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1、2016 Annual ReportTO OUR SHAREHOLDERS In 2016,we made great strides to strengthen our position as one of the leading medical technology companies in the world.We remain financially strong.We delivered record revenue and earnings,and outperformed major market indices.We launched several key products,
2、made strategic investments to expand our product portfolio,and sharpened our focus on the customer experience.THE YEAR IN PERSPECTIVEFive years ago,we implemented a strategy for driv-ing profitability focusing on improving our exe-cution,optimizing our structure,and accelerating growth.This strategy
3、 has delivered impressive re-sults and has enabled us to become a much stronger company.For the third consecutive year,Integra delivered double-digit revenue growth.We grew net revenues 12 percent,to a record$992 million,and achieved record organic growth1 of 9 percent.We significantly improved gros
4、s margins and working capital,and expanded EBITDA margins,which helped generate operating cash flows of approximately$160 million in 2016,excluding the accreted interest payment associated with our convertible notes.We simplified the organization two years ago by cre-ating two global divisions Speci
5、alty Surgical Solu-tions,and Orthopedics and Tissue Technologies to intensify our focus on market opportunities,increase efficiencies and drive improvement in our profitability.In 2016,we started to reap the benefits of moving to a more streamlined and simplified or-ganizational structure.Our Specia
6、lty Surgical Solu-tions division,which accounts for 64 percent of our revenues,grew 7.8 percent to$632.5 million,driven by strong performance from our market-leading dural repair products,and strong performance in international markets.Our Orthopedics and Tissue Technologies division grew 21.5 perce
7、nt to$359.6 million.This growth was primarily driven by our re-generative technologies franchise,including private label,as well as the full-year contribution from the TEI acquisition.For the first time in our 20-year history as a public company,we declared a two-for-one stock split,demonstrating ou
8、r confidence in our long-term outlook.We expanded our credit facility from$1.1 billion to$1.5 billion,providing more capital flexibility to support our acquisition strategy and achieve relevant scale.Integra is financially and op-erationally strong,and is well-positioned to capital-ize on dynamic ma
9、rket opportunities.BUILDING ON OUR STRENGTHSOver the years,we have built our reputation on the quality of our products,and we remain committed to strengthening our diverse product portfolio of regenerative,plastic and reconstructive,specialty surgical,and orthopedic technologies.In 2016,we launched
10、the Cadence Total Ankle System to com-Thanks to the extraordinary efforts and commitment of more than 3,700 employees around the world,Integra LifeSciences is well-positioned to continue to deliver value for our customers,patients and shareholders.plement our acquisition of Salto Talaris Total Ankle
11、,enabling Integra to offer a complete set of solutions in the fast-growing total ankle arthroplasty market.We made significant investments to expand our market-leading regenerative technologies platform.The regenerative markets are growing faster than many other healthcare sectors and we believe wit
12、h the right scale,Integra will be positioned for long-term growth.In 2016,we received FDA approval and began the U.S.market commercialization of Om-nigraft Dermal Regeneration Matrix,which is the only FDA-approved product that regenerates dermal tissue used in the treatment of diabetic foot ulcers.R
13、ecognized as one of the top 10 innovations in the podiatry segment,Omnigraft heals more effective-ly,using fewer applications than competing tech-nologies a unique value proposition that will save payers,customers and patients money.Additional-ly,we finalized new product alliances for HuMend Acellul
14、ar Dermal Matrix and Voltac Antimicrobial Wound Dressing,further expanding our advanced wound care and surgical solutions portfolio.These technologies,combined with Omnigraft and Prima-trix Dermal Repair Scaffold,form the foundation of our 3x3 advanced wound care strategy,which offers three differen
15、t technologies with clinical data and broad indications in three product families,through three different sales channels inpatient,outpatient and enterprise.We are now in a stronger position to contract directly with providers,and to give payers the necessary supporting data to drive a complete prod
16、uct portfolio and strong value.Throughout the year,we strengthened our R&D ca-pabilities,clinical trial expertise,and market access and reimbursement capabilities,allowing us to com-pete better in a changing healthcare environment.Additionally,we improved our supply chain man-agement and maintained
17、our focus on operational and process excellence.More than 300 employees have gone through process excellence training,such as LEAN,to help drive efficiencies and reduce waste.2016 was one of our best years for product supply and working capital improvements.On the people front,we continued to improv
18、e our ability to attract,develop and retain talent,welcom-ing more than 500 new colleagues to our organiza-tion.We also launched our leadership development program,designed to build the capabilities of our leaders and provide them with the tools to lead,coach and develop their teams.We welcomed Lisa
19、 Evoli,corporate vice president and chief human re-sources officer,and Nora Brennan,vice president and treasurer,to our executive leadership team.We also announced key strategic executive leadership changes to our organization.Bob Davis,Dan Reuvers and Glenn Coleman assumed new responsibilities to l
20、ead our businesses to continue to drive growth and success in 2017 and beyond.They are proven leaders who have demonstrated strong management capa-bilities and accomplishments that have contributed to our strong business performance.SHARPENING OUR FOCUS ON CUSTOMER EXCELLENCEWe believe that putting
21、the customer first is a pow-erful enabler of growth.Core to this belief is our commitment to strengthen our organization and create a customer-and patient-centric culture.Since we launched this effort a year ago,we have laid the foundation to address customer pain points,improve our processes,and pr
22、ovide tools and pro-grams that will pave the way for a better customer experience.In 2016,we introduced programs and services to make it easier for customers to do business with us.We are committed to our customers professional development to help them gain critical knowledge and share their experie
23、nces worldwide.Last year,we trained more than 800 surgeons and conducted more than 100 clinical presentations.We introduced the first mobile training ankle lab to bring knowl-edge and training directly to surgeons,and held our first international tissue technologies symposium,which more than 100 cli
24、nicians attended.Lastly,we launched our first Integra service van fleet to direct-ly service hospitals in the United States.We continue to invest in channel expansion in both our Specialty Surgical Solutions and Orthopedic and Tissue Technologies businesses in the U.S.and internationally.Additionall
25、y,we are continuing to strengthen our tools,systems and training to enable our commercial teams to successfully support our customers.These investments are essential in developing long-term relationships with highly satisfied custom-ers,and uniquely position Integra as a compelling choice for their
26、medical technology needs.LOOKING AHEAD TO A PROMISING FUTUREWhile we take great pride in our strong perfor-mance in 2016,we are far from done.Our strategy has served us well over the past several years and we remain steadfast in our focus to become a leader in specialty surgical solutions,regenerati
27、ve technolo-gies and orthopedic extremities.In early 2017,we completed the acquisition of Der-ma Sciences,a leading tissue technology company,and announced the planned acquisition of Codman Neurosurgery,a leading global provider of neurosur-gical products.These acquisitions will significantly transf
28、orm the way Integra will help limit uncertainty for surgeons,and more importantly,provide a wide range of products and healthcare solutions for pa-tients,who depend on them to live healthier and longer lives.We want to especially recognize and express our deep appreciation to our founder,Dr.Richard
29、Caru-so.His vision and entrepreneurial spirit shaped In-tegra LifeSciences and provided the foundation for it to grow from its humble beginnings as a pioneer in regenerative medicine to a leading global provid-er of innovative medical technologies.In 2017,Dr.Caruso will assume the role of chairman e
30、meritus and director emeritus.On behalf of our board of directors,the executive leadership team and all the employees of Integra LifeSciences,we thank you for your support and continued confidence in our company.We remain determined to make a difference in the lives of the surgeons and patients we s
31、erve.Sincerely,Peter ArduiniPresident and Chief Executive Officer1 Organic revenue is calculated by comparing 2016 Total Revenue of$992.1 million plus$2.7 million from foreign currency less$41.2 million of acquired revenue and$6.3 million of discontinued product revenue to 2015 total revenue of$882.
32、7 million less$13.3 million of discontinued products.Peter J.ArduiniPresident and Chief Executive Officer Paul GonsalvesSenior Vice President,Chief Commercial OfficerNora BrennanVice President and TreasurerRichard D.GorelickCorporate Vice President,General Counsel,Administration and SecretaryJohn Mo
33、oradianCorporate Vice President,Global Operations and Supply ChainKenneth BurhopCorporate Vice President,Chief Scientific OfficerJudith E.OGrady,R.N.,M.S.N.,R.A.C.Corporate Vice President,Global Regulatory AffairsGlenn G.ColemanCorporate Vice President,Chief Financial Officer and Principal Accountin
34、g OfficerWilliam ComptonSenior Vice President,Chief Information OfficerMaria PlatsisSenior Vice President,Corporate DevelopmentRobert T.Davis,Jr.Corporate Vice President and President,Orthopedics and Tissue TechnologiesDan ReuversCorporate Vice President and President,Specialty Surgical SolutionsJos
35、eph VinhaisCorporate Vice President,Global Quality AssuranceLisa EvoliCorporate Vice President,Chief Human Resources OfficerManagement TeamStanding(L to R):Christian S.Schade,President and Chief Executive Officer,Aprea Therapeutics,and Chair,Finance Committee;Peter J.Arduini,President and Chief Exec
36、utive Officer,Integra LifeSciences;Barbara B.Hill,Operating Partner,NexPhase Capital;Keith Bradley,Ph.D.,former Professor of International Management and Management Strategy,Open University and Cass Business School,U.K.,and Chair,Compensation Committee;Lloyd W.Howell,Jr.,Chief Financial Officer and
37、Treasurer,Booz Allen Hamilton Seated(L to R):Raymond G.Murphy,former Senior Vice President and Treasurer,Time Warner Inc.,and Chair,Audit Committee;James M.Sullivan,former Executive Vice President of Lodging Development,Marriott International,Inc.,and Chair,Nominating and Corporate Governance Commit
38、tee;Richard E.Caruso,Ph.D.,President of The Provco Group,Ltd.,and Chairman Emeritus and Director Emeritus;Stuart M.Essig,Ph.D.,Managing Director,Prettybrook Partners,LLC,and Chairman of the Board;Donald E.Morel,Jr.,Ph.D.,former Chief Executive Officer,West Pharmaceutical Services,Inc.Board of Direct
39、orsFinancial HighlightsTotal Revenues2014$796.72015$882.72016$992.1$0$200$400$600$800$1000($in Millions)($in Millions)Operating Cash Flow2014$62.92015$117.12016$116.4020406080100120(Per Share Amounts)Diluted Earnings Per Share2014$0.552015$0.102016$0.94$0.00$0.20$0.40$0.60$0.80$1.0012/31/1102/29/120
40、4/30/1206/30/1208/31/1210/31/1212/31/1202/28/1304/30/1306/30/1308/31/1310/31/1312/31/1302/28/1404/30/1406/30/1408/31/1410/31/1412/31/1402/28/1504/30/1506/30/1508/31/1510/31/1512/31/1502/29/1604/30/1606/30/1608/31/1610/31/1612/30/16050100150200250207.9%166.0%109.5%106.6%83.2%2016 Revenues by Product
41、Category2016 Revenues by Geographic Area11%REST OF WORLD12%EUROPE77%UNITED STATES64%SPECIALTY SURGICAL SOLUTIONS36%ORTHOPEDICS&TISSUE TECHNOLOGIES5-Year IART and Peer PerformanceIARTR2000S&P HealthcareNASDAQPeer Average*data on fileIntegra has a broad range of instruments for use in general medicine
42、 and a number of specialties such as neurosurgery;cardiac;ear,nose,and throat;dental;and plastic surgery.Some of the well-known precision instrument brands used by surgeons around the world include Jarit,Luxtec,MicroFrance,Miltex,Ruggles-Redmond,and Padgett.O UR GLOB AL FR ANC HISE SIntegra offers a
43、 broad range of products and healthcare solutions to help orthopedic surgeons treat pathologies of the upper and lower extremities.Some of the well-known ankle brands in our product portfolio include Salto Talaris Total Ankle,Cadence Total Ankle System,and Titan Modular Shoulder System.In 2016,Integ
44、ra announced initial clinical use of the Cadence Total Ankle System in the United States and Europe.The Cadence Total Ankle System,developed in partnership with leading foot and ankle surgeons,has a differentiated anatomical design and streamlined surgical technique.Integra now offers a complete set
45、 of options to treat the continuum of care in total ankle prosthesis,one of the fastest-growing extremities segments.Orthopedic HardwareIntegra is a pioneer in the field of dermal regeneration and the first company to obtain FDA approval for tissue regeneration.The collagen developed by Integra mimi
46、cs the natural collagen present in the human body and has been used successfully in more than 10 million procedures worldwide.*Omnigraft Dermal Regeneration Matrix is the only FDA-approved product that helps regenerate dermal tissue.It is an advanced bi-layer dermal regeneration matrix indicated for
47、 use in the treatment of partial-and full-thickness neuropathic diabetic foot ulcers that are greater than six weeks in duration,with no capsule,tendon or bone exposed,when used in conjunction with standard diabetic ulcer care.Tissue TechnologiesSurgical InstrumentsIntegra is one of the leading glob
48、al providers of neurosurgical care products,providing neurosurgeons with a broad range of innovative solutions.The unique CUSA Clarity all-in-one system is the only ultrasonic tissue ablation system that combines a tough tissue tip,continuous tissue contact,a precision and ergonomic handpiece,and ad
49、aptive power.These four integrated components provide a greater than 50-percent increase in fibrous tissue removal rate over the CUSA Excel+system.The CUSA Clarity system was developed with extensive feedback from neurosur-geons worldwide,and has been installed and used in more than 80 procedures by
50、 15 surgeons from seven academic medical centers across four countries.NeurosurgeryPATIE NT STOR IE SMALORYA FUTURE RE-IMAGINED Severely burned when an oil heater in her French countryside home accidentally exploded,5-year-old Malory Sculfort was transferred to a special burn center at Trousseau in
51、Paris.“It was a terrible case,with extremely deep burns,mostly to the face and upper limbs,”recalls Dr.Jean-Michel Rives,M.D.,Plastic,Reconstructive and Aesthetic Surgery,and Diplomat,European Board of Plastic Surgery,who was assigned to Malorys case.“All of her facial structure was destroyed,almost
52、 carbonized.”With limited tools at his disposal,Dr.Rives,a pioneer in his field,found hope in a new procedure Integra Dermal Regeneration Template(IDRT)technique to treat burn victims.“Integra was the only opportunity for me to first save her life and then restore her face,”says Dr.Rives,who became
53、the first surgeon in his country to use IDRT.Integra Dermal Regeneration Template is a two-layer skin regeneration system for treating life-threatening burns where other treatments are not sufficient.The outer layer is made of a thin sili-cone film that acts as the skins epidermis,protect-ing the wo
54、und from infection while controlling both heat and moisture loss.The inner layer is construct-ed of a complex matrix of cross-linked fibers.This porous material serves as a scaffold for regenerating dermal skin cells,enabling the re-growth of a func-tional dermal layer of skin.Once dermal skin is re
55、-generated,the silicone outer layer is removed and replaced with a thin epidermal skin graft.The usage of IDRT results in less scarring and faster healing.Patients can begin rehabilitation with IDRT in place.“Integra enabled a little girl to grow into a woman and become a mother,and that is the best
56、 recogni-tion that we have given Malory a normal life,”recalls Dr.Rives.Sixteen years and countless surgeries later,Malory credits her survival to a supportive family,to her strong character and to Dr.Rives.“I have only distant memories of the accident,”said Malory,“but Dr.Rives has looked after me
57、for 16 years.He is a god to me.”Integra gave Malory,now the mother of three,the ability to re-imagine the rest of her life.“Integra enabled a little girl to grow into a woman and become a mother,and that is the best recognition that we have given Malory a normal life.”Dr.Jean-Michel RivesDr.Rives an
58、d MaloryWithin a month of being deployed to Afghanistan,Marine Corporal Colin Faust was on his way home.But it was not the homecoming anyone would have imagined.He had been on a routine reconnaissance mission when an improvised explosive device(IED)exploded under his feet,nearly destroying both legs
59、 and sending shrapnel throughout his body.Lucky to be alive,Colin struggled on the battlefield,un-der enemy fire,until it was safe for a helicopter to land and rescue him.His prognosis was grim.Imme-diately,his left leg was amputated above the knee.He was facing a double amputation until innovative
60、surgeons suggested they could salvage and recon-struct Colins right leg.To stabilize his knee,a technique called flap surgery was used,where tissue is lifted from a donor site and moved to a recipient site with an intact blood supply.Dr.Ian Valerio and Dr.Patrick Basile,both accom-plished plastic an
61、d reconstructive surgeons,then used Integra Bilayer Wound Matrix to begin the lengthy process to graft skin and repair the leg.This semi-permeable silicone membrane controls water vapor loss,provides a flexible adherent covering for the wound surface,and adds increased strength to the device.It cont
62、ains a cross-linked bovine tendon collagen and glycosaminoglycan biodegradable matrix,which provides a scaffold for cellular inva-sion and capillary growth.Highly conformable to a variety of anatomical sites,Integra Bilayer Wound Matrix provides excellent coverage over partial-and full-thickness wou
63、nds.Trauma wounds are one of its many approved indications.“Few doctors would even consider limb salvage,”says Colin.“Integra provided a healthy base for my skin and it meant a lot to save my leg.”Having the use of one leg enables Colin to be more mobile and independent,to get in and out of his whee
64、lchair or his car without assistance,and to help around the house.Recently married,he is completing a degree in business administration and plans to start a cus-tom woodworking business.Although he uses a wheelchair,this highly decorat-ed combat veteran lives a full life.Through team-work and medica
65、l science,Colin Faust is now able to climb to greater heights in pursuit of his dreams.COLIN INDEPENDENCE FOR A PATRIOT“Integra provided a healthy base for my skin and it meant a lot to save my leg.”Colin FaustColin and his wife,JuliaSince the age of 3,Marvin began his day with a sim-ple routine:a s
66、hot of insulin,a glass of orange juice and breakfast.Despite a diagnosis of Type 1 diabe-tes,or juvenile diabetes,Marvin had a wonderful,normal childhood,and enjoyed playing sports.A casual observer would never know that Marvin has lived most of his life with this chronic disease.In his mid-40s,comp
67、lications from a quintuple heart bypass left Marvin blind in one eye.Five years later,he began to suffer with severe pain in his right foot,which turned out to be an ischemic foot ulcer a serious,life-threatening diagnosis.According to physicians specializing in this field,patients diag-nosed with i
68、schemic chronic foot ulcers typically have a 56 percent,five-year mortality rate.An op-tometrist,husband,father and grandfather,Marvin was not ready to give up his active lifestyle.With help from his vascular surgeon,Marvin is still walking and working full-time.“He gave me op-tions,”says Marvin.“In
69、stead of doing an invasive treatment immediately,my doctor performed sur-geries to improve blood flow to my foot.”Although he lost the toes on his right foot,Marvin is able to walk with the help of appropriate diabetic footwear.Both Integra Bilayer Wound Matrix and Integra Flowable Wound Matrix were
70、 used to manage his chronic wounds.Bilayer Wound Matrix is an ad-vanced wound care device comprised of a porous matrix of collagen and glycosaminoglycan,and a semi-permeable silicone layer,while Flowable Wound Matrix is comprised of a gel-like granulat-ed collagen and glycosaminoglycan.The collagen
71、and glycosaminoglycan biodegradable matrix pres-ent in both products serves as a resorbable scaffold onto which cells can attach,migrate,proliferate and differentiate.It allows for capillary growth.Integra products provide excellent coverage,which makes them suitable for diabetic ulcers,chronic and
72、vascu-lar ulcers,and other serious wounds.Thirteen years and 16 operations later,Marvin is still working and walking.His wonderful wife,Jackie,has provided the necessary support and strength to suc-ceed in this fight.Marvin considers his surgeon his“guardian angel,”and the physician credits the over
73、-all care team,including Integra,in giving Marvin a helping hand to keep him going.MARVIN A HELPING HAND FOR AN AMAZING MANPatients diagnosed with ischemic chronic foot ulcers typically have a 56 percent,five-year mortality rate.Thirteen years and 16 operations later,Marvin is still working and walk
74、ing.Marvin and his wife,JackieUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,DC 20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2016orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SE
75、CURITIES EXCHANGE ACT OF 1934For the transition period from toCOMMISSION FILE NO.0-26224INTEGRA LIFESCIENCES HOLDINGS CORPORATION(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)DELAWARE51-0317849(STATE OR OTHER JURISDICTION OFINCORPORATION OR ORGANIZATION)(I.R.S.EMPLOYERIDENTIFICATION NO.)311
76、ENTERPRISE DRIVEPLAINSBORO,NEW JERSEY08536(ZIP CODE)(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)REGISTRANTS TELEPHONE NUMBER,INCLUDING AREA CODE:(609)275-0500SECURITIES REGISTERED PURSUANT TO SECTION 12(b)OF THE ACT:Title of Each ClassName of Exchange on Which RegisteredCommon Stock,Par Value$.01 Per Sh
77、areThe Nasdaq Stock Market LLCSECURITIES REGISTERED PURSUANT TO SECTION 12(g)OF THE ACT:NONEIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the SecuritiesAct.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to
78、 Section 13 or 15(d)of theSecurities Exchange Act.Yes No 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 registrantwas required
79、to file such reports),and(2)has been subject to such filing requirements for the past90 days.Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,ifany,every Interactive Data File required to be submitted and posted pursuant to Rule 4
80、05 of Regulation S-T(232.405of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submitand post such files).Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not containedherein,and will
81、 not be contained,to the best of registrants knowledge,in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-acceler
82、atedfiler or a smaller reporting company.See the definitions of“large accelerated filer”,“accelerated filer”and“smallerreporting company”in Rule 12b-2 of the Exchange Act.(Check one):Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company(Do not check if a smaller repo
83、rting company)Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the ExchangeAct).Yes No As of June 30,2016,the aggregate market value of the registrants common stock held by non-affiliates wasapproximately$2,393.5 million based upon the closing sales price
84、of the registrants common stock on The NasdaqGlobal Market on such date.The number of shares of the registrants Common Stock,$0.01 par value,outstanding asof February 21,2017 was 74,816,177.DOCUMENTS INCORPORATED BY REFERENCE:Certain portions of the registrants definitive proxy statement relating to
85、 its scheduled May 24,2017 AnnualMeeting of Stockholders are incorporated by reference in Part III of this report.INTEGRA LIFESCIENCES HOLDINGS CORPORATIONTABLE OF CONTENTSPagePART IItem 1.Business.1Item 1A.Risk Factors.12Item 1B.Unresolved Staff Comments.33Item 2.Properties.33Item 3.Legal Proceedin
86、gs.33Item 4.Mine Safety Disclosures.34PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchasesof Equity Securities.35Item 6.Selected Financial Data.36Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.37Item 7A.Quant
87、itative and Qualitative Disclosures About Market Risk.61Item 8.Financial Statements and Supplementary Data.63Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.63Item 9A.Controls and Procedures.63Item 9B.Other Information.64PART IIIItem 10.Directors,Executiv
88、e Officers and Corporate Governance.65Item 11.Executive Compensation.65Item 12.Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters.65Item 13.Certain Relationships,Related Transactions,and Director Independence.65Item 14.Principal Accountant Fees and Services
89、.65PART IVItem 15.Exhibits and Financial Statements Schedules.66SIGNATURES.81PART IITEM 1.BUSINESSOVERVIEWThe terms“we,”“our,”“us,”“Company”and“Integra”refer to Integra LifeSciences Holdings Corporation,a Delaware corporation,and its subsidiaries,unless the context suggests otherwise.Integra,headqua
90、rtered in Plainsboro,New Jersey,is a world leader in medical technology.The Companyemploys approximately 3,700 people around the world who are dedicated to limiting uncertainty for surgeons,sothat they can concentrate on providing the best care for their patients.Integra offers innovative solutions,
91、including leading regenerative technologies,specialty surgical solutions,and orthopedic solutions.Revenuesgrew to$992.1 million in 2016,an increase of 12%from$882.7 million in 2015.Integra was founded on an engineered collagen technology platform that is used to repair and regeneratetissue.The Compa
92、ny has developed numerous product lines from this technology for applications ranging fromburn and deep tissue wounds to repair of dura mater in the brain to repair of nerve and tendon.Over the past 30years,Integra has grown by building upon this core regenerative technology,acquiring businesses in
93、marketswith overlapping customer bases,and developing products to further meet the needs of target customers.On October 25,2016,our Board of Directors recommended,subject to stockholder approval,an amendmentto the Companys Certificate of Incorporation(the“Amendment”)to increase the number of authori
94、zed shares ofcommon stock from 60.0 million shares to 240.0 million shares,par value$0.01 per share,for the purpose of,among other things,affecting a two-for-one stock split.The stockholders approved the Amendment on its specialStockholdersMeeting on December 21,2016.The Company filed a certificate
95、of amendment to our amendedand restated certificate of incorporation to effect the increase in authorized shares of common stock and the two-for-one-stock split.Stockholders of record as of the close of market on December 21,2016 were entitled toreceive one additional share of common stock for each
96、share held.The shares were distributed on January 3,2017.No fractional shares of common stock were issued as a result of the two-for-one stock split.The adjustedstock price was reflected on the NASDAQ stock market on January 4,2017.The shares of common stock retained a par value of$0.01 per share.Ac
97、cordingly,the stockholdersequityreflects the stock split by reclassifying from“Additional paid-in capital”to“Common stock”for an amount equalto the par value of the increased shares resulting from the stock split.All references in this Form 10-K to thenumber of shares of common stock,price per share
98、 and weighted average shares of common stock have beenadjusted to reflect the post-split amounts,unless otherwise indicated.VISIONWe aspire to be a multi-billion dollar diversified global medical technology company that helps patients bylimiting uncertainty for healthcare professionals.Our customers
99、 will recognize us as a leader in specialty surgicalapplications,regenerative technologies and extremities orthopedics worldwide.STRATEGYOur strategy is built around three pillarsexecute,optimize,and accelerate growth.These three pillarssupport our strategic initiatives to deliver on our commitments
100、 through improved planning and communication,optimize our infrastructure,and grow our revenues by introducing new products to the market through internaldevelopment,geographic expansion,and strategic acquisitions.This is an essential strategic approach for two reasons.First,the costs inherent in ope
101、rating a medicaltechnology company have increased at an accelerating rate in recent years and continue to rise.Scale is therefore1correlated with rates of profitability in our industry.Our strategic response is to focus efforts and investments onaccelerating growth in the clinical areas where we com
102、pete today.Second,we compete in a complex and highlyregulated industry,and we have grown through more than 45 acquisitions in our history.We have madesignificant accomplishments in the past several years to reduce our operational footprint,simplify ourorganizational structure and build platforms for
103、 common systems.To effectively execute on our plans to growour core business and integrate acquisitions,we must continue to improve our infrastructure and processes.Theseimprovements will fortify a solid platform from which to grow our business.Our executive leadership team has set forth the followi
104、ng several near-term objectives aligned to thisstrategy:Portfolio Optimization.We are investing in innovative product development to drive a multi-generationalpipeline for our key product franchises.Our product development efforts focus on regenerative technologies andother projects with the potenti
105、al for significant returns on investment.We have a goal of generating at least onequarter of our organic growth in any one year from products launched in the previous two to three years.Theserecent efforts have contributed to an active schedule of impactful product launches.In addition to new produc
106、tdevelopment,we are funding studies to gather clinical evidence to support launches,ensure market access andimprove reimbursement for existing products.We also continue to identify low-growth,low-margin products andproduct franchises for discontinuation and will continue to look at other ways of opt
107、imizing our portfolio.Commercial Channel Optimization and International Expansion.Through the acquisition of TEIBiosciences,Inc.and TEI Medical Inc.(collectively“TEI”)in July 2015 and the 2016 launch of Omnigraft TMfor diabetic foot ulcers,we have established a new presence in the outpatient segment
108、 of the fast-growingadvanced wound care market.We have built up this commercial channel and support infrastructure to facilitatethe Omnigraft product launch.Our 3x3 strategy takes advantage of our unique position to call upon providers inthree sales channels(inpatient,outpatient,and multi-center ent
109、erprise-wide contracting)and offer three productfamilies for advanced wound healing(engineered collagen,acellular collagen and human amniotic wounddressings).We also see an opportunity to accelerate revenue growth by increasing our international presence.Inorder to achieve this,we are expanding our
110、commercial infrastructure in key markets and securing ownership orother control of our product registrations and distribution system.Additionally,we have a plan for registeringand launching our existing products in countries where we already have a selling presence,but are missing keyleading brands.
111、We expect this focus on key markets and products that carry both high margins and relevant pricepoints to increase our international business.More broadly,to compete successfully against much larger,diversified medical technology competitors,we are building upon our leadership brands across our prod
112、uctfranchises and engaging hospital systems through enterprise-wide contracts.Strategic Corporate Development.Over the years,we have successfully acquired and in-licensedbusinesses,products and technologies to grow our business.Our corporate development program is a corecompetency,and an important p
113、art of our strategy is to continue to pursue strategic transactions and licensingagreements to increase relevant scale in the clinical areas in which we compete.Heading into 2017,closing theacquisition of the Codman Neurosurgery business of Johnson&Johnson(“Codman Neurosurgery”)andintegrating Derma
114、Sciences,Inc.(“Derma Sciences”)will be key objectives for the company.Acquisitions,inparticular,may expand international distribution,add a technology platform,increase the scale of one of ourcurrent portfolios,or provide access into an adjacent growth area that leverages the sales channel.We focus
115、ourefforts on the clinical areas of wound care,extremities orthopedics,and specialty surgical applications.Ourcorporate development capabilities are increasingly important to remain competitive in todays environment.Finally,we are investing in training programs to strengthen our leadership bench in
116、the organization,and wecontinue to invest in targeted additions to our sales organization to improve market coverage.These initiatives,investments,and talent development efforts will strengthen the foundation necessary to support a faster growing,multi-billion dollar global medical technology compan
117、y.Our strategy to execute,optimize and accelerate growthwill enable us to continue to be a company that helps limit uncertainty for customers and touches millions ofpatients each year,while driving returns for shareholders.2BUSINESS SEGMENTSWe currently manufacture and sell our products in the follo
118、wing two global reportable business segments:Specialty Surgical Solutions and Orthopedics and Tissue Technologies.We include financial informationregarding our reportable business segments and certain geographic information under“Item 7.ManagementsDiscussion and Analysis of Financial Condition and R
119、esults of Operations”and in Note 15,Segment andGeographic Information to our consolidated financial statements.Specialty Surgical SolutionsOur Specialty Surgical Solutions business offers specialty surgical instrumentation for a broad range ofspecialties,including a market-leading product portfolio
120、used in the neurosurgery operating suite and criticalcare unit.We sell products and solutions for dural repair,precision tools and instruments,tissue ablation,andneuro critical care,including related service and repair.For neurosurgeons,we have products for each stepof a procedure and the care of th
121、e patient after surgery,from both equipment and implants used in theneurosurgery operating room to monitoring in the neurosurgery intensive care unit.We are also among thelargest surgical instrument suppliers in the United States to hospitals,acute care surgical centers,andclinician offices.Our port
122、folio includes over 60,000 instrument patterns and surgical products,surgicalheadlight systems and table-mounted retractors that address a broad set of surgical specialties.In the United States,Specialty Surgical Solutions products are sold through a combination of directlyemployed sales representat
123、ives,sales agents and distributors,depending on the customer call point.We havea specialized sales organization composed of directly employed sales representatives who primarily call onneurosurgeons and the neuro critical care unit.In addition,we have a sales organization consisting of acombination
124、of directly employed sales representatives and sales agents who primarily call on the centralsterile processing unit of hospitals and acute care surgical centers.Finally,we reach the diverse alternate sitecall point,which includes physician,dental and veterinary offices,through distributors.Internat
125、ionally,wesell certain products and product lines from the Specialty Surgical Solutions portfolio through a combinationof direct efforts,primarily in certain European countries,Australia,New Zealand,and Canada,and throughdistributors in other countries.Orthopedics and Tissue TechnologiesOur Orthoped
126、ics and Tissue Technologies business offers a unique combination of differentiated softtissue repair and tissue regeneration products,and small bone fixation and joint replacement solutions.We sell regenerative technology products that can be used to provide treatment for acute wounds,suchas burns,c
127、hronic wounds,including diabetic foot ulcers,surgical tissue repair including hernia repair,peripheral nerve repair and protection,and tendon repair.For extremity bone and joint reconstructionprocedures,we sell hardware products,such as bone and joint fixation and joint replacement devices,implants
128、and instruments,which provide for the orthopedic reconstruction of bone in the hand,wrist,elbowand shoulder(Upper Extremity),and the foot,ankle and leg below the knee(Lower Extremity).In the United States,we have a specialized sales organization composed of directly employed salesrepresentatives,as
129、well as specialty distributors,organized based upon their call point.A team of extremitiessales representatives calls on surgeons who treat acute wounds in hospitals,extremity orthopedic disorders,including osteoarthritis,rheumatoid arthritis,wrist,ankle and shoulder arthroplasty,and other condition
130、srequiring foot or hand reconstruction.In addition,we sell our shoulder products through a specialtydistributor network of sales agents who call on shoulder surgeons.A team of wound care clinic salesrepresentatives calls on physicians who treat chronic wounds in the outpatient wound care clinic sett
131、ing.Ateam of surgical sales representatives calls on surgeons who treat patients requiring surgical tissue repair3and reconstruction.Finally,we have a small group of clinical sales specialists who focus on our regenerativeproducts and support these three sales organizationsextremities,wound care and
132、 surgicalto addresstheir clinicians needs as they relate to this class of products.Outside the United States,we have a smalldirect sales presence,primarily in certain European countries,Australia,New Zealand,and Canada,andutilize distributors in other international markets to sell certain products a
133、nd product lines from theOrthopedics and Tissue Technologies portfolio.This segment also includes private-label sales of a broad set of our regenerative technologies.Ourcustomers are other medical technology companies that sell to end markets primarily in orthopedics,spine,surgical and wound care.PR
134、ODUCTS OVERVIEWWe offer thousands of products for the medical specialties we target.Our objective is to develop,acquire orotherwise provide products that will limit uncertainty for hospitals and surgeons.These products include ourregenerative technology implants,metal implants,instruments and equipm
135、ent for small bone orthopedic surgeryand specialty surgical applications.We distinguish ourselves by emphasizing the importance of regenerativetechnology,which we define as surgical implants derived from our proprietary collagen matrix technology andother biologic platforms that enable or facilitate
136、 the bodys healing process and are resorbed.RESEARCH AND DEVELOPMENT STRATEGYOur research and development activities focus on identifying unmet surgical needs and addressing thoseneeds with innovative solutions and products.We apply our core competency in regenerative technology toproducts for neuro
137、surgical,orthopedic and wound applications,and we have extensive programs for our coreplatforms of orthopedic hardware and electromechanical technologies.We are focusing our research anddevelopment efforts on the development of innovative products and clinical studies to generate efficacy andhealth
138、economic evidence.Regenerative Technologies.Because regenerative technology products represent a fast-growing,high-margin opportunity for us,we allocate a large portion of our research and development budget to these projects.Our regenerative technology development program applies our expertise in b
139、ioengineering to a range ofbiomaterials including,natural collagen and human tissues as well as synthetics such as polymers.These uniqueproduct designs are used for neurosurgical and orthopedic surgical applications,as well as dermal regeneration,including the healing of chronic and acute wounds,ten
140、don and nerve repair.After finalizing our multi-centerclinical trial evaluating the safety and effectiveness of the INTEGRADermal Regeneration Template for theTreatment of Diabetic Foot Ulcer(“DFU”)in 2015,we filed a submission with the United States Food and DrugAdministration(“FDA”)and received Pr
141、emarket Approval(“PMA”)approval on January 7,2016.The Companystarted commercializing the resulting DFU product,Omnigraft,in 2016.Additionally,we finalized patientfollow-up in a Post Approval Study for our DuraSealExact Spine Sealant System,and submitted the studyresults to the FDA in October 2016.Th
142、e study demonstrated the continued safety and effectiveness of thisproduct,and we expect that this study will satisfy the post-approval commitment related to it.We are investing inthe development of next generation products,including nerve products,anti-microbial adjuncts for primarywound management
143、,and specific chronic wound care solutions for the inpatient and outpatient settings,additional clinical studies for indications to support existing products,including ongoing studies of the use of ourproducts in chronic wound,abdominal wall,and complex wounds and for an approval for a breast recons
144、tructionindication as well as longer-term research programs to evaluate combination products.Orthopedic Reconstruction.We develop fixation and small joint reconstruction implants and instruments forupper and lower extremities to both provide next generation solutions and expand our product portfolio
145、.Thisportfolio focuses on joint replacement products.Integra already has a strong shoulder portfolio,which includes atotal shoulder system and a reverse shoulder.We continue to work on advanced shoulder products and are4developing a pyrocarbon hemi-shoulder product to add to that portfolio.We have a
146、 strong differentiated assetthat resides in our exclusively licensed pyrocarbon products,and we continue to invest to bring new products tomarket with this technology,which has shown significantly less wear on bone than traditional metals.OurCadencetotal ankle replacement product launched in 2016 an
147、d complements the acquired Salto Talarisankle.The two ankles address different market needs with the Cadence ankle designed to simplify the anklereplacement procedure and maximize reproducibility through its instrumentation and technique.Electromechanical Technologies and Instrumentation.Because our
148、 electromechanical products andinstruments represent products that limit uncertainty for surgeries,we continue to invest in approvals for newindications and next generation improvements to our market-leading products.We have several active programfocused on life cycle management and innovation on bo
149、th capital and disposable products in our portfolio.Wealso work with a number of primarily German instrument partners to bring new surgical instrument patterns tothe market,enabling us to add new instruments with minimal expense.Finally,our lighting franchise is amongthe most dynamic in the industry
150、,and we continue to invest in ongoing development in LED technology.COMPETITIONOur primary competitors in specialty surgical solutions are the Aesculap division of B.Braun Medical,Inc.,Johnson&Johnson,Medtronic,Inc.,Stryker Corporation,Becton,Dickinson and Company,and C.R.Bard,Inc.In addition,we com
151、pete with many smaller specialized companies and larger companies that do not otherwisefocus on specialty surgical solutions.We rely on the depth and breadth of our sales and marketing organization,our innovative technology,and our procurement operation to maintain our competitive position in much o
152、f ourprecision tools and instruments portfolio.Our competition in orthopedics and tissue technologies includes the DePuy/Synthes business of Johnson&Johnson,Stryker Corporation,Wright Medical Group,N.V.,Smith&Nephew plc,MiMedx Group,Inc.,AcelityL.P.Inc.,a subsidiary of Allergan PLC,and Zimmer Biomet
153、 Holdings,Inc.,as well as other major orthopediccompanies that carry a full line of small bone and joint fixation and soft tissue products.Finally,in certain cases our products compete primarily against medical practices that treat a conditionwithout using a medical device or any particular product,
154、such as medical practices that utilize autograft tissueinstead of our dermal regeneration products,duraplasty products and nerve repair products.Depending on theproduct line,we compete on the basis of our products features,strength of our sales force or distributors,sophistication of our technology
155、and cost effectiveness of our solution.GOVERNMENT REGULATIONWe are a manufacturer and marketer of medical devices,and therefore are subject to extensive regulation bythe FDA,the Center for Medicare Services of the U.S.Department of Health and Human Services,other federalgovernmental agencies and,in
156、some jurisdictions,by state and foreign governmental authorities.Theseregulations govern the introduction of new medical devices,the observance of certain standards with respect tothe design,manufacture,testing,labeling,promotion and sales of the devices,the maintenance of certain records,the abilit
157、y to track devices,the reporting of potential product defects,the import and export of devices,and othermatters.United States Food and Drug AdministrationWe have an outstanding FDA warning letter related to TEI Biosciences Inc.,an acquisition by Integra onJuly 17,2015.TEI Biosciences Inc.received a
158、Warning Letter from the FDA dated May 29,2015 for promotingthe product SurgiMend for breast surgery applications that were not cleared in the 510(k)process and do nothave a PMA Approval for the indication.The FDA requested that TEI Biosciences Inc.immediately cease allactivities that resulted in mis
159、branding or adulteration of the product in commercial distribution.The FDA also5required TEI Biosciences Inc.to cease all violations regarding promotion of the product for an indication that itwas not cleared or approved.TEI Biosciences Inc.responded with a corrective action plan to the FDA and took
160、action to address the issues prior to the completion of the acquisition.We will continue to monitor this activityand address all corrective actions submitted to the FDA.The FDA may not accept our corrective action plan or itmay choose to scrutinize other promotional claims on products and require ad
161、ditional corrective actions.We donot expect to incur material operating expenses to complete the corrective action plan.The regulatory process of obtaining product approvals and clearances can be onerous and costly.The FDArequires,as a condition to marketing a medical device in the United States,tha
162、t we secure a PremarketNotification clearance pursuant to Section 510(k)of the Federal Food,Drug and Cosmetic Act(the“FD&C Act”)or an approved PMA application(or supplemental PMA application).Obtaining these approvals and clearancescan take up to several years and may involve preclinical studies and
163、 clinical trials.The FDA also may require apost-approval clinical study as a condition of approval.To perform clinical trials for significant risk devices inthe United States on an unapproved product,we are required to obtain an Investigational Device Exemption(“IDE”)from the FDA.The FDA may also re
164、quire a filing for approval prior to marketing products that aremodifications of existing products or new indications for existing products.Moreover,after clearance/approval isgiven,if the product is shown to be hazardous or defective,the FDA and foreign regulatory agencies have thepower to withdraw
165、 the clearance or approval,as the case may be,or require us to change the device,itsmanufacturing process or its labeling,to supply additional proof of its safety and effectiveness or to recall,repair,replace or refund the cost of the medical device.Because we currently export medical devices manufa
166、ctured inthe United States that have not been approved by the FDA for distribution in the United States,we are required toobtain approval/registration in the country to which we are exporting and maintain certain records relating toexports and make these available to the FDA for inspection,if requir
167、ed.Human Cells,Tissues and Cellular and Tissue-Based ProductsIntegra distributes medical devices derived from human tissue(demineralized bone tissue).The FDA hasspecific regulations governing human cells,tissues and cellular and tissue-based products,or HCT/Ps.An HCT/Pis a product containing,or cons
168、isting of,human cells or tissue intended for transplantation into a human patient.Examples include bone,ligament,skin and cornea.Some HCT/Ps fall within the definition of a biological product,medical device or drug regulated under theFD&C Act.These biologic,device or drug HCT/Ps must comply both wit
169、h the requirements exclusivelyapplicable to HCT/Ps and,in addition,with requirements applicable to biologics,devices or drugs,includingpremarket clearance or approval from the FDA.Section 361 of the Public Health Service Act(“PHSA”),authorizes the FDA to issue regulations to preventthe introduction,
170、transmission or spread of communicable disease.HCT/Ps regulated as“361”HCT/Ps aresubject to requirements relating to registering facilities and listing products with the FDA,screening and testingfor tissue donor eligibility,Good Tissue Practice when processing,storing,labeling,and distributing HCT/P
171、s,including required labeling information,stringent record keeping,and adverse event reporting.The American Association of Tissue Banks(“AATB”)has issued operating standards for tissue banking.Compliance with these standards is a requirement in order to become an AATB-accredited tissue establishment
172、.In addition,some states have their own tissue banking regulations.We are licensed or have permits for tissuebanking in California,Florida,New York and Maryland.National Organ Transplant Act.Procurement of certain human organs and tissue for transplantation issubject to the restrictions of the Natio
173、nal Organ Transplant Act(“NOTA”),which prohibits the transfer of certainhuman organs,including skin and related tissue for valuable consideration,but permits the reasonable paymentassociated with the removal,transportation,implantation,processing,preservation,quality control and storage ofhuman tiss
174、ue and skin.We reimburse tissue banks for their expenses associated with the recovery,storage and6transportation of donated human tissue that they provide to us for processing.We include in our pricing structureamounts paid to tissue banks to reimburse them for their expenses associated with the rec
175、overy and transportationof the tissue,in addition to certain costs associated with processing,preservation,quality control and storage ofthe tissue,marketing and medical education expenses,and costs associated with development of tissueprocessing technologies.NOTA payment allowances may be interpret
176、ed to limit the amount of costs andexpenses that we may recover in our pricing for our products,thereby reducing our future revenue andprofitability.Medical Device RegulationsWe also are required to register with the FDA as a medical device manufacturer.As such,ourmanufacturing sites are subject to
177、periodic inspection by the FDA for compliance with the FDAs Quality SystemRegulations.These regulations require that we manufacture our products and maintain our documents in aprescribed manner with respect to design,manufacturing,testing and control activities.Further,we are requiredto comply with
178、various FDA requirements and other legal requirements for labeling and promotion.If the FDAbelieves that a company is not in compliance with applicable regulations,it may issue a warning letter,instituteproceedings to detain or seize products,issue a recall order,impose operating restrictions,enjoin
179、 futureviolations and assess civil penalties against that company,its officers or its employees and may recommendcriminal prosecution to the U.S.Department of Justice.Medical device regulations also are in effect in many of the countries in which we do business outside theUnited States.These laws ra
180、nge from comprehensive medical device approval and Quality System requirementsfor some or all of our medical device products to simpler requests for product data or certifications.The numberand scope of these requirements are increasing.Under the European Union Medical Device Directive,medicaldevice
181、s must meet the Medical Device Directive standards and receive CE Mark Certification prior to marketingin the European Union(the“EU”).CE Mark Certification requires a comprehensive quality system program,technical documentation and data on the product,which are then reviewed by a Notified Body.A Not
182、ified Bodyis an organization designated by the national governments of the European Union member states to makeindependent judgments about whether a product complies with the requirements established by each CE markingdirective.The Medical Device Directive,ISO 9000 series and ISO 13485 are recognize
183、d international qualitystandards that are designed to ensure that we develop and manufacture quality medical devices.Other countriesare also instituting regulations regarding medical devices or interpreting and enforcing existing regulations morestrictly.Compliance with these regulations requires ex
184、tensive documentation and clinical reports for all of ourproducts,revisions to labeling,and other requirements such as facility inspections to comply with the registrationrequirements.A recognized Notified Body audits our facilities annually to verify our compliance with the ISO13485 Quality System
185、standard.Certain countries,as well as the EU,have issued regulations that govern products that contain materialsderived from animal sources.Regulatory authorities are particularly concerned with materials infected with theagent that causes bovine spongiform encephalopathy(“BSE”),otherwise known as m
186、ad cow disease.Theseregulations affect our dermal regeneration products,duraplasty products,hernia repair products,biomaterialproducts for the spine,nerve and tendon repair products and certain other products,all of which contain materialderived from bovine tissue.Although we take great care to prov
187、ide that our products are safe and free of agentsthat can cause disease,products that contain materials derived from animals,including our products,may becomesubject to additional regulation,or even be banned in certain countries,because of concern over the potential forprion transmission.Significan
188、t new regulations,a ban of our products,or a movement away from bovine-derivedproducts because of an outbreak of BSE could have a material adverse effect on our current business or ourability to expand our business.See“Item 1A.Risk FactorsCertain of our products contain materials derivedfrom animal
189、sources and may become subject to additional regulation.”Postmarket Requirements.After a device is cleared or approved for commercial distribution,numerousregulatory requirements apply.These include the FDA Quality System Regulations which cover the procedures7and documentation of the design,testing
190、,production,control,quality assurance,labeling,packaging,sterilization,storage and shipping of medical devices;the FDAs general prohibition against promoting productsfor unapproved or off-labeluses;the Medical Device Reporting regulation,which requires that manufacturersreport to the FDA if their de
191、vice may have caused or contributed to a death or serious injury or malfunctioned ina way that would likely cause or contribute to a death or serious injury if it were to recur;and the Reports ofCorrections and Removals regulation,which require manufacturers to report recalls and field corrective ac
192、tionsto the FDA if initiated to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act.Other regulationsAnti-Bribery Laws.In the United States,we are subject to laws and regulations pertaining to healthcarefraud and abuse,including anti-kickback laws and physician self-
193、referral laws that regulate the means by whichcompanies in the health care industry may market their products to hospitals and health care professionals andmay compete by discounting the prices of their products.Similar anti-bribery laws exist in many of the countriesin which we sell our products ou
194、tside of the United States,as well as the United States Foreign Corrupt PracticesAct(which addresses the activities of U.S.companies in foreign markets).Our products also are subject toregulation regarding reimbursement,and U.S.healthcare laws apply when a customer submits a claim for aproduct that
195、is reimbursed under a federally funded healthcare program.These global laws require that weexercise care in designing our sales and marketing practices,including involving interactions with healthcareprofessionals,and customer discount arrangements.See“Item 1A.Risk FactorsOversight of the medicaldev
196、ice industry might affect the manner in which we may sell medical devices and compete in the marketplace.”Import-export.Our international operations subject us to laws regarding sanctioned countries,entities andpersons,customs,and import-export.Among other things,these laws restrict,and in some case
197、s can prevent,United States companies from directly or indirectly selling goods,technology or services to people or entities incertain countries.In addition,these laws require that we exercise care in our business dealings with entities inand from foreign countries.Hazardous materials.Our research,d
198、evelopment and manufacturing processes involve the controlled use ofcertain hazardous materials.We are subject to country-specific,federal,state and local laws and regulationsgoverning the use,manufacture,storage,handling and disposal of these materials and certain waste products.Webelieve that our
199、environmental,health and safety procedures for handling and disposing of these materialscomply with the standards prescribed by the controlling laws and regulations.However,risk of accidentalreleases or injury from these materials is possible.These risks are managed to minimize or eliminate associat
200、edbusiness impacts.In the event of this type of accident,we could be held liable for damages that may result,andany liability could exceed our resources.We could be subject to a regulatory shutdown of a facility that couldprevent the distribution and sale of products manufactured there for a signifi
201、cant period of time,and we couldsuffer a casualty loss that could require a shutdown of the facility in order to repair it,any of which could have amaterial,adverse effect on our business.Although we continuously strive to maintain full compliance withrespect to all applicable global environmental,h
202、ealth and safety laws and regulations,we could incur substantialcosts to fully comply with future laws and regulations,and our operations,business or assets may be negativelyaffected.Furthermore,global environmental,health and safety compliance is an ongoing process.Integra hascompliance procedures
203、in place for compliance with Employee Health&Safety laws,driven by a centrally ledorganizational structure that ensures proper implementation,which is essential to our overall business objectives.In addition to the above regulations,we are,and may be,subject to regulation under country-specific fede
204、raland state laws,including,but not limited to,requirements regarding record keeping,and the maintenance ofpersonal information,including personal health information.As a public company,we are subject to thesecurities laws and regulations,including the Sarbanes-Oxley Act of 2002.We also are subject
205、to other present,and could be subject to possible future,local,state,federal and foreign regulations.Third-Party Reimbursement.Healthcare providers that purchase medical devices generally rely on third-party payors,including,in the United States,the Medicare and Medicaid programs and private payors,
206、such as8indemnity insurers,employer group health insurance programs and managed care plans,to reimburse all or partof the cost of the products.As a result,demand for our products is and will continue to be dependent in part onthe coverage and reimbursement policies of these payors.The manner in whic
207、h reimbursement is sought andobtained varies based upon the type of payor involved and the setting in which the product is furnished andutilized.Reimbursement from Medicare,Medicaid and other third-party payors may be subject to periodicadjustments as a result of legislative,regulatory and policy ch
208、anges,as well as budgetary pressures.Possiblereductions in,or eliminations of,coverage or reimbursement by third-party payors,or denial of,or provision ofuneconomical reimbursement for new products may affect our customers revenue and ability to purchase ourproducts.Any changes in the healthcare reg
209、ulatory,payment or enforcement landscape relative to our customershealthcare services has the potential to significantly affect our operations and revenue.INTELLECTUAL PROPERTYWe seek patent and trademark protection for our key technology,products and product improvements,bothin the United States an
210、d in selected foreign countries.When determined appropriate,we have enforced and planto continue to enforce and defend our patent and trademark rights.In general,however,we do not rely solely onour patent and trademark estate to provide us with any significant competitive advantages as it relates to
211、 ourexisting product lines.We also rely upon trade secrets and continuing technological innovations to develop andmaintain our competitive position.In an effort to protect our trade secrets,we have a policy of requiring ouremployees,consultants and advisors to execute proprietary information and inv
212、ention assignment agreementsupon commencement of employment or consulting relationships with us.These agreements also provide that allconfidential information developed or made known to the individual during the course of their relationship withus must be kept confidential,except in specified circum
213、stances.AccuDrain,Advansys,Ascension,BioFix,BioMotion,Bold,Budde,Buzz,Camino,Capture,CRW,CUSA,DigiFuse,DuraGen,DuraSeal,First Choice,FuturaTM,Hallu,HeliCote,HeliPlug,HeliTape,HeliMend,Helistat,Helitene,Integra,IPP-ON,Jarit,Licox,LimiTorr,Luxtec,MemoFix,MicroFrance,Miltex,Movement,NeuraGen,NeuraWrap,
214、NuGrip,Omni-Tract,OSV II,Qwix,Padgett,Panta,PriMatrix,PyroSphere,Redmond,Ruggles,SafeGuard,SaltoTalaris,Subtalar MBA,SurgiMend,TenoGlide,Ti6,Tibiaxys,TissueMend,Titan,Trel-X,Trel-XC,Trel-XPressTM,TruArch,Uni-CP,Uni-Clip,and the Integra logo are some of the materialtrademarks of Integra LifeSciences
215、Corporation and its subsidiaries.MAYFIELDis a registered trademark ofSM USA,Inc.,and is used by Integra under license.EMPLOYEESAt December 31,2016,we had approximately 3,700 employees engaged in production and productionsupport for warehouse,engineering and facilities,quality assurance,quality contr
216、ol,research and development,regulatory and clinical affairs,sales,marketing,administration and finance.Except for certain employees at ourfacilities in France and Mexico,none of our employees are subject to a collective bargaining agreement.FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREASFinancial infor
217、mation about our geographical areas is set forth under“Item 7.Managements Discussionand Analysis of Financial Condition and Results of OperationsGeographic Product Revenues and Operations”and in our financial statements Note 15,Segment and Geographic Information,to our consolidated financialstatemen
218、ts.SOURCES OF RAW MATERIALSIn general,raw materials essential to our businesses are readily available from multiple sources.For reasonsof quality assurance,availability,or cost effectiveness,certain components and raw materials are available onlyfrom a sole supplier.Our policy is to maintain suffici
219、ent inventory of components so that our production will notbe significantly disrupted even if a particular component or material is not available for a period of time.9Certain of our products,including our dermal regeneration products,duraplasty products,wound careproducts,bone void fillers,nerve an
220、d tendon repair products and certain other products,contain material derivedfrom bovine tissue.We take great care to provide that our products are safe and free of agents that can causedisease.In particular,the collagen used in the products that Integra manufactures is derived either from the deepfl
221、exor tendon of cattle less than 24 months old from New Zealand,a country that has never had a reported case ofbovine spongiform encephalopathy,or from the United States or from fetal dermis.The World HealthOrganization classifies different types of cattle tissue for relative risk of BSE transmission
222、.Deep flexor tendonand fetal bovine skin are in the lowest-risk category for BSE transmission,and is therefore considered to have anegligible risk of containing the agent that causes BSE.SEASONALITYRevenues during our fourth quarter tend to be stronger than other quarters because many hospitals incr
223、easetheir purchases of our products during the fourth quarter to coincide with the end of their budget cycles in theU.S.In general,our first quarter usually has lower revenues than the preceding fourth quarter,the second andthird quarters have higher revenues than the first quarter,and the fourth qu
224、arter revenues are the highest in theyear.The main exceptions to this pattern occur because of material intervening acquisitions.AVAILABLE INFORMATIONWe are subject to the informational requirements of the Securities Exchange Act of 1934,as amended,(the“Exchange Act”).In accordance with the Exchange
225、 Act,we file annual,quarterly and special reports,proxystatements and other information with the Securities and Exchange Commission.You may view our financialinformation,including the information contained in this report,and other reports we file with the Securities andExchange Commission,on the Int
226、ernet,without charge as soon as reasonably practicable after we file them withthe Securities and Exchange Commission,in the“SEC Filings”page of the Investor Relations section of ourwebsite at .You may also obtain a copy of any of these reports,without charge,from ourinvestor relations department,311
227、 Enterprise Drive,Plainsboro,NJ 08536.Alternatively,you may view or obtainreports filed with the Securities and Exchange Commission at the SEC Public Reference Room at 100 F Street,N.E.in Washington,D.C.20549,or at the Securities and Exchange Commissions Internet site at www.sec.gov.Please call the
228、Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operationof the public reference facilities.10SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSWe have made statements in this report,including statements under“Business”and“ManagementsDiscussion and Analysis of Fina
229、ncial Condition and Results of Operations”that constitute forward-lookingstatements within the meaning of Section 27A of the Securities Act of 1933,as amended(the“Securities Act”),and Section 21E of the Exchange Act.These forward-looking statements are subject to a number of risks,uncertainties and
230、assumptions about us including,among other things:general economic and business conditions,both nationally and in our international markets;our expectations and estimates concerning future financial performance,financing plans and the impactof competition;anticipated trends in our business;anticipat
231、ed demand for our products,particularly capital equipment;our ability to produce collagen-based products in sufficient quantities to meet sales demands;our expectations concerning our ongoing restructuring,integration and manufacturing transfer andexpansion activities;existing and future regulations
232、 affecting our business,and enforcement of those regulations;our ability to obtain additional debt and equity financing to fund capital expenditures and workingcapital requirements and acquisitions;physicians willingness to adopt our recently launched and planned products,third-party payorswillingne
233、ss to provide or continue reimbursement for any of our products and our ability to secureregulatory approval for products in development;initiatives launched by our competitors;our ability to protect our intellectual property,including trade secrets;our ability to complete acquisitions,integrate ope
234、rations post-acquisition and maintain relationshipswith customers of acquired entities;our ability to remediate all matters identified in FDA observations and warning letters that we receivedor may receive;andother risk factors described in the section entitled“Risk Factors”in this report.You can id
235、entify these forward-looking statements by forward-looking words such as“believe,”“may,”“could,”“might,”“will,”“estimate,”“continue,”“anticipate,”“intend,”“seek,”“plan,”“expect,”“should,”“would”and similar expressions in this report.We undertake no obligation to publicly update or revise anyforward-
236、looking statements,whether as a result of new information,future events or otherwise.In light of theserisks and uncertainties,the forward-looking events and circumstances discussed in this report may not occur andactual results could differ materially from those anticipated or implied in the forward
237、-looking statements.11ITEM 1A.RISK FACTORSRisks Related to Our BusinessOur operating results may fluctuate.Our operating results,including components of operating results such as gross margin and cost of productsales,may fluctuate from time to time,and such fluctuations could affect our stock price.
238、Our operating resultshave fluctuated in the past and can be expected to fluctuate from time to time in the future.Some of the factorsthat may cause these fluctuations include:economic conditions worldwide,which could affect the ability of hospitals and other customers topurchase our products and cou
239、ld result in a reduction in elective and non-reimbursed operativeprocedures;the impact of acquisitions and our ability to integrate acquisitions;the impact of our restructuring activities;the timing of significant customer orders,which tend to increase in the fourth quarter to coincide withthe end o
240、f budget cycles for many hospitals;market acceptance of our existing products,as well as products in development;the timing of regulatory approvals as well as changes in country-specific regulatory requirements;changes in the rates of exchange between the U.S.dollar and other currencies of foreign c
241、ountries inwhich we do business,such as the euro,British pound,Swiss franc,Canadian dollar,Japanese yen,Australian dollar,Mexican peso,Brazilian real and Chinese yuan;expenses incurred and business lost in connection with product field correction actions or recalls;potential backorders and lost sale
242、s resulting from stoppages in production relating to product recalls orfield corrective actions;changes in the cost or decreases in the supply of raw materials,including energy and steel;our ability to manufacture and ship our products efficiently or in sufficient quantities to meet salesdemands;the
243、 timing of our research and development expenditures;expenditures for major initiatives;reimbursement for our products by third-party payors such as Medicare,Medicaid,private and publichealth insurers and foreign governmental health systems;the ability to maintain existing distribution rights to and
244、 from certain third parties;the ability to maintain business if or when we opt to convert such business from distributors to a directsales model;the ability of our new commercial sales representatives to obtain sales targets in a reasonable timeframe;peer-reviewed publications discussing the clinica
245、l effectiveness of the products we sell;inspections of our manufacturing facilities for compliance with Quality System Regulations(GoodManufacturing Practices)which could result in Form 483 observations,warning letters,injunctions orother adverse findings from the FDA or from equivalent regulatory b
246、odies,and corrective actions,procedural changes and other actions that we determine are necessary or appropriate to address theresults of those inspections,any of which may affect production and our ability to supply our customerswith our products;12changes in regulations or guidelines that impact t
247、he marketing practices for products that we sell;the increased regulatory scrutiny of certain of our products,including products which we manufacturefor others,could result in their being removed from the market or involve field corrective actions thatcould affect the marketability of our products;c
248、hanges in tax laws,or their interpretations;andthe impact of goodwill and intangible asset impairment charges if future operating results of theacquired businesses are significantly less than the results anticipated at the time of the acquisitions.The industry and market segments in which we operate
249、 are highly competitive,and we may be unable tocompete effectively with other companies.In general,there is intense competition among medical device companies.We compete with establishedmedical technology companies in many of our product areas.Competition also comes from early-stagecompanies that ha
250、ve alternative technological solutions for our primary clinical targets,as well as universities,research institutions and other non-profit entities.Many of our competitors have access to greater financial,technical,research and development,marketing,manufacturing,sales,distribution,administrative,co
251、nsultingand other resources than we do.Our competitors may be more effective at developing commercial products.Ourcompetitors may be able to gain market share by offering lower-cost products or by offering products that enjoybetter reimbursement methodologies from third-party payors,such as Medicare
252、,Medicaid,private and publichealth insurers and foreign governmental health systems.Our competitive position will depend on our ability to achieve market acceptance for our products,developnew products,implement production and marketing plans,secure regulatory approval for products underdevelopment,
253、obtain and maintain reimbursement coverage under Medicare,Medicaid and private healthcareinsurance,obtain patent protection and to produce products consistently in sufficient quantities to meet demand.We may need to develop new applications for our products to remain competitive.Technological advanc
254、es byone or more of our current or future competitors or their achievement of superior reimbursement from Medicare,Medicaid and private healthcare insurance could render our present or future products obsolete or uneconomical.Our future success will depend upon our ability to compete effectively aga
255、inst current technology as well as torespond effectively to technological advances.Competitive pressures could adversely affect our profitability.Additionally,purchasing decisions of our customers may be based on clinical evidence or comparativeeffectiveness studies and,because of our vast array of
256、products,we might not be able to fund the studiesnecessary or provide the required information to compete effectively.Other companies may have more resourcesavailable to fund such studies.For example,competitors have launched and have been developing products tocompete with our duraplasty products,d
257、ural sealant,extremity reconstruction implants,regenerative skin,neurocritical care monitors and ultrasonic tissue ablation devices,among others.Our primary competitors in specialty surgical solutions are the Aesculap division of B.Braun Medical,Inc.,Johnson&Johnson,Medtronic,Inc.,Stryker Corporatio
258、n,Becton,Dickinson and Company,and C.R.Bard,Inc.Our competitors in orthopedics and tissue technologies include the DePuy/Synthes business of Johnson&Johnson,Stryker Corporation,Wright Medical Group,N.V.,Smith&Nephew plc,MiMedx Group,Inc.,AcelityL.P.Inc.,a subsidiary of Allergan PLC,and Zimmer Biomet
259、 Holdings,Inc.,as well as other major orthopediccompanies that carry a full line of small bone and joint fixation,soft tissue and/or wound care products.Additionally,we compete with many smaller specialized companies and larger companies that do not otherwisefocus on specialty surgical solutions or
260、orthopedics and tissue technology.Finally,in certain cases our productscompete primarily against medical practices that treat a condition without using a device or any particularproduct,such as the medical practices that use autograft tissue instead of our dermal regeneration products,duraplasty pro
261、ducts and nerve repair products.13We 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 fusionhardware business,now known as SeaSpine Holdings Corporation(“SeaSpin
262、e”),from the Company.Eventhough 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 increasedfocus through our two divisional structure or to achie
263、ve anticipated growth rates,margins and scale and toexecute on our strategy generally.Following the Separation,we are a smaller,less diversified company.Thisnarrower business focus could leave us more vulnerable to changing market conditions,which could adverselyaffect our business,financial conditi
264、on 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 financingrequirements to be subject to increased volatility.In addition,we may be unable to achieve some or all of thestrategic and fi
265、nancial benefits that we expected would result from the Separation,or such benefits may bedelayed,which could adversely affect our business,financial condition and results of operations.Further,therecan be no assurance that the combined value of the common stock of the two publicly-traded companies
266、will beequal 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 wemay have indemnification obligations to each other with respect to such arrangem
267、ents.We entered into various agreements with SeaSpine in connection with the Separation,including a transitionservices agreement,a separation and distribution agreement,a tax matters agreement,an employee mattersagreement and several supply agreements.These agreements will govern our relationship wi
268、th SeaSpinefollowing the Separation.If we are required to indemnify SeaSpine for certain liabilities and related lossesarising in connection with any of these agreements or if SeaSpine is required to indemnify us for certainliabilities and related losses arising in connection with any of these agree
269、ments and does not fulfill its obligationsto us,we may be subject to substantial liabilities,which could have a material adverse effect on our financialposition.If there is a determination that the spin-off is taxable for U.S.federal income tax purposes,then we and ourstockholders that are subject t
270、o U.S.federal income tax could incur significant U.S.federal income taxliabilities and,in certain circumstances,we could be required to indemnify SeaSpine for material taxespursuant to indemnification obligations under the tax matters agreement.We received an opinion of Latham&Watkins LLP,tax counse
271、l to us(the“Tax Opinion”),substantially tothe effect that(i)the contribution of the stock of SeaSpine Orthopedics Corporation to SeaSpine,together withthe internal distribution of the stock of SeaSpine to Integra(collectively,the“internal distribution”),willconstitute a reorganization under Sections
272、 355 and 368(a)(1)(D)of the Internal Revenue Code of 1986,asamended(the“Code”)and(ii)the contribution of cash from us to SeaSpine(the“cash contribution”),togetherwith the distribution of the stock of SeaSpine to our shareholders(the“distribution”),will constitute areorganization under Sections 355 a
273、nd 368(a)(1)(D)of the Code.Based on this tax treatment,the distribution willbe tax-free to Integra and its stockholders for U.S.federal income tax purposes(except for any cash received inlieu of fractional shares).The Tax Opinion relied on certain facts,assumptions,representations and undertakingsfr
274、om us and SeaSpine regarding the past and future conduct of the companiesrespective businesses and othermatters.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 ca
275、sh contributionand 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 internaldistribution,the cash contribution and the distribution sh
276、ould be taxable for other reasons,including as a result ofa significant change in stock or asset ownership after the distribution.If the distribution ultimately is determinedto be taxable,the distribution could be treated as a taxable dividend or capital gain to our stockholders for U.S.federal inco
277、me tax purposes,and our stockholders could incur significant U.S.federal income tax liabilities.In14addition,we would recognize gain in an amount equal to the excess of the fair market value of shares ofSeaSpine common stock distributed to our stockholders on the distribution date over our tax basis
278、 in such sharesof SeaSpine common stock.Moreover,we could incur significant U.S.federal income tax liabilities if it isultimately 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 desirab
279、le 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 inorder to preserve,for U.S.federal inc
280、ome tax purposes,the tax-free nature of the internal distribution and thedistribution.Even if the internal distribution and the distribution otherwise qualify for tax-free treatment underSection 355 of the Code,they may result in corporate-level taxable gain to us under Section 355(e)of the Code ift
281、here is a 50%or greater change in ownership,by vote or value,of shares of our stock or SeaSpines stockoccurring as part of a plan or series of related transactions that includes the internal distribution or thedistribution.Any acquisitions or issuances of our stock or SeaSpines stock within two year
282、s after the distributionare generally presumed to be part of such a plan,although we or SeaSpine may be able to rebut that presumption.We may be subject to continuing contingent liabilities of SeaSpine following the spin-off.After the Separation,there are several significant areas where the liabilit
283、ies of SeaSpine may become ourobligations.For example,under the Code and the related rules and regulations,each corporation that was amember of our consolidated U.S.federal income tax reporting group during any taxable period or portion of anytaxable period ending on or before the effective time of
284、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 isunable to pay any prior period taxes for which it is responsible,we could be required to pay the entire amount ofsuch taxes.Our c
285、urrent strategy involves growth through acquisitions,which requires us to incur substantial costs andpotential liabilities for which we may never realize the anticipated benefits.In addition to internally generated growth,our current strategy involves growth through acquisitions.Between January 1,20
286、14 and December 31,2016,we have acquired 7 businesses at a total cost of approximately$677.9 million.We may be unable to continue to implement our growth strategy,and our strategy ultimately may beunsuccessful.A significant portion of our growth in revenues has resulted from,and is expected to conti
287、nue toresult from,the acquisition of businesses or products complementary to our own.We engage in evaluations ofpotential acquisitions and are in various stages of discussion regarding possible acquisitions,certain of which,ifconsummated,could be significant to us.Any new acquisition could result in
288、 material transaction expenses,increased interest and amortization expense,increased depreciation expense,increased operating expense,andpossible in-process research and development charges for acquisitions that do not meet the definition of a“business,”any of which could have a material adverse eff
289、ect on our operating results.Certain businesses that weacquire may not have adequate financial,disclosure,regulatory,quality or other compliance controls at the timewe acquire them.As we grow by acquisition,we must manage and integrate the new businesses to bring theminto our systems for financial,d
290、isclosure,compliance,regulatory and quality control,realize economies of scale,and control costs.In addition,acquisitions involve other risks,including diversion of management resourcesotherwise available for development of our business and risks associated with entering markets in which ourmarketin
291、g teams and sales force has limited experience or where experienced distribution alliances are notavailable.Our future profitability will depend in part upon our ability to develop further our resources to adapt tothese new products or business areas and to identify and enter into or maintain satisf
292、actory distribution networks.We may not be able to identify suitable acquisition candidates in the future,obtain acceptable financing or15consummate any future acquisitions.If we cannot integrate acquired businesses and operations,manage the costof providing our products or price our products approp
293、riately,our profitability could suffer.In addition,as aresult of our acquisitions of other healthcare businesses,we may be subject to the risk of unanticipated businessuncertainties,regulatory and other compliance matters or legal liabilities relating to those acquired businesses forwhich the seller
294、s of the acquired businesses may not indemnify us,for which we may not be able to obtaininsurance(or adequate insurance),or for which the indemnification may not be sufficient to cover the ultimateliabilities.Our future financial results could be adversely affected by impairments or other charges.Si
295、nce we have grown through acquisitions,we have$510.6 million of goodwill and$1.0 million ofindefinite-lived intangible assets as of December 31,2016.Under the authoritative guidance for determining theuseful life of intangible assets,we are required to test both goodwill and indefinite-lived intangi
296、ble assets forimpairment on an annual basis based upon a fair value approach,rather than amortizing them over time.We arealso required to test goodwill and indefinite-lived intangible assets for impairment between annual tests if anevent occurs such as a significant decline in revenues or cash flows
297、 for certain products,or the discount ratesused in the calculations of discounted cash flow change significantly,or circumstances change that would morelikely than not reduce our enterprise fair value below its book value.If such a decline,rate change orcircumstance were to materialize,we may record
298、 an impairment of these intangible assets that could be materialto the financial statements.See“Managements Discussion and Analysis of Financial Condition and Results ofOperationsCritical Accounting Estimates”of this report.The guidance on long-lived assets requires that we assess the impairment of
299、our long-lived assets,includingfinite-lived intangible assets,whenever events or changes in circumstances indicate that the carrying value maynot be recoverable as measured by the sum of the expected future undiscounted cash flows.As of December 31,2016,we had$560.2 million of finite-lived intangibl
300、e assets.At December 31,2016 our trade names have a carrying value of$71.3 million and decisions relating to ourtrade names may occur over time.Additionally,we may discontinue certain products in the future as we continueto assess the profitability of our product lines.As a result,we may need to rec
301、ord impairment charges oraccelerate amortization on certain trade names or technology-related intangible assets in the future.The value of a medical device business is often volatile,and the assumptions underlying our estimates madein connection with our assessments under the guidance may change as
302、a result of that volatility or other factorsoutside our control and mayresult in impairment charges.The amount of any such impairment charges could be significant and could have amaterial adverse effect on our reported financial results for the period in which the charge is taken and couldhave an ad
303、verse effect on the market price of our securities,including the notes and the common stock into whichthey may be converted.The adoption of healthcare reform in the United States and initiatives sponsored by other governments mayadversely affect our business,results of operations and/or financial co
304、ndition.Our operations may be substantially affected by potential fundamental changes in the global political,economic and regulatory landscape of the healthcare industry.Government and private sector initiatives to limitthe growth of healthcare costs are continuing in the U.S.,and in many other cou
305、ntries where we do business,causing the marketplace to put increased emphasis on the delivery of more cost-effective treatments.Theseinitiatives include price regulation,competitive pricing,coverage and payment policies,comparativeeffectiveness of therapies,technology assessments and managed-care ar
306、rangements.In March 2010,significant reforms to the U.S.healthcare system were adopted in the form of the PatientProtection and Affordable Care Act(the“Affordable Care Act”).The Affordable Care Act includes provisions16that,among other things,reduce and/or limit Medicare reimbursement,require all in
307、dividuals to have healthinsurance(with limited exceptions)and impose new and/or increased taxes.Specifically,the law requires themedical device industry to subsidize healthcare reform by implementing a 2.3%excise tax,commencing onJanuary 1,2013,on the sale of certain medical devices by a manufacture
308、r,producer or importer of such devicesin the United States.Because the substantial majority of our revenues is generated in the United States,theAffordable Care Act affected our financial results since it came into effect after December 31,2012.InDecember 2015,President Obama signed into law The Con
309、solidated Appropriations Act,which included a two-year moratorium on the 2.3%medical device excise tax,with the effect such that medical device revenues earnedin 2016 and 2017 will be exempt from such tax.Unless there is further legislative action during that two-yearperiod,the 2.3%medical device ex
310、cise tax automatically will be reinstated for sales of medical devices on orafter January 1,2018.While this two-year moratorium on the 2.3%medical device excise tax could provide ashort-term benefit to the Company in terms of providing additional monies available to spend on various projectsin 2016
311、and 2017,we are unable to predict what the long-term impact will have on our financial statements andfinancial performance.In addition,the Affordable Care Act also requires detailed disclosure of gifts and other remuneration madeto healthcare professionals,which could have a negative impact on our r
312、elationships with customers and abilityto seek input on product design or involvement in research.Other provisions of the Affordable Care Act could meaningfully change the way healthcare is developedand delivered in the United States,and may adversely affect our business and results of operations.Th
313、ere are many programs and requirements for which the details have not yet been fully established orconsequences not fully understood,and it is unclear what the full impact of the legislation will be.We cannotpredict what healthcare programs and regulations will ultimately be implemented at the U.S.f
314、ederal or statelevel,or the effect of any future legislation or regulation in the United States or elsewhere.That said,anychanges that lower reimbursements for our products or reduce medical procedure volumes could have a materialadverse effect on our business,financial condition and results of oper
315、ations.We continue to monitor theimplementation of such legislation and,to the extent new market or industry trends or new governmentalprograms evolve,we will have implemented or will consider implementing programs to respond.Initiatives sponsored by government agencies,legislative bodies and the pr
316、ivate sector to limit the growth ofhealthcare costs,including price regulation and competitive pricing,are ongoing in other markets where we dobusiness.Further,the Affordable Care Act encourages hospitals and physicians to work collaboratively throughshared savings programs,such as accountable care
317、organizations,as well as other bundled payment initiatives,which may ultimately result in the reduction of medical device purchases and the consolidation of medical devicesuppliers used by hospitals.Changes in the healthcare industry may require us to decrease the selling price for our products,mayr
318、educe the size of the market for our products,or may eliminate a market,any of which could have anegative impact on our financial performance.Trends toward managed care,healthcare cost containment and other changes in government and privatesector initiatives in the United States and other countries
319、in which we do business are placing increased emphasison the delivery of more cost-effective medical therapies that could adversely affect the sale and/or the prices ofour products.For example:as mentioned above,the Affordable Care Act,which is intended to expand access to health insurancecoverage o
320、ver time,has resulted in and will continue to result in major changes in the United Stateshealthcare system that have had and could continue to have an adverse effect on our business,including17a 2.3%excise tax on U.S.sales of most medical devices,implemented in 2013,which has adverselyaffected our
321、earnings through the end of 2015(Note:even though President Obama signed into lawThe Consolidated Appropriations Act in December 2015,which included a two-year moratorium onthe 2.3%excise tax for medical device revenues earned in 2016 and 2017,the 2.3%excise taxautomatically will be reinstated for s
322、ales of medical devices on or after January 1,2018 unless there isfurther legislative action);third-party payors of hospital services and hospital outpatient services,including Medicare,Medicaid,private and public health insurers and foreign governmental health systems,annually revise theirpayment m
323、ethodologies,which can result in stricter standards for reimbursement of hospital chargesfor certain medical procedures or the elimination of reimbursement;foreign governmental health systems have revised,and continue to consider whether to revise,theirpayment methodologies,which have resulted and c
324、ould continue to result in stricter standards forreimbursement of hospital charges for certain medical procedures leading to less governmentreimbursement,thereby putting downward pricing pressure on our products or rendering someuneconomical;Medicare,Medicaid,private and public health insurer and fo
325、reign governmental cutbacks could createdownward price pressure on our products;in the United States,local Medicare coverage as well as commercial carrier coverage determinationswill reduce or eliminate reimbursement or coverage for certain of our wound matrix products as well asother collagen produ
326、cts in most regions,negatively affecting our market for these products,and futuredeterminations could reduce or eliminate reimbursement or coverage for these products in otherregions and could reduce or eliminate reimbursement or coverage for other products;there has been a consolidation among healt
327、hcare facilities and purchasers of medical devices in theUnited States,some of whom prefer to limit the number of suppliers from whom they purchase medicalproducts,and these entities may decide to stop purchasing our products or demand discounts on ourprices;there has been a growing movement of phys
328、icians becoming employees of hospitals and otherhealthcare entities,which aligns surgeon product choices with his or her employers purchasingdecisions,and adds to pricing pressures;in the United States,we are party to contracts with group purchasing organizations,which negotiatepricing for many memb
329、er hospitals,that require us to discount our prices for certain of our productsand limit our ability to raise prices for certain of our products,particularly surgical instruments;there is economic pressure to contain healthcare costs in domestic and international markets,and,regardless of the consol
330、idation discussed above,providers generally are exploring ways to cut costs byeliminating purchases or driving reductions in the prices that they pay for medical devices;there are proposed and existing laws,regulations and industry policies in domestic and internationalmarkets regulating the sales a
331、nd marketing practices and the pricing and profitability of companies inthe healthcare industry;proposed laws or regulations will permit hospitals to provide financial incentives to doctors forreducing hospital costs(known as gainsharing),will award physician efficiency(known as physicianprofiling),
332、and will encourage partnerships with healthcare service and goods providers to reduceprices;andthere have been initiatives by third-party payors and foreign governmental health systems to challengethe prices charged for medical products that could affect our ability to sell products on a competitive
333、basis.Any and all of the above factors could adversely affect our levels of revenue and our profitability.18We are subject to stringent domestic and foreign medical device regulation and any adverse regulatoryaction may adversely affect our financial condition and business operations.Our products,development activities and manufacturing processes are subject to extensive and rigorousregulation by
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