (Loss) is Presented
	(In thousands)
Gains and losses on cash flow hedges
Interest rate swap	$	(761	)	Interest (expense)
	327			Tax (expense) or benefit
	$	(434	)	Net of tax

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. SEGMENT AND GEOGRAPHIC INFORMATION

Starting in the first quarter of 2015, because of changes in how the Company internally manages and reports the results of its businesses to its chief operating decision maker, the Company is disclosing three global reportable segments. The three global reportable segments and their activities are described below, as follows:

• The Specialty Surgical Solutions segment includes (i) the Neurosurgery business which sells a full line of products specifically for neurosurgery and critical care such as tissue ablation equipment, dural repair products, cerebral spinal fluid management devices, intracranial monitoring equipment, and cranial stabilization equipment and (ii) the Instruments business which sells more than 60,000 instrument patterns and surgical and lighting products to hospitals, surgery centers, and dental, podiatry, and veterinary offices.

• The Orthopedics and Tissue Technologies segment includes such offerings as skin and wound repair, bone and joint fixation, implants in the upper and lower extremities, bone grafts and nerve and tendon repair.

• The Spine segment focuses on spinal fusion, spinal implants, and deformity correction, together with bone graft substitutes and other related medical devices that are used to enhance the repair and regeneration of bone in various types of orthopedic surgical procedures. Subsequent to June 30, 2015, this operating segment was eliminated due to the spin-off of the SeaSpine business. Refer to Note 14 - Subsequent Events for additional information.

The most notable change from the Company's financial statements for the year ended December 31, 2014 included in the Annual Report on Form 10-K is the integration of the former International reportable segment into the segments noted above as well as the Private Label segment into Orthopedics and Tissue Technologies and Spine.

The Corporate and other category includes (i) various legal, finance, information systems, executive, and human resource functions, (ii) brand management, and (iii) share-based compensation costs. Prior to the realignment, costs related to procurement, manufacturing operations and logistics for the Company's entire organization were not allocated to operating segments. In connection with the realignment, a portion of these costs have now been incorporated into the disclosed operating segments.

The operating results of the various reportable segments as presented are not comparable to one another because (i) certain operating segments are more dependent than others on corporate functions for unallocated general and administrative and/or operational manufacturing functions, and (ii) the Company does not allocate certain manufacturing costs and general and administrative costs to the operating segment results. Net sales and profit by reportable segment for the three and six months ended June 30, 2015 and 2014 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015		2014
	(In thousands)
Segment Net Sales
Specialty Surgical Solutions	$	146,709		$	137,516		$	286,769	$	264,710
Orthopedics and Tissue Technologies	63,834			57,954			125,199		112,544
Spine	33,535			35,881			65,775		69,156
Total revenues	$	244,078		$	231,351		$	477,743	$	446,410
Segment Profit
Specialty Surgical Solutions	$	62,325		$	48,991		$	122,657	$	97,288
Orthopedics and Tissue Technologies	18,428			20,019			38,010		37,020
Spine	1,266			4,101			1,578		6,849
Segment profit	82,019			73,111			162,245		141,157
Amortization	(3,104		)	(2,985)			(6,639)		(6,018)
Corporate and other	(64,961		)	(57,734		)	(124,864)		(114,009		)
Operating income	$	13,954		$	12,392		$	30,742	$	21,130

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company attributes revenues to geographic areas based on the location of the customer. There are certain revenues managed by the various U.S. segments that are generated from non-U.S. customers and therefore are included in Europe and the Rest of World revenues below. Total revenue by major geographic area consisted of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands)
United States	$	190,093	$	178,806	$	371,030	$	342,187
Europe	27,497		25,851		54,258		51,176
Rest of World	26,488		26,694		52,455		53,047
Total Revenues	$	244,078	$	231,351	$	477,743	$	446,410

13. COMMITMENTS AND CONTINGENCIES

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

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

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

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INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. SUBSEQUENT EVENTS

SeaSpine Separation

On November 1, 2014, the Company announced plans to spin-off the spine business into a stand-alone public company ("SeaSpine"). On July 1, 2015, the Company completed the distribution of 100% of the outstanding common shares of SeaSpine to Integra stockholders who received one share of SeaSpine common stock for every three shares of Integra held as of the close of business on the record date, June 19, 2015. The historical results of operations and the financial position of SeaSpine are included in the consolidated financial statements of Integra and will be reported as discontinued operations beginning in the third quarter of 2015.

As a result of the spin-off and pursuant to the indenture for the Company's 2016 Notes, the conversion price and rate is required to be adjusted. The conversion price on the 2016 Notes has been adjusted to $52.83 per share and the new conversion rate is 18.9287 shares per $1,000 principal amount of 2016 Notes. Similarly, the strike price of the call transaction has been adjusted to $52.83 per share and the warrant transaction has been adjusted to $64.43 per share.

Acquisition of TEI Biosciences, Inc. and TEI Medical, Inc.

On July 17, 2015, the Company completed the execution of the two merger agreements (collectively, the "Agreements") under which the Company acquired TEI Biosciences, Inc., a Delaware corporation ("TEI Bio"), and TEI Medical Inc., a Delaware corporation ("TEI Med", collectively "TEI").

TEI Bio is in the business of developing and commercializing biologic devices for soft tissue repair and regenerative applications, including dura and hernia repair and plastic and reconstructive surgery. TEI Med is a spin-off of TEI Bio and holds a license to TEI Bio’s regenerative technology in the fields of wound healing and orthopedics.

Under the terms of the Agreements, the Company paid $312.0 million ($211.0 million for TEI Bio and $101.0 million for TEI Med) subject in each case to purchase price adjustments for certain working capital changes. In July 2015, the Company drew $310.0 million on its Revolving Credit Facility to facilitate this transaction. The Company has not yet performed the purchase price allocation and will do so in the third quarter of 2015.

TEI manufactures a bovine-derived surgical mesh product for Boston Scientific Corporation ("BSC”) and has been named as a defendant in several hundred lawsuits under a broad range of products liability theories, many of which have not been served on TEI.  Currently, there are approximately forty-five active cases against TEI.  Pursuant to an indemnification agreement with BSC (i) BSC is managing the litigation; (ii) TEI has in place a products liability insurance policy, of which it must exhaust $3.0 million before BSC’s indemnity begins to cover relevant claims (and of which only a small portion has been utilized to date and against which the insurer has reserved the entire $3.0 million).  Because the thrust of products liability litigation focuses on synthetic surgical mesh products, counsel is filing motions to dismiss on behalf of TEI in many cases.  In addition, Integra has certain protections in the merger agreements with TEI which would indemnify it for approximately $30.0 million for the first fifteen months after closing and between $20.0 and $30.0 million for the remainder of the three-year period after closing for losses relating to a variety of matters, including half of certain products liability claims (including those related to the product it manufactures for BSC) not covered by insurance. 

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes thereto appearing elsewhere in this report and our consolidated financial statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K.

We have made statements in this report which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking statements are subject to a number of risks, uncertainties and assumptions about the Company. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014 and under the heading "Risk Factors" in this report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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

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GENERAL

Integra is a world leader in medical technology focused on limiting uncertainty for surgeons so that they can concentrate on providing the best patient care. Integra offers innovative solutions in orthopedic extremity surgery, neurosurgery, spine surgery, and reconstructive and general surgery.

In the first quarter of 2015, we changed how we manage the business. As a result, we report our financial results under three global reportable segments - Specialty Surgical Solutions, Orthopedics and Tissue Technologies, and Spine. Refer to Note 12 - Segment and Geographic Information for more information.

Our Specialty Surgical Solutions segment includes, among other things, dural grafts and dural sealants which are indicated for the repair of the dura mater, ultrasonic surgery systems for tissue ablation, monitoring systems for neuro critical care, cranial stabilization and retraction systems, and a wide range of specialty and general surgical and dental instruments and surgical lighting for sale to hospitals, outpatient surgery centers, and physician, veterinarian and dental practices. Our Orthopedics and Tissue Technologies segment includes specialty metal implants for surgery of the upper and lower extremities, dermal regeneration products and tissue-engineered wound dressings and nerve and tendon repair products. Our Spine segment focuses on orthobiologics and spinal fusion hardware solutions used to meet the varying combinations of products that neurosurgeons and orthopedic spine surgeons need to perform fusion procedures in the lumbar, thoracic and cervical spine.

We manufacture many of our products in plants located in the United States, Puerto Rico, France, Germany, Ireland, and Mexico. We also source most of our handheld surgical instruments and specialty metal and pyrocarbon implants through specialized third-party vendors.

Our products in each reportable segment are sold through a combination of a direct sales organization and distributors.

We also market certain products through strategic partners in the United States.

We aspire to be a multi-billion dollar diversified global medical technology company that helps patients by limiting uncertainty for medical professionals, and is a high quality investment for shareholders. We will achieve these goals by delivering on our Brand Promises to our customers worldwide and by becoming a top player in all markets in which we compete.

Our strategy is built around three pillars - optimize, execute and accelerate growth. These three pillars support our strategic initiatives to optimize our infrastructure, to deliver on our commitments through improved planning and communication, and to grow by introducing new products to the market through internal development, expanding geographically, and strategic acquisitions.

Acquisitions

TEI Biosciences, Inc. and TEI Medical, Inc.

Subsequent to June 30, 2015, on July 17, 2015, the Company completed the execution of the two merger agreements (collectively, the "Agreements") under which the Company acquired TEI Biosciences, Inc., a Delaware corporation ("TEI Bio"), and TEI Medical Inc., a Delaware corporation ("TEI Med").

TEI Bio is in the business of developing and commercializing biologic devices for soft tissue repair and regenerative applications, including dura and hernia repair and plastic and reconstructive surgery. TEI Med is a spin-off of TEI Bio and holds a license to TEI Bio’s regenerative technology in the fields of wound healing and orthopedics.

Under the terms of the Agreements, we paid $312.0 million ($211.0 million for TEI Bio and $101.0 million for TEI Med) subject in each case to purchase price adjustments for certain working capital changes.

Metasurg

In December 2014, we acquired certain assets of Koby Ventures II, L.P. dba Metasurg ("Metasurg") for an aggregate purchase price of $27.6 million. The purchase price consists of an initial cash payment to Metasurg of $26.5 million, a separate purchase price adjustment cash payment of $0.4 million, and contingent consideration with an acquisition date fair value of $0.7 million. The potential maximum undiscounted contingent consideration of $38.5 million is based on reaching certain sales levels for acquired products from April 1, 2015 through June 30, 2016. Metasurg develops intuitive implant systems for the foot and ankle market and sells almost entirely in the U.S. market.

MicroFrance

In October 2014, we acquired all outstanding shares of Medtronic Xomed Instrumentation, SAS ("MicroFrance") from Medtronic, Inc. ("Medtronic") as well as certain assets of Medtronic for $60.1 million in cash (including working capital and purchase price adjustments of $1.5 million, of which $0.8 million was recorded against goodwill). MicroFrance specializes in manual ear, nose, and throat ("ENT") surgical instruments and designs, manufactures, and sells reusable handheld instruments to ENT and laparoscopy surgical specialists around the world.

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Confluent Surgical, Inc.

In January 2014, we acquired all outstanding shares of Confluent Surgical, Inc., ("Confluent Surgical") - including its surgical sealant and adhesion barrier product lines - from Covidien Group S.a.r.l, ("Covidien") for an aggregate purchase price of $255.9 million. The purchase price consists of an initial cash payment to Covidien of $231.0 million upon the closing of the transaction, a separate prepayment of $4.0 million made under a transitional supply agreement with an affiliate of Covidien, and contingent consideration with an acquisition date fair value of $20.9 million. The potential maximum undiscounted contingent consideration of $30.0 million consists of $25.0 million upon obtaining certain U.S. governmental approvals and $5.0 million upon obtaining certain European governmental approvals, both related to the completion of the transition of the Confluent Surgical business to us. Confluent Surgical is a developer and supplier of polymer-based biosurgery technology used in surgical sealants and anti-adhesion products.

The transitional supply agreement secures the supply of the acquired products from an affiliate of Covidien until the earlier of (i) the time that the transition of the Confluent Surgical business as discussed above is complete, or (ii) the fifth anniversary of the effective date of the agreement (the agreement also contains an option to extend for another two years by providing written notice at least 180 days prior to the end of the initial five-year period). This agreement contains financial incentives to the affiliate of Covidien for the timely supply of products each fiscal quarter through the third anniversary of the agreement. The prices paid under the supply agreement are essentially flat through the third anniversary of the agreement, and then increase significantly each of the following three years. We also entered into a transition services agreement with an affiliate of Covidien at the closing for services such as customer service, accounting and information technology management, clinical and regulatory affairs, manufacturing transition services, and other functions.

This acquisition complements our global neurosurgery growth strategy aimed at providing a broader set of solutions for surgical procedures in the head.

Diabetic Foot Ulcer Clinical Trial

During July 2014, we completed our multicenter clinical trial evaluating the safety and effectiveness of the INTEGRA® Dermal Regeneration Template for the Treatment of Diabetic Foot Ulcers (“DFU”). The data collected formed the foundation for the Premarket Approval Supplement application that we filed with the FDA, which we announced in February 2015. In addition, the results from our Integra DFU clinical trial have been accepted by an important peer-reviewed wound journal. An FDA approval, along with published data, will form the key to securing reimbursement. Assuming FDA approval and timely publication of the peer-reviewed journal article, the Company anticipates commercializing the resulting DFU product in the middle of 2016.

Separation of the Spine Business

In November 2014, we announced a plan to spin-off our spine business into a stand-alone public company ("SeaSpine"). On July 1, 2015, we completed the distribution of 100% of the outstanding common shares of SeaSpine to Integra stockholders who received one share of SeaSpine common stock for every three shares of Integra held as of the close of business on the record date, June 19, 2015. We incurred pre-separation expenses of approximately $9.9 million and $14.8 million in the three and six months ended June 30, 2015, respectively. Pre-separation costs included all incremental expenses incurred by Integra in order to effect the separation until the distribution date, July 1, 2015. They also included the cost of all new employees recruited to operate the two separate companies. We also expect to incur, upon separation, transaction expenses, which, among other things, relate to advisory fees as well as tax costs related to the distribution. Total post-separation costs are expected to be approximately $5.2 million which includes a non-cash stock compensation charge. The historical results of operations and the financial position of SeaSpine are included in the consolidated financial statements of Integra and will be reported as discontinued operations beginning in the third quarter of 2015.

Realignment of the Integra Portfolio and Change in Reportable Segments

In the first quarter of 2015, the Company's management began reporting business performance and making decisions primarily on a global basis, including the results of its former International reportable segment in each of its respective three division global structure. Following the above announced separation of the Spine business, we will have the two remaining global segments. Accordingly, to align with the way the business is currently managed, the Company’s reportable operating segments now consist of Specialty Surgical Solutions, Orthopedics and Tissue Technologies, and Spine. International is no longer reported as a separate reportable operating segment. Specialty Surgical Solutions includes the i) Neurosurgery business, the ii) Instruments business and iii) their respective international components, Orthopedics and Tissue Technologies includes the former U.S. Extremities business and its international components, and the Spine reportable segment includes the former U.S. Spine operating segment and its respective international components. Private Label has been incorporated in the reportable segments based on the nature of the product line. Further information regarding the Company’s operating segments may be found in Note 12 - Segment and Geographic Information.

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RESULTS OF OPERATIONS

Executive Summary

Net income for the three months ended June 30, 2015, was $5.0 million, or $0.15 per diluted share as compared to $4.8 million or $0.15 per diluted share for the three months ended June 30, 2014.

Net income for the six months ended June 30, 2015 was $13.4 million or $0.40 per diluted share as compared to $7.0 million or $0.21 per diluted share for the six months ended June 30, 2014.

The increase in net income for the six months ended June 30, 2015 over the same period last year resulted primarily from the inclusion of the MicroFrance and Metasurg operations as well as strong growth in our dural repair and regenerative technology franchises.

Income before taxes includes the following special charges:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands)
Global ERP implementation charges	$	3,610	$	6,916	$	7,430	$	13,016
Structural optimization charges	3,641		2,753		5,418		5,713
Manufacturing facility remediation costs	—		224		—		367
Certain employee severance charges	253		3,929		1,299		4,610
Discontinued product lines charges	—		713		—		713
Acquisition-related charges	3,334		1,253		6,428		5,006
Impairment charges	—		—		409		600
Convertible debt non-cash interest	1,885		1,767		3,686		3,434
Spine spin-off charges	9,931		—		14,778		—
Total	$	22,654	$	17,555	$	39,448	$	33,459

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015			2014
	(In thousands)
Cost of goods sold	$	2,761	$	4,192	$	6,498		$	7,069
Research and development	—		500		—			500
Selling, general and administrative	18,008		11,096		29,233			22,456
Intangible asset amortization	—		—		409			—
Interest expense	1,885		1,767		3,686			3,434
Other income	—		—		(378		)	—
Total	$	22,654	$	17,555	$	39,448		$	33,459

We typically define special charges as items for which the amounts and/or timing of such expenses may vary significantly from period to period, depending upon our acquisition, integration and restructuring activities, and for which the amounts are non-cash in nature, or for which the amounts are not expected to recur at the same magnitude. We believe that given our ongoing strategy of seeking acquisitions, our continuing focus on rationalizing our existing manufacturing and distribution infrastructure and our continuing review of various product lines in relation to our current business strategy, certain of the special charges discussed above could recur with similar materiality in the future. In 2010, we began investing significant resources in the global implementation of a single enterprise resource planning ("ERP") system. We began capitalizing certain costs for the project starting in 2011 and continued to do so during the first half of 2015. We placed the ERP in service across a number of U.S. sites in May of 2014, and at that time, we began depreciating the capitalized costs associated with that part of the implementation. We expect the additional capital and integration expenses associated with our ERP system to decrease as we continue to progress in our ERP implementation over the next several years.

We believe that the separate identification of these special charges provides important supplemental information to investors regarding financial and business trends relating to our financial condition and results of operations. Investors may find this

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information useful in assessing comparability of our operating performance from period to period, the business model objectives that management has established, and other companies in our industry. We provide this information to investors so that they can analyze our operating results in the same way that management does and to use this information in their assessment of our core business and valuation of Integra.

Update on Remediation Activities

The FDA inspected our Andover, UK facility (the "Andover Facility") in June 2012, which resulted in the issuance of FDA Form 483 Observations. We subsequently received a Warning Letter on November 1, 2012. On April 25, 2014, we received a letter from the FDA stating that while it accepted the Corrective Action Plan for the Andover Facility, the warning letter would not be closed out until the FDA conducted an inspection of the Andover facility and concluded that the violations stated in the FDA warning letter had been addressed. On December 31, 2014, we closed the Andover Facility and delisted it as an FDA registered facility. We notified the FDA regarding the closure of the Andover Facility, and most of the products were moved to our facility in Tullamore, Ireland (the "Tullamore Facility"). The FDA inspected the Tullamore Facility in March 2015 and no FDA Form 483 Observations were issued. One June 30, 2015, the FDA issued a letter to the Company informing us that we had addressed the violations in the FDA warning letter dated November 1, 2012 related to the Andover Facility and that such warning letter had been closed out effective June 30, 2015.

We have an outstanding FDA warning letter related to TEI Biosciences Inc., a recent acquisition by Integra on July 17, 2015.  TEI Biosciences Inc. received a Warning Letter from the FDA dated May 29, 2015 for promoting the product SurgiMend for breast surgery applications that was not cleared in the 510(k) process and does not have a PMA Approval for the indication. The FDA requested that TEI Biosciences Inc. immediately cease all activities that resulted in misbranding or adulteration of the product in commercial distribution. The FDA also required TEI Biosciences Inc. to cease all violations regarding promotion of the productfor an indication that it was not cleared or approved. TEI Biosciences Inc. responded with a corrective action plan to the FDA.  We will continue to monitor this activity and address all corrective actions submitted to the FDA.  The FDA may not accept our corrective action plan or it may choose to scrutinize other promotional claims on products and require additional corrective actions. We do not expect to incur material operating expenses to complete the corrective action plan.

The FDA inspected our Añasco, Puerto Rico facility in October and November 2012, and issued a warning letter for that facility on February 13, 2013. On November 26, 2013, the FDA completed its second inspection of the Añasco facility and issued a new Form 483 with six additional observations. On September 30, 2014, the FDA completed its third inspection of the Añasco facility, and concluded that the Company had addressed the issues raised in the Warning Letter and previous inspectional observations, and it issued no other inspectional observations. The Añasco warning letter was closed out effective January 14, 2015.

There were no remediation expenses incurred in the three-and six-months ended June 30, 2015 and an insignificant amount of expenses were incurred in the three-and six-months ended June 30, 2014.

Revenues and Gross Margin on Product Revenues

Our revenues and gross margin on product revenues were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Segment Net Sales	(Dollars in thousands)
Specialty Surgical Solutions	$	146,709		$	137,516		$	286,769		$	264,710
Orthopedics & Tissue Technologies	63,834			57,954			125,199			112,544
Spine	33,535			35,881			65,775			69,156
Total revenue	244,078			231,351			477,743			446,410
Cost of goods sold	86,539			86,976			173,261			169,359
Gross margin on total revenues	$	157,539		$	144,375		$	304,482		$	277,051
Gross margin as a percentage of total revenues	64.5		%	62.4		%	63.7		%	62.1		%

2014 Segment revenues above have been reclassified in order to conform with the current year's presentation.

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Three Months Ended June 30, 2015 as Compared to Three Months Ended June 30, 2014

Revenues and Gross Margin

For the three months ended June 30, 2015 total revenues increased by $12.7 million to $244.1 million from $231.4 million for the same period in 2014.

Specialty Surgical Solutions revenues were $146.7 million, an increase of 7% from the prior-year period. The increase partially resulted from the impact of the MicroFrance product sales arising out of the acquisition, which added $6.3 million in the quarter. Global sales of our Dural repair products increased in line with the overall segment. Revenue in our Precision Tools and Instruments business, which includes the former Instruments product portfolio as well as our cranial stabilization and stereotaxy product lines, also increased, particularly in the U.S. These increased sales were partially offset by a decline in tissue ablation and neuro critical care.

Orthopedics and Tissue Technologies revenues were $63.8 million, an increase of 10% from the prior-year period. The increase partially resulted from the impact of the Metasurg product sales arising out of the acquisition, which added $1.7 million in the quarter. We continue to see strong demand in our regenerative technologies franchise as a result of both additional headcount in our sales force and new products, including the Integra Wound Matrix-Thin, Integra Reinforcement Matrix and Integra Wound Matrix-Meshed. Sales growth in our upper extremity franchise also benefited from increasing demand for new products in shoulder and wrist arthroplasty. These increased sales were partially offset by a decline in our lower extremities franchise.

Spine revenues were $33.5 million, a decrease of 7% from the prior-year period. The decrease was mostly driven by our spine hardware business, which continued to face pricing pressures, delays in product launches, and the slower than anticipated addition of new distributors. Our orthobiologics business was up slightly during the quarter.

Gross margin increased to $157.5 million for the three-month period ended June 30, 2015 from $144.4 million for the same period last year. Gross margin as a percentage of total revenue increased to 64.5% for the second quarter of 2015 from 62.4% for the same period last year. The increase in gross margin percentage resulted primarily from an increase in sales of higher margin products such as DuraSeal, DuraGen, skin and wound products, and improvements in the utilization of our manufacturing facilities.

We expect our consolidated gross margin percentage for the full year 2015 to be between 63.5% and 64.0%. We expect our gross margin will see increases from improved product mix offset by a negative top-line impact on revenues because of the stronger U.S. dollar and corresponding weaknesses in other currencies in which we transact business, particularly the euro, as well as additional costs related to the completion of our regenerative technology manufacturing facility capacity expansion.

Operating Expenses

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

	Three Months Ended June 30,
	2015		2014
Research and development	5.7	%	5.9	%
Selling, general and administrative	51.9	%	49.8	%
Intangible asset amortization	1.3	%	1.3	%
Total operating expenses	58.9	%	57.0	%

Total operating expenses, which consist of research and development expenses, selling, general and administrative expenses, and amortization expense, increased $11.6 million, or 9%, to $143.6 million in the three months ended June 30, 2015, compared to $132.0 million in the same period last year.

Research and development expenses in the second quarter of 2015 remained flat compared to the same period last year. We expect full-year 2015 spending on research and development to be approximately 5.5% of total revenues.

Selling, general and administrative expenses in the second quarter of 2015 increased by $11.3 million to $126.6 million compared to $115.3 million in the same period last year. Selling and marketing expenses increased by $3.1 million, primarily resulting from higher commissions and distributor fees related to the MicroFrance and Metasurg sales, increased headcount and overall sales increases in general. General and administrative costs increased $8.2 million as a result of incremental costs to support the spin-off of our Spine business as well as additional depreciation as we implemented our ERP in certain locations during May of 2014. These increases were partially offset by a decrease in integration costs related to the Covidien Surgical acquisition recorded in the

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first quarter of 2014. We expect full year selling, general and administrative expenses to be approximately 46.5% of revenues, including costs related to the spin-off of our spine business.

Amortization expense as a percentage of revenues in the second quarter of 2015 remained flat compared to the same period last year.

Non-Operating Income and Expenses

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

	Three Months Ended June 30,
	2015			2014
	(In thousands)
Interest income	$	8		$	58
Interest expense	(5,471		)	(5,382		)
Other (expense) income, net	(919		)	118

Interest Income and Interest Expense

Interest expense in the three months ended June 30, 2015 increased by $0.1 million primarily because we increased borrowings on our Senior Credit facility compared to the prior year. Our reported interest expense for the three-month periods ended June 30, 2015 and 2014 includes non-cash interest related to the accounting for convertible securities of $1.9 million and $1.8 million, respectively.

Interest income was negligible for the three months ended June 30, 2015, and 2014.

Other Income

Other income for both the second quarter of 2015 and 2014 was primarily attributable to the foreign exchange impact on intercompany balances.

Income Taxes

	Three Months Ended June 30,
	2015			2014
	(In thousands)
Income before income taxes	$	7,572		$	7,186
Income tax expense	2,574			2,361
Effective tax rate	34.0		%	32.9		%

The Company’s effective income tax rates for the three months ended June 30, 2015 and 2014 were 34.0% and 32.9%, respectively. The primary drivers of the higher tax rate for the three months ended June 30, 2015 were a tax expense of $0.4 million for nondeductible costs relating to the spine spin-off transaction and a $0.4 million relating to foreign tax returns filed during the quarter.

The Company expects its effective income tax rate for the full year to be approximately 32%, resulting largely from nondeductible spine spin-off costs and audit settlements offset by the release of uncertain tax positions, as well as the jurisdictional mix of pretax income in U.S.-based operations relative to foreign operations.

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

While it is often difficult to predict the final outcome or the timing of resolution of any particular matter with the various Federal, state, and foreign tax authorities, we believe that our reserves reflect the most probable outcome of know tax contingencies. Settlement of any particular issue would usually require the use of cash. Favorable resolution would be recognized as a reduction to our annual effective tax rate in the year of resolution. The tax reserves are presented in the balance sheet within other liabilities,

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except for amounts relating to items we expect to pay in the coming year which would be classified as current income taxes payable.

Six Months Ended June 30, 2015 as Compared to Six Months Ended June 30, 2014

Revenues and Gross Margin

For the six months ended June 30, 2015, total revenues increased by $31.3 million to $477.7 million from $446.4 million during the prior-year period.

Specialty Surgical Solutions revenues were $286.8 million, an increase of 8% from the prior-year period. The increase partially resulted from the impact of the MicroFrance product sales arising out of the acquisition, which added $12.1 million for the six months ended June 30, 2015. Our Dural repair franchise performed very well as demand for our products continued to rise. Revenue in our Precision Tools and Instruments business, which includes the former Instruments product portfolio as well as our cranial stabilization and stereotaxy product lines, also increased. Neuro critical care increased slightly during the period. These increased sales were partially offset by a decline in tissue ablation.

Orthopedics and Tissue Technologies revenues were $125.2 million, an increase of 11% from the prior-year period. The increase partially resulted from the impact of the Metasurg product sales arising out of the acquisition, which added $3.3 million for the six months ended June 30, 2015. The increase was driven by strong demand in our regenerative technologies franchise as a result of both additional headcount in our sales force and new products, including the Integra Wound Matrix-Thin, Integra Reinforcement Matrix and Integra Wound Matrix-Meshed. Sales growth in our upper extremity franchise benefited from increasing demand for new products in shoulder and wrist arthroplasty. These increased sales were partially offset by a decline in lower extremities.

Spine revenues were $65.8 million, a decrease of 5% from the prior-year period. The decrease was mostly driven by our spine hardware business which continued to face pricing pressures, delays in product launches, and the slower than anticipated addition of new distributors. Our orthobiologics business increased slightly during the six month period.

Gross margin increased to $304.5 million for the six-month period ended June 30, 2015 from $277.1 million for the same period last year. Gross margin as a percentage of total revenue increased to 63.7% for the first-half of 2015 from 62.1% for the same period last year. The increase in gross margin percentage resulted primarily from an increase in sales of higher margin products such as DuraSeal, DuraGen, skin and wound products, and improvements in our utilization of manufacturing facilities.

Operating Expenses

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

	Six Months Ended June 30,
	2015		2014
Research and development	5.5	%	5.9	%
Selling, general and administrative	50.4	%	50.1	%
Intangible asset amortization	1.4	%	1.3	%
Total operating expenses	57.3	%	57.3	%

Total operating expenses, which consist of research and development expenses, selling, general and administrative expenses, and amortization expense, increased $17.8 million, or 7.0%, to $273.7 million in the first six months of 2015, compared to $255.9 million in the same period last year.

Research and development expenses in the first six months of 2015 remained flat compared to the same period last year.

Selling, general and administrative expenses in the first six months of 2015 increased by $17.1 million to $240.7 million compared to $223.6 million in the same period last year. Selling and marketing expenses increased by $7.2 million primarily resulting from higher commissions and distributor fees related to the MicroFrance and Metasurg sales, increased headcount and overall sales increases in general. General and administrative costs increased $9.9 million primarily because of incremental costs to support the spin-off of our Spine business as well as additional depreciation as we put our ERP system in service in certain locations during May of 2014.

Amortization expense in the first six months of 2015 increased by $0.6 million to $6.6 million, compared to $6.0 million in the same period last year. Amortization expense in the first half of 2015 reflects the Spine goodwill impairment charge of $0.4 million.

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Non-Operating Income and Expenses

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

	Six Months Ended June 30,
	2015			2014
	(In thousands)
Interest income	$	13		$	120
Interest expense	(10,963		)	(10,524		)
Other income, net	397			435

Interest Income and Interest Expense

Interest expense in the six-month period ended June 30, 2015 increased by $0.4 million primarily because we increased borrowings on our Senior Credit facility compared to the prior year. Our reported interest expense for the six-month periods ended June 30, 2015 and 2014 includes non-cash interest related to the accounting for convertible securities of $3.7 million and $3.4 million, respectively.

Interest income was negligible for the six months ended June 30, 2015 and 2014.

Other Income (Expense)

Other income for both the six months ended June 30, 2015 and June 30, 2014 was primarily attributable to the foreign exchange impact on intercompany balances.

Income Taxes

	Six Months Ended June 30,
	2015			2014
	(In thousands)
Income before income taxes	$	20,189		$	11,161
Income tax expense	6,807			4,130
Effective tax rate	33.7		%	37.0		%

The Company's effective income tax rates for the six months ended June 30, 2015 and 2014 were 33.7% and 37.0%, respectively. The primary drivers of the overall tax rate for the six months ended June 30, 2014 were a tax expense of $1.1 million relating to foreign and state income tax audit settlements and a tax expense of $0.3 million relating to a change in state filing positions.

The Company expects its effective income tax rate for the full year to be approximately 32%, resulting largely from nondeductible spine spin-off costs and audit settlements offset by the release of uncertain tax positions, as well as the jurisdictional mix of pretax income in U.S.-based operations relative to foreign operations.

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

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

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GEOGRAPHIC PRODUCT REVENUES AND OPERATIONS

We attribute revenues to geographic areas based on the location of the customer. Total revenue by major geographic area consisted of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands)
United States	$	190,093	$	178,806	$	371,030	$	342,187
Europe	27,497		25,851		54,258		51,176
Rest of World	26,488		26,694		52,455		53,047
Total Revenues	$	244,078	$	231,351	$	477,743	$	446,410

Domestic revenues increased to $190.1 million, or 78% of total revenues, for the three months ended June 30, 2015 from $178.8 million, or 77% of total revenues, for the three months ended June 30, 2014. International revenues increased to $54.0 million from $52.5 million in the prior-year period, an increase of 3%. Changes in foreign exchange rates decreased our sales by $6.7 million compared to the three months ended June 30, 2014.

Domestic revenues increased to $371.0 million, or 78% of total revenues, for the six months ended June 30, 2015 from $342.2 million, or 77% of total revenues, for the six months ended June 30, 2014. International revenues increased to $106.7 million from $104.2 million in the prior-year period, an increase of 2%. Changes in foreign exchange rates decreased our sales by $12.5 million in the six- month period compared to the same period last year.

We generate significant revenues outside the United States, a portion of which are U.S. dollar-denominated transactions conducted with customers who generate revenue in currencies other than the U.S. dollar. As a result, currency fluctuations between the U.S. dollar and the currencies in which those customers do business could have an impact on the demand for our products in foreign countries.

Local economic conditions, regulatory compliance or political considerations, the effectiveness of our sales representatives and distributors, local competition and changes in local medical practice all may combine to affect our sales into markets outside the United States.

LIQUIDITY AND CAPITAL RESOURCES

Cash and Marketable Securities

We had cash and cash equivalents totaling approximately $131.3 million and $72.0 million at June 30, 2015 and December 31, 2014, respectively, which are valued based on Level 1 measurements in the fair value hierarchy. At June 30, 2015, our non-U.S. subsidiaries held approximately $70.0 million of cash and cash equivalents that are available for use by our operations outside of the United States. If cash and cash equivalents held by our non-U.S. subsidiaries were repatriated to the United States, or used for United States operations, certain amounts could be subject to tax in the United States for the incremental amount in excess of the foreign tax paid.

Cash Flows

	Six Months Ended June 30,
	2015			2014
	(In thousands)
Net cash provided by operating activities	$	49,742		$	27,631
Net cash used in investing activities	(18,744		)	(255,691		)
Net cash provided by financing activities	30,450			244,236
Effect of exchange rate fluctuations on cash	(2,146		)	370
Net increase in cash and cash equivalents	$	59,302		$	16,546

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In 2015, we anticipate that our principal uses of cash will include between $40.0 million and $45.0 million on capital expenditures primarily for the completion of our regenerative technology manufacturing capacity expansion, support and maintenance in our existing plants, our enterprise resource planning system implementation, and additions to our instrument kits used in sales of orthopedic products. In addition, we provided $47.0 million of cash to the spine business in conjunction with the spin-off and we expect total costs to be approximately $20.0 million for professional fees and other expenses to separate the business and build the corporate infrastructure.

Cash Flows Provided by Operating Activities

We generated operating cash flows of $49.7 million and $27.6 million for the six months ended June 30, 2015 and 2014, respectively.

Operating cash flows for the six months ended June 30, 2015 benefited from an increase in net income of $6.4 million compared to the same period in 2014. Changes in working capital decreased cash flows for the six months ended June 30, 2015 by approximately $2.9 million. Among the changes in working capital, accounts receivable used $4.5 million of cash, inventory used $9.9 million of cash, prepaid expenses and other current assets used $7.3 million of cash, and accounts payable, accrued expenses and other current liabilities provided $19.6 million of cash.

Operating cash flow for the six months ended June 30, 2014 benefited from an increase in net income of $11.5 million compared to the same period in 2013. Changes in working capital decreased cash flows by approximately $15.1 million. Among the changes in working capital, accounts receivable provided $0.1 million of cash, inventory used $17.4 million of cash, prepaid expenses and other current assets used $2.8 million of cash, and accounts payable, accrued expenses and other current liabilities used $4.8 million of cash.

Cash Flows Used in Investing Activities

During the six months ended June 30, 2015, we received cash of $1.4 million related to the sale of our Andover facility and $1.8 million related to a working capital adjustment from the MicroFrance acquisition. We also paid $22.0 million for capital expenditures, most of which was directed to the expansion of our regenerative medicine production capacity and global enterprise system implementation.

During the six months ended June 30, 2014, we paid $235.0 million for the acquisition of Confluent Surgical, and $20.7 million for capital expenditures, most of which was directed to the expansion of our regenerative medicine production capacity and global enterprise system implementation.

Cash Flows Provided by Financing Activities

Our principal use of cash for financing activities in the six months ended June 30, 2015 was a repayment of $15.0 million on the revolving portion under our Senior Credit Facility. Additionally, we received proceeds from stock option exercises of $7.3 million and borrowed $35.0 million under our Senior Credit Facility to fund SeaSpine in conjunction with the spin-off.

Our principal sources of cash for financing activities in the six months ended June 30, 2014 were $235.0 million of borrowings under our senior credit facility to fund the Confluent Surgical acquisition and stock option exercises of $8.3 million.

Working Capital

At June 30, 2015 and December 31, 2014, working capital was $452.5 million and $403.3 million, respectively.

Amended and Restated Senior Credit Agreement, Convertible Debt and Related Hedging Activities

See Note 5 - Debt to the current period’s condensed consolidated financial statements for a discussion of our (i) amended and restated Senior Credit Agreement, and (ii) convertible debt and related hedging activities.

The Company is currently in discussions with its lenders to increase the size of the term loan under the Senior Credit Facility by an aggregate principal amount of $200.0 million. The intended use of proceeds of the increase in the term loan is repayment of outstanding amounts under the revolving credit facility. It is possible that the amount of the increase will change, and there can be no assurance that the Company and the lenders will reach final agreement on any such increase.

Share Repurchase Plan

On October 28, 2014, our Board of Directors terminated the previous share repurchase plan dated October 23, 2012, and authorized a new repurchase of up to $75.0 million of outstanding common stock through December 2016. Shares may be repurchased either in the open market or in privately negotiated transactions. As of June 30, 2015, there remained $75.0 million available for repurchases under this authorization.

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Dividend Policy

We have not paid any cash dividends on our common stock since our formation. Our Senior Credit Facility limits the amount of dividends that we may pay. Any future determinations to pay cash dividends on our common stock will be at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, cash flows and other factors deemed relevant by the Board of Directors.

Capital Resources

We believe that our cash and available borrowings under the Senior Credit Facility are sufficient to finance our operations and capital expenditures. The Company considers all such outstanding amounts to be long-term in nature based on its current intent and ability to repay the borrowings outside of the next twelve month period.

Contractual Obligations and Commitments

As of June 30, 2015, we were obligated to pay the following amounts under various agreements:

			Payments Due by Calendar Year
	Total		Remaining 2015		2016-2017		2018-2019		Thereafter
	(In millions)
Convertible Securities (1)	$	230.0	$	—	$	230.0	$	—	$	—
Revolving Credit Facility (2)	286.9		—		—		286.9		—
Term Loan	150.0		3.8		22.4		123.8		—
Interest (3)	16.0		4.5		8.5		3.0		—
Employment Agreements (4)	3.4		0.7		2.7		—		—
Operating Leases	79.2		6.2		20.2		12.0		40.8
Purchase Obligations	9.5		4.6		2.3		2.6		—
Other	9.0		2.2		3.6		2.6		0.6
Total	$	784.0	$	22.0	$	289.7	$	430.9	$	41.4

(1	)	The estimated debt service obligation of the senior convertible securities includes interest expense representing the amortization of the discount on the liability component of the senior convertible notes in accordance with the authoritative guidance. See Note 5 - Debt of our condensed consolidated financial statements for additional information.
(2	)	The Company may borrow and make payments against the revolver portion of its Senior Credit Facility from time to time and considers all of the outstanding amounts to be long term based on its current intent and ability to repay the borrowing outside of the next twelve-month period.
(3	)	Interest is calculated on the term loan portion of the Senior Credit Facility and convertible securities based on current interest rates paid by the Company. As the revolving credit facility can be repaid at any time, no interest has been included in the calculation.
(4	)	Amounts shown under Employment Agreements do not include compensation resulting from a change in control.

The Company has excluded contingent consideration obligations related to prior acquisitions from the contractual obligations table above; these liabilities had a fair value of $22.2 million at June 30, 2015. These liabilities have been excluded because the amounts to be paid and the potential payment dates are not fixed.

The Company has also excluded the liability for uncertain tax benefits from the contractual obligations table above, including interest and penalties, totaling $1.2 million at June 30, 2015. This liability for uncertain tax benefits has been excluded because we cannot make a reliable estimate of the period in which the uncertain tax benefits may be realized.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements during the six months ended June 30, 2015 that have or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our interests.

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OTHER MATTERS

Critical Accounting Estimates

The critical accounting estimates included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, have not materially changed, except as noted below.

Goodwill

See Note 4 - Goodwill and Other Intangible Assets to the current period’s condensed consolidated financial statements for a discussion of the reallocation of goodwill in connection with the Company's change in operating segments.

Recently Issued Accounting Standards

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including changes in foreign currency exchange rates and interest rates that could adversely affect our results of operations and financial condition. To manage the volatility relating to these typical business exposures, we may enter into various derivative transactions when appropriate. We do not hold or issue derivative instruments for trading or other speculative purposes.

Foreign Currency Exchange and Other Rate Risks

We operate on a global basis and are exposed to the risk that changes in foreign currency exchange rates could adversely affect our financial condition, results of operations and cash flows. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in euros, Swiss francs, British pounds, Canadian dollars, Australian dollars and Japanese yen. We manage the foreign currency exposure centrally, on a combined basis, which allows us to net exposures and to take advantage of any natural offsets. To mitigate the impact of currency fluctuations on transactions denominated in nonfunctional currencies, we periodically enter into derivative financial instruments in the form of foreign currency exchange forward contracts with major financial institutions. We temporarily record realized and unrealized gains and losses on these contracts that qualify as cash flow hedges in other comprehensive income, and then recognize them in other income or expense when the hedged item affects net earnings.

From time to time, we enter into foreign currency forward exchange contracts with terms of up to 12 months to manage currency exposures for transactions denominated in a currency other than an entity’s functional currency. As a result, the impact of foreign currency gains/losses recognized in earnings are partially offset by gains/losses on the related foreign currency forward exchange contracts in the same reporting period.

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

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

Interest Rate Risk

Cash and Cash Equivalents - We are exposed to the risk of interest rate fluctuations on the interest income earned on our cash and cash equivalents. A hypothetical 100 basis point movement in interest rates applicable to our cash and cash equivalents outstanding at June 30, 2015 would increase interest income by approximately $1.3 million on an annual basis. No significant decrease in interest income would be expected as our cash balances are earning interest at rates of approximately 2 basis points. We are subject to foreign currency exchange risk with respect to cash balances maintained in foreign currencies.

Senior Credit Facility - Our interest rate risk relates primarily to U.S. dollar LIBOR-indexed borrowings. We have used an interest rate derivative instrument to manage our earnings and cash flow exposure to changes in interest rates by utilizing a forward-starting interest rate swap that began to offset a portion of our interest payments in the first quarter of 2011. This interest rate derivative

34

instrument fixed the interest rate on a portion of our expected LIBOR-indexed floating-rate borrowings beginning on December 31, 2010. The interest rate swap had a notional amount of $90.0 million outstanding as of June 30, 2015. We recognized $0.4 million of additional interest expense related to this derivative during the three months ended June 30, 2015. The fair value of our interest rate derivative instrument was a net liability of $0.2 million at June 30, 2015.

Based on our outstanding borrowings at June 30, 2015, a one-percentage point change in interest rates would have affected interest expense on the unhedged portion of the debt by $3.5 million on an annualized basis.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

As required by Exchange Act Rule 13a-15(b), we have carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2015. Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2015 to provide such reasonable assurance.

As previously disclosed, the Company is in the process of a multi-year implementation of a global enterprise resource planning (“ERP”) system. In addition, in response to business integration activities, the Company has and will continue to further align and streamline the design and operation of the financial control environment to be responsive to the changing business model.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Various lawsuits, claims and proceedings are pending or have been settled by us; the most significant of which are described below.

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

TEI, a recent acquisition by Integra on July 17, 2015, manufactures a bovine-derived surgical mesh product for Boston Scientific Corporation ("BSC”) and has been named as a defendant in several hundred lawsuits under a broad range of products liability theories, many of which have not been served on TEI.  Currently, there are approximately forty-five active cases against TEI.  Pursuant to an indemnification agreement with BSC (i) BSC is managing the litigation; (ii) TEI has in place a products liability insurance policy, of which it must exhaust $3.0 million before BSC’s indemnity begins to cover relevant claims (and of which only a small portion has been utilized to date and against which the insurer has reserved the entire $3.0 million).  Because the thrust of products liability litigation focuses on synthetic surgical mesh products, counsel is filing motions to dismiss on behalf of TEI in many cases.  In addition, Integra has certain protections in the merger agreements with TEI which would indemnify it for approximately $30.0 million for the first fifteen months after closing and between $20.0 and $30.0 million for the remainder of the three-year period after closing for losses relating to a variety of matters, including half of certain products liability claims (including those related to the product it manufactures for BSC) not covered by insurance. 

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

ITEM 1A. RISK FACTORS

The Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 have not materially changed except as noted below.

We may not achieve some or all of the anticipated benefits of the separation of our Spine business.

On July 1, 2015, we completed the separation (the “Separation”) of our orthobiologics and spinal fusion hardware business, now known as SeaSpine Holdings Corporation (“SeaSpine”), from the Company. Even though the Separation has been completed, we may not realize any or all of the anticipated strategic, financial, operational, marketing or other benefits from the Separation, including our ability to benefit from the increased focus through our new two divisional structure or to achieve anticipated growth rates, margins and scale and to execute on our strategy generally. Following the Separation, we are a smaller, less diversified company. This narrower business focus may leave us more vulnerable to changing market conditions, which could materially and adversely affect our business, financial condition and results of operations. The diminished diversification of revenue, costs, and cash flows could also cause our results of operations, cash flows, working capital and financing requirements to be subject to increased volatility. In addition, we may be unable to achieve some or all of the strategic and financial benefits that we expected would result from the Separation, or such benefits may be delayed, which could materially and adversely affect our business, financial condition and results of operations. Further, there can be no assurance that the combined value of the common stock of the two publicly-traded companies will be equal to or greater than what the value of our common stock would have been had the Separation not occurred.

Following the Separation, SeaSpine will continue to be dependent on us for certain support services and we may have indemnification obligations to each other with respect to such arrangements.

We entered into various agreements with SeaSpine in connection with the Separation, including a transition services agreement, a separation and distribution agreement, a tax matters agreement, an employee matters agreement and several supply agreements. These agreements will govern our relationship with SeaSpine following the Separation. If we are required to indemnify SeaSpine for certain liabilities and related losses arising in connection with any of these agreements or if SeaSpine is required to indemnify us for certain liabilities and related losses arising in connection with any of these agreements and does not fulfill its obligations to us, we may be subject to substantial liabilities, which could have a material adverse effect on our financial position.

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If there is a determination that the spin-off is taxable for U.S. federal income tax purposes, then we and our stockholders that are subject to U.S. federal income tax could incur significant U.S. federal income tax liabilities and, in certain circumstances, we could be required to indemnify SeaSpine for material taxes pursuant to indemnification obligations under the tax matters agreement.

We received an opinion of Latham & Watkins LLP, tax counsel to us (the “Tax Opinion”), substantially to the effect that (i) the contribution of the stock of SeaSpine Orthopedics Corporation to SeaSpine, together with the internal distribution of the stock of SeaSpine to Integra (collectively, the “internal distribution”), will constitute a reorganization under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) the contribution of cash from us to SeaSpine (the “cash contribution”), together with the distribution of the stock of SeaSpine to our shareholders (the “distribution”), will constitute a reorganization under Sections 355 and 368(a)(1)(D) of the Code. Based on this tax treatment, the distribution will be tax-free to Integra and its stockholders for U.S. federal income tax purposes (except for any cash received in lieu of fractional shares). The Tax Opinion relied on certain facts, assumptions, representations and undertakings from us and SeaSpine regarding the past and future conduct of the companies’ respective businesses and other matters. The Tax Opinion is not binding on the U.S. Internal Revenue Service (the “IRS”) or the courts. Notwithstanding the opinion, the IRS could determine on audit that the internal distribution, the cash contribution and the distribution should be treated as taxable transactions if it determines that any of the facts, assumptions, representations or undertakings we or SeaSpine have made is not correct or has been violated, or that the internal distribution, the cash contribution and the distribution should be taxable for other reasons, including as a result of a significant change in stock or asset ownership after the distribution. If the distribution ultimately is determined to be taxable, the distribution could be treated as a taxable dividend or capital gain to you for U.S. federal income tax purposes, and you could incur significant U.S. federal income tax liabilities. In addition, we would recognize gain in an amount equal to the excess of the fair market value of shares of SeaSpine common stock distributed to our stockholders on the distribution date over our tax basis in such shares of SeaSpine common stock. Moreover, we could incur significant U.S. federal income tax liabilities if it is ultimately determined that the internal distribution does not qualify as a transaction that is tax-free for U.S. federal income tax purposes.

We might not be able to engage in desirable strategic transactions and equity issuances following the spin-off because of certain restrictions relating to requirements for tax-free distributions.

Our ability to engage in significant equity transactions could be limited or restricted after the spin-off in order to preserve, for U.S. federal income tax purposes, the tax-free nature of the internal distribution and the distribution. Even if the internal distribution and the distribution otherwise qualify for tax-free treatment under Section 355 of the Code, they may result in corporate-level taxable gain to us under Section 355(e) of the Code if there is a 50% or greater change in ownership, by vote or value, of shares of our stock or SeaSpine’s stock occurring as part of a plan or series of related transactions that includes the internal distribution or the distribution. Any acquisitions or issuances of our stock or SeaSpine’s stock within two years after the distribution are generally presumed to be part of such a plan, although we or SeaSpine may be able to rebut that presumption.

We will be subject to continuing contingent liabilities of SeaSpine following the spin-off.

After the Separation, there will be several significant areas where the liabilities of SeaSpine may become our obligations. For example, under the Code and the related rules and regulations, each corporation that was a member of our consolidated U.S. federal income tax reporting group during any taxable period or portion of any taxable period ending on or before the effective time of the spin-off is jointly and severally liable for the U.S. federal income tax liability of the entire consolidated tax reporting group for that taxable period. If SeaSpine is unable to pay any prior period taxes for which it is responsible, we could be required to pay the entire amount of such taxes.

We are subject to stringent domestic and foreign medical device regulation and any adverse regulatory action may materially adversely affect our financial condition and business operations.

Our products, development activities and manufacturing processes are subject to extensive and rigorous regulation by numerous government agencies, including the FDA and comparable foreign agencies. To varying degrees, each of these agencies monitors and enforces our compliance with laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of our medical devices. The process of obtaining marketing approval or clearance from the FDA and comparable foreign regulatory agencies for new products, or for enhancements or modifications to existing products, could

• take a significant amount of time;

• require the expenditure of substantial financial and other resources;

• involve rigorous and expensive pre-clinical and clinical testing, as well as increased post-market surveillance;

• involve modifications, repairs or replacements of our products; and

37

• result in limitations on the indicated uses of our products.

We cannot be certain that we will receive required approval or clearance from the FDA and foreign regulatory agencies for new products or modifications to existing products on a timely basis. The failure to receive approval or clearance for significant new products or modifications to existing products on a timely basis could have a material adverse effect on our financial condition and results of operations.

Both before and after a product is commercially released, we have ongoing responsibilities under FDA regulations. For example, we are required to comply with the FDA's Quality System Regulation, which mandates that manufacturers of medical devices adhere to certain quality assurance requirements pertaining to, among other things, validation of manufacturing processes, controls for purchasing product components, and documentation practices. As another example, the Federal Medical Device Reporting regulation requires us to provide information to the FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury or, that a malfunction occurred which would be likely to cause or contribute to a death or serious injury upon recurrence. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA, which may result in observations on Form 483, and in some cases warning letters, that require corrective action. If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the FDA could ban such medical devices, detain or seize such medical devices, order a recall, repair, replacement, or refund of such devices, or require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health.

The FDA has been increasing its scrutiny of the medical device industry and the government is expected to continue to scrutinize the industry closely with inspections, and possibly enforcement actions, by the FDA or other agencies. Additionally, the FDA may restrict manufacturing and impose other operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices, and assess civil or criminal penalties against our officers, employees, or us. The FDA may also recommend prosecution to the Department of Justice. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively manufacturing, marketing and selling our products. In addition, negative publicity and product liability claims resulting from any adverse regulatory action could have a material adverse effect on our financial condition and results of operations.

We have an outstanding FDA warning letter related to TEI Biosciences Inc. ("TEI"), a recent acquisition by Integra on July 17, 2015. TEI received a Warning Letter from the FDA dated May 29, 2015 for promoting the product SurgiMend for breast surgery applications that were not cleared in the 510(k) process and do not have a PMA Approval for the indication. The FDA requested that TEI immediately cease all activities that resulted in misbranding or adulteration of the product in commercial distribution. The FDA also required TEI to cease all violations regarding promotion of the product for an indication that was not cleared or approved. TEI responded with a corrective action plan to the FDA. We will continue to monitor this activity and address all corrective actions submitted to the FDA. The FDA may not accept our corrective action plan or it may choose to scrutinize other promotional claims regarding TEI's or our products and require additional corrective actions.

While we have taken measures to enhance our Quality System, we cannot assure you that future inspections by the FDA and the standards they apply will not result in warning letters for any facility in the future.

The FDA Safety and Innovation Act ("FDASIA"), which includes the Medical Device User Fee Amendments of 2012 ("MDUFA III"), as well as other medical device provisions, went into effect October 1, 2012. This includes performance goals and user fees paid to the FDA by medical device companies when they register and list with the FDA and when they submit an application to market a device in the U.S. This will affect the fees paid to the FDA over the five-year period that FDASIA is in effect. As part of FDASIA, there are additional requirements regarding the FDA Establishment Registration and Listing of Medical Devices. All U.S. and foreign manufacturers must register and list medical devices for sale in the U.S. All of our facilities comply with these requirements. That said, we also source products from foreign contract manufacturers. From this business practice, it is possible that some of our foreign contract manufacturers will not comply with these requirements and choose not to register with the FDA. In such an event, we will need to determine if there are alternative foreign contract manufacturers who comply with the FDA Establishment Registration requirements. If such a foreign contract manufacturer is a sole supplier of one of our products, there is a risk that we may not be able to source another supplier.

The FDA issued a final rule on September 24, 2013 to establish a system to adequately identify devices through distribution and use. This rule requires the label of medical devices to include a unique device identifier (“UDI”), except where the rule provides for an exception or alternative placement. The labeler must submit product information concerning devices to FDA's Global Unique Device Identification Database ("GUDID"), unless subject to an exception or alternative. The system established by this rule requires the label and device package of each medical device to include a UDI and requires that each UDI be provided in a plain-text version and in a form that uses automatic identification and data capture technology. If the device is intended to be used more than once and intended to be reprocessed before each use, then there is a requirement for the UDI to be directly marked on the

38

device itself. This regulation will require significant resources and expense to comply with the regulation. We have complied with the initial requirements of this regulation for our Class III products by meeting the September 2014 deadline for labeling and entering the data in FDA's GUDID Database.

Finally, the FDA issued regulations regarding “Current Good Manufacturing Practice Requirements for Combination Products” on January 22, 2013. These regulations apply to some of our product lines that have been designated by the FDA as Combination Products. There have been and will be additional costs associated with compliance with the FDA Good Manufacturing Practice Requirements regulations for Combination Products.

We manufacture medical devices that are subject to various electrical safety standards. Many countries have adopted the recommendations of the International Electrotechnical Commission (“IEC”) for the safety and effectiveness of medical electrical equipment. The IEC is a non-profit, non-governmental international standards organization that prepares and publishes International Standards for all electrical, electronic and related technologies. Their updated standards were implemented in some markets starting in July 2012 and have continued to be adopted over the following years worldwide. If we cannot comply with these standards, we may not be able to sell some of our products in the affected markets. Most of our affected products have already been modified to meet these standards and are substantially in compliance with these standards. Except in limited circumstances, we do not anticipate any delays in selling our products in the markets that have adopted the IEC updated standards.

In addition, the FDCA permits device manufacturers to promote products solely for the uses and indications set forth in the approved product labeling. A number of enforcement actions have been taken against manufacturers that promote products for “off-label” uses, including actions alleging that federal health care program reimbursement of products promoted for "off-label" uses are false and fraudulent claims to the government. The failure to comply with “off-label” promotion restrictions can result in significant financial penalties and a required corporate integrity agreement with the federal government imposing significant administrative obligations and costs, and potential evaluation from federal health care programs.

Foreign governmental regulations have become increasingly stringent and more common, and we may become subject to even more rigorous regulation by foreign governmental authorities in the future. Penalties for a company's noncompliance with foreign governmental regulation could be severe, including revocation or suspension of a company's business license and criminal sanctions. Any domestic or foreign governmental medical device law or regulation imposed in the future may have a material adverse effect on our financial condition and business operations.

Certain of our products contain materials derived from animal sources and may become subject to additional regulation.

Certain of our products, including our dermal regeneration products, duraplasty products, biomaterial products for the spine, nerve and tendon repair products, wound care products and certain other products, contain material derived from bovine tissue. In 2014 approximately 23% of our revenues were attributable to products containing material derived from bovine tissue. Products that contain materials derived from animal sources, including food, pharmaceuticals and medical devices, are subject to scrutiny in the media and by regulatory authorities. Regulatory authorities are concerned about the potential for the transmission of disease from animals to humans via those materials. This public scrutiny has been particularly acute in Japan and Western Europe with respect to products derived from animal sources, because of concern that materials infected with the agent that causes bovine spongiform encephalopathy, otherwise known as BSE or mad cow disease, may, if ingested or implanted, cause a variant of the human Creutzfeldt-Jakob Disease, an ultimately fatal disease with no known cure. In 2013, the World Organization for Animal Health ("OIE") recommended that the United States risk classification for BSE be upgraded from controlled risk to negligible risk.

We take care to provide that our products are safe and free of agents that can cause disease. In particular, we have qualified a source of collagen from a country outside the United States that is considered BSE-free. The World Health Organization classifies different types of cattle tissue for relative risk of BSE transmission. Deep flexor tendon and bovine fetal skin, which are used in our products, are in the lowest-risk categories for BSE transmission (the same category as milk, for example), and are therefore considered to have a negligible risk of containing the agent that causes BSE (an improperly folded protein known as a prion). Nevertheless, products that contain materials derived from animals, including our products, could become subject to additional regulation, or even be banned in certain countries, because of concern over the potential for the transmission of prions. Significant new regulation, or a ban of our products, could have a material adverse effect on our current business or our ability to expand our business.

Certain countries, such as Japan, China, Taiwan and Argentina, have issued regulations that require our collagen products be sourced from countries where no cases of BSE have occurred, and the EU has requested that our dural replacement products and other products that are used in neurological tissue be sourced from a country where no cases of BSE have occurred. Currently, we source bovine fetal hides from the United States and purchase tendon from the United States and New Zealand. New Zealand has

39

never had a case of BSE. We received approval in the United States, the EU, Japan, Taiwan, China, Argentina as well as other countries for the use of New Zealand-sourced tendon in the manufacturing of our products. If we cannot continue to use or qualify a source of tendon from New Zealand or another country that has never had a case of BSE, we will not be permitted to sell our collagen products in certain countries.

Certain of our products are derived from human tissue and are subject to additional regulations and requirements.

We distribute medical devices derived from human tissue. The FDA has specific regulations governing human cells, tissues and cellular and tissue-based products, or HCT/Ps. An HCT/P is a product containing or consisting of human cells or tissue intended for transplantation into a human patient. Examples include bone, ligament, skin and cornea.

Some HCT/Ps also meet the definition of a biological product, medical device or drug regulated under the FD&C Act. Section 361 of the PHSA authorizes the FDA to issue regulations to prevent the introduction, transmission or spread of communicable disease. HCT/Ps regulated as “361” HCT/Ps are subject to requirements relating to registering facilities and listing products with FDA, screening and testing for tissue donor eligibility, Good Tissue Practice, or GTP, when processing, storing, labeling, and distribution HCT/Ps, including required labeling information, stringent record keeping; and adverse event reporting. These biologic, device or drug HCT/Ps must comply both with the requirements exclusively applicable to 361 HCT/Ps and, in addition, with requirements applicable to biologics, devices or drugs, including premarket clearance or approval.

It could be difficult to replace some of our suppliers.

Outside vendors, some of whom are sole-source suppliers, provide key components and raw materials used in the manufacture of our products. Although we believe that alternative sources for many of these components and raw materials are available, any interruption in supply of a limited or sole-source component or raw material could harm our ability to manufacture our products until a new or alternative source of supply is identified and qualified. In addition, an uncorrected defect or supplier’s variation in a component or raw material, either unknown to us or incompatible with our manufacturing process, could harm our ability to manufacture products. We may not be able to find a sufficient alternative supplier in a reasonable time period, or on commercially reasonable terms, if at all, and our ability to produce and supply our products could be impaired. We believe that these factors are most likely to affect the following products that we manufacture:

• our collagen-based products, such as the Integra^® Dermal Regeneration Template and wound matrix products, the DuraGen^® family of products, and our Absorbable Collagen Sponges;

• our products made from silicone, such as our neurosurgical shunts and drainage systems and hemodynamic shunts;

• products which use many different specialty parts from numerous suppliers, such as our intracranial monitors, catheters and headlights; and

• products that use pyrolytic carbon (i.e., PyroCarbon) technology, such as certain of our reconstructive extremity orthopedic implants.

In connection with our Confluent Surgical acquisition in January 2014, we entered into a multi-year supply agreement with an affiliate of the seller to continue to manufacture the acquired surgical sealant and adhesion barrier product lines and recently entered into a contract with a third-party to assume the manufacture of these product lines after the relationship with the affiliate of the seller concludes in several years.

If we were suddenly unable to purchase products from one or more of these companies, we would need a significant period of time to qualify a replacement, and the production of any affected products could be disrupted.

While it is our policy to maintain sufficient inventory of components so that our production will not be significantly disrupted even if a particular component or material is not available for a period of time, we remain at risk that we will not be able to qualify new components or materials quickly enough to prevent a disruption if one or more of our suppliers ceases production of important components or materials.

We may experience difficulties, delays, performance impact or unexpected costs from consolidation of facilities.

We consolidated several facilities in 2014 and 2015, and could further consolidate our operations in the future in order to improve our cost structure, achieve increased operating efficiencies, and improve our competitive standing or results of operations and/or to address unfavorable economic conditions. We may further reduce staff, make changes to certain capital projects, close certain production operations and abandon leases for certain facilities that will not be used in our operations. As part of these initiatives, we may also lose favorable tax incentives or not be able to renew leases on acceptable terms. In conjunction with any actions, we will continue to make significant investments and build the framework for our future growth. However, we may not realize, in

40

full or in part, the anticipated benefits and savings from these efforts because of unforeseen difficulties, delays, implementation issues or unexpected costs. If we are unable to achieve or maintain all of the resulting savings or benefits to our business or other unforeseen events occur, our business and results of operations may be adversely affected.

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

On October 28, 2014, our Board of Directors terminated the previous share repurchase plan dated October 23, 2012, and authorized a new repurchase of up to $75.0 million of outstanding common stock through December 2016. Shares may be repurchased either in the open market or in privately negotiated transactions.

There were no repurchases of our common stock during the three months ended June 30, 2015 under this program.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None

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ITEM 6. EXHIBITS

2.1	Separation and Distribution Agreement between Integra LifeSciences Holdings Corporation and SeaSpine Holdings Corporation, dated as of June 30, 2015 (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on July 7, 2015)
2.2	Agreement and Plan of Merger by and among Integra LifeSciences Corporation, Patriot S1, Inc., TEI Biosciences Inc. and Dr. Yiannis Monovoukas, dated as of June 26, 2015 (Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on July 20, 2015)
2.3	Agreement and Plan of Merger by and among Integra LifeSciences Corporation, Patriot S2, Inc., TEI Medical Inc. and Dr. Yiannis Monovoukas, dated as of June 26, 2015 (Incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed on July 20, 2015)
10.1	The Integra LifeSciences Holdings Corporation Third Amended and Restated 2003 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 29, 2015)
*23.1	Consent of Independent Auditors
*31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32.2	Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*99.1	Letter, dated May 29, 2015, from the United States Food and Drug Administration to TEI Biosciences Inc.
*99.2	Letter, dated June 30, 2015, from the United States Food and Drug Administration to Integra LifeSciences (Ireland) Limited
*99.3	TEI Biosciences Inc. and Subsidiary Audited Consolidated Financial Statements for the years ended December 31, 2014 and 2013
*99.4	TEI Biosciences Inc. and Subsidiary Condensed Consolidated Financial Statements (Unaudited) for the three months ended March 31, 2015 and 2014
*†101.INS	XBRL Instance Document
*†101.SCH	XBRL Taxonomy Extension Schema Document
*†101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
*†101.DEF	XBRL Definition Linkbase Document
*†101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
*†101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

† The financial information of Integra LifeSciences Holdings Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed on July 31, 2015 formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed

42

Consolidated Statements of Operations and Comprehensive Income, (ii) the Condensed Consolidated Balance Sheets, (iii) Parenthetical Data to the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, is furnished electronically herewith.

43

SIGNATURES

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

		INTEGRA LIFESCIENCES HOLDINGS CORPORATION
Date:	July 31, 2015	/s/ Peter J. Arduini
		Peter J. Arduini
		President and Chief Executive Officer
Date:	July 31, 2015	/s/ Glenn G. Coleman
		Glenn G. Coleman
		Corporate Vice President and Chief Financial Officer

44

Table of Contents

Exhibits
2.1	Separation and Distribution Agreement between Integra LifeSciences Holdings Corporation and SeaSpine Holdings Corporation, dated as of June 30, 2015 (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on July 7, 2015)
2.2	Agreement and Plan of Merger by and among Integra LifeSciences Corporation, Patriot S1, Inc., TEI Biosciences Inc. and Dr. Yiannis Monovoukas, dated as of June 26, 2015 (Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on July 20, 2015)
2.3	Agreement and Plan of Merger by and among Integra LifeSciences Corporation, Patriot S2, Inc., TEI Medical Inc. and Dr. Yiannis Monovoukas, dated as of June 26, 2015 (Incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed on July 20, 2015)
10.1	The Integra LifeSciences Holdings Corporation Third Amended and Restated 2003 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 29, 2015)
*23.1	Consent of Independent Auditors
*31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32.2	Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*99.1	Letter, dated May 29, 2015, from the United States Food and Drug Administration to TEI Biosciences Inc.
*99.2	Letter, dated June 30, 2015, from the United States Food and Drug Administration to Integra LifeSciences (Ireland) Limited
*99.3	TEI Biosciences Inc. and Subsidiary Audited Consolidated Financial Statements for the years ended December 31, 2014 and 2013
*99.4	TEI Biosciences Inc. and Subsidiary Condensed Consolidated Financial Statements (Unaudited) for the three months ended March 31, 2015 and 2014
*†101.INS	XBRL Instance Document
*†101.SCH	XBRL Taxonomy Extension Schema Document
*†101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
*†101.DEF	XBRL Definition Linkbase Document
*†101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
*†101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

45

† The financial information of Integra LifeSciences Holdings Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed on July 31, 2015 formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations and Comprehensive Income, (ii) the Condensed Consolidated Balance Sheets, (iii) Parenthetical Data to the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, is furnished electronically herewith.

46

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

We consent to the use of our report dated June 25, 2015, with respect to the consolidated financial statements of TEI Biosciences Inc. and Subsidiary included as Exhibit 99.3 of Integra Lifesciences Holdings Corporation’s Form 10-Q for the period ended June 30, 2015.

/s/ Ernst and Young LLP Boston, MA

July 31, 2015

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Peter J. Arduini, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Integra LifeSciences Holdings Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	July 31, 2015	/s/ Peter J. Arduini
		Peter J. Arduini
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Glenn G. Coleman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Integra LifeSciences Holdings Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	July 31, 2015	/s/ Glenn G. Coleman
		Glenn G. Coleman
		Corporate Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Principal Executive Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Peter J. Arduini, President and Chief Executive Officer of Integra LifeSciences Holdings Corporation (the “Company”), hereby certify that, to my knowledge:

1. The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2015 (the “Report”) fully complies with the requirement of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 31, 2015	/s/ Peter J. Arduini
		Peter J. Arduini
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of Principal Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Glenn G. Coleman, Corporate Vice President and Chief Financial Officer of Integra LifeSciences Holdings Corporation (the “Company”), hereby certify that, to my knowledge:

1. The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2015 (the “Report”) fully complies with the requirement of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 31, 2015	/s/ Glenn G. Coleman
		Glenn G. Coleman
		Corporate Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

10903 New Hampshire Avenue

White Oak Building 66

Silver Spring, MD 20993

WARNING LETTER

May 29, 2015

Robert Beuhler, Ph.D.

Vice President, Manufacturing and Quality

TEI Biosciences, Inc.

7 Elkins Street

Boston, MA 02127

Re: Surgical Mesh

Refer to CMS # 459703

Dear Mr. Beuhler:

The United States Food and Drug Administration (FDA) has learned that your firm is marketing SurgiMend in the United States without marketing clearance or approval, in violation of the Federal Food, Drug, and Cosmetic Act (the Act).

Under section 201 (h) of the Act, 21 U.S.C. § 321 (h), this product is a device because it is intended for use in the diagnosis of disease or other conditions or in the cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the body.

FDA has reviewed your firm's website, http://www.teibio.com/products/by-brand/surgimend-prs/ and determined that the SurgiMend is adulterated under section 501 (f)(1)(B) of the Act, 21 U.S.C. § 351(f)(1)(B), because your firm does not have an approved application for premarket approval (PMA) in effect pursuant to section 515(a) of the Act, 21 U.S.C. § 360e(a), or an approved application for an investigational device exemption (IDE) under section 520(g) of the Act, 21 U.S.C. § 360j(g) for the device as described and marketed. The SurgiMend is also misbranded under section 502(o) the Act, 21 U.S.C.§ 352(o), because your firm introduced or delivered for introduction into interstate commerce for commercial distribution this device with major changes or modifications to the intended use without submitting a new premarket notification to FDA as required by section 510(k) of the Act, 21 U.S.C. § 360(k), and 21 CFR 807.81 (a)(3)(ii).

Specifically, the SurgiMend was cleared under K083898 with the following indications: SurgiMend is intended for implantation to reinforce soft tissue where weakness exists and for the surgical repair of damaged or ruptured soft tissue membranes.

SurgiMend is specifically indicated for:

• Plastic and reconstructive surgery

• Muscle flap reinforcement

• Hernia repair including abdominal, inguinal, femoral, diaphragmatic, scrotal, umbilical, and incisional hernias

However, your firm's promotion of the device provides evidence that the device is intended for breast surgery applications, which would constitute a major change or modification to its intended use, for which your firm lacks clearance or approval. For example:

• "The superior biologic matrix for your breast surgery patients"

This indication falls outside of your firm's intended use because surgical mesh has not been cleared or approved for use in breast reconstruction using a tissue expander or implant. In addition, the specific breast reconstruction surgery indication changes the intended use of a surgical mesh cleared with a general soft tissue reinforcement indication regulated by 21 CFR 878.3300.

Our office requests that TEI Biosciences, Inc. immediately cease activities that result in the misbranding or adulteration of the SurgiMend, such as the commercial distribution of the device for the uses discussed above.

Your firm should take prompt action to correct the violations addressed in this letter. Failure to promptly correct these violations may result in regulatory action being initiated by the FDA without further notice. These actions include, but are not limited to, seizure, injunction, and civil money penalties. Also, federal agencies may be advised of the issuance of Warning Letters about devices so that they may take this information into account when considering the award of contracts.

Please notify this office in writing within fifteen business days from the date you receive this letter of the specific steps your firm has taken to correct the noted violations, as well as an explanation of how your firm plans to prevent these violations, or similar violations, from occurring again. Include documentation of the corrections and/or corrective actions (which must address systemic problems) your firm has taken. If your firm's planned corrections and/or corrective actions will occur over time, please include a timetable for implementation of those activities. If corrections and/or corrective actions cannot be completed within fifteen business days, state the reason for the delay and the time within which these activities will be completed. Your firm's response should be comprehensive and address all violations included in this Warning Letter.

Your firm's response should be sent to:

Food and Drug Administration

Center for Devices and Radiological Health

Office of Compliance

Field Inspections Support Branch

White Oak Building 66, Rm 2609

10903 New Hampshire Ave.

Silver Spring, MD 20993

Refer to the identification number CMS # 459703 when replying. We remind you that only written communication is considered as official. If you have any questions about the contents of this letter, please contact: Ms. LaShanda Long at 301-796-5770 or 301-847-8137 (fax).

Finally, you should know that this letter is not intended to be an all-inclusive list of the violations at your firm. It is your firm's responsibility to ensure compliance with the applicable laws and regulations administered by FDA.

Sincerely yours,

/S/

Jan Welch, MHS, MT (ASCP) SBB

Acting Director

Office of Compliance

Center for Devices and

Radiological Health

EX-99.2

Exhibit 99.2

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

10903 New Hampshire Avenue

Silver Spring, MD 20993

John O'Donovan

Plant Manager

Integra Lifesciences {Ireland} Limited

IDA Business & Technology Park

Tullamore, Co. Offaly

Ireland

Dear Mr. O'Donovan:

The Food and Drug Administration (FDA) has completed an evaluation of your firm's corrective actions in response to our Warning Letter #363119, dated November 1, 2012. Based on our evaluation, it appears that you have addressed the violations contained in this Warning Letter. Future FDA inspections and regulatory activities will further assess the adequacy and sustainability of these corrections.

This letter does not relieve you or your firm from the responsibility of taking all necessary steps to assure sustained compliance with the Federal Food, Drug, and Cosmetic Act and its implementing regulations or with other relevant legal authority. The Agency expects you and your firm to maintain compliance and will continue to monitor your state of compliance. This letter will not preclude any future regulatory action should violations be observed during a subsequent inspection or through other means.

Sincerely,

/s/ Carl Fischer, Ph.D.

Director

Division of International Compliance Operations

Office of Compliance

Center for Devices and Radiological Health

EX-99.3

Exhibit 99.3

C O N S O L I D A T E D F I N A N C I A L S T A T EME N T S

TEI Biosciences Inc. and Subsidiary

Years Ended December 31, 2014 and 2013

With Report of Independent Auditors

TEI Biosciences Inc. and Subsidiary

Consolidated Financial Statements

Years Ended December 31, 2014 and 2013

Contents

Report of Independent Auditors......................................................................................................................................................1

Consolidated Financial Statements

Consolidated Balance Sheets .........................................................................................................................................................2

Consolidated Statements of Income and Comprehensive Income .................................................................................................3

Consolidated Statements of Stockholders’ Equity .........................................................................................................................4

Consolidated Statements of Cash Flows ........................................................................................................................................5

Notes to Consolidated Financial Statements ..................................................................................................................................6

Report of Independent Auditors

The Board of Directors

TEI Biosciences Inc.

We have audited the accompanying consolidated financial statements of TEI Biosciences Inc. and subsidiary (the Company), which comprise the consolidated balance sheets as of December 31, 2014 and 2013, and the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TEI Biosciences Inc. and subsidiary at December 31, 2014 and 2013, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

June 25, 2015

1

TEI Biosciences Inc. and Subsidiary

Consolidated Balance Sheets

	December 31,
	2014			2013
	(All amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	11,402		$	22,669
Trade accounts receivable, net of allowance for doubtful accounts of $111 in 2014 and $262 in 2013	9,678			7,450
Inventories	6,469			5,810
Prepaid income taxes	3,415			2,397
Prepaid expenses and other current assets	262			293
Deferred income taxes	236			602
Total current assets	31,462			39,221
Property and equipment, net	1,385			1,052
Security deposit	44			44
Deferred tax assets, net	1,136			1,261
Total assets	$	34,027		$	41,578
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	396		$	325
Accrued expenses	1,631			1,803
Dividends payable	11			—
Deferred revenue	433			—
Current portion of deferred license fees	—			125
Total current liabilities	2,471			2,253
Deferred tax liability	40			—
Deferred license fees, net of current portion	—			219
Deferred rent	318			293
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock; $0.001 par value; 20,000 authorized shares; 7,455 shares issued and outstanding in 2014 and 7,453 shares issued and outstanding in 2013	7			7
Additional paid-in capital	14,131			13,776
Notes receivable - officer	(2,862		)	(2,862		)
Retained earnings	13,028			22,893
Total stockholders’ equity	24,304			33,814
Non-controlling interest	6,894			4,999
Total Equity	31,198			38,813
Total liabilities and equity	$	34,027		$	41,578
See accompanying notes.
				2

TEI Biosciences Inc. and Subsidiary

Consolidated Statements of Income and Comprehensive Income

	Year Ended December 31,
	2014			2013
	(All amounts in thousands)
Revenues:
Product sales	$	62,868		$	64,839
Royalty income	244			273
License fee	344			125
Total revenues	63,456			65,237
Cost of goods sold	7,386			5,413
Gross profit	56,070			59,824
Operating expenses:
Research and development	2,728			3,015
General and administrative	7,404			6,457
Sales and marketing	26,182			22,885
Total operating expenses	36,314			32,357
Operating income	19,756			27,467
Other income and expense:
Interest income	70			70
interest expense	(6		)	(56		)
	64			14
Income before income tax expense	19,820			27,481
Income tax expense	7,452			10,069
Net income	$	12,368		$	17,412
Net income attributable to non-controlling interest	$	1,900		$	1,655
Net income attributable to controlling interest	$	10,468		$	15,757
Other comprehensive income:
Net income	$	12,368		$	17,412
Comprehensive income	$	12,368		$	17,412
See accompanying notes.
				3

TEI Biosciences Inc. and Subsidiary

Consolidated Statements of Stockholders’ Equity

(All amounts in thousands)

	Common Stock
	Number of Shares		$0.001 Par Value		Additional Paid-In Capital		Notes Receivable - Officer			Accumulated Other Comprehensive Income (Loss)		Retained Earnings			Total Stockholders' Equity			Non-Controlling Interest			Total Equity
Balance at January 1, 2013	7,473		$	7	$	13,633	$	(2,862	)	$	—	$	7,379		$	18,157		$	3,339		$	21,496
Net income	—		—		—		—			—		15,757			15,757			1,655			17,412
Stock-based compensation expense	3		—		143		—			—		—			143			13			156
Repurchase and cancellation of shares	(23	)	—		—		—			—		(243		)	(243		)	(8		)	(251		)
Balance at December 31, 2013	7,453		7		13,776		(2,862		)	—		22,893			33,814			4,999			38,813
Net income	—		—		—		—			—		10,468			10,468			1,900			12,368
Exercise of stock options, including excess tax benefit and deductions of $60	24		—		202		—			—		—			202			—			202
Declaration of dividends	—		—		—		—			—		(19,972		)	(19,972		)	—			(19,972		)
Stock-based compensation expense	3		—		153		—			—		—			153			12			165
Repurchase and cancellation of shares	(25	)	—		—		—			—		(361		)	(361		)	(17		)	(378		)
Balance at December 31, 2014	7,455		$	7	$	14,131	$	(2,862	)	$	—	$	13,028		$	24,304		$	6,894		$	31,198

See accompanying notes.

4

TEI Biosciences Inc. and Subsidiary

Consolidated Statements of Cash Flows

	Year Ended December 31,
	2014			2013
	(All amounts in thousands)
OPERATING ACTIVITIES:
Net income	$	12,368		$	17,412
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	249			210
Stock-based compensation expense for equity awards	165			156
Excess tax benefit and deductions from stock-based compensation	(60		)	—
Provision for doubtful accounts	(72		)	222
Deferred income tax expense	513			365
Deferred rent	25			64
Changes in operating assets and liabilities:
Trade Accounts receivable	(2,156		)	(783		)
Prepaid income taxes	(940		)	517
Inventories	(659		)	(1,815		)
Prepaid expenses and other current assets	31			(170		)
Accounts payable	71			(200		)
Accrued expenses	(172		)	262
Deferred revenue	433			—
Deferred license fees	(344		)	(125		)
Net cash provided by operating activities	9,452			16,115
INVESTING ACTIVITIES:
Purchases of property and equipment	(582		)	(453		)
Net cash used in investing activities	(582		)	(453		)
FINANCING ACTIVITIES:
Payment of dividends	(19,961		)	—
Repurchase and retirement of shares	(378		)	(251		)
Proceeds received from exercise of stock options	142			—
Excess tax benefit and deductions from stock-based compensation	60			—
Repayments made on term note payable	—			(5,500		)
Net cash used in financing activities	(20,137		)	(5,751		)
Net (decrease) increase in cash and cash equivalents	(11,267		)	9,911
Cash and cash equivalents at beginning of year	22,669			12,758
Cash and cash equivalents at end of year	$	11,402		$	22,669
See accompanying notes.
				5

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

1. Operations

TEI Biosciences Inc. (the Company) is a biomedical company developing, manufacturing, marketing, and selling biologic devices for the repair, reinforcement, or reconstruction of human tissues that have failed due to aging, injury or disease. TEI Medical Inc. (TEI Medical) is a biomedical company developing, marketing, and selling biologic devices for the repair, reinforcement, or reconstruction of human tissues that have failed due to aging, injury or disease.

The Company has developed a family of collagen-based soft tissue repair products that have been cleared by the United States Food and Drug Administration for use in a broad spectrum of tissue repair applications. The Company’s principal sales and marketing partners include Medtronic Neurosurgery for Durepair® and Boston Scientific for Xenform®. The Company also sells SurgiMend® in the U.S. through its sales force and in certain foreign countries through a network of independent agents. TEI Medical’s principal sales and marketing partners include Stryker Orthopaedics (Stryker) for TissueMend®. TEI Medical also sells PriMatrix® in the U.S. through its sales force and in certain foreign countries through a network of independent agents.

2. Summary of Significant Accounting Policies

Principles of Consolidation and Variable-Interest Entity (VIE)

The consolidated financial statements include the accounts of TEI Biosciences Inc. and its 100% wholly owned subsidiary, TEI Biosciences (UK) Limited. All significant intercompany accounts and transactions have been eliminated.

The consolidated financial statements also include the accounts of TEI Medical Inc. (TEI Medical), which was established in a spin-off transaction in 2011 (see Note 3), and has been determined to be a VIE to which the Company is the primary beneficiary. TEI Medical is under largely the same common ownership as the Company, and, as further discussed in Note 3, the operations of TEI Medical in 2014 and 2013 were fully dependent on the product distribution, which was amended in January 2014, license agreement, manufacturing and supply, and operational services agreements established with the Company. All significant transactions between the Company and TEI Medical have been eliminated in consolidation.

6

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist of money market funds totaling $3,545 and $9,572 at December 31, 2014 and 2013, respectively.

Investments with maturities in excess of three months but less than one year are either classified as held-to-maturity securities or available for sale. Management determines the appropriate classification of debt securities at the time of purchase, and reevaluates such designation as of each balance sheet date. Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective-interest method. Such amortization is included in interest income. Interest on securities classified as held to maturity is included in interest income.

Trade Accounts Receivable and Allowance for Doubtful Accounts

The Company carries its receivables at invoiced amounts less an allowance for doubtful accounts. The Company provides for an allowance for doubtful accounts based on management’s periodic review for recoverability of accounts receivable of its customers, as well as history of past write-offs, collections and current credit conditions.

The Company’s policy is not to accrue interest on past-due trade receivables.

7

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Inventories

Inventories are stated at the lower of cost or market value, with cost being determined on a first-in, first-out basis. Inventories consist of raw material, work in process, and finished goods. Raw material includes unprocessed raw animal skins on hand, chemicals used for processing raw animal skins, and miscellaneous purchased components. Work in process includes: (a) processed animal skins before and after lyophilization, but before cutting; (b) lyophilized material cut and ready for sterilization; and (c) sterilized material, but before final packaging. Finished goods represent packaged product available to be shipped to fulfill customer orders. At each balance sheet date, the Company assesses the need to record a provision for excess and obsolete inventory based on the evaluation of inventories for excess quantities, obsolescence or shelf-life expiration. This evaluation includes analyses of historical sales levels by product, projections of future demand, new product launches, the risk of technological or competitive obsolescence for products, general market conditions, and a review of the shelf-life expiration dates for products, as well as the feasibility of reworking or using excess or obsolete products or components in the production or assembly of other products that are not obsolete, or for which there are not excess quantities in inventory. Any such provisions are recorded as cost of sales.

Property and Equipment

Property and equipment are recorded at cost and depreciated over the estimated useful life of the asset using the straight-line method. Details of the components of property and equipment are as follows at December 31:

	2014			2013
Leasehold improvements	$	2,165		$	2,157
Furniture and laboratory equipment	2,802			2,421
Computer and office equipment	825			778
Motor vehicles	20			20
Equipment under lease obligations	93			93
	5,905			5,469
Less: accumulated depreciation and amortization	(4,520		)	(4,417		)
	$	1,385		$	1,052

8

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Property and Equipment (continued)

The estimated useful life of various assets is as follows:

Asset Classification	Estimated Useful Life
Leasehold improvements	Shorter of remaining life of lease or useful life
Furniture and laboratory equipment	7 years
Computer and office equipment	4 years
Motor vehicles	4 years

Repairs and maintenance costs are charged to expense as incurred.

Revenue Recognition

License fees, where the Company has an ongoing involvement or performance obligation, are generally recorded as deferred revenue in the consolidated balance sheet and amortized into license fee revenue in the consolidated income statement over the term of the performance obligation. The Company also recognizes revenues from royalties, which are recognized as earned on an accrual basis.

The Company recognizes revenue from product sales to its marketing partners and sales directly to end customers upon shipment, provided that there is evidence of a final arrangement, passage of title and risk of loss, there are no uncertainties surrounding acceptance, collectability is probable, and the price is fixed or determinable. The Company recognizes revenue from product sales through its sales force and independent agents upon delivery to the end customer provided that there is evidence of a final arrangement, passage of title and risk of loss, there are no uncertainties surrounding acceptance, collectability is probable, and the price is fixed or determinable. Amounts billed to customers for shipping and handling are included in revenue at the time the related product revenue is recognized. Shipping and handling costs included in sales and marketing expenses amounted to $309 in 2014 and $293 in 2013.

9

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Concentrations of Credit Risk and Significant Customers

The Company has no financial instruments with off-balance sheet risk. The Company invests its cash and cash equivalents in financial institutions that federally insure up to $250 of deposits. At December 31, 2014, such amounts were in excess of FDIC limits by approximately $10,996.

Seven customers represented 33% of the total trade accounts receivable and 32% of total product revenues in 2014. Seven customers represented 22% of the total trade accounts receivable and 36% of total product revenues in 2013.

Reclassifications

The consolidated statement of cash flows for 2013 includes a reclassification between accounts payable of ($200) and accrued expenses of $262. These amounts were previously reported as one line on the consolidated statement of cash flows as $62. These amounts were reclassified to conform to the current year’s presentation, with no impact on financial condition.

Foreign Currency Translation and Transactions

The financial statements of the Company’s United Kingdom subsidiary, TEI Biosciences (UK) Limited, are measured using the Great Britain Pound (GBP) as the functional currency. Assets and liabilities of this subsidiary are translated at the rate of exchange in effect at the balance sheet date. Income and expense items are translated at the average daily rate of exchange during the reporting period. Resulting gains or losses are recognized as a component of other comprehensive income (loss), but have not been material to date.

Transactions denominated in currencies other than the local currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses, which are reflected in income as unrealized (based on period-end translations) or realized upon settlement of the transaction. Transaction gains or losses were not material for the years ended December 31, 2014 and 2013.

10

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

2. Summary of Significant Accounting Polices (continued)

Fair Value of Financial Instruments

Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures establishes the following fair value hierarchy for the use of observable inputs and unobservable inputs in valuing assets and liabilities:

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3: Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.

The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet credit quality standards as outlined in the Company’s investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue or type of instrument. Currently, the company’s investments are limited to money market accounts.

As of December 31, 2014 and 2013, all of the Company’s financial assets that were subject to fair value measurements were valued using observable inputs, and the Company had no financial liabilities that were subject to fair value measurement. The Company’s financial assets, valued based on Level 2 inputs, consisted of money market instruments:

11

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

2. Summary of Significant Accounting Polices (continued)

Fair Value of Financial Instruments (continued)

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
Money market	$	3,545	$	—	$	3,545	$	—
	$	3,545	$	—	$	3,545	$	—

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
Money market	$	9,572	$	—	$	9,572	$	—
	$	9,572	$	—	$	9,572	$	—

12

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Research and Development Expenses

The Company expenses research and development costs as incurred.

Research and development costs primarily comprise salaries and fringe benefits, professional fees (excluding legal expenses), pre-clinical studies, testing costs, supplies and facilities costs.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, which represent property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company does not believe that any events have occurred that would indicate that its long-lived assets were impaired at December 31, 2014.

Income Taxes

The Company provides for federal and state income taxes whereby a deferred tax asset or liability is measured at the enacted tax rates that would be in effect when any differences between the financial statement and tax bases of assets and liabilities are expected to reverse.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense totaled $1,106 in 2014 and $711 in 2013.

Comprehensive Income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The foreign currency gain was immaterial in 2014 and 2013.

13

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Accounting for Stock-Based Compensation

All share-based payments to employees are recognized as compensation in the consolidated income statement based on their fair values. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The risk-free interest rate used is the rate for a U.S. Treasury zero coupon issue with a remaining life consistent with the expected life of the option. The Company did pay a dividend in 2014 but has no scheduled expected dividend in the future. The expected life of options granted represents the period of time that option grants are expected to be outstanding. The Company uses the short-cut method as permitted under Staff Accounting Bulletin No. 107, Share-Based Payment, to estimate the expected life of options granted as the Company does not have a sufficient history of stock option exercises to derive an exclusive term. Expected volatilities are based on historical volatilities from guideline companies since there is no active market for the Company’s common stock.

Weighted-average assumptions used for grants are as follows:

Assumption	2014	2013
Risk-free interest rates	1.87%	1.16%
Expected dividend yield	—%	—%
Expected life in years	5.50	5.50
Expected volatility	55%	56%
Weighted-average fair value of options granted during the year	$7.32	$5.35

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers ASU 2014-09 affects all entities — public, private, and not-for-profit—that have contracts with customers, except for certain items, which include leases, insurance contracts; most financial instruments, and guarantees (other than product or service warranties). The new revenue recognition standard eliminates the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replaces it with a principle-based approach for determining revenue recognition.

14

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

All nonpublic entities are required to apply the revenue recognition standard for annual reporting periods beginning on or after December 15, 2017, and interim reporting periods within annual reporting periods beginning after December 15, 2018. Nonpublic entities may elect to apply the requirements of the revenue standard earlier as of the following dates: (a) An annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period (public entity effective date); (b) an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning after December 15, 2017; and (c) an annual reporting period beginning after December 15, 2017, including interim reporting periods within that reporting period. The implementation of ASU 2014-09 has not been fully evaluated as to the effect on the Company's consolidated financial statements.

3. Spin-Off Transaction

On October 31, 2011, TEI Medical was established as a wholly owned subsidiary through the issuance of 999 voting shares of common stock and 3 million non-voting shares of preferred stock to the Company in exchange for a license of the Company’s intellectual property in the orthopedic and wound management fields of use, and for certain assets, including tradenames, regulatory clearance, third-party distribution agreements and $357 of cash.

On November 15, 2011, TEI Medical commenced operations and, simultaneously, all the common shares of TEI Medical were distributed in the form of a dividend to each shareholder of the Company based on a 1-to-10 ratio of common shares held in the Company. The Company maintains ownership of all non-voting preferred shares of TEI Medical.

In connection with the spin-off, TEI Medical obtained a royalty-free, perpetual, irrevocable, exclusive, worldwide, and fully paid license to all the Company’s intellectual property, technology, know-how, products, and product concepts in the fields of use consisting of orthopedics (excluding spine surgery) and wound management (including burn care). The Company entered into a Distribution Agreement with TEI Medical whereby the Company has been a non-exclusive distributor for sales of PriMatrix and TissueMend (the Products). Under the Distribution Agreement, the Company has been selling: (a) PriMatrix to domestic accounts, primarily through its direct sales force, and internationally through a network of independent sales agents, and (b) TissueMend to Stryker. In exchange, the Company has been paying a

15

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

3. Spin-Off Transaction (continued)

distribution fee to TEI Medical based on Product revenues. The Company incurred and recorded total distribution fee expense of $279 and $8,742 to TEI Medical in 2014 and 2013, respectively, which were herein eliminated in consolidation.

The Company also entered into an Operational Services Agreement (the Services Agreement) with TEI Medical under which it has and continues to provide certain administrative, operational, and regulatory services to TEI Medical for a fee. The Company charged TEI Medical $1,310 and $5,955 for services rendered in 2014 and 2013, respectively, which were also eliminated herein in consolidation. Any technology or manufacturing developments or improvements made by the Company during the term of the Services Agreement, which are applicable to the TEI Medical Field of Use, will be licensed to TEI Medical on an exclusive basis, at no additional cost.

On January 11, 2014, the Company and TEI Medical amended and restated the November 15, 2011, Distribution Agreement. Prior to this amendment, the Company sold PriMatrix directly to customers and TissueMend to Stryker and paid TEI Medical a distribution fee. On January 11, 2014, the Company transferred its entire wound healing sales reps and other wound healing employees to TEI Medical, and the distribution fee arrangement stopped. Subsequent to January 11, 2014 the Company continues to manufacture products for TEI Medical and ship such products to customers on behalf of TEI Medical with a cost plus 30% mark up. TEI Medical is responsible for all sales and marketing activities related to PriMatrix and for sales of TissueMend to Stryker. On May 1 and again on October 1, 2014, the Company and TEI Medical amended the Manufacturing and Supply Agreement between the parties to increase the transfer price charged

by the Company to TEI Medical for the manufacturing, storage and shipping of TEI Medical products to $4 and $5 per sq cm, respectively, from the original transfer price of cost plus 30%. All amounts have been eliminated in consolidation.

16

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

4. Inventories

Inventories consisted of the following as of December 31:

	2014		2013
Raw material	$	1,254	$	1,167
Work in process	2,781		2,153
Finished goods	2,434		2,490
	$	6,469	$	5,810

5. Line of Credit

The Company had a $6,000 bank line of credit. The line bore interest at a fluctuating rate per annum determined by the bank to be 2.00% above the Daily One-Month London Interbank Offered Rate (LIBOR) in effect from time to time. The line-of-credit was secured by all Company assets. The line of credit was terminated in July 2013 when the term note payable (see Note 6) was repaid in full.

6. Term Note Payable

The Company had a $6,000 term note payable with a bank. The term note payable bore interest at a fluctuating rate per annum determined by the bank to be 2.00% above the Daily One-Month LIBOR in effect from time to time. The Company repaid this note in full in July 2013.

7. Deferred Compensation

The Company’s founder had agreed, through July 1999, to defer the payment of part of his annual compensation. In 2001, he agreed to accept a contingent future issuance of 441 shares of the Company’s common stock in lieu of a deferred compensation obligation of $1,764, contingent on: (a) the sale of the Company to a third party or (b) the first public offering of shares of common stock in which he would be able to participate and sell a sufficient number of shares of common stock to satisfy any federal or state tax obligation arising as the result of the Company’s payment of the deferred compensation obligation.

17

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

8. Income Tax

Income tax expense consists of the following for the year ended December 31:

	2014		2013
Current:
Federal	$	5,762	$	8,088
State	1,177		1,616
	6,939		9,704
Deferred:
Federal	470		352
State	43		13
	513		365
Total income tax expense	$	7,452	$	10,069

The components of deferred tax assets are as follows at December 31:

	2014			2013
Deferred compensation	$	683		$	680
Depreciation and amortization	523			761
Share-based compensation	374			468
License fee revenue	—			133
Inventory reserves	195			238
Other temporary differences	240			263
	2,015			2,543
Valuation allowance	(683		)	(680		)
Net deferred tax asset	$	1,332		$	1,863

18

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

8. Income Tax (continued)

The utilization of federal tax credit carryforwards is subject to review and possible adjustment by the Internal Revenue Service. Internal Revenue Code (IRC) Section 382 contains provisions that may limit the amount of net operating loss and tax credit carryforwards that the Company may utilize in any one year in the event of certain changes in ownership, as defined.

The Company is subject to federal income tax audits for 2011 and beyond, and state income tax audits for all open periods under the statute of limitations. The Company includes interest and penalties, when necessary, in income tax expense.

The valuation allowance relates to deferred compensation, which has been deemed an indefinitely reversing deferred tax asset. The Company’s valuation allowance at December 31, 2014, increased by $3 from the balance at December 31, 2013, due primarily to the change in the Company’s deferred state tax rate.

The Company’s income tax rate in 2014 and 2013 differed from the statutory rate mainly due to state income taxes.

Income taxes paid for both the Company and TEI Medical amounted to $7,913 in 2014 and $9,630 in 2013.

During 2014, the Company identified an error in its historical income tax provisions and tax filings whereby the Company failed to appropriately consider certain deductions related to its domestic production activities. The Company amended its historical tax filings to claim these deductions. The Company concluded that the financial reporting effects of the missed deductions were not material to any of the Company’s historical financial statements. The cumulative effect of correcting the historical misstatements in the current year would be material to the 2014 financial statements. As such, the historical financial information included herein has been restated to reflect the correction of these immaterial errors. Retained earnings as of January 1, 2013 was increased by $1,362 to reflect the cumulative effect of the corrections through that date. Additionally, income tax expense for 2013 was decreased by $720 and prepaid income taxes as of December 31, 2013 was increased by $2,082.

19

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

9. Stockholders’ Equity – TEI Biosciences Inc.

Common Stock

The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. The stockholders do not have cumulative voting rights in the election of directors. Accordingly, holders of a majority of the shares voting are able to elect all the directors. Holders of common stock are entitled to receive ratably only those dividends as may be declared by the Board out of funds legally available thereon. In the event of a liquidation, dissolution, or winding up of the Company, holders of common stock are entitled to share ratably in all of the Company’s assets remaining after outstanding liabilities are paid. Holders of common stock have no preemptive or other subscription or conversion rights. There are no redemption or sinking fund provisions applicable to the common stock.

Common Stock Repurchase Transactions and Dividends

In 2014, the Company repurchased approximately 25 shares of common stock for approximately $361. The Company also retired these repurchased shares in 2014.

On March 13, 2014, the Board of Directors of the Company declared a cash dividend on all shares of capital stock outstanding as of the close of business on March 14, 2014. The amount of the dividend was $2.67 per share, subject to any required tax withholding. The total amount of the dividend the Company declared to its shareholders was $19,972 and was paid in March and April of 2014.

In 2013, the Company repurchased 23 shares of common stock for $243. The Company also retired these repurchased shares in 2013.

20

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

9. Stockholders’ Equity – TEI Biosciences Inc. (continued)

Stock Option Plan

On June 8, 2006, the stockholders of the Company approved the Company’s 2006 Equity Incentive Plan (the 2006 Plan), which provides for the issuance of shares of common stock up to the greater of 2.5 million shares or 23% of the number of shares outstanding as of January 1 of each year, subject to certain adjustments.

The 2006 Plan is in addition to the 1997 Stock Option Plan (the 1997 Plan) that provided for the issuance of options to purchase a maximum of 2 million shares of common stock. The 1997 Plan expired in February 2007. The options under the 2006 Plan may be granted to employees, directors or consultants. Options under the 2006 Plan vest over a maximum of a four-year period, and expire ten years from the date of grant.

The Board may suspend or terminate the 2006 Plan at any time and, unless previously terminated, the 2006 Plan shall terminate on June 8, 2016. As of December 31, 2014 and 2013, 255 and 250 shares, respectively, were available for grant under the 2006 Plan. Activity under the Stock Option Plans is as follows:

	Number of Shares	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Life (Years)
Outstanding at December 31, 2013	372	$5.81	4.71
Granted	6	14.40	—
Exercised	(24)	5.93	—
Cancelled	(15)	8.27	—
Outstanding at December 31, 2014	339	5.85	3.54
Exercisable at December 31, 2014	330	5.76	3.42
Vested and expected to vest at
December 31, 2014	338	5.84	3.53

21

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

9. Stockholders’ Equity – TEI Biosciences Inc. (continued)

Stock Option Plan (continued)

At December 31, 2014, there was $67 of total unrecognized compensation expense related to non-vested stock option arrangements. The unrecognized compensation expense is calculated by applying an estimated forfeiture rate of 14% to the unvested options. This cost is being amortized on the straight-line method and is expected to be recognized over a weighted-average period of 1.21 years.

Restricted Stock

In March 2011, the Company’s Board of Directors approved amendments to an agreement that covered an award of 600 shares of restricted stock units (RSUs) granted to an officer of the Company in 2008. Each unit represents one share of the Company’s common stock. The arrangement was treated as a share-based liability award due to certain tax-related withholding features, and all restricted stock units have vested.

The amendments include, among other things, a loan (RSU Loan) to the officer in an amount equal to all applicable income and payroll taxes due upon the delivery of the 600 shares of common stock pursuant to the grant. The RSU Loan is due and payable in nine years from the date of issuance along with the related interest.

The second amendment grants the officer the right to require the Company to purchase shares of the underlying common stock at the current fair market value of the shares on the day of notice. The market value is determined by the Company’s Board of Directors solely for the purpose of paying the principal and unpaid interest of the RSU Loan outstanding and the applicable taxes due for the sale of these shares to the Company.

In April 2012, the officer took delivery of the RSUs and entered into a loan of $2,096 with the Company to pay for the applicable income and payroll taxes associated with the receipt of the shares. The loan is collateralized by the underlying shares.

No further compensation expense will be recognized under this share-based liability award as the officer of the Company took delivery of the actual shares in 2012.

22

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

9. Stockholders’ Equity – TEI Biosciences Inc. (continued)

Restricted Stock (continued)

On June 4, 2009, the Board approved the grant of 300 shares of restricted stock to an officer of the Company. The fair value of the restricted stock was based on the market price of the Company’s stock on the date of grant, and the fair value of these shares is being recorded as compensation expense based on the vesting terms of the award. The fair value per share of the restricted stock units at the date of the grant was $4.00. The restricted shares vested in quarterly installments over a three-year period from the grant date. As of December 31, 2014, all 300 restricted shares were vested. No further compensation expense will be recognized related to this award.

Notes Receivable – Officer

In connection with the 2009 restricted stock grant of 300 shares issued to an officer on June 4, 2009, noted above, the Company issued a note receivable in the amount of $300 in order to pay the related personal income taxes on the issuance. The loan is collateralized by 100 shares of common stock owned by the officer. All principal and accrued interest (2.25%) was due on the earliest of June 4, 2014, termination of employment of the officer, a significant equity event, or an event of default. Accrued and unpaid interest is due on June 4 of each year; however, the Company intends to provide a bonus amount to offset the accrued interest due. The Company has presented this note receivable as a reduction of stockholders’ equity.

In March 2011, the Company’s Board of Directors approved an amendment to the restricted stock grant $300 note receivable agreement. The amendment grants the officer the right to require the Company to purchase shares of the underlying common stock at the current fair market value of the shares on the day of notice by the officer as most recently determined by the Company’s Board of Directors solely for the purpose of paying the principal and unpaid interest of the note receivable outstanding and the applicable taxes due for the sale of these shares to the Company.

On March 7, 2013, the Board of Directors approved an amendment to the $300 note receivable. The amendment states that the maturity date of the note receivable would be extended from its original maturity date of June 4, 2014 to April 21, 2021.

23

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

9. Stockholders’ Equity – TEI Biosciences Inc. (continued)

Notes Receivable – Officer (continued)

On September 8, 2011, the same officer exercised fully vested options to purchase 292 shares. The Company issued a note receivable to the officer in the amount of $1,635, which is collateralized by the underlying shares of common stock. All principal and accrued interest (1.63% for the first three years of the note) is due on the earliest of September 8, 2016, termination of employment of the officer, a significant equity event or an event of default. Accrued and unpaid interest is due on September 8 of each year. The components of the $1,635 note receivable represent $1,169 for the exercise of the options to purchase the shares of common stock and $466 for income taxes associated with the exercise of the options to purchase the shares. Under this arrangement, the officer also has the right to put the stock to the Company at the current fair market value of the shares on the day of notice as most recently determined by the Company’s Board of Directors, at a purchase price not to exceed the note receivable balance outstanding, any accrued but unpaid interest, and the associated taxes.

The Company has disclosed the amounts in the notes to the accompanying consolidated financial statements herein and has excluded the note receivable for the exercise of the options and corresponding potential liability ($1,169) from the accompanying consolidated balance sheet as the substance of the transaction is a fully vested stock option. The loan of $466 is collateralized by the underlying shares received by the officer upon exercise of these stock options and has been presented as a reduction of stockholders’ equity.

On March 7, 2013, the Board of Directors approved an amendment to the $1,635 September 8, 2011, note receivable. The amendment states that the maturity date of the note receivable would be extended from its original maturity date of September 8, 2016 to April 21, 2021.

In connection with the delivery of 600 restricted shares to the Officer of the Company on April 21, 2012, which was granted in April 2008 as restricted stock units, the Company issued a note receivable in the amount of $2,096 in order to pay the related personal income taxes on the issuance. The loan is collateralized by the 600 fully vested shares of common stock that were delivered to the officer. All principal and accrued interest (1.15%) is due on the earliest of April 21, 2021, termination of employment of the officer, a significant equity event, or an event of default. Accrued and unpaid interest is due on April 21 of each year. The Company has presented this note receivable as a reduction of stockholders’ equity.

24

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

9. Stockholders’ Equity – TEI Biosciences Inc. (continued)

Notes Receivable – Officer (continued)

On March 7, 2013, the Board of Directors approved an amendment to the officer’s employment agreement as defined in conjunction with the $2,096 April 21, 2012, note receivable. The amendment included, among other things, that the Company shall pay to the officer a bonus payment equal to the principal balance of the note plus all accrued but unpaid interest upon the first occurrence of a change in control that results in payments to the holders of the Company’s common stock of at least $20 per share, provided that the officer has been continuously employed by the Company (except for incapacity or mutually agreed leaves of absences) from the date of the employment agreement until such change in control. The bonus shall be offset

against and used first to repay all outstanding principal and accrued but unpaid interest on this note. All payments to the officer must be paid by the Company within 60 days after the occurrence of a change in control. Also under this amendment, the officer has the right to put stock to the Company at the current fair market value of the common shares on the day of notice as most recently determined by the Company’s Board of Directors at a purchase price not to exceed the note receivable balance outstanding, any accrued but unpaid interest, and the associated taxes.

Common Stock Reserved for Future Issuances

As of December 31, 2014, the Company had reserved 1.035 million common stock shares for issuance upon exercise of stock options.

10. Stockholders’ Equity – TEI Medical Inc.

Preferred Stock

TEI Medical was authorized to issue three million shares of non-voting preferred stock with a par value of $0.001 per share. All three million shares were issued to the Company.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of TEI Medical or a deemed liquidation event, the holders of the preferred shares then outstanding shall be entitled to receive a preferred stock liquidation amount which equals the preferred stock original issue price of $1.00 per share, plus any dividends declared but unpaid.

25

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

10. Stockholders’ Equity – TEI Medical Inc. (continued)

Preferred Stock (continued)

Upon the closing of a sale of the common shares of TEI Medical to the public in a public offering under the Securities Act of 1933, all outstanding shares of preferred stock shall be automatically converted into such number of shares of common stock as determined by dividing the preferred stock original issue price of $1.00 by the public offering price.

All preferred stock outstanding is owned by the Company and is eliminated in consolidation.

Common Stock

TEI Medical was authorized to issue 10million shares of voting common stock with a par value of $0.001 per share. The common shares of TEI Medical were issued so that each shareholder of the Company received one tenth of one share of TEI Medical stock for every share of the Company held by virtue of a dividend, as well as an additional 60 shares of common stock of TEI Medical that the Company will retain to satisfy its distribution obligations with respect to the restricted stock units currently held by an officer. These shares were reissued to the officer of the Company on April 21, 2012, at the same time as the officer took delivery of the 600 shares of restricted stock of the Company as described in Note 9.

The liquidation rights of the holders of the common stock are subject to and qualified by the rights, powers and preferences of the holders of the preferred stock.

The holders of the common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings.

All common stock is eliminated in consolidation and accounted for as non-controlling interest.

Common Stock Repurchase Transactions

In 2014, TEI Medical repurchased approximately 2.5 shares of common stock for $17. The Company retired these shares in 2014.

In 2013, TEI Medical repurchased approximately 2 shares of common stock for $8. The Company retired these shares in 2013.

26

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

10. Stockholders’ Equity – TEI Medical Inc. (continued)

Stock Option Plan

On November 14, 2011, the stockholders of TEI Medical approved the 2011 Equity Incentive Plan (the 2011 Plan), which provides for the issuance of up to one million shares of common stock.

The Board may suspend or terminate the 2011 Plan at any time and, unless previously terminated, the 2011 Plan shall terminate on November 14, 2021. As of December 31, 2014 and 2013, 817 shares were available for grant under the 2011 Plan.

On November 14, 2011, the Board of TEI Medical approved the grant of 9 stock options with a one-year vesting period at the fair value per share of $0.2258 at the date of grant.

Activity under the stock option plans is as follows:

	Number of Shares	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Life (Years)
Outstanding at December 31, 2013	9	$0.2258	—
Granted	—	—	—
Exercised	—	—	—
Cancelled	—	—	—
Outstanding at December 31, 2014	9	0.2258	6.87
Exercisable at December 31, 2014	9	0.2258	6.87
Vested and expected to vest at
December 31, 2014	9	0.2258	6.87

At December 31, 2014, there was no unrecognized compensation expense related to non-vested stock option arrangements.

27

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

10. Stockholders’ Equity – TEI Medical Inc. (continued)

Restricted Stock

On November 14, 2011, the Board of TEI Medical approved the grant of 174.5 shares of restricted stock to an officer of TEI Medical. The fair value of the restricted stock was based on the market price of TEI Medical’s stock on the date of grant and the fair value of these shares is being recorded as compensation expense based on the vesting terms of the award. The fair value per share of the restricted stock shares at the date of the grant was $0.2258. The restricted shares vested in quarterly installments over a three-year period from the grant date.

As of December 31, 2014, all restricted shares are vested. The Company recorded an expense of $11 in 2014 and $13 in 2013, respectively, relative to this restricted stock grant. At December 31, 2014, there was no unrecognized compensation expense related to any non-vested portion of this restricted stock arrangement.

11. Employee Benefit Plan

The Company has a savings plan for its employees that is designed to be qualified under Section 401(k) of the IRC. Eligible employees are permitted to contribute to the 401(k) plan through payroll deductions within statutory and plan limits. The participants can select from a variety of investment options. The Company currently matches the lesser of $0.40 for each dollar contributed by the participating employee up to 5% of the employee contributions, or 2% of the eligible compensation of each participating employee. Employees received matching contributions of $272 in 2014 and $221 in 2013.

12. Commitments and Contingencies

The Company entered into a sublease on December 5, 2012, for its corporate office facilities, which expires on March 30, 2018. The Company, as part of this sublease, also paid a $44 security deposit.

The Company’s manufacturing facilities lease expires on December 31, 2017, with a five-year extension at the Company’s option.

28

TEI Biosciences Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

December 31, 2014

(All amounts in thousands)

12. Commitments and Contingencies (continued)

Rent expense was $736 in 2014 and 2013. Future minimum lease payments associated with the leases above are as follows:

	Commitment
Year:
2015	$	723
2016	891
2017	891
2018	68

13. Subsequent Events

The Company evaluated subsequent events occurring after the consolidated balance sheet date and up to the time the consolidated financial statements were available to be issued, June 25, 2015, and noted no subsequent events, except:

The Company entered into an amendment of its manufacturing facilities lease on May 1, 2015, to lease an additional 4 square feet of space through December 31, 2017.

29

EX-99.4

Exhibit 99.4

C O N D E N S E D C O N S O L I D A T E D F I N A N C I A L

S T A T EME N T S (U N A U D I T E D)

TEI Biosciences Inc. and Subsidiary

Quarters Ended March 31, 2015 and 2014

TEI Biosciences Inc. and Subsidiary

Condensed Consolidated Financial Statements (Unaudited)

Quarters Ended March 31, 2015 and 2014

Contents

Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets ..................................................................................................... 2

Condensed Consolidated Statements of Income and Comprehensive Income ..............................................3

Condensed Consolidated Statements of Cash Flows .....................................................................................4

Notes to Condensed Consolidated Financial Statements ..............................................................................5

TEI Biosciences Inc. and Subsidiary

Condensed Consolidated Balance Sheets

	March 31,			December 31,
	2015			2014
	(Unaudited)			(Audited)
ASSETS	(All amounts in thousands)
Current assets:
Cash and cash equivalents	$	18,404		$	11,402
Trade accounts receivable, net of allowance for doubtful accounts of $328 in 2015 and $111 in 2014	9,640			9,678
Inventories	6,630			6,469
Prepaid income taxes	1,244			3,415
Prepaid expenses and other current assets	253			262
Deferred income taxes	236			236
Total current assets	36,407			31,462
Property and equipment, net	1,346			1,385
Security deposit	44			44
Deferred tax assets, net	1,136			1,136
Total assets	$	38,933		$	34,027
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	325		$	396
Accrued expenses	1,899			1,631
Dividends payable	11			11
Deferred revenue	433			433
Current portion of deferred license fees	232			—
Total current liabilities	2,900			2,471
Deferred tax liability	40			40
Deferred license fees, net of current portion	1,335			—
Deferred rent	321			318
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock; $0.001 par value; 20,000 authorized shares; 7,424 shares issued and outstanding in 2015 and 7,455 shares issued and outstanding in 2014	7			7
Additional paid-in capital	14,180			14,131
Notes receivable - officer	(2,862		)	(2,862		)
Retained earnings	15,557			13,028
Total stockholders’ equity	26,882			24,304
Non-controlling interest	7,455			6,894
Total Equity	34,337			31,198
Total liabilities and equity	$	38,933		$	34,027

See accompanying notes.

2

TEI Biosciences Inc. and Subsidiary

Condensed Consolidated Statements of Income and Comprehensive Income

	Quarter Ended March 31,
	2015		2014
	(Unaudited)
	(All amounts in thousands)
Revenues:
Product sales	$	16,634	$	15,636
Royalty income	—		56
License fee	58		31
Total revenues	$	16,692	$	15,723
Cost of goods sold	1,625		1,566
Gross profit	15,067		14,157
Operating expenses:
Research and development	827		623
General and administrative	2,039		2,441
Sales and marketing	6,497		6,022
Total operating expenses	9,363		9,086
Operating income	5,704		5,071
Other income and expense:
Interest income	32		18
interest expense	—		(2		)
	32		16
Income before income tax expense	5,736		5,087
Income tax expense	2,136		1,913
Net income	$	3,600	$	3,174
Net income attributable to non-controlling interest	$	622	$	962
Net income attributable to controlling interest	$	2,978	$	2,212
Other comprehensive income:
Net income	$	3,600	$	3,174
Comprehensive income	$	3,600	$	3,174

See accompanying notes.

3

TEI Bioscienes Inc. and Subsidiary

Consolidated Statements of Cash Flows

	Quarter Ended March 31,
	2015			2014
	(Unaudited)
OPERATING ACTIVITIES:	(All amounts in thousands)
Net income	$	3,600		$	3,174
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	65			58
Stock-based compensation expense for equity awards	41			66
Excess tax benefit and deductions from stock-based compensation	(8		)	(78		)
Provision for doubtful accounts	217			102
Deferred rent	3			6
Changes in operating assets and liabilities:
Trade Accounts receivable	(350		)	(1,481		)
Prepaid income taxes	2,179			1,563
Inventories	(161		)	(261		)
Prepaid expenses and other current assets	9			30
Accounts payable	101			(14		)
Accrued expenses	267			(122		)
Deferred license fees	1,567			(31		)
Net cash provided by operating activities	7,530			3,012
INVESTING ACTIVITIES:
Purchases of property and equipment	(26		)	(177		)
Net cash used in investing activities	(26		)	(177		)
FINANCING ACTIVITIES:
Payment of dividends	—			(5,839		)
Repurchase and retirement of shares	(528		)	—
Proceeds received from exercise of stock options	18			142
Excess tax benefit and deductions from stock-based compensation	8			78
Net cash used in financing activities	(502		)	(5,619		)
Net (decrease) increase in cash and cash equivalents	7,002			(2,784		)
Cash and cash equivalents at beginning of year	11,402			22,669
Cash and cash equivalents at end of period	$	18,404		$	19,885

See accompanying notes.

4

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2015

(Unaudited)

(All amounts in thousands)

1. Operations

TEI Biosciences Inc. (the Company) is a biomedical company developing, manufacturing, marketing, and selling biologic devices for the repair, reinforcement, or reconstruction of human tissues that have failed due to aging, injury or disease. TEI Medical Inc. (TEI Medical) is a biomedical company developing, marketing, and selling biologic devices for the repair, reinforcement, or reconstruction of human tissues that have failed due to aging, injury or disease.

The Company has developed a family of collagen-based soft tissue repair products that have been cleared by the United States Food and Drug Administration for use in a broad spectrum of tissue repair applications. The Company’s principal sales and marketing partners include Medtronic Neurosurgery for Durepair® and Boston Scientific for Xenform®. The Company also sells SurgiMend® in the U.S. through its sales force and in certain foreign countries through a network of independent agents. TEI Medical’s principal sales and marketing partners include Stryker Orthopaedics (Stryker) for TissueMend®. TEI Medical also sells PriMatrix® in the U.S. through its sales force and in certain foreign countries through a network of independent agents.

2. Summary of Significant Accounting Policies

Principles of Consolidation and Variable-Interest Entity (VIE)

The consolidated financial statements include the accounts of TEI Biosciences Inc. and its 100% wholly owned subsidiary, TEI Biosciences (UK) Limited and include the accounts of TEI Medical which was determined to be a VIE to which the Company is the primary beneficiary. All significant intercompany accounts and transactions between the Company, TEI Biosciences (UK) Limited, and TEI Medical have been eliminated in consolidation.

5

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist of money market funds totaling $12,219 and $3,545 at March 31, 2015 and December 31, 2014, respectively.

Investments with maturities in excess of three months but less than one year are either classified as held-to-maturity securities or available for sale. Management determines the appropriate classification of debt securities at the time of purchase, and reevaluates such designation as of each balance sheet date. Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective-interest method. Such amortization is included in interest income. Interest on securities classified as held to maturity is included in interest income.

Trade Accounts Receivable and Allowance for Doubtful Accounts

The Company carries its receivables at invoiced amounts less an allowance for doubtful accounts. The Company provides for an allowance for doubtful accounts based on management’s periodic review for recoverability of accounts receivable of its customers, as well as history of past write-offs, collections and current credit conditions.

The Company’s policy is not to accrue interest on past-due trade receivables.

6

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Inventories

Inventories are stated at the lower of cost or market value, with cost being determined on a first-in, first-out basis. Inventories consist of raw materials, work in process, and finished goods. Raw material includes unprocessed raw animal skins on hand, chemicals used for processing raw animal skins, and miscellaneous purchased components. Work in process includes: (a) processed animal skins before and after lyophilization, but before cutting; (b) lyophilized material cut and ready for sterilization; and (c) sterilized material, but before final packaging. Finished goods represent packaged product available to be shipped to fulfill customer orders. At each balance sheet date, the Company assesses the need to record a provision for excess and obsolete inventory based on the evaluation of inventories for excess quantities, obsolescence or shelf-life expiration. This evaluation includes analyses of historical sales levels by product, projections of future demand, new product launches, the risk of technological or competitive obsolescence for products, general market conditions, and a review of the shelf-life expiration dates for products, as well as the feasibility of reworking or using excess or obsolete products or components in the production or assembly of other products that are not obsolete, or for which there are not excess quantities in inventory. Any such provisions are recorded as cost of sales.

Property and Equipment

Property and equipment are recorded at cost and depreciated over the estimated useful life of the asset using the straight-line method. Details of the components of property and equipment are as follows:

	March 31, 2015			December 31, 2014
Leasehold improvements	$	2,165		$	2,165
Furniture and laboratory equipment	2,822			2,802
Computer and office equipment	831			825
Motor vehicles	20			20
Equipment under lease obligations	93			93
	5,931			5,905
Less: accumulated depreciation and amortization	(4,585		)	(4,520		)
	$	1,346		$	1,385

7

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Property and Equipment (continued)

The estimated useful life of various assets is as follows:

Asset Classification	Estimated Useful Life
Leasehold improvements	Shorter of remaining life of lease or useful life
Furniture and laboratory equipment	7 years
Computer and office equipment	4 years
Motor vehicles	4 years

Repairs and maintenance costs are charged to expense as incurred.

Revenue Recognition

License fees, where the Company has an ongoing involvement or performance obligation, are generally recorded as deferred revenue in the consolidated balance sheet and amortized into license fee revenue in the consolidated income statement over the term of the performance obligation. The Company also recognizes revenues from royalties, which are recognized as earned on an accrual basis.

The Company recognizes revenue from product sales to its marketing partners and sales directly to end customers upon shipment, provided that there is evidence of a final arrangement, passage of title and risk of loss, there are no uncertainties surrounding acceptance, collectability is probable, and the price is fixed or determinable. The Company recognizes revenue from product sales through its sales force and independent agents upon delivery to the end customer provided that there is evidence of a final arrangement, passage of title and risk of loss, there are no uncertainties surrounding acceptance, collectability is probable, and the price is fixed or determinable. Amounts billed to customers for shipping and handling is included in revenue at the time the related product revenue is recognized. Shipping and handling costs included in sales and marketing expenses amounted to $70 and $78 for the quarters ended March 31, 2015 and 2014.

8

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Concentrations of Credit Risk and Significant Customers

The Company has no financial instruments with off-balance sheet risk. The Company invests its cash and cash equivalents in financial institutions that federally insure up to $250 of deposits. At March 31, 2015, such amounts were in excess of FDIC limits by approximately $18,218.

Foreign Currency Translation and Transactions

The financial statements of the Company’s United Kingdom subsidiary, TEI Biosciences (UK) Limited, are measured using the Great Britain Pound (GBP) as the functional currency. Assets and liabilities of this subsidiary are translated at the rate of exchange in effect at the balance sheet date. Income and expense items are translated at the average daily rate of exchange during the reporting period. Resulting gains or losses are recognized as a component of other comprehensive income (loss), but have not been material to date.

Transactions denominated in currencies other than the local currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses, which are reflected in income as unrealized (based on period-end translations) or realized upon settlement of the transaction. Transaction gains or losses were not material for the quarters ended March 31, 2015 and 2014.

9

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

2. Summary of Significant Accounting Polices (continued)

Fair Value of Financial Instruments

Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures establishes the following fair value hierarchy for the use of observable inputs and unobservable inputs in valuing assets and liabilities:

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3: Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.

The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet credit quality standards as outlined in the Company’s investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue or type of instrument. Currently, the company’s investments are limited to money market accounts.

As of March 31, 2015 and December 31, 2014, all of the Company’s financial assets that were subject to fair value measurements were valued using observable inputs, and the Company had no financial liabilities that were subject to fair value measurement. The Company’s financial assets, valued based on Level 2 inputs, consisted of money market instruments:

10

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

2. Summary of Significant Accounting Polices (continued)

Fair Value of Financial Instruments (continued)

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
Money market	$	12,219	$	—	$	12,219	$	—
	$	12,219	$	—	$	12,219	$	—

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
Money market	$	3,545	$	—	$	3,545	$	—
	$	3,545	$	—	$	3,545	$	—

11

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Research and Development Expenses

The Company expenses research and development costs as incurred.

Research and development costs primarily comprise salaries and fringe benefits, professional fees (excluding legal expenses), pre-clinical studies, testing costs, supplies and facilities costs.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, which represent property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company does not believe that any events have occurred that would indicate that its long-lived assets were impaired at March 31, 2015.

Income Taxes

The Company provides for federal and state income taxes whereby a deferred tax asset or liability is measured at the enacted tax rates that would be in effect when any differences between the financial statement and tax bases of assets and liabilities are expected to reverse.

Significant deferred tax assets of the Company consists of depreciation and amortization, share-based compensation, license fee revenue and inventory reserves.

The Company’s effective income tax rates for the quarters ended March 31, 2015 and 2014 were 37.2% and 37.6%, respectively.

Comprehensive Income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The foreign currency gain was immaterial for the quarters ended March 31, 2015 and 2014.

12

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

2. Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers ASU 2014-09 affects all entities - public, private, and not-for-profit-that have contracts with customers, except for certain items, which include leases, insurance contracts; most financial instruments, and guarantees (other than product or service warranties). The new revenue recognition standard eliminates the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replaces it with a principle-based approach for determining revenue recognition. All nonpublic entities are required to apply the revenue recognition standard for annual reporting periods beginning on or after December 15, 2017, and interim reporting periods within annual reporting periods beginning after December 15, 2018. Nonpublic entities may elect to apply the requirements of the revenue standard earlier as of the following dates: (a) An annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period (public entity effective date); (b) an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning after December 15, 2017; and (c) an annual reporting period beginning after December 15, 2017, including interim reporting periods within that reporting period. The implementation of ASU 2014-09 has not been fully evaluated as to the effect on the Company's consolidated financial statements.

On April 1, 2015 the Financial Accounting Standards Board (FASB) voted to delay implementation for a year for both public and private companies under Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date. As a result, public entities filing under U.S. GAAP will apply the new standard to annual reporting periods beginning after December 15, 2017, and nonpublic entities will apply it to annual reporting periods beginning after December 15, 2018.

13

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

3. Inventories

Inventories consisted of the following:

	March 31, 2015		December 31, 2014
Raw material	$	1,349	$	1,254
Work in process	2,777		2,781
Finished goods	2,504		2,434
	$	6,630	$	6,469

4. Deferred Compensation

The Company’s founder had agreed, through July 1999, to defer the payment of part of his annual compensation. In 2001, he agreed to accept a contingent future issuance of 441 shares of the Company’s common stock in lieu of a deferred compensation obligation of $1,764, contingent on: (a) the sale of the Company to a third party or (b) the first public offering of shares of common stock in which he would be able to participate and sell a sufficient number of shares of common stock to satisfy any federal or state tax obligation arising as the result of the Company’s payment of the deferred compensation obligation.

5. Common Stock Repurchase Transactions and Dividends

In 2015, the Company and TEI Medical repurchased approximately 39.7 shares of common stock for approximately $528. The Company also retired these repurchased shares in 2015.

In 2014 the Board of Directors declared a cash dividend of $2.67 per share, subject to any required tax withholding. The total amount of the dividend the Company declared to its shareholders was $19,972 and was paid in March and April of 2014.

14

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

6. Notes Receivable - Officer

An officer of the Company has three notes outstanding in the amount of $4,031, with interest rates ranging from 1.15% to 2.25%. All three notes mature on April 21, 2021 and are collateralized by shares of the Company’s common stock owned by the officer.

The Company has presented these notes receivable as a reduction of stockholders’ equity, except for the note for the exercise of stock options and corresponding potential liability ($1,169) which has been excluded from the accompanying consolidated balance sheets as the substance of the transaction is a fully vested stock option.

7. Stock-Based Compensation

As of March 31, 2015, the Company had stock options outstanding from the Company’s 2006 Equity Incentive Plan (the 2006 Plan). Stock options issued under the Plan become exercisable over specified periods, generally within four years from the date of grant for employees and one year for board of directors and generally expire ten years from the grant date.

As of March 31, 2015, there was approximately $89 of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted- average period of approximately one year. There were 6 stock options granted during the three months ended March 31, 2015.

8. Employee Benefit Plan

The Company has a savings plan for its employees that is designed to be qualified under Section 401(k) of the IRC. Eligible employees are permitted to contribute to the 401(k) plan through payroll deductions within statutory and plan limits. The participants can select from a variety of investment options. The Company currently matches the lesser of $0.40 for each dollar contributed by the participating employee up to 5% of the employee contributions, or 2% of the eligible compensation of each participating employee. Employees received matching contributions of $75 and $67 for the quarters ended March 31, 2015 and 2014.

15

TEI Biosciences Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2015

(Unaudited)

(All amounts in thousands)

9. Commitments and Contingencies

The Company entered into a sublease on December 5, 2012, for its corporate office facilities, which expires on March 30, 2018. The Company, as part of this sublease, also paid a $44 security deposit.

The Company’s manufacturing facilities lease expires on December 31, 2017, with a five-year extension at the Company’s option.

Rent expense was $184 for the quarters ended March 31, 2015 and 2014. Future minimum lease payments associated with the leases above are as follows:

	Commitment
Year:
2015	$	545
2016	891
2017	891
2018	68

10. Subsequent Events

The Company evaluated subsequent events occurring after the consolidated balance sheet date and up to the time the consolidated financial statements were prepared, July 15, 2015, and noted no subsequent events, except:

The Company entered into an amendment of its manufacturing facilities lease on May 1, 2015, to lease an additional 4 square feet of space through December 31, 2017.

On June 26, 2015, the Company and TEI Medical signed two separate merger agreements with Integra LifeSciences Corporation (Integra) whereby Integra will acquire all the shares of the Company and TEI Medical as stated in the Agreement and Plan of Merger documents.

16

XML

DEBT -5 year payout table (Details) - Term Loan $ in Thousands	Jun. 30, 2015 USD ($)
Term loan maturities [Line Items]
Long-term Debt, Maturities, Repayments of Principal in 2015	$ 3,750
Long-term Debt, Maturities, Repayments of Principal in 2016	9,375
Long-term Debt, Maturities, Repayments of Principal in 2017	13,125
Long-term Debt, Maturities, Repayments of Principal in 2018	15,000
Long-term Debt, Maturities, Repayments of Principal in 2019	108,750
Secured Debt	$ 150,000

XML

SEGMENT AND GEOGRAPHIC INFORMATION - Net Sales and Profit by Reportable Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Segment Reporting Information [Line Items]
Revenues	$ 244,078	$ 231,351	$ 477,743	$ 446,410
Operating income	13,954	12,392	30,742	21,130
Intangible asset amortization	(3,104)	(2,985)	(6,639)	(6,018)
Operating Segments
Segment Reporting Information [Line Items]
Operating income	82,019	73,111	162,245	141,157
Operating Segments | Specialty Surgical Solutions
Segment Reporting Information [Line Items]
Revenues	146,709	137,516	125,199	112,544
Operating income	62,325	48,991	38,010	37,020
Operating Segments | Orthopedics and Tissue Technologies
Segment Reporting Information [Line Items]
Revenues	63,834	57,954	286,769	264,710
Operating income	18,428	20,019	122,657	97,288
Operating Segments | Spine
Segment Reporting Information [Line Items]
Revenues	33,535	35,881	65,775	69,156
Operating income	1,266	4,101	1,578	6,849
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Operating income	$ (64,961)	$ (57,734)	$ (124,864)	$ (114,009)

XML

NET INCOME PER SHARE - Narrative (Detail) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options, shares outstanding (in shares)	1.1	1.4	1.4
Stock Compensation Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from computation as their effect would be anti-dilutive	0.1	0.2	0.2

XML

SEGMENT AND GEOGRAPHIC INFORMATION - Total Revenue by Major Geographic Area (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Segment Reporting Information [Line Items]
Revenues	$ 244,078	$ 231,351	$ 477,743	$ 446,410
United States
Segment Reporting Information [Line Items]
Revenues	190,093	178,806	371,030	342,187
Europe
Segment Reporting Information [Line Items]
Revenues	27,497	25,851	54,258	51,176
Rest of World
Segment Reporting Information [Line Items]
Revenues	$ 26,488	$ 26,694	$ 52,455	$ 53,047

XML

INCOME TAXES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Tax Disclosure [Abstract]
Reported tax rate	34.00%	32.90%	33.70%	37.00%
Nondeductible spinoff expense	$ 0.4
Income Tax Contingency [Line Items]
Effective Tax Rate Estimate			32.00%
Foreign Tax Authority
Income Tax Contingency [Line Items]
Change in tax expense due to filing with tax authorities	$ 0.4
Change in tax expense due to settlement with tax authority			$ 1.1
State and Local Jurisdiction
Income Tax Contingency [Line Items]
Change in tax expense due to change in filing position			$ 0.3

XML

BUSINESS ACQUISITIONS - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Business Acquisition [Line Items]
Total revenue	$ 241,801	$ 467,310
Net income	$ 7,009	$ 12,581
Basic (in dollars per share)	$ 0.22	$ 0.39

XML

DERIVATIVE INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Fair Value In Balance Sheet For Derivatives Designated As Hedging Instruments

The following table summarizes the fair value and presentation for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014:

	Fair Value as of
Location on Balance Sheet (1):	June 30, 2015		December 31, 2014
	(In thousands)
Derivatives designated as hedges — Liabilities:
Interest rate swap — Accrued expenses and other current liabilities (2)	$	161	$	898
Total Derivatives designated as hedges — Liabilities	$	161	$	898

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

⁽²⁾  At June 30, 2015 and December 31, 2014, the notional amount related to the Company’s sole interest rate swap was $90.0 million and $97.5 million, respectively. In the next twelve months, the Company expects to reduce the notional amount by the entire $90.0 million

Effect of Derivative Instruments Designated as Cash Flow Hedges on Statements of Operations

The following presents the effect of derivative instruments designated as cash flow hedges on the accompanying condensed consolidated statements of operations during the three and six months ended June 30, 2015 and 2014:

	Balance in AOCI Beginning of Quarter			Amount of Loss Recognized in AOCI- Effective Portion			Amount of Loss Reclassified from AOCI into Earnings-Effective Portion			Balance in AOCI End of Quarter			Location in Statements of Operations
	(In thousands)
Three Months Ended June 30, 2015
Interest rate swap	(527		)	(7		)	(373		)	(161		)	Interest (expense)
	$	(527	)	$	(7	)	$	(373	)	$	(161	)
Three Months Ended June 30, 2014
Interest rate swap	(2,097		)	(60		)	(444		)	(1,713		)	Interest (expense)
	$	(2,097	)	$	(60	)	$	(444	)	$	(1,713	)
	Balance in AOCI Beginning of Quarter			Amount of Loss Recognized in AOCI- Effective Portion			Amount of Loss Reclassified from AOCI into Earnings-Effective Portion			Balance in AOCI End of Quarter			Location in Statements of Operations
	(In thousands)
Six Months Ended June 30, 2015
Interest rate swap	(898		)	(25		)	(762		)	(161		)	Interest (expense)
	$	(898	)	$	(25	)	$	(762	)	$	(161	)
Six Months Ended June 30, 2014
Interest rate swap	(2,439		)	(169		)	(895		)	(1,713		)	Interest (expense)
	$	(2,439	)	$	(169	)	$	(895	)	$	(1,713	)

XML

COMPREHENSIVE INCOME (LOSS) - Schedule of Comprehensive Loss Income (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Equity [Abstract]
Net income	$ 4,998	$ 4,825	$ 13,382	$ 7,031
Foreign currency translation adjustment	7,166	(234)	(17,227)	585
Change in unrealized gain on derivatives, net of tax	209	219	420	414
Pension liability adjustment, net of tax	(48)	(58)	7	(73)
Comprehensive income (loss)	$ 12,325	$ 4,752	$ (3,418)	$ 7,957

XML

DERIVATIVE INSTRUMENTS - Summary of Fair Value in Balance Sheet for Derivatives Designated Hedging Instruments (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Fair value of derivative liabilities	$ 161	$ 898
Interest Rate Swap
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Notional amount derivative instruments	90,000	97,500
Reduction in notional amount of interest rate derivatives in next twelve months	90,000
Interest Rate Swap | Accrued expenses and other current liabilities
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Fair value of derivative liabilities	$ 161	$ 898

XML

GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Goodwill [Line Items]
Impairment of intangible assets	$ 409	$ 600
Annual amortization expense expected to approximate in 2015	31,900
Annual amortization expense expected to approximate in 2016	29,700
Annual amortization expense expected to approximate in 2017	27,600
Annual amortization expense expected to approximate in 2018	27,300
Annual amortization expense expected to approximate in 2019	26,500
Confluent Surgical, Inc.
Goodwill [Line Items]
Impairment of intangible assets	$ 600

XML

COMPREHENSIVE INCOME (LOSS) (Reclassification Adjustment from AOCI) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest (expense)	$ (5,471)	$ (5,382)	$ (10,963)	$ (10,524)
Tax (expense) or benefit	(2,574)	(2,361)	(6,807)	(4,130)
Net income	4,998	$ 4,825	13,382	$ 7,031
Reclassification out of Accumulated Other Comprehensive Income | Gains and Losses on Cash Flow Hedges
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Tax (expense) or benefit	160		327
Net income	(213)		(434)
Reclassification out of Accumulated Other Comprehensive Income | Gains and Losses on Cash Flow Hedges | Interest Rate Swap
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest (expense)	$ (373)		$ (761)

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INCOME TAXES - Summary of Effective Tax Rate (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Tax Disclosure [Abstract]
Reported tax rate	34.00%	32.90%	33.70%	37.00%

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GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

In the first quarter of 2015 the Company revised its reportable segments in connection with the realignment of its portfolio. Specifically, the Company integrated the five existing business divisions into three global divisions, no longer focusing on international as a separate reportable segment but managing each business globally. The change in reportable segments resulted in the Company's requirement to reallocate existing goodwill to the new reportable segments based on the relative-fair-value of the Company's four underlying reporting units. With the reportable segments now being managed at a global level, goodwill previously assigned to the EMEA, LAPAC, and Private Label reporting units was reallocated to the new global reporting units. The Company estimated the fair value of the reporting units using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty. Inputs used to fair value the Company's reporting units are considered inputs of the fair value hierarchy. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement. The key assumptions impacting the valuation included the following:

• The reporting unit's financial projections, which are based on management's assessment of regional and macroeconomic variables, industry trends and market opportunities, and the Company's strategic objectives and future growth plans.

• The projected terminal value for the reporting unit, which represents the present value of projected cash flows beyond the last period in the discounted cash flow analysis. The terminal value reflects the Company's assumptions related to long-term growth rates and profitability, which are based on several factors, including local and macroeconomic variables, market opportunities, and future growth plans.

• The discount rate used to measure the present value of the projected future cash flows is set using a weighted-average cost of capital method that considers market and industry data as well as the Company's specific risk factors that are likely to be considered by a market participant. The weighted-average cost of capital is the Company's estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise.

Based on the Company's fair value calculations, with the exception of the Spine reporting unit, given the excess of the Specialty Surgical Solutions Instruments, Specialty Surgical Solutions Neurosurgery, and Orthopedics and Tissue Technologies estimated fair value over their carrying value after the reallocation of goodwill, management concluded that any future goodwill impairment is not likely. The Company's allocation of goodwill to the Spine reporting unit has been impaired during the first quarter of 2015 as a result of the carrying value of its goodwill exceeding the implied fair value. Refer to Note 12 - Segment and Geographic Information for more information on the change in reportable segments.

Changes in the carrying amount of goodwill for the six months ended June 30, 2015 were as follows:

	Specialty Surgical Solutions			Orthopedics and Tissue Technologies			Spine			Total
	(In thousands)
Goodwill, gross	$	281,829		$	81,650		$	409		$	363,888
Accumulated impairment losses	—			—			—			—
Goodwill at December 31, 2014	281,829			81,650			409			363,888
MicroFrance working capital and purchase price adjustments	(828		)	—			—			(828		)
Metasurg working capital and purchase price adjustment	—			263			—			263
Goodwill impairment charge	—			—			(409		)	(409		)
Foreign currency translation	(4,451		)	(1,441		)	—			(5,892		)
Balance, June 30, 2015	$	276,550		$	80,472		$	—		$	357,022

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

	June 30, 2015
	Weighted Average Life	Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Completed technology	18 years	$	344,406	$	(72,393	)	$	272,013
Customer relationships	12 years	159,548		(91,621		)	67,927
Trademarks/brand names	34 years	43,221		(15,814		)	27,407
Trademarks/brand names	Indefinite	48,484		—			48,484
Supplier relationships	27 years	34,721		(11,522		)	23,199
All other (1)	4 years	2,721		(1,168		)	1,553
		$	633,101	$	(192,518	)	$	440,583

	December 31, 2014
	Weighted Average Life	Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Completed technology	18 years	$	345,082	$	(62,920	)	$	282,162
Customer relationships	12 years	162,031		(87,653		)	74,378
Trademarks/brand names	34 years	44,520		(15,755		)	28,765
Trademarks/brand names	Indefinite	48,484		—			48,484
Supplier relationships	27 years	34,721		(10,809		)	23,912
All other (1)	4 years	4,810		(3,052		)	1,758
		$	639,648	$	(180,189	)	$	459,459

⁽¹⁾  At June 30, 2015 and December 31, 2014, all other included in-process research and development ("IPR&D") of $1.4 million in both periods, which was indefinite-lived.

During the six months ended June 30, 2014, the Company recorded an impairment charge of $0.6 million in cost of goods sold related to technology assets acquired from Confluent Surgical that will no longer be sold resulting from a regulatory event that occurred after the acquisition date.

Based on quarter-end exchange rates, annual amortization expense (including amounts reported in cost of product revenues, but excluding any possible future amortization associated with acquired in-process research and development) is expected to approximate $31.9 million in 2015, $29.7 million in 2016, $27.6 million in 2017, $27.3 million in 2018 and $26.5 million in 2019. Identifiable intangible assets are initially recorded at fair market value at the time of acquisition using an income or cost approach.

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DERIVATIVE INSTRUMENTS - Effect of Derivative Instruments Designated Cash Flow Hedges on Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Balance in AOCI Beginning of Period	$ (527)	$ (2,097)	$ (898)	$ (2,439)
Amount of Loss Recognized in AOCI- Effective Portion	(7)	(60)	(25)	(169)
Amount of Loss Reclassified from AOCI into Earnings-Effective Portion	(373)	(444)	(762)	(895)
Balance in AOCI End of Period	(161)	(1,713)	(161)	(1,713)
Interest Expense | Interest Rate Swap
Derivative Instruments, Gain (Loss) [Line Items]
Balance in AOCI Beginning of Period	(527)	(2,097)	(898)	(2,439)
Amount of Loss Recognized in AOCI- Effective Portion	(7)	(60)	(25)	(169)
Amount of Loss Reclassified from AOCI into Earnings-Effective Portion	(373)	(444)	(762)	(895)
Balance in AOCI End of Period	$ (161)	$ (1,713)	$ (161)	$ (1,713)

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SEGMENT AND GEOGRAPHIC INFORMATION (Tables)

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Total Revenue By Major Geographic Area

Net sales and profit by reportable segment for the three and six months ended June 30, 2015 and 2014 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015		2014
	(In thousands)
Segment Net Sales
Specialty Surgical Solutions	$	146,709		$	137,516		$	286,769	$	264,710
Orthopedics and Tissue Technologies	63,834			57,954			125,199		112,544
Spine	33,535			35,881			65,775		69,156
Total revenues	$	244,078		$	231,351		$	477,743	$	446,410
Segment Profit
Specialty Surgical Solutions	$	62,325		$	48,991		$	122,657	$	97,288
Orthopedics and Tissue Technologies	18,428			20,019			38,010		37,020
Spine	1,266			4,101			1,578		6,849
Segment profit	82,019			73,111			162,245		141,157
Amortization	(3,104		)	(2,985)			(6,639)		(6,018)
Corporate and other	(64,961		)	(57,734		)	(124,864)		(114,009		)
Operating income	$	13,954		$	12,392		$	30,742	$	21,130

The Company attributes revenues to geographic areas based on the location of the customer. There are certain revenues managed by the various U.S. segments that are generated from non-U.S. customers and therefore are included in Europe and the Rest of World revenues below. Total revenue by major geographic area consisted of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands)
United States	$	190,093	$	178,806	$	371,030	$	342,187
Europe	27,497		25,851		54,258		51,176
Rest of World	26,488		26,694		52,455		53,047
Total Revenues	$	244,078	$	231,351	$	477,743	$	446,410

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COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Schedule of Comprehensive (Loss) Income

Comprehensive income (loss) was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(In thousands)
Net income	$	4,998		$	4,825		$	13,382		$	7,031
Foreign currency translation adjustment	7,166			(234		)	(17,227		)	585
Change in unrealized gain on derivatives, net of tax	209			219			420			414
Pension liability adjustment, net of tax	(48		)	(58		)	7			(73		)
Comprehensive income (loss)	$	12,325		$	4,752		$	(3,418	)	$	7,957

Schedule of Changes in Accumulated Other Comprehensive Income by Component

Changes in Accumulated Other Comprehensive Loss by component between December 31, 2014 and June 30, 2015 are presented in the table below, net of tax:

	Gains and (Losses) on Cash Flow Hedges			Defined Benefit Pension Items			Foreign Currency Items			Total
	(In thousands)
Beginning balance	$	(512	)	$	(906	)	$	(22,070	)	$	(23,488	)
Other comprehensive (loss) income before reclassifications	(14		)	7			(17,227		)	(17,234		)
Amounts reclassified from accumulated other comprehensive income	434			—			—			434
Net current-period other comprehensive income (loss)	420			7			(17,227		)	(16,800		)
Ending balance	$	(92	)	$	(899	)	$	(39,297	)	$	(40,288	)

Reclassification out of Accumulated Other Comprehensive Income (Loss)

The reclassification adjustments out of Accumulated Other Comprehensive Loss during the three and six months ended June 30, 2015 were as follows:

Three Months Ended June 30, 2015
Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Affected Line Item in the Statement where Net Income (Loss) is Presented
	(In thousands)
Gains and losses on cash flow hedges
Interest rate swap	$	(373	)	Interest (expense)
	160			Tax (expense) or benefit
	$	(213	)	Net of tax
Six Months Ended June 30, 2015
Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Affected Line Item in the Statement where Net Income (Loss) is Presented
	(In thousands)
Gains and losses on cash flow hedges
Interest rate swap	$	(761	)	Interest (expense)
	327			Tax (expense) or benefit
	$	(434	)	Net of tax

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SUBSEQUENT EVENTS - Narrative (Details)	Jul. 17, 2015 USD ($) case acquisition	Jul. 02, 2015 $ / shares	Jul. 02, 2014 USD ($)	Jun. 15, 2011 $ / shares
Subsequent Event
Subsequent Event [Line Items]
Distribution of shares, percent		100.00%
Shares of Integra required for share of Sea Spine		3
Number of businesses acquired | acquisition	2
Consideration for acquisition	$ 312,000,000
TEI Biosciences Inc. | Subsequent Event
Subsequent Event [Line Items]
Consideration for acquisition	211,000,000
TEI Medical Inc. | Subsequent Event
Subsequent Event [Line Items]
Consideration for acquisition	$ 101,000,000
TEI Biosciences Inc and TEI Medical Inc. | Subsequent Event
Subsequent Event [Line Items]
Number of active cases | case	45
Indemnification policy in place	$ 3,000,000.0
2016 Convertible Senior Notes
Subsequent Event [Line Items]
Initial conversion price, per share | $ / shares				$ 57.44
Common stock based on initial conversion rate ratio (in shares)				17.4092
Strike price of the call transaction (in dollars per share) | $ / shares				$ 57.44
Strike price of warrant transactions (in dollars per share) | $ / shares				$ 70.05
2016 Convertible Senior Notes | Subsequent Event
Subsequent Event [Line Items]
Initial conversion price, per share | $ / shares		$ 52.83
Common stock based on initial conversion rate ratio (in shares)		18.9287
Strike price of the call transaction (in dollars per share) | $ / shares		$ 52.83
Strike price of warrant transactions (in dollars per share) | $ / shares		$ 64.43
July 2014 Amendment | Revolving Credit Facility
Subsequent Event [Line Items]
Proceeds from lines of credit			$ 272,000,000
July 2014 Amendment | Revolving Credit Facility | Subsequent Event
Subsequent Event [Line Items]
Proceeds from lines of credit	310,000,000
Indemnification period - Up to 15 months after close | TEI Biosciences Inc and TEI Medical Inc. | Subsequent Event
Subsequent Event [Line Items]
Maximum indemnification from acquisition	$ 30,000,000.0
Period of indemnification	15 months
Indemnification period - Up to 3 years after close | TEI Biosciences Inc and TEI Medical Inc. | Subsequent Event
Subsequent Event [Line Items]
Maximum indemnification from acquisition	$ 30,000,000.0
Period of indemnification	3 years
Minimum indemnification from acquisition	$ 20,000,000.0

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STOCK-BASED COMPENSATION - Narrative (Detail) - Jun. 30, 2015 - USD ($) $ in Millions	Total
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period, net of forfeitures	77,347
Requisite service periods of awards, in years	3 years
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options exercisable, vesting period, in years	4 years
Total unrecognized compensation costs	$ 2.4
Weighted-average period for cost recognition, in years	2 years
Restricted stock awards/stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options exercisable, vesting period, in years	3 years
Total unrecognized compensation costs	$ 18.4
Weighted-average period for cost recognition, in years	2 years
Awards granted during period	146,300
Performance shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted during period	64,930
Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period, in years	8 years
Directors and certain executive officers | Minimum | Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period, in years	8 years
Directors and certain executive officers | Maximum | Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period, in years	10 years

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BUSINESS ACQUISITIONS - Narrative (Details) - USD ($) $ in Thousands				3 Months Ended		6 Months Ended
	Dec. 05, 2014	Oct. 27, 2014	Jan. 15, 2014	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Business Acquisition [Line Items]
Impairment of intangible assets						$ 409	$ 600
Metasurg
Business Acquisition [Line Items]
Consideration for acquisition	$ 27,600
Adjustment of consideration for acquisition	400					400
Payments for acquisition	26,500
Contingent consideration acquisition	700
Business acquisition, additional cash consideration payable upon completion of milestones	$ 38,500
Fair value inputs, discount rate	19.90%
Revenue of acquired company since acquisition				$ 1,700		3,300
Net assets acquired				27,558		27,558
Medtronic MicroFrance
Business Acquisition [Line Items]
Adjustment of consideration for acquisition		$ (1,500)				1,500
Payments for acquisition		60,100
Revenue of acquired company since acquisition				6,300		12,100
Adjustment to goodwill		$ 800
Net assets acquired				60,067		60,067
Confluent Surgical, Inc.
Business Acquisition [Line Items]
Contingent consideration acquisition			$ 20,900
Business acquisition, additional cash consideration payable upon completion of milestones			$ 30,000
Fair value inputs, discount rate			2.20%
Revenue of acquired company since acquisition				18,900	$ 14,100	36,600	$ 32,400
Net assets acquired			$ 255,895	$ 255,895		255,895
Payments to acquire business interest			231,000
Payments for transitional supply agreements from acquisition			$ 4,000
Contingent liability extension period			2 years
Consideration liability, number of required days for extension			180 days
Contingent liability, period of consideration arrangement			5 years
Contingent liability, period of transitional supply price increases			3 years
Impairment of intangible assets						$ 600
Fair value input, probability of event			95.00%
Incremental increase in contingent liability			$ 300
Incremental decrease in contingent liability			400
Confluent Surgical, Inc. | Potential Cash Consideration Fair Value
Business Acquisition [Line Items]
Business acquisition, additional cash consideration payable upon completion of milestones			25,000
Confluent Surgical, Inc. | Cash Consideration Two
Business Acquisition [Line Items]
Business acquisition, additional cash consideration payable upon completion of milestones			$ 5,000
Deferred Tax Liability | Confluent Surgical, Inc.
Business Acquisition [Line Items]
Working capital and purchase price adjustment					$ 12,400

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BUSINESS ACQUISITIONS - Schedule of Purchase Price Allocation (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014	Jan. 15, 2014
Business Acquisition [Line Items]
Goodwill	$ 357,022	$ 363,888
Metasurg
Business Acquisition [Line Items]
Inventory	4,800
Fixed assets	1,246
Goodwill	732
Net assets acquired	27,558
Metasurg | In Process Research and Development
Business Acquisition [Line Items]
Indefinite intangible assets	190
Metasurg | Technology-Based Intangible Assets
Business Acquisition [Line Items]
Finite intangible assets	$ 20,590
Metasurg | Technology-Based Intangible Assets | Minimum
Business Acquisition [Line Items]
Weighted average useful life	8 years
Metasurg | Technology-Based Intangible Assets | Maximum
Business Acquisition [Line Items]
Weighted average useful life	14 years
Medtronic MicroFrance
Business Acquisition [Line Items]
Cash	$ 2,195
Inventory	3,155
Inventory deposit	620
Fixed assets	3,675
Other current assets	5,025
Goodwill	16,607
Total assets acquired	65,977
Accounts payable and other liabilities	5,910
Net assets acquired	60,067
Medtronic MicroFrance | Trade Names
Business Acquisition [Line Items]
Finite intangible assets	$ 11,990
Medtronic MicroFrance | Trade Names | Maximum
Business Acquisition [Line Items]
Weighted average useful life	20 years
Medtronic MicroFrance | Technology-Based Intangible Assets
Business Acquisition [Line Items]
Finite intangible assets	$ 4,580
Medtronic MicroFrance | Technology-Based Intangible Assets | Minimum
Business Acquisition [Line Items]
Weighted average useful life	15 years
Medtronic MicroFrance | Technology-Based Intangible Assets | Maximum
Business Acquisition [Line Items]
Weighted average useful life	16 years
Medtronic MicroFrance | Customer relationships
Business Acquisition [Line Items]
Finite intangible assets	$ 18,130
Medtronic MicroFrance | Customer relationships | Minimum
Business Acquisition [Line Items]
Weighted average useful life	12 years
Medtronic MicroFrance | Customer relationships | Maximum
Business Acquisition [Line Items]
Weighted average useful life	16 years
Confluent Surgical, Inc.
Business Acquisition [Line Items]
Inventory deposit	$ 4,000
Fixed assets	438
Deferred tax assets - long term	12
Goodwill	105,331
Total assets acquired	349,981
Contingent supply liability	5,891
Other	731
Deferred tax liabilities - long term	87,464
Net assets acquired	$ 255,895		$ 255,895
Confluent Surgical, Inc. | Technology-Based Intangible Assets | Minimum
Business Acquisition [Line Items]
Weighted average useful life	3 years
Confluent Surgical, Inc. | Technology-Based Intangible Assets | Maximum
Business Acquisition [Line Items]
Weighted average useful life	20 years
Confluent Surgical, Inc. | Developed Technology Rights
Business Acquisition [Line Items]
Finite intangible assets	$ 239,800
Confluent Surgical, Inc. | Other Intangible Assets
Business Acquisition [Line Items]
Finite intangible assets	$ 400

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INVENTORIES

6 Months Ended

Jun. 30, 2015

Inventory, Net [Abstract]

INVENTORIES

INVENTORIES

Inventories, net consisted of the following:

	June 30, 2015		December 31, 2014
	(In thousands)
Finished goods	$	146,912	$	150,483
Work in process	54,707		50,166
Raw materials	40,216		36,465
	$	241,835	$	237,114

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BUSINESS ACQUISITIONS - Schedule of Contingent Consideration (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Business Acquisition, Contingent Consideration [Roll Forward]
Loss from increase in fair value of contingent consideration liabilities	$ 239	$ (998)
Level 3 | Potential Cash Consideration Fair Value
Business Acquisition, Contingent Consideration [Roll Forward]
Balance as of January 1, 2015	22,008
Fair value at June 30, 2015	22,247
Level 3 | Selling, General and Administrative Expenses | Potential Cash Consideration Fair Value
Business Acquisition, Contingent Consideration [Roll Forward]
Loss from increase in fair value of contingent consideration liabilities	$ 239

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DEBT - Components of Interest Expense (Detail) - 2016 Convertible Senior Notes - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Debt Instrument [Line Items]
Amortization of the discount on the liability component	$ 1,885	$ 1,766	$ 3,744	$ 3,433
Cash interest related to the contractual interest coupon	824	837	1,669	1,639
Total	$ 2,709	$ 2,603	$ 5,413	$ 5,072

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SEGMENT AND GEOGRAPHIC INFORMATION - Narrative (Detail) - 6 months ended Jun. 30, 2015 product in Thousands	product Segment
Segment Reporting [Abstract]
Number of reportable segments | Segment	3
Specialty Surgical Solutions
Segment Reporting Information [Line Items]
Number of products offered	60

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Total revenue, net	$ 244,078	$ 231,351	$ 477,743	$ 446,410
Costs and expenses:
Cost of goods sold	86,539	86,976	173,261	169,359
Research and development	13,891	13,745	26,447	26,312
Selling, general and administrative	126,590	115,253	240,654	223,591
Intangible asset amortization	3,104	2,985	6,639	6,018
Total costs and expenses	230,124	218,959	447,001	425,280
Operating income	13,954	12,392	30,742	21,130
Interest income	8	58	13	120
Interest expense	(5,471)	(5,382)	(10,963)	(10,524)
Other (expense) income, net	(919)	118	397	435
Income before income taxes	7,572	7,186	20,189	11,161
Income tax expense	2,574	2,361	6,807	4,130
Net income	$ 4,998	$ 4,825	$ 13,382	$ 7,031
Basic net income per common share (in dollars per share)	$ 0.15	$ 0.15	$ 0.41	$ 0.22
Diluted net income per common share (in dollars per share)	$ 0.15	$ 0.15	$ 0.40	$ 0.21
Weighted average common shares outstanding (See Note 10):
Basic (in shares)	33,032	32,398	32,884	32,336
Diluted (in shares)	33,939	32,804	33,644	32,796
Comprehensive income (loss) (See Note 11)	$ 12,325	$ 4,752	$ (3,418)	$ 7,957

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TREASURY STOCK (Additional Information) (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Oct. 28, 2014
Accelerated Share Repurchases [Line Items]
Stock repurchased during period, shares	0	0
Amount available for share repurchase under this latest authorization	$ 75,000,000
October 2012 Authorization
Accelerated Share Repurchases [Line Items]
Stock repurchase program, authorized amount			$ 75,000,000

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

General

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

In the opinion of management, the June 30, 2015 unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K. The December 31, 2014 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. Operating results for the three- and six-month periods ended June 30, 2015 are not necessarily indicative of the results to be expected for the entire year.

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

Certain amounts from the prior year’s financial statements have been reclassified in order to conform to the current year’s presentation.

Recently Issued Accounting Standards

In April 2014, the FASB issued amendments to guidance for reporting discontinued operations and disposals of components of an entity. The amended guidance requires that a disposal representing a strategic shift that has (or will have) a major effect on an entity’s financial results or a business activity classified as held for sale should be reported as discontinued operations. The amendments also expand the disclosure requirements for discontinued operations and add new disclosures for individually significant dispositions that do not qualify as discontinued operations. The amendments are effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014 (early adoption is permitted only for disposals that have not been previously reported). The new guidance is effective for Integra prospectively for all disposals (or classifications as held for sale) of components of an entity that occur after January 1, 2015 and will be in effect for the spin-off of the spine business in the Company's third quarter 2015 results.

In May 2014, the FASB issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB deferred for one year the effective date of the new revenue standard, but early adoption will be permitted. The new standard will be effective for the Company on January 1, 2018. The Company is in the process of evaluating the impact of this standard on its financial statements.

In June 2014, the FASB issued Update No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (Topic 718). The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This update is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. The implementation of the amended guidance is not expected to have a material impact on the consolidated financial position or results of operations.

In August 2014, the FASB issued Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendment requires management to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around management’s plan to alleviate these doubts are required. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2016. The implementation of the amended guidance is not expected to have an impact on current disclosures in the financial statements.

In April 2015, the FASB issued Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendment requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The new standard is limited to the presentation of debt issuance costs and does not affect the recognition or measurement of debt issuance costs. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2015. The implementation of the amended guidance is not expected to have a material impact on the consolidated results of operations and will result in a reclassification of the debt issuance costs from other long-term assets to long-term debt when adopted.

There are no other recently issued accounting pronouncements that are expected to have a material effect on the financial position, results of operations or cash flows.

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GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Goodwill [Roll Forward]
Goodwill at December 31, 2014	$ 363,888
Balance, June 30, 2015	357,022
Orthopedics and Tissue Technologies
Goodwill [Line Items]
Goodwill, gross		$ 81,650
Accumulated impairment losses		0
Goodwill [Roll Forward]
Goodwill at December 31, 2014	81,650
Goodwill impairment charge	0
Foreign currency translation	(1,441)
Balance, June 30, 2015	80,472
Spine
Goodwill [Line Items]
Goodwill, gross		409
Accumulated impairment losses		0
Goodwill [Roll Forward]
Goodwill at December 31, 2014	409
Goodwill impairment charge	(409)
Foreign currency translation	0
Balance, June 30, 2015	0
U.S. Spine And Other
Goodwill [Line Items]
Goodwill, gross		363,888
Accumulated impairment losses		0
Goodwill [Roll Forward]
Goodwill at December 31, 2014	363,888
Goodwill impairment charge	(409)
Foreign currency translation	(5,892)
Balance, June 30, 2015	357,022
Specialty Surgical Solutions
Goodwill [Line Items]
Goodwill, gross		281,829
Accumulated impairment losses		$ 0
Goodwill [Roll Forward]
Goodwill at December 31, 2014	281,829
Goodwill impairment charge	0
Foreign currency translation	(4,451)
Balance, June 30, 2015	276,550
Medtronic MicroFrance
Goodwill [Roll Forward]
Balance, June 30, 2015	16,607
Medtronic MicroFrance | Orthopedics and Tissue Technologies
Goodwill [Roll Forward]
Working capital and purchase price adjustment	0
Medtronic MicroFrance | Spine
Goodwill [Roll Forward]
Working capital and purchase price adjustment	0
Medtronic MicroFrance | U.S. Spine And Other
Goodwill [Roll Forward]
Working capital and purchase price adjustment	(828)
Medtronic MicroFrance | Specialty Surgical Solutions
Goodwill [Roll Forward]
Working capital and purchase price adjustment	(828)
Metasurg
Goodwill [Roll Forward]
Balance, June 30, 2015	732
Metasurg | Orthopedics and Tissue Technologies
Goodwill [Roll Forward]
Working capital and purchase price adjustment	263
Metasurg | Spine
Goodwill [Roll Forward]
Working capital and purchase price adjustment	0
Metasurg | U.S. Spine And Other
Goodwill [Roll Forward]
Working capital and purchase price adjustment	263
Metasurg | Specialty Surgical Solutions
Goodwill [Roll Forward]
Working capital and purchase price adjustment	$ 0

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INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2015

Inventory, Net [Abstract]

Schedule of Inventory, Net

Inventories, net consisted of the following:

	June 30, 2015		December 31, 2014
	(In thousands)
Finished goods	$	146,912	$	150,483
Work in process	54,707		50,166
Raw materials	40,216		36,465
	$	241,835	$	237,114

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GOODWILL AND OTHER INTANGIBLE ASSETS - Components of Company's Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
Cost	$ 633,101	$ 639,648
Accumulated Amortization	(192,518)	(180,189)
Net	$ 440,583	$ 459,459
Completed technology
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Life	18 years	18 years
Cost	$ 344,406	$ 345,082
Accumulated Amortization	(72,393)	(62,920)
Net	$ 272,013	$ 282,162
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Life	12 years	12 years
Cost	$ 159,548	$ 162,031
Accumulated Amortization	(91,621)	(87,653)
Net	$ 67,927	$ 74,378
Trademarks/brand names
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Life	34 years	34 years
Cost	$ 43,221	$ 44,520
Accumulated Amortization	(15,814)	(15,755)
Net	27,407	28,765
Trademarks/brand names indefinite
Acquired Finite-Lived Intangible Assets [Line Items]
Cost	48,484	48,484
Accumulated Amortization	0	0
Net	$ 48,484	$ 48,484
Supplier relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Life	27 years	27 years
Cost	$ 34,721	$ 34,721
Accumulated Amortization	(11,522)	(10,809)
Net	$ 23,199	$ 23,912
All other
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Life	4 years	4 years
Cost	$ 2,721	$ 4,810
Accumulated Amortization	(1,168)	(3,052)
Net	1,553	1,758
In Process Research and Development
Acquired Finite-Lived Intangible Assets [Line Items]
Other Indefinite-lived Intangible Assets	$ 1,400	$ 1,400

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DEBT (Tables)

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt

At June 30, 2015 there was $150.0 million outstanding under the term loan component of the Senior Credit Facility at a weighted average interest rate of 1.8%. Contractual repayments of the term loan do not begin until September 30, 2015 and are due as follows:

Year Ended December 31,	Principal Repayment
	(In thousands)
2015	$	3,750
2016	9,375
2017	13,125
2018	15,000
2019	108,750
	$	150,000

Components of Interest Expense

The interest expense components of the Company’s convertible notes are as follows (net of capitalized interest amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands)
2016 Notes:
Amortization of the discount on the liability component	$	1,885	$	1,766	$	3,744	$	3,433
Cash interest related to the contractual interest coupon	824		837		1,669		1,639
Total	$	2,709	$	2,603	$	5,413	$	5,072

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BUSINESS ACQUISITIONS

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

BUSINESS ACQUISITIONS

BUSINESS ACQUISITIONS

Metasurg

On December 5, 2014, the Company acquired certain assets of Koby Ventures II, L.P. dba Metasurg ("Metasurg") for an aggregate purchase price of $27.6 million (including working capital and purchase price adjustments of $0.4 million). The purchase price consists of an initial cash payment to Metasurg of $26.5 million, a separate purchase price adjustment cash payment of $0.4 million, and contingent consideration with an acquisition date fair value of $0.7 million. The potential maximum undiscounted contingent consideration of $38.5 million is based on reaching certain sales levels for acquired products from April 1, 2015 through June 30, 2016. The fair value of this liability is based on future sales projections of the Metasurg product under various potential scenarios and weighting the probability of these outcomes for the twelve-month period ended December 31, 2015. At the date of the acquisition, the cash flow projection was discounted using an internal rate of return of 19.9%. These fair value measurements were based on significant inputs not observed in the market and thus represented a Level 3 measurement.

Metasurg develops intuitive implant systems for the foot and ankle market and sells almost entirely in the U.S. market. The acquired foot and ankle products will enhance the Company's lower extremities market position.

The Company recorded revenue for Metasurg of approximately $1.7 million and $3.3 million in the condensed consolidated statements of operations for the three- and six-month period ended June 30, 2015. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been fully integrated into the Company's operations.

The Company adjusted the preliminary purchase price allocation during the quarter ended June 30, 2015 to reflect the $0.4 million working capital and purchase price adjustment. The following summarizes the preliminary allocation of the purchase price as of June 30, 2015 based on the fair value of the assets acquired and liabilities assumed:

	Preliminary Purchase Price Allocation
	(Dollars in thousands)
Inventory	$	4,800
Property, plant, and equipment	1,246
Intangible assets:			Wtd. Avg. Life:
Technology product rights	20,590		8 - 14 Years
In-process research and development	190		Indefinite
Goodwill	732
Net assets acquired	$	27,558

MicroFrance

On October 27, 2014, the Company acquired all outstanding shares of Medtronic Xomed Instrumentation, SAS ("MicroFrance") from Medtronic, Inc. ("Medtronic") as well as certain assets of Medtronic for $60.1 million in cash (including working capital and purchase price adjustments of $1.5 million, of which $0.8 million was recorded against goodwill). MicroFrance specializes in manual ear, nose, and throat ("ENT") surgical instruments and designs, manufactures, and sells reusable handheld instruments to ENT and laparoscopy surgical specialists around the world. The acquired ENT instruments fill a portfolio gap for the Company with clear growth opportunities through market adjacencies and provides for increased scale and reach in the international market.

The Company recorded revenue for MicroFrance of approximately $6.3 million and $12.1 million in the condensed consolidated statements of operations for the three- and six-month period ended June 30, 2015. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been fully integrated into the Company's operations.

The Company adjusted the preliminary purchase price allocation during the quarter ended March 31, 2015 to reflect the $1.5 million working capital and purchase price adjustments. The following summarizes the final allocation of the purchase price as of June 30, 2015 based on the fair value of the assets acquired and liabilities assumed:

	Final Purchase Price Allocation
	(Dollars in thousands)
Cash	$	2,195
Inventory	3,155
Prepaid expenses	620
Property, plant, and equipment	3,675
Other current assets	5,025
Intangible assets:			Wtd. Avg. Life:
Trade name	11,990		20 Years
Technology	4,580		15 - 16 Years
Customer relationships	18,130		12 - 16 Years
Goodwill	16,607
Total assets acquired	65,977
Accounts payable and other liabilities	5,910
Net assets acquired	$	60,067

Confluent Surgical, Inc.

On January 15, 2014, the Company acquired all outstanding shares of Confluent Surgical, Inc., ("Confluent Surgical") - including its surgical sealant and adhesion barrier product lines - from Covidien Group S.a.r.l, ("Covidien") for an aggregate purchase price of $255.9 million. The purchase price consists of an initial cash payment to Covidien of $231.0 million upon the closing of the transaction, a separate prepayment of $4.0 million made under a transitional supply agreement with an affiliate of Covidien, and contingent consideration with an acquisition date fair value of $20.9 million. The potential maximum undiscounted contingent consideration of $30.0 million consists of $25.0 million upon obtaining certain U.S. governmental approvals and $5.0 million upon obtaining certain European governmental approvals, both related to the completion of the transition of the Confluent Surgical business to the Company.

The transitional supply agreement secures the supply of the acquired products from an affiliate of Covidien until the earlier of (i) the time that the transition of the Confluent Surgical business as discussed above is complete, or (ii) the fifth anniversary of the effective date of the agreement (the agreement also contains an option to extend for another two years by providing written notice at least 180 days prior to the end of the initial five-year period). This agreement contains financial incentives to the affiliate of Covidien for the timely supply of products each fiscal quarter through the third anniversary of the agreement. The prices paid under the supply agreement are essentially flat through the third anniversary of the agreement, and then increase significantly each of the following three years. The Company also entered into a transition services agreement with an affiliate of Covidien at the closing for services such as customer service, accounting and information technology management, clinical and regulatory affairs, manufacturing transition services, and other functions.

This acquisition complements the Company's global neurosurgery growth strategy aimed at providing a broader set of solutions for surgical procedures in the head.

The Company recorded revenue for Confluent Surgical of approximately $18.9 million and $36.6 million in the condensed consolidated statements of operations for the three- and six-month periods ended June 30, 2015 and $14.1 million and $32.4 million for the three- and six-month periods ended June 30, 2014. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been fully integrated into the Company's operations.

The Company adjusted the preliminary purchase price allocation during the quarter ended June 30, 2014 to reduce deferred tax liabilities by $12.4 million. This adjustment offset goodwill and was the result of the Company analyzing and revising its tax positions in certain jurisdictions. The following summarizes the final allocation of the purchase price as of June 30, 2015 based on the fair value of the assets acquired and liabilities assumed:

	Final Purchase Price Allocation
	(Dollars in thousands)
Inventory deposit	$	4,000
Fixed assets	438
Intangible assets:			Wtd. Avg. Life
Technology product rights	239,800		3 - 20 Years
Other	400		Less than 1 year
Deferred tax assets - long term	12
Goodwill	105,331
Total assets acquired	349,981
Contingent supply liability	5,891
Other	731
Deferred tax liabilities - long term	87,464
Net assets acquired	$	255,895

Subsequent to the acquisition date, a regulatory event occurred that resulted in the full-impairment of one of the acquired technology product rights of $0.6 million. This event was not known, or knowable, at the time of the acquisition and therefore the impairment has been included in the Company's cost of sales.

The Company accounted for the contingent supply liability by recording its fair value as a liability on the date of the acquisition based on a discounted cash-flow model. This contingent supply liability relates to contractual quarterly incentive payments that will be made to an affiliate of Covidien if certain supply minimums under the transitional supply agreement are met.

The Company accounted for the contingent consideration by recording its fair value as a liability on the date of the acquisition. The contingent consideration relates to the Company's obtaining certain U.S. and European regulatory approvals. At the date of the acquisition, both of these milestones were valued using a discount rate of 2.2%, which is equivalent to the cost of debt for the estimated time horizon, and an overall probability of occurring of 95%. Accordingly, on January 15, 2014 the Company recorded a $20.9 million liability representing the initial fair value estimate of the probability weighted contingent consideration that management believes will be paid between early 2017 and late 2018. Depending on the expected timing of the estimated payments, the acquisition date fair value of the probability adjusted payments could have been $0.3 million higher or $0.4 million lower. These fair value measurements were based on significant inputs not observed in the market and thus represented a Level 3 measurement. The contingent consideration is re-measured to fair value at each reporting date until the contingency is resolved, and those changes in fair value are recognized in earnings.

The goodwill recorded in connection with these acquisitions is based on (i) expected cost savings, operating synergies and other benefits expected to result from the combined operations, (ii) the value of the going-concern element of the existing businesses (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately), and (iii) intangible assets that do not qualify for separate recognition such as an assembled workforce. The acquisitions generated a combination of deductible and non-deductible goodwill.

Contingent consideration

The Company increased the fair value of contingent consideration during the six-month period ended June 30, 2015 to reflect the change in the time value of money during the period. A reconciliation of the opening balances to the closing balances of these Level 3 measurements is as follows (in thousands):

			Location in Statement of Operations
Balance as of January 1, 2015	$	22,008
Loss from increase in fair value of contingent consideration liabilities	239		Selling, general and administrative
Fair value at June 30, 2015	$	22,247

The entire contingent consideration balance was included in Other liabilities at June 30, 2015 and December 31, 2014.

Pro Forma Results

The following unaudited pro forma financial information summarizes the results of operations for the three and six months ended June 30, 2014 as if the acquisitions completed by the Company during 2014 had been completed as of January 1, 2013. The pro forma results are based upon certain assumptions and estimates, and they give effect to actual operating results prior to the acquisition and adjustments to reflect (i) the change in interest expense, depreciation expense, and intangible asset amortization, (ii) certain external expenses related to the acquisition as if they were incurred on January 1, 2013 that will not be recurring in the post-acquisition periods, and (iii) income taxes on the aforementioned adjustments at the Company’s statutory rate. No effect has been given to other cost reductions or operating synergies. As a result, these pro forma results do not necessarily represent results that would have occurred if the acquisition had taken place on the basis assumed above, nor are they indicative of the results of future combined operations.

	Three Months Ended June 30, 2014		Six Months Ended June 30, 2014
	(In thousands, except per share amounts)
Total revenue	$	241,801	$	467,310
Net income	$	7,009	$	12,581
Net income per share:
Basic	$	0.22	$	0.39

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 131,296	$ 71,994
Trade accounts receivable, net of allowances of $6,447 and $6,184	134,546	131,918
Inventories, net	241,835	237,114
Deferred tax assets	58,173	58,663
Prepaid expenses and other current assets	42,397	29,632
Total current assets	608,247	529,321
Property, plant and equipment, net	215,460	209,986
Intangible assets, net	440,583	459,459
Goodwill	357,022	363,888
Deferred tax assets	5,689	5,603
Other assets	10,893	10,368
Total assets	1,637,894	1,578,625
Current liabilities:
Borrowings under senior credit facility	7,500	3,750
Convertible securities	2,903	0
Accounts payable, trade	58,197	34,060
Deferred revenue	4,303	5,176
Accrued compensation	40,019	40,943
Accrued expenses and other current liabilities	42,831	42,096
Total current liabilities	155,753	126,025
Long-term borrowings under senior credit facility	429,375	413,125
Long-term convertible securities	214,358	213,121
Deferred tax liabilities	94,701	91,623
Other liabilities	31,984	30,409
Total liabilities	$ 926,171	$ 874,303
Commitments and contingencies
Stockholders’ equity:
Preferred stock; no par value; 15,000 authorized shares; none outstanding	$ 0	$ 0
Common stock; $0.01 par value; 60,000 authorized shares; 42,012 and 41,644 issued at June 30, 2015 and December 31, 2014, respectively	420	416
Additional paid-in capital	790,371	779,555
Treasury stock, at cost; 8,903 shares at June 30, 2015 and December 31, 2014	(367,121)	(367,121)
Accumulated other comprehensive loss	(40,288)	(23,488)
Retained earnings	328,341	314,960
Total stockholders’ equity	711,723	704,322
Total liabilities and stockholders’ equity	$ 1,637,894	$ 1,578,625

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SEGMENT AND GEOGRAPHIC INFORMATION

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

Starting in the first quarter of 2015, because of changes in how the Company internally manages and reports the results of its businesses to its chief operating decision maker, the Company is disclosing three global reportable segments. The three global reportable segments and their activities are described below, as follows:

• The Specialty Surgical Solutions segment includes (i) the Neurosurgery business which sells a full line of products specifically for neurosurgery and critical care such as tissue ablation equipment, dural repair products, cerebral spinal fluid management devices, intracranial monitoring equipment, and cranial stabilization equipment and (ii) the Instruments business which sells more than 60,000 instrument patterns and surgical and lighting products to hospitals, surgery centers, and dental, podiatry, and veterinary offices.

• The Orthopedics and Tissue Technologies segment includes such offerings as skin and wound repair, bone and joint fixation, implants in the upper and lower extremities, bone grafts and nerve and tendon repair.

• The Spine segment focuses on spinal fusion, spinal implants, and deformity correction, together with bone graft substitutes and other related medical devices that are used to enhance the repair and regeneration of bone in various types of orthopedic surgical procedures. Subsequent to June 30, 2015, this operating segment was eliminated due to the spin-off of the SeaSpine business. Refer to Note 14 - Subsequent Events for additional information.

The most notable change from the Company's financial statements for the year ended December 31, 2014 included in the Annual Report on Form 10-K is the integration of the former International reportable segment into the segments noted above as well as the Private Label segment into Orthopedics and Tissue Technologies and Spine.

The Corporate and other category includes (i) various legal, finance, information systems, executive, and human resource functions, (ii) brand management, and (iii) share-based compensation costs. Prior to the realignment, costs related to procurement, manufacturing operations and logistics for the Company's entire organization were not allocated to operating segments. In connection with the realignment, a portion of these costs have now been incorporated into the disclosed operating segments.

The operating results of the various reportable segments as presented are not comparable to one another because (i) certain operating segments are more dependent than others on corporate functions for unallocated general and administrative and/or operational manufacturing functions, and (ii) the Company does not allocate certain manufacturing costs and general and administrative costs to the operating segment results. Net sales and profit by reportable segment for the three and six months ended June 30, 2015 and 2014 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015		2014
	(In thousands)
Segment Net Sales
Specialty Surgical Solutions	$	146,709		$	137,516		$	286,769	$	264,710
Orthopedics and Tissue Technologies	63,834			57,954			125,199		112,544
Spine	33,535			35,881			65,775		69,156
Total revenues	$	244,078		$	231,351		$	477,743	$	446,410
Segment Profit
Specialty Surgical Solutions	$	62,325		$	48,991		$	122,657	$	97,288
Orthopedics and Tissue Technologies	18,428			20,019			38,010		37,020
Spine	1,266			4,101			1,578		6,849
Segment profit	82,019			73,111			162,245		141,157
Amortization	(3,104		)	(2,985)			(6,639)		(6,018)
Corporate and other	(64,961		)	(57,734		)	(124,864)		(114,009		)
Operating income	$	13,954		$	12,392		$	30,742	$	21,130

The Company attributes revenues to geographic areas based on the location of the customer. There are certain revenues managed by the various U.S. segments that are generated from non-U.S. customers and therefore are included in Europe and the Rest of World revenues below. Total revenue by major geographic area consisted of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands)
United States	$	190,093	$	178,806	$	371,030	$	342,187
Europe	27,497		25,851		54,258		51,176
Rest of World	26,488		26,694		52,455		53,047
Total Revenues	$	244,078	$	231,351	$	477,743	$	446,410

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 29, 2015
Document Documentand Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Trading Symbol	iart
Entity Registrant Name	INTEGRA LIFESCIENCES HOLDINGS CORP
Entity Central Index Key	0000917520
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		33,163,415

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

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

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

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

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Trade accounts receivable, allowances	$ 6,447	$ 6,184
Preferred Stock, par value (in dollars per share)	$ 0	$ 0
Preferred Stock, authorized shares (in shares)	15,000,000	15,000,000
Preferred Stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	60,000,000	60,000,000
Common stock, shares issued (in shares)	42,012,000	41,644,000
Treasury stock, shares (in shares)	8,903,000	8,903,000

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

As of June 30, 2015, the Company had stock options, restricted stock awards, performance stock units, contract stock awards and restricted stock unit awards outstanding under three plans, the 2000 Equity Incentive Plan (the “2000 Plan”), the 2001 Equity Incentive Plan (the “2001 Plan”), and the 2003 Equity Incentive Plan (the “2003 Plan,” and collectively, the “Plans”).

Stock options issued under the Plans become exercisable over specified periods, generally within four years from the date of grant for officers, directors, and employees, and generally expire eight years from the grant date for employees, and from eight to ten years for directors and certain executive officers. Restricted stock issued under the Plans vests over specified periods, generally three years after the date of grant. The vesting of performance stock, issued under the Plans, is subject to service and performance conditions.

Stock Options

As of June 30, 2015, there were approximately $2.4 million of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately two years. There were 77,347 stock options granted during the six months ended June 30, 2015.

Awards of Restricted Stock, Performance Stock and Contract Stock

Performance stock, restricted stock and contract stock awards generally have requisite service periods of three years. Performance stock units are subject to graded vesting conditions and the Company expenses their fair value over the requisite service period. The Company expenses the fair value of restricted stock and contract stock awards on a straight-line basis over the vesting period or requisite service period, whichever is shorter. As of June 30, 2015, there were approximately $18.4 million of total unrecognized compensation costs related to these unvested awards. The Company expects to recognize these costs over a weighted-average period of approximately two years. The Company granted 146,300 restricted stock awards/stock units and 64,930 performance shares during the six months ended June 30, 2015.

The Company has no formal policy related to the repurchase of shares for the purpose of satisfying stock-based compensation obligations.

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

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DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

Interest Rate Hedging

The Company’s interest rate risk relates to U.S. dollar denominated variable LIBOR interest rate borrowings. The Company uses an interest rate swap derivative instrument entered into on August 10, 2010 with an effective date of December 31, 2010 to manage its earnings and cash flow exposure to changes in interest rates by converting a portion of its floating-rate debt into fixed-rate debt beginning on December 31, 2010. This interest rate swap expires on August 10, 2015.

The Company designates this derivative instrument as a cash flow hedge. The Company records the effective portion of any change in the fair value of a derivative instrument designated as a cash flow hedge as unrealized gains or losses in accumulated other comprehensive income (“AOCI”), net of tax, until the hedged item affects earnings, at which point the effective portion of any gain or loss will be reclassified to earnings. If the hedged cash flow does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time.

The Company expects that approximately $0.2 million of pre-tax losses recorded as net in AOCI related to the interest rate hedge could be reclassified to earnings prior to the date of expiration.

Foreign Currency Hedging

From time to time the Company enters into foreign currency hedge contracts intended to protect the U.S. dollar value of certain forecasted foreign currency denominated transactions. The Company records the effective portion of any change in the fair value of foreign currency cash flow hedges in AOCI, net of tax, until the hedged item affects earnings. Once the related hedged item affects earnings, the Company reclassifies the effective portion of any related unrealized gain or loss on the foreign currency cash flow hedge to earnings. If the hedged forecasted transaction does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time.

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

There were no contracts outstanding as of June 30, 2015.

Counterparty Credit Risk

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

Fair Value of Derivative Instruments

The Company has classified all of its derivative instruments within Level 2 of the fair value hierarchy because observable inputs are available for substantially the full term of the derivative instruments. The fair value of the foreign currency forward exchange contracts related to inventory purchases is determined by comparing the forward rate as of the period end and the settlement rate specified in each contract. The fair value of the interest rate swaps was developed using a market approach based on publicly available market yield curves and the terms of the related swap. The Company performs ongoing assessments of counterparty credit risk.

The following table summarizes the fair value and presentation for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014:

	Fair Value as of
Location on Balance Sheet (1):	June 30, 2015		December 31, 2014
	(In thousands)
Derivatives designated as hedges — Liabilities:
Interest rate swap — Accrued expenses and other current liabilities (2)	$	161	$	898
Total Derivatives designated as hedges — Liabilities	$	161	$	898

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

⁽²⁾  At June 30, 2015 and December 31, 2014, the notional amount related to the Company’s sole interest rate swap was $90.0 million and $97.5 million, respectively. In the next twelve months, the Company expects to reduce the notional amount by the entire $90.0 million.

The following presents the effect of derivative instruments designated as cash flow hedges on the accompanying condensed consolidated statements of operations during the three and six months ended June 30, 2015 and 2014:

	Balance in AOCI Beginning of Quarter			Amount of Loss Recognized in AOCI- Effective Portion			Amount of Loss Reclassified from AOCI into Earnings-Effective Portion			Balance in AOCI End of Quarter			Location in Statements of Operations
	(In thousands)
Three Months Ended June 30, 2015
Interest rate swap	(527		)	(7		)	(373		)	(161		)	Interest (expense)
	$	(527	)	$	(7	)	$	(373	)	$	(161	)
Three Months Ended June 30, 2014
Interest rate swap	(2,097		)	(60		)	(444		)	(1,713		)	Interest (expense)
	$	(2,097	)	$	(60	)	$	(444	)	$	(1,713	)
	Balance in AOCI Beginning of Quarter			Amount of Loss Recognized in AOCI- Effective Portion			Amount of Loss Reclassified from AOCI into Earnings-Effective Portion			Balance in AOCI End of Quarter			Location in Statements of Operations
	(In thousands)
Six Months Ended June 30, 2015
Interest rate swap	(898		)	(25		)	(762		)	(161		)	Interest (expense)
	$	(898	)	$	(25	)	$	(762	)	$	(161	)
Six Months Ended June 30, 2014
Interest rate swap	(2,439		)	(169		)	(895		)	(1,713		)	Interest (expense)
	$	(2,439	)	$	(169	)	$	(895	)	$	(1,713	)

The Company recognized no gains or losses resulting from ineffectiveness of cash flow hedges during the six months ended June 30, 2015 and 2014.

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes In Carrying Amount Of Goodwill

Changes in the carrying amount of goodwill for the six months ended June 30, 2015 were as follows:

	Specialty Surgical Solutions			Orthopedics and Tissue Technologies			Spine			Total
	(In thousands)
Goodwill, gross	$	281,829		$	81,650		$	409		$	363,888
Accumulated impairment losses	—			—			—			—
Goodwill at December 31, 2014	281,829			81,650			409			363,888
MicroFrance working capital and purchase price adjustments	(828		)	—			—			(828		)
Metasurg working capital and purchase price adjustment	—			263			—			263
Goodwill impairment charge	—			—			(409		)	(409		)
Foreign currency translation	(4,451		)	(1,441		)	—			(5,892		)
Balance, June 30, 2015	$	276,550		$	80,472		$	—		$	357,022

Components of Company's Identifiable Intangible Assets

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

	June 30, 2015
	Weighted Average Life	Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Completed technology	18 years	$	344,406	$	(72,393	)	$	272,013
Customer relationships	12 years	159,548		(91,621		)	67,927
Trademarks/brand names	34 years	43,221		(15,814		)	27,407
Trademarks/brand names	Indefinite	48,484		—			48,484
Supplier relationships	27 years	34,721		(11,522		)	23,199
All other (1)	4 years	2,721		(1,168		)	1,553
		$	633,101	$	(192,518	)	$	440,583

	December 31, 2014
	Weighted Average Life	Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Completed technology	18 years	$	345,082	$	(62,920	)	$	282,162
Customer relationships	12 years	162,031		(87,653		)	74,378
Trademarks/brand names	34 years	44,520		(15,755		)	28,765
Trademarks/brand names	Indefinite	48,484		—			48,484
Supplier relationships	27 years	34,721		(10,809		)	23,912
All other (1)	4 years	4,810		(3,052		)	1,758
		$	639,648	$	(180,189	)	$	459,459

⁽¹⁾  At June 30, 2015 and December 31, 2014, all other included in-process research and development ("IPR&D") of $1.4 million in both periods, which was indefinite-lived.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2015

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

SeaSpine Separation

On November 1, 2014, the Company announced plans to spin-off the spine business into a stand-alone public company ("SeaSpine"). On July 1, 2015, the Company completed the distribution of 100% of the outstanding common shares of SeaSpine to Integra stockholders who received one share of SeaSpine common stock for every three shares of Integra held as of the close of business on the record date, June 19, 2015. The historical results of operations and the financial position of SeaSpine are included in the consolidated financial statements of Integra and will be reported as discontinued operations beginning in the third quarter of 2015.

As a result of the spin-off and pursuant to the indenture for the Company's 2016 Notes, the conversion price and rate is required to be adjusted. The conversion price on the 2016 Notes has been adjusted to $52.83 per share and the new conversion rate is 18.9287 shares per $1,000 principal amount of 2016 Notes. Similarly, the strike price of the call transaction has been adjusted to $52.83 per share and the warrant transaction has been adjusted to $64.43 per share.

Acquisition of TEI Biosciences, Inc. and TEI Medical, Inc.

On July 17, 2015, the Company completed the execution of the two merger agreements (collectively, the "Agreements") under which the Company acquired TEI Biosciences, Inc., a Delaware corporation ("TEI Bio"), and TEI Medical Inc., a Delaware corporation ("TEI Med", collectively "TEI").

TEI Bio is in the business of developing and commercializing biologic devices for soft tissue repair and regenerative applications, including dura and hernia repair and plastic and reconstructive surgery. TEI Med is a spin-off of TEI Bio and holds a license to TEI Bio’s regenerative technology in the fields of wound healing and orthopedics.

Under the terms of the Agreements, the Company paid $312.0 million ($211.0 million for TEI Bio and $101.0 million for TEI Med) subject in each case to purchase price adjustments for certain working capital changes. In July 2015, the Company drew $310.0 million on its Revolving Credit Facility to facilitate this transaction. The Company has not yet performed the purchase price allocation and will do so in the third quarter of 2015.

TEI manufactures a bovine-derived surgical mesh product for Boston Scientific Corporation ("BSC”) and has been named as a defendant in several hundred lawsuits under a broad range of products liability theories, many of which have not been served on TEI.  Currently, there are approximately forty-five active cases against TEI.  Pursuant to an indemnification agreement with BSC (i) BSC is managing the litigation; (ii) TEI has in place a products liability insurance policy, of which it must exhaust $3.0 million before BSC’s indemnity begins to cover relevant claims (and of which only a small portion has been utilized to date and against which the insurer has reserved the entire $3.0 million).  Because the thrust of products liability litigation focuses on synthetic surgical mesh products, counsel is filing motions to dismiss on behalf of TEI in many cases.  In addition, Integra has certain protections in the merger agreements with TEI which would indemnify it for approximately $30.0 million for the first fifteen months after closing and between $20.0 and $30.0 million for the remainder of the three-year period after closing for losses relating to a variety of matters, including half of certain products liability claims (including those related to the product it manufactures for BSC) not covered by insurance.

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NET INCOME PER SHARE

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

NET INCOME PER SHARE

NET INCOME PER SHARE

Basic and diluted net income per share was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands, except per share amounts)
Basic net income per share:
Net income	$	4,998	$	4,825	$	13,382	$	7,031
Weighted average common shares outstanding	33,032		32,398		32,884		32,336
Basic net income per common share	$	0.15	$	0.15	$	0.41	$	0.22
Diluted net income per share:
Net income	$	4,998	$	4,825	$	13,382	$	7,031
Weighted average common shares outstanding — Basic	33,032		32,398		32,884		32,336
Effect of dilutive securities:
2016 Convertible notes	477		—		268		—
Stock options and restricted stock	430		406		492		460
Weighted average common shares for diluted earnings per share	33,939		32,804		33,644		32,796
Diluted net income per common share	$	0.15	$	0.15	$	0.40	$	0.21

At June 30, 2015 and 2014, the Company had 1.1 million and 1.4 million of outstanding stock options, respectively. The Company also has warrants outstanding relating to its 2016 Notes at June 30, 2015 and 2014 and the Company's 2016 Notes are convertible to common shares in certain circumstances (see Note 5). Stock options, restricted stock, warrants and the excess conversion value of the 2016 Notes are included in the diluted earnings per share calculation using the treasury stock method, unless the effect of including such items would be anti-dilutive.

For the three months ended June 30, 2015 and 2014, 0.1 million and 0.2 million, respectively, of anti-dilutive stock options were excluded from the diluted earnings per share calculation. For the six months ended June 30, 2015 and 2014, a minimal amount and 0.2 million, respectively, of anti-dilutive stock options were excluded from the diluted earnings per share calculation. The effect of outstanding warrants were anti-dilutive because the strike price of the warrants exceeded the Company’s average stock price for the periods presented.

For the three and six months ended June 30, 2015, the potential excess conversion value on the 2016 Notes was included in the Company's dilutive share calculation because the average stock price for the three and six months ended June 30, 2015 exceeded the conversion price. The potential excess conversion value of the 2016 Notes were anti-dilutive because the conversion price exceeded the Company's stock price for the three and six months ended June 30, 2014; therefore, these amounts have been excluded from the diluted earnings per share calculation.

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TREASURY STOCK

6 Months Ended

Jun. 30, 2015

Treasury Stock Transactions, Excluding Value of Shares Reissued [Abstract]

TREASURY STOCK

TREASURY STOCK

On October 28, 2014, the Board of Directors terminated the October 2012 authorization and authorized up to $75.0 million of its outstanding common stock through December 2016. The Company has not repurchased any of its outstanding shares of common stock during the six-month periods ended June 30, 2015 and 2014. As of June 30, 2015, there remained $75.0 million available for repurchases under this authorization.

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INCOME TAXES

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Reported tax rate	34.0	%	32.9	%	33.7	%	37.0	%

The Company’s effective income tax rates for the three months ended June 30, 2015 and 2014 were 34.0% and 32.9%, respectively. The primary drivers of the higher tax rate for the three months ended June 30, 2015 were a tax expense of $0.4 million for nondeductible costs relating to the spine spin-off transaction and a tax expense of $0.4 million relating to foreign tax returns filed during the quarter.

The Company's effective income tax rates for the six months ended June 30, 2015 and 2014 were 33.7% and 37.0%, respectively. The primary drivers of the overall tax rate for the six months ended June 30, 2014 were a tax expense of $1.1 million relating to foreign and state income tax audit settlements and a tax expense of $0.3 million relating to a change in state filing positions.

The Company expects its effective income tax rate for the full year to be approximately 32%, resulting largely from nondeductible spine spin-off costs and audit settlements offset by the release of uncertain tax positions, as well as the jurisdictional mix of pretax income in U.S.-based operations relative to foreign operations. This estimate could be revised in the future as additional information is presented to the Company.

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COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

COMPREHENSIVE INCOME (LOSS)

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(In thousands)
Net income	$	4,998		$	4,825		$	13,382		$	7,031
Foreign currency translation adjustment	7,166			(234		)	(17,227		)	585
Change in unrealized gain on derivatives, net of tax	209			219			420			414
Pension liability adjustment, net of tax	(48		)	(58		)	7			(73		)
Comprehensive income (loss)	$	12,325		$	4,752		$	(3,418	)	$	7,957

Changes in Accumulated Other Comprehensive Loss by component between December 31, 2014 and June 30, 2015 are presented in the table below, net of tax:

	Gains and (Losses) on Cash Flow Hedges			Defined Benefit Pension Items			Foreign Currency Items			Total
	(In thousands)
Beginning balance	$	(512	)	$	(906	)	$	(22,070	)	$	(23,488	)
Other comprehensive (loss) income before reclassifications	(14		)	7			(17,227		)	(17,234		)
Amounts reclassified from accumulated other comprehensive income	434			—			—			434
Net current-period other comprehensive income (loss)	420			7			(17,227		)	(16,800		)
Ending balance	$	(92	)	$	(899	)	$	(39,297	)	$	(40,288	)

The reclassification adjustments out of Accumulated Other Comprehensive Loss during the three and six months ended June 30, 2015 were as follows:

Three Months Ended June 30, 2015
Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Affected Line Item in the Statement where Net Income (Loss) is Presented
	(In thousands)
Gains and losses on cash flow hedges
Interest rate swap	$	(373	)	Interest (expense)
	160			Tax (expense) or benefit
	$	(213	)	Net of tax
Six Months Ended June 30, 2015
Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Affected Line Item in the Statement where Net Income (Loss) is Presented
	(In thousands)
Gains and losses on cash flow hedges
Interest rate swap	$	(761	)	Interest (expense)
	327			Tax (expense) or benefit
	$	(434	)	Net of tax

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INVENTORIES (Inventory, Net) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Inventory, Net [Abstract]
Finished goods	$ 146,912	$ 150,483
Work-in process	54,707	50,166
Raw materials	40,216	36,465
Inventories, net	$ 241,835	$ 237,114

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COMPREHENSIVE INCOME (LOSS) (Schedule of Changes in Accumulated Other Comprehensive Income by Component (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2015 USD ($)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	$ (23,488)
Other comprehensive (loss) income before reclassifications	(17,234)
Amounts reclassified from accumulated other comprehensive income	434
Net current-period other comprehensive income (loss)	(16,800)
Ending balance	(40,288)
Gains and Losses on Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	(512)
Other comprehensive (loss) income before reclassifications	(14)
Amounts reclassified from accumulated other comprehensive income	434
Net current-period other comprehensive income (loss)	420
Ending balance	(92)
Defined Benefit Pension Items
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	(906)
Other comprehensive (loss) income before reclassifications	7
Amounts reclassified from accumulated other comprehensive income	0
Net current-period other comprehensive income (loss)	7
Ending balance	(899)
Foreign Currency Items
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	(22,070)
Other comprehensive (loss) income before reclassifications	(17,227)
Amounts reclassified from accumulated other comprehensive income	0
Net current-period other comprehensive income (loss)	(17,227)
Ending balance	$ (39,297)

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BUSINESS ACQUISITIONS (Tables)

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Schedule of Purchase Price Allocation

The following summarizes the preliminary allocation of the purchase price as of June 30, 2015 based on the fair value of the assets acquired and liabilities assumed:

	Preliminary Purchase Price Allocation
	(Dollars in thousands)
Inventory	$	4,800
Property, plant, and equipment	1,246
Intangible assets:			Wtd. Avg. Life:
Technology product rights	20,590		8 - 14 Years
In-process research and development	190		Indefinite
Goodwill	732
Net assets acquired	$	27,558

The following summarizes the final allocation of the purchase price as of June 30, 2015 based on the fair value of the assets acquired and liabilities assumed:

	Final Purchase Price Allocation
	(Dollars in thousands)
Inventory deposit	$	4,000
Fixed assets	438
Intangible assets:			Wtd. Avg. Life
Technology product rights	239,800		3 - 20 Years
Other	400		Less than 1 year
Deferred tax assets - long term	12
Goodwill	105,331
Total assets acquired	349,981
Contingent supply liability	5,891
Other	731
Deferred tax liabilities - long term	87,464
Net assets acquired	$	255,895

The following summarizes the final allocation of the purchase price as of June 30, 2015 based on the fair value of the assets acquired and liabilities assumed:

	Final Purchase Price Allocation
	(Dollars in thousands)
Cash	$	2,195
Inventory	3,155
Prepaid expenses	620
Property, plant, and equipment	3,675
Other current assets	5,025
Intangible assets:			Wtd. Avg. Life:
Trade name	11,990		20 Years
Technology	4,580		15 - 16 Years
Customer relationships	18,130		12 - 16 Years
Goodwill	16,607
Total assets acquired	65,977
Accounts payable and other liabilities	5,910
Net assets acquired	$	60,067

Schedule of Contingent Consideration

A reconciliation of the opening balances to the closing balances of these Level 3 measurements is as follows (in thousands):

			Location in Statement of Operations
Balance as of January 1, 2015	$	22,008
Loss from increase in fair value of contingent consideration liabilities	239		Selling, general and administrative
Fair value at June 30, 2015	$	22,247

Pro Forma Information

As a result, these pro forma results do not necessarily represent results that would have occurred if the acquisition had taken place on the basis assumed above, nor are they indicative of the results of future combined operations.

	Three Months Ended June 30, 2014		Six Months Ended June 30, 2014
	(In thousands, except per share amounts)
Total revenue	$	241,801	$	467,310
Net income	$	7,009	$	12,581
Net income per share:
Basic	$	0.22	$	0.39

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Schedule of effective income tax rate reconciliation

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Reported tax rate	34.0	%	32.9	%	33.7	%	37.0	%

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NET INCOME PER SHARE - Basic and Diluted Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Basic net income per share:
Net income	$ 4,998	$ 4,825	$ 13,382	$ 7,031
Weighted average common shares outstanding (in shares)	33,032	32,398	32,884	32,336
Basic net income per common share (in dollars per share)	$ 0.15	$ 0.15	$ 0.41	$ 0.22
Diluted net income per share:
Net income	$ 4,998	$ 4,825	$ 13,382	$ 7,031
Weighted average common shares outstanding (in shares)	33,032	32,398	32,884	32,336
Effect of dilutive securities:
2016 Convertible notes (in shares)	477	0	268	0
Stock options and restricted stock (in shares)	430	406	492	460
Weighted average common shares for diluted earnings per share (in shares)	33,939	32,804	33,644	32,796
Diluted net income per common share (in dollars per share)	$ 0.15	$ 0.15	$ 0.40	$ 0.21

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DERIVATIVE INSTRUMENTS - Narrative (Detail)	6 Months Ended
	Jun. 30, 2015 USD ($) contract	Jun. 30, 2014 USD ($)
Derivative [Line Items]
Interest rate swap expiration date	August 10, 2015
Gain (loss) on hedging ineffectiveness	$ 0	$ 0
Interest Rate Swap
Derivative [Line Items]
Pretax losses expected to be reclassified from AOCI in next 12 months	$ 200,000
Foreign Exchange Contract
Derivative [Line Items]
Derivative contracts | contract	0

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
OPERATING ACTIVITIES:
Net income	$ 13,382	$ 7,031
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	31,159	29,164
Non-cash impairment charges	409	600
Deferred income tax	1,648	(503)
Amortization of debt issuance costs	1,060	1,243
Non-cash interest expense	3,744	3,433
Loss on disposal of property and equipment	38	378
Change in fair value of contingent consideration	239	(998)
Share-based compensation	5,616	8,302
Excess tax benefits from stock-based compensation arrangements	(3,501)	(1,164)
Changes in assets and liabilities, net of business acquisitions:
Accounts receivable	(4,480)	106
Inventories	(9,875)	(17,367)
Prepaid expenses and other current assets	(7,314)	(2,832)
Other non-current assets	(1,806)	(1,846)
Accounts payable, accrued expenses and other current liabilities	19,613	4,848
Deferred revenue	(805)	188
Other non-current liabilities	615	(2,952)
Net cash provided by operating activities	49,742	27,631
INVESTING ACTIVITIES:
Purchases of property and equipment	(22,013)	(20,691)
Sale of property and equipment	1,438	0
Cash used in business acquisition, net of cash acquired	0	(235,000)
Proceeds from working capital purchase price adjustment	1,831	0
Net cash used in investing activities	(18,744)	(255,691)
FINANCING ACTIVITIES:
Borrowings under senior credit facility	35,000	235,000
Repayments under senior credit facility	(15,000)	0
Principal payments under capital lease obligations	(396)	(245)
Proceeds from exercised stock options	7,345	8,317
Excess tax benefits from stock-based compensation arrangements	3,501	1,164
Net cash provided by financing activities	30,450	244,236
Effect of exchange rate changes on cash and cash equivalents	(2,146)	370
Net change in cash and cash equivalents	59,302	16,546
Cash and cash equivalents at beginning of period	71,994	120,614
Cash and cash equivalents at end of period	$ 131,296	$ 137,160

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DEBT

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

DEBT

DEBT

Amended and Restated Senior Credit Agreement

On December 19, 2014, the Company entered into an amendment to the amended and restated credit agreement (the "Senior Credit Facility") which modified covenants to permit the distribution and/or dividend by the Company of its spine business to the Company's public stockholders. The intent of the amendment was to permit the Company to consummate the spine business spin-off transaction.

On July 2, 2014, the Company entered into the Senior Credit Facility with a syndicate of lending banks, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association, as Syndication Agent and HSBC Bank USA, National Association, Royal Bank of Canada, Citizens Bank, National Association, DNB Capital LLC, Credit Agricole-Corporate and Investment Bank and TD Bank, N.A., as Co-Documentation Agents. The Company's Senior Credit Facility was originally amended and restated on August 10, 2010, and that agreement was then amended on June 8, 2011, May 11, 2012, and June 21, 2013, as previously disclosed.

The 2014 amended and restated Senior Credit Facility created an aggregate principal amount of up to $900.0 million available to the Company through the following facilities:

i. a $750.0 million revolving credit facility (increased from $600.0 million), which includes a $60.0 million sublimit for the issuance of standby letters of credit and a $60.0 million sublimit for swingline loans, and

ii. a $150.0 million term loan facility.

The Senior Credit Facility allows the Company to further increase the size of either the revolving credit facility or the term loan facility, or a combination thereof, by an aggregate of $200.0 million with additional commitments. The July 2014 amended and restated Senior Credit Facility extended the maturity date of the prior facility from June 8, 2016 to July 2, 2019.

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

i. the Eurodollar Rate (as defined in the amendment and restatement) in effect from time to time plus the applicable rate (ranging from 1.00% to 1.75%), or

ii. the highest of:

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

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

3. the one-month Eurodollar Rate plus 1.00%.

The applicable rates are based on the Company’s consolidated total leverage ratio (defined as the ratio of (a) consolidated funded indebtedness less cash in excess of $40.0 million that is not subject to any restriction of the use or investment thereof to (b) consolidated EBITDA) at the time of the applicable borrowing.

The Company will also pay an annual commitment fee (ranging from 0.15% to 0.30%, based on the Company’s consolidated total leverage ratio) on the daily amount by which the revolving credit facility exceeds the outstanding loans and letters of credit under the credit facility.

The Senior Credit Facility is collateralized by substantially all of the assets of the Company’s U.S. subsidiaries, excluding intangible assets. The Senior Credit Facility is subject to various financial and negative covenants and at June 30, 2015 the Company was in compliance with all such covenants. In connection with the modification of the 2014 amendment and restatement of the Senior Credit Facility, the Company capitalized $3.2 million of incremental financing costs, and expensed $0.3 million of previously capitalized financing costs.

On July 2, 2014, the Company borrowed $422.0 million under the Senior Credit Facility consisting of a $150.0 million term loan and $272.0 million under its revolving credit facility. The Company used the funds to repay the balance of its previous Senior Credit Facility. The outstanding borrowings have one, two, three, six months, or, if available, twelve months interest periods.

At June 30, 2015 and December 31, 2014, there was $286.9 million and $266.9 million outstanding under the revolving credit component of the Senior Credit Facility at a weighted average interest rate of 2.0% and 1.7%, respectively. At June 30, 2015, there was approximately $463.1 million available for borrowing under the Senior Credit Facility. The Company considers the balance to be long-term in nature based on its current intent and ability to repay the borrowing outside of the next twelve-month period.

At June 30, 2015 there was $150.0 million outstanding under the term loan component of the Senior Credit Facility at a weighted average interest rate of 1.8%. Contractual repayments of the term loan do not begin until September 30, 2015 and are due as follows:

Year Ended December 31,	Principal Repayment
	(In thousands)
2015	$	3,750
2016	9,375
2017	13,125
2018	15,000
2019	108,750
	$	150,000

The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit facility and term loan components at June 30, 2015 was approximately $269.1 million and $143.0 million, respectively. These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair value hierarchy. Level 2 inputs represent inputs that are observable for the asset or liability, either directly or indirectly and are other than active market observable inputs that reflect unadjusted quoted prices for identical assets or liabilities.

2016 Convertible Senior Notes

On June 15, 2011, the Company issued $230.0 million aggregate principal amount of its 1.625% Convertible Senior Notes due in 2016 (the “2016 Notes”). The 2016 Notes mature on December 15, 2016, and bear interest at a rate of 1.625% per annum payable semi-annually in arrears on December 15 and June 15 of each year. The portion of the debt proceeds that was classified as equity at the time of the offering was $43.2 million, an equivalent of that amount is being amortized to interest expense using the effective interest method through December 2016. The effective interest rate implicit in the liability component is 5.6%.

At June 30, 2015, the carrying amount of the liability component was $217.3 million, the remaining unamortized discount was $12.7 million, and the principal amount outstanding was $230.0 million. The fair value of the 2016 Notes at June 30, 2015 was approximately $285.8 million. At December 31, 2014, the carrying amount of the liability component was $213.1 million, the remaining unamortized discount was $16.9 million and the principal amount outstanding was $230.0 million. The fair value of the liability of the 2016 Notes was determined using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2.

The 2016 Notes are senior, unsecured obligations of the Company, and are convertible into cash and, if applicable, shares of its common stock based on an initial conversion rate, subject to adjustment of 17.4092 shares per $1,000 principal amount of 2016 Notes (which represents an initial conversion price of approximately $57.44 per share). The Company will satisfy any conversion of the 2016 Notes with cash up to the principal amount of the 2016 Notes pursuant to the net share settlement mechanism set forth in the indenture and, with respect to any excess conversion value, with shares of the Company’s common stock. The 2016 Notes are convertible only in the following circumstances: (1) if the closing sale price of the Company’s common stock exceeds 150% of the conversion price during a period as defined in the indenture; (2) if the average trading price per $1,000 principal amount of the 2016 Notes is less than or equal to 98% of the average conversion value of the 2016 Notes during a period as defined in the indenture; (3) at any time on or after June 15, 2016; or (4) if specified corporate transactions occur. The issue price of the 2016 Notes was equal to their face amount, which is also the amount holders are entitled to receive at maturity if the 2016 Notes are not converted. As of March 31, 2015, certain conversion features were triggered due to the announced spin-off of the Company's subsidiary, SeaSpine Holdings Corporation, which allowed the holders to convert all or any of the 2016 Notes subject to certain conditions. The 2016 Notes were convertible through June 10, 2015 and as of the close of the conversion window, 2,903 note holders provided notice to convert. The Company has classified the cash settlement of the conversion into short-term as of June 30, 2015. The remainder of the debt has continued to be classified as long-term as the conversion window has closed.

In connection with the issuance of the 2016 Notes, the Company entered into call transactions and warrant transactions, primarily with affiliates of the initial purchasers of such notes (the “hedge participants”). The initial strike price of the call transaction is approximately $57.44 per share, subject to customary anti-dilution adjustments. The initial strike price of the warrant transaction is approximately $70.05 per share, subject to customary anti-dilution adjustments. Refer to Note 14 - Subsequent Events for more information on the change in the conversion price as a result of the SeaSpine Separation.

Convertible Note Interest

The interest expense components of the Company’s convertible notes are as follows (net of capitalized interest amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands)
2016 Notes:
Amortization of the discount on the liability component	$	1,885	$	1,766	$	3,744	$	3,433
Cash interest related to the contractual interest coupon	824		837		1,669		1,639
Total	$	2,709	$	2,603	$	5,413	$	5,072

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NET INCOME PER SHARE (Tables)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Basic and Diluted Net Income Per Share

Basic and diluted net income per share was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands, except per share amounts)
Basic net income per share:
Net income	$	4,998	$	4,825	$	13,382	$	7,031
Weighted average common shares outstanding	33,032		32,398		32,884		32,336
Basic net income per common share	$	0.15	$	0.15	$	0.41	$	0.22
Diluted net income per share:
Net income	$	4,998	$	4,825	$	13,382	$	7,031
Weighted average common shares outstanding — Basic	33,032		32,398		32,884		32,336
Effect of dilutive securities:
2016 Convertible notes	477		—		268		—
Stock options and restricted stock	430		406		492		460
Weighted average common shares for diluted earnings per share	33,939		32,804		33,644		32,796
Diluted net income per common share	$	0.15	$	0.15	$	0.40	$	0.21

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DEBT -Narrative (Details)			6 Months Ended
	Jul. 02, 2014 USD ($)	Jun. 15, 2011 USD ($) $ / shares	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 16, 2015 convertible_debt_instrument	Dec. 31, 2014 USD ($)
Debt Instrument [Line Items]
Amortization of debt issuance costs			$ 1,060,000	$ 1,243,000
Term loan, amount outstanding			150,000,000
Carrying amount of liability			$ 214,358,000			$ 213,121,000
July 2014 Amendment
Debt Instrument [Line Items]
Senior credit facility, maximum borrowing capacity	$ 900,000,000
Additional commitments	200,000,000
Cash balance threshold above which excess amount is not subject to any restriction of use or investment	40,000,000
Deferred finance costs, gross	3,200,000
Amortization of debt issuance costs	$ 300,000
July 2014 Amendment | Minimum
Debt Instrument [Line Items]
Line of credit, commitment fee percentage	0.15%
July 2014 Amendment | Maximum
Debt Instrument [Line Items]
Line of credit, commitment fee percentage	0.30%
Proceeds from lines of credit	$ 422,000,000
July 2014 Amendment | Standby Letters of Credit
Debt Instrument [Line Items]
Senior credit facility, maximum borrowing capacity	60,000,000
July 2014 Amendment | Revolving Credit Facility
Debt Instrument [Line Items]
Senior credit facility, maximum borrowing capacity	750,000,000
Proceeds from lines of credit	272,000,000
July 2014 Amendment | Swingline Loan
Debt Instrument [Line Items]
Senior credit facility, maximum borrowing capacity	60,000,000
Term Loan
Debt Instrument [Line Items]
Weighted average interest rate on debt			1.80%
Long-term debt, fair value			$ 143,000,000
June 2011 Amendment | Revolving Credit Facility
Debt Instrument [Line Items]
Senior credit facility, maximum borrowing capacity	600,000,000
Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility outstanding			$ 286,900,000			$ 266,900,000
Weighted average interest rate on debt			2.00%			1.70%
Available borrowings under senior secured revolving credit facility			$ 463,100,000
Line of credit facility, fair value of amount outstanding			269,100,000
2016 Convertible Senior Notes
Debt Instrument [Line Items]
Principal amount outstanding		$ 230,000,000	230,000,000			$ 230,000,000
Interest rate on debt		1.625%
Portion of the debt proceeds that was classified as equity at the time of the offering		$ 43,200,000
Effective interest rate implicit in the liability component		5.60%
Carrying amount of liability			217,300,000			213,100,000
Unamortized discount			12,700,000			$ 16,900,000
Fair value of outstanding borrowings			$ 285,800,000
Common stock based on initial conversion rate ratio (in shares)		17.4092
Principal amount to be considered for conversion purpose		$ 1,000
Initial conversion price, per share | $ / shares		$ 57.44
Maximum selling price of company's common stock		150.00%
Principal amount of notes per average trading price		$ 1,000
Maximum average conversion value of the Notes		98.00%
Number debt instruments pending conversion | convertible_debt_instrument					2,903
Strike price of the call transaction (in dollars per share) | $ / shares		$ 57.44
Strike price of warrant transactions (in dollars per share) | $ / shares		$ 70.05
Term Loan | July 2014 Amendment
Debt Instrument [Line Items]
Senior credit facility, maximum borrowing capacity	150,000,000
Proceeds from lines of credit	$ 150,000,000
Federal Funds | July 2014 Amendment
Debt Instrument [Line Items]
Interest rates available to the Company at its option	0.50%
(LIBOR) | July 2014 Amendment
Debt Instrument [Line Items]
Interest rates available to the Company at its option	1.00%
Eurodollar | July 2014 Amendment | Minimum
Debt Instrument [Line Items]
Interest rates available to the Company at its option	1.00%
Eurodollar | July 2014 Amendment | Maximum
Debt Instrument [Line Items]
Interest rates available to the Company at its option	1.75%

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In April 2014, the FASB issued amendments to guidance for reporting discontinued operations and disposals of components of an entity. The amended guidance requires that a disposal representing a strategic shift that has (or will have) a major effect on an entity’s financial results or a business activity classified as held for sale should be reported as discontinued operations. The amendments also expand the disclosure requirements for discontinued operations and add new disclosures for individually significant dispositions that do not qualify as discontinued operations. The amendments are effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014 (early adoption is permitted only for disposals that have not been previously reported). The new guidance is effective for Integra prospectively for all disposals (or classifications as held for sale) of components of an entity that occur after January 1, 2015 and will be in effect for the spin-off of the spine business in the Company's third quarter 2015 results.

In May 2014, the FASB issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB deferred for one year the effective date of the new revenue standard, but early adoption will be permitted. The new standard will be effective for the Company on January 1, 2018. The Company is in the process of evaluating the impact of this standard on its financial statements.

In June 2014, the FASB issued Update No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (Topic 718). The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This update is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. The implementation of the amended guidance is not expected to have a material impact on the consolidated financial position or results of operations.

In August 2014, the FASB issued Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendment requires management to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around management’s plan to alleviate these doubts are required. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2016. The implementation of the amended guidance is not expected to have an impact on current disclosures in the financial statements.

In April 2015, the FASB issued Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendment requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The new standard is limited to the presentation of debt issuance costs and does not affect the recognition or measurement of debt issuance costs. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2015. The implementation of the amended guidance is not expected to have a material impact on the consolidated results of operations and will result in a reclassification of the debt issuance costs from other long-term assets to long-term debt when adopted.

There are no other recently issued accounting pronouncements that are expected to have a material effect on the financial position, results of operations or cash flows.