2024
ANNUAL REPORT
Dear fellow stockholders:
It is an exciting time to be an Integer stockholder. Through steadfast execution of our strategy, we have
established Integer as a leading medical device contract development and manufacturing organization
(CDMO). We continue to make significant progress on our Journey to Excellence, which has positioned
the Company on a tremendous trajectory. The Company delivered strong results in 2024 and is
positioned to sustainably deliver above-market sales growth and margin expansion moving forward.
We are uniquely equipped to serve customers across all phases of the product lifecycle with deep
technologies, unmatched breadth of capabilities and products, and a global manufacturing footprint. Our
structured and disciplined approach to investing in capabilities and capacity that help our customers
address unmet patient needs has enabled Integer to shift the mix of our business to faster growing
markets. Through the execution of our product line and operational strategy, we have significantly grown
our product development pipeline in high growth markets, enabling our customers to bring lifesaving and
life-enhancing innovations to market faster than our competitors.
We are continuing to invest in capacity expansion to meet increasing customer demand. Last year, we
opened a new state of the art development and manufacturing center in Galway, Ireland and completed
an 80,000 square foot expansion in New Ross, Ireland.
Our strategic tuck-in acquisition strategy is also contributing to the success of the Company. The
acquisitions of Oscor, Aran, InNeuroCo, and Pulse Technologies are exceeding our strategic and
financial objectives. Our most recent additions – Precision Coating in January 2025 and VSi Parylene in
February 2025 – expand our capabilities to include differentiated and proprietary coating solutions.
We have taken actions to improve profitability and drive excellence across our operations and our
strategy is working. We continue to further our Manufacturing Excellence strategy through the Company-
wide adoption of the Integer Production System, a standardized structure of systems and processes to
deliver world-class operational performance, quality, and efficiency across all our global sites.
Our global team is creating a values-based culture where we build upon one another’s differences to
bring forward innovative solutions to help shape the future of medtech. Throughout the year, we held
approximately 120 inclusion-focused activities, all driven by associates to strengthen engagement and
collaboration. Also, in keeping with our pursuit for excellence, associates throughout the Company
contributed suggestions to drive efficiencies in our production lines. Building on this momentum, we
launched a formal Direct Labor Continuous Improvement program that recognizes and rewards frontline
workers for their impactful suggestions.
We have a clear vision, compelling strategy, strong values, and incredibly talented associates. As I look
ahead, I remain confident in our strategy, our associates, and our ability to create a premium valuation
for our stockholders as we enhance the lives of patients worldwide by being our customers’ partner of
choice for innovative technologies and services.
Thank you for your partnership along our journey and continued ownership in Integer.
Joseph W. Dziedzic
President & Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM 10-K
_____________________________________
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended December 31, 2024
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 1-16137
_____________________________________
INTEGER HOLDINGS CORPORATION
(Exact name of Registrant as specified in its charter)
_____________________________________
Delaware
16-1531026
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
5830 Granite Parkway, Suite 1150
Plano, Texas
75024
(Address of principal executive offices)
(Zip Code)
(214) 618-5243
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, Par Value $0.001 Per Share
ITGR
New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the 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 registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report.
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b).
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of common stock held by non-affiliates as of June 28, 2024 (the last business day of the registrant’s
most recently completed second fiscal quarter), based on the last sale price of $115.79, as reported on the New York Stock Exchange
on that date was approximately $3.828 billion. Solely for the purpose of this calculation, shares held by directors and officers and 10
percent stockholders of the registrant have been excluded. This exclusion should not be deemed a determination or an admission that
these individuals are, in fact, affiliates of the registrant.
Shares of common stock outstanding as of February 14, 2025: 33,617,354
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following document are specifically incorporated by reference into the indicated parts of this report:
Document
Part
Proxy Statement for the 2025 Annual Meeting of
Stockholders (which shall be filed with the U.S. Securities
and Exchange Commission within 120 days after the end of
the fiscal year to which this report relates)
Part III, Item 10
“Directors, Executive Officers and Corporate Governance”
Part III, Item 11
“Executive Compensation”
Part III, Item 12
“Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters”
Part III, Item 13
“Certain Relationships and Related Transactions, and
Director Independence”
Part III, Item 14
“Principal Accountant Fees and Services”
INTEGER HOLDINGS CORPORATION
ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 2024
TABLE OF CONTENTS
PART I
PAGE
Item 1.
Business .....................................................................................................................................................................
3
Item 1A. Risk Factors ...............................................................................................................................................................
16
Item 1B. Unresolved Staff Comments ......................................................................................................................................
30
Item 1C. Cybersecurity .............................................................................................................................................................
30
Item 2.
Properties ...................................................................................................................................................................
32
Item 3.
Legal Proceedings ......................................................................................................................................................
32
Item 4.
Mine Safety Disclosures ............................................................................................................................................
32
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
33
Item 6.
[Reserved] ..................................................................................................................................................................
33
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ....................................
34
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ...................................................................................
52
Item 8.
Financial Statements and Supplementary Data ..........................................................................................................
53
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...................................
107
Item 9A. Controls and Procedures ............................................................................................................................................
107
Item 9B. Other Information ......................................................................................................................................................
107
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections .......................................................................
107
PART III
Item 10.
Directors, Executive Officers and Corporate Governance .........................................................................................
108
Item 11.
Executive Compensation ...........................................................................................................................................
108
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..................
108
Item 13.
Certain Relationships and Related Transactions, and Director Independence ..........................................................
108
Item 14.
Principal Accountant Fees and Services ....................................................................................................................
108
PART IV
Item 15.
Exhibits and Financial Statement Schedules .............................................................................................................
109
Item 16.
Form 10-K Summary .................................................................................................................................................
112
Signatures ...................................................................................................................................................................
113
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PART I
ITEM 1.
BUSINESS
OVERVIEW
Integer Holdings Corporation, headquartered in Plano, Texas, is among the world’s largest medical device contract development
and manufacturing organizations in the world, serving the cardiac rhythm management, neuromodulation, and cardio and vascular
markets. As a strategic partner of choice to medical device companies and original equipment manufacturers (“OEMs”), we are
committed to enhancing the lives of patients worldwide by providing innovative, high-quality products and solutions. Our brands
include Greatbatch Medical® and Lake Region Medical®. Our primary customers include large, multi-national OEMs and their
affiliated subsidiaries. When used in this report, the terms “Integer,” “we,” “us,” “our” and the “Company” mean Integer
Holdings Corporation and its subsidiaries.
Over the past several years, Integer has evolved our Portfolio Strategy to focus on higher growth medtech markets where we
possess differentiated capabilities. We exited our legacy non-Medical reportable operating segment, Electrochem, in the fourth
quarter of 2024 and expect to complete the exit of our Portable Medical business, announced in early 2022, by the end of 2026.
Integer continues to execute a tuck-in acquisition strategy that has added capabilities, leading brands and complementary
technologies, increased customer penetration, and enhanced scale in our targeted growth markets. These markets are attractive to
Integer because they have strong, long-term growth characteristics, and allow us to leverage our existing expertise in process
technology and systems engineering to provide comprehensive solutions to our customers. Integer is now a pure-play medical
technology company focused on Cardio & Vascular, Cardiac Rhythm Management and Neuromodulation markets.
During the fourth quarter of 2024, we began referring to our “Advanced Surgical, Orthopedics & Portable Medical” product line
as the “Other Markets” product line, to better capture the evolving nature of our products and ongoing strategic focus. The name
change has no impact on financial information previously reported.
Our Acquisitions and Divestitures
On October 31, 2024, we completed the sale of our wholly-owned subsidiary Electrochem Solutions, Inc. (“Electrochem”), which
focused on nonmedical applications for the energy, military and environmental sectors. As a result, we classified the results of
operations of Electrochem as discontinued operations in the Consolidated Statements of Operations for all periods presented and
classified the related assets and liabilities associated with the discontinued operations as held for sale on the Consolidated Balance
Sheets as of December 31, 2023. All results and information are presented as continuing operations and exclude the Electrochem
business unless otherwise noted or identified specifically as discontinued operations.
Refer to Note 3, “Discontinued Operations” of the Notes to Consolidated Financial Statements contained in Item 8, “Financial
Statements and Supplementary Data,” of this report for additional information about the divestiture of Electrochem.
On January 5, 2024, we acquired 100% of the outstanding capital stock of Pulse Technologies, Inc. (“Pulse”), a technology,
engineering and contract manufacturing company focused on complex micro machining of medical device components for high
growth structural heart, heart pump, electrophysiology, leadless pacing, and neuromodulation markets. Pulse also provides
proprietary advanced technologies, including hierarchical surface restructuring (HSRTM), scratch-free surface finishes, and
titanium nitride coatings. The acquisition of Pulse further increased our end-to-end development capabilities and manufacturing
footprint in targeted growth markets and provides customers with expanded capabilities, capacity and resources to accelerate the
time to market for customer products.
Effective as of October 1, 2023, we acquired substantially all of the assets and assumed certain liabilities of InNeuroCo, Inc.
(“InNeuroCo”), a privately-held company based in Florida. A recognized leader in neurovascular catheter innovation with strong
development and manufacturing capabilities, InNeuroCo’s expertise and highly differentiated neurovascular catheter innovation
complements our existing capabilities and market focus, while further increasing our ability to provide enhanced solutions to our
customers in the neurovascular catheter space.
On April 6, 2022, we acquired 100% of the outstanding equity interests of Connemara Biomedical Holdings Teoranta, including
its operating subsidiaries Aran Biomedical and Proxy Biomedical (collectively “Aran”). A recognized leader in proprietary
medical textiles, high precision biomaterial coverings and coatings as well as advanced metal and polymer braiding, Aran delivers
development and manufacturing solutions for implantable medical devices. Consistent with our strategy, the acquisition of Aran
further increased our ability to offer complete solutions for complex delivery and therapeutic devices in high growth
cardiovascular markets such as structural heart, neurovascular, peripheral vascular, and endovascular as well as general surgery.
Refer to Note 2, “Business Acquisitions,” of the Notes to Consolidated Financial Statements contained in Item 8, “Financial
Statements and Supplementary Data,” of this report for additional information about the Pulse, InNeuroCo and Aran acquisitions.
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REPORTING SEGMENT AND PRODUCT LINES
We operate our business in one reportable segment and derive our revenues from three principal product lines: Cardio &
Vascular, Cardiac Rhythm Management & Neuromodulation and Other Markets. Prior to the divestiture of Electrochem, we
operated in two reportable segments: Medical and Non-Medical. The divestiture of Electrochem, which was completed on
October 31, 2024, also represented a sale of the Non-Medical segment as the Electrochem business constituted substantially all of
the assets and liabilities and operations reported in the Non-Medical segment. Refer to Note 3 “Discontinued Operations,” of the
Notes to Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” of this report
for additional information about the divestiture of Electrochem.
Cardio & Vascular
The Cardio & Vascular product line leverages a global footprint to produce a full range of components, subassemblies, and
finished devices used in interventional cardiology, structural heart, heart failure, peripheral vascular, neurovascular, interventional
oncology, electrophysiology, vascular access, infusion therapy, hemodialysis, urology, and gastroenterology procedures.
The following are the principal products and services offered by our Cardio & Vascular product line:
Interventional Cardiology. Our interventional cardiology portfolio is focused primarily on the design, development and
manufacture of catheter and wire-based technologies intended to diagnose and treat cardiac disease. Key products and
capabilities span a full suite of devices including coronary stents, balloon catheters, atherectomy devices, imaging and sensing
devices, chronic total occlusion solutions, percutaneous transluminal coronary angioplasty and access guidewires, introducer
sheaths, and vascular closure devices. Core areas of technical expertise include laser-cut hypotubes, catheter shafts (extrusion,
filmcast, and reflow), integrated hub assemblies, pad printing, tip shaping, polytetrafluoroethylene (PTFE) coating, complex
machining, and sensor integration.
Structural Heart and Heart Failure. Structural heart and heart failure products include those used by cardiologists,
echocardiographers, cardiac surgeons, and heart failure specialists to treat diseases or defects of the heart, such as valvular
diseases and congenital defects. Integer provides components, subassemblies, and finished devices to these markets leveraging a
wide range of technologies and capabilities. These include laser-cut and machined components, complex braided meshes,
guidewires, introducer sheaths, steerable sheaths and delivery catheters, and implants used in transcatheter aortic valve
replacement, balloon aortic valvuloplasty, transcatheter mitral valve repair and replacement, tricuspid mitral valve repair and
replacement, atrial and defect closure, left ventricular assist, and shunt procedures.
Peripheral Vascular, Neurovascular, and Interventional Oncology. Our peripheral vascular, neurovascular, and interventional
oncology portfolio is primarily focused on the design, development and manufacture of devices used during the treatment of
peripheral artery disease, transcatheter embolization and occlusion, aortic aneurysm repair, and neurovascular stroke treatment.
Our broad portfolio of devices, capabilities and technology platforms provides our customers with cost effective, high quality
solutions ranging from device components to complex assemblies to finished devices such as regulatory approved guidewires and
introducers.
Integer’s broad technology and capability portfolio within the peripheral vascular markets enables us to address the full spectrum
of devices needed in the diagnoses and treatment of peripheral vascular disease. In the peripheral artery disease markets, our
technologies are focused on the manufacture and development of interventional guidewires, support catheters, introducers and
guiding sheaths, balloon catheters, self-expanding stents and stent grafts as well as embolic protection devices. Our neurovascular
technology portfolio encompasses micro guidewires, micro and access catheters, aspiration catheters, stent retrievers,
embolization coils, as well as flow diverters. In the interventional oncology market, we offer customers guidewires and
microcatheters designed to enable the effective delivery of embolic agents.
Electrophysiology. Electrophysiology products include devices used by electrophysiologists and interventional cardiologists for
the treatment of cardiac arrythmias, such as atrial fibrillation. Integer primarily produces devices used for treatment of atrial
fibrillation, the most prevalent cardiac arrythmia. These devices include sheaths and needles for transseptal access, diagnostic and
mapping catheters to record and map the arrythmia sources, and ablation catheters to create lesions for blocking the arrythmia
signals. Integer has the technical capabilities and expertise to provide the full spectrum of products from components to finished
devices. Typical components include polyimide tubing, electrode rings, platinum tips and fine wires. Sub-assemblies include
electrode ring and wire assemblies, steerable handle assemblies, and spline and basket assemblies. Finished devices include
steerable transseptal sheaths, diagnostic catheters and ablation catheters.
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Vascular Access, Infusion Therapy and Hemodialysis. Our solutions in these markets are focused on vessel access, treatment
and device placement for medication and fluid delivery in patients with severe conditions requiring repeated vessel access. We
design and manufacture a wide range of vascular access guidewires, stylets, catheters, valved / non-valved peelable and micro
introducers. Our portfolio of market-ready vascular access guidewires and introducers kits enables a range of venous and arterial
access applications, including transradial access. Additionally, we support customers with custom introducer sheaths and kit
solutions leveraging our deep expertise in thin-wall sheath design, hydrophilic coatings and guidewire manufacturing (including
poly-jacketed, mandrel, and nitinol core guidewire constructions).
Non-vascular Markets: Within the Cardio & Vascular product line, we also manage non-vascular markets for which we have
expertise and offer a broad range of products, technologies and capabilities. Those markets include:
Urology. Our main focus is in endourology for which we develop and manufacture finished devices and components for access
and interventional devices such as guidewires, ureteral access sheaths, dilation devices, retrieval devices, ureteral stents, biopsy
forceps, and endoscopes.
Gastroenterology. Our comprehensive range of technologies and capabilities enable us to support our customers’ needs with a
broad variety of products such as guidewires, dilatation devices, retrieval devices, snares, wire-formed and polymer stents, stent
delivery systems, RF ablation devices, and endoscopes.
Cardiac Rhythm Management & Neuromodulation
The Cardiac Rhythm Management & Neuromodulation product line offers design, development and manufacturing capabilities
for components, sub-assemblies, assemblies, and finished medical device systems. We support a variety of clinical markets, with
an emphasis on the following markets:
Cardiac Rhythm Management. The cardiac rhythm management (“CRM”) market comprises implanted medical devices
(“IMDs”), implanted leads, procedure accessories, as well as external devices that monitor and treat heart rhythm disorders and
heart disease. Examples of CRM products include implantable pacemakers, implantable cardioverter defibrillators (“ICDs”),
insertable cardiac monitors (“ICMs”), implantable cardiac pacing and defibrillation leads, and heart failure therapies such as
ventricular assist devices and cardiac resynchronization devices (“CRT-P” and “CRT-D”). An IMD system generally includes an
implantable pulse generator (“IPG”) and one or more stimulation leads. An IPG is a small battery powered device implanted
under the skin in the chest that can sense and produce electrical pulses through specialized wires called leads. These leads sense
electrical heart signals and carry them back to the IPG which in turn delivers electrical pulses back through the lead to the heart to
deliver therapy.
Our portfolio of technologies and products include components, sub-assemblies, and assemblies for active IPGs, implanted
sensing and stimulation leads, accessories, or external instruments. Our investments in research and development have created
leadership positions in battery, capacitor, and feedthrough technology, including filtered feedthroughs. We are also a supplier of
medical stamped components, and shallow and deep draw casings and assemblies.
Beyond the IPG, Integer’s CRM product line provides lead development and manufacturing solutions including expertise in low-
polarization specialty-coated electrodes and components, and lead and device accessories such as stylets, guidewires, introducers,
and lead adapters. Integer also offers fully designed and manufactured epicardial pacing leads.
Neuromodulation. Similar to the CRM market, the neuromodulation (“Neuro”) market comprises IPGs, implanted leads,
procedure accessories, and external devices, such as battery chargers, trial stimulators and patient controllers. Examples of Neuro
products include implantable spinal cord stimulators for chronic pain, sacral nerve stimulators for incontinence, deep brain
stimulators for movement disorders and other IMDs to treat psychiatric disorders, sleep disorders and hearing loss. The Neuro
market also includes several new emerging applications, such as implanted bioelectronic devices aimed at treating chronic
diseases.
Within the Neuro market, we offer IMD component technologies that have been developed to meet the needs of our customers
including our Xcellion® line of lithium-ion rechargeable batteries, QMR® and CFx non-rechargeable batteries, feedthroughs,
device enclosures, machined components and lead components and sub-assemblies. Additionally, Integer helps OEMs and other
emerging companies with the development and manufacture of complete neuromodulation IMD solutions, including custom IPGs,
programmer systems, battery chargers, patient controllers, fully finished lead systems and accessories from initial development
through commercial quantities.
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Other Markets
We provide a broad range of products and services to other markets such as minimally invasive surgery, general surgery,
orthopedics, and Portable Medical. Other markets are areas where Integer is not strategically focused.
Portable Medical. Our offerings include customized rechargeable batteries and chargers to power medical devices across
multiple clinical markets including patient monitoring, ventilators, portable defibrillators, portable ultrasound and X-Ray
machines.
During 2021, we initiated plans to exit our portable medical market to enhance profitability and reallocate manufacturing capacity
to support growth. Since that time, we have been working closely with impacted customers to support the transition of these
products to other suppliers. Due to quality and regulatory requirements, we expected it would take three to four years to complete
this transition. We currently expect Portable Medical sales to wind down with the final sales and market exit occurring in 2025.
Refer to “Divestiture and Market Exit,” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations,” of this report for additional information.
OTHER FACTORS IMPACTING OUR OPERATIONS
Customers
Our products are designed to provide reliable, long-lasting solutions that meet the evolving requirements and needs of our
customers. The nature and extent of our commercial relationships with each of our customers are different in terms of breadth of
products purchased, product volumes, length of contractual commitment, ordering patterns, inventory management, and selling
prices. Contracts with customers can include rebates and tiered pricing arrangements based on predetermined volume levels, in
which higher volume levels typically have lower pricing, or specific prices are offered to customers in exchange for increased
volume levels and/or longer contract terms. Typically, our contracts specify minimum order quantities and lead times.
Our customers may have inventory management programs, vertical integration plans and/or alternate supply arrangements that
may not be communicated to or shared with us. Additionally, the relative market share among the OEM manufacturers changes
periodically, which may cause customer inventory levels to rebalance to match new demand. Consequently, these and other
factors can significantly impact our sales in any given period. Our customers may initiate field actions with respect to market-
released products. These actions may include product recalls or communications with a significant number of physicians about a
product or labeling issue. The scope of such actions can range from very minor issues affecting a small number of units to more
significant actions.
Our customers include large multi-national medical device OEMs and their subsidiaries. During 2024, three of our customers,
Abbott Laboratories, Boston Scientific and Medtronic were each in excess of 10% of total sales and collectively accounted for
47% of our total sales. We believe that the diversification of our sales among the various subsidiaries and market segments with
those three customers reduces our exposure to negative developments with any one customer. The loss of a significant amount of
business from any large customer or a further consolidation of such customers could have a material adverse effect on our
financial condition and results of operations, as further explained in Item 1A, “Risk Factors,” of this report.
Sales and Marketing
With limited exceptions, we sell our products directly to our customers, including large, multi-national OEMs and their affiliated
subsidiaries. In 2024, approximately 55% of our products sold were shipped to locations in the United States (“U.S.”). Sales
within and outside the U.S. are primarily to customers whose corporate offices are located and headquartered in the U.S.
Information regarding our sales by geographic area is set forth in Note 19, “Segment and Geographic Information,” of the Notes
to Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” of this report.
Although the majority of our customers contract with us to develop custom components and assemblies to fit their product
specifications, we also provide system and device solutions ready for market distribution by OEMs. We have established close
working relationships between our internal program managers and our customers. We market our products and technologies at
industry meetings and trade shows domestically and internationally. We have placed additional emphasis on reaching long-term
agreements with our OEM customers to secure our revenue base and incentivize growth.
Internal account executives support all sales activity and involve engineers and technology professionals in the sales process to
address customer requests across all product lines. For system and device solutions, we partner with our customers’ research,
marketing, and clinical groups to jointly develop technology platforms in alignment with their product roadmaps and therapy
needs.
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We leverage our account executives with support from our engineers to design and sell product solutions into our targeted
markets. Our account executives are trained to assist our customers in selecting appropriate materials and configurations. We
market our products and services through well-defined selling strategies and marketing campaigns that are customized for each of
the industries we target.
Firm backlog orders at December 31, 2024 were approximately $728 million. The majority of the orders outstanding at
December 31, 2024 are expected to be shipped within one year.
Competition
The MDO manufacturing industry has traditionally been highly fragmented amongst several hundred companies, many of which
we believe have limited manufacturing capabilities and limited sales and marketing expertise. We believe that very few
companies offer the scope of manufacturing capabilities and services that we provide to medical device companies; however, we
may compete in the future against other companies that provide broad manufacturing capabilities and related services. We
compete against different companies depending on the type of product or service offered or the geographic area served. We also
face competition from existing and prospective customers that employ in-house capabilities to produce some of the products we
provide.
Our existing or potential competitors include suppliers with different subsets of our manufacturing capabilities, suppliers that
concentrate in niche markets, and suppliers that have, are developing, or may in the future develop, broad manufacturing
capabilities and related services. We compete for new business at all phases of the product life cycle, which includes development
of new products, the redesign of existing products and transfer of mature product lines to outsourced manufacturers. Competitive
advantage is generally based on reputation, quality, delivery, responsiveness, breadth of capabilities, including design and
engineering support, price, customer relationships and increasingly the ability to provide complete supply chain solutions rather
than only producing and providing individual components.
Acquisitions and Investments
One facet of our growth strategy is to acquire additional technology or manufacturing capabilities to expand our product offering
in our key existing growth markets. We expect to continue to engage in business development activities and technology licensing
arrangements to support our growth in these markets.
As our customers grow and consolidate, they seek suppliers who can offer broad product capabilities, manufacturing scale and
facilitate speed to market. Our strategy aligns with enhancing our portfolio from both organic and inorganic means to partner
more broadly with our customers to support their growth. Our inorganic strategy will be primarily focused on strategic “tuck-in”
acquisitions that will supplement our existing product portfolio.
Strategic Overview
We continue to take steps to better align our resources in order to invest to grow our portfolio of products. In addition to our
portfolio strategy, we continue to execute our six key operational strategic imperatives designed to drive excellence in everything
we do:
•
Sales Force Excellence: We align our organizational structure to match product line growth strategies and customer needs.
This alignment and related evolution is about getting more out of the capabilities we already have and maximizing individual
accountability and clarity of ownership, while serving customers more effectively.
•
Market Focused Innovation: We are ensuring we get the most return on our research and development investments. We are
focused on having a clear picture of how we spend our money so we can increase investments to drive future growth.
•
Manufacturing Excellence: The goal is to deliver world-class operational performance in the areas of safety, quality, delivery
and overall efficiency. We want to transition our manufacturing into a competitive advantage through a single, enterprise-
wide manufacturing structure known as the Integer Production System. This system will provide standardized systems and
processes by leveraging best practices and applying them across all of our global sites.
•
Business Process Excellence: We are taking a systematic approach to driving excellence in everything we do by
standardizing, optimizing and ultimately sustaining all of our processes.
•
Leadership Capability: We have a robust plan to make leadership a competitive advantage for us, and as the success rate is
higher with internal hires, we are focusing on finding and developing leaders from within the Company to build critical
capabilities for future success.
•
Performance Excellence: We are raising the bar on associate performance to maximize our impact. This includes aligning key
roles with critical capabilities, positioning the best talent against the biggest work, and putting tools and processes in place to
provide higher financial rewards for top performers, so our top performers can see increased results in pay for increased
results in their performance.
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We believe we are well-positioned within the medical technology and MDO manufacturing market and that there is a robust
pipeline of opportunities to pursue. We have expanded our medical device capabilities and are excited about opportunities to
partner with customers to drive innovation. We believe we have the scale and global presence, supported by world-class
manufacturing and quality capabilities, to capture these opportunities. We are confident in our capabilities as one of the largest
MDO manufacturers, with a long history of successfully integrating companies, driving down costs and growing revenues over
the long-term. Ultimately, our strategic vision is to drive shareholder value by enhancing the lives of patients worldwide by being
our customers’ partner of choice for innovative technologies and services.
Research and Product Development
Our position as a leading developer and manufacturer of medical devices and components is largely the result of our long history
of technological innovation. Our scientists, engineers and technicians focus on developing new products, improving and
enhancing existing products, and expanding the use of our products in new or tangential applications. In addition to our internal
technology and capability development efforts aimed at providing our customers with differentiated solutions, we also engage
outside research institutions for unique technology projects.
We believe our core business is well positioned because our OEM customers leverage our portfolio of intellectual property. We
continue to build a healthy pipeline of diverse medical technology opportunities and provide a new level of industry leading
capabilities and services to our OEM customers across the full range of medical device products and services. We are at the
forefront of innovating technologies and products that help change the face of healthcare, enabling us to provide our customers
with a distinct advantage as they bring complete medical systems and solutions to market. In turn, our customers are able to
accelerate patient access to life enhancing therapies. We offer our customers a comprehensive portfolio comprising the best
technologies, providing a single point of support, and driving optimal outcomes.
Some of the more significant product development opportunities we are pursuing are as follows:
Product Line
Product Development Projects
Cardio & Vascular
Active projects in structural heart delivery systems subassemblies, structural heart delivery
accessories, components for structural heart implants, electrophysiology catheters, accessories and
subassemblies, peripheral vascular catheters and guidewires, neurovascular therapies to prevent
hemorrhagic and ischemic stroke, enhanced access introducers, gastrointestinal scope components,
fractional flow reserve guidewire subassemblies, sensor-enabled guidewires, and oncology
catheters. Technology investments to enable our customer’s catheter, delivery system, introducer,
guidewire, and implant development programs in our core Cardio & Vascular markets.
Cardiac Rhythm
Management &
Neuromodulation
Active projects to develop custom batteries, filtered feedthroughs, high voltage capacitors and
finished device solutions including both leads and IPG systems that reduce the size and cost, while
improving performance, for cardiac and neuromodulation devices.
Patents and Proprietary Technology
Our policy is to protect our intellectual property rights related to our technologies and products, and we rely on a combination of
patents, licenses, trade secrets and know-how to establish and protect our rights. Where appropriate, we apply for U.S. and
foreign patents. We also are a party to license agreements with third parties under which we have obtained, on varying terms,
exclusive or non-exclusive rights to patents held by them. In the aggregate, these intellectual property assets and licenses are of
material importance to our business; however, we believe that no single patent, technology, trademark, intellectual property asset
or license is material in relation to any segment of our business or to our business as a whole. As of December 31, 2024, we
owned 556 U.S. and foreign patents, and have license right to another 159 patents.
Design, development and regulatory aspects of our business also provide competitive advantages, and we require our employees,
consultants and other parties having access to our confidential information to execute confidentiality agreements. These
agreements prohibit disclosure of confidential information to third parties, except in specified circumstances. In the case of
employees and consultants, the agreements generally provide that all confidential information relating to our business is the
exclusive property of Integer.
Manufacturing, Regulatory and Quality Assurance
We leverage our strength as an innovative designer and manufacturer of finished devices and components to the medical device
industry. Our manufacturing and engineering services include: design, testing, component manufacture, and device manufacture.
We also provide regulatory and clinical services including product registration, clinical evaluations, and post-market surveillance
in accordance with the regulatory requirements of the U.S. and European Union (“EU”) as well as other geographies. We have
integrated our proprietary technologies in our own products and those of our customers. Our flexible, high productivity
manufacturing capabilities span sites across the U.S., Mexico, Uruguay, Ireland, Malaysia, and the Dominican Republic.
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Due to the highly regulated nature of the products we produce, we have implemented strong quality systems across all sites which
are supplemented by a corporate quality system that harmonizes the major functions across sites. The quality systems at our sites
are compliant with and certified to various recognized international standards, requirements, and directives. Each site’s quality
system is certified under an applicable International Organization for Standardization (“ISO”) quality system standard, such as
ISO 13485 (Medical device and component sites). This certification requires, among other things, an implemented quality system
that applies (where applicable) to the design and manufacture of components, assemblies and finished medical devices, including
component quality and supplier control. Maintenance of these certifications for each facility requires periodic re-examination
from accredited notified bodies.
Along with ISO 13485, the facilities producing finished medical devices are subject to oversight by national regulations and the
various national regulatory bodies where we do business, including the U.S. Food and Drug Administration (“FDA”), to assure
the conformance of devices and components in the international markets where they are sold. For these facilities, we maintain
FDA registration and compliance with all applicable domestic and international regulations. Compliance with applicable
regulatory requirements is subject to continual internal review and is monitored externally through periodic inspections by
regulatory bodies.
Suppliers and Raw Materials
We purchase some critical raw materials from a limited number of suppliers due to the technically challenging requirements of the
supplied product and/or the lengthy process required to qualify these materials both internally and with our customers. We cannot
quickly establish additional or replacement suppliers for these materials because of these rigid requirements. For these critical raw
materials, we maintain safety stocks and partner with suppliers through contract to help ensure the continuity of supply.
Many of the raw materials that are used in our products are subject to fluctuations in market price. In particular, the prices of
precious metals, such as gold or platinum, have historically fluctuated, and the prices that we pay for these materials, and, in some
cases, their availability, are dependent upon general market conditions. In most cases, we have pass-through pricing arrangements
with our customers that purchase components containing precious metals or have established firm-pricing agreements with our
suppliers that are designed to minimize our exposure to market fluctuations.
We utilize competitive pricing methods such as bulk purchases, precious metal forward buys, blanket orders, and long-term
contracts to secure supply.
As discussed more fully in Item 1A, “Risk Factors,” of this report, our business depends on a continuous supply of raw materials
from a limited number of suppliers. If an unforeseen interruption of supply were to occur, we may be unable to obtain substitute
sources for these raw materials on a timely basis, on terms acceptable to us or at all, which could harm our ability to manufacture
our products profitably or on time. Additionally, we may be unable to quickly establish additional or replacement suppliers for
these materials as qualifying an alternative material or supplier may take an extended amount of time and, in some instances, there
may be a limited number of worldwide suppliers.
Working Capital Practices
Our goal is to carry sufficient levels of inventory to ensure that we have adequate supply of raw materials from suppliers and meet
the product delivery needs of our customers. We also provide and receive payment terms to customers and from suppliers in the
normal course of business, and utilize factoring and supplier financing arrangements. It will continue to be a priority for us to
maintain appropriate working capital levels while improving our operating cash flow and managing our leverage ratio.
Government Regulation
Medical Device Regulation
Integer develops, manufactures, markets and sells products in multiple countries throughout the world and is therefore subject to
regulation by numerous agencies and legislative bodies, including the FDA, European Medicines Agency, Health Product
Regulatory Agency, Health Canada, Therapeutics Goods Administration and other comparable foreign counterparts. These
regulatory requirements subject our products and our business to numerous risks that are specifically discussed within “Legal and
Compliance Risks” under Item 1A, “Risk Factors,” of this report. A summary of critical aspects of our regulatory environment is
included below.
In the U.S., these regulations are enacted by the Federal Food, Drug and Cosmetic Act and its subsequent amendments, and the
regulations issued or proposed thereunder.
The FDA’s Quality System Regulation sets forth quality requirements for our sites that includes product design and
manufacturing processes, requires the maintenance of certain records, and provides for on-site inspection of our facilities and
periodic review by the FDA. The ability to commercially market our non-exempt products in the U.S. is granted by the FDA
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under procedures referred to as 510(k) pre-market notification or pre-market approval (“PMA”). These processes require us to
obtain FDA approval or authorization before marketing the device.
The FDA classifies medical devices based on the risks associated with use of the device. Devices are classified into one of three
categories - Class I, Class II, or Class III. Class I devices are deemed to be low risk and are therefore subject to the least
regulatory controls, referred to as General Controls. Class II devices are higher risk devices than Class I and require greater
regulatory controls that generally include General Controls combined with Special Controls. Special Controls define the specific
risks to health along with an optional means for addressing those risks. Class III devices are generally the highest risk devices and
are therefore subject to the highest level of regulatory control, generally requiring a PMA by the FDA before they are marketed
and continued controls in the form of amendments or supplements which require approval prior to making certain product or
process changes.
The member countries of the EU have a single set of requirements that apply to all member countries and medical products. The
EU is in the process of replacing its regulatory requirements from the European Medical Device Directives (“MDD”) and Active
Implantable Medical Device Directive (“AIMDD”) to the European Medical Device Regulation (“EU-MDR”). The EU MDR
became effective in May 2021, resulting in additional premarket and post-market requirements which must be in place by the
timeline associated with the class of the device (Class III devices: by the end of 2027; Class III custom-made implantable devices:
by May 26, 2026; Some Class IIb implantable devices: by the end of 2027; The remaining Class II devices: by the end of 2028;
Unique Device Identification to be included on Class I devices by May 26, 2025). These directives require, and the EU-MDR
requires, companies that wish to manufacture and distribute medical devices in the EU to obtain a CE Mark for those products.
The CE Mark indicates the product has met minimum standards of performance, essential requirements, safety conformity
assessment and quality. Companies must work with an EU recognized Notified Body to gain approval for the product and
manufacturing site before obtaining free movement of products throughout the member countries. In Europe, our devices are
considered Class I, Class IIa, or Class III, under MDD or AIMDD and will be in Class I, Class IIa or Class III under the EU-
MDR.
In addition to the U.S. and EU, we have approval to manufacture or market our products in numerous other countries and
therefore are subject to those countries’ regulations affecting, among other things, product standards, sterilization, packaging,
labeling, and import requirements. We are also subject to on-site inspection by independent bodies with the authority to issue or
not issue certifications we require to sell products in certain countries. Many of the regulations applicable to our devices and
products in these countries are similar to those of the U.S. or EU; however, others vary widely, ranging from simple product
registrations to detailed submissions.
We believe that the procedures we use for quality control, development, testing, manufacturing, labeling, marketing and
distribution of our medical devices conform to the requirements of all pertinent regulations.
Environmental Health and Safety Laws
We are subject to direct governmental regulation, including the laws and regulations generally applicable to all businesses in the
jurisdictions in which we operate. We are subject to federal, state and local environmental laws and regulations governing the
emission, discharge, use, storage and disposal of hazardous materials and the remediation of contamination associated with the
release of these materials at our facilities and at off-site disposal locations. Our manufacturing and research, development and
engineering (“RD&E”) activities may involve the controlled use of small amounts of hazardous materials. Liabilities associated
with hazardous material releases arise principally under the Federal Comprehensive Environmental Response, Compensation and
Liability Act and analogous state laws that impose strict, joint and several liability on owners and operators of contaminated
facilities and parties that arrange for the offsite disposal of hazardous materials. We are not aware of any material noncompliance
with the environmental laws currently applicable to our business and we are not subject to any material claim for liability with
respect to contamination at any of our facilities or any offsite location. We may have environmental liability associated with
historic operations as disclosed in Note 14, “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements
contained in Item 8, “Financial Statements and Supplementary Data,” of this report. We may also become subject to
environmental liabilities in the future as a result of other historic or current operations.
Conflict Minerals and Supply Chain
We are subject to Securities and Exchange Commission (“SEC”) rules adopted pursuant to the Dodd-Frank Wall Street Reform
and Consumer Protection Act concerning “conflict minerals” (generally tin, tantalum, tungsten and gold) and similar rules
adopted by the EU. Certain of these conflict minerals are used in the manufacture of our products. These rules require us to
perform an inquiry of all suppliers regarding the country of origin for materials or components containing conflict minerals
necessary to the production or functionality of our products. If any such conflict minerals originated in the Democratic Republic
of the Congo or adjoining countries (the “DRC region”), we must undertake due diligence efforts to ascertain whether such
minerals financed or benefited armed groups in the DRC region. Since our supply chain is complex, our ongoing compliance with
these rules could affect the pricing, sourcing and availability of conflict minerals used in the manufacture of our products.
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We are also subject to disclosure requirements regarding abusive labor practices in portions of our supply chain under the
California Transparency in Supply Chains Act and the UK Modern Slavery Act.
Other Laws and Regulations
Our sales and marketing practices are subject to regulation by the U.S. Department of Health and Human Services pursuant to
federal anti-kickback laws, and are also subject to similar state laws.
Human Capital
Our Board of Directors and the executive team put significant focus on our human capital resources, as we strive to build
leadership capability and create a diverse, inclusive work environment that inspires excellence. This cultural framework
recognizes the value of individuals as critical to Integer’s operational strategy. As of December 31, 2024, Integer employed
approximately 11,000 associates in addition to a contingent workforce of approximately 500 to assist with various projects and
service functions and address peaks in staff requirements. As of December 31, 2024, our workforce is distributed as follows:
•
41% in the U.S.;
•
27% in Mexico;
•
16% in Ireland;
•
9% in the Dominican Republic;
•
4% in Uruguay;
•
3% in Malaysia; and
•
less than 1% combined in China and Switzerland.
Associate Management and Development
Leaders at Integer are responsible for managing and developing the talent of their associates. To facilitate leaders’ efforts, we rely
on a “Talent Cycle” framework, which is a holistic, integrated approach for meeting the human capital needs of Integer. The
Talent Cycle (i) defines the major categories of leadership responsibilities in alignment with the employment lifecycle and (ii)
prioritizes programs and resources to ensure these responsibilities are executed consistently. Stages of the Talent Cycle include:
•
Planning for current and future capabilities
•
Acquiring the critical talent needed to run our business
•
Engaging our associates to motivate and retain them
•
Differentiating our talent at all levels to foster a performance culture
•
Developing our talent to achieve performance excellence
•
Building leadership capability and promoting associates who have demonstrated strong leadership capability
Developing our talent is one of the most critical stages in the Talent Cycle and an ongoing focus at Integer. We have defined a
model of core skills and competencies to guide associates in their development planning, and we encourage associates to actively
focus on their own development though individual development plans, designed to help each associate be more effective in their
current role and to prepare for their next role. Additionally, we regularly conduct talent reviews and succession planning to
identify and develop our top leadership talent. Finally, all associates participate in our performance management process, which
involves both ongoing feedback and a formal performance evaluation at year-end.
Leadership Development
Our success as a company is tied to the effectiveness of our leaders in setting direction, aligning resources and engaging our
workforce in accomplishing our strategic goals. To that end we have built a foundation of leadership development resources and
programs to enhance our leaders’ capabilities. This includes leadership competencies, feedback tools, and various online and
virtual programs aligned to our talent programs and leadership competencies.
Competitive Pay/Benefits and Gender Equity
Our total rewards program is designed to attract, retain and motivate associates to contribute to Integer’s success, and includes
market-competitive elements reflective of the geographies in which we operate. We incorporate many factors into associate pay
decisions, including market comparisons of compensation and benefits for similar roles, individual associate skills and experience
in their role, individual performance annually and over multiple years, and relative contributions to the Company’s short- and
long-term success. Reflective of our commitment to diverse representation at Integer, we have analyzed the compensation of our
senior leadership team and believe there is no pay gap between genders.
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Inclusion and Non-Discrimination
Through our values and Code of Conduct, we strive to create a culture that unifies and embraces the uniqueness that each
associate brings to Integer, which we believe positions us for long-term success. We are committed to creating a better, more
inclusive company in which all of us accept, respect and value one another’s individual differences, encouraging different
perspectives and ideas that improve team synergy and communication. We seek to instill an inclusive mindset in our leaders and
associates and foster an inclusive work environment, so the Company can seek to realize the full value of its workforce. The
Company has established and maintains six employee resource groups, which are voluntary, employee-led groups of associates
who join based on common interests, backgrounds or demographic factors.
As part of our management approach and culture of promoting, protecting and respecting all associates, we continue to encourage
a workplace free from discrimination or unlawful harassment. We continue to achieve our goal of 100% of associates globally
completing annual Code of Conduct and Anti-Harassment, Non-Discrimination and Anti-Retaliation training. Training is
conducted in multiple languages, including English, Spanish and Malay, covering all legal and ethical requirements, and is
provided when onboarding all associates hired at Integer and conducted annually thereafter. In addition, all Board members and
professional and management associates are required to annually review and certify their understanding of, and agreement to
comply with, our Code of Conduct.
Seasonality
Our business is generally not seasonal in nature. However, since most of our customers are large OEM businesses, our sales are
influenced by the inventory levels they carry, which can cause shifts in our sales volume as their inventories fluctuate.
Available Information
Our Internet address is www.integer.net. We also make available free of charge through our website our annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably
practicable after we electronically file those reports with, or furnish them to, the SEC. The information contained on our website
is not incorporated by reference in this annual report on Form 10-K and should not be considered a part of this report. The SEC
maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including the
Company, that file electronically with the SEC. The public can obtain any documents that we file with the SEC at www.sec.gov.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Information concerning our executive officers is presented below as of February 20, 2025. The officers’ terms of office run from
year to year until the first meeting of the Board of Directors occurring immediately following our Annual Meeting of
Stockholders, and until their successors are elected and qualified, except in the case of earlier death, retirement, resignation or
removal.
Joseph W. Dziedzic, age 56, is President and Chief Executive Officer of the Company and a member of our Board of Directors.
He assumed that role on July 16, 2017 following his appointment as interim President & Chief Executive Officer on March 27,
2017. Mr. Dziedzic was the Executive Vice President and Chief Financial Officer of The Brink’s Company from 2009 to 2016,
and prior to joining The Brink’s Company in 2009, he had a 20-year career with General Electric.
Margaret Carthy, age 61, is Executive Vice President, Quality and Regulatory Affairs. Ms. Carthy was promoted to her current
position in January 2024 from Senior Vice President, Quality and Regulatory Affairs, which position she had held since 2022.
During her 20 year career with Integer, Margaret has served in a variety of quality and regulatory roles at the plant and corporate
levels, including Vice President of Quality and Regulatory for the Cardio & Vascular (C&V) product category from 2016 to 2022.
Prior to joining our Company, Ms. Carthy was a Quality & Regulatory Leader for the European Region at Sola International, now
Carl Zeiss.
John Harris, age 65, is Executive Vice President, Global Operations and Manufacturing Strategy. Mr. Harris was promoted to his
current position in January 2024 from Senior Vice President, Operations for the Cardio & Vascular product line, which position
he had held since 2022. During his 25-year career with Integer, John has held numerous executive roles, including also serving as
Vice President of Operations for Cardio & Vascular product line from 2018 to 2022.
Payman Khales, age 55, is President, Cardio & Vascular, and joined the Company on February 20, 2018. Mr. Khales is also the
leader for the Integer Market Focused Innovation strategic imperative. Prior to joining Integer, Mr. Khales was the President of
the Environmental Technologies Segment at CECO Environmental Company from May 2014 through July 2017. Previously, he
was employed by Ingersoll Rand Company where he held a variety of different roles in the United States and Canada, including
Vice President Product Management for the global Power Tools division from January 2012 through April 2014, and Vice
President Strategic Accounts & Channels from February 2010 through December 2011.
McAlister C. Marshall, II, age 55, is Senior Vice President, General Counsel, Chief Ethics and Compliance Officer and Corporate
Secretary. He joined the Company in September 2021 on an interim basis and assumed his current role on a permanent basis in
January 2022. Mr. Marshall was previously the Senior Vice President, General Counsel and Chief Administrative Officer at The
Brink’s Company from July 2016 until December 2018, after serving as Vice President and General Counsel beginning in
September 2008. Mr. Marshall continued to serve as a consultant for The Brink’s Company until December 2019.
Andrew Senn, age 43, is Senior Vice President, Strategy, Business Development and Investor Relations. Mr. Senn was promoted
to the position of Senior Vice President, Strategy and Business Development in January 2022 and assumed the Investor Relations
responsibilities in February 2023. From October 2015 to January 2022, Mr. Senn served as Vice President in various roles
responsible for research & development, marketing and commercial sales. From January 2013 until the Company’s acquisition of
Lake Region Medical in October 2015, he was responsible for research & development and program management for Lake
Region Medical. Prior to joining Lake Region Medical, Mr. Senn served as Director of Program Management responsible for
electrophysiology systems at St. Jude Medical from June 2009 until January 2013. From June 2003 to June 2009, Mr. Senn
served in various engineering and program management roles at Lake Region Medical.
Diron Smith, age 52, is Executive Vice President and Chief Financial Officer. He assumed that role in October 2023 following
his appointment as interim Chief Financial Officer in May 2023. Mr. Smith joined the Company in August of 2021 as Vice
President, Financial Planning & Analysis. Prior to joining the Company, he served in various finance roles at Tiffany & Co.,
including Vice President, Finance Officer, Americas from January 2021 to August 2021, Vice President, Finance Officer, Global
Supply & Distribution from October 2017 to January 2021, and Senior Director Finance, Global Jewelry Supply from March
2016 to October 2017. Prior to joining Tiffany & Co., Mr. Smith worked in finance at General Electric for 15 years and in
assurance services at KPMG for five years.
Jim Stephens, age 51, is President, Cardiac Rhythm Management & Neuromodulation. He joined the Company in May 2023.
Prior to joining Integer, Mr. Stephens served as President and Chief Executive Officer of HDT Global, a global manufacturer of
highly engineered infrastructure solutions from 2020 until its sale in July 2021. Mr. Stephens also served for approximately 18
years in various leadership positions at Parker Hannifin Corporation, including from 2017 to 2020 as General Manager of its
Stratoflex Products Division and from 2015 to 2017 as General Manager of its Aircraft Wheel & Brake Division. Earlier in his
career, he held positions at domnick hunter (UK) and Ceridian Corporation.
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Kirk Thor, age 61, is Executive Vice President and Chief Human Resources Officer. From 2013 until joining the Company in
January 2018, Mr. Thor was Vice President for Global Talent Management & Organization Effectiveness at Flowserve
Corporation. From 2007 to 2012, he served as Vice President for Talent Management & Organization Development at JC
Penney. In February 2018, he assumed leadership for the Integer Culture strategic imperative.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
Some statements contained in this report and other written and oral statements made from time to time by us and our
representatives are not statements of historical or current fact. As such, they are “forward-looking statements” within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, and are
subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. We have based these
forward-looking statements on our current expectations, and these statements are subject to known and unknown risks,
uncertainties and assumptions. Forward-looking statements include, but are not limited to, statements relating to:
•
supply chain pressures on the Company and our business;
•
future development and expected growth of our business and industry;
•
our ability to execute our business model and our business strategy;
•
the timing for final sales of our Portable Medical products;
•
having available sufficient cash and borrowing capacity to meet working capital, debt service and capital
expenditure requirements for the next twelve months; and
•
projected contractual debt service obligations.
You can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “intends,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “forecast,” “outlook,” “assume,” “potential” or “continue”
or variations or the negative counterparts of these terms or other comparable terminology. These statements are only predictions
and are no guarantee of future performance, and investors should not place undue reliance on forward-looking statements as
predictive of future results. Actual events or results may differ materially from those stated or implied by these forward-looking
statements. In evaluating these statements and our prospects, you should carefully consider the factors set forth below. All
forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these
cautionary factors and to others contained throughout this report. We disclaim any obligation to publicly update or revise the
forward-looking statements made in this report as a result of new information, future events or otherwise, except as required by
law.
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While it is not possible to create a comprehensive list of all factors that may cause actual results to differ from results expressed or
implied by our forward-looking statements or that may affect our future results, some of these factors include, but in no way are
limited to, the following:
•
operational risks, such as our dependence upon a limited number of customers; pricing pressures and contractual pricing
restraints we face from customers; our reliance on third-party suppliers for raw materials, key products and
subcomponents; interruptions in our manufacturing operations; our ability to attract, train and retain a sufficient number
of qualified associates to maintain and grow our business; the potential for harm to our reputation and competitive
advantage caused by quality problems related to our products; our dependence upon our information technology systems
and our ability to prevent cyber-attacks and other failures; global climate change and the emphasis on ESG (as defined
below) matters by various stakeholders; our dependence upon our senior management team and key technical personnel;
and consolidation in the healthcare industry resulting in greater competition;
•
strategic risks, such as the intense competition we face and our ability to successfully market our products; our ability to
respond to changes in technology; our ability to develop new products and expand into new geographic and product
markets; and our ability to successfully identify, make and integrate acquisitions to expand and develop our business in
accordance with expectations;
•
financial and indebtedness risks, such as our ability to accurately forecast future performance based on operating results
that often fluctuate; our significant amount of outstanding indebtedness and our ability to remain in compliance with
financial and other covenants under the credit agreement governing our senior secured credit facilities (“Senior Secured
Credit Facilities”); economic and credit market uncertainties that could interrupt our access to capital markets,
borrowings or financial transactions; the conditional conversion feature of the 2028 Convertible Notes (as defined below)
adversely impacting our liquidity; the conversion of our 2028 Convertible Notes, diluting ownership interests of existing
holders of our common stock; the counterparty risk associated with our capped call transaction; the counter financial and
market risks related to our international operations and sales; our complex international tax profile; and our ability to
realize the full value of our intangible assets;
•
legal and compliance risks, such as regulatory issues resulting from product complaints, recalls or regulatory audits; the
potential of becoming subject to product liability or intellectual property claims; our ability to protect our intellectual
property and proprietary rights; our ability to comply with customer-driven policies and third-party standards or
certification requirements; our ability to obtain and/or retain necessary licenses from third parties for new technologies;
our ability and the cost to comply with environmental regulations; legal and regulatory risks from our international
operations; the fact that the healthcare industry is highly regulated and subject to various regulatory changes; and our
business being indirectly subject to healthcare industry cost containment measures that could result in reduced sales of
our products; and
•
other risks and uncertainties that arise from time to time and are described in Item 1A, “Risk Factors,” and Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report.
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ITEM 1A. RISK FACTORS
Our business faces many risks, and you should carefully consider the following risk factors, together with all of the other
information included in this report, including the financial statements and related notes contained in Item 8, “Financial Statements
and Supplementary Data,” and the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” of this report, when deciding to invest in us. Any of the risks discussed below, or elsewhere in this report
or in our other SEC filings, could have a material impact on our business, financial condition or results of operations. Additional
risks not currently known to us or that we currently consider immaterial also may materially adversely affect our business,
financial condition or results of operations in the future. As a result, the trading price of our common stock could decline and you
could lose all or part of your investment in our common stock.
Operational Risks
We depend heavily on a limited number of customers, and if we lose any of them or they reduce their business with us, we
would lose a substantial portion of our revenues.
In 2024, our top three customers collectively accounted for approximately 47% of our revenues. Reductions in demand from
these customers has negatively impacted our results of operations during prior fiscal years and may impact our future results of
operations if material reductions in demand from any of these customers recur. We do not have long-term supply agreements with
all of our customers, and our customers may not agree to renew or extend our supply agreements with them. Furthermore, many
of our supply agreements do not contain minimum purchase level requirements and therefore there is no guaranteed source of
revenue that we can depend upon under these agreements. In addition, we are dependent on the continued growth, viability and
financial stability of these customers. The markets in which these customers operate are subject to rapid technological change,
vigorous competition and short product life cycles. As a result, when these customers are adversely affected by these factors, we
have in the past been and may in the future be similarly adversely affected. The loss of any large customer, a material reduction
of business with that customer, or a delay or failure by that customer to make payments due to us, would harm our business,
financial condition and results of operations.
We are subject to pricing pressures from customers and contractual pricing constraints, which could harm our operating
results and financial condition.
Given the highly competitive industry in which we operate, we have reduced prices for some of our customers in recent years, and
we expect customer pressure for continued price reductions in future periods. These additional price reductions, if they were to
occur, may cause our operating results and financial condition to suffer.
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We rely on third-party suppliers for raw materials, key products and subcomponents. Unavailability of, or increased
prices for, these materials, products or subcomponents could adversely affect our results of operations and financial
condition.
Our business depends on a continuous supply of raw materials. The principal raw materials used in our business include platinum,
stainless steel, gold, titanium, nitinol, lithium, palladium, iridium, tantalum, nickel cobalt, ruthenium, gallium trichloride,
vanadium oxide, carbon monoflouride and plastics. The supply and price of raw materials may be susceptible to fluctuations due
to transportation issues, government regulations, price controls, wars in Ukraine and the Middle East, increased tensions in Asia
relating to China and Taiwan, changing geopolitical conditions, including any political instability resulting from war, terrorism,
insurrections and foreign civil unrest, tariffs, worldwide economic conditions or other unforeseen circumstances. Increasing
global demand for raw materials has caused prices of certain materials to increase. Significant increases in the cost of raw
materials that cannot be recovered through increases in the prices of our products could adversely affect our results of operations.
There can be no assurance that our customers will support or approve higher prices or that price increases and productivity gains
or procurement deflation projects or savings will fully offset any raw material cost increases in the future. In addition, there are a
limited number of worldwide suppliers of several raw materials needed to manufacture our products. For reasons of quality, cost
effectiveness or availability, we obtain some raw materials from a single supplier. Although we work closely with our suppliers to
seek to ensure continuity of supply, we may not be able to continue to procure raw materials critical to our business in sufficient
quantities or at all or to procure them at acceptable price levels. A disruption or delay in deliveries from our suppliers, price
increases or decreased availability of raw materials could have an adverse effect on our ability to meet our commitments to our
customers and increase our operating costs. Finally, continued uncertainty around inflationary pressures and macroeconomic
conditions have increased the risk of creating new, or exacerbating existing, economic challenges we face with regard to our
supply chain. Inflation has the potential to increase our overall cost structure, and sustained inflation has resulted in, and may
continue to result in, higher interest rates and capital costs, increased shipping costs, supply shortages, increased costs of labor,
weakening exchange rates, and other similar effects. While we have implemented cost containment measures and taken other
actions to offset these inflationary pressures in our global supply chain, we may not be able to completely offset all the increases
in our operational costs.
We rely on third-party manufacturers to supply many of the products and subcomponents that are incorporated into our products
and components. These third-party manufacturers have their own complex supply chains and related risks, whether due to the
shipping risks described below, the raw material and availability risks described above, or other causes. Manufacturing problems
may occur with these and other outside sources, as a supplier may fail to develop or manufacture products and subcomponents for
us on a timely basis, or may supply us with products and subcomponents that do not meet our quality, quantity and cost
requirements. Our third-party suppliers are also subject to shipping risks, including container shortages, blocked shipping lanes,
and port backlogs. If any of these problems occur, we may be unable to obtain substitute sources for these products and
subcomponents on a timely basis or on terms acceptable to us, which could harm our ability to manufacture our own products and
components profitably or on time. In addition, to the extent the processes our third-party suppliers use to manufacture products
and subcomponents are proprietary, we may be unable to obtain comparable products and subcomponents from alternative
suppliers.
Our business is also subject to potential increased costs and expenses and others risks resulting from existing and potential future
U.S. and foreign legislation, regulations and trade agreements relating to the products we manufacture outside of the U.S and
import into the U.S. and other materials we import, including the tariffs on steel that the U.S. has imposed, the tariffs that the new
U.S. presidential administration has imposed or threatened to impose, particularly relating to imports into the U.S. from Canada,
Mexico (where we currently manufacture a significant portion of our products) and China, and other quotas, duties, tariffs or taxes
or restrictions on imports, all or any of which could adversely affect our operations, increase the costs of products that we
manufacture outside the U.S. or adversely impact our profits or margins. Adverse changes in import costs and restrictions,
including tariffs, or the failure by us or our suppliers to comply with trade regulations or similar laws, could harm our business. If
additional tariffs or trade restrictions are implemented by the U.S. or other countries in connection with a global trade war, the
cost of our products manufactured in Mexico or other countries and imported into the U.S. or other countries could increase
further, which, in turn, could adversely affect the demand for these products, make our products less competitive and have an
adverse effect on our business and results of operations. Further such tariffs and, if enacted, any further legislation or actions
taken by the U.S. federal government that restrict trade, such as additional tariffs, trade barriers, and other protectionist or
retaliatory measures taken by governments in Europe, Asia, and other countries, could adversely impact our ability to sell
products in our international markets. We cannot predict whether new or additional U.S. and foreign customs quotas, duties
(including antidumping or countervailing duties), tariffs, taxes or other charges or restrictions, requirements as to where raw
materials must be purchased or other restrictions on our imports will be imposed in the future or adversely modified, or what
effect any such future actions would have on our costs of operations. Future quotas, duties or tariffs may adversely affect our
business, financial condition, results of operations or cash flows. In addition, future trade agreements or a global trade war could
also provide our competitors with an advantage over us, or increase our costs, either of which could adversely affect our business,
financial condition, results of operations or cash flows.
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Interruptions of our manufacturing operations could delay production and adversely affect our operations.
Our products are designed and manufactured in facilities located around the world. In most cases, the manufacturing of specific
product lines is concentrated in one or a few locations. If an event (including any weather or natural disaster-related event or a
resurgence of the COVID-19 pandemic or other similar pandemic event) occurred that resulted in material damage, loss or
incapacitation of one or more of these manufacturing facilities or if we lacked sufficient labor to fully operate any of our facilities,
we may not be able to transfer the manufacture of the relevant products to another facility or location in a cost-effective or timely
manner, if at all. This potential inability to transfer production could occur for a number of reasons, including but not limited to a
lack of necessary relevant manufacturing capability or capacity at another facility, or the regulatory requirements of the FDA or
other governmental regulatory bodies. Other disruptions in our manufacturing operations for any reason, including equipment
malfunction, failure to follow specific protocols and procedures, or environmental factors could lead to an inability to supply our
customers with our products, unanticipated costs, lost revenues and damage to our reputation. In addition, our business involves
complex manufacturing processes and the use of various hazardous materials, chemicals and other regulated substances, such as
trichloroethylene, which can be dangerous to our associates. We must also comply with various health and safety regulations in
the U.S. and abroad in connection with our operations. Although we employ safety procedures in the design and operation of our
facilities, there is a risk that an accident or death could occur. Any accident, such as a chemical spill or fire, could result in
significant manufacturing delays or claims for damages resulting from injuries, which would harm our business, results of
operations and financial condition. The potential liability resulting from any such accident or death, to the extent not covered by
insurance, could harm our financial condition or operating results. Any disruption of operations at any of our facilities, and in
particular our larger facilities, could result in production delays, which could adversely affect our operations and harm our
business.
We may not be able to attract, train and retain a sufficient number of qualified associates to maintain and grow our
business.
We monitor the markets in which we compete and assess opportunities to better align expenses with revenues, while preserving
our ability to make needed investments in RD&E projects, capital and our associates that we believe are critical to our long-term
success. Our success depends, and our continued success will depend, in large part upon our ability to attract, train, retain and
motivate highly skilled associates. There is currently aggressive competition for employees who have experience in technology
and engineering. We compete intensely with other companies to recruit and hire from this limited pool. The industries in which
we compete for employees are characterized by high levels of employee attrition. Although we believe we offer competitive
salaries and benefits, we have had to, and may in the future have to, increase spending to attract, train and retain qualified
personnel. If we are unable to attract, train and retain a sufficient number of qualified associates to maintain and grow our
business, it could have an adverse impact on our results of operations.
Quality problems with our products could result in warranty claims and additional costs, could harm our reputation and
could erode our competitive advantage.
Quality is important to us and our customers, and our products are held to high quality and performance standards. In the event
our products fail to meet these standards, we generally allow customers to return defective or damaged products under warranty.
We carry a safety stock of inventory for our customers that may be impacted by warranty claims. We reserve for our exposure to
warranty claims based upon recent historical experience and other specific information as it becomes available. However, these
reserves may not be adequate to cover future warranty claims. If our reserves for warranty claims are inadequate, additional
warranty costs or inventory write-offs may need to be incurred in the future, which could harm our operating results. We also
could be subject to negative publicity and our reputation could be harmed if we fail to meet quality standards. This could erode
our competitive advantage over competitors, causing us to lose or see a material reduction in business from customers and
resulting in lower revenues. In addition, we might be required to devote significant resources to address any quality issues
associated with our products, which could reduce the resources available for product development and other matters.
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Our operations are subject to cyber-attacks and other information technology disruptions that could have a material
adverse effect on our business, results of operations and financial condition.
We are a global company with a complex business model. In the ordinary course of business, our operations are, and in the future
are expected to continue to be, dependent on digital technologies and information technology (“IT”) systems. Due to the complex
nature of our business, and due to policies we have in place allowing certain of our employees to work from home from time to
time, we are increasingly dependent upon our technology systems to operate our business and our ability to effectively manage
our business depends on the security, reliability and adequacy of our technology systems and data. We use these technologies and
systems for internal purposes, including data storage, processing and transmissions, as well as in our interactions with customers
and suppliers. The security of this information and these systems are important to our operations and business strategy. Our IT
systems and infrastructure have been, and in the future are expected to continue to be, subject to the risk of cyber-attacks by
hackers or malware, or breach due to associate error, malfeasance or other disruptions, including natural disasters, failures in
hardware or software and power fluctuations. As the techniques used to obtain unauthorized access, disable or degrade service or
sabotage infrastructure and systems change frequently and may be difficult to detect for long periods of time, we may be unable to
anticipate these techniques or implement adequate preventive measures. If our systems for protecting against cybersecurity risks
or other IT disruptions prove insufficient, our business could be disrupted, resulting in numerous consequences, including
temporary or permanent loss of, damage to, third party access to, or misappropriation or public disclosure of our or a third party’s
intellectual property, proprietary or confidential information, or customer, supplier, or employee data; interruption of our business
operations; litigation, including individual claims, consumer class actions and commercial litigation; regulatory intervention and
sanctions or fines; prolonged negative publicity; and increased costs required to prevent, respond to, or mitigate such
cybersecurity attacks or IT disruptions. In addition, any such breach could compromise our networks and the information stored
there could be accessed, publicly disclosed or stolen. Emerging technologies such as generative artificial intelligence (AI) may be
used by malicious actors to identify vulnerabilities, create more targeted and sophisticated phishing narratives or otherwise
strengthen social engineering capabilities, which may increase our threat landscape. Vulnerabilities may be introduced from the
use of artificial intelligence by us, our customers, suppliers and other business partners and third-party vendors. These risks could
harm our reputation and brand, and our relationships with customers, suppliers, employees and other third parties, and may result
in claims or proceedings against us. In certain circumstances, we may rely on third-party vendors to process, store and transmit
data for our business whose operations are subject to similar risks. While we conduct security risk assessments prior to engaging
third party suppliers and other vendors and business partners to validate that they maintain appropriate safeguards to protect our
and their information systems in connection with the services they provide, as described below in greater detail under Item 1C,
“Cybersecurity,” it is possible that they suffer a cybersecurity attack that negatively impacts us. These risks could have a material
adverse effect on our business, financial condition and results of operations. If we are unable to protect our business against or
efficiently respond to cybersecurity attacks, it could have a material adverse impact on our business, results of operations and
financial condition.
Additionally, the legal and regulatory environment surrounding information security and privacy is increasingly demanding, with
the imposition of new and changing requirements across businesses, including SEC rules requiring timely public disclosure of
material cybersecurity incidents. We are required to comply with increasingly complex and changing legal and regulatory
requirements that govern the collection, use, storage, security, transfer, disclosure and other processing of personal data in the
U.S. and in other countries, including, but not limited to, HIPAA, HITECH, the California Privacy Rights Act and the EU’s
General Data Protection Regulation (“GDPR”). The GDPR imposes stringent EU data protection requirements and provides for
significant penalties for noncompliance. HIPAA also imposes stringent data privacy and security requirements and the regulatory
authority has imposed significant fines and penalties on organizations found to be out of compliance. We or our third-party
providers and business partners may also be subjected to audits or investigations by one or more domestic or foreign government
agencies relating to compliance with information security and privacy laws and regulations, and noncompliance with the laws and
regulations could results in material fines or litigation.
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Global climate change and related emphasis on environmental, social and governance (“ESG”) matters by various
stakeholders could negatively affect our business or the price of our common stock.
Customer, investor and employee expectations relating to ESG have been rapidly evolving and increasing. In addition,
governmental and non-governmental organizations are enhancing or advancing requirements specific to ESG matters. The
heightened stakeholder focus on ESG issues related to our business requires the continuous monitoring of various and evolving
laws, regulations, standards and expectations and the associated reporting requirements. Stakeholders may begin to request or
require disclosures on ESG topics such as greenhouse gas emissions, human capital matters and specific ESG-risk management
practices, and we expect this trend to continue and be amplified by existing and potential legislation, such as the Corporate
Sustainability Reporting Directive in the European Union and the SEC climate rules. A failure to adequately meet stakeholder
expectations may result in material noncompliance, the loss of business, reputational impacts, reduced investor demand to
purchase or continue to hold our common stock, diluted market valuation and an inability to attract customers. In addition, our
adoption of certain standards or mandated compliance with certain requirements could necessitate additional investments that
could increase our operating costs and have a negative impact on our profitability.
The long-term effects of global climate change are difficult to predict and may be widespread. Global climate change could
disrupt our operations by impacting the availability and cost of materials within our supply chain and could also increase our other
operating costs. The economic and market uncertainty created by transitioning to low-carbon alternatives may result in reduced
demand or product obsolescence for certain of our customers’ products, which in turn would result in reduced profit margin
associated with certain of our customers, or loss of customers that we may not be able to replace. Further, increased public
awareness and concern regarding global climate change may result in new or enhanced legal requirements to reduce or mitigate
the effects of greenhouse gas emissions. If legislation or regulations are enacted in jurisdictions in which we do business that are
more stringent than our current obligations, we and companies in our supply chain may experience increased compliance burdens
and costs to meet these obligations, which could cause disruption in the sourcing, manufacturing and distribution of our products
and adversely affect our business, financial condition or results of operations. Additionally, the impacts of climate change may
further include customer preferences and requirements. Failure to meet these preferences or requirements could potentially result
in loss of market share.
We are dependent upon our senior management team and key technical personnel and the loss of any of them could
significantly harm us.
Our future performance depends to a significant degree upon the continued contributions of our senior management team and key
technical personnel. In general, only highly qualified and trained scientists have the necessary skills to develop our products,
which are often highly technical in nature. The loss or unavailability to us of any member of our senior management team or a key
technical employee could significantly harm us. We face intense competition for these professionals from our competitors,
customers and companies operating in our industry. To the extent that the services of members of our senior management team
and key technical personnel would be unavailable to us for any reason, we would be required to hire other personnel to manage
and operate our Company and to develop our products and technology, which could adversely impact our business. We may not
be able to locate or employ these qualified personnel on acceptable terms or may need to increase spending to attract these
qualified personnel.
Consolidation in the healthcare industry could result in greater competition and reduce our revenues and harm our
business and our operating results.
Many healthcare industry companies are consolidating to create new companies with greater market power. As the healthcare
industry consolidates, competition to provide products and services to industry participants will become more intense. These
industry participants may try to use their market power to negotiate price reductions for our products or may undertake additional
vertical integration or supplier diversification initiatives. If we are forced to reduce our prices, our revenues would decrease and
our operating results would suffer.
Strategic Risks
If we are unable to successfully market our current or future products, our business will be harmed and our revenues and
operating results will be adversely affected.
If the markets for our products do not grow as we or industry experts forecast, our revenues could be less than expected.
Furthermore, it is difficult to predict the rate at which the markets for our products will grow or if new and increased competition
will result in market saturation. Slower growth in the cardiac rhythm management, neuromodulation, and cardio and vascular
markets in particular would adversely impact our revenues. In addition, we face the risk that our products will lose widespread
market acceptance. Our customers may not continue to utilize the products we offer and a market may not develop for our future
products.
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We have in the past spent, and in the future may need to spend, more time and resources than we expect to develop, market and
introduce new products. We may at times determine that it is not technically or economically feasible for us to continue to
manufacture certain products and we may not be successful in developing or marketing replacement products. Additionally, new
products and technologies that we develop may not be rapidly accepted because of industry-specific factors, including the need
for regulatory clearance, entrenched patterns of clinical practice and uncertainty over third-party reimbursement, and we may not
be able to recover all or a meaningful part of our investment in the new products and technologies. If any of these events occurs,
our business will be harmed and our revenues and operating results will be adversely affected.
We may face intense competition that could harm our business, including competitors, in-sourcing and the possibility of
dual sourcing; and we may be unable to compete successfully against new entrants and established companies with greater
resources.
Competition in connection with the manufacturing of our medical products across all of our product lines, which is fragmented
and subject to rapid technological change, has intensified in recent years and may continue to intensify in the future. We
encounter significant competition across our product lines and in each market in which our medical products are sold from various
medical device companies, some of which may have greater financial, operational, personnel, sales, technical and marketing
resources than we do and are more well-established. In addition, our medical customers have in the past elected, and may in the
future elect, to in source production or implement supplier diversification initiatives. Such actions have in the past resulted in,
and may in the future result in, the customer manufacturing or dual sourcing some or all of the components or products that we
currently supply to them, which could cause our operating results to suffer.
If we do not respond to changes in technology, our products may become obsolete or less competitive and we may
experience a loss of customers and lower revenues.
We sell our products to customers in several industries that are characterized by extensive research and development, rapid
technological changes, new product introductions and evolving industry standards. Without the timely introduction of new
products, technologies and enhancements, our products and services will likely become technologically obsolete or less
competitive over time and we may lose or see a reduction in business from a significant number of our customers. We dedicate a
significant amount of effort and resources to the development of our products, technologies and enhancements. Our product
development efforts may be affected by a number of factors, including our ability to anticipate customer needs, develop or acquire
new technologies and enhancements (including but not limited to artificial intelligence), secure intellectual property protection for
our products, and manufacture products in a cost-effective manner. In addition, we would be harmed if our products and
technologies do not meet customer requirements and expectations. Our inability, for technological or other reasons, to
successfully develop and introduce new and innovative products, technologies and enhancements could result in a loss of
customers and lower revenues.
We intend to develop new products and expand into new geographic and product markets, which may not be successful
and could harm our operating results.
We intend to develop new and modified products using our existing technologies and engineering capabilities and to continue to
expand into new geographic and product markets. These efforts have required, and will continue to require, us to make
substantial investments, including significant RD&E expenditures and capital expenditures for new, expanded or improved
manufacturing facilities. Additionally, many of the new products we are developing take longer and more resources to develop
and commercialize than those products we are currently marketing, including more time and resources required to obtain
regulatory approvals.
Specific risks in connection with expanding into new products and product markets include: longer product development cycles,
the inability to transfer our quality standards and technology into new products, the failure to receive or the delay in receipt of
regulatory approval for new products or modifications to existing products and the failure of our existing customers or the market
generally to accept the new or modified products. Our inability to develop new products or expand into new geographic and
product markets, as currently intended, could hurt our business, financial condition and results of operations.
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If we are not successful in making acquisitions to expand and develop our business, our operating results may suffer.
One facet of our growth strategy is to make acquisitions that complement our core competencies in technology and manufacturing
to enable us to manufacture and sell additional or enhanced products to our existing customers and to expand our business into
related markets. Our continued growth through acquisitions depends on our ability to successfully identify and acquire companies
that complement or enhance our existing business on acceptable terms. We may not be able to identify or complete future
acquisitions. In addition, we will need to comply with the terms of our Senior Secured Credit Facilities and any future financing
that we may incur, to pursue and complete future acquisitions. In connection with pursuing this growth strategy, some of the risks
that we may encounter include expenses associated with and difficulties in identifying potential targets, the costs associated with
unsuccessful acquisitions, the acquisition or assumption of unexpected or unanticipated liabilities or costs resulting from the
acquisition of a target company or the operation of an acquired business, and higher prices for acquired companies because of
significant competition for attractive acquisition targets.
Successful integration and anticipated benefits of acquisitions cannot be assured and integration matters could divert
attention of management away from operations.
Part of our business strategy includes acquiring additional businesses and assets, which we have done in each of the last six years.
If we do not successfully integrate acquisitions, we may not realize anticipated operating advantages and cost savings. Our ability
to realize the anticipated benefits from acquisitions will depend, to a large extent, on our ability to integrate these acquired
businesses with our legacy businesses. Integrating and coordinating aspects of the operations and personnel of the acquired
business with legacy businesses involves complex operational, technological and personnel-related challenges. This process is
time-consuming and expensive, disrupts the businesses of both companies and may not result in the achievement of the full
benefits expected by us, including cost synergies expected to arise from supply chain efficiencies and overlapping general and
administrative functions.
The potential difficulties, and resulting costs and delays, include:
•
managing a larger combined company;
•
consolidating corporate and administrative infrastructures;
•
issues in integrating manufacturing, warehouse and distribution facilities, supply chain, RD&E and sales forces;
•
difficulties attracting and retaining key personnel;
•
loss of customers and suppliers and inability to attract new customers and suppliers;
•
unanticipated issues in integrating information technology, communications and other systems;
•
incompatibility of purchasing, logistics, marketing, administration and other systems and processes; and
•
unforeseen or unexpected liabilities or costs related to the acquisition of a target company or the operation of an acquired
business, which may be beyond the scope of any applicable insurance coverage we may have.
Additionally, the integration of our legacy businesses with an acquired company’s operations, products and personnel may place a
significant burden on management and other internal resources. The attention of our management may be directed towards
integration considerations and may be diverted from our day-to-day business operations, and matters related to the integration
may require commitments of time and resources that could otherwise have been devoted to other opportunities that might have
been more beneficial to us and our business. The diversion of management’s attention, and any difficulties encountered in the
transition and integration process, could harm our business, financial condition and operating results.
We may not be able to maintain the levels of operating efficiency that acquired companies or businesses have achieved or might
achieve separately. Successful integration of each acquisition will depend upon our ability to manage those operations and to
eliminate redundant and excess costs. Difficulties in integration may be magnified if we make multiple acquisitions over a
relatively short period of time. Because of difficulties in combining and expanding operations, we may not be able to achieve the
cost savings and other benefits that we hoped to achieve after these acquisitions.
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Financial and Indebtedness Risks
Our operating results may fluctuate, which may make it difficult to forecast our future performance and may result in
volatility in our common stock price.
Our operating results have fluctuated in the past and are likely to continue to fluctuate from quarter to quarter, making forecasting
future performance difficult and resulting in volatility in our common stock price. These fluctuations are due to a variety of
factors, including the following:
•
timing of orders placed by our customers;
•
our customers’ approach to inventory management;
•
changes in the mix of our revenue represented by our various products and customers could result in reductions in our
profits if the mix of our revenue represented by lower margin products increases;
•
a portion of our costs are fixed in nature, which results in our operations being particularly sensitive to fluctuations in
production volumes;
•
increased costs and decreased availability of raw materials or supplies; and
•
our ability to effectively execute on operational initiatives to drive manufacturing efficiencies.
We have significant indebtedness that could adversely affect our operations, financial condition, and cash flows if we fail
to meet certain financial covenants required by our debt agreements or if our access to capital markets is interrupted.
At December 31, 2024, we had $1.0 billion in principal amount of debt outstanding under the Senior Secured Credit Facilities and
the 2.125% convertible senior notes due 2028 (the “2028 Convertible Notes”). As of December 31, 2024, our debt service
obligations, comprised of principal and interest on our outstanding indebtedness and commitment fees on the unused portion of
our Revolving Credit Facility, are estimated to be approximately $52 million for 2025. The outstanding indebtedness and the
terms and covenants of the agreements under which this debt was incurred, could, among other things:
•
require us to dedicate a large portion of our cash flow from operations to the servicing and repayment of our outstanding
indebtedness, thereby reducing funds available for working capital, capital expenditures, acquisitions, RD&E
expenditures and other general corporate requirements;
•
limit our ability to obtain additional financing to fund future working capital, capital expenditures, RD&E expenditures
and other general corporate requirements in the future;
•
delay or prevent an otherwise beneficial takeover or takeover attempt of us;
•
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
•
restrict our ability to make strategic acquisitions or dispositions or to exploit business opportunities;
•
place us at a competitive disadvantage compared to our competitors that have less outstanding indebtedness; and
•
adversely affect the market price of our common stock, including by dilution resulting from the conversion of all or some
of our 2028 Convertible Notes.
Additionally, our failure to comply with the covenants contained in the 2021 Credit Agreement governing our Senior Secured
Credit Facilities, if not waived, could cause a default under our Senior Secured Credit Facilities that requires repayment in full, or
acceleration, of debt payments. If that were to occur, there can be no assurance that we would be able to refinance or obtain a
replacement financing on favorable terms or at all.
Economic and credit market uncertainty could interrupt our access to capital markets, borrowings, or financial
transactions to hedge certain risks, which could adversely affect our business prospects and financial condition.
To date, we have been able to access debt and equity financing that has allowed us to complete acquisitions, make investments in
growth opportunities and fund working capital requirements. In addition, we enter into financial transactions to hedge certain
risks, including foreign exchange and interest rate risk, as further discussed below. Our continued access to capital markets, the
stability of our lenders under our Senior Secured Credit Facilities and their willingness to support our needs, and the stability of
the parties to our financial transactions that hedge risks are essential for us to meet our current and long-term obligations, fund
operations, and fund our strategic initiatives. An interruption in our access to external financing or financial transactions to hedge
risk could adversely affect our business prospects and financial condition.
In addition, certain of our borrowings are at variable interest rates and therefore we are subject to interest rate risk. Persistent
inflation, especially in Europe and the U.S., has led central banks to raise interest rates to dampen inflation. Changes in interest
rates directly impact the amount of interest we pay on our variable rate obligations and continued or sustained increases in interest
rates could negatively impact our business.
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The conditional conversion feature of the 2028 Convertible Notes could adversely affect our financial condition and
operating results.
The holders of our 2028 Convertible Notes have had the ability to, and may in the future continue to have the ability to, convert
their notes at their option prior to the scheduled maturities. One of the conditional conversion features of the 2028 Convertible
Notes has been triggered from time and time at the end of calendar quarters, including as of December 31, 2024, due to the
trading price of our common stock exceeding 130% of the 2028 Convertible Notes conversion price on at least 20 out of the 30
consecutive trading days prior to such date. As a result, the 2028 Convertible Notes are convertible at the option of the holders, in
whole or in part, until March 31, 2025. Whether the 2028 Convertible Notes will be convertible in any future period will depend
on the satisfaction of this condition or another conversion condition at such time. If one or more noteholders elect to convert their
2028 Convertible Notes, we would be required to settle a portion or all of our conversion obligation through the payment of cash,
which could adversely affect our liquidity. In addition, holders of our 2028 Convertible Notes will have the right to require us to
repurchase their notes upon the occurrence of a fundamental change (as defined in the indenture governing the 2028 Convertible
Notes), at a repurchase price equal to the principal amount of the 2028 Convertible Notes to be repurchased, plus accrued and
unpaid special interest, if any, to but not including, the fundamental change repurchase date. We may not have enough available
cash or be able to obtain financing at the time we are required to repurchase the 2028 Convertible Notes or pay the cash amounts
due upon conversion. In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may
restrict our ability to repurchase the 2028 Convertible Notes or pay the cash amounts due upon conversion. Our failure to
repurchase the 2028 Convertible Notes or to pay the cash amounts due upon conversion when required will constitute a default
under the indenture governing the 2028 Convertible Notes. A default under the indenture governing the 2028 Convertible Notes
or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, including the
2021 Credit Agreement governing the Senior Secured Credit Facilities, which may result in that other indebtedness becoming
immediately payable in full. We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the
2028 Convertible Notes.
If a conversion request occurs, we have the intent and ability to refinance the amounts that may become due with respect to the
2028 Convertible Notes using available borrowing capacity under the Revolving Credit Facility. As such, the obligations
associated with the 2028 Convertible Notes were classified as a long-term liability on the Consolidated Balance Sheets as of
December 31, 2024. As of December 31, 2024, the borrowing capacity under our Revolving Credit Facility was $668.7 million,
which exceeded the $500.0 million outstanding principal amount of the 2028 Convertible Notes. Even if holders of the 2028
Convertible Notes do not elect to convert their notes, or if our available borrowing capacity under our Revolving Credit Facility
were to fall below the outstanding principal amount of the 2028 Convertible Notes, we could be required under applicable
accounting rules to reclassify all or a portion of the outstanding principal of the 2028 Convertible Notes as a current rather than
long-term liability, which would result in a material reduction of our net working capital.
Certain provisions in the 2028 Convertible Notes and the indenture governing the 2028 Convertible Notes could delay or
prevent an otherwise beneficial takeover or takeover attempt of us.
Certain provisions in the 2028 Convertible Notes and the indenture governing the 2028 Convertible Notes could make it more
difficult or more expensive for a third party to acquire us. For example, if a takeover constitutes a fundamental change, holders of
the 2028 Convertible Notes will have the right to require us to repurchase their notes in cash. In addition, if a takeover constitutes
a make-whole fundamental change (as defined in the indenture governing the 2028 Convertible Notes), we may be required to
increase the conversion rate for holders of the 2028 Convertible Notes who convert their notes in connection with such takeover.
In either case, and in other cases, our obligations under the 2028 Convertible Notes and the indenture governing the 2028
Convertible Notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing
incumbent management, including in a transaction that holders of our common stock may view as favorable.
Transactions relating to our 2028 Convertible Notes may affect the market price of our common stock.
The conversion of some or all of our 2028 Convertible Notes would dilute the ownership interests of existing stockholders to the
extent we satisfy our conversion obligation by delivering shares of our common stock upon any conversion of such 2028
Convertible Notes. Our 2028 Convertible Notes have in the past been and currently are through March 31, 2025, and may in the
future become, convertible at the option of their holders under certain circumstances. If holders of our 2028 Convertible Notes
elect to convert their notes, we may settle our conversion obligation by delivering to them a significant number of shares of our
common stock, which would cause dilution to our existing stockholders.
In connection with the pricing of the 2028 Convertible Notes, we entered into capped call transactions with the option
counterparties. The capped call transactions are expected generally to reduce potential dilution to our common stock upon
conversion of any 2028 Convertible Notes and/or offset or substantially offset any cash payments we are required to make in
excess of the principal amount of converted 2028 Convertible Notes, as the case may be, with such reduction and/or offset subject
to a cap.
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In addition, the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other
securities of ours in secondary market transactions prior to the maturity of the 2028 Convertible Notes (and are likely to do so on
each exercise date for the capped call transactions or following any termination of any portion of the capped call transactions in
connection with any repurchase, redemption or early conversion of the 2028 Convertible Notes). This activity could cause or
avoid an increase or decrease in the market price of our common stock.
In addition, if any such capped call transactions fail to become effective, the option counterparties or their respective affiliates
may unwind their hedge positions with respect to our common stock, which could adversely affect the trading price of our
common stock.
We are subject to counterparty risk with respect to the capped call transactions.
The option counterparties are financial institutions, and we will be subject to the risk that any or all of them might default under
the capped call transactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. Past
global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions.
If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings
with a claim equal to our exposure at that time under the capped call transactions with such option counterparty. Our exposure
will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price and in
the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences
and more dilution than we currently anticipate with respect to our common stock. We can provide no assurance as to the financial
stability or viability of the option counterparties.
Our international sales and operations are subject to a variety of market and financial risks and costs that could adversely
affect our profitability and operating results.
Our sales outside the U.S., which accounted for approximately 45% of sales for 2024, and our operations in Europe, Asia,
Mexico, South America, Central America and the Caribbean are and will continue to be subject to a number of risks and potential
costs, including:
•
changes in foreign economic conditions or regulatory requirements;
•
changes in foreign currency exchange rates;
•
local product preferences and product requirements;
•
outstanding accounts receivables that take longer to collect than is typical in the U.S.;
•
difficulties in enforcing agreements through foreign legal systems;
•
less protection of intellectual property in some countries outside of the U.S.;
•
trade protection measures, including costs we may incur as a result of the enactment of new tariffs or changes in existing
tariffs (in particular, the potential new tariffs imposed by the new U.S. presidential administration on goods imported
into the U.S. from Mexico, where we currently manufacture a significant portion of our products) or our inability to pass
these tariff costs on to our customers, and import and export licensing requirements;
•
work force instability;
•
significant natural disasters and other events or factors impact local infrastructure;
•
political and economic instability, including civil or international conflicts, war and terrorism;
•
transportation delays or interruptions; and
•
complex tax and cash management issues.
These risks are also present in connection with our entry into new geographic markets.
Additionally, as a result of our international operations, we are subject to exposure from currency exchange rate fluctuations. We
purchase forward currency contracts in certain currencies to reduce our exposure; however, these transactions may not be
adequate or effective to protect us from the exposure for which they are purchased. Historically, foreign currency exchange rate
fluctuations have not had a material effect on our net financial results. However, fluctuations in foreign currency exchange rates
could have a significant impact on our financial results in the future.
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We have a complex tax profile due to the global nature of our operations and may experience increases and variability in
our quarterly and annual effective tax rate due to several factors, including changes in the mix of pre-tax income and the
jurisdictions to which it relates, business acquisitions, settlements with taxing authorities and changes in tax rates.
Our global operations encompass multiple taxing jurisdictions. Variability in the mix and profitability of domestic and
international activities, identification and resolution of various tax uncertainties, changes in tax laws and rates, and the extent to
which we are able to realize net operating loss and other carryforwards included in deferred tax assets and avoid potential adverse
outcomes included in deferred tax liabilities, among other matters, may significantly affect our effective income tax rate in the
future.
The tax regimes we are subject to or operate under may be subject to significant changes, and changes in international tax laws or
additional changes in U.S. tax laws could materially affect our financial position and results of operations. Changes in applicable
tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect, could affect our
income tax expense and profitability. Certain provisions of the Inflation Reduction Act passed in 2022, including a 15% corporate
alternative minimum tax, as well as the similar 15% global minimum tax under the Organization for Economic Co-operation and
Development (“OECD”) Pillar Two Global Anti-Base Erosion Rules, may impact our income tax expense, profitability, and
capital allocation decisions and may negatively impact our effective tax rate. If tax laws and related regulations change, our
financial results could be materially impacted. Given the unpredictability of these possible changes and their potential
interdependency, it is possible such changes could adversely impact our financial results.
Our effective income tax rate is the result of the income tax rates in the various countries in which we do business. Our mix of
income and losses in these jurisdictions affects our effective tax rate. For example, relatively more income in higher tax rate
jurisdictions would increase our effective tax rate and thus lower our net income. Similarly, if we generate losses in tax
jurisdictions for which no benefits are available, our effective income tax rate will increase. Our effective income tax rate may
also be impacted by the recognition of discrete income tax items, such as required adjustments to our liabilities for uncertain tax
positions or our deferred tax asset valuation allowance. Our effective income tax rate has fluctuated from 13.0% in 2022, to
15.4% in 2023 and to 18.0% for 2024. A significant increase in our effective income tax rate could have a material adverse impact
on our earnings.
We have recorded deferred tax assets based on our assessment that we will be able to realize the benefits of our net operating
losses and other favorable tax attributes. Realization of deferred tax assets involve significant judgments and estimates which are
subject to change and ultimately depends on generating sufficient taxable income of the appropriate character during the
appropriate periods. Changes in circumstances may affect the likelihood of such realization, which in turn may trigger a write-
down of our deferred tax assets, the amount of which would depend on a number of factors. A write-down would reduce our
reported net income, which may adversely impact our financial condition or results of operations or cash flows. In addition, we
are potentially subject to ongoing and periodic tax examinations and audits in various jurisdictions, including with respect to the
amount of our net operating losses and any limitation thereon. An adjustment to such net operating loss carryforwards, including
an adjustment from a taxing authority, could result in higher tax costs, penalties and interest, thereby adversely impacting our
financial condition, results of operations or cash flows.
We may never realize the full value of our intangible assets, which represent a significant portion of our total assets.
At December 31, 2024, we had $1.8 billion of goodwill and other intangible assets, representing 58% of our total assets. These
intangible assets consist primarily of goodwill, trademarks, tradenames, customer lists and patented technology arising from our
acquisitions. Goodwill and other intangible assets with indefinite lives are not amortized, but are tested annually or upon the
occurrence of certain events that indicate that the assets may be impaired. Definite lived intangible assets are amortized over their
estimated useful lives and are tested for impairment upon the occurrence of certain events that indicate that the assets may not be
recoverable. We may not receive the recorded value for our intangible assets if we sell or liquidate our business or assets. In
addition, our significant amount of intangible assets increases the risk of a large charge to earnings in the event that the
recoverability of these intangible assets is impaired. In the event of a significant charge to earnings, the market price of our
common stock could be adversely affected. In addition, intangible assets with definite lives, which represent $688.0 million of our
net intangible assets at December 31, 2024, will continue to be amortized. These expenses will continue to reduce our future
earnings or increase our future losses. The accounting for intangible assets requires reliance on forward-looking estimates of sales
and/or earnings. Estimating the future performance of our business is extremely challenging and the range of deviation from
internal estimates could be more significant in the current market environment.
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Legal and Compliance Risks
Regulatory issues resulting from product complaints, recalls or regulatory audits could harm our ability to produce and
supply products or bring new products to market.
The products that we design, manufacture and distribute, including our customers’ finished medical devices, product components
that are incorporated into our customers’ finished medical devices, and our own finished medical devices, are designed,
manufactured and distributed globally in compliance with applicable regulations and standards. However, a product complaint,
recall (either voluntary or as required by any governmental authority) or negative regulatory audit may cause our products,
including product components and finished medical devices, to be removed from the market and harm our operating results or
financial condition. In addition, during the period in which corrective action is being taken by us to remedy a product complaint,
recall or negative regulatory audit, regulators may not allow our new products or components to be cleared for marketing and sale.
If we become subject to product liability claims, our operating results and financial condition could suffer.
Our business exposes us to potential product liability claims, which may take the form of a one-off claim from a single claimant
or a class action lawsuit covering multiple claimants. Product failures, including those that arise from the failure to meet product
specifications, misuse or malfunction, or design flaws, or the use of our products with other components, systems or medical
devices not manufactured or sold by us could result in product liability claims or a recall. Many of our products are components
that interact with our customers’ medical devices. For example, our batteries are produced to meet electrical performance,
longevity and other specifications, but the actual performance of those products is dependent on how they are utilized as part of
our customers’ devices over the lifetime of their products. Product performance and device interaction from time to time have
been, and may in the future be, different than expected for a number of reasons. Consequently, it is possible that customers may
experience problems with their medical devices that could require device recall or other corrective action, where our batteries or
other products or components met the specification at delivery, and for reasons that are not related primarily or at all to any failure
by our product to perform in accordance with specifications. It is possible that our customers (or end-users) may in the future
assert that our products caused or contributed to device failure. Even if these assertions do not lead to product liability or contract
claims, they could harm our reputation and our customer relationships. Furthermore, the design and manufacturing of finished
medical devices of the types that we also produce entail an inherent risk of product liability claims. Some of the medical devices
that we manufacture and sell are designed to be implanted into the human body. A number of factors could result in an unsafe
condition or injury to, or death of, a patient with respect to these medical devices. These factors could also result in product
liability claims, a recall of one or more of our medical devices or a safety alert relating to one or more of our medical devices.
Provisions contained in our agreements with key customers attempting to limit our damages, including provisions to limit
damages to liability for negligence, may not be enforceable in all instances or may otherwise fail to adequately protect us from
liability for damages. Product liability claims or product recalls, regardless of their ultimate outcome and whether related to a
product component or a finished medical device, could require us to spend significant time and money in litigation and require us
to pay significant damages and could divert the attention of our management from our business operations. We may choose to
settle product liability claims against us regardless of their actual merit, and the occurrence of product liability claims or product
recalls could adversely affect our operating results and financial condition.
We carry product liability insurance with coverage that is limited in scope and amount. We may not be able to maintain this
insurance at a reasonable cost or on reasonable terms, or at all. This insurance may not be adequate to protect us against product
liability claims made against us.
If we are unable to protect our intellectual property and proprietary rights, our business could be harmed.
We rely on a combination of patents, licenses, trade secrets and know-how to establish and protect our rights to our technologies
and products. However, these measures afford only limited protection, and our patent rights, whether issued, subject to license or
in process, and our other intellectual property protections may be misappropriated, circumvented or invalidated. The laws of some
foreign countries do not offer the same level of protection for our intellectual property as the laws of the U.S. Further, no
assurances can be given that any patent application we have filed or will file will result in a patent being issued, or that any
existing or future patents will afford adequate or meaningful protection against competitors or against similar technologies. In
addition, competitors may design around our technology or develop competing technologies that do not infringe our proprietary
rights. As patents and other intellectual property protection expire, we may lose our competitive advantage. If third parties
infringe or misappropriate our patents or other proprietary rights, our business could be seriously harmed.
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In addition, we cannot assure you that our existing or planned products do not or will not infringe on the intellectual property
rights of others or that others will not claim such infringement. Our industry has experienced extensive ongoing patent litigation
which can result in the incurrence of significant legal costs for indeterminate periods of time, injunctions against the manufacture
or sale of infringing products and significant royalty payments. At any given time, we may be a plaintiff or defendant in these
types of actions. We cannot assure you that we will be able to prevent competitors from challenging our patents or other
intellectual property rights or entering markets we currently serve.
In addition to seeking formal patent protection whenever possible, we attempt to protect our proprietary rights and trade secrets by
entering into confidentiality agreements with employees, consultants and third parties with which we do business. However, these
agreements may be breached and, if a breach occurs, there may be no adequate remedies available to us and we may be unable to
prevent the unauthorized disclosure or use of our technical knowledge, practices or procedures. If our trade secrets become
known, we may lose our competitive advantages.
We may be subject to intellectual property claims, which could be costly and time consuming and could divert our
management’s attention from our business operations.
In producing our products, third parties may claim that we are infringing on their intellectual property rights, and we may be
found to have infringed on those intellectual property rights. We may be unaware of the intellectual property rights of others that
may be used in our technology and products. In addition, third parties may claim that our patents have been improperly granted
and may seek to invalidate our existing or future patents. If any claim for invalidation prevailed, third parties may manufacture
and sell products that compete with our products and our revenues from any related license agreements would decrease
accordingly. Former employers of our associates may assert claims that these associates have improperly disclosed to us the
confidential or proprietary information of those former employers. We also typically do not receive significant indemnification
from parties that license technology to us against third-party claims of intellectual property infringement.
Any litigation or other challenges regarding our patents or other intellectual property, with or without merit, could be costly and
time consuming and could divert the attention of our management and key personnel from our business operations. The
complexity of the technology involved in producing our products and the uncertainty of intellectual property litigation increases
these risks. If we are not successful in defending these claims, we could be required to stop selling, delay shipments of, or
redesign our products, discontinue the use of related technologies or designs, pay monetary amounts as damages, and satisfy
indemnification obligations that we have with some of our customers. Claims of intellectual property infringement may also
require us to enter into costly royalty or license agreements. However, we may not be able to obtain royalty or license agreements
on terms acceptable to us, or at all. We also may be made subject to significant damages or injunctions against development and
sale of our products.
A failure to comply with customer-driven policies and standards and third-party certification requirements or standards
could adversely affect our business and reputation.
Our customers have in the past, and may in the future, require us to comply with their own or third-party quality standards,
business policies, commercial terms, or other policies or standards, which have been, and may continue to be, even more
restrictive than current laws and regulations as well as our pre-existing policies or terms with our suppliers, before they
commence, or continue, doing business with us. These policies or standards may be customer-driven, established by the market
sectors in which we operate or imposed by third-party organizations.
Our compliance with these heightened or additional policies, standards and third-party certification requirements, and managing a
supply chain in accordance with those policies, standards and requirements, could be costly and time consuming, and our failure
to comply could adversely affect our operations, customer relationships, reputation and profitability. In addition, our adoption of
these standards could adversely affect our cost competitiveness and ability to provide customers with required service levels. In
certain circumstances, to meet the requirements or standards of our customers, we may be obligated to select certain suppliers or
make other sourcing choices, and we may bear responsibility for adverse outcomes even if these matters are the result of third-
party actions or outside of our control.
Our failure to obtain licenses from third parties for new technologies or the loss of these licenses could impair our ability
to design and manufacture new products and reduce our revenues.
We occasionally license technologies from third parties rather than depending exclusively on our own proprietary technology and
developments. Our ability to license new technologies from third parties is and will continue to be critical to our ability to offer
new and improved products. We may not be able to continue to identify new technologies developed by others and even if we are
able to identify new technologies, we may not be able to negotiate licenses on favorable terms, or at all. Additionally, we may
lose rights granted under licenses for reasons beyond our control or if the license has a finite term and cannot be renewed on
favorable terms or at all.
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Our business is subject to environmental regulations that could be costly to comply with.
Federal, state and local regulations impose various environmental controls on the manufacturing, transportation, storage, use and
disposal of batteries and hazardous chemicals and other materials used in, and hazardous waste produced by the manufacturing of
our products. Conditions relating to our historical operations, including a former manufacturing facility located in South
Plainfield, New Jersey previously operated by a subsidiary of Lake Region Medical, may require expenditures for clean-up in the
future that could materially adversely affect our financial results. In addition, changes in environmental laws and regulations may
impose costly compliance requirements on us or otherwise subject us to future liabilities. Additional or modified regulations
relating to the manufacture, transportation, storage, use and disposal of materials used to manufacture our products or restricting
disposal or transportation of batteries may be imposed that may result in higher costs or lower operating results. In addition, we
cannot predict the effect that additional or modified environmental regulations may have on us or our customers.
Our international operations expose us to legal and regulatory risks, which could adversely affect our business.
Our profitability and international operations are, and will continue to be, subject to risks relating to changes in foreign legal and
regulatory requirements. In addition, our international operations are governed by various U.S. laws and regulations, including the
U.S. Foreign Corrupt Practices Act and other similar anti-corruption laws in other countries that prohibit us and our business
partners and other intermediaries from making improper payments or offers of payment to foreign governments and their officials
and political parties for the purpose of obtaining or retaining business. In recent years, both the U.S. and non-U.S. regulators have
increased regulation, enforcement, inspections, and governmental investigations of the medical device industry, including
increased U.S. government oversight and enforcement of the U.S. Foreign Corrupt Practices Act. Any alleged or actual violations
of these regulations may subject us to government scrutiny, severe criminal or civil sanctions and other liabilities and could
adversely affect our business, reputation, operating results, and financial condition.
The healthcare industry is highly regulated and subject to various political, economic and regulatory changes that could
increase our compliance costs and force us to modify how we develop and price our products.
The healthcare industry is highly regulated and is influenced by changing political, economic and regulatory factors. Several of
our product lines are subject to international, federal, state and local health and safety, packaging and product content regulations,
including the European Medical Device Regulation, which was adopted by the EU as a common legal framework for all EU
member states. In addition, medical devices are subject to regulation by the FDA and similar governmental agencies. These
regulations cover a wide variety of product activities from design and development to labeling, manufacturing, promotion, sales
and distribution. Compliance with these regulations is time consuming, burdensome and expensive and could adversely affect our
ability to sell products. This may result in higher than anticipated costs or lower than anticipated revenues.
Furthermore, healthcare industry regulations are complex, change frequently and have tended to become more stringent over time.
Federal and state legislatures have periodically considered and implemented programs to reform or amend the U.S. healthcare
system at both the federal and state levels. In addition, these regulations may contain proposals to increase governmental
involvement in healthcare, lower reimbursement rates or otherwise change the environment in which healthcare industry
participants operate. We may be required to incur significant expenses to comply with these regulations or remedy past violations
of these regulations. Our failure to comply with applicable government regulations could also result in cessation of portions or all
of our operations, impositions of fines and restrictions on our ability to carry on or expand our operations. In addition, because
many of our products are sold into regulated industries, we must comply with additional regulations in marketing our products.
In response to perceived increases in healthcare costs in recent years, there have been and continue to be proposals by the
presidential administrations of both major U.S. political parties, members of Congress, state governments, regulators and third-
party payors to control these costs and, more generally, to reform the U.S. healthcare system, including by amending, repealing or
replacing the Patient Protection and Affordable Care Act. It is unclear how such reforms will progress under the new U.S.
presidential administration. Elements of health care reform such as comparative effectiveness research, an independent payment
advisory board, payment system reforms including shared savings pilots and other provisions could meaningfully change the way
healthcare is developed and delivered and may materially adversely impact numerous aspects of our business, results of
operations and financial condition.
Our business is indirectly subject to healthcare industry cost containment measures that could result in reduced sales of
our products.
Several of our customers rely on third-party payors, such as government programs and private health insurance plans, to
reimburse some or all of the cost of the procedures in which our products are used. The continuing efforts of governments,
insurance companies and other payors of healthcare costs to contain or reduce those costs could lead to patients being unable to
obtain approval for payment from these third-party payors for procedures in which our products are used. If this occurs, sales of
medical devices may decline significantly and our customers may reduce or eliminate purchases of our products or demand
further price reductions. The cost containment measures that healthcare payors are instituting, both in the U.S. and internationally,
could reduce our revenues and harm our operating results.
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ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
We recognize the critical importance of developing, implementing, and maintaining cybersecurity measures to safeguard our
information systems and protecting the confidentiality, integrity, and availability of our data and other information located on our
information systems. Below is a discussion of how we assess, identify and manage material risks from cybersecurity threats.
Managing Material Cybersecurity Risks Within Our Overall Risk Management Framework
We have strategically and deliberately integrated cybersecurity risk management into our broader risk management framework to
promote a Company-wide culture of cybersecurity risk management. This integration seeks to ensure that cybersecurity
considerations are an integral part of our decision-making processes at every level. Our management-level Security, Privacy and
Compliance Committee (the “SPCC”) was established to help ensure that the Company’s information security strategy supports
our business operations and that the Company complies with applicable laws and regulations with respect to privacy and other
cybersecurity matters. The SPCC is also primarily responsible for monitoring and responding to cybersecurity threats as they
arise. The SPCC meets quarterly and as necessary. The SPCC is a cross-functional committee, and its members include Company
officers and associates involved in various aspects of the Company’s governance and operations, including our General Counsel,
Corporate Controller, Chief Information Officer, Head of Environmental, Health, Safety and Security and others, and is chaired
by our Chief Information Security Officer (“CISO”). In addition, we have established a management-level Cyber Disclosure
Escalation Committee (the “CDEC”) to assist in the evaluation of cybersecurity incidents that may arise from time to time and the
potential need for public disclosure of any such incident. The CDEC meets quarterly and on an ad hoc basis as necessary, and it
reports to our CEO and other members of the Company’s senior management.
Third-Party Engagement in Cybersecurity Risk Management
Recognizing the complexity and evolving nature of cybersecurity threats, we engage with a range of external experts, including
cybersecurity assessors, consultants, and auditors in evaluating and testing our cybersecurity risk management systems. These
partnerships enable us to leverage specialized knowledge and insights, seeking to ensure that our cybersecurity strategies and
processes remain at the forefront of industry best practices. Our collaboration with these third parties includes threat assessments,
consultations on security enhancements and cybersecurity strategies and trends and penetration testing designed to simulate an
external cyberattack on the Company. We also periodically retain a third-party advisor to perform a cybersecurity materiality
assessment of the Company using the NIST CSF framework. Finally, we also engage a third party to evaluate the cybersecurity
strengths of our vendors as part of our third-party risk oversight, as described below under “Oversight of Third-Party Risks.”
Oversight of Third-Party Risks
We have sought to implement stringent processes to oversee and manage cybersecurity risks resulting from our day-to-day
business interactions with third parties. Our third-party risk oversight is primarily handled internally at the Company and consists
of four fundamental pillars. First, we require each third-party information technology vendor that we engage with to complete a
cybersecurity questionnaire detailing their cybersecurity standards and practices. These questionnaires are completed at the
beginning of the relationship and thereafter periodically throughout the relationship based upon our risk level assessment. Second,
we use a third-party consultant to monitor and assess cybersecurity matters relating to our vendors based on publicly available
information. This monitoring is ongoing and, if an issue is identified, we will proactively seek to engage with our vendors to
remediate the issue. Third, we seek to strictly limit access to our internal infrastructure and, for those vendors that have a need to
access to our infrastructure, we use methods and processes to limit their access. Finally, we require our contracts with third-party
vendors to include contractual obligations with respect to cybersecurity matters that are applicable those vendors, including data
breach notifications.
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Risks from Cybersecurity Threats
Based upon the information that we have as of the end of the year covered by this report, we do not believe that any risks from
any cybersecurity threat or from any previous cybersecurity incident have materially affected or are reasonably likely to
materially affect our business strategy, results of operations or financial condition. However, the risks from cybersecurity threats
and incidents continue to increase, and the preventative actions we have taken and continue to take to reduce the risk of
cybersecurity threats and incidents may not successfully protect against all such threats and incidents, and, as a result, there can be
no assurance that we or the third parties we interact with will not experience a cybersecurity event in the future that will
materially affect us. For more information on risks to us from cybersecurity threats see Item 1A, “Risk Factors,” under the
heading “Our operations are subject to cyber-attacks and other information technology disruptions that could have a material
adverse effect on our business, results of operations and financial condition.”
Cybersecurity Governance Matters
Our Board understands the critical nature of managing risks associated with cybersecurity threats. Our Board has established
oversight mechanisms to ensure effective governance in managing risks associated with cybersecurity threats because we
recognize the significance of these threats to our operational integrity and in maintaining stockholder confidence.
Board of Directors’ Oversight Role and Management’s Role in Managing Cybersecurity Risk
Our Board has direct oversight responsibility for the Company’s strategic risks. The Audit Committee has been made primarily
responsible for the Board’s oversight of cybersecurity risks, but the Board has discretion to delegate this oversight responsibility
to any committee or sub-committee as it deems appropriate. The Audit Committee is composed of directors with diverse expertise
including risk management, operations, technology and finance and accounting, equipping them to oversee cybersecurity risks
effectively.
Our CISO is responsible for updating the Audit Committee on cybersecurity risks and the processes and procedures that Company
management has put in place to seek to mitigate these risks. At least twice each year, our CISO provides updates to the Audit
Committee on cybersecurity risks, incidents and incident resolution. The Audit Committee also discusses at least annually with
the CISO regarding the status of the Company’s IT policies, procedures, disaster recovery plans and other security issues. In
addition, reports describing known cybersecurity threats are delivered to our executive leadership team on a monthly basis and
general updates relating to our cybersecurity systems are delivered to our executive leadership team on a bi-monthly basis.
Monthly cybersecurity reviews are also undertaken with our IT leadership team to discuss actionable cybersecurity issues.
In addition to our scheduled meetings, the Audit Committee, CISO and other senior members of management maintain an
ongoing and active dialogue regarding emerging or potential cybersecurity risks. The Audit Committee actively participates in
strategic decisions related to cybersecurity, offering oversight and approval for major initiatives. This involvement ensures that
cybersecurity considerations are integrated into the broader strategic objectives of the Company. This oversight review by our
Audit Committee helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with the overall
risk management framework. In addition, we require all Company associates to complete mandatory cybersecurity awareness and
information handling training at the time of hiring and on an annual basis.
Risk Management Personnel
Our CISO is primarily responsible for assessing, monitoring and managing our cybersecurity risks and has worked in the
cybersecurity field since 1996. His background includes both the public and private sectors. Our CISO has served in his position
with the Company since 2020 and has built out a comprehensive security program for the Company by adding cybersecurity
capabilities and aligning our cybersecurity systems to leading industry standards, including the National Institute of Standards and
Technology Cybersecurity Framework. In addition, our CISO oversees our governance programs, tests our compliance with
standards, remediates known risks, and leads our cybersecurity training program for associates.
Company Processes for Monitoring Cybersecurity Incidents
The CISO is regularly informed about developments in cybersecurity, including potential threats and innovative risk management
techniques. This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation, and remediation of
cybersecurity incidents. The CISO works with the SPCC to implement and oversee processes for the regular monitoring of our
information systems. This includes the deployment of advanced security measures and regular system audits to seek to identify
potential vulnerabilities. If a cybersecurity event involving the Company were to occur, the CDEC would be engaged to initially
evaluate the potential materiality of the event and the potential need for public disclosure, and the SPCC and other members of
senior management would be engaged to determine the timing and extent of the response and to consider whether any future
vulnerabilities are expected. As part of this evaluation, the Company, through the SPCC, would also work to identify actions to
seek to mitigate the impact and long-term strategies for remediation and prevention of future incidents. After an initial evaluation
by the CDEC, the relevant information regarding the cybersecurity event and its potential materiality would also be promptly
raised to the Company’s Disclosure Committee for further review and evaluation as to whether public disclosure would be
required.
Table of Contents
- 31 -
ITEM 2.
PROPERTIES
Our principal executive office and headquarters is located in Plano, Texas, in a leased facility. As of December 31, 2024, we
operated 15 facilities in the U.S., 4 in Europe, 3 in Mexico, 2 in Asia, 1 in the Dominican Republic and 1 in South America. Of
these facilities, 20 were leased and 6 were owned. We occupy approximately two million square feet of manufacturing and
RD&E space worldwide. We believe the facilities we operate and their equipment are effectively utilized, well maintained,
generally are in good condition, and will be able to accommodate our capacity needs to meet current levels of demand. We
continuously review our anticipated requirements for facilities and, on the basis of that review, may from time to time acquire
additional facilities or expand or dispose of existing facilities.
ITEM 3.
LEGAL PROCEEDINGS
For information regarding certain legal proceedings pending against us, see Note 14, “Commitments and Contingencies,” of the
Notes to Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” of this report.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
Table of Contents
- 32 -
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Common Stock and Dividends. The Company’s common stock trades on the New York Stock Exchange (“NYSE”) under the
symbol “ITGR.” We have not paid cash dividends in the past and do not anticipate paying any cash dividends in the foreseeable
future.
Stockholders. According to the records of our transfer agent, there were approximately 100 holders of record of our common
stock on February 14, 2025. Because many of these shares are held by brokers and other institutions on behalf of the ultimate
beneficial holders of these shares, we are unable to estimate the total number of stockholders represented by these record holders.
Stock Performance Graph
The following graph compares, for the five year period ended December 31, 2024, the cumulative total stockholder return for
Integer Holdings Corporation, the Russell 2000 Index, and iShares US Medical Devices ETF. The graph assumes that $100 was
invested on December 31, 2019 and assumes reinvestment of dividends. No adjustments have been made for the value provided
to shareholders for spin-offs. The stock price performance shown on the following graph is not necessarily indicative of future
price performance.
Index Value
Total Return Performance
Integer Holdings Corporation
Russell 2000 Index
iShares US Medical Devices ETF
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
$0
$50
$100
$150
$200
$250
Company/Index
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
Integer Holdings Corporation
$
100.00 $
100.94 $
106.42 $
85.12 $
123.19 $
164.76
Russell 2000 Index
100.00
104.63
134.21
114.78
131.59
142.19
iShares US Medical Devices ETF
100.00
124.18
150.30
120.67
124.55
135.27
Unregistered Sales of Equity Securities
During the three months ended December 31, 2024, the Company issued 13 shares of its unregistered common stock upon
settlement of conversions of an aggregate of $4,000 in principal amount of the 2028 Convertible Notes. These shares of the
Company’s common stock were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the
Securities Act of 1933, as amended. We did not receive any proceeds upon conversion.
ITEM 6.
[RESERVED]
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- 33 -
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our
consolidated financial statements and the related notes appearing in Item 8, “Financial Statements and Supplementary Data,” of
this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors,
including but not limited to those under the heading Item 1A, “Risk Factors,” of this report. Unless otherwise stated, all results
and comparisons below represent results from continuing operations.
Our Business
•
Our business
•
Impact of global events
•
Business acquisitions
•
Divestiture and market exit
•
Discontinued operations
Our Financial Results
•
Fiscal 2024 compared with fiscal 2023
•
Fiscal 2023 compared with fiscal 2022
•
Liquidity and capital resources
•
Cash and other commitments
•
Impact of recently issued accounting standards
Critical Accounting Estimates
•
Inventories
•
Acquisition method of accounting
•
Valuation of goodwill, indefinite-lived intangible assets and long-lived assets
Our Business
Integer Holdings Corporation is one of the largest medical device contract development and manufacturing organizations in the
world, serving the cardiac rhythm management, neuromodulation, and cardio and vascular markets. As a strategic partner of
choice to medical device companies and OEMs, we are committed to enhancing the lives of patients worldwide by providing
innovative, high-quality products and solutions.
We operate our business in one segment and derive our revenues from three product lines: Cardio & Vascular, Cardiac Rhythm
Management & Neuromodulation and Other Markets. Prior to the divestiture of Electrochem, we operated in two reportable
segments: Medical and Non-Medical.
Impact of Global Events
Our future results of operations and liquidity could be materially adversely affected by uncertainty surrounding macroeconomic
and geopolitical factors in the U.S. and globally characterized by the supply chain environment, inflationary pressure, elevated
interest rates, disruptions in the commodities’ markets as a result of the conflict between Russia and Ukraine and conflicts in the
Middle East, including Israel and Iran, and the introduction of or changes in tariffs or trade barriers. The impact of these issues on
our business will vary by geographic market and product line, but specific impacts to our business include increased borrowing
costs, labor shortages, disruptions in the supply chain, delayed or reduced customer orders and sales, delays in shipments to and
from certain countries and potential increased expenses resulting from tariffs or other trade barriers. We monitor economic
conditions closely. In response to reductions in revenue, we can take actions to align our cost structure with changes in demand
and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact
of the current and future adverse economic conditions and other developments.
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- 34 -
Business Acquisitions
We selectively evaluate acquisitions as a means to acquire additional technology or manufacturing capabilities to expand our
product offering in our key existing growth markets. Consistent with our tuck-in acquisition strategy, since the beginning of 2022
we have completed the following acquisitions, including those that impact the comparability of our results between periods:
Subsequent to the end of the 2024, on January 7, 2025, we acquired substantially all of the assets and assumed certain liabilities of
certain subsidiaries of Katahdin Industries, Inc., including its main operating subsidiary, Precision Coating LLC (collectively
“Precision”). Prior to the acquisition, Precision was a privately-held manufacturer specializing in high value surface coating
technology platforms, including fluoropolymer, anodic coatings, ion treatment solutions and laser processing. Based in
Massachusetts, Precision has additional locations in the New England area and an additional facility in Costa Rica. The
acquisition of Precision increased our service offerings to include differentiated and proprietary coatings capabilities that position
us to better meet customers’ evolving needs. Given the January 7, 2025 closing date of the acquisition, Precision’s results are not
included in this MD&A and the disclosures included herein. Refer to Note 21, “Subsequent Events,” of the Notes to Consolidated
Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” of this report for additional
information about the acquisition of Precision.
On January 5, 2024, we acquired Pulse, a privately-held technology, engineering and contract manufacturing company focused on
complex micro machining of medical device components for high growth structural heart, heart pump, electrophysiology, leadless
pacing, and neuromodulation markets. Pulse also provides proprietary advanced technologies, including hierarchical surface
restructuring (HSRTM), scratch-free surface finishes, and titanium nitride coatings. The acquisition of Pulse further increased our
end-to-end development capabilities and manufacturing footprint in targeted growth markets and provides customers with
expanded capabilities, capacity and resources to accelerate the time to market for customer products.
On October 1, 2023, we acquired substantially all of the assets and assumed certain liabilities of InNeuroCo, a recognized leader
in neurovascular catheter innovation with strong development and manufacturing capabilities. InNeuroCo’s expertise and highly
differentiated neurovascular catheter innovation complements our existing capabilities and market focus. Consistent with our
strategy, the addition of InNeuroCo further increased our ability to provide enhanced solutions to our customers in the
neurovascular catheter space.
On April 6, 2022, we acquired Aran, a recognized leader in proprietary medical textiles, high precision biomaterial coverings and
coatings as well as advanced metal and polymer braiding, Aran delivers development and manufacturing solutions for implantable
medical devices. The acquisition of Aran further increased our ability to offer complete solutions for complex delivery and
therapeutic devices in high growth cardiovascular markets such as structural heart, neurovascular, peripheral vascular, and
endovascular as well as general surgery.
Refer to Note 2, “Business Acquisitions,” of the Notes to Consolidated Financial Statements contained in Item 8, “Financial
Statements and Supplementary Data,” of this report for additional information about the acquisitions of Pulse, InNeuroCo and
Aran.
Divestiture and Market Exit
On October 31, 2024, we completed the sale of our wholly-owned subsidiary Electrochem Solutions, Inc. (“Electrochem”) for a
total purchase price of $50.0 million in cash, subject to customary working capital adjustments. Electrochem, which focused on
nonmedical applications for the energy, military and environmental sectors, represented substantially all of the assets and
operations in our previously reported Non-Medical reporting segment. Subsequently to the divestiture of Electrochem, we operate
in one reportable segment.
During 2022, we announced plans to exit our portable medical market (the “Portable Medical Exit”) to enhance profitability and
reallocate manufacturing capacity to support growth. Since that time, we have been working closely with impacted customers to
support the transition of these products to other suppliers. Due to quality and regulatory requirements, we expected it would take
three to four years to complete this transition. We currently expect Portable Medical sales to begin to wind down with the final
sales and market exit occurring in 2025. Portable Medical sales are included in our Other Markets product line sales.
Discontinued Operations
As a result of the Electrochem divestiture, the results of operations of the Electrochem business have been classified as
discontinued operations for all periods presented. Intersegment sales to Electrochem that were previously eliminated in
consolidation have been treated as third-party sales and are included in sales from continuing operations as we will continue to
supply the Electrochem business with certain specified products following its divestiture. Prior period amounts have been
reclassified to conform to the continuing operations reporting presentation.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
- 35 -
Income (loss) from discontinued operations, net of tax, was a loss of $1.2 million for 2024, which represented the results of
operations of Electrochem for ten months prior to its divestiture on October 31, 2024 and a pre-tax gain on sale of discontinued
operations of $0.8 million. During 2023, we recognized income from discontinued operations of $1.5 million, which represented
the results of operations of Electrochem for the full year in 2023. During 2022, we recognized income from discontinued
operations of $6.6 million, which included Electrochem results for the full year in 2022 and $1.0 million of income from a portion
of our AS&O product line that we sold in 2018.
All results and information presented exclude discontinued operations unless otherwise noted. Refer to Note 3, “Discontinued
Operations” of the Notes to Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary
Data,” of this report for additional information on the divestiture of Electrochem.
Our Financial Results
The following table presents selected financial information derived from our Consolidated Financial Statements, contained in
Item 8, “Financial Statements and Supplementary Data,” of this report, for the periods presented (dollars in thousands, except per
share amounts):
Change
Change
2024 vs. 2023
2023 vs. 2022
2024
2023
2022
$
%
$
%
Cardio & Vascular
$ 949,576
$ 836,343
$ 699,401
$ 113,233
14 % $ 136,942
20 %
Cardiac Rhythm Management &
Neuromodulation
660,610
612,891
534,371
47,719
8 %
78,520
15 %
Other Markets
106,410
106,422
97,505
(12)
— %
8,917
9 %
Total sales
1,716,596
1,555,656
1,331,277
160,940
10 % 224,379
17 %
Cost of sales
1,257,582
1,145,767
985,516
111,815
10 % 160,251
16 %
Gross profit
459,014
409,889
345,761
49,125
12 %
64,128
19 %
Gross profit as a % of sales
26.7 %
26.3 %
26.0 %
Operating expenses:
Selling, general and administrative
185,202
173,171
158,050
12,031
7 %
15,121
10 %
Research, development and engineering
53,425
61,967
59,762
(8,542) (14) %
2,205
4 %
Restructuring and other charges
12,149
11,428
15,271
721
6 %
(3,843) (25) %
Total operating expenses
250,776
246,566
233,083
4,210
2 %
13,483
6 %
Operating income
208,238
163,323
112,678
44,915
28 %
50,645
45 %
Interest expense
56,374
51,275
37,265
5,099
10 %
14,010
38 %
Loss on equity investments, net
780
5,691
7,636
(4,911) (86) %
(1,945) (25) %
Other (income) loss, net
3,521
975
(899)
2,546
NM
1,874
NM
Income from continuing operations
before income taxes
147,563
105,382
68,676
42,181
40 %
36,706
53 %
Provision for income taxes
26,510
16,239
8,929
10,271
63 %
7,310
82 %
Effective tax rate
18.0 %
15.4 %
13.0 %
Income from continuing operations
$ 121,053
$ 89,143
$ 59,747
$ 31,910
36 % $ 29,396
49 %
Diluted earnings per share from
continuing operations
$
3.40
$
2.64
$
1.79
$
0.76
29 % $
0.85
47 %
NM - Calculated change not meaningful.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
- 36 -
Fiscal 2024 Compared with Fiscal 2023
The following discussion is a comparison between results for the years ended December 31, 2024 and 2023.
Financial Overview
Income from continuing operations for 2024 was $121.1 million or $3.40 per diluted share compared to $89.1 million or $2.64 per
diluted share for 2023. These variances are primarily the result of the following:
•
Sales for 2024 increased 10% to $1.717 billion, driven by strong demand, new product ramps, growth from emerging
customers with PMA (premarket approval) products and contributions from our recent acquisitions.
•
Gross profit for 2024 increased $49.1 million, or 12%, primarily from higher sales volume leverage, efficiencies gained from
the continued improvement in the supply chain and contributions from our recent acquisitions.
•
Operating expenses for 2024 increased by $4.2 million compared to 2023, due to higher SG&A and Restructuring and other
charges, partially offset by lower RD&E costs.
•
Interest expense for 2024 increased by $5.1 million, primarily due to higher average debt outstanding, partially offset by a
decrease in losses from extinguishment of debt.
•
We recognized net losses on equity investments of $0.8 million and $5.7 million during 2024 and 2023, respectively. Gains
and losses on equity investments are generally unpredictable in nature.
•
Other (income) loss, net for 2024 and 2023 were losses of $3.5 million and $1.0 million, respectively, primarily due to
fluctuations in foreign currency gains and losses in the respective periods.
•
We recorded provisions for income taxes of $26.5 million and $16.2 million for 2024 and 2023, respectively. The changes in
income tax were primarily due to relative changes in pre-tax income and the impact of discrete tax items.
Sales
During the fourth quarter of 2024, we began referring to our “Advanced Surgical, Orthopedics & Portable Medical” product line
as the “Other Markets” product line, to better capture the evolving nature of our products and ongoing strategic focus. The name
change has no impact on financial information previously reported.
Sales by product line for 2024 and 2023 were as follows (dollars in thousands):
Change
2024
2023
$
%
Cardio & Vascular
$
949,576 $
836,343 $
113,233
13.5 %
Cardiac Rhythm Management & Neuromodulation
660,610
612,891
47,719
7.8 %
Other Markets
106,410
106,422
(12)
— %
Total sales
$
1,716,596 $
1,555,656 $
160,940
10.3 %
Cardio & Vascular (“C&V”) sales for 2024 increased $113.2 million, or 14%, in comparison to 2023. The increase in C&V sales
for 2024 was driven by strong growth across targeted C&V markets, driven by electrophysiology, structural heart, and the
InNeuroCo and Pulse acquisitions.
Cardiac Rhythm Management & Neuromodulation (“CRM&N”) sales for 2024 increased $47.7 million, or 8%, in comparison to
2023. CRM&N sales for 2024 were driven by double-digit neuromodulation growth from emerging customers with premarket
approval products and normalized low single-digit cardiac rhythm management growth.
Other Markets sales for 2024 were flat in comparison to 2023, as the decline in Portable Medical from the multi-year exit
announced in 2022 was offset by the Pulse acquisition.
Gross Profit
2024
2023
Gross profit (in thousands)
$
459,014
$
409,889
Gross margin
26.7 %
26.3 %
Gross profit as a percent of sales (“Gross margin”) for 2024 increased 40 basis points compared to 2023. The improved year over
year gross margin was primarily driven by higher sales volume leverage and efficiencies realized through our manufacturing
excellence initiatives.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
- 37 -
SG&A Expenses
SG&A expenses comprise the following for 2024 and 2023 (in thousands):
2024
2023
Change
Compensation and benefits(a)
$
97,086 $
89,549 $
7,537
Depreciation and amortization expense(b)
42,837
41,516
1,321
Professional fees(c)
16,338
15,553
785
Contract services(d)
14,197
11,774
2,423
Bank fees and charges(e)
3,695
2,903
792
All other SG&A
11,049
11,876
(827)
Total SG&A expense
$
185,202 $
173,171 $
12,031
__________
(a)
Compensation and benefits increased primarily due to annual merit increases and an increase in headcount related to the
recent Pulse and InNeuroCo acquisitions.
(b)
Depreciation and amortization expense increased due to amortization of intangible assets from the Pulse and InNeuroCo
customer list intangible assets.
(c)
Professional fees increased primarily due to increased costs associated with third-party information technology services and
higher legal expense related to general corporate matters.
(d)
Contract services expense increased primarily due to higher software costs from information technology enhancements.
(e)
The increase in bank fees and charges was driven by increased fees related to our factoring and supplier financing
arrangements, primarily due to higher volume under both arrangements during 2024 compared to 2023.
RD&E
RD&E expenses for 2024 and 2023 were $53.4 million and $62.0 million, respectively. The decrease in RD&E expenses for
2024 compared to 2023 was primarily due to lower labor costs and the timing of program milestone achievements for customer
funded programs. RD&E expenses are influenced by the number and timing of in-process projects and labor hours and other costs
associated with these projects. Our research and development initiatives continue to emphasize new product development, product
improvements, and the development of new technological platform innovations.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
- 38 -
Restructuring and Other Charges
We continuously evaluate our business and identify opportunities to realign resources to better serve our customers and markets,
improve operational efficiency and capabilities, and lower operating costs. To realize the benefits associated with these
opportunities, we undertake restructuring-type activities to transform our business. We incur costs associated with these activities,
which primarily include exit and disposal costs and other costs directly related to the restructuring initiative. Restructuring
charges include exit and disposal costs from these activities. In addition, from time to time, we incur costs associated with
acquiring and integrating businesses, and certain other general expenses, including asset impairments.
Restructuring and other charges comprise the following for 2024 and 2023 (in thousands):
2024
2023
Change
Restructuring charges(a)
4,013
5,874
(1,861)
Acquisition and integration costs(b)
8,941
3,444
5,497
Other general expenses(c)
(805)
2,110
(2,915)
Total restructuring and other charges
$
12,149 $
11,428 $
721
__________
(a)
Restructuring charges for 2024 and 2023 primarily consisted of costs associated with our strategic reorganization and
alignment and manufacturing alignment to support growth initiatives. Included in restructuring charges for 2023 are $3.6
million in costs related to the relocation and closure of our R&D facility in Israel.
(b)
Amount for 2024 primarily includes acquisition expenses of $5.5 million, primarily related to the Pulse and Precision Coating
(completed in January 2025) acquisitions, and integration expenses of $3.4 million, primarily related to the InNeuroCo and
Pulse acquisitions. Amount for 2023 primarily includes acquisition expenses of $0.7 million, primarily related to the
InNeuroCo and Pulse acquisitions, and integration expenses of $2.8 million, primarily related to the Aran and Oscor
acquisitions. The 2024 and 2023 acquisition amounts are net of benefits of $3.6 million and $0.7 million, respectively,
related to adjustments to the fair value of acquisition-related contingent consideration liabilities. See Note 18, “Financial
Instruments and Fair Value Measurements,” of the Notes to Consolidated Financial Statements contained in Item 8,
“Financial Statements and Supplementary Data,” of this report for additional information related to the fair value
measurement of the contingent consideration.
(c)
Amounts include gains and losses in connection with the disposal of property, plant and equipment. In addition, during 2024
and 2023 we recorded $(1.2) million and $2.0 million, respectively, of property loss (recoveries) relating to property damage
which occurred in the fourth quarter of 2023 at one of our manufacturing facilities.
Refer to Note 12, “Restructuring and Other Charges,” of the Notes to Consolidated Financial Statements contained in Item 8,
“Financial Statements and Supplementary Data,” of this report for additional information regarding these initiatives.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
- 39 -
Interest Expense
Information relating to our interest expense for 2024 and 2023 is as follows (dollars in thousands):
2024
2023
Change
Amount
Rate
Amount
Rate
Amount
Rate
(bp)
Contractual interest expense
$
51,520
4.83 % $
44,082
4.62 % $
7,438
21
Gain on interest rate swap
—
—
(1,262)
(0.12)
1,262
12
Amortization of deferred debt issuance
costs and original issue discount
4,057
0.42
3,536
0.42
521
—
Loss from extinguishment of debt
—
—
4,518
0.46
(4,518)
(46)
Interest expense on borrowings
55,577
5.25 %
50,874
5.38 %
4,703
(13)
Other interest expense
797
401
396
Total interest expense
$
56,374
$
51,275
$
5,099
Interest expense relates primarily to borrowings made under our Senior Secured Credit Facilities, which consist of a five-year
$800 million revolving credit facility (the “Revolving Credit Facility”) and a five-year “term A” loan (the “TLA Facility”), and
our 2028 Convertible Notes.
During 2024, contractual interest expense primarily increased due to higher average debt outstanding. The higher average debt
balance outstanding is primarily the result of borrowings on our Revolving Credit Facility to fund the Pulse and InNeuroCo
acquisitions.
Other components of interest expense on borrowings include gains on an interest rate swap contract and non-cash amortization
and write-off (losses from extinguishment of debt) of deferred debt issuance costs and original issue discount. Gain on interest
rate swap includes realized gains on an interest rate swap contract which matured as of June 30, 2023. Amortization of deferred
debt issuance costs and original issue discount increased during 2024 compared to the same periods in 2023 as a result of higher
unamortized balances related to new debt. The losses from extinguishment of debt during 2023 were related to prepayments of
portions of the TLA Facility and full repayment of our Term Loan B facility in connection with issuance of the 2028 Convertible
Notes.
See Note 9, “Debt,” of the Notes to the Consolidated Financial Statements contained in Item 8, “Financial Statements and
Supplementary Data,” of this report for additional information pertaining to our debt.
As of December 31, 2024 and 2023, approximately 50% of our principal amount of debt were fixed rate borrowings.
Loss on Equity Investments, Net
During 2024 and 2023, we recognized net losses of $0.8 million and $5.7 million, respectively, on our equity investments. Gains
and losses on equity investments are generally unpredictable in nature. During 2024 and 2023, we recognized impairment
charges of $0.2 million and $5.2 million, respectively, related to investments in our non-marketable equity securities. The
residual losses for 2024 and 2023 relate to our share of equity method investee gains/losses, including unrealized appreciation and
depreciation of the underlying interests of the investee. As of December 31, 2024 and December 31, 2023, the carrying value of
our equity investments was $7.4 million and $8.2 million, respectively. See Note 18, “Financial Instruments and Fair Value
Measurements,” of the Notes to Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary
Data,” of this report for further details regarding these investments.
Other (Income) Loss, Net
Other (income) loss, net for 2024 and 2023 were net losses of $3.5 million and $1.0 million, respectively. Other (income) loss, net
primarily includes gains/losses from the impact of exchange rates on transactions denominated in foreign currencies. Our foreign
currency transaction gains/losses are based primarily on fluctuations of the U.S. dollar relative to the Euro, Mexican peso,
Uruguayan peso, Malaysian ringgits or Dominican peso.
The impact of foreign currency exchange rates on transactions denominated in foreign currencies included in Other (income) loss,
net for 2024 and 2023 were net losses of $3.2 million and $1.0 million, respectively. We continually monitor our foreign
currency exposures and seek to take steps to mitigate these risks. However, fluctuations in foreign currency exchange rates could
have a significant impact, positive or negative, on our financial results in the future.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
- 40 -
Provision for Income Taxes
During 2024 and 2023, our provision for income taxes was $26.5 million on worldwide pre-tax income of $147.6 million
(effective tax rate of 18.0%) and $16.2 million on worldwide pre-tax income of $105.4 million (effective tax rate of 15.4%),
respectively. The stand-alone U.S. component of the effective tax rate for 2024 reflected a $10.5 million provision on $55.6
million of pre-tax book income (effective tax rate of 19.0%) versus a $5.4 million provision on $29.1 million of pre-tax book
income (effective tax rate of 18.5%) for 2023. The stand-alone International component of the effective tax rate for 2024
reflected a $16.0 million provision on $92.0 million of pre-tax book income (effective tax rate of 17.4%) versus a $10.8 million
provision on $76.3 million of pre-tax book income (effective tax rate of 14.2%) for 2023.
The provision for income taxes for 2024 differs from the U.S. statutory rate due to the following (dollars in thousands):
U.S.
International
Combined
$
%
$
%
$
%
Income before provision for income taxes
$ 55,571
$ 91,992
$ 147,563
Provision at statutory rate
$ 11,670
21.0 % $ 19,318
21.0 % $ 30,988
21.0 %
Federal tax credits (including R&D)
(13,628)
(24.5)
—
—
(13,628)
(9.2)
Foreign rate differential
1,881
3.4
(6,655)
(7.2)
(4,774)
(3.2)
Stock-based compensation
1,506
2.7
—
—
1,506
1.0
Uncertain tax positions
289
0.5
—
—
289
0.2
State taxes, net of federal benefit
1,413
2.5
—
—
1,413
1.0
U.S. tax on foreign earnings, net of §250 deduction
7,972
14.4
—
—
7,972
5.4
Valuation allowance
216
0.4
202
0.2
418
0.3
OECD Pillar II: Global Minimum Tax
—
—
2,189
2.4
2,189
1.5
Other
(792)
(1.4)
929
1.0
137
—
Provision for income taxes
$ 10,527
19.0 % $ 15,983
17.4 % $ 26,510
18.0 %
The provision for income taxes for 2023 differs from the U.S. statutory rate due to the following (dollars in thousands):
U.S.
International
Combined
$
%
$
%
$
%
Income before provision for income taxes
$ 29,089
$ 76,293
$ 105,382
Provision at statutory rate
$
6,109
21.0 % $ 16,021
21.0 % $ 22,130
21.0 %
Federal tax credits (including R&D)
(11,129)
(38.3)
—
—
(11,129)
(10.6)
Foreign rate differential
1,921
6.6
(7,434)
(9.7)
(5,513)
(5.2)
Stock-based compensation
1,847
6.3
—
—
1,847
1.7
Uncertain tax positions
(1,170)
(4.0)
—
—
(1,170)
(1.1)
State taxes, net of federal benefit
1,108
3.8
—
—
1,108
1.1
U.S. tax on foreign earnings, net of §250 deduction
6,194
21.3
—
—
6,194
5.9
Valuation allowance
411
1.4
1,326
1.7
1,737
1.6
Other
120
0.4
915
1.2
1,035
1.0
Provision for income taxes
$
5,411
18.5 % $ 10,828
14.2 % $ 16,239
15.4 %
Our effective tax rate of 18.0% for 2024 is higher than our effective tax rate of 15.4% for 2023, primarily due to the impact of the
OECD Pillar II Global Minimum Tax enacted on January 1, 2024, the expiration of the Malaysia Tax Holiday described below,
the increase in pre-tax book income and related statutory rate differential, and the impact of non-recurring discrete tax benefits
recorded in 2023 for provision to return adjustments for the 2022 tax return filed in 2023, partially offset by favorable discrete tax
benefits in 2024 including the release of uncertain tax benefits related to the expiration of the statute of the 2020 tax year.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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Our effective tax rate for 2024 differs from the U.S. federal statutory tax rate of 21% due principally to the estimated impact of
Federal Tax Credits (including R&D credits and Foreign tax credits), stock-based compensation and the impact of earnings
realized in foreign jurisdictions with statutory rates that are different than the U.S. federal statutory rate. These benefits are
partially offset by the impact of the OECD Pillar II Global Minimum Tax enacted on January 1, 2024, and the impact of U.S.
taxes on foreign earnings, including the GILTI provision which requires us to include foreign subsidiary earnings in excess of a
deemed return on a foreign subsidiary’s tangible assets in our U.S. income tax return. The U.S. tax on foreign earnings is reflected
net of a statutory deduction of 50% of the GILTI inclusion (subject to limitations based on U.S. taxable income, if any) and net of
FDII that provides a 37.5% deduction to domestic companies for certain foreign sales and services income. The primary foreign
jurisdictions in which we operate and the statutory tax rate for each respective jurisdiction include Switzerland (22%), Mexico
(30%), Uruguay (25%), Ireland (12.5%) and Malaysia (24%). We have previously operated in Malaysia under a tax holiday. We
met the conditions of the Malaysian tax holiday and the holiday expired in accordance with its original terms on April 30, 2023.
Our manufacturing operations in the Dominican Republic operate under a free trade zone agreement through March 2034.
There is a potential for volatility of our effective tax rate due to several factors, including changes in the mix of pre-tax income
and the jurisdictions to which it relates, business acquisitions, settlements with taxing authorities, changes in tax rates, and foreign
currency exchange rate fluctuations. In addition, we continue to explore tax planning opportunities that may have a material
impact on our effective tax rate.
It is reasonably possible that a reduction of approximately $4.0 million of the balance of unrecognized tax benefits may occur
within the next twelve months as a result of the lapse of the statute of limitations and/or audit settlements. As of December 31,
2024, approximately $6.1 million of unrecognized tax benefits would favorably impact the effective tax rate (net of federal impact
on state issues), if recognized.
On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which
generally provides for a minimum effective tax rate of 15%, as established by the OECD Pillar Two Framework. The effective
dates are January 1, 2024, and January 1, 2025 for different aspects of the directive. Our 2024 provision for income taxes includes
the impact of the Pillar Two 15% Global Minimum Tax, with an enactment date of January 1, 2024. A significant number of other
countries are expected to also implement similar legislation with varying effective dates in the future. We are continuing to
evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual
countries.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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Fiscal 2023 Compared with Fiscal 2022
The following discussion is a comparison between results for the years ended December 31, 2023 and 2022.
Sales
Sales by product line for 2023 and 2022 were as follows (dollars in thousands):
Change
2023
2022
$
%
Cardio & Vascular
$
836,343 $
699,401 $
136,942
19.6 %
Cardiac Rhythm Management & Neuromodulation
612,891
534,371
78,520
14.7 %
Other Markets
106,422
97,505
8,917
9.1 %
Total sales
$
1,555,656 $
1,331,277 $
224,379
16.9 %
C&V sales for 2023 increased $136.9 million or 20% in comparison to 2022. The increase in C&V sales for 2023 was driven by
strong demand, acquisition performance and supply chain improvements, with double-digit growth across all C&V markets.
Foreign currency exchange rate fluctuations increased C&V sales for 2023 by $1.2 million.
CRM&N sales for 2023 increased $78.5 million or 15% in comparison to 2022. CRM&N sales for 2023 were driven by double-
digit CRM growth from strong customer demand, double-digit Neuromodulation growth from emerging customers, and supply
chain improvements.
Other Markets sales for 2023 increased by $8.9 million in comparison to 2022, driven by high double-digit growth in Portable
Medical related to demand to support the multi-year Portable Medical exit.
Gross Profit
2023
2022
Gross profit (in thousands)
$
409,889
$
345,761
Gross margin
26.3 %
26.0 %
Gross profit as a percent of sales (“Gross margin”) for 2023 increased 30 basis points compared to 2022. The improved year over
year gross margin was primarily due to higher sales volume leverage and efficiencies gained from the continued improvement in
the supply chain.
SG&A Expenses
SG&A expenses comprise the following for 2023 and 2022 (in thousands):
2023
2022
Change
Compensation and benefits(a)
$
89,549 $
83,538 $
6,011
Depreciation and amortization expense(b)
41,516
37,682
3,834
Professional fees(c)
15,553
13,929
1,624
Contract services(d)
11,774
10,157
1,617
Bank fees and charges(e)
2,903
1,015
1,888
All other SG&A
11,876
11,729
147
Total SG&A expense
$
173,171 $
158,050 $
15,121
__________
(a)
Compensation and benefits increased primarily due to annual merit increases and higher incentive compensation, partially
offset by lower headcount.
(b)
Depreciation and amortization expense increased due to amortization of customer list intangible assets from the acquisitions
of Aran and Oscor, which was acquired in December 2021.
(c)
Professional fees increased primarily due to increased costs associated with third-party information technology services.
(d)
Contract services expense increased primarily due to higher software costs from information technology enhancements.
(e)
The increase in bank fees and charges was driven by increased factoring and supplier financing fees primarily due to the
launch of accounts receivable factoring arrangements during 2023.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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RD&E
RD&E expenses for 2023 and 2022 were $62.0 million and $59.8 million, respectively. The increase in RD&E expenses for 2023
compared to 2022 was primarily due to higher labor costs attributed to annual merit increases and higher incentive compensation.
Restructuring and Other Charges
Restructuring and other charges comprise the following for 2023 and 2022 (in thousands):
2023
2022
Change
Restructuring charges(a)
5,874
4,008
1,866
Acquisition and integration costs(b)
3,444
10,075
(6,631)
Other general expenses(c)
2,110
1,188
922
Total restructuring and other charges
$
11,428 $
15,271 $
(3,843)
__________
(a)
Restructuring charges for 2023 and 2022 primarily consisted of costs associated with our strategic reorganization and
alignment and manufacturing alignment to support growth initiatives. Included in restructuring charges for 2023 are $3.6
million in costs related to the relocation and closure of our R&D facility in Israel.
(b)
Amount for 2023 primarily includes acquisition expenses related to the InNeuroCo and Pulse acquisitions, and integration
expenses related to the Aran and Oscor acquisitions. Amount for 2022 primarily includes expenses related to the Aran and
Oscor acquisitions. The 2023 and 2022 amounts also include a benefit of $0.7 million and expense of $3.1 million,
respectively, related to adjustments to the fair value of acquisition-related contingent consideration liabilities.
(c)
Amounts include gains and losses in connection with the disposal of property, plant and equipment. In addition, the 2023
amount includes $2.0 million of property loss and related expenses resulting from property damage which occurred in the
fourth quarter of 2023 at one of our manufacturing facilities.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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Interest Expense
Information relating to our interest expense for 2023 and 2022 is as follows (dollars in thousands):
2023
2022
Change
Amount
Rate
Amount
Rate
Amount
Rate
(bp)
Contractual interest expense
$
44,082
4.62 % $
33,915
3.80 % $
10,167
82
(Gain) loss on interest rate swap
(1,262)
(0.12)
918
0.10
(2,180)
(22)
Amortization of deferred debt issuance
costs and original issue discount
3,536
0.42
1,922
0.23
1,614
19
Loss from extinguishment of debt
4,518
0.46
114
0.01
4,404
45
Interest expense on borrowings
50,874
5.38 %
36,869
4.14 %
14,005
124
Other interest expense
401
396
5
Total interest expense
$
51,275
$
37,265
$
14,010
During 2023, contractual interest expense increased due to higher average debt outstanding combined with increasing applicable
interest rates. The higher average debt balance outstanding was the result of incremental borrowings related to the strategic
change to replace some of our variable rate debt to fixed rate through issuance of the 2028 Convertible Notes. Interest rates
climbed due to increases in overall market rates, partially offset by a 25 basis point decrease in the interest rate margin on our
Senior Secured Credit Facilities. The decrease in the interest rate margin was effective during the second quarter of 2023 based
on our secured net leverage ratio.
Our outstanding interest rate swap matured as of June 30, 2023. Amortization of deferred debt issuance costs and original issue
discount increased during 2023 compared to 2022 as a result of higher unamortized balances related to new debt. The losses from
extinguishment of debt during 2023 were related to prepayments of portions of the TLA Facility and full repayment of our Term
Loan B facility in connection with issuance of the 2028 Convertible Notes.
Loss on Equity Investments, Net
During 2023 and 2022, we recognized net losses of $5.7 million and $7.6 million, respectively, on our equity investments. During
2023, we recognized impairment charges of $5.2 million related to investments in our non-marketable equity securities. The
residual losses for 2023 and 2022 relate to our share of equity method investee gains/losses, including unrealized appreciation and
depreciation of the underlying interests of the investee.
Other (Income) Loss, Net
Other (income) loss, net for 2023 were losses of $1.0 million compared to income of $0.9 million in 2022. Other (income) loss,
net primarily includes gains/losses from the impact of exchange rates on transactions denominated in foreign currencies. The
impact of foreign currency exchange rates on transactions denominated in foreign currencies included in Other (income) loss, net
for 2023 were net losses of $1.0 million and net gains of $1.1 million for 2022.
Provision for Income Taxes
During 2023 and 2022, our provision for income taxes was $16.2 million on worldwide pre-tax income of $105.4 million
(effective tax rate of 15.4%) and $8.9 million on worldwide pre-tax income of $68.7 million (effective tax rate of 13.0%),
respectively. The stand-alone U.S. component of the effective tax rate for 2023 reflected a $5.4 million provision on $29.1 million
of pre-tax book income (effective tax rate of 18.5%) versus a $3.3 million provision on $7.2 million of pre-tax book income
(effective tax rate of 45.6%) for 2022. The stand-alone International component of the effective tax rate for 2023 reflected a
$10.8 million provision on $76.3 million of pre-tax book income (effective tax rate of 14.2%) versus a $5.7 million provision on
$61.5 million of pre-tax book income (effective tax rate of 9.2%) for 2022.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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The provision for income taxes for 2023 differs from the U.S. statutory rate due to the following (dollars in thousands):
U.S.
International
Combined
$
%
$
%
$
%
Income before provision for income taxes
$ 29,089
$ 76,293
$ 105,382
Provision at statutory rate
$
6,109
21.0 % $ 16,021
21.0 % $ 22,130
21.0 %
Federal tax credits (including R&D)
(11,129)
(38.3)
—
—
(11,129)
(10.6)
Foreign rate differential
1,921
6.6
(7,434)
(9.7)
(5,513)
(5.2)
Stock-based compensation
1,847
6.3
—
—
1,847
1.7
Uncertain tax positions
(1,170)
(4.0)
—
—
(1,170)
(1.1)
State taxes, net of federal benefit
1,108
3.8
—
—
1,108
1.1
U.S. tax on foreign earnings, net of §250 deduction
6,194
21.3
—
—
6,194
5.9
Valuation allowance
411
1.4
1,326
1.7
1,737
1.6
Other
120
0.4
915
1.2
1,035
1.0
Provision for income taxes
$
5,411
18.5 % $ 10,828
14.2 % $ 16,239
15.4 %
The provision for income taxes for 2022 differs from the U.S. statutory rate due to the following (dollars in thousands):
U.S.
International
Combined
$
%
$
%
$
%
Income before provision for income taxes
$
7,164
$ 61,512
$ 68,676
Provision at statutory rate
$
1,505
21.0 % $ 12,917
21.0 % $ 14,422
21.0 %
Federal tax credits (including R&D)
(9,305) (130.0)
—
—
(9,305)
(13.6)
Foreign rate differential
1,459
20.4
(9,152)
(14.9)
(7,693)
(11.2)
Stock-based compensation
1,983
27.7
—
—
1,983
2.9
Uncertain tax positions
2,469
34.5
—
—
2,469
3.6
State taxes, net of federal benefit
687
9.6
—
—
687
1.0
U.S. tax on foreign earnings, net of §250 deduction
5,323
74.3
—
—
5,323
7.8
Valuation allowance
(912)
(12.7)
694
1.1
(218)
(0.3)
Other
60
0.8
1,201
2.0
1,261
1.8
Provision for income taxes
$
3,269
45.6 % $
5,660
9.2 % $
8,929
13.0 %
Our effective tax rate of 15.4% for 2023 is higher than our effective tax rate of 13.0% for 2022, primarily due to the expiration of
a tax holiday in Malaysia, the increase in pre-tax book income and related statutory rate differential, and the impact of non-
recurring discrete tax benefits recorded in 2022 for provision to return adjustments for the 2021 tax return filed in 2022, partially
offset by favorable discrete tax benefits in 2023 from the release of uncertain tax benefits related to the expiration of the statute of
the 2019 tax year.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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Liquidity and Capital Resources
Sources of Liquidity
(dollars in thousands)
December 31,
2024
December 31,
2023
Cash and cash equivalents
$
46,543 $
23,674
Working capital from continuing operations(1)
$
443,946 $
382,497
Current ratio from continuing operations(1)
2.95
2.76
__________
(1) Excludes assets held for sale at December 31, 2023.
Cash and cash equivalents at December 31, 2024 increased by $22.9 million from December 31, 2023, primarily as a result of
cash generated by operating activities, proceeds from the sale of Electrochem, and net borrowings on our Revolving Credit
Facility, mostly offset by purchases of property, plant and equipment and cash paid to acquire Pulse.
Working capital increased by $61.4 million from December 31, 2023, or $38.6 million excluding the increase in cash and cash
equivalents. The increase in working capital, exclusive of cash and cash equivalents, primarily relates to positive fluctuations in
accounts receivable, inventory and contract assets. Inventory increased from higher sales volume and product demand which also
contributed to the increase in contract assets and accounts receivable.
At December 31, 2024, $22.8 million of our cash and cash equivalents were held by foreign subsidiaries. We intend to limit our
distributions from foreign subsidiaries to previously taxed income or current period earnings. If distributions are made utilizing
current period earnings, we will record foreign withholding taxes in the period of the distribution.
As of December 31, 2024, our capital structure consisted of $990.2 million of debt, net of deferred debt issuance costs and
unamortized discounts, outstanding under our Senior Secured Credit Facilities and the 2028 Convertible Notes, and 34 million
shares of common stock outstanding. As of December 31, 2024, we have access to $668.7 million of borrowing capacity under
our Revolving Credit Facility. We are authorized to issue up to 100 million shares of common stock, of which approximately 34
million shares were issued and outstanding at December 31, 2024, and 100 million shares of preferred stock, none of which were
outstanding at December 31, 2024. As of December 31, 2024, our contractual debt service obligations for 2025, consisting of
principal and interest on our outstanding debt and commitment fees on the unused portion of the Revolving Credit Facility are
estimated to be approximately $52 million. Actual principal and interest payments may be higher if, for instance, the applicable
interest rates on our Senior Secured Credit Facilities increase, we borrow additional amounts on our Revolving Credit Facility, or
we pay principal amounts in excess of the required minimums reflected in the contractual debt service obligations above.
Our off-balance sheet commitments related to our outstanding letters of credit as of December 31, 2024 were $5.3 million.
Credit Facilities and 2028 Convertible Notes
As of December 31, 2024, we had Senior Secured Credit Facilities that consist of an $800 million Revolving Credit Facility, with
an outstanding principal balance of $126 million, and a TLA Facility with an outstanding principal balance of $375 million. The
Revolving Credit Facility and TLA Facility mature on February 15, 2028. The Senior Secured Credit Facilities include a
mandatory prepayment provision customary for similar credit facilities.
During 2023, we issued $500 million aggregate principal amount of notes. The 2028 Convertible Notes mature on February 15,
2028 and bear interest at a fixed rate of 2.125% per annum. The conditions allowing holders of the 2028 Convertible Notes to
convert the 2028 Convertible Notes were met as of June 30, 2024 and, thereafter, continued to be met as of December 31, 2024, in
each instance due to the trading price of our common stock exceeding 130% of the 2028 Convertible Notes conversion price on at
least 20 out of the 30 consecutive trading days prior to such date. Therefore, the 2028 Convertible Notes became eligible for
conversion at the option of the holders beginning on July 1, 2024 and will continue to be eligible for conversion through March
31, 2025. Any determination regarding the convertibility of the 2028 Convertible Notes during future periods will be made in
accordance with the terms of the indenture governing the 2028 Convertible Notes. If a conversion request occurs, we have the
intent and ability to refinance the amounts that may become due with respect to the 2028 Convertible Notes using available
borrowing capacity under the Revolving Credit Facility. As such, the obligations associated with the 2028 Convertible Notes
continue to be classified as a long-term liability on the Consolidated Balance Sheets as of December 31, 2024.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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The Revolving Credit Facility and TLA Facility contain covenants requiring that we maintain (i) a Total Net Leverage Ratio not
to exceed 5.00:1.00, subject to increase in certain circumstances following certain qualified acquisitions and (ii) an interest
coverage ratio of at least 2.50:1.00. As of December 31, 2024, we were in compliance with these financial covenants. As of
December 31, 2024, our Total Net Leverage Ratio, calculated in accordance with our Senior Secured Credit Facilities agreement,
was approximately 2.3:1.0. For the year ended December 31, 2024, our interest coverage ratio, calculated in accordance with our
Senior Secured Credit Facilities agreement, was approximately 8.1:1.0.
Failure to comply with these financial covenants would result in an event of default as defined under the Revolving Credit Facility
and TLA Facility unless waived by the lenders. An event of default may result in the acceleration of our indebtedness. As a
result, management believes that compliance with these covenants is material to us.
See Note 9, “Debt,” of the Notes to the Consolidated Financial Statements contained in Item 8, “Financial Statements and
Supplementary Data,” of this report for a further information of our outstanding debt.
Factoring Arrangements
We may utilize accounts receivable factoring arrangements with financial institutions to accelerate the timing of cash receipts and
enhance our cash position. These arrangements, in all cases, do not contain recourse provisions which would obligate us in the
event of our customers’ failure to pay. During 2024 and 2023, we sold, without recourse, $231.0 million and $144.4 million,
respectively, of accounts receivable. See Note 1, “Summary of Significant Accounting Policies,” of the Notes to the Consolidated
Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” of this report for a further information
regarding the factoring arrangements.
Summary of Cash Flow
The following cash flow summary information includes cash flows related to discontinued operations (in thousands):
2024
2023
Cash provided by (used in):
Operating activities
$
205,205 $
180,213
Investing activities
(195,414)
(163,367)
Financing activities
13,321
(18,014)
Effect of foreign currency exchange rates on cash and cash equivalents
(243)
570
Net change in cash and cash equivalents
$
22,869 $
(598)
Operating Activities - During 2024, we generated cash from operations of $205.2 million, compared to $180.2 million in 2023.
The increase of $25.0 million was the result of a $27.3 million increase in net income adjusted for non-cash items such as
depreciation and amortization, partially offset by a $2.3 million decrease in cash flow provided by changes in operating assets and
liabilities. The increase in net income adjusted for non-cash items such as depreciation and amortization was primarily from
higher sales volume and margin partially offset by higher acquisition costs due to the Pulse and Precision acquisitions.
Investing Activities – The $32.0 million increase in net cash used in investing activities was primarily attributable to an increase
in net cash paid for acquisitions, partially offset by decreased purchases of property, plant and equipment and net cash proceeds
from the sale of Electrochem. Investing activities for 2024 included net cash paid of $138.5 million for the Pulse acquisition. For
2023, investing activities included $43.6 million for the InNeuroCo acquisition.
Financing Activities – Net cash provided by financing activities during 2024 was $13.3 million compared to net cash used in
financing activities of $18.0 million in 2023. Cash provided by financing activities during 2024 was primarily due to net
borrowings on our Revolving Credit Facility of $27.0 million. The cash used in financing activities during 2023 was primarily
related to the $335.6 million full repayment of our Term Loan B facility, $80.3 million in repayments of our TLA Facility, $41.7
million of net payments on our Revolving Credit Facility, $35.0 million of capped call purchases related to the issuance of our
2028 Convertible Notes, and $7.7 million paid to settle certain contingent consideration liabilities related to acquisitions, which
was partially offset by the issuance of our 2028 Convertible Notes of $486.3 million.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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Cash and Other Commitments
We have material cash requirements to pay third parties under various contractual obligations discussed below. Presented below is
a summary of contractual obligations and other minimum commitments as of December 31, 2024. Refer to Note 14,
“Commitments and Contingencies,” of the Notes to Consolidated Financial Statements contained in Item 8, “Financial Statements
and Supplementary Data,” of this report for additional information regarding self-insurance liabilities, which are not reflected in
the table below.
Payments due by period
Total
Less than 1
year
1-3 years
3-5 years
More than 5
years
Principal amount of debt outstanding(a)
$
1,001,000 $
10,000 $
57,500 $
933,500 $
—
Interest on debt(a)
124,992
41,652
78,774
4,566
—
Operating lease obligations(b)
115,782
12,501
24,804
23,671
54,806
Finance lease obligations(b)
35,484
5,952
10,789
6,053
12,690
__________
(a)
Interest payments in the table above reflect the contractual interest payments on our outstanding debt and commitment fees
on the unused portion of the Revolving Credit Facility based upon the balance outstanding and applicable interest rates at
December 31, 2024, and exclude the impact of the debt discount and deferred issuance costs. Refer to Note 9, “Debt,” of the
Notes to Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” of this
report for additional information regarding long-term debt.
(b)
Refer to Note 15, “Leases,” of the Notes to Consolidated Financial Statements contained in Item 8, “Financial Statements and
Supplementary Data,” of this report for additional information about our operating and finance lease obligations.
Capital expenditures, which are net of proceeds from the sale of property, plant and equipment, for 2024 totaled $105.3 million,
compared to $119.8 million and $74.1 million in 2023 and 2022, respectively. Capital expenditures in 2024 related primarily to
upgrades of manufacturing facilities, manufacturing equipment and information technology systems. We expect 2025 capital
expenditures to approximate $110 million to $120 million, with a significant portion related to additional upgrades of
manufacturing facilities, as well as for manufacturing equipment to support productivity initiatives and information technology
systems.
We have recorded liabilities for unrecognized tax benefits that, because of their nature, have a high degree of uncertainty
regarding the timing of future cash payment and other events that extinguish these liabilities. Refer to Note 13, “Income Taxes,”
of the Notes to Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data,” of this report for
additional information about these unrecognized tax benefits.
Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash
equivalents and borrowings under our Revolving Credit Facility are sufficient to meet our working capital, debt service and
capital expenditure requirements for the next twelve months. However, such cash flows are dependent upon our future operating
performance which, in turn, is subject to prevailing economic conditions, and to financial, business and other factors, including
the conditions of our markets, some of which are beyond our control. If our future financing needs increase, we may need to
arrange additional debt or equity financing. We continually evaluate and consider various financing alternatives to enhance or
supplement our existing financial resources. However, we cannot be assured that we will be able to enter into any such
arrangements on acceptable terms or at all.
Impact of Recently Issued Accounting Standards
In the normal course of business, we evaluate all new accounting pronouncements issued by the Financial Accounting Standards
Board (“FASB”), SEC, or other authoritative accounting bodies to determine the potential impact they may have on our
Consolidated Financial Statements. Refer to Note 1, “Summary of Significant Accounting Policies,” of the Notes to Consolidated
Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” of this report for additional
information about these recently issued accounting standards and their potential impact on our financial condition or results of
operations.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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CRITICAL ACCOUNTING ESTIMATES
Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial
statements, which have been prepared in accordance with GAAP. We make estimates and assumptions in the preparation of our
consolidated financial statements that affect the reported amounts of assets and liabilities, revenue and expenses and related
disclosures of contingent assets and liabilities. We base our estimates and judgments upon historical experience and other factors
that are believed to be reasonable under the circumstances. Changes in estimates or assumptions could result in a material
adjustment to the consolidated financial statements.
We have identified several critical accounting estimates. An accounting estimate is considered critical if both: (a) the nature of the
estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (b) the impact of changes in the
estimates and assumptions have had or are reasonably likely to have a material effect on the consolidated financial statements.
This listing is not a comprehensive list of all of our accounting policies. For further information regarding the application of these
and other accounting policies, see Note 1, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial
Statements contained in Item 8, “Financial Statements and Supplementary Data,” of this report.
Inventories
Inventories are measured on a first-in, first-out basis at the lower of cost or net realizable value. Net realizable value is the
estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and
transportation. The valuation of inventory requires us to estimate obsolete or excess inventory, as well as inventory that is not of
saleable quality.
Historically, our inventory adjustment has been adequate to cover our losses. However, variations in methods or assumptions
could have a material impact on our results. If our demand forecast for specific products is greater than actual demand and we fail
to reduce manufacturing output accordingly, we could be required to record additional inventory write-down or expense a greater
amount of overhead costs, which would negatively impact our net income.
Acquisition Method of Accounting
We account for business combinations using the acquisition method of accounting. We recognize the identifiable assets acquired,
the liabilities assumed and any noncontrolling interest in the acquiree at their estimated fair values on the date of acquisition. Any
excess purchase price over the fair value of net assets acquired is recorded to goodwill. Determining the fair value of these items
requires management’s judgment and more often than not the utilization of independent valuation specialists. The judgments
made in the determination of the estimated fair values assigned to the assets acquired, the liabilities assumed and any
noncontrolling interest in the investee, as well as the estimated useful life of each asset and the duration of each liability, can
materially impact the financial statements in periods after acquisition, such as through depreciation and amortization expense. For
more information on our acquisitions and application of the acquisition method, see Note 2, “Business Acquisitions,” of the Notes
to Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” of this report.
Valuation of Goodwill, Indefinite-Lived Intangible Assets and Long-Lived Assets
We make assumptions in establishing the carrying value, fair value and, if applicable, the estimated lives of our intangible and
other long-lived assets. Goodwill and intangible assets determined to have an indefinite useful life are not amortized. Instead,
these assets are evaluated for impairment on an annual basis on the last day of our fiscal year and whenever events or business
conditions change that could indicate that the asset is impaired. Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable.
Evaluation of goodwill for impairment
We test our reporting unit’s goodwill for impairment on the last day of our fiscal year and between annual tests if an event occurs
or circumstances change that would more-likely-than-not reduce the fair value of the reporting unit below its carrying value. In
conducting this annual impairment testing, we may first perform a qualitative assessment of whether it is more-likely-than-not
that the reporting unit’s fair value is less than its carrying value. If not, no further goodwill impairment testing is required. If it is
more-likely-than-not that the reporting unit’s fair value is less than its carrying value, or if we elect not to perform a qualitative
assessment of the reporting unit, a quantitative analysis is performed, in which the fair value of the reporting unit is compared to
its carrying value. If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized equal to the
excess, limited to the amount of goodwill allocated to the reporting unit.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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We performed a qualitative assessment of our single reporting unit as of December 31, 2024. As part of this analysis, we
evaluated factors including, but not limited to, our market capitalization and stock price performance, macro-economic conditions,
market and industry conditions, cost factors, the competitive environment, and the operational stability and overall financial
performance of the reporting unit. The assessment indicated that it was more likely than not that the fair value of the reporting
unit exceeded its carrying value.
Due to the divestiture of our Non-Medical segment, which also historically represented the Non-Medical reporting unit, we
considered the goodwill attributable to our Non-Medical reporting unit for impairment at the time the assets and liabilities were
reclassified as held-for-sale and concluded there was no indication of impairment as the cash consideration received exceeded the
carrying value of the net assets.
Evaluation of indefinite-lived intangible assets for impairment
Our indefinite-lived intangible assets include the Greatbatch Medical and Lake Region Medical tradenames. Similar to goodwill,
we perform an annual impairment review of our indefinite-lived intangible assets on the last day of our fiscal year, unless events
occur that trigger the need for an interim impairment review. We have the option to first assess qualitative factors in determining
whether it is more-likely-than-not that an indefinite-lived intangible asset is impaired. If we elect not to use this option, or we
determine that it is more-likely-than-not that the asset is impaired, we perform a quantitative assessment that requires us to
estimate the fair value of each indefinite-lived intangible asset and compare that amount to its carrying value. Fair value is
estimated using the relief-from-royalty method. Significant assumptions inherent in this methodology include estimates of royalty
rates and discount rates. The discount rate applied is based on the risk inherent in the respective intangible assets and royalty rates
are based on the rates at which comparable tradenames are being licensed in the marketplace. Impairment, if any, is based on the
excess of the carrying value over the fair value of these assets.
We performed a quantitative assessment to test our indefinite-lived intangible assets for impairment as of December 31, 2024.
For the Greatbatch Medical tradename, the excess of the estimated fair value over carrying value (expressed as a percentage of
carrying value) was in excess of its carrying value of $20 million by approximately 354% as of December 31, 2024. The Lake
Region Medical tradename had an excess of the estimated fair value over carrying value of approximately 88% and a carrying
value of $70 million at December 31, 2024. We do not believe that our indefinite-lived intangible assets are at risk for
impairment. However, a significant increase in the discount rate, decrease in the terminal growth rate, increase in tax rates,
decrease in the royalty rate or substantial reductions in our end-markets and volume assumptions could have a negative impact on
the estimated fair values of either of our tradenames and require us to recognize impairments of these indefinite-lived intangible
assets in a future period.
Evaluation of long-lived assets for impairment
When impairment indicators exist, we determine if the carrying value of the long-lived asset(s) or definite-lived intangible asset(s)
including, but not limited to, PP&E and right-of-use lease assets, exceeds the related undiscounted future cash flows. In cases
where the carrying value exceeds the undiscounted future cash flows, the carrying value is written down to fair value. Fair value is
generally determined using a discounted cash flow analysis. When it is determined that the useful life of an asset (asset group) is
shorter than the originally estimated life, and there are sufficient cash flows to support the carrying value of the asset (asset
group), we accelerate the rate of depreciation/amortization in order to fully depreciate/amortize the asset over its shorter useful
life.
Estimation of the cash flows and useful lives of long-lived assets and definite-lived intangible assets requires significant
management judgment. Events could occur that would materially affect our estimates and assumptions. Unforeseen changes,
such as the loss of one or more significant customers, technology obsolescence, or significant manufacturing disruption, among
other factors, could substantially alter the assumptions regarding the ability to realize the return of our investment in long-lived
assets, definite-lived intangible assets or their estimated useful lives.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISK
In the normal course of business, we are exposed to market risk primarily due to changes in foreign currency exchange rates and
interest rates. Changes in these rates could result in fluctuations in our earnings and cash flows. We regularly assess these risks
and have established policies and business practices to help protect against the adverse effects of these and other potential
exposures. However, fluctuations in foreign currency exchange rates and interest rates could have a significant impact, positive or
negative, on our financial results in the future.
Foreign Currency Exchange Rate Risk
We have foreign operations in the Dominican Republic, Ireland, Malaysia, Mexico, Switzerland, and Uruguay which expose us to
foreign currency exchange rate fluctuations due to transactions denominated in Dominican pesos, Euros, Malaysian ringgits,
Mexican pesos, Swiss francs, and Uruguayan pesos. We continuously evaluate our foreign currency risk, and we use operational
hedges and forward currency exchange rate contracts, to manage the impact of currency exchange rate fluctuations on earnings
and cash flows. We do not enter into currency exchange rate derivative instruments for speculative purposes. A hypothetical 10%
change in the value of the U.S. dollar in relation to the Euro, our most significant foreign currency exposure, would have had an
impact of approximately $8 million on our 2024 annual sales. This amount is not indicative of the hypothetical net earnings
impact due to the partially offsetting impacts on cost of sales and operating expenses in those currencies. We estimate that foreign
currency exchange rate fluctuations during 2024 increased sales in comparison to 2023 by $0.2 million.
We had currency derivative instruments with notional amounts totaling $132.9 million outstanding as of December 31, 2024. As
of December 31, 2024, we recorded liabilities totaling $6.5 million to recognize the fair value of these derivative instruments on
our Consolidated Balance Sheets. The amounts recorded during 2024 related to our forward contracts was an increase in Cost of
sales of $1.5 million. Refer to Note 18, “Financial Instruments and Fair Value Measurements,” of the Notes to the Consolidated
Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” of this report for additional
information regarding our outstanding forward contracts.
To the extent that our monetary assets and liabilities, including short-term and long-term intercompany loans, are recorded in a
currency other than the functional currency of the subsidiary, these amounts are remeasured each period at the period-end
exchange rate, with the resulting gain or loss being recorded in Other (income) loss, Net, in the Consolidated Statements of
Operations. We recorded net foreign currency measurement and transaction losses of $3.2 million for 2024.
We translate all assets and liabilities of our foreign operations where the U.S. dollar is not the functional currency at the period-
end exchange rate and translate sales and expenses at the average exchange rates in effect during the period. The net effect of
these translation adjustments is recorded in the Consolidated Financial Statements as Comprehensive income (loss). The
translation adjustment for 2024 was a loss of $27.5 million and primarily related to the strengthening U.S. dollar relative to the
Euro. Translation adjustments are not adjusted for income taxes as they relate to permanent investments in our foreign
subsidiaries. A hypothetical 10% change in the value of the U.S. dollar in relation to our most significant foreign currency net
assets would have had an impact of approximately $38 million on our foreign net assets as of December 31, 2024.
Interest Rate Risk
We regularly monitor interest rate risk attributable to our outstanding debt obligations. We may enter into interest rate swap
agreements in order to reduce the cash flow risk caused by interest rate changes on our outstanding floating rate borrowings. As
of December 31, 2024, we had $1.0 billion in principal amount of debt outstanding. Interest rates on our Revolving Credit
Facility and TLA Facility, reset at a rate based on the secured overnight financing rate (“SOFR”), in relation to any loan in U.S.
dollars, and the Euro Interbank Offered Rate (“EURIBOR”), in relation to any loan in Euros, thus subjecting us to interest rate
risk. A hypothetical one percentage point (100 basis points) change in SOFR on the $501 million of floating rate debt outstanding
as of December 31, 2024 would increase our interest expense by approximately $5 million. We had no loans in Euros outstanding
at December 31, 2024. As of December 31, 2024 and 2023, approximately 50% of our principal amount of debt is fixed rate
borrowings.
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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INTEGER HOLDINGS CORPORATION
Index to Consolidated Financial Statements
Page
Management’s Report on Internal Control Over Financial Reporting .....................................................................................
54
Reports of Independent Registered Public Accounting Firm ..............................................................................................................
55
Consolidated Balance Sheets as of December 31, 2024 and 2023 ...........................................................................................
59
Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 ..........................................
60
Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022 .....................
61
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 .........................................
62
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, 2023 and 2022 ..........................
63
Notes to Consolidated Financial Statements
Note 1 - Summary of Significant Accounting Policies ........................................................................................................
64
Note 2 - Business Acquisitions ............................................................................................................................................
75
Note 3 - Discontinued Operations .......................................................................................................................................
79
Note 4 - Supplemental Cash Flow Information ...................................................................................................................
81
Note 5 - Inventories .............................................................................................................................................................
82
Note 6 - Property, Plant and Equipment, Net ......................................................................................................................
82
Note 7 - Goodwill and Other Intangible Assets, Net ...........................................................................................................
83
Note 8 - Accrued Expenses and Other Current Liabilities ..................................................................................................
84
Note 9 - Debt ........................................................................................................................................................................
85
Note 10 - Benefit Plans ........................................................................................................................................................
88
Note 11 - Stock-Based Compensation .................................................................................................................................
88
Note 12 - Restructuring and Other Charges .........................................................................................................................
91
Note 13 - Income Taxes .......................................................................................................................................................
93
Note 14 - Commitments and Contingencies ........................................................................................................................
97
Note 15 - Leases ..................................................................................................................................................................
98
Note 16 - Earnings Per Share ...............................................................................................................................................
99
Note 17 - Stockholders’ Equity ...........................................................................................................................................
100
Note 18 - Financial Instruments and Fair Value Measurements ..........................................................................................
101
Note 19 - Segment and Geographic Information .................................................................................................................
104
Note 20 - Revenue from Contracts with Customers ............................................................................................................
105
Note 21 - Subsequent Events ...............................................................................................................................................
106
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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company’s certifying officers are responsible for establishing and maintaining adequate internal control over
financial reporting. The Company’s internal control over financial reporting is designed and maintained under the
supervision of its certifying officers to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of the Company’s consolidated financial statements for external reporting purposes in accordance with
accounting principles generally accepted in the United States of America.
As of December 31, 2024, management conducted an assessment of the effectiveness of the Company’s internal control
over financial reporting based on the framework established in Internal Control – Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management
has determined that the Company’s internal control over financial reporting as of December 31, 2024 is effective.
On January 5, 2024, the Company acquired Pulse Technologies, Inc. (“Pulse) and is currently integrating Pulse into its
operations, compliance programs and internal control processes. Securities and Exchange Commission rules and
regulations permit companies to exclude acquisitions from the assessment of internal control over financial reporting
during the first year following an acquisition while integrating the acquired company. The Company has excluded Pulse
from its assessment of the Company’s internal control over financial reporting as of December 31, 2024. The acquired
assets and operations of Pulse that were excluded from the Company’s assessment of internal control over financial
reporting constitute 5% of total assets, 9% of net assets and 2% of sales of the consolidated financial statement amounts
as of and for the year ended December 31, 2024.
The effectiveness of internal control over financial reporting as of December 31, 2024 has been audited by Deloitte &
Touche LLP, the Company’s independent registered public accounting firm.
Dated: February 20, 2025
/s/ Joseph W. Dziedzic
/s/ Diron Smith
Joseph W. Dziedzic
Diron Smith
President & Chief Executive Officer
Executive Vice President &
Chief Financial Officer
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Integer Holdings Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Integer Holdings Corporation and subsidiaries (the
“Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended
December 31, 2024, of the Company and our report dated February 20, 2025, expressed an unqualified opinion on those
consolidated financial statements and financial statement schedule.
As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its
assessment the internal control over financial reporting at Pulse Technologies, Inc., which was acquired on January 5,
2024. The acquired assets and operations constitute 5% of total assets, 9% of net assets, and 2% of sales of the
consolidated financial statement amounts as of and for the year ended December 31, 2024. Accordingly, our audit did not
include the internal control over financial reporting at Pulse Technologies, Inc.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Deloitte & Touche LLP
Williamsville, New York
February 20, 2025
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Integer Holdings Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Integer Holdings Corporation and subsidiaries (the
“Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive
income, cash flows, and stockholders’ equity for each of the three years in the period ended December 31, 2024, and the
related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2024, and 2023, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated February 20, 2025, expressed an unqualified opinion on the
Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts
or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Inventories - Refer to Notes 1 and 5 to the financial statements
Critical Audit Matter Description
Inventories are stated at the lower of cost, determined using the first-in first-out method, or net realizable value. The
valuation of inventory requires the Company to estimate obsolete or excess inventory, as well as inventory that is not of
saleable quality. Variations in assumptions used could have a material impact to the amount of write-downs for excess,
obsolete or expired inventory. A significant change in the timing or level of demand for specific products may result in
recording material adjustments for excess, obsolete or expired inventory in the future.
Given the amount of judgment required by management in estimating the timing or level of demand forecast for a
specific product, performing audit procedures to evaluate the reasonableness of the estimated excess or obsolete
inventory, or inventory that is not of saleable quality required a high degree of auditor judgment and an increased extent
of effort.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the valuation of excess or obsolete inventory or inventory that is not of saleable quality,
included the following, among others:
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•
We tested the effectiveness of controls over management’s review of the periodic calculation of the valuation
for excess or obsolete inventory or inventory that is not of saleable quality.
•
We tested management’s process for determining the valuation of inventory, including:
◦
We tested the accuracy and completeness of the source information underlying the determination of the
valuation for excess or obsolete inventory, or inventory that is not of saleable quality.
◦
We tested the demand forecast by obtaining documentation to support customer orders, contracts with
customers, as well as historical and future sales that corroborate the amount stated for the demand
forecast.
◦
We evaluated whether the methodology and assumptions applied by management are reasonable and
consistent with the nature of the inventory.
◦
We performed a retrospective review of the prior-year estimates for excess or obsolete inventory, or
inventory that is not of saleable quality, to determine whether management’s judgments and
assumptions relating to those estimates indicate a possible bias.
◦
We compared the Company's inventory demand forecast to events and trends discussed in industry and
analyst reports and disclosed in recent press releases from the Company's major customers (including
financial information). In addition, we also considered any changes within the business including
restructuring events and strategic changes.
◦
We held discussions with senior financial and operations management to determine that any strategic,
regulatory, or operational changes in the business were consistent with the projections of future
demand that were utilized as the basis for the reserves recorded.
Business Acquisitions — Pulse Technologies, Inc. — Customer Lists Intangible Asset — Refer to Notes 1 and 2 to the
financial statements
Critical Audit Matter Description
The Company completed the acquisition of Pulse Technologies, Inc. (“Pulse”) on January 5, 2024. The Company
accounted for the acquisition under the acquisition method of accounting for business combinations. Accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including
recording a customer lists intangible asset of $48.0 million. Management estimated the fair value of the customer lists
intangible asset using the multi-period excess earnings method, a form of the income approach. The fair value
determination of the customer lists intangible asset required management to make significant estimates and assumptions
related to forecasts of future revenue, the customer attrition rate, as well as the identified discount rate.
Given the significant judgments made by management to estimate the fair value of the customer lists intangible asset,
performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to
forecasts of future revenue, the selection of the discount rate and attrition rate required a high degree of auditor judgment
and increased audit effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the forecasts of future revenue, the selection of the attrition rate, as well as the selection
of the discount rate used by management to determine the fair value of the customer lists intangible asset included the
following, among others:
•
We tested the effectiveness of controls over the valuation of the customer lists intangible asset, including
management’s controls over the forecasts of future revenue, the selection of the discount rate and attrition rate.
•
With the assistance of fair value specialists, we evaluated the reasonableness of the models supporting the
values of the customer lists intangible asset, as well as the discount rate, and attrition rate used in the valuation
of the customer lists intangible asset, respectively, by:
◦
Evaluating whether the valuation models used in the determination of fair value of the customer lists
intangible asset was reasonable.
◦
Testing the source information underlying the determination of the discount rate and the mathematical
accuracy of the calculation.
◦
Developing a range of independent estimates and comparing those to the discount rate selected by
management.
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◦
Testing the mathematical accuracy of the customer attrition rate used in the customer lists intangible
asset valuation model and comparing it to historical data.
•
We evaluated management’s ability to accurately forecast future revenue used in the fair value determination of
the customer lists intangible asset by:
◦
Comparing the revenue forecasts to information included in the Company's communications to its
Board of Directors, medical device manufacturing industry reports, and analyst reports for certain of its
peer companies.
◦
Comparing the forecasts of future revenue to historical financial results, corroborating forecasts of
future revenue with management, and evaluating whether forecasts of future revenue were consistent
with audit evidence obtained in other areas of the audit.
/s/ Deloitte & Touche LLP
Williamsville, New York
February 20, 2025
We have served as the Company’s auditor since 1985.
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(in thousands except share and per share data)
December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
46,543
$
23,674
Accounts receivable, net of provision for credit losses of $0.3 million and $0.4 million,
respectively
245,269
231,283
Inventories
247,126
229,102
Contract assets
103,772
85,871
Prepaid expenses and other current assets
28,409
30,033
Current assets of discontinued operations held for sale
—
17,705
Total current assets
671,119
617,668
Property, plant and equipment, net
465,798
392,569
Goodwill
1,017,729
994,007
Other intangible assets, net
778,286
779,598
Deferred income taxes
8,309
7,001
Operating lease assets
86,082
81,319
Financing lease assets
27,689
11,675
Other long-term assets
22,959
22,407
Noncurrent assets of discontinued operations held for sale
—
36,409
Total assets
$
3,077,971
$
2,942,653
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt
$
10,000
$
—
Accounts payable
101,498
118,258
Operating lease liabilities
7,352
8,564
Accrued expenses and other current liabilities
108,323
90,644
Current liabilities of discontinued operations held for sale
—
3,503
Total current liabilities
227,173
220,969
Long-term debt
980,153
959,925
Deferred income taxes
124,608
143,552
Operating lease liabilities
77,702
72,126
Financing lease liabilities
23,760
10,272
Other long-term liabilities
25,360
14,303
Noncurrent liabilities of discontinued operations held for sale
—
2,464
Total liabilities
1,458,756
1,423,611
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.001 par value, authorized 100,000,000 shares; no shares issued or outstanding
—
—
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,546,262 and 33,329,648 shares
issued, respectively, and 33,546,256 and 33,329,648 outstanding, respectively
34
33
Additional paid-in capital
741,977
727,435
Treasury stock, at cost, 6 shares and 0 shares, respectively
—
—
Retained earnings
891,247
771,351
Accumulated other comprehensive income (loss)
(14,043)
20,223
Total stockholders’ equity
1,619,215
1,519,042
Total liabilities and stockholders’ equity
$
3,077,971
$
2,942,653
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
INTEGER HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
- 59 -
Year Ended December 31,
(in thousands except per share data)
2024
2023
2022
Sales
$
1,716,596 $
1,555,656 $
1,331,277
Cost of sales
1,257,582
1,145,767
985,516
Gross profit
459,014
409,889
345,761
Operating expenses:
Selling, general and administrative
185,202
173,171
158,050
Research, development and engineering
53,425
61,967
59,762
Restructuring and other charges
12,149
11,428
15,271
Total operating expenses
250,776
246,566
233,083
Operating income
208,238
163,323
112,678
Interest expense
56,374
51,275
37,265
Loss on equity investments, net
780
5,691
7,636
Other (income) loss, net
3,521
975
(899)
Income from continuing operations before income taxes
147,563
105,382
68,676
Provision for income taxes
26,510
16,239
8,929
Income from continuing operations
121,053
89,143
59,747
Income (loss) from discontinued operations, net of tax
(1,157)
1,507
6,630
Net income
$
119,896 $
90,650 $
66,377
Basic earnings per share:
Income from continuing operations
$
3.60 $
2.68 $
1.80
Income (loss) from discontinued operations
(0.03)
0.05
0.20
Basic earnings per share
3.57
2.72
2.00
Diluted earnings per share:
Income from continuing operations
$
3.40 $
2.64 $
1.79
Income (loss) from discontinued operations
(0.03)
0.04
0.20
Diluted earnings per share
3.36
2.69
1.99
Weighted average shares outstanding:
Basic
33,601
33,320
33,127
Diluted
35,649
33,758
33,357
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
INTEGER HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
- 60 -
Year Ended December 31,
(in thousands)
2024
2023
2022
Comprehensive Income
Net income
$
119,896 $
90,650 $
66,377
Other comprehensive income (loss):
Foreign currency translation gain (loss)
(27,514)
14,379
(25,570)
Net change in cash flow hedges, net of tax
(6,821)
310
3,200
Defined benefit plan liability adjustment, net of tax
69
205
509
Other comprehensive income (loss), net
(34,266)
14,894
(21,861)
Comprehensive income
$
85,630 $
105,544 $
44,516
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
INTEGER HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
- 61 -
Year Ended December 31,
(in thousands)
2024
2023
2022
Cash flows from operating activities:
Net income
$
119,896
$
90,650
$
66,377
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
111,031
98,841
91,991
Debt related charges included in interest expense
4,057
8,054
2,036
Inventory step-up amortization
1,056
590
798
Stock-based compensation
24,767
23,283
21,023
Non-cash lease expense
9,125
11,248
10,914
Non-cash loss on equity investments
780
5,691
7,636
Contingent consideration fair value adjustment
(3,550)
(736)
3,097
Other non-cash losses
6,954
4,379
5,854
Deferred income taxes
(14,110)
(9,490)
(17,498)
Gain on sale of discontinued operations
(177)
—
—
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
(6,532)
(7,437)
(41,380)
Inventories
(18,079)
(30,178)
(56,721)
Contract assets
(18,447)
(13,646)
(7,543)
Prepaid expenses and other assets
(229)
(930)
764
Accounts payable
(16,620)
(520)
26,038
Accrued expenses and other liabilities
4,472
7,908
(9,529)
Income taxes payable
811
(7,494)
12,524
Net cash provided by operating activities
205,205
180,213
116,381
Cash flows from investing activities:
Acquisition of property, plant and equipment
(105,357)
(119,938)
(74,728)
Purchase of intangible asset
(250)
—
—
Proceeds from sale of property, plant and equipment
39
173
639
Proceeds from return of capital from equity investments
—
—
304
Acquisitions, net of cash acquired
(138,544)
(43,602)
(126,636)
Proceeds from sale of discontinued operations, net
48,698
—
—
Net cash used in investing activities
(195,414)
(163,367)
(200,421)
Cash flows from financing activities:
Principal payments of long-term debt
(6)
(415,938)
(25,249)
Proceeds from issuance of convertible notes, net of discount
—
486,250
—
Proceeds from revolving credit facility
274,500
383,103
166,000
Payments of revolving credit facility
(247,500)
(424,801)
(45,000)
Purchase of capped calls
—
(35,000)
—
Payment of debt issuance costs
(2,075)
(2,181)
—
Proceeds from the exercise of stock options
742
2,303
150
Tax withholdings related to net share settlements of restricted stock units
(10,938)
(3,098)
(2,929)
Proceeds from contingent consideration
—
—
1,319
Payment of contingent consideration
—
(7,660)
(972)
Principal payments on finance leases
(10,723)
(1,182)
(843)
Other financing activities
9,321
190
—
Net cash provided by (used in) financing activities
13,321
(18,014)
92,476
Effect of foreign currency exchange rates on cash and cash equivalents
(243)
570
(2,049)
Net increase (decrease) in cash and cash equivalents
22,869
(598)
6,387
Cash and cash equivalents, beginning of year
23,674
24,272
17,885
Cash and cash equivalents, end of year
$
46,543
$
23,674
$
24,272
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
INTEGER HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
- 62 -
Year Ended December 31,
(in thousands)
2024
2023
2022
Total stockholders’ equity, beginning balance
$
1,519,042 $
1,417,456 $
1,354,697
Common stock and additional paid-in capital
Balance, beginning of period
727,468
731,426
713,183
Stock awards exercised or vested
(10,224)
(991)
(2,780)
Stock-based compensation
24,767
23,283
21,023
Capped calls related to the issuance of convertible notes, net of tax
—
(26,250)
—
Balance, end of period
742,011
727,468
731,426
Retained earnings
Balance, beginning of period
771,351
680,701
614,324
Net income
119,896
90,650
66,377
Balance, end of period
891,247
771,351
680,701
Accumulated other comprehensive income (loss)
Balance, beginning of period
20,223
5,329
27,190
Other comprehensive income (loss)
(34,266)
14,894
(21,861)
Balance, end of period
(14,043)
20,223
5,329
Total stockholders’ equity, ending balance
$
1,619,215 $
1,519,042 $
1,417,456
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
INTEGER HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
- 63 -
(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Integer Holdings Corporation (together with its consolidated subsidiaries, “Integer” or the “Company”) is a publicly traded
corporation listed on the New York Stock Exchange under the symbol “ITGR.” Integer is a medical device contract
development and manufacturing organization primarily serving the cardiac rhythm management, neuromodulation, and cardio
and vascular markets. Integer is committed to enhancing the lives of patients worldwide by providing innovative, high-quality
products and solutions. The Company’s customers include large multi-national original equipment manufacturers (“OEMs”)
and their affiliated subsidiaries.
Basis of Presentation and Principles of Consolidation
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the
United States of America (“GAAP”) and include the accounts of Integer Holdings Corporation and its wholly owned
subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
On September 27, 2024, the Company entered into a stock purchase agreement to sell 100% of the issued and outstanding
shares of common stock of Electrochem Solutions, Inc. (“Electrochem”), a wholly owned subsidiary of the Company, to
Ultralife Corporation (“Ultralife”), and on October 31, 2024, completed the sale.
Electrochem met the criteria to be reported as held for sale and discontinued operations as of September 27, 2024. Because
Electrochem was previously a reportable operating segment, the Company concluded the divestiture was a strategic shift in its
business. Consequently, the Electrochem business has been reclassified as a discontinued operation.
The assets and liabilities that were transferred in the Electrochem divestiture have been classified as held for sale in the
Consolidated Balance Sheet as of December 31, 2023. The results of operations of the Electrochem business have been
classified as discontinued operations in the Consolidated Statements of Operations for all periods presented. Intersegment sales
to Electrochem that were previously eliminated in consolidation have been treated as third party sales and are included in sales
from continuing operations as the Company will continue to supply the Electrochem business with certain specified products
following its divestiture. The Consolidated Statements of Cash Flows include cash flows related to the discontinued operations
due to Integer’s (parent) centralized treasury and cash management processes. All results and information in the consolidated
financial statements, including the notes to the consolidated financial statements, have been updated for all periods presented to
exclude information pertaining to discontinued operations, unless otherwise noted specifically as discontinued operations, and
reflect only the continuing operations of the Company. Refer to Note 3, “Discontinued Operations,” for additional information
on the Electrochem divestiture.
The divestiture of Electrochem also represents a sale of the Company’s previously reported Non-Medical segment as the
Electrochem business constituted substantially all of the assets and liabilities and operations reported in the historical Non-
Medical segment, which focused on nonmedical applications for the energy, military and environmental sectors. Under the new
organizational and reporting structure, all continuing operations are included in one reportable segment.
Reclassifications
Certain amounts in the consolidated financial statements for the prior year have been reclassified to conform to the current year
presentation. These reclassifications had no impact on net earnings, financial position, or cash flows.
For the year ended December 31, 2024, the Company no longer separately presents Refundable income taxes or Income taxes
payable in its Consolidated Balance Sheets. As a result, Refundable income taxes and Income taxes payable amounts presented
in prior periods were reclassified to Prepaid expenses and other current assets and Accrued expenses and other current
liabilities, respectively, to conform to the current year presentation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of sales and expenses during the reporting periods. Actual results could differ materially from
those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid, short-term investments with maturities at the time of purchase of
three months or less.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 64 -
(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of accounts
receivable. A significant portion of the Company’s sales and accounts receivable are to three customers, all in the medical
device industry, and, as such, the Company is directly affected by the condition of those customers and that industry. However,
the credit risk associated with trade receivables is partially mitigated due to the stability of those customers. The Company
performs on-going credit evaluations of its customers. Note 20, “Revenue from Contracts with Customers,” contains
information on sales and accounts receivable for these customers. The Company maintains cash deposits with major banks,
which from time to time may exceed insured limits. The Company performs on-going credit evaluations of its banks.
Trade Accounts Receivable and Provision for Current Expected Credit Losses
The Company provides credit, in the normal course of business, to its customers in the form of trade receivables. Credit is
extended based on evaluation of a customer’s financial condition and collateral is not required. The Company maintains a
provision for those customer receivables that it does not expect to collect. In accordance with Accounting Standards
Codification (“ASC”) Topic 326, the Company accrues its estimated losses from uncollectable accounts receivable to the
provision based upon recent historical experience, the length of time the receivable has been outstanding, other specific
information as it becomes available, and reasonable and supportable forecasts not already reflected in the historical loss
information. Provisions for current expected credit losses are charged to current operating expenses. Actual losses are charged
against the provision when incurred.
Factoring Arrangements
The Company has receivable factoring arrangements, pursuant to which certain receivables may be sold on a non-recourse basis
to financial institutions. Transactions under the receivables factoring arrangements are accounted for as sales under ASC 860,
Transfers and Servicing of Financial Assets, with the sold receivables removed from the Company’s Consolidated Balance
Sheets. Under these arrangements, the Company does not maintain any beneficial interest in the receivables sold. Once sold, the
receivables are no longer available to satisfy creditors in the event of bankruptcy. Sale proceeds are reflected in Cash flows
from operating activities on the Consolidated Statements of Cash Flows. Factoring fees are recorded in Selling, general, and
administrative expenses in the Company’s Consolidated Statements of Operations. During the years ended December 31, 2024
and December 31, 2023, the Company sold accounts receivable of $231.0 million and $144.4 million, respectively. During the
years ended December 31, 2024 and December 31, 2023, the Company recorded factoring fees of $1.7 million and $1.1 million,
respectively. The Company did not utilize receivable factoring arrangements prior to 2023.
Supplier Financing Arrangements
The Company utilizes supplier financing arrangements with financial institutions to sell certain accounts receivable on a non-
recourse basis. These transactions are treated as a sale of, and are accounted for as a reduction to, accounts receivable. The
agreements transfer control and risk related to the receivables to the financial institutions. The Company has no continuing
involvement in the transferred receivables subsequent to the sale. Fees for supplier financing arrangements are recorded in
Selling, general, and administrative expenses in the Company’s Consolidated Statements of Operations. During the years ended
December 31, 2024, 2023 and 2022, the Company sold and de-recognized accounts receivable of $156.6 million,
$139.4 million and $120.7 million, respectively. During the years ended December 31, 2024, 2023 and 2022, the Company
recorded costs associated with the supplier financing arrangements of $2.2 million, $1.8 million, and $0.9 million, respectively.
Inventories
Inventories are stated at the lower of cost, determined using the first-in first-out method, or net realizable value. Net realizable
value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal,
and transportation. Write-downs for excess, obsolete or expired inventory are based primarily on how long the inventory has
been held, historical sales volume, and estimates of forecasted net sales of that product. A significant change in the timing or
level of demand for products may result in recording additional write-downs for excess, obsolete or expired inventory in the
future. Note 5, “Inventories,” contains additional information on the Company’s inventory.
Leases
The Company determines if an arrangement is, or contains, a lease at inception and classifies it at as finance or operating. The
Company has operating and finance leases for office and manufacturing facilities, machinery, computer hardware, office
equipment, and vehicles. Short-term finance lease liabilities are included in Accrued expenses and other current liabilities on
the Consolidated Balance Sheets.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 65 -
(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease right-of-use (“ROU”) assets and corresponding liabilities are recognized based on the present value of the lease payments
over the lease term at commencement date. When discount rates implicit in leases cannot be readily determined, the Company
uses its incremental borrowing rate based on information available at commencement date in determining the present value of
future payments. The incremental borrowing rate is determined based on the Company’s recent debt issuances, the Company’s
specific credit rating, lease term and the currency in which lease payments are made.
Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise
such option. Costs associated with operating leases are recognized within operating expenses on a straight-line basis over the
lease term. Finance lease assets are amortized within operating expenses on a straight-line basis over the shorter of the
estimated useful lives of the assets or, in the instance where title does not transfer at the end of the lease term, the lease term.
The interest component of a finance lease is included in Interest expense and recognized using the effective interest method
over the lease term. The Company combines lease and non-lease components for all asset classes. For certain leases where rent
escalates based upon a change in a financial index, such as the Consumer Price Index, the difference between the rate at lease
inception and the subsequent fluctuations in that rate are included in variable lease costs. Additionally, because the Company
does not separate lease and non-lease components, variable costs also include payments to the landlord for common area
maintenance, real estate taxes, insurance and other operating expenses. The Company does not apply the recognition
requirements to leases with lease terms of 12 months or less. Note 15, “Leases,” contains additional information on the
Company’s leases.
Property, Plant and Equipment (“PP&E”)
PP&E is carried at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated
useful lives of the assets, as follows: buildings and building improvements 12-30 years; machinery and equipment 3-10 years;
office equipment 3-10 years; and leasehold improvements over the remaining lives of the improvements or the lease term,
whichever is shorter. The costs of repairs and maintenance are expensed as incurred; renewals and betterments are capitalized.
Upon retirement or sale of an asset, its cost and related accumulated depreciation or amortization is removed from the accounts
and any gain or loss is recorded in operating income or expense. The Company also reviews its PP&E for impairment when
impairment indicators exist. When impairment indicators exist, the Company determines if the carrying value of its fixed assets
exceeds the related undiscounted future cash flows. In cases where the carrying value of the Company's long-lived assets or
asset groups (excluding goodwill and indefinite-lived intangible assets) exceeds the related undiscounted cash flows, the
carrying value is written down to fair value. Fair value is generally determined using a discounted cash flow analysis. Note 6,
“Property, Plant and Equipment, Net,” contains additional information on the Company’s PP&E.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the “exit price”) in an
orderly transaction between market participants at the measurement date. ASC 820, Fair Value Measurements, establishes a
hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that
market participants would use in pricing the asset or liability developed based on market data obtained from sources
independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions
market participants would use in pricing the asset or liability developed based on the best information available in the
circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the Company has the
ability to access. Level 1 valuations do not entail a significant degree of judgment.
Level 2 – Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for
identical instruments in markets that are not active or by model-based techniques in which all significant inputs are
observable in the market.
Level 3 – Valuation is based on unobservable inputs that are significant to the overall fair value measurement. The degree
of judgment in determining fair value is greatest for Level 3 valuations.
Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific
measure. Therefore, even when market assumptions are not readily available, assumptions are required to reflect those that
market participants would use in pricing the asset or liability at the measurement date. Note 18, “Financial Instruments and Fair
Value Measurements,” contains additional information on assets and liabilities recorded at fair value in the consolidated
financial statements.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 66 -
(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Acquisitions
The Company accounts for acquisitions under the acquisition method of accounting for business combinations. Results of
operations of acquired companies are included in the Company’s results of operations as of the respective acquisition dates.
The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of
the acquisition. Any purchase price in excess of these net assets is recorded as goodwill.
All direct acquisition-related costs are expensed as incurred and are recognized as a component of Restructuring and other
charges. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair
values during the measurement period, which may be up to one year from the acquisition date.
Assets Held for Sale and Discontinued Operations
An asset, group of assets, or qualifying business are considered held for sale when they meet all the applicable criteria,
including: (i) having the authority to sell, (ii) being available to sell in their present condition, (iii) having an active program to
locate buyers, (iv) being actively marketed at current fair value, and (v) considered probable of selling within one year.
Assets and liabilities of a qualifying business are excluded from the net assets of continuing operations, separated in a disposal
group and classified as held for sale in the period in which the held for sale criteria was met. Corporate debt is not included as a
component of the disposal group, regardless of repayment provisions, and only debt directly attributable to the divested
operations may be included as held for sale. Assets and liabilities held for sale are recorded at the lower of its carrying amount
or estimated fair value less expected cost to sell and any unrecognized other comprehensive loss. The fair value of the assets
and liabilities held for sale are based on significant inputs that are unobservable and thus represent Level 3 measurements.
Assets held for sale do not experience any subsequent depreciation or amortization after being classified as held for sale. Assets
held for sale are reviewed for impairment at least quarterly, and if the carrying amount of the disposal group exceeds the
estimated fair value less cost to sell, a loss is recognized.
The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift
that has (or will have) a major effect on an entity’s operations and financial results when the business is sold and meets the
criteria for being classified as held for sale. Assets and liabilities of a disposal group classified as held for sale and related to
discontinued operations are presented as held for sale for all current and prior periods presented within the Consolidated
Balance Sheets. The results of discontinued operations are reported in Income (loss) from discontinued operations, net of tax in
the accompanying Consolidated Statements of Operations for the current and prior periods commencing in the period in which
the business meets the held for sale criteria, and includes any gain or loss recognized on closing, or adjustment of the carrying
amount to fair value less cost to sell while being held for sale. Income (loss) from discontinued operations, net of tax includes
only direct costs attributable to the divested business and excludes any indirect cost allocation associated with any shared or
corporate led functions unless otherwise dedicated to the divested business. Transactions between the businesses held for sale
and businesses held for use that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the
continuing operations and balances held for sale. Interest costs from corporate debt, excluding loss on extinguishment of debt,
may be included as a component of Income (loss) from discontinued operations, net of tax specifically attributable to interest
from corporate debt that is obligated to be repaid following the completion of a divestiture; plus the allocation of interest cost
from corporate debt not directly attributable to or related to other operations based on the ratio of net assets of the disposal
group held for sale to the consolidated net assets plus consolidated debt, excluding debt assumed in transaction, required to be
repaid, or directly attributable to other operations of the Company. See Note 3, “Discontinued Operations,” for further details.
Contingent Consideration
In circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability
equal to the fair value of the contingent payments it expects to make as of the acquisition date. Increases or decreases in the fair
value of the contingent consideration liability can result from changes in discount periods and rates, as well as changes in the
timing, amount of, or the likelihood of achieving the applicable performance target. Increases in projected revenues, estimated
cash flows and probabilities of payment may result in significantly higher fair value measurements; decreases in these items
may have the opposite effect. Increases in the discount rates in periods prior to payment may result in significantly lower fair
value measurements and decreases in the discount rates may have the opposite effect.
The contingent consideration fair value measurement is based on significant inputs not observable in the market and therefore
constitute Level 3 inputs within the fair value hierarchy. The Company determines the initial fair value of contingent
consideration liabilities using a Monte Carlo (“Monte Carlo”) valuation model, which involves a simulation of future revenues
during the earn out-period using management’s best estimates, or a probability-weighted discounted cash flow analysis.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 67 -
(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In periods subsequent to the initial measurement, contingent consideration liabilities are remeasured to fair value each reporting
period until the contingent consideration is settled using various assumptions including estimated revenues (based on internal
operational budgets and long-range strategic plans), discount rates, revenue volatility and projected payment dates. The current
portion of contingent consideration liabilities is included in Accrued expenses and other current liabilities and the non-current
portion is included in Other long-term liabilities on the Consolidated Balance Sheets. Adjustments to the fair value of
contingent consideration liabilities are included in Restructuring and other charges in the Consolidated Statements of
Operations, and cash flows from operating activities in the Consolidated Statements of Cash Flows. Note 18, “Financial
Instruments and Fair Value Measurements,” contains additional information on contingent consideration recorded at fair value
in the consolidated financial statements.
Goodwill
Goodwill represents the excess of cost over the fair value of identifiable net assets of a business acquired and is assigned to one
or more reporting units. The Company’s reporting unit is the same as its reportable segment. The Company tests the reporting
unit’s goodwill for impairment at least annually as of the last day of the fiscal year and between annual tests if an event occurs
or circumstances change that would more-likely-than-not reduce the fair value of the reporting unit below its carrying amount.
In conducting its goodwill test, the Company either performs a qualitative assessment or a quantitative assessment. A
qualitative assessment requires that the Company consider events or circumstances including, but not limited to, macro-
economic conditions, market and industry conditions, cost factors, competitive environment, changes in strategy, changes in
customers, changes in the Company’s stock price, results of the last impairment test, and the operational stability and the
overall financial performance of the reporting unit. If, after assessing the totality of events or circumstances, the Company
determines that it is more likely than not that the fair value of its reporting unit is greater than the carrying amount, then the
quantitative goodwill impairment test is not performed. The Company may elect to bypass the qualitative analysis and perform
a quantitative analysis.
If the qualitative assessment indicates that the quantitative analysis should be performed or if management elects to bypass a
qualitative analysis to perform a quantitative analysis, the Company then evaluates goodwill for impairment by comparing the
fair value of its reporting unit to its carrying value, including the associated goodwill. To determine the fair value, the
Company uses a combination of the income approach based on estimated discounted future cash flows and the market approach
based on comparable publicly traded companies. The cash flow assumptions consider historical and forecasted revenue,
operating costs and other relevant factors.
The Company completed its annual goodwill impairment test as of December 31, 2024 and determined, after performing a
qualitative review of its reporting unit, that it is more likely than not that the fair value of the reporting unit exceeds its carrying
amount. Accordingly, there was no indication of impairment and the quantitative goodwill impairment test was not performed.
Due to the divestiture of its Non-Medical segment, which also historically represented the Non-Medical reporting unit, the
Company considered the goodwill attributable to its Non-Medical reporting unit for impairment at the time the assets and
liabilities were reclassified as held-for-sale and concluded there was no indication of impairment as the cash consideration
received exceeded the carrying value of the net assets.
Other Intangible Assets
Other intangible assets consist of purchased technology and patents, customer lists and trademarks. Definite-lived intangible
assets are amortized on an accelerated or straight-line basis, which approximates the projected cash flows used to determine the
fair value of those definite-lived intangible assets at the time of acquisition, as follows: purchased technology and patents 5-20
years; customer lists 7-20 years and other intangible assets 1-20 years. Certain trademark assets are considered indefinite-lived
intangible assets and are not amortized. The Company expenses the costs incurred to renew or extend the term of intangible
assets.
The Company reviews its definite-lived intangible assets for impairment when impairment indicators exist. When impairment
indicators exist, the Company determines if the carrying value of its definite-lived intangible assets or asset groups exceeds the
related undiscounted future cash flows. In cases where the carrying value exceeds the undiscounted future cash flows, the
carrying value is written down to fair value. Fair value is generally determined using a discounted cash flow analysis.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 68 -
(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Company assesses its indefinite-lived intangible assets for impairment periodically to determine if any adverse conditions
exist that would indicate impairment or when impairment indicators exist. The Company assesses its indefinite-lived intangible
assets for impairment at least annually by comparing the fair value of the indefinite-lived intangible asset to its carrying value.
The fair value is determined using the relief from royalty method, which is based on unobservable, Level 3, inputs.
Refer to Note 7, “Goodwill and Other Intangible Assets, Net,” for further details of the Company’s goodwill and other
intangible assets.
Equity Investments
The Company holds long-term, strategic investments in companies to promote business and strategic objectives. These
investments are included in Other long-term assets on the Consolidated Balance Sheets. Equity investments are measured and
recorded as follows:
•
Non-marketable equity securities are equity securities without readily determinable fair value that are measured and
recorded at fair value with changes in fair value recognized within net income. The Company measures the securities at
cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. If an
impairment is recognized on the Company’s non-marketable equity securities during the period, these assets are
classified as Level 3 within the fair value hierarchy based on the nature of the fair value inputs.
•
Equity method investments are equity securities in investees the Company does not control but over which it has the
ability to exercise influence. Equity method investments are recorded at cost and are adjusted to recognize (1) the
Company’s share, based on percentage ownership or other contractual basis, of the investee’s income or loss, (2)
additional contributions made and dividends or other distributions received, and (3) impairments resulting from other-
than-temporary declines in fair value.
Realized and unrealized gains and losses resulting from changes in fair value or the sale of these equity investments are
recorded through Loss on equity investments, net. For some investments, the Company records its share of the investee’s
income or loss one quarter in arrears due to the timing of its receipt of such information. The carrying value of the Company’s
non-marketable equity securities is adjusted for qualifying observable price changes resulting from the issuance of similar or
identical securities by the same issuer. Determining whether an observed transaction is similar to a security within the
Company’s portfolio requires judgment based on the rights and preferences of the securities. Recording upward and downward
adjustments to the carrying value of the Company’s equity securities as a result of observable price changes requires
quantitative assessments of the fair value of these securities using various valuation methodologies and involves the use of
estimates.
Non-marketable equity securities and equity method investments (collectively referred to as non-marketable equity
investments) are also subject to periodic impairment reviews. The Company’s quarterly impairment analysis considers both
qualitative and quantitative factors that may have a significant impact on the investee’s fair value. Qualitative factors
considered include the investee’s financial condition and business outlook, market for technology, operational and financing
cash flow activities, technology and regulatory approval progress, and other relevant events and factors affecting the investee.
When indicators of impairment exist, quantitative assessments of the fair value of the Company’s non-marketable equity
investments are prepared.
To determine the fair value of these investments, the Company uses all pertinent financial information available related to the
investees, including financial statements, market participant valuations from recent and proposed equity offerings, and other
third-party data. Non-marketable equity securities are tested for impairment using a qualitative model similar to the model used
for goodwill and long-lived assets. Upon determining that an impairment may exist, the security’s fair value is calculated and
compared to its carrying value and an impairment is recognized immediately if the carrying value exceeds the fair value.
Equity method investments are subject to periodic impairment reviews using the other-than-temporary impairment model,
which considers the severity and duration of a decline in fair value below cost and the Company’s ability and intent to hold the
investment for a sufficient period of time to allow for recovery.
The Company has determined that its investments are not considered variable interest entities. The Company’s exposure related
to these entities is limited to its recorded investment. These investments are in start-up research and development companies
whose fair value is highly subjective in nature and subject to future fluctuations, which could be significant. Refer to Note 18,
“Financial Instruments and Fair Value Measurements,” for additional information on the Company’s equity investments.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 69 -
(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Debt Issuance Costs and Discounts
Debt issuance costs and discounts associated with the issuance of debt by the Company are deferred and amortized over the
lives of the related debt. Debt issuance costs incurred in connection with the Company’s issuance of its revolving credit facility
are classified within Other long-term assets and amortized to Interest expense on a straight-line basis over the contractual term
of the revolving credit facility. Debt issuance costs and discounts related to the Company’s term-debt are recorded as a
reduction of the carrying value of the related debt and are amortized to Interest expense using the effective interest method over
the period from the date of issuance to the maturity date. Upon prepayment of the related debt, the Company also recognizes a
proportionate amount of the costs as extinguishment of debt. Costs treated as extinguishment of debt are expensed and included
in Interest expense in the accompanying Consolidated Statements of Operations. The amortization of debt issuance costs and
discounts, and debt extinguishment charges are included in Debt related charges included in interest expense in the
Consolidated Statements of Cash Flows. Note 9, “Debt,” contains additional information on the Company’s debt issuance costs
and discounts.
Income Taxes
The consolidated financial statements of the Company have been prepared using the asset and liability approach to account for
income taxes, which requires the recognition of deferred income taxes for the expected future tax consequences of net operating
losses, credits, and temporary differences between the financial statement carrying amounts and the tax bases of assets and
liabilities. A valuation allowance is provided on deferred tax assets if it is determined, within each taxing jurisdiction, that it is
more likely than not that the asset will not be realized.
The Company accounts for uncertain tax positions using a more likely than not recognition threshold. The evaluation of
uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions
taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes
in facts or circumstances related to a tax position. These tax positions are evaluated on a quarterly basis. The Company
recognizes interest expense related to uncertain tax positions as Provision for income taxes. Penalties, if incurred, are
recognized as a component of Selling, general and administrative (“SG&A”) expenses.
The Company and its subsidiaries file a consolidated United States (“U.S.”) federal income tax return. State tax returns are filed
on a combined or separate basis depending on the applicable laws in the jurisdictions where the tax returns are filed. The
Company also files foreign tax returns on a separate company basis in the countries in which it operates.
Derivative Financial Instruments
The Company recognizes all derivative financial instruments in its consolidated financial statements at fair value. The
accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as
part of a hedging relationship and, if so, the reason for holding it. The Company’s use of derivative instruments is generally
limited to cash flow hedges of certain interest rate risks and minimizing foreign currency exposure on foreign currency
transactions, which are typically designated in hedging relationships, and intercompany balances, which are not designated as
hedging instruments. Under master agreements with the respective counterparties to the Company’s derivative contracts,
subject to applicable requirements, it has the right of set-off and is allowed to net settle transactions of the same type with a
single net amount payable by one party to the other. Foreign currency contracts are recorded in the Consolidated Balance Sheets
at fair value and the related gains or losses are deferred as a component of Accumulated other comprehensive income (loss)
(“AOCI”) in the Consolidated Balance Sheets until the underlying transaction is recorded in earnings. When the hedged item is
realized, gains or losses are reclassified from AOCI to the Consolidated Statement of Operations on the same line item as the
underlying transaction. In the event the forecasted transactions do not occur, or it becomes probable that they will not occur,
the Company reclassifies any gain or loss on the related cash flow hedge to earnings in the respective period. Cash flows related
to these derivative financial instruments are included in cash flows from operating activities. Foreign currency contracts not
designated as hedging relationships are recorded in the Consolidated Balance Sheets at fair value and resulting gains or losses
are recorded in the Consolidated Statement of Operations.
Revenue Recognition
The majority of the Company’s revenues consist of sales of various medical devices and products to large, multinational OEMs
and their affiliated subsidiaries. The Company considers the customer’s purchase order, which in some cases is governed by a
long-term agreement, and the Company’s corresponding sales order acknowledgment as the contract with the customer. The
majority of contracts have an original expected duration of one year or less. Consideration payable to customers is included in
the transaction price. In accordance with ASC 340-40-25-4, the Company expenses incremental costs of obtaining a contract
when incurred because the amortization period is less than one year.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 70 -
(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Company recognizes revenue from contracts with customers as performance obligations are satisfied when the customer
obtains control of the products. Control is defined as the ability to direct the use of and obtain substantially all of the remaining
benefits from the products. The customer obtains control of the products when title and risk of ownership transfers to them,
which is primarily based upon shipping terms. Most of the Company’s revenues are recognized at the point in time when the
products are shipped to customers. When a contract with a customer relates to products with no alternative use and the
Company has an enforceable right to payment, including reasonable profit, for performance completed to date throughout the
duration of the contract, revenue is recognized over time as control is transferred to the customer. When revenue is recognized
over time, the Company uses an input measure to determine progress towards completion and total estimated costs at
completion. Under this method, sales and gross profit are recognized generally as actual costs are incurred. Revenue is
recognized net of sales tax, value-added taxes and other taxes.
Performance Obligations
The Company assesses whether promises are separate and distinct in the context of the contract. If promises are not separate
and distinct, they are aggregated with other promises until they are separate and distinct, resulting in a performance obligation.
The Company considers each shipment of an individual product included on a purchase order to be a separate performance
obligation because the customer obtains economic benefit as each shipment occurs. Standard payment terms range from 30 to
90 days and may include a discount for early payment.
The Company does not offer its customers a right of return. Rather, the Company warrants that each unit received by the
customer will meet the agreed upon technical and quality specifications and requirements. If the units do not meet these
requirements, the customer can return the non-compliant units as a corrective action under the warranty. The remedy offered to
the customer is repair of the returned units or replacement if repair is not viable. Accordingly, the Company records a warranty
reserve and any warranty activities are not considered to be a separate performance obligation.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable and less frequently,
contract liabilities. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract
liabilities are recorded when customers pay or are billed in advance of the Company’s satisfaction of its performance
obligations. The current portion of contract liabilities is included in Accrued expenses and other current liabilities and the non-
current portion is included in Other long-term liabilities on the Consolidated Balance Sheets. For contracts with customers
where revenue is recognized over time, the Company records a contract asset when revenue is earned but not yet billed
associated with non-cancellable customer orders. Contract assets are presented as a current asset on the Consolidated Balance
Sheets.
Transaction Price
Generally, the transaction price of the Company’s contracts consists of a unit price for each individual product included in the
contract. The unit price can be fixed or variable based on the number of units ordered. In some instances, the transaction price
also includes a rebate for meeting certain volume-based targets over a specified period of time. The transaction price of a
contract is determined based on the unit price and the number of units ordered, reduced by the rebate expected to be earned on
those units. Rebates are estimated based on the expected achievement of volume-based targets using the most likely amount
method and are updated quarterly. Adjustments to these estimates are recognized in the period in which they are identified.
When contracts with customers include consideration payable at the beginning of the contract, the transaction price is reduced
at the later of when the Company recognizes revenue for the transfer of the related goods to the customer or when the Company
pays or promises to pay the consideration. Volume discounts and rebates and other pricing reductions earned by customers are
offset against their receivable balances.
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. As the majority of
products sold to customers are manufactured to meet the specific requirements and technical specifications of that customer, the
products are considered unique to that customer and the unit price stated in the contract is considered the standalone selling
price.
Contract Modifications
Contract modifications, which can include a change in scope, price, or both, most often occur related to contracts that are
governed by a long-term arrangement. Contract modifications typically relate to the same products already governed by the
long-term arrangement, and therefore, are accounted for as part of the existing contract. If a contract modification adds
additional products, it is accounted for as a separate contract.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Environmental Costs
Environmental expenditures that relate to an existing condition caused by past operations and that do not provide future benefits
are expensed as incurred. Liabilities are recorded when environmental assessments are made, the requirement for remedial
efforts is probable and the amount of the liability can be reasonably estimated. Liabilities are recorded generally no later than
the completion of feasibility studies. The Company has a process in place to monitor, identify, and assess how the current
activities for known exposures are progressing against the recorded liabilities. The process is also designed to identify other
potential remediation sites that are not presently known.
Restructuring and Other Charges
The Company continuously evaluates the business and identifies opportunities to realign its resources to better serve its
customers and markets, improve operational efficiency and capabilities, and lower its operating costs or improve profitability.
To realize the benefits associated with these opportunities, the Company undertakes restructuring-type activities to transform its
business. The Company incurs costs associated with these activities, which primarily include exit and disposal costs and other
costs directly related to the restructuring initiative. These actions may result in voluntary or involuntary employee termination
benefits. Voluntary termination benefits are accrued when an employee accepts the related offer. Involuntary termination
benefits are accrued upon the commitment to a termination plan and the benefit arrangement is communicated to affected
employees, or when liabilities are determined to be probable and estimable, depending on the existence of a substantive plan for
severance or termination. All other exit costs are expensed as incurred. The Company records exit and disposal costs
(“restructuring charges”) as incurred in accordance with ASC 420, Exit or Disposal Cost Obligations, and are classified within
Restructuring and other charges, while other costs directly related to the restructuring initiatives (“restructuring-related
charges”) are classified within Cost of sales, Selling, general and administrative, and Research, development and engineering
expenses in the Consolidated Statements of Operations.
In addition, from time to time, the Company incurs costs associated with acquiring and integrating businesses, and certain other
general expenses, including asset impairments. The Company classifies costs associated with these items within Restructuring
and other charges in the Consolidated Statements of Operations. Refer to Note 12, “Restructuring and Other Charges,” for
additional information.
Research, Development and Engineering (“RD&E”)
RD&E costs are expensed as incurred. The primary costs are salary and benefits for personnel, material costs used in
development projects and subcontracting costs.
Product Warranties
The Company allows customers to return defective or damaged products for credit, replacement, or repair. The Company
warrants that its products will meet customer specifications and will be free from defects in materials and workmanship. The
Company accrues its estimated exposure to warranty claims, through Cost of Sales, based upon experience and other specific
information as it becomes available. The product warranty liability is classified as Accrued expenses and other current
liabilities on the Consolidated Balance Sheets. Adjustments to pre-existing estimated exposure for warranties are made as
changes to the obligations become reasonably estimable. The Company’s product warranty liability totaled $1.4 million and
$0.1 million as of December 31, 2024 and December 31, 2023, respectively.
Stock-Based Compensation
The Company recognizes stock-based compensation expense for its compensation plans. These plans include stock options,
restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”). For the Company’s PRSUs, in
addition to service conditions, the ultimate number of shares to be earned depends on the achievement of targets based on
market conditions, such as total shareholder return, or performance conditions based on the Company’s operating results. The
Company records forfeitures of equity awards in the period in which they occur.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 72 -
(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The fair value of the stock-based compensation is determined at the grant date. The Company uses the Black-Scholes standard
option pricing model (“Black-Scholes model”) to determine the fair value of stock options. The fair value of each RSU is
determined based on the Company’s closing stock price on the date of grant. The fair value of each PRSU is determined based
on either the Company’s closing stock price on the date of grant or through a Monte Carlo valuation model for those awards
that include a market-based condition. The Black-Scholes and Monte Carlo valuation models incorporate assumptions as to
stock price volatility, the expected life of stock option or PRSU awards, a risk-free interest rate, illiquidity discount and
dividend yield.
The Company recognizes compensation expense over the required service or vesting period based on the fair value of the award
on the date of grant. Certain executive stock-based awards contain market, performance and service conditions. Compensation
expense for awards with market conditions is recognized over the service period and is not reversed if the market condition is
not met. Compensation expense for awards with performance conditions is reassessed each reporting period and recognized
based upon the probability that the performance targets will be achieved.
All stock option awards granted under the Company’s compensation plans have an exercise price equal to the closing stock
price on the date of grant, a ten-year contractual life and generally vest annually over a three-year vesting term. RSUs typically
vest in equal annual installments over a three year period. RSUs issued to members of the Company’s Board of Directors as a
portion of their annual retainer vest quarterly over a one-year vesting term. Earned PRSUs typically vest three years from the
date of grant.
The Company records deferred tax assets for awards that result in deductions on the Company’s income tax returns, based on
the amount of stock-based compensation expense recognized and the statutory tax rate in the jurisdiction in which it will receive
a deduction. Differences between the deferred tax assets recognized for financial reporting purposes and the actual tax
deduction reported on the income tax return are recorded as a component of Provision for income taxes in the Consolidated
Statements of Operations. Note 11, “Stock-Based Compensation,” contains additional information on the Company’s stock-
based compensation.
Defined Benefit Plans
The Company recognizes on its Consolidated Balance Sheets as an asset or liability the overfunded or underfunded status of its
defined benefit plans provided to its employees located in Mexico and Switzerland. This asset or liability is measured as the
difference between the fair value of plan assets, if any, and the benefit obligation of those plans. For these plans, the benefit
obligation is the projected benefit obligation, which is calculated based on actuarial computations of current and future benefits
for employees. Actuarial gains or losses and prior service costs or credits that arise during the period, but are not included as
components of net periodic benefit expense, are recognized as a component of AOCI on the Consolidated Balance Sheets. The
Company records the service cost component of net benefit costs in Cost of sales and SG&A expenses. The interest cost
component of net benefit costs is recorded in Interest expense and the remaining components of net benefit costs, amortization
of net losses and expected return on plan assets, are recorded in Other (income) loss, net.
Foreign Currency Translation and Remeasurement
The Company translates all assets and liabilities of its foreign subsidiaries, where the U.S. dollar is not the functional currency,
at the period-end exchange rate and translates income and expenses at the average exchange rates in effect during the period.
The net effect of this translation is recorded in the consolidated financial statements as a component of AOCI. Translation
adjustments are not adjusted for income taxes as they relate to permanent investments in the Company’s foreign subsidiaries.
The Company has foreign operations in the Dominican Republic, Ireland, Malaysia, Mexico, Switzerland, and Uruguay, which
expose the Company to foreign currency exchange rate fluctuations due to transactions denominated in Dominican pesos,
Euros, Malaysian ringgits, Mexican pesos, Swiss francs, and Uruguayan pesos. To the extent that monetary assets and
liabilities, including short-term and long-term intercompany loans, are recorded in a currency other than the functional currency
of the subsidiary, these amounts are remeasured each period at the period-end exchange rate, with the resulting gain or loss
being recorded in Other (income) loss, net in the Consolidated Statements of Operations. Net foreign currency transaction
(gains) losses included in Other (income) loss, net amounted to $3.2 million, $1.0 million and $(1.1) million for the years ended
December 31, 2024, 2023 and 2022, respectively, and primarily related to the fluctuation of the U.S. dollar relative to the Euro
and the remeasurement of certain intercompany loans.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 73 -
(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Share (“EPS”)
Basic EPS is calculated using the weighted average number of shares outstanding during the period. Diluted EPS is calculated
using the weighted average number of shares outstanding during the period plus, if dilutive, common stock equivalents
outstanding during the period and stock issuable upon conversion of convertible debt instruments. The Company's common
stock equivalents consist of shares issuable upon the release of RSUs and PRSUs and the incremental shares of common stock
issuable upon the exercise of stock options. The dilutive effect of these common stock equivalents is reflected in diluted EPS
by application of the treasury stock method. The dilutive effect of shares issuable upon conversion of convertible debt
instruments are included in the calculation of diluted EPS under the if-converted method. Note 16, “Earnings Per Share,”
contains additional information on the computation of the Company’s EPS.
Comprehensive Income
The Company’s comprehensive income as reported in the Consolidated Statements of Comprehensive Income includes net
income, foreign currency translation adjustments, the net change in cash flow hedges, net of tax, and defined benefit plan
liability adjustments, net of tax. The Consolidated Statements of Comprehensive Income and Note 17, “Stockholders’ Equity,”
contain additional information on the computation of the Company’s comprehensive income.
Recent Accounting Pronouncements
In the normal course of business, management evaluates all new Accounting Standards Updates (“ASU”) and other accounting
pronouncements issued by the Financial Accounting Standards Board (“FASB”), Securities and Exchange Commission
(“SEC”), or other authoritative accounting bodies to determine the potential impact they may have on the Company’s
Consolidated Financial Statements. Other than those discussed below, management does not expect any of the recently issued
accounting pronouncements, which have not already been adopted, to have a material impact on the Company’s Consolidated
Financial Statements.
Accounting Guidance Adopted During the Period
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)-Improvements to Reportable Segment
Disclosures, requiring public entities to disclose information about their reportable segments’ significant expenses and other
segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the
disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC
280 on an interim and annual basis. The Company adopted ASU 2023-07 during the year ended December 31, 2024. See Note
19, “Segment and Geographic Information,” for further details.
Accounting Guidance to be Adopted in Future Periods
In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20): Induced
Conversions of Convertible Debt Instruments. The ASU clarifies the assessment of whether certain settlements of convertible
debt instruments should be accounted for as an inducement conversion or extinguishment of convertible debt. The ASU is
effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual
reporting periods, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this ASU
will have on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU is intended to
improve disclosures about a public business entity’s expense and provide more detailed information to investors about the types
of expenses in commonly presented expense captions. The ASU is effective for fiscal years beginning after December 15, 2026,
and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is
currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements and related
disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures. The
ASU requires additional quantitative and qualitative income tax disclosures to allow readers of the consolidated financial
statements to assess how the Company’s operations, related tax risks and tax planning affect its tax rate and prospects for future
cash flows. For public business entities, the ASU is effective for annual periods beginning after December 15, 2024. The
Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 74 -
(2.)
BUSINESS ACQUISITIONS
2024 Acquisition
On January 5, 2024, the Company acquired 100% of the outstanding capital stock of Pulse Technologies, Inc. (“Pulse”), a
privately-held technology, engineering and contract manufacturing company focused on complex micro machining of medical
device components for high growth structural heart, heart pump, electrophysiology, leadless pacing, and neuromodulation
markets. Based in Pennsylvania, Pulse also provides proprietary advanced technologies, including hierarchical surface
restructuring (HSRTM), scratch-free surface finishes, and titanium nitride coatings. Consistent with the Company’s tuck-in
acquisition strategy, the acquisition of Pulse further increases the Company’s end-to-end development capabilities and
manufacturing footprint in targeted growth markets and provides customers with expanded capabilities, capacity and resources
to accelerate the time to market for customer products. The Company funded the purchase price with borrowings under its
Revolving Credit Facility (as defined below).
The total consideration transferred was $142.3 million, including contingent consideration, working capital and other purchase
price adjustments. The Company recorded contingent consideration with an estimated acquisition date fair value of
$3.6 million, representing the Company’s obligation, under the purchase agreement, to make an additional payment of up to
$20.0 million based on a specified revenue growth milestone being met in 2025. During 2024 the Company recorded
adjustments to the purchase price allocation, inclusive of working capital and other closing adjustments, resulting in decreases
to goodwill and current liabilities. Purchase price allocation adjustments recorded during 2024 were not material.
The final purchase price allocation was as follows (in thousands):
Fair value of net assets acquired
Current assets (excluding inventory)
$
7,456
Inventory
8,612
Property, plant and equipment
25,950
Goodwill
38,058
Definite-lived intangible assets
64,000
Finance lease assets
7,964
Current liabilities
(1,760)
Finance lease liabilities
(7,936)
Fair value of net assets acquired
$
142,344
The fair values of the assets acquired were determined using one of three valuation approaches: market, income or cost. The
selection of a particular method for a given asset depended on the reliability of available data and the nature of the asset, among
other considerations.
Current Assets and Liabilities
The fair value of current assets and liabilities, excluding inventory, was assumed to approximate their carrying value as of the
acquisition date due to the short-term nature of these assets and liabilities.
The fair value of in-process and finished goods inventory acquired was estimated by applying a version of the income approach
called the comparable sales method. This approach estimates the fair value of the assets by calculating the potential revenue
generated from selling the inventory and subtracting from it the costs related to the completion and sale of that inventory and a
reasonable profit allowance for these remaining efforts. Net book value was deemed to be a reasonable proxy for the fair value
of raw materials. Based upon this methodology, the Company recorded the inventory acquired at fair value resulting in an
increase in inventory of $1.1 million.
Property, Plant and Equipment
The fair value of Property, Plant and Equipment acquired was estimated by applying the cost approach for personal property
and leasehold improvements. The cost approach was applied by developing a replacement cost and adjusting for economic
depreciation and obsolescence.
Leases
The Company recognized a finance lease liability and finance lease right-of-use asset for a manufacturing facility in accordance
with ASC 842, Leases. The lease terms were determined to be at-market as of the acquisition date.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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(2.)
BUSINESS ACQUISITIONS (Continued)
Goodwill
The excess of the purchase price over the fair value of net tangible and intangible assets acquired and liabilities assumed was
allocated to goodwill. The goodwill resulting from the transaction is primarily attributable to future customer relationships and
the assembled workforce of the acquired business. The goodwill acquired in connection with the Pulse acquisition is deductible
for tax purposes.
Intangible Assets
The purchase price was allocated to intangible assets as follows (dollars in thousands):
Definite-lived Intangible Assets
Fair Value
Assigned
Weighted
Average
Amortization
Period
(Years)
Weighted
Average
Discount Rate
Customer lists
$
48,000
20.0
13.0%
Technology
16,000
10.0
13.0%
$
64,000
Customer Lists - Customer lists represent the estimated fair value of contractual and non-contractual customer relationships
Pulse had as of the acquisition date. These relationships were valued separately from goodwill at the amount that an
independent third party would be willing to pay for these relationships. The fair value of customer lists was determined using
the multi-period excess-earnings method, a form of the income approach. The estimated useful life of the existing customer
base was based upon the historical customer annual attrition rate of 5.0%, as well as management’s understanding of the
industry and product life cycles.
Technology - Technology consists of technical processes, patented and unpatented technology, manufacturing know-how, trade
secrets and the understanding with respect to products or processes that have been developed by Pulse and that will be
leveraged in current and future products. The fair value of technology acquired was determined utilizing the relief from royalty
method, a form of the income approach, with a royalty rate of 7.5%. The estimated useful life of the technology is based upon
management’s estimate of the product life cycle associated with the technology before it will be replaced by new technologies.
Contingent Consideration - As part of the Pulse acquisition, the Company may be required to pay additional consideration
based on a specified revenue growth milestone being met in 2025. Any amounts earned will be payable in 2026. The contingent
consideration is classified as Level 3 in the fair value hierarchy and the fair value is measured based on a Monte Carlo
simulation utilizing projections about future performance. Significant inputs include revenue volatility of 11%, a discount rate
of 12% and projected financial information. See Note 18, “Financial Instruments and Fair Value Measurements,” for additional
information related to the fair value measurement of the contingent consideration.
2023 Acquisition
Effective as of October 1, 2023, the Company acquired substantially all of the assets and assumed certain liabilities of
InNeuroCo, Inc. (“InNeuroCo”), a privately-held company based in Florida. InNeuroCo was a recognized leader in
neurovascular catheter innovation with strong development and manufacturing capabilities. InNeuroCo’s expertise and highly
differentiated neurovascular catheter innovation complements the Company’s existing capabilities and market focus.
Consistent with the Company’s strategy, the addition of InNeuroCo further increases Integer’s ability to provide enhanced
solutions to its customers in the neurovascular catheter space. The Company funded the purchase price with borrowings under
its Revolving Credit Facility.
The total consideration transferred was $44.5 million, consisting of an initial cash payment of $43.6 million and $0.9 million in
estimated fair value of contingent consideration. The contingent consideration represents the estimated fair value of the
Company’s obligation, under the purchase agreement, to make additional payments of up to $13.5 million based on specified
annual revenue growth milestones being met through 2027, and a one-time contingent payment to be made based on cumulative
revenue amounts through 2027 exceeding a specified revenue target. See Note 18, “Financial Instruments and Fair Value
Measurements,” for additional information related to the fair value measurement of the contingent consideration.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 76 -
(2.)
BUSINESS ACQUISITIONS (Continued)
The cost of the acquisition was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at
the date of the acquisition. During 2023 and 2024, the Company recorded measurement period adjustments of $2.2 million and
$1.5 million, respectively, to increase the allocation of the purchase price to certain current assets. These adjustments were
based on facts and circumstances that existed, but were not known, as of the acquisition date which resulted in a decrease to
goodwill of $3.7 million.
The final purchase price allocation was as follows (in thousands):
Fair value of net assets acquired
Current assets (excluding inventory)
$
8,471
Inventory
5,376
Property, plant and equipment
3,436
Goodwill
19,442
Definite-lived intangible assets
9,200
Operating lease assets
2,072
Current liabilities
(2,331)
Operating lease liabilities
(1,157)
Fair value of net assets acquired
$
44,509
Intangible Assets
The purchase price was allocated to intangible assets as follows (dollars in thousands):
Definite-lived Intangible Assets
Fair Value
Assigned
Weighted
Average
Amortization
Period
(Years)
Customer lists
$
4,000
20.0
Technology
5,200
10.0
$
9,200
2022 Acquisition
On April 6, 2022, the Company acquired 100% of the outstanding equity interests of Connemara Biomedical Holdings
Teoranta, including its operating subsidiaries Aran Biomedical and Proxy Biomedical (collectively “Aran”), a recognized leader
in proprietary medical textiles, high precision biomaterial coverings and coatings as well as advanced metal and polymer
braiding. Aran delivers development and manufacturing solutions for implantable medical devices. Consistent with the
Company’s strategy, the acquisition of Aran further increases Integer’s ability to offer complete solutions for complex delivery
and therapeutic devices in high growth cardiovascular markets such as structural heart, neurovascular, peripheral vascular, and
endovascular as well as general surgery. The Company funded the purchase price with borrowings under its Revolving Credit
Facility.
The total consideration transferred was $141.3 million, consisting of an initial cash payment of $133.9 million ($129.3 million
net of cash acquired) and $7.4 million in estimated fair value of contingent consideration. The contingent consideration
represented the estimated fair value of the Company’s obligation, under the purchase agreement, to make additional payments
of up to €10 million ($10.9 million at the exchange rate as of April 6, 2022) based on Aran’s achievement of 2022 revenue
growth milestones. The earn-out period ended on December 31, 2022 and full payment was made, in accordance with the terms
of the share purchase agreement, in April 2023. See Note 18, “Financial Instruments and Fair Value Measurements,” for
additional information related to the fair value measurement of the contingent consideration.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 77 -
(2.)
BUSINESS ACQUISITIONS (Continued)
The final purchase price allocation was as follows (in thousands):
Fair value of net assets acquired
Current assets
$
9,319
Property, plant and equipment
4,151
Goodwill
68,460
Definite-lived intangible assets
71,485
Operating lease assets
3,505
Other noncurrent assets
1,354
Current liabilities
(4,370)
Operating lease liabilities
(3,258)
Other noncurrent liabilities
(9,377)
Fair value of net assets acquired
$
141,269
Intangible Assets
The purchase price was allocated to intangible assets as follows (dollars in thousands):
Definite-lived Intangible Assets
Fair Value
Assigned
Weighted
Average
Amortization
Period
(Years)
Customer lists
$
53,395
26.0
Technology
17,435
12.0
Tradenames
655
1.5
$
71,485
Actual and Pro Forma (unaudited) disclosures
The following table presents (in thousands) unaudited pro forma financial information for the years ended December 31, 2023
and 2022, as if Pulse, InNeuroCo and Aran had been included in the Company’s financial results as of the beginning of fiscal
year 2023, 2022 and 2021, respectively, through the date of acquisition. Actual results for each acquired business are included
in the the Company’s consolidated results subsequent to the date of acquisition (in thousands):
2023
2022
Sales
$
1,616,952 $
1,357,765
Income from continuing operations
78,050
62,550
The unaudited pro forma results are presented for illustrative purposes only and do not reflect the realization of potential cost
savings, and any related integration costs. Certain costs savings may result from the acquisition; however, there can be no
assurance that these cost savings will be achieved. These unaudited pro forma results do not purport to be indicative of the
results that would have been obtained, or to be a projection of results that may be obtained in the future. These unaudited pro
forma results include certain adjustments, primarily due to increases in amortization expense due to the fair value adjustments
of intangible assets, the increases to interest expense reflecting the amount borrowed in connection with the acquisition,
acquisition related costs and the impact of income taxes on the pro forma adjustments. The impact of discontinued operations
have been removed from pro forma sales for each of the periods presented.
From the date of acquisition through the year ended December 31, 2024, sales related to Pulse were $41.7 million. As of the
closing date, the Company began to immediately integrate the acquisition into existing operations and management structure of
Pulse, making it impracticable to determine the post-acquisition earnings on a standalone basis. From the date of acquisition
through the year ended December 31, 2023, sales related to InNeuroCo were $5.2 million, and earnings were not material. From
the date of acquisition through the year ended December 31, 2022, sales related to Aran were $15.1 million, and earnings were
not material.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 78 -
(2.)
BUSINESS ACQUISITIONS (Continued)
Acquisition costs
During the years ended December 31, 2024, 2023 and 2022, direct costs of the Pulse, InNeuroCo and Aran acquisitions of
$2.6 million, $1.5 million and $5.9 million, respectively, were expensed as incurred and included in Restructuring and other
charges in the Consolidated Statements of Operations. Acquisition costs include incremental expense (benefit) of adjustments
to increase (decrease) the fair value of acquisition-related contingent consideration liabilities. See Note 18, “Financial
Instruments and Fair Value Measurements,” for additional information related to the fair value measurement of the contingent
consideration.
(3.)
DISCONTINUED OPERATIONS
The following table summarizes the components of Income (loss) from discontinued operations, net of tax in the accompanying
Consolidated Statement of Income for the years ended December 31, 2024, 2023 and 2022:
2024
2023
2022
Income (loss) from discontinued operations before taxes - Electrochem
$
(816) $
1,912 $
7,282
Income from discontinued operations before taxes - AS&O Product Line
—
—
1,323
Income (loss) from discontinued operations before taxes
(816)
1,912
8,605
Provision for income taxes from discontinued operations
341
405
1,975
Income (loss) from discontinued operations, net of tax
$
(1,157) $
1,507 $
6,630
Divestiture of Electrochem
On September 27, 2024, the Company entered into a stock purchase agreement to sell 100% of the issued and outstanding
shares of common stock of Electrochem to Ultralife, and on October 31, 2024, completed the sale, collecting cash proceeds of
$48.7 million, which is net of transaction costs and adjustments set forth in the stock purchase agreement. In connection with
the sale, the parties executed a customary transition services agreement whereby the Company will provide certain corporate
services (including services related to accounting, finance, quality, human resources and information technology) to Ultralife
for a period of up to nine months from the date of the closing to facilitate an orderly transfer of business operations. Ultralife
will pay Integer for certain of these services, with such payments varying in amount and for different lengths of time as
specified in the transition services agreement. Transactions under this agreement were not material during the year ended
December 31, 2024.
In connection with the closing of the transaction, the Company recognized a pre-tax gain on sale of discontinued operations of
$0.8 million during the year ended December 31, 2024. The Company is in the process of finalizing the net working capital
adjustment with Ultralife as provided for in the stock purchase agreement. The final net working capital adjustment, as
determined through the established process outlined in the stock purchase agreement, may be different from the Company’s
estimates. The impact of any changes in the net working capital adjustment and associated income taxes will be recorded as an
adjustment to the gain on sale from discontinued operations in the period such change occurs and may be materially different
from the Company’s estimates.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 79 -
(3.)
DISCONTINUED OPERATIONS (Continued)
The following summarizes the Electrochem assets and liabilities, which have been segregated from Integer’s continuing
operations and are reported as assets and liabilities of discontinued operations held for sale in the Consolidated Balance Sheets
as of December 31, 2023 (in thousands):
Accounts receivable, net of provision for credit losses
$
6,994
Inventories
10,614
Prepaid expenses and other current assets
97
Current assets of discontinued operations classified as held for sale
17,705
Property, plant and equipment, net
15,385
Goodwill
17,000
Other intangible assets, net (Purchased technology and patents)
3,548
Other long-term assets
476
Noncurrent assets of discontinued operations classified as held for sale
36,409
Total assets of discontinued operations classified as held for sale
54,114
Accounts payable
2,035
Accrued expenses and other current liabilities
1,468
Current liabilities of discontinued operations classified as held for sale
3,503
Deferred income taxes
2,073
Other long-term liabilities
391
Noncurrent liabilities of discontinued operations classified as held for sale
2,464
Total liabilities of discontinued operations classified as held for sale
5,967
Net assets
$
48,147
The following table summarizes the components of Income (loss) from discontinued operations, net of tax associated with the
Electrochem divestiture in the accompanying Consolidated Statements of Operations for the years ended December 31, 2024,
2023 and 2022 (in thousands):
2024
2023
2022
Sales
$
27,227 $
41,017 $
44,819
Cost of sales
22,123
32,617
31,574
Gross profit
5,104
8,400
13,245
SG&A expenses
2,239
2,448
2,528
Research, development and engineering costs
1,485
1,804
1,156
Restructuring and other charges
678
141
912
Interest expense
2,340
2,095
1,367
Gain on sale of discontinued operations
(822)
—
—
Income (loss) from discontinued operations before taxes
(816)
1,912
7,282
Provision for income taxes
341
405
1,679
Income (loss) from discontinued operations, net of tax
$
(1,157) $
1,507 $
5,603
The Company elected to allocate interest expense to discontinued operations for the Company's debt that is not directly
attributed to the Electrochem business based on a ratio of net assets of discontinued operations to the sum of consolidated net
assets and consolidated debt.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 80 -
(3.)
DISCONTINUED OPERATIONS (Continued)
Cash flow information from discontinued operations associated with the Electrochem divestiture for the years ended
December 31, 2024, 2023 and 2022 was as follows (in thousands):
2024
2023
2022
Cash provided by operating activities
$
3,138 $
6,993 $
7,007
Cash used in investing activities (all capital expenditures)
(783)
(514)
(425)
Depreciation and amortization
974
1,211
1,095
Divestiture of AS&O Product Line
In July 2018, the Company completed the sale of its Advanced Surgical and Orthopedic product lines (the “AS&O Product
Line”). There were no income or cash flows from discontinued operations associated with the AS&O Product Line for the years
ended December 31, 2024 and 2023. During the year ended December 31, 2022, the Company recognized other income from
discontinued operations of $1.3 million for the release of pre-divestiture indemnified tax liabilities resulting from the lapse of
the statute of limitations and the effective settlement of tax audits.
Income from discontinued operations, net of tax associated with the AS&O Product Line for the year ended December 31, 2022
was as follows (in thousands):
Other income
$
1,323
Provision for income taxes
296
Income from discontinued operations, net of tax
$
1,027
Cash flow information from discontinued operations associated with the AS&O Product Line for the year ended December 31,
2022 was as follows (in thousands):
Income from discontinued operations
$
1,027
Changes in operating assets and liabilities, net of acquisitions:
Accrued expenses and other liabilities
(1,323)
Income taxes payable
296
Net cash provided by operating activities
$
—
(4.)
SUPPLEMENTAL CASH FLOW INFORMATION
The following represents supplemental cash flow information, including supplemental information related to discontinued
operations, for the years ended December 31, 2024, 2023 and 2022 (in thousands):
2024
2023
2022
Non-cash investing and financing activities:
Property, plant and equipment purchases included in accounts payable
$
15,345 $
21,044 $
13,592
Cash paid during the year for:
Interest
54,167
37,701
35,804
Income taxes
36,472
30,351
11,165
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 81 -
(5.) INVENTORIES
Inventories comprise the following (in thousands):
December 31,
2024
2023
Raw materials
$
104,620 $
109,036
Work-in-process
126,810
102,668
Finished goods
15,696
17,398
Total
$
247,126 $
229,102
(6.) PROPERTY, PLANT AND EQUIPMENT, NET
PP&E comprises the following (in thousands):
December 31,
2024
2023
Manufacturing machinery and equipment
$
508,869 $
419,657
Buildings and building improvements
159,974
88,021
Information technology hardware and software
80,994
71,523
Leasehold improvements
102,988
90,114
Furniture and fixtures
16,902
15,605
Land and land improvements
11,809
10,429
Construction work in process
84,891
147,772
Other
1,552
1,392
967,979
844,513
Accumulated depreciation
(502,181)
(451,944)
Total
$
465,798 $
392,569
Depreciation expense for PP&E was as follows for the years ended December 31, 2024, 2023 and 2022 (in thousands):
2024
2023
2022
Cost of sales
$
44,927 $
35,569 $
34,260
SG&A
4,611
4,415
4,526
RD&E
2,981
3,450
3,049
Restructuring and other charges
349
—
—
Total depreciation expense
$
52,868 $
43,434 $
41,835
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 82 -
(7.) GOODWILL AND OTHER INTANGIBLE ASSETS, NET
See Note 2, “Business Acquisitions,” and Note 3, “Discontinued Operations,” for additional details regarding goodwill and
intangible assets.
Goodwill
The changes in the carrying amount of goodwill during the years ended December 31, 2024 and 2023 was as follows (in
thousands):
December 31, 2022
$
965,192
InNeuroCo acquisition (Note 2)
23,196
InNeuroCo acquisition-related adjustments (Note 2)
(2,207)
Foreign currency translation
7,826
December 31, 2023
994,007
Pulse acquisition (Note 2)
38,094
Pulse acquisition-related adjustments (Note 2)
(36)
InNeuroCo acquisition-related adjustments (Note 2)
(1,547)
Foreign currency translation
(12,789)
December 31, 2024
$
1,017,729
As of December 31, 2024, no accumulated impairment loss has been recognized for the Company’s goodwill.
Intangible Assets
Intangible assets comprise the following (in thousands):
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
December 31, 2024
Definite-lived:
Purchased technology and patents
$
293,164 $
(204,591) $
88,573
Customer lists
870,692
(284,104)
586,588
Amortizing tradenames and other
20,002
(7,165)
12,837
Total amortizing intangible assets
$
1,183,858 $
(495,860) $
687,998
Indefinite-lived:
Trademarks and tradenames
$
90,288
December 31, 2023
Definite-lived:
Purchased technology and patents
$
286,535 $
(195,329) $
91,206
Customer lists
837,453
(253,267)
584,186
Amortizing tradenames and other
21,035
(7,117)
13,918
Total amortizing intangible assets
$
1,145,023 $
(455,713) $
689,310
Indefinite-lived:
Trademarks and tradenames
$
90,288
Included in the Company’s indefinite-lived intangible assets are the Lake Region Medical and Greatbatch Medical tradenames
with carrying values of $70.0 million and $20.3 million, respectively.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 83 -
(7.) GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Continued)
Aggregate intangible asset amortization expense comprises the following for the years ended December 31, 2024, 2023 and
2022 (in thousands):
2024
2023
2022
Cost of sales
$
17,451 $
15,921 $
15,388
SG&A
37,163
36,270
32,612
Restructuring and other charges
—
638
—
Total intangible asset amortization expense
$
54,614 $
52,829 $
48,000
Estimated future intangible asset amortization expense based upon the carrying value as of December 31, 2024 is as follows (in
thousands):
2025
2026
2027
2028
2029
After 2029
Amortization expense
$
53,364 $
52,568 $
51,066 $
49,255 $
46,855 $ 434,890
(8.)
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities comprise the following (in thousands):
December 31,
2024
2023
Profit sharing and bonuses
$
36,795 $
35,348
Salaries and benefits
34,921
30,089
Cash flow hedges
6,091
—
Short-term finance lease liabilities
4,561
1,854
Contract liabilities
4,440
6,142
Accrued interest
4,201
4,578
Financing agreements
3,748
518
Income taxes payable
2,978
3,896
Product warranties
1,410
82
Other
9,178
8,137
Total
$
108,323 $
90,644
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 84 -
(9.) DEBT
Long-term debt comprises the following (in thousands):
December 31, 2024
December 31, 2023
Principal
Amount
Discounts
and Deferred
Issuance
Costs
Net
Carrying
Amount
Principal
Amount
Discounts
and Deferred
Issuance
Costs
Net
Carrying
Amount
Senior Secured Credit Facilities:
Revolving credit facilities
$
126,000 $
— $
126,000
$
99,000 $
— $
99,000
Term loan A
375,000
(1,302)
373,698
375,000
(1,687)
373,313
Convertible Senior Notes due 2028
499,994
(9,539)
490,455
500,000
(12,388)
487,612
Total
$ 1,000,994 $
(10,841) $
990,153
$
974,000 $
(14,075) $
959,925
Current portion of long-term debt
(10,000)
—
Long-term debt
$
980,153
$
959,925
In September 2021, the Company entered into a credit agreement (the “2021 Credit Agreement”), governing the Company’s
senior secured credit facilities (the “Senior Secured Credit Facilities”). As of December 31, 2024, the Senior Secured Credit
Facilities consists of a revolving credit facility (the “Revolving Credit Facility”) and a “term A” loan (the “TLA Facility”). In
February 2023, the Company issued $500 million aggregate principal amount of 2.125% Convertible Senior Notes due in 2028
(the “2028 Convertible Notes”).
Senior Secured Credit Facilities
Third Amendment to the 2021 Credit Agreement
On July 1, 2024, the Company entered into a third amendment (the “Third Amendment”) to the 2021 Credit Agreement. The
Third Amendment amended the terms of the 2021 Credit Agreement to increase the maximum borrowing capacity of the
Company under the Revolving Credit Facility pursuant to the 2021 Credit Agreement by $300.0 million from $500.0 million to
$800.0 million. All other terms of the 2021 Credit Agreement remained unchanged. In connection with the Third Amendment,
the Company incurred and capitalized $2.1 million of issuance costs in accordance with ASC 470-50, Debt Modifications and
Extinguishment. These costs have been recorded as a component of Other long-term assets on the Consolidated Balance Sheet
as of December 31, 2024 and will be amortized over the remaining term of the 2021 Credit Agreement.
Revolving Credit Facility
The Revolving Credit Facility matures on February 15, 2028. As of December 31, 2024, the Company had available borrowing
capacity on the Revolving Credit Facility of $668.7 million after giving effect to $126.0 million of outstanding borrowings and
$5.3 million of outstanding standby letters of credit. Borrowings under the Revolving Credit Facility bear interest at a rate
based on the secured overnight financing rate for the applicable interest period plus an adjustment of 0.10% per annum, in
relation to any loan in U.S. dollars, and the Euro Interbank Offered Rate, in relation to any loan in Euros, plus a margin based
on the Company’s Secured Net Leverage Ratio (as defined in the 2021 Credit Agreement). In addition, the Company is
required to pay a commitment fee on the unused portion of the Revolving Credit Facility, which ranges between 0.15% and
0.25%, depending on the Company’s Secured Net Leverage Ratio. As of December 31, 2024, the weighted average interest
rate on outstanding borrowings under the Revolving Credit Facility was 5.96% and the commitment fee on the unused portion
of the Revolving Credit Facility was 0.18%.
Term Loan Facilities
The TLA Facility matures on February 15, 2028, and requires quarterly installments. The quarterly principal installments under
the TLA Facility increase over the term of the loan. During 2023, the Company prepaid the contractual amounts due on the
TLA Facility through the second quarter of 2025. The interest rate terms for the TLA Facility are the same as those above for
the Revolving Credit Facility borrowings in U.S. dollars. As of December 31, 2024, the interest rate on the TLA Facility was
5.96%.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 85 -
(9.) DEBT (Continued)
Covenants
The Senior Secured Credit Facilities agreement contains customary terms and conditions, including representations and
warranties and affirmative and negative covenants, as well as financial covenants for the benefit of the lenders under the
Revolving Credit Facility and the TLA Facility, which require that (i) the Company maintain a Total Net Leverage Ratio not
to exceed 5.00:1.00, subject to increase in certain circumstances following qualified acquisitions, but shall not exceed
5.50:1.00 and (ii) the Company maintain an interest coverage ratio of at least 2.50:1.00. As of December 31, 2024, the
Company was in compliance with these financial covenants.
Contractual maturities under the Senior Secured Credit Facilities as of December 31, 2024 are as follows (in thousands):
2025
2026
2027
2028
Future minimum principal payments
$
10,000 $
27,500 $
30,000 $ 433,500
2028 Convertible Notes
In February of 2023, the Company issued $500 million aggregate principal amount of Convertible Senior Notes due in 2028
(“2028 Convertible Notes”) in a private offering, which aggregate principal amount included the exercise in full of the initial
purchasers’ option to purchase up to an additional $65 million principal amount of the 2028 Convertible Notes. The 2028
Convertible Notes were issued pursuant to an indenture dated as of February 3, 2023, by and between the Company and
Wilmington Trust, National Association, as trustee.
The 2028 Convertible Notes are senior unsecured obligations of the Company, which bear interest at a fixed rate of 2.125% per
annum, payable semiannually in arrears on February 15 and August 15 of each year. The 2028 Convertible Notes will mature
on February 15, 2028 unless repurchased, redeemed, or converted in accordance with their terms prior to such date and do not
contain financial maintenance covenants. The 2028 Convertible Notes are convertible at an initial conversion rate of 11.4681
shares of the Company’s common stock per $1,000 principal amount of the 2028 Convertible Notes, which is equivalent to an
initial conversion price of approximately $87.20 per share of common stock. The conversion rate is subject to standard anti-
dilutive adjustments and adjustments upon the occurrence of specified events.
The Company may not redeem the 2028 Convertible Notes prior to February 20, 2026. The Company may redeem for cash all
or any portion of the 2028 Convertible Notes, at its option, on or after February 20, 2026 and prior to February 15, 2028, if the
last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading
days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period)
ending not more than two trading days immediately preceding the date on which the Company provides notice of redemption at
a redemption price equal to 100% of the principal amount of the 2028 Convertible Notes to be redeemed, plus accrued and
unpaid interest, if any, to, but excluding, the redemption date.
Holders of the 2028 Convertible Notes may convert all or a portion of their 2028 Convertible Notes at their option prior to
November 15, 2027, in multiples of $1,000 principal amounts, only under the following circumstances:
•
during any calendar quarter commencing after the calendar quarter ended on March 31, 2023 (and only during such
calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not
consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the
immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading
day;
•
during the five business day period after any ten consecutive trading day period (the “Measurement Period”) in which the
trading price (as defined in the indenture governing the 2028 Convertible Notes) per $1,000 principal amount of the 2028
Convertible Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported
sale price of the Company’s common stock and the conversion rate in effect on each such trading day;
•
if the Company calls any or all of the 2028 Convertible Notes for redemption, at any time prior to the close of business on
the second scheduled trading day immediately preceding the redemption date; or
•
upon the occurrence of specified corporate events.
On or after November 15, 2027 until the close of business on the second scheduled trading day immediately preceding the
maturity date, holders may convert all or any portion of their 2028 Convertible Notes, in multiples of $1,000 principal
amount, at the option of the holder regardless of the foregoing circumstances.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 86 -
(9.) DEBT (Continued)
Upon conversion, the 2028 Convertible Notes will be settled in cash up to the aggregate principal amount of the 2028
Convertible Notes to be converted, and in cash, shares of the Company’s common stock or a combination thereof, at the
Company’s option, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate
principal amount of the 2028 Convertible Notes being converted. If the Company undergoes a fundamental change (as defined
in the indenture governing the 2028 Convertible Notes), subject to certain conditions, holders may require the Company to
repurchase for cash all or any portion of their 2028 Convertible Notes, in principal amounts of $1,000 or a multiple thereof, at a
fundamental change repurchase price equal to 100% of the principal amount of the 2028 Convertible Notes to be repurchased,
plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In addition, following
certain corporate events or if the Company issues a notice of redemption, the Company will, under certain circumstances,
increase the conversion rate for holders who elect to convert their 2028 Convertible Note in connection with such corporate
event or during the relevant redemption period.
The conditions allowing holders of the 2028 Convertible Notes to convert the 2028 Convertible Notes was met as of June 30,
2024 and, thereafter, continued to be met as of December 31, 2024, in each instance due to the trading price of our common
stock exceeding 130% of the 2028 Convertible Notes conversion price on at least 20 out of the 30 consecutive trading days
prior to such date. Therefore, the 2028 Convertible Notes became eligible for conversion at the option of the holders beginning
on July 1, 2024 and will continue to be eligible for conversion through March 31, 2025. Any determination regarding the
convertibility of the 2028 Convertible Notes during future periods will be made in accordance with the terms of the indenture
governing the 2028 Convertible Notes. If a conversion request occurs, the Company has the intent and ability to refinance the
amounts that may become due with respect to the 2028 Convertible Notes using available borrowing capacity under the
Revolving Credit Facility. As such, the obligations associated with the 2028 Convertible Notes continue to be classified as a
long-term liability on the Consolidated Balance Sheets as of December 31, 2024.
The 2028 Convertible Notes are accounted for as a single liability measured at amortized cost. The discount and issuance costs
related to the 2028 Convertible Notes are being amortized to interest expense over the contractual term of the 2028 Convertible
Notes at an effective interest rate of 2.76%.
Capped Call Transactions
In connection with the issuance of the 2028 Convertible Notes, the Company entered into privately negotiated capped call
transactions (the “Capped Calls”) with certain financial institutions. The Capped Calls are expected generally to reduce the
potential dilution to the Company’s common stock in connection with any conversion of the 2028 Convertible Notes and/or
offset any cash payments the Company is required to make in excess of the principal amount of converted 2028 Convertible
Notes, as the case may be, with such reduction and/or offset subject to a cap based on strike price of written warrants. The
initial upper strike price of the Capped Calls is $108.59 per share and is subject to certain adjustments under the terms of the
Capped Calls.
Deferred Debt Issuance Costs and Discounts
The change in deferred debt issuance costs related to the Company’s Revolving Credit Facility during the year ended
December 31, 2024 was as follows (in thousands):
December 31, 2023
2,166
Financing costs incurred
2,075
Amortization during the period
(823)
December 31, 2024
$
3,418
The change in debt discount and deferred debt issuance costs related to the TLA Facility and 2028 Convertible Notes during
the year ended December 31, 2024 was as follows (in thousands):
Deferred Debt
Issuance
Costs
Debt Discount
Total
December 31, 2023
2,667
11,408
14,075
Amortization during the period
(612)
(2,622)
(3,234)
December 31, 2024
$
2,055 $
8,786 $
10,841
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 87 -
(10.) BENEFIT PLANS
Savings Plan
The Company sponsors a defined contribution 401(k) plan (the “Plan”) for its U.S. based employees. The Plan provides for the
deferral of employee compensation under Internal Revenue Code §401(k) and a Company match. The Company matches $0.50
per dollar of each participant’s deferral made to the Plan up to 6% of their compensation, subject to Internal Revenue Service
guidelines. Contributions from employees, as well as those matched by the Company, vest immediately. Net costs related to
defined contribution plans for 2024, 2023 and 2022 were $10.8 million, $9.5 million and $8.5 million, respectively.
Defined Benefit Plans
The Company is required to provide its employees located in Switzerland and Mexico certain statutorily mandated defined
benefits. Under these plans, benefits accrue to employees based upon years of service, position, age and compensation. The
defined benefit pension plan provided to the Company’s employees located in Switzerland is a funded contributory plan, while
the plans that provide benefits to the Company’s employees located in Mexico are unfunded and noncontributory. The assets of
the Switzerland plan are held at an AA- rated insurance carrier who bears the pension risk and longevity risk, and will be used
to cover the pension liability for the remaining retirees of the Swiss plan, as well as the remaining employees at that location.
The liability and corresponding expense related to these benefit plans is based on actuarial computations of current and future
benefits for employees. The aggregated projected benefit obligation for these plans was $2.9 million as of December 31, 2024
and December 31, 2023. Net periodic pension cost for 2024, 2023 and 2022 was $0.6 million, $0.6 million and $0.1 million,
respectively. Over the next ten years, the Company expects gross benefit payments to be $1.6 million in total for the
years 2025 through 2029, and $2.9 million in total for the years 2030 through 2034.
(11.) STOCK-BASED COMPENSATION
Stock-based Compensation Plans
The Company maintains certain stock-based compensation plans that were approved by the Company’s stockholders and are
administered by the Board of Directors (the “Board”) or the Compensation and Organization Committee of the Board (the
“Compensation Committee”). The stock-based compensation plans provide for the granting of stock options, restricted stock
awards, RSUs, performance awards, stock appreciation rights and stock bonuses to employees, non-employee directors,
consultants, and service providers.
As of December 31, 2024, the Company’s outstanding stock-based compensation plans and agreements include the 2021
Omnibus Incentive Plan (the “2021 Plan”), 2016 Stock Incentive Plan (the “2016 Plan”), 2011 Stock Incentive Plan (the “2011
Plan”), the 2009 Stock Incentive Plan (the “2009 Plan”). The 2021 Plan replaced the 2016 Plan and the Company ceased
granting any new awards under the 2016 Plan. The number of shares initially reserved for issuance under the 2021 Plan was (i)
1,450,000 plus (ii) the total number of shares of common stock available for issuance under the 2016 Plan, plus (iii) any shares
of common stock that are subject to awards forfeited, cancelled, expired, terminated or otherwise lapsed or settled in cash, in
whole or in part, without the delivery of shares under the 2016 Plan. The 2011 Plan and 2009 Plan have expired and no awards
are available for issuance under these expired plans. As of December 31, 2024, there were 818,109 shares available for future
grants under the 2021 Plan.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 88 -
(11.) STOCK-BASED COMPENSATION (Continued)
Stock-based Compensation Expense
The classification of stock-based compensation expense in the accompanying Consolidated Statements of Operations was as
follows (in thousands):
Year Ended December 31,
2024
2023
2022
RSUs and PRSUs
$
24,515 $
23,108 $
20,287
Discontinued operations
252
175
736
Total stock-based compensation expense
$
24,767 $
23,283 $
21,023
Cost of sales
$
3,881 $
3,694 $
3,195
SG&A
19,415
18,189
14,810
RD&E
1,153
1,152
1,005
Restructuring and other charges
66
73
1,277
Discontinued operations
252
175
736
Total stock-based compensation expense
$
24,767 $
23,283 $
21,023
Income tax benefit recognized for stock-based compensation arrangements
$
5,096 $
3,667 $
2,762
Stock Options
There were no stock options granted during 2024, 2023 or 2022. The following table summarizes stock option activity during
the year ended December 31, 2024:
Number of
Stock
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value
(in millions)
Outstanding at December 31, 2023
158,089 $
40.35
Exercised
(28,006)
43.69
Outstanding at December 31, 2024
130,083 $
39.63
2.0
$
12.1
Vested and exercisable at December 31, 2024
130,083 $
39.63
2.0
$
12.1
Intrinsic value is calculated for in-the-money options (exercise price less than market price) as the difference between the
market price of the Company’s common stock as of December 31, 2024 ($132.52) and the weighted average exercise price of
the underlying stock options, multiplied by the number of options outstanding and/or exercisable. Shares are distributed from
the Company’s authorized but unissued reserve upon the exercise of stock options. As of December 31, 2024, there was no
unrecognized compensation cost related to stock options.
The following table provides certain information relating to the exercise of stock options during 2024, 2023 and 2022 (in
thousands):
2024
2023
2022
Intrinsic value
$
2,007 $
3,670 $
370
Cash received
742
2,303
150
Actual tax benefit for the tax deductions from the exercise of options
482
881
89
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 89 -
(11.) STOCK-BASED COMPENSATION (Continued)
Restricted Stock Units
The following table summarizes RSU activity during the year ended December 31, 2024:
Time-Vested
Activity
Weighted
Average
Grant Date
Fair Value
Nonvested at December 31, 2023
349,755 $
76.63
Granted
148,777
107.84
Vested
(158,180)
81.39
Forfeited
(26,948)
84.65
Nonvested at December 31, 2024
313,404 $
88.36
As of December 31, 2024, there was $14.5 million of total unrecognized compensation cost related to RSUs, which is expected
to be recognized over a weighted-average period of approximately 1.6 years. The fair value of RSU shares that vested during
2024, 2023 and 2022 was $17.3 million, $9.1 million and $10.7 million, respectively. The weighted average grant date fair
value of RSUs granted during 2024, 2023 and 2022 was $81.39, $79.03 and $75.87, respectively.
Performance Restricted Stock Units
The following table summarizes PRSU activity during the year ended December 31, 2024:
Performance-
Vested
Activity
Weighted
Average
Grant Date
Fair Value
Nonvested at December 31, 2023
275,503 $
84.57
Granted
78,246
110.54
Performance adjustment(a)
111,590
93.38
Vested
(223,655)
93.41
Forfeited
(3,786)
83.02
Nonvested at December 31, 2024
237,898 $
88.95
__________
(a)
Represents additional PRSUs earned related to above-target achievement of performance conditions, the achievement of
which was based upon predefined performance targets established by the Compensation Committee at the initial grant date.
For the Company’s PRSUs, in addition to service conditions, the ultimate number of shares earned depends on the achievement
of financial or market-based performance conditions. The financial performance condition is based on the Company’s sales.
The market conditions are based on the Company’s achievement of a relative total shareholder return (“TSR”) performance
requirement, on a percentile basis, compared to a defined group of peer companies over three year performance periods, or
contingent upon achieving specified stock price milestones over a five year performance period.
At December 31, 2024, there was $8.1 million of total unrecognized compensation cost related to unvested PRSUs, which is
expected to be recognized over a weighted-average period of approximately 1.8 years. The fair value of PRSU shares vested
during 2024 and 2023 was $19.8 million and $1.8 million, respectively. There were no PRSU shares vested during 2022. The
weighted average grant date fair value of PRSUs granted during 2024, 2023 and 2022 was $110.54, $74.32 and $90.84,
respectively.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 90 -
(11.) STOCK-BASED COMPENSATION (Continued)
The grant-date fair values of the market-based portion of the PRSUs granted during 2024, 2023 and 2022 were determined
using the Monte Carlo valuation model on the date of grant. The weighted average fair value and assumptions used to value the
TSR portion of the PRSUs granted are as follows:
2024
2023
2022
Weighted average fair value
$
117.96
$
74.29
$
97.58
Risk-free interest rate
4.13 %
3.79 %
1.58 %
Expected volatility
34 %
46 %
42 %
Expected life (in years)
3.0
3.0
3.9
Expected dividend yield
— %
— %
— %
The valuation of the TSR portion of the PRSUs granted during 2024, 2023 and 2022 also reflects a weighted average illiquidity
discount of 8.00%, 11.23% and 9.25%, respectively, related to the period that recipients are restricted from selling, transferring,
pledging or assigning the underlying shares, in the event of vesting.
(12.) RESTRUCTURING AND OTHER CHARGES
Restructuring and other charges comprise the following (in thousands):
2024
2023
2022
Restructuring charges
$
4,013 $
5,874 $
4,008
Acquisition and integration costs
8,941
3,444
10,075
Other general expenses (gains)
(805)
2,110
1,188
Total restructuring and other charges
$
12,149 $
11,428 $
15,271
Restructuring programs
Operational excellence
The Company’s operational excellence (“OE”) initiatives mainly consist of costs associated with executing on its sales force,
manufacturing, business process and performance excellence operational strategic imperatives. These projects focus on
changing the Company’s organizational structure to match product line growth strategies and customer needs, transitioning its
manufacturing process into a competitive advantage and standardizing and optimizing its business processes.
2022 OE Initiatives - Costs related to the Company’s 2022 OE initiatives primarily include termination benefits. The Company
estimates that it will incur aggregate pre-tax charges in connection with the 2022 OE initiatives of between approximately
$11 million and $13 million, the majority of which are expected to be cash expenditures. As of December 31, 2024, total
restructuring and restructuring-related charges incurred since inception were $10.5 million. These actions are expected to be
substantially complete by the end of 2025.
Strategic reorganization and alignment
The Company’s strategic reorganization and alignment (“SRA”) initiatives primarily include those that align resources with
market conditions and the Company’s strategic direction in order to enhance the profitability of its portfolio of products.
2021 SRA Initiatives - During the fourth quarter of 2021, the Company initiated plans to exit certain markets to enhance
profitability and reallocate manufacturing capacity needed to support the Company’s overall growth plans. The Company
estimates that it will incur a range of pre-tax charges in connection with the 2021 SRA initiatives of approximately $6 million
and $7 million, the majority of which are expected to be cash expenditures. Costs related to the Company’s 2021 SRA
Initiatives primarily include termination benefits. As of December 31, 2024, total charges incurred since inception were
$6.2 million. These actions are expected to be completed by the end of 2025.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 91 -
(12.) RESTRUCTURING AND OTHER CHARGES (Continued)
Manufacturing alignment to support growth
The Company’s manufacturing alignment to support growth (“MASG”) initiatives are designed to reduce costs, improve
operating efficiencies or increase capacity to accommodate growth, which may involve relocation or consolidation of
manufacturing operations.
Research and Product Development Alignment – In 2023, the Company commenced an initiative to consolidate certain
research and product development operations to more efficiently meet customer needs. The Company will be consolidating
existing facilities in Israel and Ireland primarily to a new facility in Ireland. The Company estimates that it will incur aggregate
pre-tax charges in connection with this initiative of between approximately $6 million and $8 million, the majority of which are
expected to be cash expenditures. Costs related to the Company’s Research and Product Development Alignment initiative
primarily include asset disposal and impairment charges and termination benefits. As of December 31, 2024, total restructuring
and restructuring-related charges incurred since inception were $5.4 million. These actions are expected to be substantially
complete by the end of 2026.
2022 MASG - In 2022, the Company initiated plans to relocate manufacturing of certain products. The Company estimates that
it will incur aggregate pre-tax charges in connection with the 2022 MASG initiatives of between approximately $5 million and
$7 million, the majority of which are expected to be cash expenditures. Costs related to the Company’s 2022 MASG initiative
primarily include non-labor costs to relocate equipment and inventory, as well as other costs related to the closure and
relocation of certain manufacturing operations. As of December 31, 2024, total restructuring and restructuring-related charges
incurred since inception were $2.7 million. These actions are expected to be substantially complete by the end of 2026.
The following table comprises restructuring and restructuring-related charges by classification in the accompanying
Consolidated Statements of Operations (in thousands):
2024
2023
2022
Restructuring charges:
Restructuring and other charges
$
4,013 $
5,874 $
4,008
Restructuring-related expenses(a):
Cost of sales
2,170
1,633
891
Selling, general and administrative
942
1,775
1,966
Research, development and engineering
130
667
1,231
Total restructuring and restructuring-related charges
$
7,255 $
9,949 $
8,096
__________
(a) Restructuring-related expenses primarily include non-labor costs to relocate equipment and inventory, retention bonuses,
consulting expenses and professional fees.
The following table summarizes the activity for restructuring reserves (in thousands):
Operational
excellence
initiatives
Strategic
reorganization
and alignment
Manufacturing
alignment to
support
growth
Total
December 31, 2023
$
21 $
125 $
1,290 $
1,436
Charges incurred, net of reversals
2,161
445
1,407
4,013
Cash payments
(1,492)
(455)
(2,348)
(4,295)
Non-cash adjustments
—
—
(349)
(349)
December 31, 2024
$
690 $
115 $
— $
805
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 92 -
(12.) RESTRUCTURING AND OTHER CHARGES (Continued)
Acquisition and integration costs
Acquisition and integration costs primarily consist of professional fees directly related to completed and contemplated business
acquisitions and costs to integrate the systems, processes and organizations acquired. During 2024, 2023 and 2022, acquisition
and integration costs included incremental expense (benefit) of $(3.6) million, $(0.7) million and $3.1 million, respectively,
related to adjustments to the fair value of acquisition-related contingent consideration liabilities. See Note 18, “Financial
Instruments and Fair Value Measurements,” for additional information related to the fair value measurement of the contingent
consideration.
Other general expenses
During 2024, 2023 and 2022, the Company recorded expenses related to other initiatives not described above, which primarily
include gains and losses in connection with the disposal of property, plant and equipment. In addition, during 2024 and 2023
the Company recorded $(1.2) million and $2.0 million, respectively, of property loss (recoveries) relating to property damage
which occurred in the fourth quarter of 2023 at one of its manufacturing facilities.
(13.) INCOME TAXES
Income from continuing operations before income taxes for fiscal years 2024, 2023 and 2022 consisted of the following (in
thousands):
2024
2023
2022
U.S.
$
55,571 $
29,089 $
7,164
International
91,992
76,293
61,512
Total income from continuing operations before income taxes
$
147,563 $
105,382 $
68,676
The provision for income taxes from continuing operations for fiscal years 2024, 2023 and 2022 comprises the following (in
thousands):
2024
2023
2022
Current:
Federal
$
18,309 $
11,072 $
18,704
State
1,655
1,292
439
International
19,476
13,140
6,871
39,440
25,504
26,014
Deferred:
Federal
(9,456)
(7,262)
(15,937)
State
(245)
(132)
76
International
(3,229)
(1,871)
(1,224)
(12,930)
(9,265)
(17,085)
Total provision for income taxes
$
26,510 $
16,239 $
8,929
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 93 -
(13.) INCOME TAXES (Continued)
The provision for income taxes from continuing operations differs from the U.S. statutory rate for fiscal years 2024, 2023 and
2022 due to the following:
2024
2023
2022
Statutory rate
$ 30,988
21.0 % $ 22,130
21.0 % $ 14,422
21.0 %
Federal tax credits (including R&D)
(13,628)
(9.2)
(11,129)
(10.6)
(9,305)
(13.6)
Foreign rate differential
(4,774)
(3.2)
(5,513)
(5.2)
(7,693)
(11.2)
Stock-based compensation
1,506
1.0
1,847
1.7
1,983
2.9
Uncertain tax positions
289
0.2
(1,170)
(1.1)
2,469
3.6
State taxes, net of federal benefit
1,413
1.0
1,108
1.1
687
1.0
U.S. tax on foreign earnings, net of §250 deduction
7,972
5.4
6,194
5.9
5,323
7.8
Valuation allowance
418
0.3
1,737
1.6
(218)
(0.3)
OECD Pillar II: Global Minimum Tax
2,189
1.5
—
—
—
—
Other
137
—
1,035
1.0
1,261
1.8
Effective tax rate
$ 26,510
18.0 % $ 16,239
15.4 % $
8,929
13.0 %
The difference between the Company’s effective tax rate and the U.S. federal statutory income tax rate in the current year is
primarily attributable to the availability of Foreign Tax Credits, R&D Credits, the impact of the Company’s earnings realized in
foreign jurisdictions with statutory rates that are different than the U.S. federal statutory rate, the impact of the OECD Pillar II
Global Minimum Tax enacted on January 1, 2024, and the provision for Global Intangible Low Taxed income (“GILTI”), net of
the statutory deduction of 50% of the GILTI inclusion and the Foreign Derived Intangible Income (“FDII”) deduction
(collectively “Section 250 deduction”). The Company’s foreign earnings are primarily derived from Switzerland, Mexico,
Uruguay, Ireland and Malaysia. The Company has previously operated under a tax holiday in Malaysia, which expired in
accordance with its original terms on April 30, 2023. The Company’s manufacturing operations in the Dominican Republic
operate under a free trade zone agreement through March 2034.
Difference Attributable to Foreign Investment: Certain foreign subsidiary earnings are subject to U.S. taxation under the Tax
Cuts and Jobs Act of 2017 (the “Tax Reform Act”) . The Company intends to permanently reinvest substantially all of its
foreign subsidiary earnings, as well as its capital in those foreign subsidiaries, with the exception of planned distributions made
out of current year earnings and profits (“E&P”) and E&P previously taxed as of and for the year ended December 29, 2017,
including E&P subject to the toll charge under the Tax Reform Act. The Company accrues for withholding taxes on
distributions in the year associated with earnings that are intended to be distributed.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 94 -
(13.) INCOME TAXES (Continued)
As of December 31, 2024 and December 31, 2023, the Company had a net deferred tax liability consisting of the following (in
thousands):
December 31,
2024
December 31,
2023
Research and development
$
37,201 $
27,222
Lease liabilities
28,772
20,641
Net operating loss carryforwards
8,093
7,814
Accrued expenses
7,122
7,515
Tax credit carryforwards
5,749
8,989
Original issue discount from capped calls
5,733
7,288
Stock-based compensation
5,438
5,030
Other
5,578
2,597
Gross deferred tax assets
103,686
87,096
Less valuation allowance
(13,387)
(15,741)
Net deferred tax assets
90,299
71,355
Intangible assets
(167,514)
(178,353)
Lease assets
(28,802)
(20,773)
Property, plant and equipment
(10,282)
(7,200)
Other
—
(1,580)
Gross deferred tax liabilities
(206,598)
(207,906)
Net deferred tax liability
$
(116,299) $
(136,551)
Presented as follows:
Noncurrent deferred tax asset
$
8,309 $
7,001
Noncurrent deferred tax liability
(124,608)
(143,552)
Net deferred tax liability
$
(116,299) $
(136,551)
As of December 31, 2024, the Company has the following carryforwards available (in millions):
Jurisdiction
Tax
Attribute
Gross
Amount
Deferred
Tax Asset
Valuation
Allowance
Begin to
Expire
U.S. State
Net operating losses(a)(b)
$
80.0 $
3.1 $
(3.0)
2025
International
Net operating losses(a)
$
21.0 $
5.0 $
(5.0)
2025
U.S. Federal
Foreign tax credits
$
2.3 $
2.3 $
(2.3)
2029
U.S. State
R&D tax credits(b)
$
0.3 $
0.2 $
—
2036
U.S. State
State tax credits(b)
$
3.8 $
3.0 $
(3.0)
2025
International
R&D tax credits
$
0.2 $
0.2 $
—
Indefinite
__________
(a) Net operating losses are presented as pre-tax amounts.
(b) U.S. State deferred tax assets and valuation allowance are presented net of federal benefit.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 95 -
(13.) INCOME TAXES (Continued)
In assessing the realizability of deferred tax assets, management considers, within each taxing jurisdiction, whether it is more
likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based
on the consideration of the weight of both positive and negative evidence, management has determined it is more likely than not
that a portion of the deferred tax assets as of December 31, 2024 and December 31, 2023 related to certain foreign tax credits,
state investment tax credits, and foreign and state net operating losses will not be realized.
The Company files annual income tax returns in the U.S., various state and local jurisdictions, and in various foreign
jurisdictions. A number of years may elapse before an uncertain tax position, for which the Company has unrecognized tax
benefits, is examined and finally settled. While it is often difficult to predict the final outcome or the timing of resolution of any
particular uncertain tax position, the Company believes that its unrecognized tax benefits reflect the most probable outcome.
The Company adjusts these unrecognized tax benefits, as well as the related interest, in light of changing facts and
circumstances. The resolution of an uncertain tax position, if recognized, would be recorded as an adjustment to the provision
for income taxes and the effective tax rate in the period of resolution.
Below is a summary of changes to the unrecognized tax benefit for the years ended December 31, 2024, 2023 and 2022 (in
thousands):
2024
2023
2022
Balance, beginning of year
$
6,470 $
7,739 $
5,537
Additions based upon tax positions related to the current year
353
356
1,364
Additions (reductions) related to prior period tax returns
(6)
(18)
838
Reductions related to settlements (amounts paid)
(166)
—
—
Reductions as a result of a lapse of applicable statute of limitations
(450)
(1,607)
—
Balance, end of year
$
6,201 $
6,470 $
7,739
The tax years that remain open and subject to tax audits vary depending on the tax jurisdiction. The Company is no longer
subject to tax authority examinations in the U.S. for tax years prior to 2021 and is generally no longer subject to tax authority
examinations in other major foreign, or state tax jurisdictions for years prior to fiscal year 2020.
It is reasonably possible that a reduction of approximately $4.0 million of the balance of unrecognized tax benefits may occur
within the next twelve months as a result of the lapse of the statute of limitations and/or audit settlements. As of December 31,
2024, approximately $6.1 million of unrecognized tax benefits would favorably impact the effective tax rate (net of federal
impact on state issues), if recognized.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of Provision for
income taxes on the Consolidated Statements of Operations. As of December 31, 2024, 2023 and 2022, interest and penalties
accrued for unrecognized tax benefits were $1.4 million, $0.8 million and $0.5 million. Expenses related to interest and
penalties during 2024, 2023, and 2022 were not material.
On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which
generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and
Development (OECD) Pillar Two Framework. The EU effective dates are January 1, 2024, and January 1, 2025, for different
aspects of the directive. The Company’s 2024 provision for income taxes includes the impact of the Pillar Two 15% Global
Minimum Tax, with an enactment date of January 1, 2024. A significant number of other countries are expected to also
implement similar legislation with varying effective dates in the future. The Company is continuing to evaluate the potential
impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries.
See Note 3, “Discontinued Operations,” for additional information pertaining to income taxes from discontinued operations.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 96 -
(14.) COMMITMENTS AND CONTINGENCIES
Contingent Consideration Arrangements
The Company records contingent consideration liabilities related to the earn-out provisions for certain acquisitions. See Note
18, “Financial Instruments and Fair Value Measurements,” for additional information.
Litigation
The Company is subject to litigation arising from time to time in the ordinary course of its business. The Company does not
expect that the ultimate resolution of any pending legal actions will have a material effect on its consolidated results of
operations, financial position, or cash flows. However, litigation is subject to inherent uncertainties. As such, there can be no
assurance that any pending legal action will not become material in the future.
Environmental Matters
The Company acquired Lake Region Medical Holdings, Inc. (“LRM”) in 2015. At the direction of the New Jersey Department
of Environmental Protection (“NJDEP”), LRM has been performing, and has agreed to fund approximately $0.3 million for,
environmental investigations of a manufacturing facility LRM owned in South Plainfield, New Jersey from 1971 to 2004, and
where it conducted operations from 1971 to 2007. NJDEP required LRM to perform and fund these environmental
investigations due to concerns that prior investigations by LRM at the property were inadequate and because NJDEP concluded
that the property was a source of local ground water contamination during LRM’s operations, including the Franklin Street
Regional Groundwater Contamination Area, which has been designated as an immediate environmental concern by NJDEP.
LRM funded the environmental investigation undertaken by NJDEP’s contractor by placing approximately $0.3 million in
escrow for the environmental investigation. As of December 31, 2024, approximately $0.2 million had been drawn down from
the escrow account by NJDEP to pay for the environmental investigation, and approximately $0.1 million remains in escrow for
anticipated future costs associated with the environmental investigation. These environmental investigations may conclude that
remediation of the property by LRM, and the reimbursement of costs and damages, including natural resource damages,
associated with the groundwater immediate environmental concern, are necessary. Further, the current owner of the property
claims to have been financially impacted by LRM’s inadequate environmental investigations. While the Company does not
expect this environmental matter will have a material effect on its consolidated results of operations, financial position or cash
flows, there can be no assurance that this environmental matter will not become material in the future. As of December 31,
2024, there was $0.1 million recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets in
connection with this environmental matter.
License Agreements
The Company is a party to various license agreements for technology that is utilized in certain of its products. The most
significant of these agreements are licenses for basic technology used in the production of filtered feedthroughs and stylets and
guidewires. Expenses related to license agreements were $1.2 million, $1.7 million, and $1.5 million, for 2024, 2023 and 2022,
respectively, and are primarily included in Cost of Sales.
Self-Insurance Liabilities
As of December 31, 2024, and at various times in the past, the Company self-funded certain of its workers’ compensation and
employee medical and dental expenses. The Company has established reserves to cover these self-insured liabilities and also
maintains stop-loss insurance to limit its exposures under these programs. Claims reserves represent accruals for the estimated
uninsured portion of reported claims, including adverse development of reported claims, as well as estimates of incurred but not
reported claims. Claims incurred but not reported are estimated based on the Company’s historical experience, which is
continually monitored, and accruals are adjusted when warranted by changes in facts and circumstances. The Company’s actual
experience may be different than its estimates, sometimes significantly. Changes in assumptions, as well as changes in actual
experience could cause these estimates to change. Insurance and claims expense will vary from period to period based on the
severity and frequency of claims incurred in a given period. The Company’s self-insurance reserves totaled $6.2 million and
$7.3 million as of December 31, 2024 and December 31, 2023, respectively. These accruals are recorded in Accrued expenses
and other current liabilities and Other long-term liabilities on the Consolidated Balance Sheets.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 97 -
(15.) LEASES
The components and classification of lease cost for the years ended December 31, 2024, 2023 and 2022 are as follows (in
thousands):
2024
2023
2022
Finance lease cost:
Amortization of lease assets
$
2,575 $
1,367 $
1,080
Interest on lease liabilities
845
321
317
Finance lease cost
3,420
1,688
1,397
Operating lease cost
14,076
13,920
13,801
Short-term lease cost (leases with initial term of 12 months or less)
257
305
309
Variable lease cost
3,071
2,994
2,970
Sublease income
(929)
(904)
(1,294)
Total lease cost
$
19,895 $
18,003 $
17,183
Cost of sales
$
15,566 $
13,339 $
12,896
SG&A
2,991
3,028
2,864
RD&E
403
929
1,106
Restructuring and other charges
90
386
—
Interest expense
$
845 $
321 $
317
Total lease cost
$
19,895 $
18,003 $
17,183
The Company’s sublease income is derived primarily from certain real estate leases to several non-affiliated tenants under
operating sublease arrangements.
Supplemental cash flow information related to leases for the years ended December 31, 2024, 2023 and 2022 is as follows (in
thousands):
2024
2023
2022
Cash paid for operating leases
$
12,557 $
13,751 $
13,381
Cash paid for interest on finance leases
845
320
315
Assets acquired under operating leases
13,384
17,526
16,166
Assets acquired under finance leases
18,300
4,085
1,850
At December 31, 2024, the maturities of operating and finance lease liabilities were as follows (in thousands):
Operating
Leases
Finance
Leases
2025
$
12,501 $
5,952
2026
12,478
5,545
2027
12,326
5,244
2028
11,901
4,011
2029
11,770
2,042
Thereafter
54,806
12,690
Gross lease liabilities
115,782
35,484
Less: imputed interest
(30,728)
(7,163)
Present value of lease liabilities
85,054
28,321
Less: current portion of lease liabilities
(7,352)
(4,561)
Total long-term lease liabilities
$
77,702 $
23,760
As of December 31, 2024, the Company did not have any leases that have not yet commenced.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 98 -
(15.) LEASES (Continued)
The following table presents the weighted average remaining lease term and discount rate.
December 31,
2024
December 31,
2023
Weighted-average remaining lease term - operating leases (in years)
10.0
9.3
Weighted-average remaining lease term - finance leases (in years)
8.0
7.8
Weighted-average discount rate - operating leases
6.3 %
5.5 %
Weighted-average discount rate - finance leases
5.7 %
4.4 %
(16.) EARNINGS PER SHARE
The following table sets forth a reconciliation of the information used in computing basic and diluted EPS for the years ended
December 31, 2024, 2023 and 2022 (in thousands, except per share amounts):
2024
2023
2022
Numerator for basic and diluted EPS:
Income from continuing operations
$
121,053 $
89,143 $
59,747
Income (loss) from discontinued operations, net of tax
(1,157)
1,507
6,630
Net income
$
119,896 $
90,650 $
66,377
Denominator for basic and diluted EPS:
Weighted average shares outstanding - Basic
33,601
33,320
33,127
Dilutive effect of share-based awards
514
438
230
Dilutive impact of convertible notes
1,534
—
—
Denominator for diluted EPS
35,649
33,758
33,357
Basic earnings per share:
Income from continuing operations
$
3.60 $
2.68 $
1.80
Income (loss) from discontinued operations
(0.03)
0.05
0.20
Basic earnings per share
3.57
2.72
2.00
Diluted earnings per share:
Income from continuing operations
$
3.40 $
2.64 $
1.79
Income (loss) from discontinued operations
(0.03)
0.04
0.20
Diluted earnings per share
3.36
2.69
1.99
The diluted weighted average share calculations do not include the following securities for the years ended December 31, 2024,
2023 and 2022, which are not dilutive to the EPS calculations or the performance criteria have not been met (in thousands):
2024
2023
2022
Time-vested stock options, restricted stock and restricted stock units
1
1
15
Performance-vested restricted stock units
31
84
152
The dilutive effect for the Company's 2028 Convertible Notes is calculated using the if-converted method. The Company is
required, pursuant to the indenture governing the 2028 Convertible Notes, to settle the principal amount of the 2028 Convertible
Notes in cash and may elect to settle the remaining conversion obligation (the in-the-money portion) in cash, shares of the
Company's common stock, or a combination thereof. Because the principal amount of the 2028 Convertible Notes must be
settled in cash, the dilutive impact of applying the if-converted method is limited to the in-the-money portion, if any, of the
2028 Convertible Notes. During the year ended December 31, 2023, the potential conversion of the 2028 Convertible Notes
was not included in the diluted earnings per share calculation because the conversion feature in the 2028 Convertible Notes was
out of the money and all associated shares were antidilutive.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 99 -
(17.) STOCKHOLDERS’ EQUITY
Common Stock
The following is a summary of the number of shares of common stock issued and outstanding for the years ended December 31,
2024 and December 31, 2023:
Issued
Treasury
Stock
Outstanding
December 31, 2022
33,169,778
—
33,169,778
Stock options exercised
72,125
—
72,125
Vested and settled RSUs and PRSUs, net of shares withheld to cover taxes
87,745
—
87,745
December 31, 2023
33,329,648
—
33,329,648
Stock options exercised
23,981
—
23,981
Vested and settled RSUs and PRSUs, net of shares withheld to cover taxes
192,615
—
192,615
Stock issued upon conversion of convertible debt
18
—
18
Exercise of capped call upon conversion of convertible debt
—
(6)
(6)
December 31, 2024
33,546,262
(6)
33,546,256
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) comprises the following (in thousands):
Defined
Benefit
Plan
Liability
Cash
Flow
Hedges
Foreign
Currency
Translation
Adjustment
Total
Pre-Tax
Amount
Tax
Net-of-
Tax
Amount
December 31, 2022
$
(346) $
1,760 $
4,150 $
5,564 $
(235) $
5,329
Unrealized gain on cash flow hedges
—
7,008
—
7,008
(1,472)
5,536
Realized gain on foreign currency hedges
—
(5,353)
—
(5,353)
1,124
(4,229)
Realized gain on interest rate swap hedge
—
(1,262)
—
(1,262)
265
(997)
Net defined benefit plan adjustments
318
—
—
318
(113)
205
Foreign currency translation gain
—
—
14,379
14,379
—
14,379
December 31, 2023
$
(28) $
2,153 $
18,529 $
20,654 $
(431) $
20,223
Unrealized loss on cash flow hedges
—
(10,065)
—
(10,065)
2,114
(7,951)
Realized loss on foreign currency hedges
—
1,430
—
1,430
(300)
1,130
Net defined benefit plan adjustments
95
—
—
95
(26)
69
Foreign currency translation loss
—
—
(27,514)
(27,514)
—
(27,514)
December 31, 2024
$
67 $
(6,482) $
(8,985) $ (15,400) $
1,357 $ (14,043)
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 100 -
(18.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Fair value measurement standards apply to certain financial assets and liabilities that are measured at fair value on a recurring
basis (each reporting period). For the Company, these financial assets and liabilities include its derivative instruments and
contingent consideration. The Company does not have any nonfinancial assets or liabilities that are measured at fair value on a
recurring basis.
The Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency exchange
rates, and uses derivatives to manage these exposures that occur in the normal course of business. The Company does not hold
or issue derivatives for trading or speculative purposes. All derivatives are recorded at fair value on the Consolidated Balance
Sheets.
The following tables provide information regarding assets and liabilities recorded at fair value on a recurring basis (in
thousands):
Fair Value
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
December 31, 2024
Liabilities: Foreign currency hedging contracts
$
6,482 $
— $
6,482 $
—
Liabilities: Contingent consideration
904
—
—
904
December 31, 2023
Assets: Foreign currency hedging contracts
$
2,153 $
— $
2,153 $
—
Liabilities: Contingent consideration
876
—
—
876
Derivatives Designated as Hedging Instruments
Foreign Currency Contracts
The Company periodically enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange
rate fluctuations in its international operations. The Company has designated these foreign currency forward contracts as cash
flow hedges.
Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of December 31, 2024
is as follows (dollars in thousands):
Notional
Amount
Maturity
Date
$/Foreign Currency
Fair
Value
Balance Sheet Location
$ 60,589
Dec 2025
1.0831
Euro
$
1,950 Accrued expenses and other current liabilities
10,690
Dec 2025
0.0248
UYU Peso
248 Accrued expenses and other current liabilities
51,341
Dec 2025
0.0566
MXN Peso
3,893 Accrued expenses and other current liabilities
10,322
Jul 2026
0.0566
MXN Peso
391 Other long-term liabilities
Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of December 31, 2023
is as follows (dollars in thousands):
Notional
Amount
Maturity
Date
$/Foreign Currency
Fair
Value
Balance Sheet Location
$ 51,389
Dec 2024
1.0831
Euro
$
1,389 Prepaid expenses and other current assets
19,392
Dec 2024
0.0566
MXN Peso
182 Prepaid expenses and other current assets
19,201
Dec 2024
0.0248
UYU Peso
582 Prepaid expenses and other current assets
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 101 -
(18.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
The following table presents the impact of cash flow hedge derivative instruments on the Company’s Consolidated Statements
of Operations and Consolidated Statements of Comprehensive Income for fiscal years 2024, 2023 and 2022 (in thousands):
Gain (Loss) Recognized in OCI
Gain (Loss) Reclassified from AOCI
Derivative
2024
2023
2022
Location in Statement
of Operations
2024
2023
2022
Interest rate swaps
$
— $
— $ 3,322
Interest expense
$
— $ 1,262 $
(918)
Foreign exchange contracts
(3,296)
1,171
(2,226) Sales
43
(241)
(2,073)
Foreign exchange contracts
(6,473)
5,666
2,225
Cost of sales
(1,494)
5,611
2,205
Foreign exchange contracts
(296)
171
328
Operating expenses
21
(17)
384
The Company expects to reclassify net losses totaling $6.1 million related to its cash flow hedges from AOCI into earnings
during the next twelve months.
Derivatives Not Designated as Hedging Instruments
The Company also has foreign currency exposure on balances, primarily intercompany, that are denominated in a foreign
currency and are adjusted to current values using period-end exchange rates. To minimize foreign currency exposure, the
Company enters into foreign currency contracts with a one month maturity. At December 31, 2024 and December 31, 2023, the
Company had total gross notional amounts of $33.0 million and $23.0 million, respectively, of foreign currency contracts
outstanding that were not designated as hedges. The fair value of derivatives not designated as hedges was not material for any
period presented. The Company recorded net gains on foreign currency contracts not designated as hedging instruments of
$2.6 million, $0.4 million and $2.6 million for 2024, 2023 and 2022, respectively, which are included in Other (income) loss,
net. Each of the foreign currency contracts not designated as hedging instruments will have approximately offsetting effects
from the underlying intercompany loans subject to foreign exchange remeasurement.
Contingent Consideration Liabilities
The following table presents the changes in the estimated fair values of the Company’s liabilities for contingent consideration
measured using significant unobservable inputs (Level 3) for fiscal years 2024, 2023 and 2022 (in thousands):
Year Ended December 31,
2024
2023
2022
Contingent consideration, beginning of year
$
876 $
11,756 $
2,415
Amount recorded for current year acquisitions
3,578
876
7,375
Fair value measurement adjustments
(3,550)
(736)
3,097
Payments
—
(11,177)
(972)
Foreign currency translation
—
157
(159)
Contingent consideration, end of year
$
904 $
876 $
11,756
The contingent consideration liability of $0.9 million was non-current as of December 31, 2024 and December 31, 2023. The
contingent consideration liability at December 31, 2024 consisted of the estimated fair value of the Company’s remaining
obligations, under the purchase agreements for Pulse and InNeuroCo, to make additional payments if certain revenue goals are
met. The contingent consideration liability at December 31, 2023 was the estimated fair value of the earnout payments of the
InNeuroCo and InoMec Ltd. acquisitions. The contingent consideration liability at December 31, 2022 was the estimated fair
value of the earnout payments of the Aran and InoMec Ltd. acquisitions.
The Company will make earnout payments ranging from zero to $20.0 million based on a specified revenue growth milestone
being met in 2025 for Pulse and payments ranging from zero to $9.5 million based on the achievement of the remaining defined
milestone targets for InNeuroCo.
The significant unobservable inputs used to calculate the fair value of the contingent consideration are projected revenue for the
remaining earnout periods. Actual results will differ from the projected results and could have a significant impact on the
estimated fair value of the contingent considerations.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 102 -
(18.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Fair value standards also apply to certain assets and liabilities that are measured at fair value on a nonrecurring basis. The
carrying amounts of cash, accounts receivable, contract assets, accounts payable and accrued expenses approximate fair value
due to the short-term nature of these items.
Borrowings under the Company’s Revolving Credit Facility and TLA Facility accrue interest at a floating rate tied to a standard
short-term borrowing index, selected at the Company’s option, plus an applicable margin. The carrying amount of this floating
rate debt approximates fair value based upon the respective interest rates adjusting with market rate adjustments.
The estimated fair value of the 2028 Convertible Notes was approximately $800 million as of December 31, 2024. The
estimated fair value of the 2028 Convertible Notes is generally determined through consideration of quoted market prices. To
the extent quoted prices are not available, fair values are generally derived using bid/ask spreads. The fair value of the 2028
Convertible Notes are categorized in Level 2 of the fair value hierarchy.
Equity Investments
Equity investments comprise the following (in thousands):
December 31,
2024
December 31,
2023
Equity method investment
$
7,237 $
7,771
Non-marketable equity securities
180
427
Total equity investments
$
7,417 $
8,198
The components of Loss on equity investments, net for each period were as follows (in thousands):
2024
2023
2022
Equity method investment loss
$
533 $
481 $
7,636
Impairment charges
247
5,210
—
Total loss on equity investments, net
$
780 $
5,691 $
7,636
During 2024 and 2023, the Company determined that certain investments in its non-marketable equity securities were impaired
and determined the fair value to be zero based upon available information. During 2024 and 2023, the Company recorded
impairment charges of $0.2 million and $5.2 million, respectively. These assessments were based on qualitative indications of
impairment which are considered to be a Level 3 fair value measurement, as the fair value was determined based on significant
inputs not observable in the market. Factors that significantly influenced the determination of the impairment losses included
the investee’s financial condition, operational and financing cash flow activities, and priority claims to the equity security,
distributions rights and preferences. During 2022, the Company received a cash distribution representing a return of capital on
our equity method investments of $0.3 million.
The Company’s equity method investment is in a venture capital fund focused on investing in life sciences companies. As of
December 31, 2024, the Company owned 7.7% of this fund.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 103 -
(19.) SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates as one operating segment. The Company's chief operating decision maker ("CODM") is its Chief
Executive Officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated income
from continuing operations to make key operating decisions, including resource allocations and performance assessments.
The following table presents selected financial information with respect to the Company’s single operating segment for the
years ended December 31, 2024, 2023 and 2022 (in thousands).
2024
2023
2022
Sales
$
1,716,596 $
1,555,656 $
1,331,277
Cost of sales
1,257,582
1,145,767
985,516
Gross profit
459,014
409,889
345,761
Operating expenses:
Selling, general and administrative
185,202
173,171
158,050
Research, development and engineering
53,425
61,967
59,762
Restructuring and other charges
12,149
11,428
15,271
Total operating expenses
250,776
246,566
233,083
Operating income
208,238
163,323
112,678
Interest expense
56,374
51,275
37,265
Loss on equity investments, net
780
5,691
7,636
Other (income) loss, net
3,521
975
(899)
Income from continuing operations before income taxes
147,563
105,382
68,676
Provision for income taxes
26,510
16,239
8,929
Income from continuing operations
$
121,053 $
89,143 $
59,747
See the consolidated financial statements for other financial information regarding the Company’s operating segment.
The following table presents sales by significant country for the years ended December 31, 2024, 2023 and 2022. In these
tables, sales are allocated based on where the products are shipped (in thousands).
2024
2023
2022
Sales by geographic area:
United States
$
938,675 $
872,926 $
732,595
Non-Domestic locations:
Puerto Rico
137,057
121,487
114,078
Costa Rica
124,694
108,421
76,140
Rest of world
516,170
452,822
408,464
Total sales
$
1,716,596 $
1,555,656 $
1,331,277
The following table presents PP&E by geographic area as of December 31, 2024 and December 31, 2023. In these tables,
PP&E is aggregated based on the physical location of the tangible long-lived assets (in thousands).
December 31,
2024
December 31,
2023
Long-lived tangible assets by geographic area:
United States
$
260,220 $
218,861
Ireland
139,889
118,965
Mexico
37,838
34,785
Rest of world
27,851
19,958
Total
$
465,798 $
392,569
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 104 -
(20.) REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregated Revenue
The Company operates as one segment, which is separated into three distinct product lines. The following table presents sales
by product line for the years ended December 31, 2024, 2023 and 2022 (in thousands):
2024
2023
2022
Cardio & Vascular
$
949,576 $
836,343 $
699,401
Cardiac Rhythm Management & Neuromodulation
660,610
612,891
534,371
Other Markets
106,410
106,422
97,505
Total sales
$
1,716,596 $
1,555,656 $
1,331,277
A significant portion of the Company’s sales for the years ended December 31, 2024, 2023 and 2022 and accounts receivable
at December 31, 2024 and December 31, 2023 were to three customers as follows:
Sales
Accounts Receivable
2024
2023
2022
December 31,
2024
December 31,
2023
Customer A
18%
16%
17%
10%
8%
Customer B
16%
17%
17%
9%
11%
Customer C
13%
13%
13%
14%
10%
47%
46%
47%
33%
29%
Revenue recognized from products and services transferred to customers over time during 2024 and 2023 represented 32% and
31%, respectively, of total revenue.
Contract Balances
The opening and closing balances of the Company’s contract assets and contract liabilities are as follows (in thousands):
December 31,
2024
December 31,
2023
Contract assets
$
103,772
$
85,871
Contract liabilities (included in Accrued expenses and other current liabilities)
4,440
6,142
Contract liabilities (included in Other long-term liabilities)
4,398
—
Contract assets at December 31, 2024 increased $17.9 million from December 31, 2023 primarily due to a contract modification
to add existing products. During 2024, the Company recognized $4.4 million of revenue that was included in the contract
liability balance as of December 31, 2023. During 2023, the Company recognized $3.6 million of revenue that was included in
the contract liability balance as of December 31, 2022.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 105 -
(21.)
SUBSEQUENT EVENTS
Precision Acquisition
On January 7, 2025, the Company acquired substantially all of the assets and assumed certain liabilities of certain subsidiaries
of Katahdin Industries, Inc., including its main operating subsidiary, Precision Coating LLC (collectively “Precision”), in an all
cash transaction for $152.0 million, subject to customary post-closing adjustments, with up to $5.0 million of contingent
consideration payable based on achievement of a revenue milestone for 2025. The Company funded the purchase price with
borrowings under its Revolving Credit Facility during the first quarter of 2025.
Prior to the acquisition, Precision was a privately-held manufacturer specializing in high value surface coating technology
platforms, including fluoropolymer, anodic coatings, ion treatment solutions and laser processing. Based in Massachusetts,
Precision has additional locations in the New England area and an additional facility in Costa Rica. Consistent with the
Company’s tuck-in acquisition strategy, the acquisition of Precision increased Integer’s service offerings to include
differentiated and proprietary coatings capabilities that position Integer to better meet customers’ evolving needs.
In addition to assets acquired and liabilities assumed, the Company expects to allocate a portion of the purchase price to
identifiable intangible assets such as developed technology and customer relationships. The initial accounting for this
acquisition is not yet complete. The Company expects to complete the initial accounting and determine the preliminary
purchase price allocation prior to the end of the first fiscal quarter of 2025. Goodwill arising from the acquisition is tax
deductible.
VSi Parylene Acquisition
On February 18, 2025, the Company entered into a purchase agreement to acquire substantially all of the assets and assumed
certain liabilities of Vertical Solutions, Inc., d/b/a VSi Parylene (“VSi”) for a purchase price of $28.0 million, which will be
payable $23.0 million in cash and $5.0 million in shares of Integer’s common stock, subject to customary purchase price
adjustments. The Company expects to complete the acquisition by the end of February 2025 and intends to fund the cash
portion of the purchase price with borrowings under its Revolving Credit Facility.
Headquartered in Colorado, VSi is a privately-held full-service provider of parylene coating solutions, primarily focused on
complex medical device applications. Consistent with the Company’s tuck-in acquisition strategy, the acquisition of VSi will
further increase the Company’s service offerings to include differentiated and proprietary coatings capabilities that position the
Company to better meet customers’ evolving needs.
Table of Contents
INTEGER HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 106 -
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, including the principal executive officer and principal financial officer, evaluated our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) related to the recording, processing,
summarization and reporting of information in our reports that we file with the SEC as of December 31, 2024. These disclosure
controls and procedures have been designed to provide reasonable assurance that material information relating to us, including our
subsidiaries, is made known to our management, including these officers, by our employees, and that this information is recorded,
processed, summarized, evaluated and reported, as applicable, within the time periods specified in the SEC’s rules and forms.
Based on their evaluation, as of December 31, 2024, our principal executive officer and principal financial officer have concluded
that our disclosure controls and procedures are effective.
Management’s Report on Internal Control over Financial Reporting
Management’s Report on Internal Control Over Financial Reporting appears in Part II, Item 8, “Financial Statements and
Supplementary Data,” of this report and is incorporated into this Item 9A by reference.
Our independent auditor, Deloitte & Touche LLP, an independent registered public accounting firm, has issued an audit report on
the effectiveness of our internal control over financial reporting which appears Part II, Item 8, “Financial Statements and
Supplementary Data,” of this report.
Changes in Internal Control over Financial Reporting
There were no changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) that occurred during the quarter ended December 31, 2024 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
During the quarter ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange
Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to
satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any non-Rule 10b5-1 trading arrangement
(as identified in Item 408(c) of Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
Table of Contents
- 107 -
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding the Company’s directors appearing under the caption “Election of Directors” in the Company’s Proxy
Statement for its 2025 Annual Meeting of Stockholders is incorporated herein by reference.
Information regarding the Company’s executive officers is presented under the caption “Information About our Executive
Officers” in Part I of this Annual Report on Form 10-K.
Except as provided below, the other information required by Item 10 is incorporated herein by reference from the Company’s
Proxy Statement for its 2025 Annual Meeting of Stockholders.
Insider Trading Policy
The Company has adopted and maintains a Policy on Avoidance of Insider Trading and Related Procedures for Securities
Transactions that is reasonably designed to promote compliance with insider trading laws, rules and regulations and applies to
members of the Company’s Board of Directors, its executive officers and all other associates who have access to material,
nonpublic information regarding the Company. The Policy on Avoidance of Insider Trading and Related Procedures for
Securities Transactions is filed as an exhibit to this report.
ITEM 11.
EXECUTIVE COMPENSATION
Information regarding executive compensation appearing under the captions “Compensation Discussion and Analysis”,
“Executive Compensation” and “Compensation Committee Interlocks and Insider Participation” in the Company’s Proxy
Statement for the 2025 Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information regarding security ownership of certain beneficial owners and management and related stockholder matters, including
the table titled “Equity Compensation Plan Information” and under the caption “Security Ownership of Certain Beneficial Owners
and Management” in the Company’s Proxy Statement for the 2025 Annual Meeting of Stockholders is incorporated herein by
reference.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information regarding certain relationships and related transactions, and director independence under the captions “Related-
Person Transactions” and “Board Independence” in the Company’s Proxy Statement for the 2025 Annual Meeting of
Stockholders is incorporated herein by reference.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Company’s independent registered public accounting firm is Deloitte & Touche LLP, Williamsville, New York, PCAOB
Auditor Firm ID: 34.
Information regarding the fees paid to and services provided by Deloitte & Touche LLP is provided under the caption
“Ratification of the Appointment of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the
2025 Annual Meeting of Stockholders is incorporated herein by reference.
Table of Contents
- 108 -
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) LIST OF DOCUMENTS FILED AS PART OF THIS REPORT
(1) Financial statements and financial statement schedules filed as part of this report. Refer to Part II, Item 8, “Financial
Statements and Supplementary Data,” of this report.
(2) The following financial statement schedule is included in this report (in thousands):
Schedule II—Valuation and Qualifying Accounts
Col. C—Additions
Column A
Description
Col. B
Balance at
Beginning
of Period
Charged
to Costs &
Expenses
Charged
to Other
Accounts-
Describe
Col. D
Deductions
- Describe
Col. E
Balance at
End of
Period
December 31, 2024
Provision for credit losses
$
371 $
163
$
—
$
(224) (4)
$
310
Valuation allowance for deferred tax assets
$ 15,741 $
1,534 (2) $
(28) (3) $
(3,860) (2)
$ 13,387
December 31, 2023
Provision for credit losses
$
338 $
74
$
1 (1) $
(42) (4)
$
371
Valuation allowance for deferred tax assets
$ 16,649 $
3,267 (2) $
(14) (3) $
(4,161) (2)
$ 15,741
December 31, 2022
Provision for credit losses
$
132 $
48
$
163 (1) $
(5) (4)
$
338
Valuation allowance for deferred tax assets
$ 19,456 $
(684) (2) $
(131) (3) $
(1,992) (2)
$ 16,649
(1)
Amount reclassified from deferred revenue.
(2)
Valuation allowance recorded in the provision for income taxes for certain net operating losses and tax credits.
Deductions include the expiration of certain net operating losses and tax credits. The 2024 amount includes a deduction
of $0.6 million from the divestiture of Electrochem.
(3)
Includes foreign currency translation effect.
(4)
Accounts written off and reductions to allowances existing at the beginning of the year.
Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is
shown in the financial statements or notes thereto.
(3) See exhibits listed under Part (b) below.
Table of Contents
- 109 -
(b) EXHIBITS:
3.1
Restated Certificate of Incorporation of Integer Holdings Corporation (incorporated by reference to Exhibit 3.1 to
our Quarterly Report on Form 10-Q for the period ended July 1, 2016).
3.2
By-laws of Integer Holdings Corporation (Amended as of August 3, 2016) (incorporated by reference to Exhibit 3.2
to our Quarterly Report on Form 10-Q for the period ended July 1, 2016).
4.1
Description of Securities of Integer Holdings Corporation registered under Section 12 of the Exchange Act
(incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K for the year ended December 31,
2020).
4.2
Indenture, dated February 3, 2023, by and between the Integer Holdings Corporation and Wilmington Trust,
National Association as trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed
on February 6, 2023).
4.3
Form of 2.125% Convertible Senior Note due 2028 (incorporated by reference to Exhibit 4.2 to our Current Report
on Form 8-K filed on February 6, 2023).
10.1
Credit Agreement, dated as of September 2, 2021, among Integer Holdings Corporation, Greatbatch Ltd., Wells
Fargo Bank, National Association, as administrative agent, and the other agents and lenders parties thereto.
(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on September 2, 2021).
10.2
First Amendment to Credit Agreement, dated as of January 30, 2023, among Integer Holdings Corporation,
Greatbatch Ltd., Wells Fargo Bank, National Association, as administrative agent, and the other agents and lenders
parties thereto (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on January 30,
2023).
10.3
Second Amendment to Credit Agreement, dated as of February 15, 2023, among Integer Holdings Corporation,
Greatbatch Ltd., Wells Fargo Bank, National Association, as administrative agent, and the other agents and lenders
parties thereto (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on February 16,
2023).
10.4
Third Amendment to Credit Agreement (Revolver Increase), dated as of July 1, 2024, among Greatbatch Ltd.,
Integer Holdings Corporation, the Subsidiary Guarantors party thereto, the Incremental Revolving Credit Lenders,
and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.1 to
our Current Report on Form 8-K filed on July 1, 2024).
10.5
Incremental Term Loan Agreement, dated as of December 1, 2021, among Integer Holdings Corporation,
Greatbatch Ltd., Wells Fargo Bank, National Association, as administrative agent, the Incremental Term A-1 Loan
Lenders party thereto and the arrangers and agents party thereto (incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K filed on December 2, 2021).
10.6
Form of Base Capped Call Confirmation (incorporated by reference to Exhibit 10.1 to our Current Report on Form
8-K filed on February 6, 2023).
10.7
Form of Additional Capped Called Confirmation (incorporated by reference to Exhibit 10.2 to our Current Report
on Form 8-K filed on February 6, 2023).
10.8#
Integer Holdings Corporation Retirement Savings Restoration Plan (incorporated by reference to Exhibit 10.10 to
our Annual Report on Form 10-K for the year ended December 31, 2020).
10.9#
Integer Holdings Corporation Director Compensation Policy (most recently amended and restated May 24, 2023)
(incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended June 30,
2023).
10.10#
Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.50 to our Annual Report on
Form 10-K for the year ended December 31, 2020).
10.11#
2009 Stock Incentive Plan (incorporated by reference to Exhibit A to our Definitive Proxy Statement on Schedule
14A filed on April 13, 2009 (File No. 001-16137)).
10.12#
2011 Stock Incentive Plan (incorporated by reference to Exhibit A to our Definitive Proxy Statement on Schedule
14A filed on April 14, 2014).
10.13#
Greatbatch, Inc. 2016 Stock Incentive Plan (incorporated by reference to Exhibit A to our Definitive Proxy
Statement on Schedule 14A filed on April 18, 2016).
10.14#
Amendment to Greatbatch, Inc. 2011 Stock Incentive Plan, Greatbatch, Inc. 2009 Stock Incentive Plan, Greatbatch,
Inc. 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K for
the year ended January 3, 2014).
10.15#
Second Amendment to Greatbatch, Inc. 2011 Stock Incentive Plan and Greatbatch, Inc. 2009 Stock Incentive Plan
(incorporated by reference to Exhibit 10.15 to our Annual Report on Form 10-K for the year ended December 30,
2016).
10.16#
First Amendment to Greatbatch, Inc. 2016 Stock Incentive Plan (incorporated by reference to Exhibit 10.16 to our
Annual Report on Form 10-K for the year ended December 30, 2016).
EXHIBIT
NUMBER
DESCRIPTION
Table of Contents
- 110 -
10.17#
Amendment to Integer Holdings Corporation 2016 Stock Incentive Plan, Integer Holdings Corporation 2011 Stock
Incentive Plan, Integer Holdings Corporation 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.31
to our Annual Report on Form 10-K for the year ended December 28, 2018).
10.18#
Amendment to Integer Holdings Corporation 2016 Stock Incentive Plan and Integer Holdings Corporation 2011
Stock Incentive Plan (incorporated by reference to Exhibit 10.17 to our Annual Report on Form 10-K for the year
ended December 31, 2019).
10.19#
Integer Holdings Corporation 2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K filed on May 19, 2021).
10.20#
Form of Nonqualified Stock Option Award Letter (incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q for the period ended March 31, 2017).
10.21#
Form of Time-Based Restricted Stock Units Award Agreement (for awards granted on or after January 1, 2020)
(incorporated by reference to Exhibit 10.29 to our Annual Report on Form 10-K for the year ended December 31,
2019).
10.22#
Form of Time-Based Restricted Stock Units Award Agreement (for awards granted on or after January 1, 2021)
(incorporated by reference to Exhibit 10.38 to our Annual Report on Form 10-K for the year ended December 31,
2020).
10.23#
Form of Time-Based Restricted Stock Units Award Agreement under the 2021 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended July 2,
2021).
10.24#
Form of Performance-Based Restricted Stock Units Award Agreement under the 2021 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the period ended July 2,
2021).
10.25#
Form of Time-Based Restricted Stock Units Award Agreement for Joseph Dziedzic under the 2021 Omnibus
Incentive Plan (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the period
ended July 2, 2021).
10.26#
Form of Performance-Based Restricted Stock Units Award Agreement for Joseph Dziedzic under the 2021
Omnibus Incentive Plan (incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the
period ended July 2, 2021).
10.27#
Special Performance-Based Restricted Stock Unit Award Agreement for Joseph W. Dziedzic, dated March 11, 2022
(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on March 15, 2022).
10.28#
Form of Restricted Stock Unit Agreement for Non-Employee Directors under the 2021 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the period ended July 2,
2021).
10.29#
Form of Change of Control Agreement between Integer Holdings Corporation and its executive officers
(incorporated by reference to Exhibit 10.8 to our Annual Report on Form 10-K for the year ended December 28,
2012).
10.30#
Form of Change of Control Agreement between Integer Holdings Corporation and its U.S.-based executive officers
(for agreements entered into after January 19, 2022) (incorporated by reference to Exhibit 10.37 to our Annual
Report on Form 10-K for the year ended December 31, 2023).
10.31#
Form of Change of Control Agreement between Integer Holdings Corporation and its Ireland-based executive
officers (for agreements entered into after January 19, 2022) (incorporated by reference to Exhibit 10.38 to our
Annual Report on Form 10-K for the year ended December 31, 2023).
10.32#
Employment Agreement, dated July 16, 2017, between Integer Holdings Corporation and Joseph W. Dziedzic
(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 17, 2017).
10.33#
Employment Offer Letter, dated October 4, 2023, between Integer Holdings Corporation and Diron Smith
(incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended September
29, 2023).
10.34#
Employment Offer Letter, dated February 6, 2018, between Integer Holdings Corporation and Payman Khales
(incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended July 3,
2020).
10.35#
Employment Offer Letter, dated November 30, 2017, between Integer Holdings Corporation and Kirk Thor
(incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended June 28,
2019).
10.36#
Employment Offer Letter, dated December 15, 2021, between Integer Holdings Corporation and McAlister
Marshall (incorporated by reference to Exhibit 10.43 to our Annual Report on Form 10-K for the year ended
December 31, 2023).
19.1*
Policy on Avoidance of Insider Trading and Related Procedures for Securities Transactions.
EXHIBIT
NUMBER
DESCRIPTION
Table of Contents
- 111 -
21.1*
Subsidiaries of Integer Holdings Corporation
23.1*
Consent of Independent Registered Public Accounting Firm
31.1*
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
31.2*
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
32.1**
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97
Integer Holdings Corporation Incentive Compensation Recoupment Policy (incorporated by reference to Exhibit 97
to our Annual Report on Form 10-K for the year ended December 31, 2023).
101.INS*
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL document.
101.SCH*
XRBL Taxonomy Extension Schema Document
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*
XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)
EXHIBIT
NUMBER
DESCRIPTION
* -
Filed herewith.
** -
Furnished herewith.
# -
Indicates exhibits that are management contracts or compensation plans or arrangements required to be filed pursuant to
Item 15(b) of Form 10-K.
ITEM 16.
FORM 10-K SUMMARY
None.
Table of Contents
- 112 -
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
INTEGER HOLDINGS CORPORATION
Dated: February 20, 2025
By /s/ Joseph W. Dziedzic
Joseph W. Dziedzic (Principal Executive Officer)
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date
indicated.
Table of Contents
- 113 -
Signature
Title
Date
/s/ Joseph W. Dziedzic
President, Chief Executive Officer and Director
February 20, 2025
Joseph W. Dziedzic
(Principal Executive Officer)
/s/ Diron Smith
Executive Vice President and Chief Financial Officer
February 20, 2025
Diron Smith
(Principal Financial Officer)
/s/ Tom P. Thomas
Vice President, Corporate Controller
February 20, 2025
Tom P. Thomas
(Principal Accounting Officer)
/s/ Pamela G. Bailey
Chair of the Board
February 20, 2025
Pamela G. Bailey
/s/ Sheila Antrum
Director
February 20, 2025
Sheila Antrum
/s/ Cheryl C. Capps
Director
February 20, 2025
Cheryl C. Capps
/s/ James F. Hinrichs
Director
February 20, 2025
James F. Hinrichs
/s/ Jean M. Hobby
Director
February 20, 2025
Jean M. Hobby
/s/ Tyrone Jeffers
Director
February 20, 2025
Tyrone Jeffers
/s/ M. Craig Maxwell
Director
February 20, 2025
M. Craig Maxwell
/s/ Filippo Passerini
Director
February 20, 2025
Filippo Passerini
/s/ Donald J. Spence
Director
February 20, 2025
Donald J. Spence
/s/ William B. Summers, Jr.
Director
February 20, 2025
William B. Summers, Jr.
Table of Contents
- 114 -
Leadership Team
Joseph W. Dziedzic
President and Chief Executive Officer
Diron Smith
Executive Vice President and
Chief Financial Officer
Payman Khales
Executive Vice President and
Chief Operating Officer
Margaret Carthy
Executive Vice President,
Global Quality and Regulatory Affairs
John Harris
Executive Vice President, Global
Operations and Manufacturing
Strategy
Lindsay Krause Blackwood
Senior Vice President, General
Counsel, Chief Ethics and Compliance
Officer and Corporate Secretary
Andrew Senn
President, Cardio & Vascular
Jim Stephens
President, Cardiac Rhythm
Management & Neuromodulation
Kirk Thor
Executive Vice President and Chief
Human Resources Officer
Board of Directors
Pamela G. Bailey, Chair
Retired President and Chief Executive
Officer, The Grocery Manufacturers
Association
Sheila Antrum
Senior Vice President and Chief
Operating Officer, UCSF Health
Cheryl C. Capps
Retired Senior Vice President and Chief
Supply Chain Officer, Corning Inc.
Joseph W. Dziedzic
President and Chief Executive Officer,
Integer Holdings Corporation
James F. Hinrichs
Founding Partner, Atmas Health
and Executive Vice President
and Chief Financial Officer of
Vantive Health, LLC
Jean Hobby
Retired Partner,
PricewaterhouseCoopers, LLP
Alvin (Tyrone) Jeffers
Vice President, Global Manufacturing
and Supply Chain, SPX FLOW, Inc.
M. Craig Maxwell
Retired Vice President and Chief
Technology and Innovation Officer,
Parker Hannifin Corporation
Filippo Passerini
Retired Group President and Chief
Information Officer, Procter & Gamble
Company
Donald J. Spence
Retired President and Chief Executive
Officer, Ebb Therapeutics
William B. Summers, Jr.
Retired Chairman and Chief Executive
Officer, McDonald Investments Inc.
Investor Information
Stock Exchange Listing
NYSE: ITGR
Global Headquarters
5830 Granite Parkway, Suite 1150
Plano, TX 75024
Independent Registered
Public Accounting Firm
Deloitte & Touche LLP
Williamsville, NY
Investor Relations
Kristen Stewart
Director, Investor Relations
(551) 337-3973
You may also contact us by sending an
email to IR@integer.net or by
visiting the Investor Relations
section of the Company’s website
at investor.integer.net.
The Company’s publicly filed reports,
including financial statements, are
available on the Securities and
Exchange Commission’s EDGAR
system (www.sec.gov).
Transfer Agent
Computershare Shareholder Services
P.O. Box 43078
Providence, RI 02940-3078
(877) 832-7265
(201) 680-6578
www.computershare.com/investor
For Overnight Delivery:
150 Royall Street, Suite 101
Canton, MA 02021
Integer Holdings Corporation
5830 Granite Parkway, Suite 1150
Plano, TX 75024
(214) 618-5243 | Integer.net