Good day, and welcome to the Integra LifeSciences Fourth Quarter 2025 Financial Results. [Operator Instructions] This call may be recorded. I would now like to turn the call over to Chris Ward, Senior Director of Investor Relations. Please go ahead.

Good morning, and thank you for joining the Integra LifeSciences Fourth Quarter 2025 Earnings Conference Call. With me on the call are Mojdeh Poul, President and Chief Executive Officer; and Lea Knight, Chief Financial Officer. Earlier this morning, we issued a press release announcing our fourth quarter 2025 financial results. The release and corresponding earnings presentation, which we will reference during the call, are available at integralife.com under Investors, Events and Presentations in the following fourth quarter 2025 earnings call presentation. Before we begin, I want to remind you that many of the statements made during this call may be considered forward-looking. Factors that could cause actual results to differ materially are discussed in the company's Exchange Act reports that are filed with the SEC and in the release. Also in our prepared remarks, we will reference reported and organic revenue growth. Organic revenue growth excludes the effects of foreign currency, acquisitions and divestitures. Unless otherwise stated, all disaggregated and franchise level revenue growth rates are based on organic performance. Lastly, in our comments today, we will reference certain non-GAAP financial measures. Reconciliations of non-GAAP financial measures can be found in today's press release, which is an exhibit to Integra's current report on Form 8-K filed today with the SEC. And with that, I will now turn the call over to Mojdeh.

Good morning, everyone, and thank you for joining us for our Fourth Quarter 2025 Earnings Call. Before I review our 2025 performance and outline our priorities for 2026, I want to briefly acknowledge the recent Supreme Court decision and the administration's announcement regarding new Section 122 tariffs. While these are meaningful developments, there remains substantial uncertainty around the implementation and timing. As a result, our 2026 full year and first quarter guidance do not incorporate these tariff changes. We are actively monitoring the situation, and Lea will provide more details and context in her remarks. In the fourth quarter, we advanced our transformation, continued to deliver for our customers and patients and met our financial commitments with revenue of $435 million and adjusted earnings per share of $0.83, both above the midpoint of our guidance range. This performance builds on a year of meaningful operational and strategic progress. During the year, we further strengthened our quality management system, advanced our compliance master plan and progressed execution of our risk-based remediation plan while maintaining constructive engagement with the FDA on our warning letter commitments and routine inspections. We also improved supply reliability, enhanced our execution capabilities and delivered significant outcomes in key supply chain resiliency efforts. Additionally, we advanced our in China for China strategy, completing submission of our initial regulatory requirements. These accomplishments supported by our portfolio prioritization and disciplined capital allocation are reinforcing the foundation for future growth and innovation. I want to thank our employees for their significant contributions throughout 2025. Their efforts and steadfast focus on our purpose and our customers have been instrumental in solidifying our foundation and positioning us well for the opportunities ahead. Throughout 2025, we took several important steps to strengthen our company. We welcomed 6 new leaders to our executive leadership team,…

Thanks, Mojdeh. We'll begin with our full year financial results, starting with Slide 6. Full year 2025 revenue was $1.635 billion, representing 1.5% growth on a reported basis and a 0.7% organic decline. The full year contribution from the Acclarent acquisition was a key contributor to reported growth while we manage quality remediation work and supply constraints that affected organic growth performance throughout the year. Despite these operational impacts, demand across the portfolio remains strong. For the full year 2025, we delivered double-digit growth in CereLink, MAYFIELD Capital, Aurora, DuraSorb programmable valves and 6 pressure valves. We also achieved above-market growth in DuraGen and Jarit instruments, demonstrating the meaningful value our technologies bring to customers and the effectiveness of our commercial teams. Full year gross margin was 61.9%, down 260 basis points year-over-year, reflecting tariffs, supply pressures and incremental costs associated with our compliance master plan. These same factors weighed on profitability with adjusted EBITDA margin of 19.4%, down 60 basis points and adjusted EPS of $2.23 compared to $2.56 in 2024. Disciplined cost management actions helped mitigate some of the impact on both adjusted EBITDA and adjusted EPS. Cash flow from operations for the full year was $50.4 million. Capital expenditures totaled $81.4 million. During the year, we invested in manufacturing infrastructure to improve supply reliability. We also continued funding 2 major initiatives, construction of the Braintree facility and supporting EU MDR compliance. These projects accounted for about $97 million in cash outlays. As investments in these programs wind down and we see improved working capital and adjusted EBITDA, we expect to see a meaningful improvement in free cash flow beginning in 2026. On Slide 7, I will cover our fourth quarter financial results. Our fourth quarter revenues were $435 million, representing a decrease of 1.7% on a reported…

Thank you, Lea. In closing, as we look ahead in 2026, our focus remains on continuing to strengthen the foundation of the business. We will continue to advance quality, improve supply reliability and drive consistent execution across the organization. At the same time, we are being deliberate in positioning the company for what comes next. As we return key products to the market, recapture share and sharpen our approach to innovation and portfolio prioritization, we are laying the groundwork to support accelerated growth over time. With strong positions in attractive end markets, our focus in 2026 will remain on delivering quarter-to-quarter consistency while building the foundation for sustainable growth and value creation. With that, operator, please open the lines for questions.

[Operator Instructions] Our first question comes from Ravi Misra with Truist Securities.

I guess 2 questions for me upfront. First, just on the free cash flow generation and improvement. It's a little bit weaker than I think we thought what we were looking for on kind of the prior expectations. Can you just help tease that out a little bit and what you're kind of contemplating in 2026? And then secondly, just on the Tissue Technologies business, a lot of stuff just going on, still lingering in the air here around CMS changes and how companies are reacting to that. Can you maybe talk about what you're seeing in the field here early on in the first quarter?

So I'll start, and thank you for the question, Ravi. In terms of free cash flow for the quarter, to your point, free cash flow was negative $5 million. A lot of that driven by timing of collections in the period. So that explains about 2/3 of that. The other 1/3 is driven by restructuring costs associated with the transformation and the model changes that Mojdeh referenced in her remarks. Perhaps more importantly, though, as we move into 2026, we do expect to see a much improved cash flow profile. We're going to experience reduced cash outlays associated with some of our key initiatives that I talked about, namely EU MDR compliance along with Braintree. And for reference, to put it in context, for 2026, we're expecting operating cash flow to be north of $200 million, which is about $150 million improvement over 2025 landed, about half of that $150 million is driven by EU MDR and Braintree cost reductions. And then the other half is driven by improved working capital profile, lower CapEx and better EBITDA for the year.

Yes, Ravi, this is Mojdeh, and thanks for your question. To answer your second question, the changes, the reimbursement changes, yes, there are changes that are happening in the market and where they actually are going to land remains to be seen. We're continuing to monitor. But suffice it to say that, again, a reminder, our business is 90% in the acute care setting. And also one thing to keep in mind is the pricing that we have for our products are well within the new reimbursement range. So we do not expect to see any negative impact on our business as a result of the changes. One of the things that we're hearing though from the market, and we're seeing in the market is that the customers are really curious about better understanding the dynamics and the changes and our health economics teams are being asked by some of our major customers to actually sit down and educate them on what the changes are, which is a great opportunity for us because, if anything, the changes are very much aligned with the strategy that we've had for this product category, which is investment in clinical evidence, health economics as well as then being able to represent our full portfolio across the entire sites of care. So obviously, the anticipation is that this market is going to shrink because of the reimbursement pricing significantly being reduced. And who are the players that are going to remain in the market remains to be seen as to how much they can economically absorb because of this significant reduction in the reimbursement rate.

Our next question comes from Robbie Marcus with JPMorgan.

This is Allen on for Robbie. Just to start off, I wanted to ask on your assumptions behind growth for both CSS and Tissue Tech, both for the fourth quarter and for the full year, just how you're thinking about that in the context of the full company guide.

Yes, certainly. So from a Q4 standpoint, let me first start by saying how excited we are about the performance of the business in Q4. As I mentioned in my remarks, we delivered a sequential step-up of about $33 million versus Q3, which we believe is evidence of the strength of the underlying demand for our portfolio. Within that, as you look at CSS and Tissue, both delivered revenue that were largely in line with our expectations. CSS delivered a low single-digit growth, which is on top of a very tough comp from the prior year. If you recall, in Q3 of 2024, we experienced a supply interruption. Q4 benefited from strong backorder clearance. And so we were lapping that on that business. And despite that, we saw double-digit growth across parts of the CSS portfolio, namely CereLink, MAYFIELD Capital and Aurora and high single-digit growth in CUSA. So strong performance within and overall, given the comp that we saw versus 2024. In Tissue, similarly, we saw declines in that business in Q4, again, not unanticipated. Once again, we were facing a MediHoney remediation headwind for Q4 of 2025, coupled with Integra Skin facing a very strong comp again. So we saw a strong backorder clearance on Integra Skin in Q4 of 2024 and in '25, we comped that, which describes the performance for tissue. As we move into 2026, I think as we talk about kind of growth expectations across both of those businesses, I think it's important for me to kind of ground you in how we approach guidance for this year. We're very intentionally -- our guide intentionally reflects the demonstrated progress that we've made in terms of the remediation work that we've conducted all year long. It assumes a measured ramp for any products that -- as we return them back to market. And it assumes that supply from products not already in market will be layered in over time. And it, quite frankly, allows for prudence, right, as we continue to improve our capability, improve overall visibility. With that, the growth expectations for both CSS and Tissue are below market, but not driven by demand, definitely a reflection of supply. So for CSS, we're expecting a low -- flat to low single-digit growth on that business. And for Tissue Tech, we're expecting low to mid-single-digit growth during the course of 2026.

Got it. And you kind of touched upon my follow-up question there, but just the health of the underlying markets and the demand you're seeing both from a procedure and capital standpoint just to kick off the year, has it remained relatively healthy? And what are you assuming for the balance of the year?

Yes. So to that end, exactly, the growth expectations aren't a reflection of demand. We do continue to see strong demand across both parts of the business as evidence of what we saw in our performance in Q4. And then even on Tissue Tech, as we exited Q4, we continue to see strong momentum on that business specific to Integra Skin that we expect to drive kind of the full year growth expectation that I articulated.

[Operator Instructions] Our next question comes from Vik Chopra with Wells Fargo.

This is Namrata on for Vik. I have 2 questions. So first, with Braintree expected to resume mid-2026, and SurgiMend relaunching in Q4. What are some of the key milestones you're focused on to ensure a strong return to market?

Thank you for your question. We remain on track with the operationalization of the Braintree by the end of June of this year. And the milestones that are remaining is mainly process validations that are required before we get to the inventory build. So we remain on track for that. And those are going to continue until the plant is going to get operationalized.

That's helpful. I have one other question. So for PriMatrix and Durepair, these have been historically very solid contributors. So what's your outlook for the recovery and ramp in 2026?

So to your point, we relaunched Durepair and PriMatrix early, about 12 months ahead of plan. So we relaunched them in Q4 of 2025. Early read on both are -- they're performing really well in terms of customer reception as we're getting back into market. So we're looking at that and continuing to build on that as we move throughout the year. And as part of our guidance strategy, assuming kind of a measured ramp as we build back, but using the learnings coming from that relaunch as we plan for the SurgiMend relaunch that will happen in Q4 of this year. So excited about the early read and the opportunity to make both of those products a strong contributor to our overall performance this year.

Our next question comes from Travis Steed with BofA Securities.

This is Ray on for Travis. Just a follow up on Allen's question. What is the status of the MediHoney remediation efforts? Is it still excluded from the guide? Or has it been baked in for Q1 and 2026?

Yes. Thank you for your question. We do not have -- we haven't accounted for any revenues for MediHoney for this year in our numbers. We have been remediating that product. It's one of those products that the remediation has continued into 2026. We obviously love to have these things go a lot faster, but we're taking our time to do it right. We want to make sure when we bring the product back to the market, we have a safe and quality product for our customers. So we are diligently working on that. If we get to pull the time line up, that would be upside for us. But we don't have anything accounted for it in our guide at this point in 2026.

Makes sense. And then just one on the Tissue Technology organic growth. How much did the low double-digit decline internationally contribute to the decline there? I know you mentioned it's partly due to MediHoney, but is there any additional color you can give? Has there been any material change in international market dynamics? And how should we be thinking about China going forward?

Yes. So in terms of the international component of Tissue Tech, not as significant a driver. Our international business is primarily CSS. As you look within the Tissue Tech performance, the decline of 12.8%. Absent MediHoney, the decline would have been about 6%, and that's largely driven by Integra Skin. And again, that driver was the prior year comp, right, strong backorder clearance in Q4 of 2025. Going forward, right, as we exit Q4, we continue to see strong growth on Integra Skin, consistent with the expectations that we have for performance on the brand for the full year. So not concerned about that as we move forward. To your second question about, I think, China and as part of the international portfolio, we saw strong performance in double-digit performance in China and Canada for our international business, and we expect that to continue to be a strong growth contributor in 2026 and as we move forward.

Thank you. That concludes the question-and-answer session, and you may now disconnect. Everyone, have a great day.