$477 Million ($1.37 Billion total)
Prior Fiscal: $521.3 Million
Percentage Change: -8.5%
No. of Employees: 3,700

The tattoo was a bust.

Jalen Richardson wanted a phoenix rising from ashes branded on his right arm, but the ink didn’t take. The black pigment never fully absorbed into his skin, fading instead into scar tissue covering most of the area.

Not one to brood over setbacks, Richardson was unphased by the anomaly. In fact, the unsuccessful marking only strengthened his resolve to emerge from the shadow of his disfigurement.

“My skin is a tattoo in itself,” the Georgia National Guardsman told Emory Medicine magazine this past winter. “My scars tell a story of their own.”

And it’s a remarkable story—one of survival, courage, and perseverance.

Richardson’s tale begins on Sept. 4, 2016, in Atlanta. After finishing work at UPS that afternoon, the motorcycle enthusiast hopped on his 2003 Suzuki GSK and rode with friends around the city’s outskirts. As he headed back downtown, however, an unfamiliar (outside) rider nudged his way into the biker pack, darting behind Richardson, and striking the Suzuki GSK’s back tire.

The bike toppled upon impact; as he hit the asphalt, Richardson’s right hand reflexively squeezed the motorcycle’s throttle, sending “body and bike skidding down the highway in a fiery shower of sparks,” according to Emory Medicine. After coming to rest, Richardson found himself pinned underneath the weight of his bike. As he struggled to free himself, fuel from his leaking gas tank ignited, engulfing both Richardson and the Suzuki in flames.

The explosion, which grazed traffic signs 20 feet above the highway, produced industrial-strength heat that melted Richardson’s bike helmet and instantly fused his nylon-and-mesh riding jacket into the asphalt. Paramedics had to cut Richardson’s jacket off the pavement to free him.

“I’ve worked a lot of motorcycle wrecks out of Lithonia,” DeKalb Fire Rescue first responder Travis Owens recalled to Emory Medicine. “Two bikes on fire with a rider melted to the asphalt? That doesn’t happen every day.”

Neither does the kinds of injuries Richardson sustained in the accident. The fiery crash left the then-20-year-old with third-degree burns on 60-70 percent of his body (trauma suffered by only a fraction of patients admitted to Grady Memorial Hospital Burn Center); his left forearm was practically burned to the bone and would later need to be amputated.

Richardson spent three months in a medically-induced coma as Grady Memorial Hospital doctors rebuilt his charred skin using the Integra Dermal Regeneration Template, a two-layer skin regeneration system. Developed by Princeton, N.J.-based Integra Lifesciences, the Template’s outer layer is made of a thin silicone film that serves as the skin’s epidermis, protecting open wounds from infection and controlling both heat and moisture loss. The inner layer is a mix of pure bovine collagen and glycosaminoglycan (GAG), normal components of human skin. The cross-linked bovine-GAG matrix acts as a scaffold for regenerating a permanent functional dermis. Once the dermal skin is regenerated, the silicone outer layer is removed and replaced with a thin epidermal skin graft.

Richardson underwent 14 skin graft surgeries and remained hospitalized for 14 months before being released to rehab. Twenty months after his accident, he rejoined his Georgia National Guard unit (Charlie Company 151, part of the 78th Aviation Troop Command); Richardson has healed so well that he can now outpace his fellow soldiers in a two-mile run. Last fall, he was named the 78th Aviation Troop Command’s Soldier of the Year.

“What I always saw in Jalen was that he was a great person on the inside, no matter how much he wasn’t acting like that on a particular day, or how much things got difficult, I knew that inside—beneath all of that junk—was someone who was worth putting in the time and effort [for],” Emory surgeon Juvanda Hodge recounted in a video on Integra Lifesciences’ website. “We ended up doing an amputation because that [left] arm was burned before it could be salvaged, but after that we were able to put Integra [Dermal Regeneration Template] on the remainder of his amputation stump and grafted it. You have to have a good foundation is what I always say, and Integra gives you that great foundation to start grafting on top of that.”

The Integra Dermal Regeneration Template has been a great foundation not only for burn patients but also for the company itself in the more than 15 years since its introduction. But that foundation was a bit unstable last year as COVID-19 forced hospitals worldwide to postpone or cancel all elective surgeries and non-emergency chronic wound treatments.

Accordingly, Integra’s total revenue took a significant hit in the first half of 2020, falling 17.5 percent to $612.9 million. Sales improved as elective procedures resumed in H2 but nevertheless ended the year at a deficit, slipping 2 percent to $758.8 million. Gains were particularly strong in the Dermal Regeneration Template, nerve, and amniotic tissue product portfolios, according to the company.

Integra’s robust second-half performance, however, failed to fully offset its pandemic-induced losses. Total company revenue fell 9.8 percent to $1.37 billion; Orthopedics and Tissue Technologies sales tumbled 8 percent to $477 million.

“Integra kicked off the year strong and on track against our operating plans when the COVID-19 pandemic quickly disrupted this growth trajectory and adversely impacted our performance,” President and CEO Peter J. Arduini told shareholders in the firm’s 2020 annual report. “We completed strategic investments and operational improvements to bolster our supply and order-fulfillment capabilities at several regenerative product manufacturing facilities. While the impact of the COVID-19 pandemic may be far from over, we are confident the important steps we took in 2020 have set us up for long-term success.”

Perhaps the most important step Integra took to ensure its long-term success was divesting its Extremity Orthopedics Business to Smith+Nephew for $240 million last fall. The business generated roughly $90 million for the company in 2019 and $32.7 million in H1 2020.

The sale covered Integra’s Titan Reverse Shoulder System and various other devices used to repair and reconstruct bones in the ankle, shoulder, hand, wrist, and elbow. The deal complements Smith+Nephew’s existing product portfolio and provides the company admittance into the shoulder replacement and foot/ankle segments.

“Smith+Nephew’s strong focus in orthopedics will enable the business to expand its reach and scale, while allowing the team to thrive in a new environment,” Arduini said in announcing the sale. “This divestiture will increase our focus on Integra’s portfolio of products in neurosurgery, surgical instrumentation, and regenerative medicine, and move us closer to achieving our long-term growth and profitability targets.”

Integra increased its focus rather quickly in regenerative medicine, acquiring Columbia, Md.-based ACell Inc. for up to $400 million in mid-December. ACell develops products for wound management and surgical soft tissue repair—its proprietary porcine urinary bladder matrix platform technology, MatriStem UBM, aims to enhance the body’s ability to restore natural tissue and minimize scarring. It allows for a wide range of characteristics to be incorporated into devices for specific challenges in wound repair, ranging from strong suturable sheet materials designed for abdominal wall surgery to fine granular materials that conform to complex wound surfaces. Products include MicroMatrix, a particulate formulation, as well as Cytal Wound Matrix and Gentrix Surgical Matrix, both sheet formulations for the management of acute and chronic wounds and reinforcement of soft tissue in certain surgical applications.

Integra deemed the ACell deal a “next step” in expanding its Orthopedics and Tissue Technologies segment. The company took similar (albeit smaller) steps earlier last year with the February launch of the AmnioExcel Plus Placental Allograft Membrane, and the U.S. Food and Drug Administration’s (FDA) July clearance of specific neurosurgery indications for CUSA Clarity.

AmnioExcel Plus is a next-generation, thicker, tri-layer, non-side specific allograft consisting of amnion-chorion-amnion layers that helps create an environment for closing complex wounds. The proprietary DryFlex processing technology preserves the inherent growth factors, cytokines and extracellular matrix (ECM) found in native placental tissue.

The CUSA system has been used for decades in neurosurgical applications, but the FDA indication validates CUSA Clarity’s safety and efficacy in resecting tumors with soft to firm consistencies, and removing primary and secondary malignant and benign brain and spinal tumors, including but not limited to meningiomas and gliomas.

The CUSA Clarity Ultrasonic Surgical Aspirator System is an ultrasonically vibrating surgical device which, in combination with irrigation and aspiration, fragments, emulsifies, and removes unwanted tissue. It allows for selective dissection of target tissue like tumors while preserving vessels, ducts, and other delicate structures.

“Integra has a long history of developing technologies that meet surgeons’ needs for enhanced surgical performance, especially for longer and tougher cases, such as brain tumor resections,” Mike McBreen, who was promoted to executive vice president and president of Codman Specialty Surgical last June, said upon the FDA clearance. “This specific indication represents our continued commitment to offering neurosurgeons safe and effective products that help them achieve the best outcomes for their patients.”

$521 Million ($1.52B total)
Prior Fiscal: $509 Million
Percentage Change: +2.5%
No. of Employees: 4,000 (total)

New Jersey often gets a bad rap. From “What exit are you?” to references to the HBO hit, “The Sopranos,” it is commonly the butt of a joke. But many lifelong residents will tell you the ribbing doesn’t really bother them as anyone who downplays how fantastic N.J. can be has clearly only landed at Newark-Liberty International Airport on their way into New York City. From the beaches to the pine barrens to the world-class universities, it’s a wonderful place to live and work.

Apparently, Integra’s CEO agrees. “We looked hard and wide at other towns in New Jersey and other states before choosing this location,” Peter Arduini, the firm’s president and CEO stated at a ribbon-cutting ceremony in December 2019. “For a lot of good reasons, we just kept coming back to this area.”

The new Princeton headquarters, formerly occupied by pharmaceutical company Novo Nordisk, houses approximately 600 of the organization’s employees within the five-story structure. Meanwhile, it’s previous executive center is being refurbished to become a world-class technology center, where the company’s R&D team will work. The former headquarters location will also offer sales training and a site for professional surgeon training within a cadaver lab.

The announcement capped off a year that saw Integra Lifesciences enjoy modest gains over the prior fiscal, with a 3.1 percent increase overall in revenue gains. That translated to a $45 million rise to finish at $1.52 billion total revenue. Within its primary business segment—Codman Specialty Surgical, which accounts for an almost 2:1 ratio in revenue generation compared to the Orthopedics and Tissue Technologies (OTT) division—finished up 3.3 percent to tally $996 million.

The OTT revenues saw similar gains, posting 2.5 percent growth over 2018 to finish at $521 million. Sales of Wound Reconstruction and Care products were attributed as responsible for the increases, while the Extremity Orthopedics unit was flat year over year.

Citing the company’s doubling in size in recent years, primarily due to the 2017 Codman acquisition, Integra Lifesciences announced it was making a pair of moves with regard to its leadership. To oversee the company’s operations and a percentage of its labor force, Glenn Coleman was named chief operating officer (COO). Integra’s former financial chief is the company’s first COO as the position was newly created for his changing responsibilities.

“Looking at the opportunities ahead, the creation of the COO role will provide the oversight we need to accelerate our future growth. The move will also allow me to focus greater attention on our long-term strategic direction and spend more time with our customers,” explained Arduini.

Carrie Anderson was hired to replace Coleman as CFO, having served as chief accounting officer and corporate controller at Dover Corp.

The revised leadership team at Integra oversaw the launch of two noteworthy orthopedic solutions in 2019. First was the Titan Reverse Shoulder System-S (RSS-S), which included a new glenoid baseplate design. The novel design was accomplished using advanced imaging analysis to improve fit and stability for patients of varying anatomy. The new RSS-S baseplate was designed to achieve immediate fixation with an independent central screw, and the porous-coated central post allows the patient’s bone to grow onto the implant to further maximize the potential for long-term fixation.

“We designed the Titan Reverse Shoulder System-S to leverage the latest data on glenoid morphology in various patient populations, while streamlining the instrumentation to improve the flow of each case,” said Dr. Matthew Ramsey of the Rothman Institute and one of the thought leaders Integra worked with on the design of the system. “The new system builds upon the established legacy of our diaphyseal-fit humeral stems, which allow me to treat my patients without cement in primary and revision surgeries.”

About a month later, Integra announced the launch of the Panta 2 TTC Arthrodesis Nail System for tibio-talo-calcaneal (TTC) fusion of the ankle. TTC fusion is a reconstructive ankle surgery for severe arthritis and complex deformities in which bone-to-bone contact through compression is paramount for long-term success. Panta 2’s new carbon fiber targeting and compression device offers surgeons an unobstructed view intraoperatively of the system’s nail for improved visibility for positioning and identification that bone-to-bone contact has been achieved.

Looking to the potential for future product innovation, Integra also announced it was teaming with a group of orthopedists, Consortium of Focused Orthopedists LLC (CFO), to develop a short stem and stemless shoulder system. According to Integra, the design of the bone-sparing shoulder system will be competitively differentiated, with design features that address limitations of systems currently on the market.

“We designed this system to allow for patients to be anatomically suited to experience the bone-sparing benefits of a short stem,” said Dr. Armodios Hatzidakis, an orthopedic surgeon at Western Orthopaedics, and one of the design surgeons with CFO. “Integra is a proven leader in medical devices with a successful track record of commercializing innovative products that improve patients’ lives. They are a logical choice to partner with to bring this product to market.”

AT A GLANCE
$509 Million ($1.47B total)
Prior Fiscal: $468 Million
Percentage Change: +8.7%
No. of Employees: 4,500

Integra is a company that could be seen as in a state of flux, at least when viewed from an orthopedic perspective. With the Codman acquisition in 2017, the firm seemed to move much more into the neurosurgical space than the orthopedic arena. The organization was notably absent from last year’s Top Company list and only returned this year due to the acquisition of DJO and its subsequent lack of an annual report. This status is counter to the direction the company was taking back in 2011 when it acquired SeaSpine—a provider of spinal fusion products. Of course, only a short four-years later, Integra completed the spinout of that same entity to stand on its own once again.

Integra President and CEO Peter J. Arduini might disagree with that assessment, though. “With the integration of Codman Neurosurgery nearing completion, important channel investments in place, and exciting new product introductions on the horizon, we expect to reap the benefits of a comprehensive product portfolio, a larger and more focused sales team, and a broader global footprint,” he said in his letter to shareholders in the company’s 2018 annual report.

Within that same letter, Arduini notes the company is living up to the vision of its founder, Dr. Richard Caruso, in providing medical technologies and products that make it a leader in regenerative medicine, which includes extremity orthopedics.

Although the company is lopsided in where revenue is generated between its two divisions—Codman Specialty Surgical, and Orthopedics and Tissue Technologies—by an almost 2:1 split, the orthopedics and tissue segment is still a vital component that has enjoyed favorable growth in recent years. The $508.5 million in 2018 sales was an 8.7 percent increase over 2017’s tally of $467.9 million. In the specific area of Extremity Orthopedics, the firm reported low-single digit revenue losses due to declines in its lower fixation portfolio, but those dips were mostly offset by growth in shoulder and ankle offerings.

In comparison, Integra’s Codman Specialty Surgical unit posted $963.9 million in 2018, which represented a 33.8 percent rise over the $720.3 million the segment brought in during 2017. The most direct (and obvious) reason for the increase was the enjoyment of a full year of revenues from the absorption of Codman Neurosurgery, which only offered partial contributions to the company during the previous fiscal in which it was purchased.

Taking a global look at the company’s financials reveals the firm’s sales are well established in the United States. The overall revenue for the entire organization topped $1 billion in 2018 ($1.046 billion) in the U.S.—an increase of 17 percent over the prior year. Integra’s growth internationally, however, is gaining in significant chunks. The European market added just over $200 million to the firm’s total in 2018, a 34 percent gain over 2017. Asia Pacific contributed $144 million, which represented a 79 percent expansion over the previous fiscal. Even the Rest of World, which was a modest $63 million in 2017, rose 28 percent to finish 2018 just shy of $81 million.

Taking a year off from M&A activity, Integra instead focused on ensuring organic growth was still a focus for the firm. With that in mind, it launched its XT Revision Total Ankle Replacement System late in the year. According to a company statement, the system represents one of the first FDA-cleared devices indicated exclusively for revision ankle arthroplasty and can be used to revise any commercially available primary total ankle replacement system. Further, the augmented posterior sloped talus addresses subsidence by rebuilding posterior talar height. The anatomic design mimics the natural kinematics of the ankle, designed to promote a more normal gait and better overall function postoperatively.

“The launch of the Integra XT Revision Total Ankle Replacement System represents Integra’s commitment to further advance ankle arthroplasty solutions,” said Robert T. Davis Jr., corporate vice president and president, Orthopedics and Tissue Technologies. “Many of our surgeons have expressed their excitement for the XT system and our approach for ankle revision surgery. With this addition to our ankle reconstruction portfolio, Integra now offers comprehensive care for end-stage ankle arthritis patients.”

Unfortunately, the company did come under the dark cloud that has been looming over the entire medical device industry during the last 18 months. Whether the “60 Minutes” story about Boston Scientific’s transvaginal mesh product, “The Bleeding Edge” documentary that was distributed via Netflix, or the Implant Files investigations organized by the International Consortium of Investigative Journalists that highlighted an array of problem devices that were impacting patients worldwide, the medtech industry certainly faced a PR nightmare during the year. In late November, Integra was caught up in it as well.

An NBC News feature titled “Exporting pain: U.S.-made medical devices cause serious injuries, pain overseas” shared the story of Australia’s Wolfgang Neszpor who had received Integra’s PyroTITAN shoulder implant. The technology was an “export-only” device, which means it did not face the standard FDA regulatory oversight. The article went on to share both the pros and cons of the policy, and how it came to be. Regardless of where one stands on the ethics of legislation that permits devices to be sold to other countries while the products are not approved in the U.S., being featured so prominently in the NBC News report could not have been the message Integra wanted going out to the public. According to the report, the company suspended two clinical trials for the device and had planned a new one that was set to close in 2020.

Whether Integra will seek approval of the device in the U.S. will remain to be seen, but the firm did offer a written statement to NBC News regarding the implant. “Today, the PyroTITAN device meets all regulatory, safety and performance requirements…[and] has enabled many patients to regain the mobility of their shoulders.” There was no indication, however, whether the device had been modified, according to NBC’s report.

$992 Million
NO. OF EMPLOYEES: 3,700

With its SeaSpine business now a standalone firm, Integra is thinking small in terms of its orthopedic offerings. Small bone fixation products and upper and lower extremity implants are all that remain of the company’s orthopedic hardware portfolio.

That’s not to say Integra isn’t invested in orthopedics. The company merely removed itself from the remarkably competitive spine business in order to stake its claim in the promising extremities growth market and evolve its mainstay tissue regeneration, neurosurgery, and specialty surgical instruments enterprises. The extremities market is currently somewhat of a “grab bag” for both established and emerging companies because no one organization holds a sizeable market share, and the majority of innovation is coming from small- to mid-sized firms. Large orthopedic firms have typically devoted themselves to large joints, and are discovering that to truly grow they must—ironically—think smaller.

Integra made sure to raise its voice among extremities players in fiscal year 2016 (ended Dec. 31) by releasing the Cadence Total Ankle System. Cadence added to the Integra’s growing mix of ankle replacement products. The company made its foray into ankle replacement in 2015 by acquiring the Salto Talaris and Salto Talaris XT prostheses from Tornier, and Cadence complements this product line with several features to accommodate many patient anatomies. Cadence’s side-specific, anatomical tibial and talar components avoid fibular impingement and minimize resected talar bone to preserve the ankle’s vascularity. Further, Cadence’s bearing inserts are made from a highly crosslinked ultra-high molecular weight polyethylene (UHMWPE) to improve wear characteristics. Cadence’s first clinical use in the United States was achieved in April 2016, and in Europe in September.

“This ankle has incorporated many anatomical considerations into its design,” said Dr. Selene Parekh, Duke University foot and ankle surgeon and one of Cadence’s developers. “It allows the surgeon to maintain more bone stock, and provides options to correctly align the ankle back to its native location. Finally, we’ve streamlined both the Cadence system’s design and instrumentation so it’s more efficient for the surgeon and surgical team.”

The Integra Cadence Total Ankle System is designed to treat ankle arthritis through replacement of the ankle joint with a prosthesis, thereby reducing pain, restoring alignment, and allowing for movement at the replaced joint. Image courtesy of Integra.

“Integra’s new Cadence system offers a two-component implant, designed to adapt to a patient’s anatomy by providing improved range of motion, intraoperatively,” said Dr. Thibaut Leemrijse of the Foot and Ankle Institute, Parc Léopold Clinic, Brussels, Belgium. “The instrumentation allows ideal positioning of the implant, and the learning curve for this new device seems short, based on our first cases.”

Integra’s Orthopedics and Tissue Technologies segment made up 38 percent of the firm’s 2016 sales of $992 million, which rose a respectable 12 percent from the year prior. The division itself posted a 22 percent upsurge in sales, earning $359 million last year. The compelling gain arose from the completion of multiple acquisitions made in 2015—which included TEI, the aforementioned Salto products, and Futura. In total, these contributed $37.5 million in incremental revenue throughout the year. Prosperity in regenerative products, upper extremities, and private label portfolios was also provoked by strong demand for skin products and new relationships with existing private label customers.

Integra further expanded its upper extremities portfolio in 2016 by launching the Fin-Lock Glenoid addition to the Titan Modular Shoulder System. Since Glenoid component loosening/failure has been cited as a significant reason for total shoulder arthroplasty complications and failure, Fin-Lock includes a central peg with four fins of increased diameter to improve pull-out strength. Three peripheral pegs provide stability against component rocking, and it is manufactured from highly cross-linked polyethylene to improve wear characteristics over the implant’s life.

The company’s Dermal Regeneration Template (IDRT) was approved by the U.S. Food and Drug Administration (FDA) to treat diabetic foot ulcers in January 2016. IDRT had been used to treat life-threatening third-degree burns since 1996. Further, this segment was also bolstered by the $204 million acquisition of Derma Sciences, also in January. Derma’s amniotic tissue-based technology broadened Integra’s regenerative technology portfolio, providing an amniotic product with reimbursement in the wound care channel.

Integra appointed over 25-year healthcare industry veteran Robert T. Davis as corporate vice president and president of the Orthopedics and Tissue Technologies business in December. He joined Integra in 2012 as global president of the neurosurgery business, and was appointed corporate vice president and president of the Specialty Surgical Solutions (SSS) business. As a result, former corporate vice president and president, International Dan Reuvers assumed Davis’ role. CFO and corporate vice president Glenn Coleman assumed Reuvers’ former duties.

“These key leadership appointments reflect the depth and strength of our management team, enabling us to promote executives from within the company,” said Integra CEO Peter Arduini. “Bob, Dan, and Glenn are proven leaders who have demonstrated exemplary management capabilities over the years and a track record of accomplishments that have contributed to our strong business performance.”

SSS is Integra’s largest business, comprising 64 percent of total sales in FY16. The division includes neurosurgical care products as well as a broad range of instruments for neurosurgery; cardiac; ear, nose, and throat; dental; and plastic surgery. The segment’s $633 million in 2016 revenues was an 8 percent growth from the year prior. The expansion was triggered by growth across all SSS franchises—most prominently in dural repair, domestic precision tools and instruments, and international tissue ablation products. The company also formed a service alliance agreement with PREZIO Health, a purveyor of perioperative services as well as repair, maintenance, and management of surgical instruments. Together the companies will offer an integrated approach to surgical instrument lifecycle management, including surgical instrumentation, services, repair, and replacement.

Though it occurred just outside of FY16 activities, Integra made a $1 billion bid for Johnson & Johnson’s Codman Neurosurgery business (from its DePuy Synthes division) in February of this year. Adding Codman’s portfolio of devices focused on advanced hydrocephalus, neuro-critical care, and operative neurosurgery to its product mix will aptly complement Integra’s tissue ablation, dural repair, and cranial stabilization offerings and catapult the firm into a leading market position for neurosurgical products. Integra hopes the transaction will accelerate its path to generate $2 billion in revenue.

“This proposed transformational acquisition of Codman Neurosurgery creates compelling value for our shareholders, employees and patients,” Arduini said in a company announcement. “Its innovative portfolio and global reach will enable us to enhance our position in the neurosurgery market, while also building a global infrastructure that will benefit Integra as a whole. We look forward to welcoming the more than 600 Codman Neurosurgery employees to the Integra team.”

$883 Million
NUMBER OF EMPLOYEES: 3,500

Integra is a company in transition. It’s still very much dedicated to providing medical technology to enhance healthcare, but its focus seems to be, in part, shifting away from the orthopedic sector focus it once maintained. Or, perhaps more accurately, it is separating itself from spine technologies within that sector. The company is still active with device solutions for tissue repair and regeneration as well as small bone fixation and joint replacement solutions.

On July 1, 2015, Integra saw the launch of SeaSpine, a company that will focus on surgical solutions for the treatment of spinal disorders. Spun off as a stand-alone firm, SeaSpine was formed out of Integra’s orthobiologics and spinal fusion hardware offerings.

“We believe that an independent SeaSpine will focus its investments on research and development and sales and marketing to drive faster growth. Similarly, the separation will result in faster growth for the remaining Integra businesses, Specialty Surgical Solutions and Orthopedics and Tissue Technologies,” Peter Arduini, Integra’s president and CEO, said in a company release.

A couple of months before the formal split from Integra, SeaSpine announced that Keith Valentine would be named CEO. Prior to that, Valentine had served as president and chief operating officer of NuVasive Inc., a position he had held since January 2007. Joining him, John Bostjancic was appointed as chief financial officer for the spinal company. Previously, Bostjancic had been senior vice president of global supply chain for Integra since February 2012 as well as senior vice president of financial planning and analysis from 2008 to 2012.

“I am thrilled to have the opportunity to lead SeaSpine following the spin-off from Integra,”  Valentine said in a release issued at the time of the announcement of his new position.

“SeaSpine has the ability to leverage its leading orthobiologics products and broad spinal fusion hardware portfolio, as well as invest in a pipeline of differentiated products to drive growth. I look forward to working with our customers, our strong management team, employees, and our future investors in the coming weeks and months.”

Since the spin-off from Integra, SeaSpine has launched several new products for the orthopedic spine market. In 2015, the company began selling the Ventura NanoMetalene transforaminal intervertebral body fusion device and the Cambria NanoMetalene cervical interbody body fusion device. In June 2016, it announced its Hollywood VI NanoMetalene transforaminal lumbar interbody fusion device was available for use in spinal fusion procedures at one or two contiguous levels (L2-S1) in skeletally mature patients with degenerative disc disease.

Meanwhile, Integra continued on its long-term quest to become a multi-billion dollar, diversified medical device company. In a letter to stockholders, Arduini indicated that in 2015, the company made significant progress toward that end. The company’s strong financial results were reflected in revenue growth of 10.8 percent over 2014’s figure of $796.7 million, representing $882.7 million in 2015. That revenue was the combined total from the company’s two segments—Specialty Surgical Solutions, which offers instrumentation for a range of specialties including neurosurgery and critical care, and Orthopedics & Tissue Technologies, which is the division responsible for aforementioned tissue repair and regeneration products, as well as small bone fixation and joint replacement solutions. This was a shift from the company’s previous three segments, which changed as a result of the spin-off of the SeaSpine business.

The surgical segment contributed 66 percent to the total revenue figure, representing $587 million. The orthopedic and tissue division offered 34 percent, or $296 million. The company’s sales are primarily driven by the U.S. market, which saw 77 percent of the revenue for $681 million. Europe and the rest of the world followed a distant second and third, posting $103 million (12 percent) and $99 million (11 percent) respectively.

While a number of factors contributed to the positive growth of Integra in 2015, the company really only had one new product release highlight for the orthopedic space. Just as the new fiscal year began for the company in January, it announced the full market release of the Integra Reinforcement Matrix, a biological implant composed of porcine dermis that may be used for any type of tendon injury that requires surgical reconstruction. The product, according to the company, leverages a material that has been used in implants for over 14 years and in more than 40,000 surgical procedures. In addition, it is indicated for use in tendon injuries in the extremities. That includes disorders such as an ankle sprain, ruptured Achilles tendon, or flexor tendon injury of the hand.

The company should be able to remedy the new product release drought seen last year in the coming future with its dedication to internal development of new technologies. Integra devoted a healthy 5.8 percent of revenue to research and development in 2015. That figure translated to $50.9 million, a total that was higher than either of the previous two years. The company explained the increase in expenditures was primarily attributed to additional spending on new product development and clinical studies, as well as acquisition activity.

Executives expect the percentage of revenue for R&D expenditures in 2016 will continue to be similarly in the range of 5.5 percent to 6 percent.

Regarding that acquisition activity, the company was quite busy in 2015, following a series of purchases over the last few years that saw the company absorb Tarsus Medical Inc. (January 2013), Confluent Surgical Inc. (from Covidien Group in January 2014), and Medtronic Xomed Instrumentation (from Medtronic in October 2014). Further, it made the largest buy in Integra’s history in July 2015. TEI Biosciences Inc. and TEI Medical Inc. were acquired for approximately $312.4 million ($210.4 million and $102 million, respectively). TEI Bio developed and sold biologic devices for soft tissue repair and regenerative applications, including dura and hernia repair and plastic and reconstructive surgery. TEI Med actually licensed technology from TEI Bio for wound healing and orthopedics.

“This acquisition broadens our presence in regenerative wound care and tissue repair and represents a significant push forward toward our growth objectives for 2015 and beyond. The addition of TEI is an important, strategic next step for both our channel and international expansion priorities. We are enthusiastic about both TEI’s product development and commercial expertise, which accelerates our ability to establish an immediate presence in the diabetic foot ulcer space,” Arduini said in a company release announcing the deal.

According to Integra, a number of factors made the purchase particularly attractive. Most notable was TEI’s PriMatrix Dermal Repair Scaffold, which enhanced Integra’s offering in the regenerative would care and tissue repair space. The firm generated 2014 revenues of $63.5 million.

“It is an exciting time for TEI, and I am confident in Integra’s ability to grow our leading platform technology to drive broader expansion into regenerative medicine including wound care, plastic and reconstructive surgery, and other soft tissue repair and reconstruction applications,” Dr. Yiannis Monovoukas, Ph.D., chairman, president, and CEO of TEI, added in the same company release.

The TEI transaction was just the largest of a number of acquisitions Integra made in 2015. The company kicked off the year in January with the announcement that it had acquired Metasurg’s foot and ankle product portfolio in the month prior. The buy enhanced Integra’s lower extremity product offering while also providing the opportunity to distribute a biologic allograft derived from human placental tissue as a compliment to the company’s wound care offerings. Posting revenues of approximately $6 million, Integra expects the product line to return to double-digit growth numbers following the transition period.

In September, the company announced the purchase of two product portfolios from Tornier. The Salto Talaris and Salto XT ankle replacement products, as well as the Futura silastic toe replacement products were purchased for $6 million in a cash transaction. Integra cited interest in the products as an opportunity to both enhance its lower extremities product offering and accelerate entry into the U.S. total ankle replacement market.

Lastly, in December, the company acquired the assets of Tekmed Instruments, an Italian distributor of Integra products within the country. The deal, worth $14.2 million, provided support to the growth of the Specialty Surgical Solutions segment within Italy. In addition, with Tekmed’s focus on neurosurgery and neurotrauma, the deal also enhanced the offerings for those areas.

$928 Million
NO. of EMPLOYEES: 3,400

Integra LifeSciences Holdings Corp. certainly is no newcomer to the orthopedic business. It may not have as much “history” as some of the more venerable firms with which it competes (DePuy Synthes, Stryker Corp., Zimmer-Biomet Holdings Inc., Medtronic plc), but that hasn’t stopped the 26-year-old company from charting a successful growth course through this industry’s all-too-often complicated and competitive waters.

As was the case for so many firms in the medical device sector, 2014 was a year of transition for Integra. The company may have reported solid top- and bottom-line gains for its fiscal year (ended Dec. 31), but officials with the Plainsboro, N.J.-based firm chose a path for their company that they claimed would be more streamlined and profitable.

“During 2014, we made significant progress … and I believe we are at an exciting and pivotal point in our transformation,” said Peter Arduini, president and CEO.

What transformation you ask?

In November, the company announced plans to spin off its spine business and realign its portfolio. Specifically, in 2014, the company chose to consolidate its five business divisions into three. Following the spinoff, the company would have a simplified, two-division global structure. Neurosurgery and Instruments were combined worldwide to create a new division called Specialty Surgical Solutions. Orthopedics and Tissue Technologies were consolidated globally and include the extremities business, comprising small bone orthopedics and wound care. The portfolio realignment, according to company brass, is part of a larger transformation strategy that began in 2012 and centers on “optimizing the business and accelerating growth.”

The spinoff created a new publicly traded company (which went public on July 1 this year). SeaSpine—the name of a former Integra acquisition—focuses on spine hardware and orthobiologics. Integra acquired Vista, Calif.-based SeaSpine in 2011 for $89 million in cash. The company is still based in Vista.

“These strategic changes create a much stronger platform for organic growth and execution, and we believe both companies will grow faster separately than together,” said Arduini. “Moving forward, Integra will have a simpler, more focused structure from which to operate, which should improve our ability to achieve our longer-term growth and margin improvement objectives. Further, we believe these moves create exciting opportunities for our shareholders and both organizations.”

Integra officials said the separation would provide both companies with a faster top-line growth profile; allow the new SeaSpine to invest more in top-line growth initiatives such as sales, marketing and research and development (R&D), and to access the capital markets; accelerate Integra’s operating margin expansion plans; and unlock equity value for Integra’s shareholders.

SeaSpine’s portfolio consists of spinal hardware solutions, including unique interbody devices, minimally invasive surgery solutions, and deformity correction products, as well as IsoTis, a leading brand in orthobiologics, including a range of osteoconductive and osteoinductive solutions using demineralized bone and synthetic matrices.

Integra’s board of directors named Kirt Stephenson, former CEO and co-founder of SeaSpine, as board chairman of the new SeaSpine.

“I’m excited about the opportunity to create another company focused on growth through new product development, strategic acquisitions and partnerships,” said Stuart Essig, Integra’s board chairman. “As a public company, SeaSpine will have a host of options to accelerate its growth and effectively invest in new business opportunities. The board believes this will be achieved more fully as a standalone public company rather than through a strategic merger or divestiture of the business. Further, Rich Caruso, Integra’s founder, and I personally look forward to remaining shareholders of both companies.”

Follow the Leader

Early in the year, Integra LifeSciences hired Kenneth Burhop, Ph.D., as corporate vice president and chief scientific officer (CSO). Burhop is responsible for setting Integra’s strategic scientific vision and road map, leading the company’s portfolio prioritization and management, and evaluating corporate development and new product opportunities. Burhop holds several patents. He is a scientific expert in various research areas, including wound healing and wound dressing development. Burhop has extensive experience in biotechnology and medical device research and development, including the development of biocompatible materials, pharmaceuticals and biopharmaceuticals, and electromechanical devices. Prior to Integra, Burhop was chief scientific officer at Sangart Inc. Prior to joining Sangart, he spent more than 20 years with Baxter Healthcare Corp. in a series of leadership roles, including most recently vice president of R&D for Baxter Pharmaceutical Technologies. Before that, Burhop was vice president/global scientific lead for Baxter’s Medication Delivery Division. Burhop received his Ph.D. and M.S. in veterinary science as well as his B.A. in zoology from the University of Wisconsin-Madison.

In April, Integra hired Mark Augusti as a corporate vice president and president of the company’s Orthopedics and Tissue Technologies businesses. Prior to joining Integra, Augusti served as CEO of Durham, N.C.-based Bioventus—a biotechnology spinoff from Smith & Nephew.

“I am pleased that Mark has become a member of our team,” said Arduini. “With more than 25 years of experience in orthopedics, in particular, extremities and biologics, Mark brings a depth of general management experience and leadership that will be instrumental to our growth strategy.”

Prior to his time with Bioventus, Augusti spent nine years with Smith & Nephew in a series of leadership roles, most recently as president of Smith & Nephew’s Biologic Division, where he was appointed to lead Smith & Nephew’s new biologics initiative (which became Bioventus). He also served as president of Smith & Nephew’s Orthopedic Trauma and Clinical Therapies business and senior vice president and general manager of the Trauma business. Prior to that, he spent 13 years at GE Medical Systems, where he held various sales, marketing and strategic management roles. Augusti received his MBA from UCLA Anderson School of Management, and his B.S. in computer science and economics from Duke University.

Signed, Sealed, Delivered

Late in the fiscal year, the company closed on the acquisition of the product portfolio from Metasurg. The addition of the Metasurg product portfolio enhances Integra’s lower extremity product line. It also offers the opportunity to distribute a biologic allograft derived from human placental tissue as a possible complement to Integra’s wound care product offering, according to Integra’s leadership. Metasurg was founded in 2005 in Houston, Texas, and focused on the foot and ankle market. The acquired portfolio includes the DigiFuse Cannulated Intramedullary Fusion System, MemoFix Super Elastic Nitinol Staple System, Ti6 screw portfolio, BioMotion First MPJ Hemi System and TruArch Subtalar Implant System. In addition to the implants, the acquisition also gave Integra the opportunity to distribute an amniotic product line called BioFix Regenerative Biologics.

In September, Integra agreed to acquire Medtronic’s MicroFrance and Xomed Manual ENT and laparoscopy instrumentation lines for approximately $60 million in cash. The MicroFrance business, which includes Xomed’s Manual ENT instruments, designs, manufactures and sells reusable handheld instruments to ear, nose and throat (ENT) and laparoscopy surgeons. Under the terms of the agreement, Integra acquired a portfolio of approximately 4,000 MicroFrance and Xomed Manual ENT and laparoscopic surgical instruments, as well as a manufacturing facility in St. Aubin le Monial, France. The deal was wrapped up by October.

At the beginning of the fiscal year, the company completed the acquisition of the DuraSeal product lines from Covidien plc (now part of Medtronic). The deal, announced in October of 2013, called for Integra to purchase the Confluent Surgical product lines from Covidien plc. The brand includes surgical sealants, adhesion barriers, and—most notably—the DuraSeal, which is used in spinal surgery and applied over stitches to prevent cerebrospinal fluid from leaking out of the incision site. The technology was approved by the U.S. Food and Drug Administration (FDA) in 2009. Under the terms of the agreement, Covidien received an initial cash payment of $235 million from Integra at the close of the transaction.

Prolific Year for New Technology

Part of the company’s ongoing strategy for expansion has been a steady release of new technology across all its product categories. In this area, 2014 was no exception.

In November, the company rolled out a new orthobiologic implant. The Demineralized Bone Matrix (DBM) Strip implant is used primarily for posterior lumbar fusion, a surgical procedure intended to promote bone fusion along the posterior elements of the spine. Available in two forms, the Integra Shaped Strip and Integra Pocket Strip are 100 percent human allograft, providing a natural biologic scaffold with verified osteoinductive potential, the company claimed. The implant features a deep recess designed to accommodate placement of additional graft material. When hydrated, the graft is pliable, maintains integrity upon irrigation, and can be contoured to varying patient anatomy.

Also in November, Integra released its Expandable Interbody System in the United States. The system, which received 510(k) clearance from the FDA earlier in 2014, is intended for spinal fusion procedures at one or two contiguous levels (L2-S1) in skeletally mature patients with degenerative disc disease. The device is intended for use with autogenous bone graft and supplemental fixation and can be used in either posterior or transforaminal lumbar interbody fusion procedures, which are performed to help alleviate pain and nerve compression by fusing and stabilizing adjacent vertebrae in the lower back. The Expandable Interbody System is designed to minimize the amount of implant insertion forces while achieving the patient-specific anatomical fit needed for proper treatment, according to the company. The system offers different implant footprints, a range of implant height expansions and instrumentation, as well as in-situ height expansion and, if necessary, the ability to reposition intraoperatively.

In September, the company introduced the Integra Freedom Wrist Arthroplasty System in the United States. The Freedom Wrist is an advanced implant design and includes enhanced instrumentation to aid in “efficient and potentially more reproducible surgical results,” officials said. The implant adds to the company’s upper extremity portfolio.

In July last year, the company completed its multicenter clinical trial evaluating the safety and effectiveness of the Integra Dermal Regeneration Template for the Treatment of Diabetic Foot Ulcers (DFU). The data collected formed the foundation for the premarket approval supplement application the company filed with the FDA in February this year. An FDA approval with published data will form the key to securing reimbursement. Assuming FDA approval and timely publication of a peer-reviewed journal article, the company plans to launch the resulting DFU product in the middle of 2016.

March saw the expansion of the company’s skin and wound product line with the introduction of the Integra Wound Matrix (Thin). Integra Wound Matrix (Thin) is a collagen-glycosaminoglycan wound matrix that maintains and supports a healing environment for wound management. Available in a variety of sizes, it may be used for second-degree burns, partial and full-thickness wounds, pressure ulcers, venous ulcers, diabetic ulcers, chronic vascular ulcers, tunneled/undermined wounds, surgical wounds (donor sites/grafts, post-Moh’s surgery, post-laser surgery, podiatric, wound dehiscence), trauma wounds (abrasions, lacerations, skin tears) and draining wounds. Terminally sterilized, Integra Wound Matrix (Thin) can be stored at room temperature, has a 24-month shelf life, and is intended for one-time use.

Also in March, Integra rolled out its Laminoplasty System in the United States. The system, which is used to treat patients with ossification of the posterior longitudinal ligament, cervical myelopathy and degenerative spinal canal stenosis, is designed for use after open-door laminoplasty procedures in the cervical and thoracic spine (C3-T3). The system encompasses a variety of arched plate designs, self-drilling bone screws and multiple insertion options, offering surgeons choices when treating patients with central canal stenosis and myelopathy. The global laminoplasty market is estimated to reach approximately $70 million by 2015.  With the addition of the Laminoplasty System, Integra is well positioned to gain a key foothold in this rapidly growing market.

Integra LifeSciences introduced its line of titanium bone wedges, designed for internal fixation for bone fractures or osteotomies in the foot and ankle, in February. The wedges may be used in corrective procedures, such as Cotton (opening wedge) osteotomies of the medial cuneiform and Evans lengthening osteotomies. They are composed of commercially pure titanium formed into a cancellous-like structure that mimics the strength and porosity of human bone. The system is available in 15 different pre-shaped anatomical sizes, to accommodate various skeletal deformities in the foot. Osteotomies are procedures in which surgeons realign or remove a segment of bone located near a damaged joint to help correct deformities, typically in the foot. Bone wedges are designed to provide bone-grafting material for osteotomy corrections. They provide a scaffold for bone growth, as well as biologic stability and structural support for deformity corrections. Ancillary plates are used to hold bone graft material in place and prevent it from expulsion.

More of a manufacturing milestone than a product development one, Integra wrapped up an ongoing FDA issue at its facility in Añasco, Puerto Rico. Following FDA inspections in the fall of 2012, the agency issued a warning letter for the facility in February 2013. On Nov. 26, 2013, the FDA completed its second inspection of the Añasco facility and issued a new Form 483 with six additional observations. On Sept. 30, 2014, the FDA completed its third inspection of the facility, and concluded that the company had addressed the issues raised in the warning letter and previous inspectional observations, and it issued no other inspectional observations. The Añasco warning letter was closed out effective Jan. 14 this year.

Magic No. 11

The company grew revenue 11 percent to $928 million. Domestic revenues increased 11 percent to $714.0 million and were 77 percent of total revenues for the year. International revenues also increased 11 percent to $214.3 million. Foreign exchange fluctuations had a negative impact of $2.3 million on annual sales. Net income was $34 million, up from a loss of $21 million for FY13. U.S. Neurosurgery revenue was $244.6 million, an increase of 42 percent, largely the result of DuraSeal product sales arising out of the Confluent Surgical acquisition, which added $54.1 million in the period. Revenue for the U.S. Instruments division was $157.8 million, a decrease of 4 percent from the prior year. According to the company, lower sales were the result of sluggish sales in the acute-care and alternate-site businesses and product discontinuations. A partial-year contribution from Integra’s purchase of Medtronic’s MicroFrance in October partially offset the decline. Sales for U.S. Extremities were $143.4 million, an increase of 12 percent—mostly due to strong sales of dermal and wound-care products, including the company’s “thin” version of its Integra Wound Matrix, and from its shoulder product line, which increased as a result of the launch of a new reverse shoulder and increases in the number of distributors selling the technology. The remainder of the company’s lower and upper extremity franchise increased slightly during the period partially as a consequence of sales force turnover in the second quarter of 2014 as well as the transition to a new total foot system, officials reported. U.S. Spine division revenue, which includes spine hardware, orthobiologics and private-label products, were $171.4 million, a decrease of 6 percent. Sales of spine hardware softened due to ongoing pricing pressure, delays in expected product launches, and slower than anticipated addition of new distributors, according to the company’s leadership. The sales slump partially was offset by growth in orthobiologics, especially demineralized bone matrix and cancellous bone products, due to ongoing market demand. Sales of private-label products decreased from the prior-year period because some business was lost as a result of recall issues in 2013.

$836 Million
NO. OF EMPLOYEES: 3,300

High expectations are the key to everything.

—Sam Walton

In 1945, with a $20,000 loan from his father-in-law, plus $5,000 of his own, Sam Walton purchased a small variety store in Newport, Ark. Today, Walton’s legacy of setting sights high continues: In 2013, Wal-Mart Stores Inc. had sales of $466 billion.

The powers that be at Integra LifeSciences Holding Corp. have made setting high expectations for their company part of their credo. The firm, which started in 1989 and specializes in extremity reconstruction surgery, spine and orthobiologics, neurosurgery and general surgery technologies, is gunning for the competition. And with companies such as DePuy Synthes, Stryker Corp., Tornier Inc., NuVasive Inc., Globus Medical Inc., Wright Medical Group, Zimmer Holdings Inc. and Biomet Inc. all playing in the same sandbox, you can bet the battle for market share is constant and grueling. Just like in any fight for position, companies continually must look for an edge—adding product value, streamlining systems, reducing production costs, developing a strong research and development pipeline, etc.

Integra’s management outlines the firm’s goals this way: “We aspire to be a multi-billion dollar diversified global medical technology company that helps patients by limiting uncertainty for medical professionals, and is a high quality investment for shareholders. We will achieve these goals by delivering on our brand promises to our customers worldwide and by becoming a top player in all markets in which we compete.” High expectations indeed.

The billion-dollar mark may not be too far away. Over the years, the company consistently has continued to increase its top line, going from $551 million in 2007 to $836 million for its 2013 fiscal year (ended Dec. 31). And though the year-over-year amount of growth slowed between fiscal 2012 and 2013, the average annual revenue expansion between 2009 and 2013 has been $38.5 million. A billion dollars in sales is a little more than 4 years away at that rate. But the orthopedic market is anything but predictable these days. To keep things moving toward the firm’s goal, 2013 has been one of restructuring as Integra searches for economies of scale to sharpen its competitive edge. The year included implementation of a global resource management system, closure and consolidation of manufacturing sites, expansion of its international sales force (international sales were only 23 percent of the company’s sales in FY13), and the creation and the use of a recently created centralized sourcing group.

Through streamlined sourcing and procurement, the company expects to reduce its number of suppliers by 30 percent in the near future. Along with that, Integra has initiated inventory planning optimization plans to increase cycles and decrease working capital requirements. The goal of the structural efficiencies is to drive significant income savings and increase cash flows. Integra’s fiscal 2013 bottom line reflected the costs but also the beginnings of the benefits from these activities.

Revenue for fiscal 2013 was $836.2 million, an increase of $5.3 million, or 0.6 percent, compared to 2012. Excluding the contribution of revenues from discontinued products, revenues increased 1.2 percent compared to 2012. Currency had a negligible impact on revenues, officials noted. The company reported a net loss of $17 million, or 60 cents per diluted share, for 2013, compared to net income of $41.2 million, or $1.44 per diluted share in 2012. Sales for the company’s U.S.

Neurosurgery division (dural repair, ultrasonic aspiration, cranial stabilization, stereotaxy, neuro critical care) were $172.3 million, up from $171.3 million in fiscal 2012. Sales for Integra’s U.S. Extremities division (soft-tissue repair for nerve, tendon, skin and wound; fixation and joint replacement in foot, ankle, hand, wrist, elbow and shoulder) were $134.6 million, up from $122.8 million from the year before. Revenues from the U.S. Instruments division (general and specialty hand-held surgical instruments in the hospital and office-based settings, surgical headlights and retractors) were $159.6 million, down from $162.3 million. Sales generated by category called U.S. Spine and Other (minimally invasive spine systems, traditional spine fusion, orthobiologics and private label) were $179.9 million, down from $190.5 million. International sales of select product lines from the Neurosurgery, Instruments, Extremities and Spine divisions were $189.7 million, up from $183.9 million. Overall, in domestic and international markets, pure orthopedic implant and product sales were $374.6 million, up from $369.3 million. Neurosurgery products generated $278.7 million in sales, up slightly from $277.5 million. Instrument sales were $182.9 million, up from $184 million. Some neurosurgery and instrument products, however, are used in orthopedic-related procedures, which is why they’re included in the revenue considered for ODT’s annual ranking.

“Our organization overcame significant challenges in 2013, and I am excited about the opportunities ahead,” said Peter Arduini, president and CEO. “Our quality and operations teams are strengthened and stabilized, and our commercial teams are launching significant new products, including DuraSeal product lines and our Titan shoulder system. We look forward to making further headway on our strategic optimization and growth objectives in 2014.” (See more info about DuraSeal and Titan below.)

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for FY13 was $138.9 million, a decrease of 16.5 percent compared to the prior year.

The company is predicting 2014 revenues between $920 million and $940 million and earnings per diluted share to be between $1.46 and $1.64 and adjusted earnings per diluted share to be between $3.00 and $3.18. The guidance includes the contribution expected from the DuraSeal acquisition.

“Our plan for 2014 anticipates strong execution, both by our sales organizations and on the cost savings initiatives underway,” said Jack Henneman, chief financial officer. “We expect to improve both profit margins and cash flow substantially versus 2013.”

Research and development spending was about 6.2 percent of total revenue for FY13 ($52.1 million), on par with 2012’s percentage of 6.1 percent. A significant portion of R&D resources for the year was spent on shoulder-related product development efforts.

‘Dura’ble Goods

In late October of last year, Integra bought the Confluent Surgical product lines from Covidien plc. The brand includes surgical sealants, adhesion barriers, and—most notably—the DuraSeal, which is is used in spinal surgery and applied over stitches to prevent cerebrospinal fluid from leaking out of the incision site. The technology was approved by the U.S. Food and Drug Administration in 2009. The deal closed early this year.

Under the terms of the agreement, Covidien received an initial cash payment of $235 million from Integra at the close of the transaction. Additionally, Covidien may receive up to $30 million, contingent upon the achievement of certain performance measures related to the transition of the Confluent Surgical business to Integra.

“The addition of the DuraSeal product lines enables our sales force and distributor partners to provide their customers with a best-in-class dural sealant as they seek to support surgeon’s efforts to minimize cerebrospinal fluid leaks upon completion of the surgical procedure,” said Robert Davis, president of Integra’s U.S. Neurosurgery division. “This acquisition perfectly complements our global Neurosurgery growth strategy aimed at providing a broader set of solutions for surgical procedures in the head. Together with our broad DuraGen product line we are fortunate to have even more options to serve our customers and the individual needs of their patients.”

Covidien divested the product line to better align existing product categories and position them for growth.

Confluent Surgical products include: DuraSeal, DuraSeal Xact, VascuSeal and SprayShield, which—according to Covidien—generated approximately $65 million in revenue during 2012.

“This transaction adds scale to our business, leverages one of our strongest customer call points, and drives accretion to our gross margins,” Jack Henneman, Integra’s chief financial officer, said at the time.

Integra reports DuraSeal revenues in its U.S. Neurosurgery and International business segments, and has been providing revenue contribution from the acquisition in financial reports this year.

Product Rollouts

In 2013, Integra launched 20 new products in the United States and internationally. Among the notable product releases:

• • The company introduced the Integra Laminoplasty System following U.S. Food and Drug Administration (FDA) 510(k) clearance. The system includes a set of implants and instruments designed for use after open-door laminoplasty procedures in the cervical and thoracic spine (C3-T3). The system incorporates several plate and screw options, enabling surgeons to treat varying patient anatomies. It also includes multiple plate insertion and drill guide options, and a new retentive screwdriver. Laminoplasty procedures treat spinal stenosis by relieving pressure on the spinal cord. The open-door laminoplasty procedure relieves pressure by first cutting the lamina on both sides of the affected vertebrae (a hinge on one side and a groove on the other), and then prying the released segment of lamina open. A laminoplasty plate is attached to the lamina, to help retain the open position while it heals. The plate also is used to hold bone graft material in place and prevent it from expulsion and impinging on the spinal cord.

• • Integra’s Proximal Humeral Fracture Plate System was released in October of FY13 in the United States. The system joined the firm’s growing portfolio of shoulder fracture solutions, which includes a primary and reverse system with a unique platform press-fit stem. According to the company, the Proximal Humeral Fracture Plate System includes two distinctive, anatomic proximal humeral plates in one tray, allowing the surgeon to intra-operatively choose between various fixation options for common to more complex and unique fracture patterns. The two plates also are designed to simplify positioning and minimize soft tissue interference. The system’s low-profile plate is designed to be placed lower on the humerus (the largest bone in the arm) to minimize subacromial and soft-tissue impingement (which helps the motion of the rotator cuff in activities such as overhead work), while the greater tuberosity plate provides a higher placement option, with 12 proximal screw holes to maximize the fixation coverage of the humeral head. Both plates include four holes, specifically designed to provide stable fixation in the calcar neck and help protect against varus tilt and settling of the humeral head.

• • The company’s Extremities division also launched the full Titan shoulder system—FDA 510(k) clearance was granted in July 2013—which includes total, reverse and humeral plating systems, greatly expanding the firm’s shoulder portfolio. The first post-clearance patient implantation took place in September last year. The reverse shoulder system is built on a unique platform stem. This platform stem simplifies the conversion of a primary total shoulder, or hemi for fracture, to a reverse shoulder, without the need to remove a stem that is well fixed in the patient’s bone. The system offers fully interchangeable components, which allow all primary, reverse, and fracture humeral bodies to be used with either the press-fit or cemented platform stems, the company said. The flexibility is designed to provide surgeons with minimally invasive intra-operative options, and the ability to offer continued care for the lifetime of the patient. The Titan release opens a “significant new market,” Integra officials noted—one that offers a healthy growth rate sustained by increases in reverse and revision procedures. To gain a greater share of the market the company estimates is worth $865 million this year and $1.3 billion by 2017, Integra has been investing in its sales operation and surgeon training to support the shoulder franchise. Company bigwigs also reported investing in “early stage technology” that is intended to strengthen the shoulder portfolio in years to come.

• • Integra released its Hollywood VI intervertebral body fusion device (IBD) system, which primarily is used in transforaminal lumbar interbody fusion (TLIF), a surgical procedure designed to help alleviate pain and nerve compression by fusing and stabilizing adjacent vertebrae in the lower back. The Hollywood VI IBD incorporates a variable insertion feature, which enables surgeons to choose the appropriate delivery angle for the implant and gives more flexibility in managing varying patient anatomy, according to the company. It includes a new, longer, 30-millimeter implant that increases the bone graft volume by 33 percent compared to the current 27 millimeter implant, and provides a larger platform to help promote spinal fusion. “Integra has developed a TLIF cage that is simple to insert, due to the variable angle insertion mechanism, while maximizing fusion rates by aggressively increasing graft space within the cage, compared to its competitors,” said Thomas N. Scioscia, M.D., OrthoVirginia in Richmond, Va. IBDs are designed to help provide stability for spinal fusion after a diseased disc is surgically removed. They are small, hollow spinal implants that are inserted into the intervertebral space to restore physiological disc height and allow fusion between vertebral bodies. The graft window in the device is packed with bone and provides an environment in which natural bone growth can occur, which then enables fusion of the vertebral segments.

• • Integra introduced its Compact Cranial Closure System, which provides titanium implants for non-loadbearing (non-facial) operative cranial neurosurgical procedures. Included with the system is a new compact disposable powered driver, a pre-sterilized, disposable, battery powered screwdriver that is used for rapid fixation of the implant’s plates and screws. Both products have received 510(k) clearance from the FDA. According to the company, the closure system’s benefits include a small and simple tray design that enhances efficiency in the operating room and the hospital sterilization department, and low-profile plates that are thin but strong titanium alloys offering improved patient aesthetics. Cranial closure occurs immediately following repair of the dural lining surrounding the brain. Neurosurgical cranial fixation sets are used in more than 200,000 cranial procedures in the United States annually, including treatment of head trauma injuries, biopsies and tumor removal, according to figures cited by the company.

Restructuring & Resolutions

Toward the end of the fiscal year, the company announced plans to eliminate its manufacturing operations in Burlington, Mass., and Andover, England. Burlington operations will be consolidated into the company’s facilities in Cincinnati, Ohio, and York, Pa. The proposed changes in Andover include consolidating electronics assembly into Integra’s facility in Ireland and discontinuing certain non-core product lines.

“I want to express my gratitude to our colleagues in Burlington and Andover, for whom we have the greatest respect, for their dedication and hard work over the years,” said CEO Arduini. “Unfortunately, we believe these moves are necessary to remain competitive due to increased costs and regulatory requirements in the medical device market.”

The consolidations will begin reducing operating expenses in 2015, company officials predicted.

As an extension of the product streamlining initiatives the company announced in third quarter of 2012, Integra discontinued several products and product lines in the U.S. Instruments segment that officials categorized as “low-margin and low-growth.” Also discontinued were “small, non-strategic and/or low-margin product lines” manufactured in Integra’s Burlington and Andover facilities, reported in the Instruments, Neurosurgery and U.S. Spine segments. The firm also eliminated low-margin, low-growth product lines in the U.S. Extremities, U.S. Neurosurgery, and International business segments “for the purpose of simplifying the product offering and reducing complexity,” company brass said.

In addition, Integra is consolidating two surgical instrument sites in Germany into one state-of-the-art facility in Rietheim-Weilheim, Germany.

In September, the company reported that it had fully resolved violations cited in a FDA warning letter relating to its Plainsboro, N.J., manufacturing facility, which had been operating subject to an FDA warning letter from December 2011 that related to quality systems and compliance issues. Following an inspection in August last year, the FDA determined that the company’s remediation activities were effective and its quality management system was adequate. Arudini said the resolution was a “measure of the progress we have made toward transforming our quality systems around the company” and that the investments the company has made and would continue to make are “producing results that are fundamental” to the firm’s long-term goals.

In February, the company received an FDA warning letter for its plant in Añasco, Puerto Rico, related to quality-systems issues. The warning letter cited concerns relating to process validations, corrective and preventative actions, and document controls. The Añasco facility manufactures several of Integra’s collagen products, including DuraGen dural graft matrix and several OEM products sold to strategic partners through the company’s private-label business. In April, Integra initiated a voluntary recall of certain products manufactured in Añasco between December 2010 and May 2011 and between November 2012 and March 2013. Specific lots of these products, including DuraGen products, were recalled because the company identified that there may have been deviations from approved processes in their production. There were no reports of adverse patient events attributable to the recalled products.

According to Integra’s management, the company made “substantial investments” in its quality and global operations organizations throughout 2013.

“Those investments have had a strong, positive impact throughout our organization, and, indeed, on the culture of our company,” Arduini wrote to shareholders at the beginning of 2014. “Our leadership team has reinvigorated both organizations and placed quality first in all we do throughout the company. These investments—capital, training, focus and emphasis—have resulted in the lifting of our warning letter in our Plainsboro, N.J., facility, enhancements to our Puerto Rico facility, and overall changes to our quality systems at all of our manufacturing facilities.”

2014: So Far, So Good

For the first quarter of 2014 (ended March 31, the most recent reported before press time) total revenues were $215.1 million, an increase of $18.4 million compared to the first quarter 2013. Net income was $2.2 million, or 7 cents per diluted share, for the first quarter of 2014, compared to a net loss of $6 million, or 22 cents per diluted share, for the first quarter of 2013. The company released the Integra Titanium Bone Wedges, designed for internal fixation for bone fractures or osteotomies in the foot and ankle. In addition, Integra hired Mark Augusti as a corporate vice president and president of the company’s Orthopedics and Tissue Technologies businesses. Prior to joining Integra, Augusti served as CEO of Durham, N.C.-based Bioventus—a biotechnology spin-off from Smith & Nephew.

$831 Million
NO. OF EMPLOYEES: 3,500

The folks at Integra LifeSciences are on a mission. The 24-year-old firm’s leadership has staked out a goal “to become a multi-billion-dollar global medical technology company whose products enhance millions of lives.” Both are lofty objectives. The billion-dollar barrier, if achieved, makes companies part of an exclusive club—particularly in the medical device industry, where the largest percentage of companies by far is composed of small to midsize firms. And when you break it down by sector—such as orthopedics—the number of billion-dollar behemoths shrinks substantially (as our Top 10 list illustrates). Since 2008, the company’s revenues have increased by 27 percent—buoyed by a series of strategic acquisitions in the last few years (in particular the buyout of Ascension Orthopedics at the end of 2011).

Integra manufactures devices and instruments for orthopedic extremity surgery, neurosurgery, spine surgery, and reconstructive and general surgery. The company’s orthopedic products include devices and implants for spine, foot and ankle, hand and wrist, shoulder and elbow, tendon and peripheral nerve protection and repair, and wound repair. In neurosurgery, Integra makes implants, devices, instruments and systems used in neurosurgery, neuromonitoring, neurotrauma, and related critical care.

Part of the company’s strategy to achieve its aims is a steady stream of new product development. It did so in fiscal 2012 (ended Dec. 31) and plans to continue doing so throughout this year.

“We continue to invest in product development, with a focus on regenerative medicine and orthopedics, and expect to launch as many as 25 new products in 2013,” Peter J. Arduini, president and CEO, wrote to shareholders at the beginning of this year. “Among them is a modular shoulder system with a reverse option that will enable us to build a more comprehensive distributor network for our shoulder and elbow product lines. We expect our shoulder offering to be differentiated, and by pairing it with our regenerative medicine portfolio, we believe we can become a significant player in the $650 million shoulder market.”

Arduini also noted that his company is funding clinical evidence to enhance product launches and obtain favorable coverage decisions by insurance providers and the Centers for Medicare and Medicaid Services.

“We expect to complete the clinical trial to support the effectiveness of our dermal regenerative products in diabetic foot ulcers by the end of 2013,” he added. “If the trial and regulatory submissions are successful, we plan to launch the product for this indication in the United States, with reimbursement in 2015. We believe that clinical, regulatory and reimbursement success would dramatically increase the opportunity for our dermal regenerative medicine products.”

The company also is aggressively pursuing international markets for its new product releases, including BRIC countries China and Brazil. European product approvals also are part of the strategy.

Part of the company’s goal for 2012 was to streamline operations. Company leadership reported making “great strides” toward improving its infrastructure by streamlining manufacturing and distribution. The company established a centralized sourcing group to optimize purchases globally and by division and to improve inventory planning. The company also is working on a common quality system—a project that began in 2012.

“We expect these investments to make us a more efficient company, with improvements in both earnings and cash flow,” Arduini said.

Along those lines, the company made two key hires toward the end of FY12.

John Mooradian and Joseph Vinhais joined the company as senior vice president of global operations and supply chain, and senior vice president of global quality assurance, respectively.

Mooradian is responsible for Integra’s newly integrated global manufacturing and supply chain functions. Prior to joining Integra, he spent 24 years at Abbott Laboratories in a series of leadership roles, where he improved manufacturing processes and systems, and implemented key compliance enhancements.One of Mooradian’s key roles at Abbot was responsibility for worldwide operations at Abbott Diagnostics Division, a $4 billion business with more than 11,000 employees.

Vinhais is responsible for Integra’s global quality systems. He has more than 20 years of global experience in quality assurance, regulatory affairs, compliance and operations.He was most recently head of quality assurance, regulatory affairs and sustainability of the computed tomography and nuclear medicine business at Philips Healthcare Imaging Systems. At Philips, Vinhais developed quality and regulatory strategies for the China market, as well as other emerging markets, and realigning the quality and regulatory functions to better support the business.

The company may be planning for a significant rollout of products in 2013, but 2012 experienced its fair share of introductions as well.

In October, the company had its full U.S. market release of the Integra Complete Cervical Intervertebral Body Fusion Device (IBD), expanding the company’s spine product portfolio with the addition of a zero-profile, standalone IBD for anterior cervical decompression and fusion procedures. The system received 510(k) clearance from the U.S. Food & Drug Administration (FDA), and is designed to help provide stability for spinal fusion after a diseased cervical disc is surgically removed. Traditionally, surgeons use a supplemental fixation plate to help hold an IBD in place. However, the Integra Complete Cervical IBD features the benefit of a zero-profile, standalone design by using two screws to help secure the IBD in its functional position, eliminating the need for a supplemental fixation plate.

Also in October, the company received FDA approval for an expanded indication for use of the Integra Vu aPOD Prime IBD in anterior lumbar interbody fusion procedures. The indication includes four points of fixation, which is composed of two screws and the firm’s SpinPlate. IBDs are designed to help provide stability for spinal fusion after a diseased lumbar disc is surgically removed. They are small, hollow spinal implants that are inserted into the intervertebral space to restore physiological disc height and allow fusion between vertebral bodies. The devices relieve pressure on the nerves and provide positive mechanical stabilization of the vertebrae. The graft window in the device is packed with bone and provides an environment in which natural bone growth can occur, which then enables fusion of the vertebral segments.

“Earlier this year the Vu aPOD Prime IBD entered its full market release with standalone indications,” said Kirt Stephenson, president of Integra’s U.S. spine business. “We’re pleased that with this additional indication, we can now provide surgeons with multiple fixation options to best meet their patients’ needs.”

Yet another October launch was Integra’s USA NXT Inferior Forward Bone Tip for the company’s CUSA NXT Ultrasonic Tissue Ablation System. The CUSA NXT system is used in neurosurgical and other surgical procedures for the controlled and selective removal of soft tissue and bone near critical structures. The newest tip in the family features a working surface that is oriented toward the inferior (bottom) surface of the tip, making it useful in situations where the surgical setting requires downward pressure for bone removal, the company claims.

In June, Integra announced a contract with Berlin, Germany-based aap Implantate AG to provide stainless-headed compression screws for mid- and hind-foot reconstruction. Headed compression screws are used in orthopedics for internal fixation of bone, typically after fractures. The new system will provide a comprehensive solution for arthrodesis and fracture management across multiple disease states, including mid-foot, ankle and hind-foot arthritis. According to the company, the new stainless steel system will feature a mid-foot set composed of 4 mm and 4.5 mm diameter screws, and a hind-foot set composed of 6.5 mm and 7.5 mm diameter screws. All screw diameters will be available in both partially threaded and fully threaded options. aap Implantate AG is a medical device company that manufactures biomaterials and implants used in orthopedic procedures.

“Headed compression screws were one of the product gaps identified by the sales force and surgeon customers, and this new product will close the gap,” said Bill Weber, vice president and general manager of Integra’s extremity reconstruction business.

Biense Visser, CEO of aap Implantate AG, said: “We have great respect for the team at Integra and are pleased to be providing them with a comprehensive Stainless Headed Compression Screw system. Integra has a strong reputation and proven track record in the industry and we believe they will be an effective partner for the distribution of this product line. The partnership also provides further validation of aap’s products and technology as we continue to expand our presence in markets outside of Europe, particularly in the United States.”

Integra’s Extremity Reconstruction business focuses on lower extremity fixation, upper extremity fixation, tendon protection, peripheral nerve repair/protection and wound repair.

The company released its IPP-ON PIP Fusion System for the fixation of proximal interphalangeal (PIP) joint arthrodesis. It is indicated for use in the lesser toes for rigid or semi-rigid hammertoe deformity, revision of failed arthroplasty or arthrodesis, and second toe shortening. The system is a one-piece, stainless steel interphalangeal fusion device that is available in two sizes to accommodate varying patient anatomy. The device is anatomically adaptive by offering both cortical and cancellous fixation. Hammertoe is a deformity that occurs when there is a shortening of the tendon that controls toe movement. The tendon shortening causes the middle joint of the toe to be bent upward and the most distal joint downward.

In March, FDA 510(k) clearance was granted for Integra’s new line of Jarit Take-Apart Laparoscopic instruments. The new instruments allow the components to be fully disassembled, making cleaning and visual inspection easier, the company says. This product line addresses the growing concerns of both hospitals and regulatory bodies about the need for instruments that can be more easily cleaned and sterilized. Integra recently has introduced a number of products to enable hospitals to increase the certainty of using clean instruments on every patient. Adding features that increase the ease and visual verification of cleaning are expected to further limit uncertainty for operating room personnel.

The beginning of 2012 included the introduction of the Allograft Wedge System, which consists of pre-cut allograft wedges for both Evans and Cotton osteotomies and a dedicated instrumentation set that is designed to provide a method of assessing osteotomy space to aid in the selection of the appropriate implant. Osteotomies are procedures in which surgeons realign or remove a segment of bone located near a damaged joint to help correct deformities, typically in the foot. The Allograft Wedge is designed to provide bone-grafting material for osteotomy corrections. The Allograft Wedge is processed from human cancellous bone, sterilized through the BioCleanse Tissue Sterilization Process and terminally sterilized using a validated method to achieve a sterility assurance level of 10-6. According to the company, the wedge provides a natural scaffold for bone growth, as well as biologic stability and structural support for deformity corrections.It also eliminates significant harvest site morbidity that may result from autograft removal.

Though prolific in its new product introductions, the company has had to contend with some quality issues as of late.

In November, Integra received an FDA warning letter related to quality systems issues at its manufacturing facility located in Andover, England. The letter resulted from an inspection held at that facility in June 2012. The letter did not restrict the company’s ability to manufacture or ship products or import them into the United States.It also did not require the recall of products.The Andover facility manufactures components of the CUSA ultrasonic aspirator system, and intracranial pressure monitors.

Quality woes continued into 2013. Following an FDA warning letter received in February (based on a November 2012 plant inspection), the company initiated a voluntary recall in April for some of its products manufactured during Dec. 2010-May 2011 and Nov. 2012-March 2013 at its Añasco, Puerto Rico, facility. The recall was announced as the company detected that certain lots of offerings under Duragen, NeuraWrap, NeuraGen and other families of products had slipped the quality standards due to deviations from an approved production process. The warning letter cited concerns relating to process validations, corrective and preventative actions, and document controls. The Añasco facility manufactures several of Integra’s collagen products, including Duragen Dural Graft Matrix and several OEM products sold to strategic partners through the company’s Private Label business.Sales of products manufactured or packaged in the Añasco facility constituted approximately 18 percent of Integra’s consolidated revenue during 2012, according to the company.Integra also can produce most ofthe relevant products in its facility in Plainsboro, N.J. Throughout 2012, the company worked to respond to a warning letter from the FDA in December 2011 related to quality systems and compliance issues at the Plainsboro plant. The letter resulted from an inspection held at that facility in August 2011.

The company has been working to address the issues in the letter and underwent a second FDA inspection in 2012 to evaluate progress.