Initiate at Mkt: Essig Returns, Recovery Underway—Show-Me Story Keeps Us Sidelined

Research evidence excerpt

Initiate at Mkt: Essig Returns, Recovery Underway—Show-Me Story Keeps Us Sidelined

ns and EBITDA

margins are both expected to expand in 2026, with further runway as one-time remediation costs roll off.

Deleveraging path is credible. The ~$150 million projected operating cash flow improvement in 2026

has identifiable, specific drivers, such as Braintree start-up costs winding down and EU MDR spend

declining together accounted for ~$97 million in 2025 cash outflows. Leverage has already improved from

4.5x at year-end 2025 to 4.1x by 1Q 2026, demonstrating early progress. Fixed-rate swap portfolio locking

over half of debt in the low 3% range through end of 2027 reduces interest expense volatility.

Significant embedded optionality in the pipeline. SurgiMend and DuraSorb PMAs are targeting the

$800 million implant-based breast reconstruction market and are excluded from 2026 guidance. 2027

approval would represent upside. SurgiMend relaunch in 4Q 2026 (ahead of PMA) allows the company to

begin rebuilding commercial momentum and customer relationships before full approval. The Braintree

restart by end of June 2026 unlocks production of SurgiMend, PriMatrix, and Durepair simultaneously.

Medicare reimbursement changes are a net positive. ~90% of the company's Wound Reconstruction

revenue comes from the inpatient market, which is largely unaffected by the new Medicare outpatient

reimbursement rules. Integra's products were already priced in line with the new ~$127/sq cm

reimbursement level, meaning no margin or pricing headwind. Market consolidation driven by

competitor exits in the outpatient space could drive incremental volume gains for Integra given its

clinical evidence advantage and product sizing flexibility.

Integra Lifesciences Holdings Corp | Page 6 July 8, 2026