Welcome to the Integra LifeSciences' Third Quarter 2016 Financial Results Conference Call. As a reminder, today's call is being recorded. At this time, I'd like to turn the conference over to Ms. Angela Steinway, Global Head of Strategic Initiatives and Investor Relations. Please go ahead, ma'am.

Thank you, Catherine. Good afternoon and thank you for joining the Integra LifeSciences third quarter 2016 earnings results conference call. Joining me today are Peter Arduini, President and Chief Executive Officer; and Glenn Coleman, Chief Financial Officer. Earlier this afternoon, we issued a press release announcing our third0quarter financial results and updating our full-year 2016 guidance. We also posted a presentation on our website which we will reference during the call today. You can find this presentation at investors.integralife.com under Events and Presentations in a file named Third Quarter Earnings Call Presentation. If you would now open that file up to slide 2, please reference our Safe Harbor statement covering the forward-looking statements we will make on today's call. As well, please reference the reconciliations of non-GAAP financial measures at the end of the presentation beginning on slide 11. Before turning to call over to Pete, I would also like to announce that we will be hosting a Regenerative Technologies Day in Plainsboro, New Jersey on December 14, 2016. We plan to showcase the breadth and depth of our regenerative products portfolio which makes up about 43% of our revenue today and explain the advantages of our technology platform, as they become a larger portion of our total sales. We will be providing additional details for this presentation in the coming weeks and look forward to seeing you -- many of you -- in Plainsboro. And now I will turn the call over to Pete.

Thank you, Angela. We're quite pleased with our performance in the third quarter and are well-positioned to achieve our financial and operating targets for the full year. Starting on slide 3, I'd like to discuss our third quarter and year-to-date financial highlights as well as our recent accomplishments. Third quarter sales of over $250 million and organic growth of 9.5% were driven by strong contributions from both segments and double-digit increases outside the United States. This is our third quarter in a row of 9% or greater organic growth. This broad-based strength is coming from a number of different product franchises and geographic regions. Our adjusted gross margins improved 230 basis points over the prior year and came in at 69.3%, a record high as a result of more favorable product mix. Acquisitions that we completed over the last several years have been accretive to our gross margins and our regenerative products continue to grow faster than the rest of the portfolio. International sales growth increased double digits in the quarter and on a year-to-year basis. In the third quarter, specialty surgical sales increased over 14% and orthopedics and tissue technology sales were up 30% on a constant currency basis. The commercial and operational improvements we've made over the last 18 months have increased our channel effectiveness, leading to international organic sales growth in the third quarter of 15%. Within specialty surgical solutions, our Dural Repair and precision tools and instruments product franchises are growing faster than their respective markets. Strong commercial execution and the success of recently launched products, such as DuraGen Secure, bovine pericardium and MAYFIELD II are driving this growth. As a result, we're slightly increasing our full-year 2016 targets for this segment. We continue to move forward with our outpatient wound care strategy during the third…

Thanks, Pete. Good afternoon, everyone. Third quarter sales of $250.3 million increased 10.6% or 9.5% on an organic basis. Broad-based strength in the Specialty Surgical Solution segment drove organic growth slightly ahead of our expectation. Orthopedics and Tissue Technologies performed in line. Acquisitions contributed about 2 points of growth to our reported revenue and foreign currency translation had a minimal impact on third quarter results. Based on our third quarter and year-to-date performance, we now believe our full-year organic growth will be in a range of 9% to 9.5% which is about 2 points higher than the guidance we provided at the beginning of the year. Our adjusted gross margin for the quarter was 69.3%, up 230 basis points from the prior year. This drove our EBITDA margin to 23.4%, also a 230 basis point increase over the prior year and it's consistent with our earlier messaging of margin expansion in the second half of 2016. Our EPS for the quarter was $0.93, a 24% increase over the prior year and benefited by $0.04 from a lower-than-expected tax rate. If you exclude this tax benefit, we would have been at the high end of our third quarter guidance range of $0.85 to $0.90. Please turn to slide 4 for a more detailed discussion on segment performance. My commentary around segment results will be in constant currency terms unless otherwise noted. Sales in our Specialty Surgical Solutions segment were $159.4 million in the third quarter, representing reported growth of 8.4% and organic growth of 8%. Dural repair sales increased low-double digits, with strength in both of our leading technologies, DuraSeal and DuraGen. We're also seeing broader acceptance of two recent Dural graft product line extensions. However, as we indicated on our last call, the Dural repair growth rates are slightly decelerating…

Thanks, Glenn. Turning to Slide 10, I'd like to provide an update on our priorities through the remainder of 2016 and beyond. Following the strength through the first three quarters of the year, we raised our full-year 2016 organic revenue growth rate. We're ahead of our 2018 target of 6% to 8% growth, established at our November 2015 analyst meeting. And while this year's growth rate is a strong indication of the capabilities of the Company, we continue to believe that the 6% to 8% organic growth rate is appropriate for our long term outlook. As we look ahead to 2017, we anticipate being near the high end of that range. With respect to profitability, we're taking progress towards our long term targets of 25% EBITDA margins and 12% earnings growth in 2018. We're experiencing faster topline growth and a benefit from a lower tax rate which will enable additional investments in clinical and commercial growth opportunities. Our free cash flow has also shown significant improvement and is on track to meet or exceed our 2018 goals. We remain committed to our 2018 targets, but we'll continue to balance bottom-line profitability with investments being made today, to grow the topline and sustain long term above-average growth rates. We're in the midst of a number of new product launches that are positioned to drive organic growth for the next several years. We're preparing for a global full-market release of Cadence, expanding our surgeon education programs for both Cadence and Salto and remain optimistic about our position in the total ankle market. Our team remains confident in the long term growth prospects of Omnigraft and our 3x3 advanced wound care strategy. Investments in clinical data, physician education and training, will contribute to growth in both domestic and international markets. These investments are focused across multiple franchises, including Dural repair, precision tools and instruments, tissue ablation and our regenerative portfolio, all of which are growth opportunities. Finally, we remain committed to executing strategic M&A that will enhance our long term plans by adding relevant scale within our current franchises. Before turning the call over, I'd like to also invite all of you to our Regenerative Technologies Day in Plainsboro, New Jersey on the morning of December 14, 2016. We'll have a number of distinguished clinical speakers on hand, our full portfolio of regenerative products on display and we'll be giving tours of our state-of-the-art collagen manufacturing center. Our senior management team will also be on-site and we look forward to seeing many of you there. With this event, we look forward to closing out a very successful 2016. And with that, operator, please open up the line for questions. In an effort to accommodate everyone, we ask that you limit yourself to one question and one follow-up, after which you may rejoin the queue. Catherine, you may now open up the phone lines.

[Operator Instructions]. And Travis Steed with Bank of America Merrill Lynch. Please go ahead.

So I understand you are not going to provide 2017 guidance at this point, but I just want to make sure we're thinking about the puts and takes next year correctly. And with the new product launches you have coming next year, it kind of seems like a reasonable assumption that growth could be at the high end of your 6% to 8% long-range goal. And also you are getting double-digit EPS for this year and you had the first half investments. So is it fair that we could think about EPS growth accelerating a little bit into 2017?

So, Travis, first of all, thanks for the question. And, yes, I think when we think about -- obviously not giving guidance at this point, but we wanted to kind of express how we see things. We think the 6% to 8%, as I mentioned, to the higher end of the range, makes a lot of sense. In our portfolio, we do have some puts and takes. And I'll have Glenn maybe comment a little bit about on how we think how profit drops through, just from a high level, to frame things up. And we'll give official guidance, as we do in February. But we see Specialty Surgical which has had a tremendous year thus far, following the trends that we see here in the second half of the year, continuing into next year which is, if you think about our broader specialty tools and instruments -- precision tools and instruments, it's really performed above the market. We see that selling into -- still performing above but not at the same level we've experienced thus far in 2016. Now Dural repair, at the beginning of the year, we were performing up in the higher-double-digit ranges; we're now moving into lower-double-digit performance areas. And those two phenomena, tied to continued performance and some increases within OTT, are how we see that 6% to 8% shaping up for next year. So Glenn, maybe you want to comment a little bit about kind of how we see -- how we should think about the profitability?

Yes. So, Travis, when we look at 2017 and beyond that, we still are targeting low-double-digit earnings per share growth. If you look at this year in our midpoint of our guidance, we're probably going to be around 13%. So a little higher than that. Keep in mind a portion of that -- a big portion of that is driven by a lower tax rate. And so we're investing some more as we move into 2017. We did have some investments in the first half of this year, but those investments are going to continue. If you look at our outpatient wound care channel as an example, we've got 50 reps today. We want to see that number continue to grow. If you think about the importance of clinical studies and having differentiated data to sell your product as you move forward in this healthcare system, more studies are going to have to be done. So those are the types of things we're going to have to invest more in as we go into 2017. But, as I think about next year -- again, low-double-digit earnings per share growth is what we're targeting right now. And again, in terms of the tax rate, I think for now, we'll just model a flat to slightly higher tax rate as we look at 2017. I think that's all I'm really ready to comment on for 2017. I think Pete did a nice job laying out the high-level topline view of what 2017 looks like. And then EPS, I would just kind of model what I just said.

And maybe just a follow-up on your M&A funnel -- how is that looking? Do you still think you can get a deal across before year-end?

Well, first of all, the funnel looks great. I mean, we're quite fortunate with the markets that we're in, either in small bones ortho, in the broader regenerative space which can move into wound care, into reconstructive surgery. And then also our Specialty Surgical area, we have quite a few tuck-in deals. Like anything else, anything is possible. I mean, keep in mind this year, we've actually done a few partnership deals that are starting to kick in from a human tissue product as well as advanced wound product in Bultek. But, yes, there's clearly possibility that we could bring some things in. What's more important is the funnel is strong. And over the next six to nine months, we would expect to be able to get some deals done and are clearly, I'd say, on the hunt, so to speak, of the right type of deals. And as I commented on before, what we're really looking at here is not to expand our base, but to really build out relevant scale, build up our capabilities in the businesses that we're in.

We will continue on to Robert Marcus with JPMorgan.

Two areas in the model that stood out were Neuro Critical Care and Tissue Ablation which you said were up high-single-digits. And then also it looks like Regenerative Technologies came in a bit lower than I was expecting. I'm guessing on the TEI component. Maybe can you just spend a minute and talk about what's going on in each of those in the puts and takes there?

Well, I would just comment at a high level, I think Neuro Critical Care and Tissue Ablation both globally had some strong performances. We've spent a lot of time within that organization, both domestically and internationally, on sales process and scale. And we continue to do well, I think, on the critical care side. We do have an installed base that we've been working through and still have had some pretty good performance of converting some older technologies out. I think on Tissue Ablation, the market continues to be reasonably robust. We've got a leadership product within that space, the CU.S.A brand and really a very strong sales force that's developed its skills, I'd say, to kind of really figure out how to not just sell the technology, but we've increased the capabilities of the device in added indications, such as liver on top of neurosurgery. And so that's added to the ROI for a given customer. And I think the organization has done a nice job of selling that value. As far as regenerative, look, we had a, I think, we thought, a very good in-line performances as we had expected. As Glenn commented on, TEI year-over-year was down, but it was up sequentially, as we had hoped, in line with some of the investments and changes that were made. Very bullish about the future of the TEI capabilities. Again, it's quite complementary. And we actually have some new products lined up to come out in 2017 into 2018. But we've made some good progress there. Our core business is doing very well. I would say, from our original platform the Company is founded on which is the larger IDRT templates, we're starting to see, in many cases, even on the inpatient side, where certain surgeons would use lower-tech products in the past, are now stepping up to use products such as our IDRT as a first-line product. And with that, we're starting to see some good growth. And we've been seeing that throughout the year. And those are the kind of trends that we think are going to continue. And so if you look at the quarter, it was really a broad-based consistent strength that we've had. And again, a little bit more weaknesses in TEI, as we had foreseen.

And then just one more. Gross margin came in a bit, I think, lower than The Street was expecting, maybe your guidance pointed to last quarter. Was that really just a function of some of the lower-margin businesses outperforming this quarter? Or was there something else going on? Thanks.

No, I mean we expected a sequential improvement on our gross margins. It was probably 20 basis points light when we had modeled when we came into the quarter, but nothing I would highlight there. What I would say as we go to the fourth quarter here, we're expecting another step-up in our gross margins to be close to the 70% range. And so we feel very good that our gross margins for the year are going to be pretty much in line with what we previously communicated. So, I would say there's nothing to highlight relative to the gross margin performance in the quarter; it was probably 20 or 30 basis points light. But again, expecting another very -- you know, large quarter going into the fourth quarter; gross margins should be very good. And then we're holding our full-year guidance on gross margins as well. So, that's all I can say about that.

Our next question comes from David Lewis with Morgan Stanley.

This is actually Jon Demchick in for David. So I think we've covered some of this, but I mean, when you look at the 10% growth, obviously first 10% growth really to date organically, I think there's obviously been the strength in Specialty Surgical that we've kind of talked about, that's been growing a little faster than you guys expected. But the other area that I wanted to focus, that was I guess international across really both businesses. If you look at the past couple of years, it's been more in that sort of low to mid-single-digit area, but this year-to-date, it's kind of been accelerating throughout the year and I think that's around 15% this quarter. How sustainable is this level of growth international?

Yes, Jon. Look, thanks for the question. International has had actually a string of some strong quarters. And it is, as far as maintaining double-digit growth, we think quite sustainable. Part of this has been a lot of the good work that Dan Reuvers and his broader team have done with putting focus on specific countries and candidly defocusing others. And then also the same thing within the product portfolio and that's enabled us to take valuable resources and really put our best of the best folks in products with on the right countries. And so we're starting to see that strategy play out. The other aspect is many of those targeted products -- we spent a good chunk of time taking a look at what end-market prices are like and what those margins are. So that as we see that growth coming through, that we could be accretive to the overall Company average from a gross margin standpoint. And so those are the two goals that -- it's still early on. We're doing quite well, but we think double-digit growth is sustainable into the future and have a pretty well laid-out plan. As you know, it's probably our biggest growth opportunity for the whole company. We obviously think wound care and Omnigraft -- big opportunity. But when only 23% of your sales outside of the United States, there's a significant opportunity we can continue to grow and manage our portfolio properly. And that's a big area of investment and focus for us as well as we go into 2017.

And just a quick follow-up on DFU. As last we spoke, the value analysis committees were, I guess, making things go a little longer, even though you were just more confident with the product. Is there any change in the way that you're seeing the DFU market and launch unfold? Is $12 million to $15 million still the bogey for this year thank you are expecting? I wasn't sure if I heard an update for that on the call.

Yes, the bogey is, as we communicated last quarter, we talked about a range of 12% to 15%. And I think it was in Glenn's part, so that's unchanged. And so we see that as no change to the year that we're on track to that. I would say the value assessment committees -- I think you probably heard other folks talk about it, not just in this area but in all product lines are increasing in prevalence. And so it's a 150-day window, 120 -- 150-day window to get a product through and to be able to get it into the purchasing system, we think, in many cases, it's probably a bar that's going to be out there for a lot of new launches. We're having, I'd say, significant amount of success moving those through. But this is a product that, as we had planned from the beginning, that uses significantly less applications. And Glenn used the term a linear ramp -- we see this as a nice consistent growth vehicle for us. And remember, we also are building out a channel of more products. And that's really what we've meant by our 3x3 strategy. So yes, we have a clear leading product with PMA quality data in Omnigraft, but we also have our PriMatrix product which has even broader indications; the Voltec product. We'll be bringing in the amniotic product and others into the portfolio. And so as we build that, one is to convert obviously individual podiatrists and users, but also as we expand it, to be able to have a breadth of products to contract, both inpatient and outpatient. And I think we're starting to make some good traction on that and feel quite good about where we're positioned in the VAs as well as the outpatient setting.

And Raj Denhoy with Jefferies. You have our next question

I wonder if I could ask about the extremities business? As you noted in the presentation, on the organic basis, it's still not growing too much, despite all the potential. And so maybe if you could just spend a minute about what you think it's going to take to get extremities moving. And it is related a bit to, I imagine, the cost side of things and so I did a follow-up on that as well.

Yes, Raj, I'll comment. I think, look, across the portfolio, we actually feel quite good about where we're with extremities. If you do remember, we had an extended period of time where, in our legacy portfolio, we were actually decreasing. And so, we're back on at some sequential growth which is important for us as far as apples to apples comparison. And then when you obviously add in the Salto and with the Cadence coming in, we're growing quite a bit. I think the interesting part for us when you look at the lower extremities with a top three ankle and a new product coming out that we believe is also going to be in that camp, we have a strong belief that that's going to create some tailwinds for the rest of the portfolio. We haven't talked a lot about it yet; we probably will in upcoming calls, about the rest of the portfolio. We've had a lot of concerted effort within our team to update that portfolio. There's been quite a few new products that are on the brink of coming out, as well as some recent launches, such as an X-Specs product that we've mentioned, that are helping move that along. On the upper end of things, I think in hand and wrist, we're moving along quite well, as well as with bringing in regenerative products such as nerve. We have a pipeline that we're working on there to bolster that. And then in shoulder, we continue to actually do well. I mean, there's clearly more competition within the shoulder ranks. That is a distributed product for us and we've been able to bring new distributors in the portfolio, because they see the quality of the product and really some of the future potential with it. So, I would say it's quite in line with what we had hoped. But the catalyst for driving more growth is clearly getting these R&D programs out and our ability to execute in the lower franchise, particularly around ankle and the users of other products that -- as we bring into our ankle portfolio.

Okay. And my follow-up question sort of encompasses this as well, but it kind of has to do with the spending that you are doing to support the growth of some of these new opportunities. You've noted again today that your 2018 EBITDA margin target is 25%. I think most have modeled you guys doing that probably a year sooner, 2017. And I guess what I'm trying to get at is your comfort with that. Do you think the spending necessary to support things like the DFB launch, extremities international, will the expense just continue to be heavy as we move through 2017, such that that 25% target really is a 2018 goal as opposed to something sooner?

Yes, Raj. So, we'll be able to give more color when we get into guidance. But, look, at a high level, we actually are in a very great spot. I mean, I've got a new outpatient channel that we've got a lot of organic as well as sourced products that we need to invest and build in. And I think as we talked before, we have roughly about 50 reps today; with success, it means doubling that. So, yes, that would be an investment in 2017 against our SG&A numbers increasing those. If you take a look within some of the products within TEI and plastics and the reconstructive area, we think we have some interesting opportunities in broader plastics. And reconstructive will take some investments but can drive some significant returns with products that are in the 80% gross margin range. We also have some other new products coming out -- launches within our neurosurgery area, within Specialty Surgical. And so those levels of investments and the kind of growth that we would expect, we think that that's a reasonable goal out into 2018 and 25% EBIT. Now that being said, obviously, if we have some faster growth rates on lower investments, those are the kind of things that we would -- obviously would come to the P&L. But I would say when you take a look at our profile today, we think that that's a realistic number -- that the kind of investments we need to make in 2017 could still enable us to hit the double-digit EPS, be in the 6% to 8% range. And also build out those markets effectively. I don't know, Glenn, if you'd like to add any other color to that?

Yes, Raj, I mean, if you look at where we're for 2016, you know, 23.5% EBITDA margins is where our guidance is, I would expect us to see another nice improvement going into 2017 and getting more EBITDA margin expansion. And then still targeting the 25% by 2018. I think we're in a fortunate position in that we're growing our topline faster. We've got some opportunities to continue to drive our tax rate lower. And with that, we've got to figure out what is the right level of investment to drive 6% to 8% over the long term? And so you can continue to expect us to get EBITDA margin expansion over the next few years, but again, we're still committing ourselves to the 25% by 2018.

And Larry Biegelsen with Wells Fargo. Please go ahead.

It's actually Craig on for Larry. I wanted to start with just Dural repair. And I know in the past that you've given a little bit of color, whether it was DuraGen or DuraSeal that actually drove the -- more of the growth. I know in your slide presentation you said kind of a strong -- or higher demand for both. But just wanted to see if you could give any more color on if one might have been stronger than the other?

Yes, I would say, Craig, that we don't break those out purposely for competitive reasons, but I would say both did quite well. We've also had new launches within the DuraGen family -- I'd had mentioned those, the suturable product in bovine pericardium and then also a very unique product, Secure, that has a certain type of ease-it characteristic for certain types of FraDura. And both of those have done very well. But the portfolio overall continues to grow. I think we've talked about this in the past, that over 50% of the procedures of closing the Dura, we believe from our data are just using a suture only. So again the surgeon would just suture it shut. And we believe that we're still seeing -- and this is again how growth takes place -- that more and more of those surgeons, as we commit to do training which we spent a significant amount of training, reaching a large group of fellows and residence within the neurosurgery world -- are starting to slowly convert to use a combination of those products by themselves or with in conjunction with sutures. So we think it's a sustainable growth. But as we've stated in previous quarters at a more moderate rate, something above where the neurosurgery procedures are which typically run in the 3% to 5% range from a procedural standpoint and our growth rate ultimately leveling out something just above that as opposed to a low-teens number. But we feel very good about it. It's been quite buoyant, even with ssome added competition into the marketplace. And it was a very good quarter for the team in Dural repair.

Thanks. That's helpful and kind of touching on your last point as a follow-up -- just wanted to get your thoughts on what you are seeing from HyperBranch in the market? Has it impacted your sales? And then I guess just broadly on the lawsuit, I know you tend not to provide specific information, but is there any update on the lawsuit? And any timeline or milestones that we should be thinking about over the next, call it, 15 months or so?

Yes, I mean, I can give a little bit of color. Look, I mean, we're obviously doing quite well in the marketplace and have really over the last 18 months to two years. We've had competition with the company you mentioned outside the United States for the last year, so we compete with them head-to-head every day. In the United States, there's clearly been some effect at this point in time, as you bring anyone new into the marketplace, but it's actually been minimal. Our product performs extremely well. I think the in-servicing, the quality of the product, the sales team, the applicator -- this product itself all performs very, very well. And I would say, look, from the broader case when we brought this up, we don't bring many cases forward but when we do, we're quite serious -- and it's around patent infringement. And again, this isn't just one patent; it's multiple patents across the board -- we still believe we have a very strong case. Now one of the first steps that you potentially go as an injunction -- they are very rare to happen. That didn't take place at this point in time, but the patent case is still well intact. And in many cases, these can take multiple years to get there. But I would say, from our perspective, nothing has changed -- the quality of our patents, the confidence that we had in and we'll see ultimately how it plays out. But in the marketplace, we continue to do well and bringing on new customers every day.

[Operator Instructions]. Matt O'Brien with Piper Jaffray. Your line is open.

This is G.P. in for Matt. Thanks for taking the questions. So I just had a kind of a loaded question within the regenerative tissue part of the business. But if the first part is -- when should we expect some more clinical data coming out of Omnigraft? The second part is -- you are at 50 reps; you've been at 50 reps for a while. I guess why isn't that ramp going quicker? Or when do you expect that ramp to kind of pick up? Is that because of the value analysis committees are taking a little longer? And then what's the expectation of the timeline for the amniotic product? Thank you.

So I think that was three questions in there. Let's see how we'll get those. So, look, I think first of all, we just launched the product in second quarter with 50 reps. We pretty much had our plans laid out on the target approaches that we would go through. And as we ramp up to a level that we'd start seeing the kind of saturation we think with the 50 reps, we'll add additional which is pretty consistent with what we communicated. And I would say, at the end of this year, going into the beginning of next year and throughout the year, we'll continue to add additional reps. And so that's part of the plan with the reps. Relative to clinical data, as you know, we've got the most extensive study that's ever been done really to date within the space. And we already have, as we bring new users through the value committees, these are many of the folks that are actually interested in doing studies. We have some people very much interested in doing health economic studies -- closure studies, closure rates beyond the traditional windows, what happens to a patient after a year? A lot of those things that can drive some transformational changes within the industry. So we have a lot of interest to work on that. And I think you'll see some of those types of studies coming out next year. There's also, because of the size of our studies, some very interesting opportunities to do retrospective work, just based even on the foundry study that we have out there. And your third question was?

Just around amniotic, yes.

Yes. So we actually have an amniotic product that we have in the doctor's office and other areas. We have plans, I would say, next year to be in a situation that we could bring it actually into the wound care clinic. And so we're working on those right now with some smaller studies and things of that nature to be able to bring it into the outpatient area. So I would say in 2017, our plans would be to have a full-fledged 3x3 product line strategy which is our Omnigraft, PriMatrix and amniotic in the wound care setting. And it's also a part of our strategy, just as we brought Voltec in, is to bring a few other products within to that portfolio, to give us more of -- I'll say a fuller bag of advanced products that can make a difference in the eyes of those clinicians. So look for hearing more about that in early 2017.

And then just if I could sneak one in on Salto. You guys still have the international rights. Do those expire any time? Or what are you guys thinking about that?

Yes, we pre-negotiated the constructs for the international rights for Salto. And we have some rights that are coming up to take advantage of those in the second half of 2017. So, we'll make some decisions probably at the beginning of 2017, what we ultimately decide to do for that.

We will now go to Jayson Bedford with Raymond James.

So I guess, first, where are you seeing the relative softness in TEI? Is it on the burn side? Is it the soft tissue side? Private-label? And then kind of what changes that and what allows it to grow?

Yes, I would say there's a couple of points -- one is we had some softness in private-label which is probably earlier in the year which was more so around our expectations about what volumes would be. And I'd say that's been stabilized and we're running at a new baseline. So I think on a go forward basis, we've kind of got that set. But that was off our expectations earlier in the year. This part is really more so around our impatient product and that ties to two aspects of it which is within the area of plastics and reconstruction, there was a warning letter for all types of players that touched into the breast area for a nonhuman product. And those sales right after we purchased, kind of planed and flattened out. We've got plans that our focus is to be able to do some broader clinical studies in that area. We think that's going to be a really interesting growth area over time. That's really the two main areas I talked about in the past that we distinctly have some opportunity with some channel additions and tweaks. And we're actually looking at that right now. We have a specialist group that will spend more time focused on some of those products. We just recently did training with our groups in those areas. And the fact is with the success of a lot of the new products we've brought out, there's been a little bit of a bandwidth issue that we talked about in Q2 and we started seeing that -- I'll say improve in Q3, as we saw sequential growth. And we think that's going to continue here quarter over quarter as we add folks and I'll just say get the products more integrated into the family. I'm still very, very optimistic about what we have here. Again, we have some new products that are going to be coming out in that area. And part of our investments that we're going to make next year -- and really into 2018, for that matter -- are also in our broader inpatient regenerative channels where we've been growing significantly. And that's going to help us be able to have more focus on some of those product families than we've had in the last two quarters.

What is regenerative as a percent of total sales? We haven't had an update on that in a while.

Yes. So if you look at, for the Company which would be the Dural repair products and then all of the tissue products and plastics and recon and then the advanced wound care products, it's about 43% of our total sales. And probably back in 2011/2012, it was around 30% or just below that.

And then maybe for Glenn, Glenn, you mentioned that G&A had decreased as a percent of sales on an adjusted basis. Can you maybe talk about some of the ongoing initiatives you have right now and maybe some of the planned initiatives as we head into the 2017 and 2018?

Yes. So if I think about the work we've done to date to bring our G&A costs down as a percentage of sales, a lot of it had to do with some of the organization changes we made back in 2015, where we moved to a two-division structure from five segments. So that was an organization change that has helped us. A big enabler for us, though, is moving to a common ERP platform. And so you know, the work we've been doing to move towards Oracle R-12, getting on a common platform is important for us to centralize a lot of our back-office resources. We've got about 90% or so of revenue going through one platform and 95% going through two. So we've made great progress around that, including a lot of enhanced reporting across the Company. In addition to that, we've got a lot of other initiatives as we look forward in terms of locations that we're looking at and things that we want to do relative to cutting a lot of our outside spend. And we're going to continue to take another bite of the apple as we look at these types of things, including the outside spend. But you'll hear more about some of the initiatives, Jayson, I would say in about 12 months, but we do have plans that we're working on. And a big part of it is continuing the consolidation of our manufacturing footprint which enables us to continue to reduce our G&A. We've made great progress in the past. We closed two facilities this year; that has helped our G&A. And then as you move forward, we'll continue to look for opportunities to consolidate facilities. So those are just some of the enablers. And you'll hear more probably in about 12 months of additional things we're working on.

And we go to Steve Whitman with Oppenheimer.

So just one question with two parts. Could you guys give us an update on two opportunities? One, enterprise selling; and two, expanding private label further, now that you have the added capacity in New Jersey?

Sure. I'll give an update on enterprise and maybe Glenn can comment a little bit on what we're doing with private-label. So the enterprise selling organization has become an integrated part of kind of who we're. I think for a diversified small to mid cap company, it's a really important tool in how we take multiple brands and products and leverage our scale and compete against some of the biggest players in the industry. And so it's enabled us and some of the larger IDNs to be able to have multiproduct contracts which become quite important for us. We clearly see a trend across the industry. We've talked about value assessment committees being a trend. I think another trend is to really be on contract within a given IDM, even for your sales rep to be able to show up in that count and make calls. And so to us, it's become quite important. We've been able to leverage contracts where we're one of two in many cases and that's driven a significant amount of sales through that channel. But it's also helped us be able to take a look at areas where we're quite strong in one brand -- say, in neurosurgery and a large well-known IDN. And we may not be as well-known in some other product lines and be able to take a look at how that might be able to position us to be able to bring those brands in. So, I would say our sales through accounts that actually have contracts has gone up quite a bit over the last two years. And we only expect that to continue. So that would be my view on enterprise and the importance of it. Glenn, why don't you comment a little bit about private-label and maybe how we're taking about the added capacity and its role?

Yes. So Steve, you know in the past couple of years, we've been supply-constrained with respect to our collagen implants. Now that we've got our new facility up and running here in Plainsboro, it's given us the added capacity to now not just support increased demand from our existing large private-label contracts, but also go out and get new contracts in areas like the dental area -- dental collagen. So we're seeing a combination of increased end-user demand in a lot of our existing contracts where we can now actually supply the product which is helping our overall private-label business. But also going out and winning new deals in private-label and this is clearly an area that's helped us. I mean, we've grown this year double-digits. We had another quarter of double-digit growth in Q3. As we look to next year, I'd expect it to continue. And so this will be a nice additive growth driver for us as we move forward into 2017 and 2018.

[Operator Instructions]. And with no additional questions in the queue, I'd like to turn the conference back over to Mr. Pete Arduini for any additional or closing remarks.

Thanks, Catherine. Thanks, everyone, for all your questions and taking some time, I know, on this busy afternoon. I'd like to briefly reiterate just a couple of the messages that we talked about -- Glenn and I, in the prepared remarks. First of all, we're exceeding our 2016 financial targets, raising organic growth rate to a range of 9% to 9.5% and increasing adjusted earnings per share to $3.47 to $3.53. Second, we're on track to achieving our long term 2018 financial targets, while continuing to invest in these future opportunities we discuss, including M&A. And we see our 2017 growth near the high end of our 6% to 8% organic revenue target. Third, we continue to look forward to the growth of our advanced wound care strategy and believe Omnigraft, through its differentiated technology and economic advantages, will become a franchise product. And finally, given our positive long term outlook, we're pleased to announce plans for a 2-for-1 stock split, subject to shareholder approval later this year. Thanks again for listening and we look forward to speaking with you all in the near future. Have a nice evening.

Thank you, ladies and gentlemen. Once again, that does conclude today's conference. Thank you all again for your participation.