Integra LifeSciences
 
English:US

President and CEO's Message



To our Stockholders:



Integra, a recognized leader in specialty surgical solutions, regenerative technologies and extremity solutions, worldwide, is committed to bringing certainty to physicians and patients, when every movement and moment counts. We develop solutions for the most pressing perioperative issues facing our customers, allowing them to focus on what is ultimately most important – helping to care for and heal their patients.


During 2015, we made significant progress toward our goal of transforming Integra into a multi-billion dollar diversified global medical technology company. In addition to successfully spinning off our spine business and completing the largest acquisition in the Company’s history, we delivered strong financial results, growing both organic revenue and profits to new levels and significantly improving our free cash flows.


While we are still evolving, Integra has reached an inflection point that allows us to build upon our core in regenerative technology and shifts our focus toward accelerating growth, ultimately creating better solutions for our customers and patients. I am very proud of what we, as a team, accomplished in 2015.



Peter Arduini
Peter Arduini
President and CEO
2015 Highlights

Integra made excellent progress across the board. We:

  • Grew our revenue 10.8% to $882.7 million;
  • Integrated our simplified two-division global structure;
  • Spun off the spine business in under nine months from our initial announcement, accelerating growth of our top line and enabling more focused investments;
  • Completed three acquisitions during the year, including TEI, the Salto Talaris® ankle and Futura™ toe from Tornier, and Tekmed Instrumentation;
  • Successfully completed follow-on, public offering of common stock, raising approximately $230 million;
  • Announced the expansion and extension of our credit facility, which provides Integra with up to $1.1 billion of borrowing capacity;
  • Raised our 2018 long-term financial targets at our November 2015 Investor Day;
  • Published results from our diabetic foot ulcer (DFU) clinical trial in Wound Repair and Regeneration, paving the way for a commercial launch in mid-2016;
  • Launched new products in skin, regenerative wound care, cranial fixation, dural repair and extremities, which helped fuel our organic growth; and
  • Began commercial production at our state-of-the-art Collagen Manufacturing Center in Plainsboro, New Jersey.

Executing Our Growth Strategy

Several years ago, we established three strategic pillars to direct our efforts toward achieving our vision. Our three-part strategy is to improve execution, optimize the business, and accelerate growth. Since implementing this strategy in 2012, we have generated strong results and are strengthening the organization. We have greatly enhanced our ability to execute Research & Development programs, improved manufacturing quality and consistency, and developed commercial scale and reach. Today, we continue to execute against plans to both streamline our operations and grow our business.


We completed the integration of our two global divisions, Specialty Surgical Solutions and Orthopedics and Tissue Technologies. We realigned corporate resources to support the new divisional model, have strong R&D pipelines and market opportunities in both of our global businesses, and are positioned to drive even better results and grow faster.

We completed several major capital projects. We began rolling out our new Enterprise Resource Planning system in 2014, and concluded most of its implementation in 2015. Our new state-of-the-art Collagen Manufacturing Center began commercial production in 2015 and provides us with capacity to meet the expected future demand for our collagen-based products. These projects, combined with our investment in developing new technologies and our two-segment structure, enable greater efficiencies in leveraging G&A functions and fueling growth.


We have a unique set of opportunities that will help accelerate our growth. We are entering fast growing, sizeable markets that include hard-to-heal diabetic foot ulcers (DFU), as well as total shoulder and ankle arthroplasty. We plan to expand our international infrastructure and fuel growth by entering new markets, optimizing our channel strategies in key countries, and registering more of our market-leading products in new geographies. And finally, new product introductions and channel investments are driving growth of our Regenerative Technology-based products, which we expect to represent more than 45% of our total sales by 2018.


Product Introductions and Organic Growth

This year, we increased our organic revenue 6.7%.* Our regenerative product portfolios in both our Specialty Surgical Solutions and Orthopedic and Tissue Technology segments drove this growth. We introduced Integra® Meshed Bilayer Wound Matrix, designed for use in conjunction with Negative Pressure Wound Therapy; and Integra® Reinforcement Matrix, which complements our portfolio of tendon repair products. MAYFIELD® is one of the most trusted brands in cranial stabilization, and customers have adopted our enhanced new MAYFIELD 2® system at a strong rate since its introduction. Our CUSA® Excel+ system became the first and only ultrasonic tissue ablation system cleared by the FDA for liver resection and tumor removal. In other regenerative product areas, BioFix®, BioFix® Plus and BioFix® Flow are our first amniotic products, offering surgeons an expanded portfolio of solutions for a broad range of clinical needs. We introduced the External Fixation System, designed for lower extremity and Charcot Foot, which is commonly associated with diabetes and affects about 1 million people worldwide; and finalized our shoulder system in the U.S., the Titan™ TSS 2.5. This positions us to have a leadership product in this growing market.



Wound Care Strategy

In early January of 2016, the FDA approved the Premarket Approval (PMA) Supplement for Integra® Dermal Regeneration Template (IDRT) for the treatment of diabetic foot ulcers (DFU). We began our efforts to treat these hard-to-heal wounds several years ago, with the launch of our FOUNDER study. Our goal was to prove to clinicians, patients and payors that our IDRT technology, which has been used successfully in the inpatient setting / operating room for over 20 years, could have the same positive impact on patients treated for hard-to-heal wounds in the outpatient clinic. The FDA approval is the culmination of years of cooperation among the investigators, clinicians and patients who participated in the study, and the hard work and dedication of our Integra colleagues. This is a very exciting opportunity for Integra and puts us another step closer to becoming a leader in regenerative wound care. We are well along in the commercialization of our DFU product, Integra® Omnigraft™ Dermal Regeneration Matrix, and are poised to enter this growing multi-million dollar market in mid-2016. I would like to thank all of the investigators and patients who participated in the study.

At our Investor Day in November, we announced our “three-by-three” wound care strategy. We will be the only company that offers three technologies through three sales channels. Clinicians will be able to treat challenging patient situations with our legacy engineered collagen matrix, an acellular matrix, or an amniotic product. As importantly, we’ll be able to reach these clinicians through three different yet aligned sales channels – the in-patient, out-patient, and customer-focused enterprise call points. This differentiated strategy, coupled with additional commercial and clinical investments, should cause our advanced wound care business to drive revenue growth for years to come.


Acquisitions

During 2015, we closed three strategic acquisitions. TEI, the largest acquisition in the Company's history, broadens our current Regenerative Wound Care portfolio, helps us expand into several new and adjacent clinical areas, and adds an attractive private label business. It also provides a wound care sales channel focused on the outpatient clinic, a key element of the successful introduction of our Diabetic Foot Ulcer product, Omnigraft™ matrix, in mid-2016. The acquisition of the Salto Talaris® ankle and the Futura™ toe from Tornier further diversifies our lower extremity portfolio. The ankle replacement market is worth almost $115 million worldwide, and we are now the number three player in the fastest growing lower extremities segment. Our most recent acquisition of Tekmed, an exclusive distributor in the Italian medical sector for over 25 years, will allow us to expand our European infrastructure and help us accelerate our international growth.



Customer Excellence

We launched our customer excellence initiative this year, a multi-phased project designed to strengthen our relationships with our customers, build greater teamwork across all facets of our business, and ultimately, enhance the total experience with Integra, anywhere in the world and in every way we interact with customers.



Looking Ahead

Reflecting upon a successful and transformative 2015, I am excited about our future. Our ongoing efforts to optimize our business, coupled with our solid foundation and depth of expertise, are enabling us to secure Integra’s strong future and long-term growth in an increasingly complex health care environment, and ultimately, make lives better for millions of patients around the globe.


I would like to thank all of our employees for their hard work and unwavering commitment to our vision. I would also like to thank our investors, customers and suppliers for their continued support. I look forward to working together to build a multi-billion dollar global medical technology company that makes a difference in patients’ lives in 2016 and years to come.


Sincerely,

Peter Arduini
President and Chief Executive Officer




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