Integra LifeSciences Holdings Corporation (IART) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Integra's 2021 Virtual Investor Day. I'm Mike Beaulieu, Director of Investor Relations, and we appreciate your interest in Integra and hope you're as excited as we are to be here this morning. Earlier today, we issued a press release announcing that for the second quarter 2021 and the company now expects to achieve the higher end of both its revenue guidance range of $372 million to $378 million and its adjusted earnings per share range of $0.63 to $0.67. We also reaffirmed our full year 2021 revenue and adjusted earnings per share guidance. For your convenience, the slides for today's presentation are posted on our website at integralife.com in the Investor Relations section under Events & Presentations. As a reminder, some of the comments we make today are forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company's Exchange Act reports filed with the SEC. Some of the numbers in today's presentation will contain non-GAAP financial measures, which we view as meaningful to evaluate our performance. Please refer to the current report on Form 8-K filed today, where we provide an explanation for these non-GAAP measures. In addition, we'll discuss products in our pipeline that have not yet received regulatory approval. And throughout today's presentation, we'll reference market size and market share information that reflect internal estimates. Here's a look at today's presentation agenda. The company is at an important inflection point following the recent divestiture of the Orthopedics business and the acquisition of ACell, and we're excited to share with you many of the changes that have taken place since our last Investor Day. President and CEO, Peter Arduini, will begin the formal presentation with a strategic update to discuss our plans to achieve our full potential; Glenn Coleman, Chief Operating Officer, will then discuss our operating model and how it provides a competitive advantage; and Bob Davis, President of Tissue Technologies, will then give an update on the many innovative programs underway in his segment. Beginning around 10:20 a.m. Eastern Time, we'll open the floor to our first Q&A session. You should see a dialogue box on your screen where you can submit a question beginning now and at any time during the presentation. We'll take as many questions as we can in the allotted time. For the first Q&A session, we'll limit the questions to presentations by Pete, Glenn and Bob. In the interest of time, we may aggregate similar questions and answer them together. Following the Q&A, we'll take a short 10-minute break and then restart the presentations at about 10:50 a.m. Eastern Time with Mike McBreen, President of Codman Specialty Surgical. Carrie Anderson, Chief Financial Officer, will follow Mike with a review of our long-term financial goals and our plans for sustainable value creation. Pete will then make some closing -- some brief closing remarks, and we'll reopen the floor to a final Q&A session, and we plan to wrap up the meeting right around 12:30 p.m. Eastern Time. So with that, it's now my pleasure to turn the presentation over to President and CEO, Peter Arduini.

Thanks, Mike. Good morning, everyone. We hope you're all doing well, and we appreciate you joining us here today. We're truly excited and energized about our plans and look forward to sharing them with you today. As Mike commented, we are at an important inflection point, and our goal today is to provide the first complete update on our long-range outlook since our last Investor Day in 2017. Our goal is for you to be -- take away a better understanding of these key messages and how well positioned for sustained, profitable growth Integra is today. First, we believe as we exited 2020 that we're now entering into a new inflection point for the company, resulting in accelerated growth and expanded market leadership. While all of us went through many challenges brought about by COVID-19 in 2020, we at Integra used the time to continue to transform our business and maintain investments in key priorities, while taking aggressive moves in other areas. And second, we've reshaped and optimized our portfolio over the period of 6 years. Divesting or eliminating low growth assets and focusing the portfolio on segments in which we can have longer-term competitive advantages. Third, we'll discuss how our growth strategies will enable us to penetrate deeper in our existing markets as well as expand into new clinical areas. Fourth, we've been building out our operating capabilities to increase consistency of execution. And while we've been consistent in achieving our quarterly EPS estimates, we've not been as consistent in delivering on 5% to 7% top line growth. This focus on execution and growth has been a priority of the executive management team. Glenn will walk you through the actions we've taken and share with why we are confident in our ability and our processes to deliver on top and bottom line results. And lastly, we have a clear line of sight to delivering on the long-term goals we laid out back in 2017. Those goals are as follows: 5% to 7% organic growth, double-digit EPS growth, 70% to 72% gross margins and 28% to 30% EBITDA margins. And Kerry will cover this in detail later in the morning. Our mission. Our mission is clear, to do well for our shareholders, employees and our customers while doing good for patients. We aspire to make a positive difference in every patient and caregiver who encounters an Integra product, service or employee. Our values as an organization align to our mission: integrity, doing the right thing; people, our number one asset; excellence, getting better every day; embracing change, which is always about looking forward to find new ways; decisiveness, structure and culture, focused on getting things done; and teamwork. Medtech is a team sport. It's all about one goal and one focus team. Here's a snapshot of Integra. We were founded in 1989 and are headquartered in Princeton, New Jersey. Our stock symbol is IART, and our market cap is over $6 billion. In 2020, during COVID, sales were $1.37 billion, and we employ approximately 3,700 employees around the world and run the business with 2 global divisions: Codman Specialty Surgical, which we refer to as CSS, representing 2/3 of our business; and Tissue Technologies, which is 1/3. 70% of our business is in the U.S. and 30% is in international markets. This is up from 8 years ago when international sales were less than 20%. Our products are sold primarily through direct sales channels and distributors in approximately 130 countries. Our strengths or differentiators are listed on the right. We're the global leader in neurosurgery, moving the market forward with innovative solutions. And if you walk into any leading neurosurgery hospital, the chances are pretty good that you'll encounter an Integra product from our extensive and comprehensive portfolio. While we're also a leader in soft tissue and plastic reconstructive surgery with leadership in trauma, burns and surgical wounds, and we're also growing positions in nerve and internal tissue repair. We've built deep capabilities in R&D, manufacturing and commercial in both segments, and we have a host of globally well-known leadership brands in both of our businesses: Codman, you know the name; DuraSeal, SurgiMend, Integra Skin; and CUSA, just to name a few. Since 2012, when I became CEO, we've been actively working on transforming our portfolio to position the company for sustainable value creation for our shareholders. In 2012, we focused on efforts on stabilizing and restructuring our company, starting with assessing the product portfolio for growth potential and profitability. This laid out a road map that has shaped our decisions in the last few years, and we implemented an operating model that increased execution, accountability, quality systems and continuous improvement. This created ownership and started our journey of continuous improvement, a journey towards building a more agile company. We also created a new R&D process aligned with quality systems and a rigorous portfolio prioritization process. From 2014 to 2018, the next phase of our evolution, we made progress on portfolio optimization. We spun out the spine business as a tax-free distribution to our shareholders. We advanced our digital and IT platforms, most notably reducing our ERP systems from 30 to 1 core platform today. And we also completed a transformational deal with Codman, clearly positioning us as the #1 player in neurosurgery. Codman has been a home run on all accounts, global profits and relevant scale. Altogether, these actions grew adjusted EBITDA margins approximately 300 basis points. In 2018 and onward, specifically in Q4 2020, we sold the Orthopedics business and bought ACell. And as I previously mentioned, we also commissioned and build out our new capabilities by building a new facility in Mansfield and optimized our Collagen Manufacturing Center as well as expanded capacity in the TT supply chain. At Integra, M&A excellence has been a long hallmark of the company. In recent years, we've also developed an extensive integration approach based on best practices and years of experience, staffed with dedicated resources and project management skills. This team, coupled with our integrated IT capabilities, enables us to ultimately capture deal synergies quickly. And on the right side of the page is a look at the type of M&A activities that we've evolved in our portfolio, starting with tuck-in deals that delivered immediate revenue and near-term accretion. Deals such as DuraSeal, Derma Sciences, MicroFrance and ACell are good examples of these types of deals, and we're always on the lookout for more types of deals such as these. Second is divestitures. Critic to our plans has been the focus of the company to shed noncore assets and assets where the cost to compete is a challenge versus other opportunities we have. We made the hard decisions and, frankly, did the heavy lifting to separate out these 3 assets. Spinning out spine, the closure of dental instruments and the sale of the Extremity Orthopedics business. Third is our transformational deal in Codman. Codman represents a once-in-a-lifetime opportunity. Integra was the #2 player. Codman was the #3 player, 2 buys 3, and we become the #1 player in neurosurgery and gained significant global scale. Codman sales were much larger internationally and enabled Integra's global expansion at a much faster pace. Our success in Japan and China today are tied to the synergies created with the Codman and Integra marriage. And as I stated earlier, Codman has been, without a doubt, a complete success and a credit to the team's ability to integrate and grow. Lastly, our technology deals, Arkis and Rebound, are great examples and 2 technology platforms that we have advanced with internal R&D. The result of all of these efforts is a much more focused company that sets us up for future growth acceleration, both top and bottom line, hence, the current inflection point. Looking at 2014 in the pie chart, sales were $928 million, and we had 5 business divisions that have been greatly simplified now into 2 global segments. If you exclude both spine and extremities, our 2014 revenues would be approximately $700 million. So in essence, we've doubled our business since 2014, going from $700 million to roughly $1.4 billion in 2020. On the right side of the page are a few metrics that emphasize the level of change in the portfolio. The efforts associated with SKU rationalization and divestitures took out underperforming SKUs that represented approximately 35% of the total sales. Today, approximately 10% of all SKUs in our current portfolio. New product introductions have increased significantly. Top share positions have increased as a percentage of total portfolio. And lastly, both gross margin and EBITDA margins have expanded. Bob and Mike will go into these points on this slide in more detail, but this is a summary of the look forward for each segment and the opportunities that exist, starting with Tissue Technologies. Tissue Technologies is all about building out a regenerative technologies platform beyond wound care. We have the fastest-growing markets -- we have fast-growing markets that are growing at really high single digits, and we have a large complementary portfolio to address many of the plastic and reconstructive surgery requirements, extending into nerve, hernia and breast, just to name a few. We also are investing in clinical, manufacturing and R&D capabilities to drive and expand competencies in biologic and combo products and for enabling broader indications. Lastly, much of the regenerative markets we compete in today are still fragmented and provide an opportunity to consolidate assets through M&A. Switching to CSS. The CSS focus is about transforming technologies to advanced care. As the global leader in the space, Mike will review how we are building a pipeline of breakthrough products that have the potential to redefine standard of care using minimally invasive technologies and allow access to new underserved markets, like ICH or intracerebral hemorrhage in stroke care, as well as dealing with legacy clinical issues such as catheter occlusions. We'll be continuing to look for strategic tuck-in acquisitions to build scale, increase competitiveness and to leverage our capabilities in near adjacencies. As I discussed in my opening comments, our financial metrics of success are consistent with what we've been communicating the last few years. We're confident in achieving these metrics based on many of the actions and programs you'll hear about today. The vision for the company, or our ambition, is to become one of the most admired medical technology companies and one of the best investments in the sector. And we'll achieve this through a couple of things: one, leading the transformation of neurosurgery, driving better outcomes with new techniques and technologies; and secondly, in Tissue Technologies, we'll build out our regenerative technologies platform beyond wound care and expand into new areas, such as nerve, breast, ab wall and trauma soft tissue repair. Together, these 2 goals will enable us to grow faster and increase profitability while making significant contributions to the patients and customers that we serve. So let's talk about Integra's strategy to achieve those aspirations. Here are the 4 pillars of our strategy that drive our priorities to achieve long-term targets. What do each of these pillars mean? Well, let's walk through them. First, execution-focused and engaged culture. It's all about building a team that gets things done and delivers on commitments. Second is optimizing relevant scale and achieving top 2 share positions, and this is about building portfolios that are critical for patient outcomes and provider financial success. Third is advancing innovation and agility. Innovation is the engine of our business. Improving agility means creating a company that can flex and move faster than our larger competitors. We focus on building capabilities that enable faster decision-making and enable taking calculated risks. Fourth is leading in customer experience. We aspire to be viewed as a best-in-class provider in the eyes of our customers. Strengthening our relationships with all customers, we want to be a company that is easy to do business with and doing the right thing the first time. So let's now walk through some of the specifics in our strategy. So consistent with the values of our organization, we recognize our colleagues as our greatest asset. At Integra, we offer a unique work experience. On one side of the coin, a highly professional and large company experience with a world-class training tools and compensation structure. On the other hand, a gritty environment where you get to demonstrate your entrepreneurial skills and take on more responsibilities. It's a unique combination of a small experience -- small company with the experience of larger resources of a big company. We focus on 4 key talent goals listed here, but it's really all about getting the right people in the right roles to drive success. We've seen our employee engagement scores improve, overall voluntary turnover decline, and our diversity in senior leadership roles increase. For example, the number of females in senior leadership roles has increased to 36% and during 2020, our employee satisfaction scores also increased during the height of the pandemic. Also as part of an execution-focused culture, we're building diverse and inclusive teams. It's not just the right thing to do. It's also a priority to get the best of the best into our organization. Our commitment to diversity and inclusion starts at the top with our Board of Directors and me. We own it with the leadership team, and we're accountable to our diversity and inclusion plans through our employee resource groups, which you see on this slide. Each resource group is sponsored by a member of my executive leadership team. Moving to our second pillar in the strategy, which is achieving relevant scale. So if you're looking at the total addressable market on the right side of the chart, you can see that we have a healthy market potential today of approximately $7 billion. This is the market that we see today, but with expansion brought on by some of the technologies you'll hear about, this market will expand with new indications and a combined growth rate of approximately mid-single digits. So from our approximately $1.5 billion of revenue today, we have plenty of room to expand. These markets represent a composite of various niche markets made accessible with common technologies, commercial capabilities and clinical expertise here at Integra. On the left side of the chart are the top brands that we have in our portfolio. These brands represent a large portion of the global revenue in the company and are recognized worldwide in their respective clinical areas. These brands open doors for other brands and also help hospital system contracting. As most of you know, in the health care ecosystem of consolidating providers and payers and resulting price pressures, having a top share position and being relevant in the eyes of your customer is critical for long-term success and differentiation. The third leg of the strategy is advancing innovation and agility. Our investments in R&D over the past few years have yielded returns and resulted in a strong pipeline of new products to drive organic growth globally. We have core capabilities in regenerative tissue engineering, electromechanical systems and plastics and silicone components. And we've increased R&D spending from approximately $60 million in 2017 to $85 million in 2020. And since Orthopedics is also out of the portfolio, a higher percentage of R&D dollars is being allocated to CSS and TT. And this will enable richer pipelines, build more robust systems and sustaining R&D capabilities for a more predictable stream of new products. In the last 4 years, we've also grown our clinical evidence capabilities, reimbursement expertise and health economic skills, all of which have become more and more essential to the future. On the right side of the page are 5 very exciting opportunities. Each of these will be covered in some more detail later this morning, and you'll also gain a really good opportunity to hear from some surgeons talk about these potential breakthroughs. And the 5 that are listed here are neurocritical care, specifically neuromonitoring; minimally invasive neurosurgery; peripheral nerve repair; intracerebral hemorrhage; and also breast reconstruction. Our last pillar is leading customer experience. Our goal is simple. We want to be seen as being easy to do business with. Our customers tell us that we actually do a pretty good job today. But we're investing to make that goal more and more a reality every day. In the area of digitization, we have invested in technologies and systems and processes to improve the way customers do business with us. For example, the development of call center systems and user self-help to access account information, using digital capabilities developed in-house to connect and engage with our customers, and we've made extensive investments in channel expansion. We've invested in Tissue Technologies and Codman Specialty Surgical commercial channels to create specialization and greater focus. We've significantly also increased our commercial and service resources outside of the United States, internationally, to support our sales organization and maximize our support for customers. We've evolved the organization and have empowered our employees to do the right things for our customers. We listen and then we take action and try to reduce as much bureaucracy as we can to do the right thing in the eyes of our customers. So those are the 4 legs of the strategy. And you may ask yourself, how does Integra make sure all of those things get done? What's the approach? What's the operating capabilities? Well, what you're seeing on the page here is the Integra operating model. And our operating model is what we do daily, weekly, monthly, and Glenn is going to spend more time on our operating model shortly and walk you through that in detail. We're actively also integrating ESG into our plans. Our mission of doing well by doing good is focused on many of the attributes associated with ESG. Integra has had a deep-rooted history of ESG values and mindset. It's entrenched in our DNA and supportive of our mission. We're formalizing this strategy and have many things that we do today that align with ESG, starting with the products that we make to the long-standing tradition of philanthropy and volunteerism as well as a focus on safety, quality and our environmental responsibilities. Examples such as our newest facility in Princeton, New Jersey, where we are today, being LEED certified. And as I noted a few minutes ago, the various diversity and inclusion programs also aligned to the spirit of ESG. We're accelerating our ESG journey in 2021, so more to come on this front. I feel quite fortunate to have a gifted board, very much engaged and led by Stuart Essig. In aggregate, the Board has a strong global track record in strategy, executive management, financial experience, M&A and health care. We also recently named Shaundra Clay to the Board, who brings significant health care knowledge and broad-based experience in global financial and health care leadership roles from world-class organization. So welcome Shaundra. This is Integra's leadership team, and I'm very proud of the quality and capabilities of the team that we've assembled here at Integra. Very high-quality experienced leaders in a mid-cap company. As you all know, a company is only as good as the team that leads it, and we're quite fortunate to have leaders with an average of more than 25 years of health care experience. And leaders that are highly accomplished in their respective functions, in guiding complex organizations and managing diversified product portfolios. All of which translates into deep insights, relationships and the wisdom to lead our company. That concludes my opening remarks. And now you're going to hear from the leaders featured on the top of the slide. So back to our agenda. Next, Glenn will be presenting, followed by Bob, after which we'll have a question-and-answer period, followed by a quick break for everyone to finish out the morning. Mike McBreen will then present followed by Carrie Anderson, and we'll end that session today with a second Q&A and plan to wrap up around 12:30 Eastern Time. And with that, I'd like to turn the podium over to our Chief Operating Officer, Glenn Coleman.

Thanks, Pete, and good morning. My name is Glenn Coleman, and I've been with Integra for 7 years, 5 years as Chief Financial Officer and the last 2 years I've served as Chief Operating Officer. As a company, we've made great progress streamlining and improving processes over the past few years. I'm excited to share with you 3 areas today: first, an update on some of the key accomplishments since our last Investor Day; second, a review of our enhanced operating model; and finally, the initiatives that we are undertaking to deliver more consistent execution. There are 5 key takeaways I'll highlight in my presentation. I assumed the COO role 2 years ago in 2019 with an initial focus on enhancing and upgrading the team. Several key changes that were made to drive consistent execution and operational excellence were, first, bringing in a proven global operations and supply leader with Steve Leonard, and appointing a new quality leader, Barb McAleer, who is previously responsible for our operations in our Tissue Technology plants. In addition, we created a new position of Chief Strategy Officer and appointed Sravan Emany to lead the overall company's strategy with increased focus and execution. These leadership changes are supported by our enhanced operating model that I'll cover in just a few minutes. We've also made very good progress on our portfolio optimization plans and have reduced complexity across the company through SKU rationalization and the divestiture of our Orthopedics business that was mentioned earlier by Pete. Most of the heavy lifting for both of these initiatives is now complete, which enables us to increase our focus on growing our core product portfolio. Like many of our peers, COVID has made us adapt to a more virtual environment in the last year. We've moved a speed and agility in a rapidly changing environment with a focus on our customers and patients. Moving to the right side of the chart, new product introductions and delivering 25% of our organic growth through impactful new product launches is not new for us. It's a key element of how we achieve consistent 5% to 7% organic growth. And you'll hear more about many of these exciting product launches later today. Lastly, our M&A integration and separation capabilities are a core competency of our company and a key enabler of our strategy. Let me now move to the high-level commitments from our last Investor Day in December of 2017 and our progress against them. At that time, we had just closed the Codman acquisition, a neurosurgery business with over half its revenues coming from international markets. This gave us immediate scale and a larger commercial presence, especially in Japan and China, where we nearly tripled the size of these businesses. These 2 countries are now the largest revenue contributors outside the U.S. and have been our fastest-growing markets since early 2018 with consistent double-digit organic growth and have outperformed our expectations. Codman also gave us increased scale across Europe, accelerating our international expansion by over a decade with a larger commercial team and expanded product offering to this important part of our international business. We clearly executed well on this complex integration and have realized the bull case for the benefits we outlined for this transformative acquisition. We also indicated that we are well positioned with a robust operating structure to deliver consistent growth and profitability. This is one area where I feel like we could have done better and fell short of the mark, especially on supply, where we didn't have adequate capacity at several of our tissue plants, which hurt us throughout 2019. Over the past 18 months, we've made the necessary changes and investments to expand capacity at these sites to not only meet our long-term demand forecast, but also build adequate safety stock. The end result is we've addressed this area and are on a right path to support our go-forward long-term growth plans. Another area of emphasis was further portfolio management to achieve relevant scale and leadership positions across our portfolio. We delivered on this commitment with aggressive actions on SKU rationalization and divesting Orthopedics, which was an unprofitable and subscale business. And finally, leveraging our IT investments to drive cost effectiveness, agility and differentiated customer service. We made significant progress in this area by moving to one global instance and advancing many digital initiatives. This slide shows a more detailed view of some of our key accomplishments over the past 3 years. I don't intend to go through this detailed list, but we'll highlight several items under technology enhancements, where we've made great progress. We successfully transitioned to a single ERP system. And many of you probably remember, 6 or 7 years ago, our back office was comprised of approximately 30 ERP systems. The benefits of a single ERP is that it allows us to leverage and centralize standard operations, like financial shared services, customer service and supply chain planning. It also helps to standardize data for advanced analytics and accelerates acquisition integration by having a standard global platform where we can add on new businesses. We've also rolled out real-time analytics and rebuilt our enterprise reporting platform from the ground up, leveraging new technologies to provide real-time data analytics in areas such as field sales reporting, financial reporting, operations and many other areas of our business. This rebuild has included a focus on cloud technologies and access for mobile devices. Moving to digital tools and virtual collaboration. We've also continued to invest in technology infrastructure with a focus on resiliency and collaboration. During the pandemic, we had to put these investments to the test, and we've been able to work through these changing workplace dynamics. And I must say, we've actually fared very well. I'm excited to share the progress on our global manufacturing footprint operations and optimization over the past few years. I want you to take away 3 things. First, we've optimized our capacity by closing or divesting 5 noncore, nonstrategic manufacturing sites and also recently announced the closure of a sixth site in France that we plan to exit by the end of 2022. At the same time, we created 4 centers of excellence across the enterprise, 3 for our neuro business located in Massachusetts, Ireland and Switzerland, along with our collagen plant in New Jersey. These centers of excellence are sites where we have deep manufacturing expertise in areas such as machining, welding, assembling and testing for products that require detailed precision and know-how such as our programmable valves. Second, we've made investments in our core plants, where we expect the greatest growth to come from over the next 5 years, including our regenerative plants in Memphis, Princeton and Boston, and that work is now complete. And then third, we have a more cost-effective structure moving forward through the reduced manufacturing footprint and operating in low-cost countries like Puerto Rico. We're now left with a manufacturing footprint that's global in nature, able to produce quality products and staffed with colleagues with deep expertise in manufacturing complex products. This, coupled with a more centralized and efficient service and repair center capability, provides faster customer turnaround times at a lower cost. We've also transformed our distribution capability through a mix of centralization and outsourcing over the past few years. Previously, we had a decentralized structure that was not optimal. And candidly, this was not a core competency for us as a company. As a result, we've now moved to a centralized and regional distribution model that's now fully managed by a third-party provider, or what we call a 3PL structure, with 4 large scalable hubs that cover 95% of our customers, 2 in the U.S. covering East and West Coast, one in Europe and one in Japan, all supported by one global transportation management process. A good example of how we can quickly scale these DCs is our recent ACell acquisition, where in less than 3 months we moved distribution into our network. The benefit of these changes includes a more cost-effective and efficient structure and timely delivery of products to our customers. Let me now transition to our operating model, which Pete briefly referred to earlier this morning. This is how we run the company day-to-day and ensure consistent execution against the 4 pillars of our strategy with a focus on continuous improvement across the entire organization. Given other items we talked about today, let me link the strategic components together for everyone. It starts with our mission. It's our purpose for existing, doing well for our shareholders, colleagues and customers by doing good for patients. That leads to our vision. What we look like when we achieve our mission? It's our destination. We then have our strategy, which are the key tenets we follow to realizing our vision. You can think of this as our blueprint. And then that then leads to our operating model. It's the way we work daily to execute the strategy. And again, you could think of this as our detailed work plan. The how we do it is through our 6 core values of our people and the type of people we attract. How we measure progress and success against this strategy is through setting out our long-term goals, which Carrie will cover later this morning. Pete referenced our 6 core values earlier this morning, so I don't plan to go through this in detail. The important takeaway is these are our core values and drive the how we execute our operating model, with diverse and inclusive teams that deliver results to integrity, teamwork and decisiveness. Let me now move to our next area of our operating model, where we've established a rigorous priority setting and capital allocation process to align with our strategy. Our near simultaneous acquisitions of Codman and Derma Sciences in 2017 created additional demands on our team's time. The goal was to shift the mindset to focus on a smaller set of high-impact priorities or what we call our platinum priorities, which get cascaded down through the entire organization to ensure we have no confusion about which priorities matter at the company. The end result is cross-functional resource alignment, better execution on high-impact business movers, and getting things done, such as key NPI programs. We also reprioritize on a quarterly basis as we complete things and learn from the market. This is done both at the corporate and divisional level, ensures that we are quick to respond to market dynamics. The executive leadership team also does an annual review and a refresh of what we believe is the full potential of Integra. This includes company-wide alignment on key strategic initiatives that need to be funded and resourced in order to achieve our corporate strategy and the defined full potential. The next slide highlights how we're doubling down on our investments in certain core competencies in both operations and quality to support our growth plans. Many of these investments are being made to avoid future supply or manufacturing disruption. Several examples I'd like to highlight include: first, implementing a disciplined business continuity planning process across all of our manufacturing sites and distribution centers; second, minimizing reliance on sole source suppliers and ensuring we have multiple suppliers for critical raw material components; third, creating a more robust short- and long-term S&OP process and global demand plan by leveraging our single ERP instance; and finally, ensuring critical SKUs have adequate safety stock. On the quality side, we're also making investments by moving to a single global QMS system and implementing a global regulatory management system later this year. We believe these and other investments that are listed here will enable faster and more consistent growth moving forward. Moving to the next area of our operating model. As mentioned earlier, we have a robust and proactive product portfolio and market assessment process that's closely tied together. A good example of this is our most recent divestiture. We spent time evaluating Orthopedics. And while we had a strong position in ankle and shoulder, we couldn't achieve a top position in this market given the market dynamics and consolidation that was taking place. So we came to the realization that achieving our strategic ambitions was no longer feasible, and we made a choice to exit. Conversely, in our Tissue Tech business, we've always had a strong position with plastic and reconstructive surgeons in the treatment of complex wounds. With the recent acquisition of ACell, we added to our strengths and broadened out our portfolio to provide these surgeons and patients more options. We're also continuously evaluating adjacent opportunities in neuro, which led to our investment into areas such as ICH and other specialty surgical areas, which include ENT instruments. This aspect of our operating model is very important to ensure we achieve relevant scale and a top 2 position across our portfolio, and we do this really well. Moving to M&A and integration. This has been a cornerstone of our company and part of our DNA that's directly tied to our strategy. Everyone throughout the organization understands the playbook, and we've done numerous transactions, which has really helped to develop this skill set and capability broadly across our organization. In fact, since the beginning of our company, we've done over 50 deals. Our acquisition strategy is supported by a full-time, dedicated M&A team of 9 people who are trained in both program management and integration and have deep organizational and process knowledge, which allows for a highly effective and repeatable process to manage these integrations. Let me highlight our Codman acquisition, which really illustrates our integration capabilities. Codman was the largest, most complex deal we've done in our company's history and a carve-out acquisition of a global business from a multinational company. We received a product portfolio and a commercial team, but no supporting infrastructure or functional capabilities. This carve-out had many aspects to it, including TSAs, TMAs, international infrastructure build-out, manufacturing transfers and regulatory filings, just to name a few. Codman was 8 months of planning between sign and close and had the same leader from beginning to end, including 2 years of post-close integration. I believe if we can integrate a complex transaction successfully like Codman, we have the capabilities to do any type of integration. Learnings from Codman and other deals, coupled with our rigorous process, were also applied to ACell leading to a quick and smooth integration. ACell, a stand-alone regenerative company, was relatively easy to integrate with all critical commercial and operational milestones completed in just four months, highlighting our strong integration capabilities. A key part of our operating model is focused on innovation in niche markets and having a regular cadence of new product launches. You're going to hear about a number of new and exciting launches later this morning from Bob and Mike, and those are shown on this page. I want to highlight the multiple processes and systems that we have in place to evaluate and monitor our R&D portfolio. This is supported by dedicated teams across functions for NPIs and sustained engineering. It starts with our worldwide R&D product planning process to obtain global input on evolving technologies and field-requested features. This thing gets prioritized based upon risk-adjusted net present value to ensure that we're investing in the right opportunities that accelerate growth and maximize the value of our R&D investment. Regular quarterly portfolio reviews are then used to assess project execution, balance resources and manage risk. This process also incorporates early stage or emerging technologies in the regenerative area. This team also evaluates opportunities to determine make versus buy decisions. And a good example would be micrografting, where we're working with a third-party instead of doing it in-house. All of our R&D programs are tracked in our [gensite] portfolio management system across Integra, which enables us to measure R&D productivity by tracking adherence to things such as the budget time lines and our revenue estimates. This has led to improved innovation, better execution and increased output of impactful NPI launches. For example, the number of key NPI launches has increased from 3 launches with about $25 million in revenue contribution several years ago to 10 launches with revenue over $100 million in 2019. Moving to the last area of our operating model. We remain focused on creating a continuous improvement culture. Our digital transformation is well underway with progress being made in all 4 areas: our people, processes, customers and products. Starting with our employees. We've increased collaboration and mobility by leveraging a very strong technology base. This enabled us to not miss a beat as we shifted a portion of our teams to remote work during the pandemic. It also bodes well for lasting efficiencies with better working models for all of our colleagues, including virtual training for our sales force. We've leveraged our integrated ERP investment to build a foundation that enables process improvements and better analytics across all parts of our business. During the pandemic, we dramatically increased our digital marketing efforts with traditional web-based properties and more specific branded properties to help drive awareness and adoption. Finally, we've seen increased collaboration between our various technology functions to leverage digital capabilities for our products. I reviewed our manufacturing COEs earlier. But now I'd like to really focus on a few of our new R&D centers of excellence. We co-located our resources in a cost-effective manner while creating domain expertise at specific sites. Following the Codman acquisition, we've now concentrated most of our electromechanical R&D personnel in new laboratories located in Mansfield, Massachusetts. The R&D teams there focus exclusively on CSS portfolio products, such as CereLink and a hydrocephalus portfolio, and they provide product support for our broader CSS business. Something that we're very excited about is our brand-new 16,000 square foot regenerative medicine center of excellence in Princeton, New Jersey. This facility will be dedicated almost exclusively to our regenerative medicine portfolio. It was built to not only meet the needs of today, but the new generation of regenerative medicine products of the future. This new state-of-the-art lab will allow us to achieve speed and agility by housing all of our regenerative R&D and process development capabilities together in one facility. This facility gives us increased capacity and capability for highly specialized functions to improve research, augment our analytical and testing capabilities and advance new product introductions and exploratory programs. Importantly, the new regenerative center of excellence will house a state-of-the-art skills laboratory. That's going to be fully equipped with the newest video and IT capabilities and will provide a well-outfitted surgical environment to which we can bring in surgeons to help develop and test new product concepts as well as train surgeons on existing Integra products. As you might imagine, our R&D teams are very excited to work in this new facility that's expected to be completed later this year. We have relentlessly improved our responsiveness, agility and cost position across all of our operations. A big enabler has been the deployment of Lean and Six Sigma throughout the entire organization. These tools and processes are increasingly part of how we work every day. We have a very structured set of operating mechanisms in place, which began at the start of every shift at every plant and roll up to our executive level teams weekly. Progress is measured across all aspects of safety, quality, delivery and cost, which allows us to focus resources and investments for maximum impact. Lean and Six Sigma starts with creating a visual workplace where abnormal conditions are quickly identified and can be addressed. You could see some of the photos here in our plant in Ireland, where the entire site has been transformed into a Lean showcase. The benefits go beyond the visuals with improvements demonstrated in all operating metrics. We've not only made significant strides in manufacturing, but also significantly improved overall quality compliance health over the past several years. This is most evident when you look at some of our KPIS, including order performance, where 90% of the audits resulted in one finding or less as well as a significant decline in field actions or product recalls in the past year. It started in January 2020 when we implemented a new organization design, which allowed leaders to focus and go deep versus being spread too wide. This included the hiring of key talent to build core competencies in validation engineering, post-market surveillance, human tissue and service and repair. We also launched the first Lean Six Sigma Green Belt certification program to drive continuous improvements across the entire organization and implemented a quality management system oversight committee to improve our overall quality program. This committee is focused on ensuring all sites adopt the global standard operating procedures, establish best practices and have clear accountability of process owners for key quality system elements to optimize different aspects of the QMS. The key takeaway here is we've strengthened our quality operating mechanisms and reduced quality risk with enhanced rigor, and this has led to better FDA inspection results. Finally, let me now move from core operations to commercial excellence. Our narrowed focus has allowed us to go deeper and cover our customers more closely. We've reimagined our sales channels and supplemented them with specialists to ensure our customers have access to not only a relationship partner, but a true subject matter expert. Bob and Mike will cover this in more detail later this morning. We believe our sales force has more depth in neurosurgery and reconstructive surgical procedures than any of our competitors. We attract talent that want to work with the top KOLs and sell our leading portfolio in these spaces. At the same time, we're making digital and marketing investments, which are supporting our field reps with additional analytical tools, funnel management and quoting and pricing capabilities. This results in greater account visibility, better forecasting and helps to simplify how our commercial teams work with our customers. Lastly, we have a team of enterprise relationship managers that spend time with the top 75 IDNs in the country, and we've steadily grown the amount of revenue through compliant contracts since 2017, which we believe is key to having access into accounts and also our long-term success. So let me now move to my key takeaways. We've accomplished a lot and made great progress towards our goals that were laid out in 2017. But when Pete opened the meeting, he talked about our inconsistent top line growth over the past 2 years. I am confident that we've made the necessary changes and have an operating model, which will deliver consistent execution moving forward, allowing us to achieve our long-term goals, including 5% to 7% organic growth. Our enhanced R&D process has led to a more robust product pipeline, and you'll hear more about this pipeline later this morning from Bob and Mike. Earned through experience, we believe our M&A and integration capabilities distinguish us from the competition. It's a core competency. We've upgraded and invested in our operations and quality functions, both of which should be an enabler of future growth. And lastly, we're well positioned with our go-to-market strategy with strong and deep customer relationships and a large commercial team that will provide us with global leadership positions in niche markets, that being neurosurgery and our regenerative technologies. And a key enabler will be our digital foundation, which should help us continue to transform the company and make us more competitive moving forward. I mentioned at the beginning of my presentation that I've been at Integra for 7 years and never have I been more excited and optimistic about our future. With that said, let me now introduce our next speaker, Bob Davis, President of our Tissue Technologies business.

Thank you, Glenn, and good morning, everyone. It's great to be with you all again from our last Investor Day in 2017. Before I jump in, I'd like to share a little more about who I am and why Tissue Technologies is at an inflection point to deliver growth. I started almost 8 years ago as President of the global neurosurgery business and was then appointed to lead Orthopedics and Tissue Technologies, which is now our Tissue Technologies division. Since joining Integra, our company has experienced tremendous growth and progress. It's been wonderful to see the transformation in both our neuro and Tissue Technologies business. Since we last met, we've done so much in terms of the divestiture of our extremities orthopedics business, the acquisition of ACell and our channel expansions. We've also made significant investments in manufacturing to overcome supply challenges and meet customer demand as well as in R&D to advance our innovative pipeline and expand into new markets. And over this last year, we have persevered through the pandemic, with our team demonstrating incredible strength and agility to continue to serve customers and patients. Our focus, scale and investments in our base business gives us an even stronger foundation for future growth and expansion with a portfolio of opportunities in the regenerative space. There is no better time to be at Integra and in Tissue Technologies. And I'm also excited to share the stage today with key members of our Tissue Technologies' leadership team and most importantly, leading surgeons who are caring for their patients with Integra products. With that, let's jump in. My goal today is to share with you why you should believe these 4 things. We are at an inflection point in this division, and we have built up a lot of confidence around a consistent 7% to 9% growth profile. Our focused sales channels is more stronger today, fine-tuned by exiting extremities and enhanced by the addition of ACell. We have strong differentiation from our competition in soft tissue repair. We are the only company offering 4 different technology platforms to achieve very surgical and clinical objectives, serving our customers through 2 channels focused on plastic and hernia reconstructions and complex wound reconstruction. Our near and midterm investments expand our current addressable markets in the fast-growing areas, including breast reconstruction and peripheral nerve repair. What I'd like to do now is talk about what we shared at the 2017 Investor Day, then I'll discuss the progress we've made since then. If you recall, our previous segment organic growth rate target was 9% to 12%. The extremities market was growing in the teens, and the complex wound reconstruction is beginning to mature. The exclusion of extremities and increase in our mix toward complex wound reconstruction with the addition of ACell brings our overall growth profile to where we've articulated it today at 7% to 9%. We have confidence in this new growth target range based on the market trends we will detail during this presentation. We also talked about our focus on new product introductions and generating clinical evidence for improved market access and reimbursement coverage. Since then, we've accomplished many things. First, as Glenn mentioned, we made the necessary investments to expand capacity to address some of the supply challenges, which impacted our growth in 2019. Despite those challenges, we've managed to launch 15 new products and completed 3 acquisitions. We achieved double-digit growth in ankle and expanded our shoulder platform. More recently, we completed the divestiture of Extremity Orthopedics and acquired ACell, which greatly shifted internal resources and focus toward Tissue Technologies and building up our regenerative medicine platform. Finally, we advanced our long-term regenerative programs. Later this morning, you will hear from Dr. Tom Gilbert, our new Head of Global Research and Development. His experience and dedication to regenerative technologies will accelerate and enhance our innovation in this space. Let me present at a high level what the Tissue Technologies segment looks like today. Revenue is inclusive of pro forma ACell and over $500 million. A majority of the revenue and market opportunity is in the U.S., while the international market for Tissue Technologies is smaller. Our international footprint at 10% of total revenue represents leading brands such as Integra Dermal Matrix, SurgiMend for breast and MediHoney in direct EU markets. We're going to grow 7% to 9% in markets that are growing 5% to 12% with a blended growth rate of about 8%. Building new products, indications and access into faster-growing and larger markets such as breast reconstruction and peripheral nerve repair will tap into the higher side of that growth opportunity. As I mentioned in my opening, our Tissue Technologies division is at an inflection point. In 2015 to '17, we built our technology platform to add several products that expanded our presence into the advanced wound care space through TEI's bovine dermis and Derma Sciences' human placental membranes. This enabled channel and field growth with expansion into the advanced wound care market. Looking at 2018 to '20, a number of challenges confronted the division since the last Analyst Day, including supply limitations where we were unable to consistently meet our customers' demand and COVID-19, which has impacted the volumes of procedures in our core markets. These challenges overshadowed the stronger, more focused commercial team we've developed during these years. Importantly, we also completed foundational work to drive meaningful growth in the peripheral nerve repair and breast reconstruction markets. Today and forward, with stronger operations and new product introductions to make and create new products laying on top of a highly focused commercial channel with execution, we could reaccelerate to hit the 7% to 9% organic growth. Investing in breast reconstruction and peripheral nerve repair, which are higher barrier to entry markets, will enable us to gain and defend leadership positions long term. I'd like to provide a quick view of our division previously with Extremity Orthopedics and today's Tissue Technologies division with ACell. In the sales composition chart, the wound reconstruction category includes all of our regenerative tissue reconstruction products such as complex wound reconstruction, peripheral nerve repair, plastic and reconstructive surgery, or PRS, and hernia repair. This trade-off has enabled us to double-down on wound and surgical reconstructive areas, improving our scale and relevance to surgeons performing soft-tissue reconstructive surgeries. This change represents an inflection point for the division. Extremities was subscale. It was complex to run. And while Extremities is a fast-growing market, it had fundamentally different resource requirements. Now we can shift those resources and investments to a focused soft tissue reconstruction business. ACell adds scale to both our complex wound reconstruction and plastics and hernia reconstruction channels. ACell is also in our wheelhouse. It brings commercial synergies, complements our portfolio and enhances our pipeline capabilities. And as a result, it is accretive to most of our financial metrics. Now let me introduce you to our differentiated technology platforms. Unique to Integra, we have 4 regenerative technology platforms. Our original engineered collagen matrix, which offers optimal porosity and scaffold for dermal regeneration; fetal bovine dermal matrix, which is rich in collagen and has great strength characteristics; human placental amniotic technology, which offers an abundant supply of growth factors; the new addition of porcine urinary bladder matrix via ACell, which features a scaffold that enables constructive wound remodeling. These platforms each have established commercial viability and clinical evidence. From a pipeline standpoint, we are particularly excited about the long-term potential of what some of these platforms can do in combination with one another. Together, These 4 platforms enable Integra to offer clinicians the tools to address the widest range of reconstructive surgical needs. Taking a look at the markets we play in today, these are our 3 clinical focus areas. Starting on the left, our scale and the majority of revenue is in complex wound reconstruction. This category is growing at approximately 6%. Next, we define our surgical reconstruction franchise as plastic and reconstructive surgery, or PRS, the global breast reconstruction market and complex hernia reconstruction. Within this area, our business is shifting from the slower-growing hernia market at 6% toward the faster-growing breast and plastic reconstructive surgery markets at 12%. The third area is another fast-growing area for us in peripheral nerve repair. Here, we are seeing another shift in our business. Today, we only address small-gap nerve repair, which is the smallest and slowest-growing portion of this clinical area. We're entering mid-gap repair soon and plan to expand our ability to capture the fastest-growing components, including long-gap nerve repair in the longer term. If you add up these 3 categories, you get what we define as the soft tissue reconstructive surgery market, which has a blended growth rate of 8%. We have a strong level of confidence in our new targets based on the market trends outlined here and the shift toward the higher end fueled by new products and expanded clinical indications. With our robust technology platforms and attractive markets, we focus on applications to improve clinical outcomes in soft tissue reconstructive surgeries. Our reconstructive tissue products have applications all over the body, both inside and out. And when reconstructive surgeons encounter a wound, they put it back together and reconstruct. We offer a portfolio of tools and solutions to solve these challenging clinical issues. We offer multiple commercial products with clinical evidence, providing value to surgeons who are reconstructing complex wounds. Both breast reconstruction and peripheral nerve are sources of growth. Each presents new and different challenges requiring soft tissue reconstruction. Turning on how we interact with our customers. We approach our markets with over 300 direct sales professionals and over 120 independent dealers in the U.S. Our complex wound reconstruction and nerve team supports a number of surgeon specialties. They are supported by clinical business specialists in nerve, burn and trauma as well as an inside sales team to enable the field reps to focus their time in our larger hospital accounts. This is the team covering complex chronic wounds. We are working with doctors and following them throughout the different sites of care in these integrated delivery networks, or IDNs, and their owned and affiliated clinics. Our amniotic sales are also supplemented by a distributor team focused on the acute setting. Our plastic and reconstructive channel focuses on plastics and general surgeons performing complex hernia repair and abdominal wall reconstructions. This team is supported by clinical business specialists in hernia. This is the team that with the appropriate approvals from the FDA will sell SurgiMend for breast reconstruction. The entire field sales force is further supported by an established contract management team that represents Integra at an enterprise level. This group helped secure GPO agreements and key IDN contracts. Outside of the U.S., we have limited sales of our Tissue Technologies brands through a mix of distribution and direct representation in select markets. Some challenges we've encountered have been price point and competing with lower-cost products in some of these markets. Filling out the portfolio with better cost position products will provide another avenue of growth. ACell's CE marks provide a longer-term opportunity with clinical evidence to expand our tissue offering in Europe. We have limited commercial representation outside the U.S. with the majority of our direct reps in the U.K. and Italy and distributors varying in the degree to which they focus on our core customers. We can add distribution with the right channel focus on plastic surgeons and additional markets to grow. In select markets, we can add direct reps and clinical support to increase our presence with our customers there. In the last several years, the supply challenges our division experienced affected our international business more, solidifying our supply chain and operational excellence investments will allow our teams to sell with confidence, especially our SurgiMend brand, which has done very well outside the U.S. in use for breast reconstruction. Finally, there are a number of countries where we are evaluating growth of our existing products, and we will determine the resources required to bring select technologies to a scaled product introduction with the right channel. Now I'm going to move to a review of the 3 key markets we play in. This is our complex wound reconstruction market, where we are a market leader with leadership in burn and acute procedures. While this market is comprised of procedures that use skin substitutes, we have adjacent opportunities such as flaps, split thickness skin grafts and temporizing matrices or cadaver skin. This is the most established market we participate in, growing 5% to 7%, and this is the market, which represents the majority of our current sales in the division served by Integra's leading brands such as Integra Dermal Matrices, PriMatrix, PriMatrix Ag, AmnioExcel Plus. And now with the addition of MicroMatrix and Cytal, we have continued leadership in burn with the only PMA indication for treatment of life-threatening, full thickness or partial thickness burns and the only one with a specific indication for the repair of scar contracture and labeled for conjunctive use with negative pressure wound therapy. Our growth drivers for this portfolio include clinical and economic evidence, expanded presence and focus on trauma and growth with new products and line extensions. In a moment, you'll hear from Dr. John Fischer, who published the study comparing the effectiveness of Integra skin substitutes to free flap and local tissue transfer procedures in complex lower extremity reconstruction. This research establishes the economic value of our Integra Bilayer product in comparison to expensive, time-consuming flap procedures. I will also introduce you to our new Vice President of Global Research and Development, Dr. Tom Gilbert, who will speak to the benefits of adding ACell's urinary bladder matrix, or UBM platform to our core technologies and will give a glimpse into the possibilities with new products and pipeline. Then Dr. Ian Valerio will share his clinical experience using ACell's MicroMatrix in conjunction with Integra Matrix products and will demonstrate the powerful combination bringing these products together provides. Our sales team is already promoting the conjunctive use of Integra and PriMatrix products with MicroMatrix. Now let's hear from Dr. Fischer.

My name is Dr. John Fischer. I am the Associate Professor of Surgery at Penn, and I am the Director of the Clinical Research Program. I've been at Penn for 11 years and have been on the faculty, this is my sixth year of practice. And much of my practice focuses on reconstructive plastic surgery amongst many other things. And certainly, as many of you know, I have a passion for clinical research outcomes as well as complex extremity salvage. So it's really a privilege to be here with you, and we're going to share some important updates on 2 pivotal clinical studies that have been recently published in plastic and reconstructive surgery. We are fortunate to have both of our articles published in the same issue in March 2020, both published as open access articles, meaning that these are downloadable and accessible to anyone. This is the first part of this two-pronged approach to looking at outcomes. In this article, we explore data on many patients, very complex patients. Really, the complexity relates to 2 primary things: first, how sick and how comorbid these patients were that were treated; and also the complexity of the actual wound that as many of these wounds were chronic wounds, and we know chronic wounds are very difficult to treat and get to heal. And this article, in the simplest summary, demonstrated that, on average, 70% of these wounds were successfully healed and reepithelialized within 180 days of treatment with the use of Integra Bilayer Wound Matrix, which we think is very, very impressive. And in our opinion, these wounds, these 70% of wounds were unlikely to heal. The second study is a little bit more of an advanced study and is a natural extension of this index study, and it looks at a comparative analysis that is comparing the Integra patients to other reconstructive modalities that surgeons would otherwise use, and it looked at 501 patients. And to really simplify this, we used very, very advanced matching techniques to try to make the comparison apples-to-apples rather than apples-to-oranges. But the bottom line was that Integra held its own compared to tissue rearrangement and flap reconstruction. And it's important to note that our institution is a center for excellence in microvascular tissue transfer, and we found that Integra, on average, was again associated with approximately a 70% incidence of success, whereas free flap and tissue reconstruction exceeded 90%, which is no surprise. Now the important findings, and this is really, I think, the first time this has been published or looked at, is that there are significant value benefits to skin substitutes and, in particular, Integra. That is a substantially shorter length of stay, significantly lower hospital-based costs by quite a bit, approaching $20,000 relative to free flaps. A significantly shorter operative time, almost tenfold. And overall, very, very good outcomes. And so this study shows that there is a significant potential economic advantage as well as hospitalization advantage, both in terms of length of stay, operative time and readmission rates, very, very favorable secondary outcomes that we show and highlight in this article. So If I had to boil this down, what this set of data says to me is that we can achieve very, very reliable results with Integra Bilayer Wound Matrix for reconstruction of complex full thickness, soft tissue defects of the extremity. And these results, I think, are very close to, if not as good as certainly in a value perspective, the traditional flap-based approaches for patients.

Thank you, Dr. Fischer. The publication of this data in the very prestigious Plastic and Reconstructive Surgery journal is a significant accomplishment. The data highlights how our most established brand in complex wound reconstruction, Integra Bilayer Wound Matrix, can effectively repair and close wounds in less time and in a more cost-efficient way and demonstrates why this product continues to grow in the market today. The opportunity to remove cost from the overall system by shifting some procedure volume from free flaps to the use of Integra skin has not been included in the total addressable markets we've shared with you. Next, I'll turn it over to Dr. Tom Gilbert to share his excitement about the urinary bladder matrix, or UBM, technology and what's new for Tissue Technologies in the coming years. Tom, over to you.

Hi, my name is Tom Gilbert. I'm the Vice President of Global Research and Development in the Tissue Technologies division at Integra. I've been in the extracellular matrix space for 20 years. I started my career in academia earning my PhD from the University of Pittsburgh and then became faculty there. I then transitioned to industry and led R&D at ACell for 8 years and was also with Miromatrix Medical, where I focused on the development of engineered liver and kidney technologies to address the shortage of transplantable organs. Joining Integra was a terrific opportunity for me to get back to developing products that are closer to clinical care. As Bob outlined earlier, we are the only company offering 4 unique technology platforms to address regenerative soft tissue reconstruction procedures. These include the recent addition of urinary bladder matrix, or UBM, which has been a central part of my career and in academia and industry. In addition to the Matrix technology, which has been a hallmark for Integra, we made our first move to an autologous tissue therapy with the addition of a micrografting technology. Micrografting provides another source of cells from both the dermal and epidermal layer of the skin. Application to a wound has the benefits of reduced donor site morbidity and better aesthetic outcomes in skin grafting. I'm also excited about future prospects for new cell-based therapies to complement our matrix-based technology for wound and surgical reconstruction repair. Opportunities in this area will move us further into regenerative medicine. In the near term, we have both clinical evidence generation and new product introductions to expand our portfolio. I will highlight that we are developing a product that may enable surgeons to prepare a wound for split thickness skin graft sooner. And Bob will be talking about the U.S. launch of NeuraGen 3D later this morning. Midterm, our pipeline includes new product line extensions, expanding the configurations of SurgiMend PRS and nerve repair solutions to support targeted muscle reinnervation, or TMR. Long term, we are seeking a PMA breast indication for SurgiMend, expanding our legacy in nerve with long-gap nerve repair solutions and generating data to support potential regenerative indications that would be unique to this space for our existing amniotic and UBM technology platforms. Again, very excited to be here, impressed with the team in R&D and across Integra, especially with the dedication to advancing technologies and bringing them to patients. Thank you.

Thanks, Tom. I know our team shares Tom's excitement for our joint venture with ACell and its technology platform. The micrografting technology is an interesting one that I'll spend more time discussing in a moment. But first, let's hear more about ACell's products, combined with ours from Dr. Valerio. Please play the video. [Presentation]

Thank you, Dr. Valerio. Dr. Valerio treats some of the more challenging of the complex wound reconstruction cases in the country. And it's great to see how he's found this combination of technologies to help him solve these clinical problems. Most of our solutions address the dermis. Micrografting enables us to help our customers fully close wounds with a solution for epidermal closure and grafting procedures. This will allow us to participate in every aspect of complex wounds from the dermis to the epidermis. As Tom alluded to in his video, we're excited that we're able to enter a distribution agreement with Human Brain Wave for the regenerative micrografting technology in Europe, and we'll be working on plans together to bring the technology to the U.S. market longer term. This technology provides a mechanical process that disaggregates the tissue while maintaining good cell viability. The result is a cell suspension that can be applied to a wound. The product is approved and commercially available in Europe, where clinicians are using this new product to process autologous tissue at the point of care within minutes. Early European clinical experience includes applications for chronic wounds, burns, trauma and wound dehiscences. The global opportunity for micrografting is not included in the total addressable market that we described today. The grafts contain all full thickness skin elements: epithelial cells, hair roots, vessels, glandular cells, muscle cells and mononuclear cells. Near term, this product enables growth in Europe in countries where we have the footprint to sell into wound repair and reconstruction such as Italy and with approvals in the U.K. Longer term, we believe this technology can add incremental growth to our complex wound reconstruction business in the U.S. with the appropriate regulatory approvals and clinical evidence. What I'd like to do now is talk about our surgical reconstruction market, which we define as plastic and reconstructive surgery, or PRS, and breast reconstruction along with complex hernia repair. First, taking the PRS and breast reconstruction markets. This segment is growing about 12% and is nascent to Integra. No manufacturer of acellular dermal matrices has an on-label indication for breast reconstruction in the U.S. today, but this is an objective of ours over the coming years, and we're actively working with the FDA on a pathway to a PMA for SurgiMend. Growth in this segment is largely driven by the increase in surgeon preference of the prepectoral technique, where the implant and acellular dermal matrix, or ADM, are placed over the pectoralis muscle in a single procedure. Moving to complex hernia. This market is growing about 6% and is comprised of biologics such as our SurgiMend ADM and Gentrix UBM products and resorbable synthetics. These more advanced technologies are used primarily to treat the sickest of patients with complex hernias, both open and laparoscopic approaches as well as hiatal hernias. Gentrix, which is new to us through the ACell acquisition, has a specific indication for minimally invasive surgery. Now I'd like to introduce Dr. Adelman, who is a leading breast reconstruction surgeon and sees significant clinical value in SurgiMend for his patients. After Dr. Adelman, you'll hear from Dr. Moses Shieh, who uses Gentrix in robotic surgical repair for complex hernias. Let's turn it over to Dr. Adelman.

My name is David Adelman, I'm a plastic and reconstructive surgeon at MD Anderson Cancer Center in Houston, Texas. ADMs, or acellular dermal matrices, are widely used in plastic and reconstructive surgery. There's no ADM that currently has a specific indication for use in implant breast reconstruction. And although ADMs have become the standard of care in implant breast reconstruction, because there's no specific indication, it's considered an off-label usage. And that presents challenges. And so we really need to work, partner the clinicians, Integra with the FDA to overcome these hurdles. I've been using SurgiMend in my clinical practice for just over 11 years now. There are really no other source materials that, in my opinion, compete with it. SurgiMend allows me to reconstruct patients in ways that I really had no tools to do so without SurgiMend. And so for those patients that have challenges to healing, having SurgiMend integrate quickly become their own tissue really helps them to heal in ways that I can't really provide through other surgical means.

Thank you, Dr. Adelman. It's always a privilege to hear Dr. Adelman speak with clarity surrounding our products and the procedures that support this space. These messages underscore why we're so excited about SurgiMend PRS as an approved technology to solve this clinical need for women's health. We are committed to working with the FDA to provide an approved solution to clinicians to use in breast reconstruction. Now let's hear from Dr. Shieh, who performs robotically assisted surgery for hernia repair.

I'm Moses Shieh, general surgery and bariatric surgery. Using Gentrix for laparoscopic devices or using any biologic, it will be necessary to make sure that it slides down smoothly through what we typically would use is anywhere from an 8-millimeter trocar for robotics as well as a 12-millimeter trocar. And so we found good success in using Gentrix in the sense that it slides very simply through versus -- that's probably -- some of the other grafts or biological grafts, they have difficulty and they get snagged on the trocars and sometimes you end up tearing the graft. So Gentrix really goes in very nicely. And so -- and it handles very easily as well when you're doing a minimally invasive and via laparoscopic approaches where some grafts may not hold their shape or have too much retention or memory lack for a better phrase as it's going through the trocar. And so then you're trying to unravel those -- the graft itself or making it more planer or flat into those areas. So Gentrix has a very good handling as well as it slides through the trocars nicely. And so that's important to have as a surgeon.

Thank you, Dr. Shieh. What a differentiated and unique approach that truly helps improve the patient experience for a complex wound reconstruction such as hernia repair. We're thrilled to have Gentrix in the portfolio with its separate indication and real benefits in practice for a laparoscopic approach. Shifting gears, I'd like to talk about peripheral nerve repair, which is a quite exciting opportunity for us relative to the market and our technical expertise. In this space, today, the U.S. market opportunity is $350 million, which is the repair of short- to long-gap injuries of the nerve and includes conduits, wraps and allograft. Our pursuit of a long-gap solution will allow us to serve a broader and fast-growing market with a 12% CAGR. This expanded market includes long-gap nerve repair and the emerging space of breast neurotization, a procedure that resensitizes nerves following breast reconstruction. Another potential opportunity for us is targeted muscle reinnervation, or TMR, which is not included in the total addressable market pictured here. While not served by currently available products, we may leverage an expansion of our NeuraGen 3D technology or address through other types of mechanical devices. Today, we have a good contracting position with our NeuraGen portfolio of wraps and conduits addressing short-gap repair. Our pipeline, starting with NeuraGen 3D in early 2022, will strengthen our ability for surgeon support to get on contract with key GPOs and IDNs. This innovation has incorporated a great deal of operations capability and organic knowledge. We also plan to build up our clinical evidence and training in the space with the introduction of new products that enhance our presence in peripheral nerve repair. Next, let's hear from Dr. Mithani, a leading plastic and microvascular surgeon, who helped us develop the exciting new technology that we'll be launching next year.

My name is Suhail Mithani, I'm a plastic and reconstructive surgeon at Duke. My practice is focused on hand and extremity reconstruction. I take care of patients who have significant upper and lower extremity injuries that involve repair of bone, soft tissue as well as nerve. We have a limited number of options available for repair and adding additional tools to our armamentarium is really key to being able to provide better care for our patients. The nerve space is one in which there are significant opportunities to improve outcomes, and this happens primarily through innovation with new products and new research coming to bear. I think NeuraGen 3D represents really the first product that has been designed and developed intelligently based upon our understanding of how nerves truly regenerate. And as such, I think it provides a significant bridge between hollow conduit repair and allograft repair and can really make a difference in terms of how we approach nerve repair and is a significant leap forward for the field.

Thank you, Dr. Mithani. You've just heard from one of our key opinion leaders who has worked with our research and development team to develop an innovative solution to improve nerve gap repair using a conduit. Let me tell you more about this new product, which is less than a year from hitting the market. Here is NeuraGen 3D, our nerve guide matrix which delivers an optimized environment that may allow for a more complete functional recovery following mid-gap nerve repair when compared to hollow conduits alone. Customers are seeking innovation to solve these clinical challenges in short- and mid-gap nerve repair. NeuraGen 3D's unique intermatrix has porous channels to accelerate axonal growth. Faster axonal growth is an important clinical objective in nerve repair and restoring function. This product has had a long development time line, largely due to how difficult it is to make. Our differentiated capability to scale and manufacture regenerative engineered collagen is a unique advantage for us here. Our dedicated nerve business leaders and the scale of our complex wound reconstruction channel has the expertise and reach to introduce this innovative product to plastic and orthopedic hand surgeons. We will be targeting the roughly 2,700 hand surgeons in the U.S. at over 250 sites, including the nearly 90 hand fellowship programs in the U.S. With that, I'd like to introduce Ruth Fleming, Vice President of Global Marketing for our Tissue Technologies division.

Thank you, Bob. Hi, everyone. My name is Ruth Fleming, and I'm the Global Vice President of Marketing for Tissue Technologies. I've been with the Tissue Technologies business since 2017. When we first laid the foundation for a complex wound reconstruction channel expansion to drive growth in the OR. Today, I'm excited to talk about commercial innovation in that space. Our customers face many challenges when dealing with complex wound reconstruction surgeries. Wound types might include a deep large burn, an orthopedic and soft tissue traumatic injury, an oncology-related reconstruction, limb salvage or surgical chronic wounds. And often, the patient has comorbidities that complicate the procedure and outcomes. Infection is also prevalent in wounds, and burn patients are especially at higher risk. It can take many weeks to regenerate the dermis or support the healing process following the surgical procedure. As we race against the clock, the risk of complications becomes even greater if the product does not perform as expected. We stand with our surgeons and behind our products and guarantee performance. IT TAKES, OR WE GIVE is our innovative product performance pledge, where we share risk with our customers that our products will perform as expected. If select products do not incorporate, Integra will replace the product at no cost to the facility. With over 300 surgeons already enrolled in the U.S., we anticipate reaching 1,000 surgeon enrollments this year. We project that this program will differentiate us from competition and increase product utilization due to confidence from surgeons as well as purchasing and other administrators, who are focused on the total cost of a patient's care and recognize that getting it right the first time is a better economic result for their hospital and a better outcome for their patients. Recently, we launched 2 new brand campaigns that are based on extensive research with our customers to understand how the Integra and PriMatrix brands occupy a unique place in their minds. Our first brand campaign addresses Integra Dermal Regeneration Template used in burn. Restoring lost function and joint mobility is a critical requirement of surgeons, particularly in hand, neck and face cases as well as upper and lower extremities. When treatment is unsuccessful, limited flexibility and scar contractures can develop, reducing the overall functional recovery. Integra Dermal Regeneration Template is specifically engineered with a 3D matrix and open pore structure. Integra promotes high-quality regeneration of functional dermis. With proven clinical excellence, Integra has demonstrated to improve function in critical areas that matter most, and is associated with the most extensive body of research any dermal matrix with over 300 published studies. Compromising won't get you far. There are other competitors, but like the blue floating tire implies, making compromises on synthetic materials, non-PMA and few clinical studies won't get you far in a serious race for successful patient outcomes. Our second brand campaign addresses PriMatrix Dermal Scaffold (sic) [ PriMatrix Dermal Repair Scaffold ] for complex wounds managed in the OR. Complex wound reconstructions come in a wide variety of types, diverse surgical situations and may occur throughout the body. PriMatrix and PriMatrix Ag is an adaptable solution for the most challenging wounds. Composed of fetal bovine collagen, PriMatrix has a robust architectural design, a preserved structure with a porous matrix to help repair dermal tissue. PriMatrix has successful clinical results with studies in a wide variety of wounds and has a broad portfolio offering with multiple sizes and configurations to conform to any wound. When a dermal scaffold helps you adapt to any challenge, it stands out. We have launched both of these new brand campaigns digitally through advertising with industry associations on social platforms and with supporting tools for our sales force. Complex wounds represent a substantial burden on the health care industry with costs in the U.S. alone estimated at over $10 billion annually. These wounds are often multifaceted, making treatment tremendously difficult. You've heard about our 4 technology platforms. And in complex wound reconstruction surgeries, there is a unique positioning for each of these products, giving Integra the broadest portfolio of skin substitute solutions. MicroMatrix and Cytal facilitates rapid tissue formation. This is because the UBM technology is a noncross-linked scaffold, allowing for rapid resorption while facilitating cellular infiltration. Additionally, MicroMatrix can be used in conjunction with sheet products like Cytal and now with Integra Wound Matrix and PriMatrix as the particulate configuration provides thorough contact with the regular areas of the wound bed. Integra Dermal Matrices help restore lost function in joint mobility for wounds in functional anatomical areas like the face, neck and joints of the extremities. Third is PriMatrix. It's an adaptable solution for challenging wounds, positioned where wounds may have high potential of shearing forces or increased areas of pressure and friction, such as the back, torso, arms and legs. PriMatrix has a robust structure to help resist the breakdown in challenging wounds. Lastly is AmnioExcel Plus. AmnioExcel Plus progresses stalled wounds that are trapped in the inflammatory phase. AmnioExcel Plus maintains the inherent extracellular matrix, cytokines and growth factors that are found in placental tissue. It is easy to handle and conforms to the wound surface. With this portfolio lineup and our specialized sales team, we are well positioned to reach more wound reconstruction surgeons and patients and help health care systems achieve greater value and efficiency through single sourcing and contracting. Now let's hear from Dr. Mohan, who will share his experience with AmnioExcel Plus and PriMatrix, demonstrating the value of a multi-platform portfolio.

My name is Pradeep Mohan. I'm a plastic and reconstructive surgeon. I also do hand and upper extremity reconstruction as well as complex wound and wound care reconstruction. I'm currently practicing in Live Oak, Texas, primarily with the Northeast Methodist Hospital (sic) [ Methodist Hospital Northeast ] and the entire Methodist system here in San Antonio. So we have a number of patients that have a number of medical comorbidities. So they range anywhere from younger patients with complex traumatic issues, a lot of wounds and things that come up from their -- based upon -- from motor vehicle accidents or other injuries, all the way up to our patients that are in their 70s or 80s with multiple comorbidities, complex pressure ulcers, low extremity diabetic ulcers and wounds like that, along with -- well, we use the upper extremity trauma as well. And we also treat general reconstructive classes. By using the AmnioExcel product, helping to build up some of the tissue and improve some of the vascularity, that's one thing that I've noticed when I've utilized the graft, has been very effective in actually building up that tissue and that tissue base and actually having that wound start to heal and improve in this overall growth information of granulation tissue. Subsequent to that, with the PriMatrix, we've used that as an improvement in the overall tissue layers and the thickness of tissue we can get over a lot of these wounds.

Thank you, Ruth. Over the longer horizon, we have the opportunity to expand how we address our 3 focused markets: complex wound and wound reconstruction, hernia and global breast reconstruction or surgical reconstruction and peripheral nerve repair. Expansion in complex wound reconstruction is enabled by continued scale and leadership with our focused channel, including our 2-tier specialist model, digital innovation and international growth. On top of that scaled infrastructure, we can drive further expansion with economic value to health systems and added patient value in innovations. We also have significant opportunities with ACell's urinary bladder matrix, or UBM, platform and emerging technologies such as micrografting. We can keep pace with our growth through leverage of ACell in the complex hernia market and position in growing robotic and minimally invasive procedures. We expect a shift in our mix toward breast reconstruction and peripheral nerve repair due to our investments in new products and expanded indications. Breast reconstruction can grow with a U.S. approval for SurgiMend via the PMA pathway. Peripheral nerve repair will be a growth engine for us by the way of our innovation with NeuraGen 3D and other product expansions that can open up the fast-growing segments of that market to us such as long-gap nerve repair and TMR. As we wrap up, I hope you can feel our excitement from our team and customers for our current and future growth opportunities in Tissue Technologies. Here are our key takeaway points. The Extremities divestiture and ACell acquisition represent an inflection point for the Tissue Technologies division. We are focused on fast-growing markets averaging a CAGR of 8%. We have confidence in delivering consistent 7% to 9% organic growth. We have differentiated platform technologies that offer long-term potential to extend our leadership positions. We are entering exciting new markets within breast reconstruction and peripheral nerve repair, which will move us towards the higher end of our growth range. Thank you. And with that, I'd like to take a pause for the Q&A session. Mike Beaulieu will take over from here. Mike?

Thanks, Bob. So we're now going to begin the first of 2 Q&A sessions. As a reminder, there's a dialogue box on your screen that allow you to submit a question. We're going to focus this Q&A session on presentations from Pete, Glenn and Bob, and we'll take as many questions as we can until about 10:40 a.m. Eastern Time, at which point we'll pause for a short 10-minute break. So with that, let's move to the first question, which is for Pete. Looking at your ability to achieve your LRP of 5% to 7%, what's different this time versus 2017?

Thanks, Mike, for the question and for those that have submitted. I know we've tried to, if there's similar questions, kind of consolidate some of them from a few of you. But look, as we've discussed, we've consistently delivered on our margin commitments. And as I mentioned, I think Glenn as well, we talked about -- our focus has been operationally and capability-wise to be able to consistently move our growth further up. We've probably been more, the last few years, a 4% grower than a 5% grower, we're not walking away from that. But we've put in place many of the things that need to happen to be in that 5% range. And I would say, look, we feel as confident as we ever have that we can do that. I would say there's probably 4 things, as I reflect on it, that play into that. One is you can't walk away from ortho out of the portfolio. We had aspirations to be a bigger leader in orthopedics. We had a good start with ankle, some other plays. But the fact is the way the market has shifted and changed price pressure, consolidation, larger players, we never were really even at the market level growth rates, and so we're always playing catch-up. Whereas our current portfolio, which is significantly more focused, is going to just reduce variability quarter-over-quarter, year-over-year just because of the brands and the level of growth that they're at. I think the second thing past focus is really the new processes and tools. I mean Glenn went through this extensively. We covered this in purpose to give you a real look under the hood about what we are doing differently, how we've addressed supply issues, how we've taken a look at execution issues. And so that's been a big part of the last few years of focus, which we've shared with you on quarterly calls. Our market expansion plans and new indications are a big deal. You've heard some already. You're going to hear more when Mike comes back up. That's an important part of it. And I'd just say the last -- I'd kind of paint this picture in your mind. In the last 2 to 3 years, if you did a pie chart of where my leadership team, the top 100, has spent their time, the chart would probably lean closer to 60% focused on internal change and 40% focused on external growth. On the view forward, really, that pie chart should be 60% plus externally, how do we gain PMAs, the growth, channel expansion, working with clinicians and less internal. Why? Because we've already done a significant amount of change that needed to carry our platform going forward. Mike, what's our next question?

[ Indiscernible ].

So I'm assuming this is a growth question. I'm assuming or I'll address it that way, and we can come back later if not. But from a growth standpoint of 5% to 7%, I would say if you frame it up this way, from a low-end standpoint, just consistent execution without having ongoing related issues is what we've been focused on gets us into the 5% range. Clearly, for this year, in 2021, coming off of the COVID year, we're going to be much above that in a 12%-plus range. But I think on our go-forward basis, that's how we think about it. If you go to the other end of the spectrum and say closer to 7%, well, it's delivering that consistent execution, but more growth around geo expansion. We've heard Glenn speak about China, Japan, other markets internationally and many of these NPIs. And I would say, think about the NPIs this way. We need singles and doubles. We don't need triples and home runs to get to that upper end of the range. So what's beyond that? Could you get above the high end of the range? Look, this is about thinking broadly in the future, the opportunity with M&A, which isn't contemplated in the 5% to 7%, that's an organic number as well as multiple of the NPIs you're going to hear about having significant success, that's the opportunity to get above that. And we're not going to try to project what those levels could be today, but I think, over the next couple of years, we'll be constantly reporting how we're doing against that. Mike?

Okay. One more question.

One more question for me?

Yes.

Sure you don't want to go to somebody else, Mike? Go ahead. What's the next question?

So can you comment on your 2017 aspirational target of $2 billion in revenue?

Yes. So it's a fair question. We didn't have that number up there. And back in '17, we used the $2 billion number, I would say, as a proxy for how to describe the size of a company we needed to get to, to be at scale. And the scale then was to correlate to how we could then drive to 28% to 30% EBITDA margins, right, because we were diffuse in a lot of different things. I would say, with the focusing of the divestitures that we had, that number today is probably closer to $1.75 billion to get to -- $1.7 billion, $1.8 billion to be at scale because we have focused the company. Now that's the point about the -- of how that relates. I would say, relative to our growth, we have every aspiration to get to $2 billion and beyond. And I think a big chunk of that is going to come through add-on M&A to get us through a number that's north of $1.8 billion from a kind of nominal level of organic growth over the next few years. But again, the reason for that metric we used it back in '17 was what size do you need to be to have margins that could be 28% to 30%? Well, we're almost there. In fact, with the growth we're projecting today out through 2023, we'll be there. So that was really the purpose of it. So Mike, back to you.

Okay. There's a couple of questions for Bob Davis. First question is around peripheral nerve repair. This is an area that Integra created. Why are you so confident in the growth of the nerve portfolio? And can you elaborate on the timing and the regulatory pathway for mid- and long-gap nerve repair?

Okay. So good morning, everyone. So I'll capture those and report those out, Mike. So I would say just our sheer expertise and subject matter expertise in science around this space, as you stated, being a leader in that space, really helps us with our confidence looking at the market. As you guys saw in my presentation, $350 million market today with double-digit growth up to over $600 million through that time period. So with the current portfolio of our collagen conduits and wraps, we have a lot of differentiation in that product and a differentiation relative to the competition. So with the innovation of NeuraGen 3D, that will then allow us to move into that -- from that short into that mid-gap where we estimate about 30%, 35% of that addressable market that we're actively working on today. As everyone knows, we don't break out the details of our peripheral nerve product areas, but we're very confident that we can more than double our nerve business today over that time period. So today, where we're in about 10% of the overall portfolios' revenues. We're looking to get into the 15% area in 2026. And I think from a NeuraGen 3D perspective, we have FDA clearance. The designs are locked. The validations are in process. And I think as I'm looking at my -- Dr. Gilbert here running our R&D organization, we've never been more confident in that Q1 2022 launch readiness. The product has a lot of differentiation around it. It stabilizes the collagen structure. It enables the cells to migrate directionally. So it really aids in the acceleration of those mid-gap repair items. And then as far as long-gap goes, we're looking at multiple areas to address that space. So we're not going to offer specifics here on what that final decision will be. It may be multiple ways that we go at it, but we're definitely looking at that long-gap repair in the mid range.

Okay. Thanks, Bob. Next question is also for you on breast reconstruction. Why is this the right area to focus on for growth?

Yes. There's a lot in there, Mike, in a short question. I would say, look, I would -- as you heard from Dr. Adelman, who I think gave a pretty powerful presentation, currently, no manufacturer has an indication for safety and efficacy in breast reconstruction today in the U.S. Now 2017, we did receive a CE mark in Europe for a breast reconstruction indication. And from that, we have a lot of clinical evidence that we'll be utilizing to aid in our assistance to validate that PMA and that indication in the U.S. So it's really leveled the playing field. So if I just get back to the headline here. The dilemma right now is with the increased rate of breast cancer, so impacting 1 in 8 women, and a lot of proactive choices for women moving forward here, I think, is the dilemma as well as the opportunity. And as you heard from Dr. Adelman, if I just capture what he talked about, SurgiMend offers up unique attributes for breast reconstruction. It rapidly revascularizes. It integrates to build more natural tissue with less complications. And in our bovine ADM, it's a more of a reliable source and consistent tissue supply for the surgeons. And the product is conformable and flexible, which is a patient advantage as well. So I think just kind of capturing that headline, I think, is important to kind of get everybody grounded why we're very excited about this space. And as you saw with some of the growth opportunities there with surgical reconstruction, there's a lot of double-digit growth over that period of time. So right now, we talked about the market currently being about $500 million, moving to about a $900 million market for ADMs. Also just another interesting factor is 8,000 plastic reconstructive surgeons in the world globally and about 7,500 of those in the U.S. So again, opportunities in the States. We're feeling good about our progress in working with the FDA to obtain that specific indication for the subpec breast construction. And we're staying very close and working collaboratively with them in the process. And as Dr. Adelman stated, it's really important that not only clinicians, vendors are working cooperatively there along with patients as well. So we anticipate submitting for the PMA later this year. I think that's as far as we'll go on the timing of that, but we're looking forward to that. And part of that, it's a multitiered program. So not only subpectoral, which is in the immediacy, we'll also be looking to submit for a prepectoral, which is a procedure that, over time, will be a larger part of that total procedure volume for breast reconstruction. And then not necessarily specifically related to the breast reconstruction piece, but we're looking at new configurations for that soft tissue surgical repair around shapes and sizes and different things that will really help the surgeon over time with those surgical techniques and the surgeon needs relative to patients, et cetera, in those procedures.

Okay. Thanks, Bob. A couple more questions for you since you had such a good presentation.

Let me get some water, Mike.

With the FDA up-regulating some tissue products, does this represent an opportunity for Integra? And if so, what product categories can benefit?

Yes. Absolutely. So the first answer is yes, we agree as well. I think increasing those barriers of entry for us is a huge opportunity. So with the divestiture of Extremity Orthopedics, we've really enabled kind of rigor and focus on our leadership in growth in regenerative soft tissue reconstruction. And I think we have a good idea of understanding that PMAs and BLAs will be critical paths forward, and we've invested heavily in building that capability in our global operations and the subsequent functions around R&D, regulatory, clinical and market access. And the FDA has recently clarified their guidance on the differences between HCT/Ps versus BLAs for human tissues as well as clarifying the requirements for a PMA for specific breast reconstruction indications. So both of these clarifications provided opportunities for us. And as we've discussed, we're actively collaborating with the FDA to develop a potential pathway to obtain approvals to -- for the market and our surgeon and PRS for breast reconstruction. And I guess with regard to the overall human tissues piece of this, we're evaluating potential, what we'll call, regenerative indications that would be the first of their kind through the biologic license application, or BLA pathway. And with more tissue-based products pursuing the BLA pathway, there will be greater clarity regarding the requirements for successful approval. And this increased clarity may open up opportunities for approvals to other platforms and our unique technology platform. And I think, lastly, Mike, this is going to be a very important aspect for us to make sure that we have that clinical efficacy and the safety requirements and ultimately will come in for reimbursement requirements will be important moving forward that we're actively investigating and investing in.

Great. Thanks, Bob. I've got a couple more for you. Can you talk about the key catalysts that you mentioned in the Tissue Technologies business that can drive revenue growth in 2022 and 2023?

Yes. Look, I would say, first off, in our business, COVID recovery had some real impact. So if you look back at procedures that didn't happen, so significantly lower volumes in not only burn but trauma. The COVID recovery and that faster ramp that we're anticipating in the second half of the year is very real for us. So think about burn, trauma. And then on the recovery and pent-up demand, think about surgical reconstruction and breast reconstruction in that pent-up demand in some of those deferred cases. And then even in complex hernia, unless it becomes an acute procedure, also, there's opportunities there. So I would just say, simple things like the pent-up demand and those increased procedures as people get back into their everyday lives around trauma and burn. I think also our focused channel that's really come to light here in this reconstructive space really adds an advantage to us. So think about that pivotal study that Dr. Fischer talked about from Penn where you have clinical benefits, clinical efficacy as well as an economic advantage are things that the sales force is out there talking to our customers today. Also high on the list is ACell. We couldn't be more excited to have ACell in our Integra family of products and the expanded portfolio and what that means to us. And I think you'll see some increased ramping there because, again, think about where ACell's focus. They're in burn, trauma as well as hernia. So those Cytal, MicroMatrix, and Gentrix focused on those areas offers up an opportunity for us. And then one of the ones that I guess if we could go back and talk about more about, I think the PriMatrix pivotal study that's expected in the first half of 2022. We're looking to increase our covered lives with that study, which was a randomized controlled trial that really talked about the advantages of PriMatrix with standard of care versus standard of care alone. And there were significant advancements that we could get into at another time about the outcomes of that study. But currently, we have about 100 million covered lives with PriMatrix, and soon to be, as we anticipate, over 240 million covered lives, which will really help our efforts in a focused area around outpatient chronic wound care. So we're very excited about that. And I think last but not least, what I talked about earlier with the introduction of NeuraGen 3D in early 2022.

Great. Thanks. I have one last question for you, Bob, on the private label business. So what is the expected growth rate of your private label business relative to the corporate average?

Yes. And look, so just for those, our private label business is about 25% of our global Tissue Technologies division, and this includes products that we make for large medtech companies and markets where we do not have direct representation, so some of these markets, including spine, traditional wound care and dental. And again, as I stated, or will state, I think we believe the private label business can grow in line with our corporate average, which is mid-single digits. We're investing in this business. We feel very good about where we've taken the business over the last couple of years and getting very grounded strong operations, as Glenn had talked earlier. And we think -- and now we're investing heavily in gaining some of those new partners for products that we currently have, and then over the next few years, entering into some new areas where we're going to be leveraging, as Glenn spoke about, our current manufacturing space and some of those core technology pro forms that can add to the overall growth. So all of these opportunities are in markets outside of our direct channel focus. And I think those -- a few of those areas we're evaluating for growth in the near term would include spine, veterinary and cardio. So we're really excited about the private label business moving forward.

Okay. Thanks, Bob. We have a question for Glenn. And the question, Glenn, is how is Integra working to introduce more diversity to its business leaders?

Yes. Thanks, Mike, and good morning, everybody. I think, first and foremost, having a diverse workforce and an inclusive culture is clearly a business priority for us and really key to long-term success of the company. As Pete showed earlier, it really starts at the top, from our Board level all the way down through the organization. And if you look at the executive leadership team, as an example, we've got 6 out of the 14 that are diverse leaders in the organization. Still have room to go, but nevertheless, making good progress. And even across our top 100 leaders in the company, we're about 36% that are diverse. And if I'd look just a few years ago, it's probably closer to 20%. So we're making good progress there. We're also driving a lot of diversity through our commercial organization, and big part of that is through our succession planning and making sure that we have upward mobility with a lot of our diverse candidates in the commercial team. So I would say on the whole, we're obviously very focused on it. You saw some of the initiatives we've got across the company. We rolled out micro and equities training. We've got a number of different employee resource groups that are across the company, whether it be the African-American affinity group, the Indian-American affinity group and so forth. And I think we're really making good progress. But obviously, it's a key focus for us as we move forward.

Okay. Thanks, Pete, Glenn and Bob, for the answers. We're going to take a short 10-minute break right now, and the presentation will resume. There'll be -- there should be a countdown timer on your screen. The presentation will resume with Mike McBreen. So thanks very much. [Break]

Good morning. I'm Mike McBreen, President of CSS. Today, I'm excited to provide you with an overview of the CSS business and an update on our continued plans for growth and innovation. Since our last Investor Day, we have demonstrated strong execution and are accelerating to the next phase of our strategic plan. I became the President of CSS in June of 2020 after several years of leading the Integra international business. I joined Integra in 2017 as part of the Codman acquisition from Johnson & Johnson. During my career at J&J, I had the opportunity to help lead the neurosurgery business as well as the neurovascular business globally. With my neurosurgery background, I can truly appreciate the magnitude of the opportunities before us. I'm excited to share those with you today. Supported by 5 key messages, our story today will be focused on our strong leadership across the globe as well as our opportunities to transform care. We are proud to be global leaders in our markets. As you may recall, in October of 2017, Integra completed the acquisition of Codman, which equipped us with a market-leading portfolio on a global scale. The integration of the Codman business provides us the capability to leverage the strength of our broad portfolio and the scale developed post acquisition. Today, with this established foundation, we have a deep and proven product offering across many neuro disease states. In addition, we have invested in innovations, which will change the practice of neurosurgery. Today, you will hear about CereLink, which will take neuro critical care monitoring to new levels; Endexo, which will help to solve the greatest unmet needs in the EVD and shunting space; and the Aurora Surgiscope, which will allow for minimally invasive approaches for both neurosurgery and the treatment of intracerebral hemorrhage. Our product pipeline will introduce several transformative approaches to our customers over the next few years. In addition, we have been very active in launching our new products. Our innovation cadence within our key markets has played a major role in our sustained growth. Our expansion efforts have increased our leadership in most regions of the world. We have also invested in growth drivers to help develop the markets we serve. For example, clinical and economic data, which has created value providers and payers. We have also expanded our portfolio in China and Japan by partnering with locally sourced products to help complete our selling bag. These partnerships allow us to get to market faster and drive growth quickly. We have a large, highly skilled commercial network, and we are confident this asset will continue to deliver strong growth and is positioned to execute on future innovation. Investments in new adjacencies, such as intracerebral hemorrhage and minimally invasive tumor removal, gives us the opportunity to transform the neurosurgical space and provide solutions to unmet needs for physicians and patients. These strategic initiatives and investments provide a strong foundation for the CSS business to successfully deliver organic growth in the 3% to 5% range. As we think about our growth, we are committed to the 3% to 5%. But with our comprehensive portfolio, we have a path that could accelerate growth higher than that range. As an example, you will hear today about the Aurora Surgiscope, which I mentioned earlier. We view this as a potential transformation technology for this design to evolve aspects of neuro care. So with strong execution and market development, we could deliver accelerated growth. As these types of programs progress, we will update you on our outlook. As we reflect on the plan presented in December of 2017, we are pleased with our progress and focus. The foundation we have built supports our execution and strategic plan focus. The integration of Codman was an immense undertaking. Today, we are pleased to report that it went well. The global integration of this size, which was a carve-out of a large player, is a tough task. By any definition, our integration of Codman was a wild success. We have completed all integration items, except for the final stages of our TMA agreement, which we expect to complete by year-end. Our ability to integrate the Codman business globally showcases our confidence in executing future deals in our market space. The global scale gain with this acquisition has positioned us strongly in the market, and we have capitalized upon several growth opportunities. In addition, we have launched 12 new products and registered existing products in new countries. These introductions were significant and are still adding growth to the business. Our approach to innovation has also evolved with a more robust approach of working closely with key opinion leaders and a rigorous approach to obtaining voice of customer. We have also leveraged our position as a global leader in neurosurgery and innovation to drive strong growth in both China and Japan. I'll elaborate on both markets later in my presentation. Also, we expanded our portfolio by acquiring 2 early stage innovations. The first was Arkis, which focused on providing surgeons with a solution for the occlusion and clogging of EVD catheters. We have commercialized our first-generation product with additional innovation to follow, along with expansion of this technology into the shunt space. By combining the Endexo Technology with our industry-leading BactiSeal technology, we will provide the market with a unique device that delivers both antimicrobial and anti-occlusion benefits, solving the top 2 unmet needs in this area. The second acquisition, which was Rebound Therapeutics, created the opportunity to transform neurosurgery by introducing a minimally invasive approach while also bringing new surgical approaches to intracerebral hemorrhage patients. I will cover this in greater detail later in the presentation. To frame up the next sections, I would like to give a brief overview of our CSS business as well as 2 business segments. As you look at the CSS business, a few things are important to note. We're the market leader, and that is driven by a very broad and strong portfolio with 14 market-leading brands. We have an extremely knowledgeable and tenured sales team located around the world, which is made up of over 460 market experts. We have a nice mix of U.S. and international sales, with 63% of our revenues coming from the U.S. and 37% from the international countries. Our overall markets grow at 3% a year, with many geographical regions as well as product segments growing faster. Our business delivers over $1 billion of revenue a year and is well balanced across our product franchises. Our total market opportunity is $4.8 billion, growing to $5.4 billion by 2025. This is fueled by increasing demand and expansion due to recent acquisitions in new market segments. We are positioned to leverage the large global scale created over the last few years and deliver our new innovations to the market. We are also a leader in surgical instruments with a portfolio, which is built on well-known, high-quality brands. As you can see, the instrument portfolio delivers over $200 million in revenue each year. We have consistently grown quicker than the market. With strong market knowledge, our performance has been strong. This business generates attractive cash flow, and we have proven the ability to win in this space. Moving forward, we will strategically invest in faster-growing specialty instrument areas and adjacencies such as ENT and MIS. For example, we are creating new instruments designed to work specifically for the Aurora Surgiscope, which will create a much smaller surgical assets approach that, in return, will result in less tissue disruption than previous techniques. We see this playing out as new product offerings as well as bundles that help -- will help create surgical efficiencies. We're also focused on leveraging other internal strengths like our enterprise contracting approach to maximize our potential in this space. Our neurosurgery business delivers about $770 million a year and is growing at mid-single digits. Today, it's the largest business within Integra. We participate in a $2.8 billion market, which puts us in a leadership position, and equally important, gives us room for growth. We command a leadership position in this space due to our deeply entrenched strengths in the management of neuro disease states such as brain lesions, hydrocephalus and traumatic brain injury. This foundational strength allowed us to further expand into adjacencies like hemorrhagic stroke and minimally invasive neurosurgery. We are excited with the geographic growth opportunities we have globally in our neurosurgery business. Our portfolio supports a wide range of neurosurgery complexity. Today, we support the most developed health care markets in the world as well as developing areas with more focus on traumatic brain injury. Let's move on to a deeper look into the markets we play in and how our portfolio positions us to grow and win, and a few examples of our strategies. We estimate in today's market, taking into account our current portfolio, the demand for neurosurgical products generates around $1.7 billion in global revenue each year, with an estimated growth rate of around 3% to 5%. However, we anticipate continued expansion due to our vision of the market and our plans to develop new approaches in neurosurgery. Neurosurgery is always at the forefront of our strategic focus. The impact our products make to the quality of the patient's life is important to our organization. As a market leader, we will continue to drive innovation across neurosurgical specialties. For example, the markets we support today include the products used to treat brain lesions via craniotomy, hydrocephalus via implantable CSF shunt systems, and traumatic brain injury in post-craniotomy patients via brain pressure monitors and CSF external drain systems. Moving forward, we will also have targeted smaller, less developed markets where we see significant unmet needs and the opportunity to enhance neurosurgery outcomes. We will focus on intracerebral hemorrhage, also known as ICH, as well as brain tumors using tools, which would combine minimally invasive access with effective easy-to-use visualization. The potential for these products may be as much as $1 billion globally. It may increase overall neurosurgery market growth by up to 6%. The upcoming launch of our CereLink monitor will drive significant global growth as well as physician and patient benefit. We view this as a breakthrough evolution in neuro critical care monitoring. We anticipate launching the product in the near future and have already obtained our CE mark and FDA 510 clearance. We have a great opportunity to deliver rapid growth in this space. Across the globe, we have a large installed base of ICP EXPRESS units. In a market primed for the next generation of neuro critical care monitoring, customers are excited about the innovation CereLink will provide. The CereLink technology raises the bar on the existing products marketed today through enhanced accuracy, usability and advanced data presentation. We will provide advanced data to the user, which will help them make decisions on how to treat these critically ill patients. CereLink is also designed for the expansion of data. As we commercialize, we'll be partnering with clinicians to understand what additional information could be utilized. The design of the product allows for seamless upgrades, so that we're able to serve the customer well for years to come. With the launch of CereLink, we now offer a high level of therapy support to the physician and patient by offering more data choices that can be reviewed and tracked over time. As we strategically plan for future upgrades, we will move into more therapy guidance due to the increased information we will provide. As I mentioned earlier, our global commercial footprint is a great asset for CSS, and it is perfectly suited to maximize our launch. As an example, we see China as a great opportunity for CereLink for several reasons. The Codman brand has a long legacy in China neurosurgery. Many years ago, as China created their medical protocols in neuro critical care monitoring, Codman was a key partner in establishing these guidelines. As a result, we have a strong business today with a large installed base of our ICP EXPRESS product. As we look at our growth profile of this new product, we expect strong growth through 2025. And as you can see in our market adoption chart, our Chinese launch more than doubles our projected revenues in 2030. Our future growth will come from continued market expansion in the traditional markets we play in as well as through entry into winnable adjacencies. We have clear line of sight of how we will achieve above-market growth. Let me walk you through our key growth drivers. Market expansion has 2 drivers. First, continue to execute within our traditional markets by solving unmet needs in the 3 disease states I mentioned previously. An example of this is our upcoming launch of the CereLink ICP monitor, the most advanced ICP monitoring system in the market. Second, growth through global expansion. The combination of the most comprehensive neurosurgery portfolio and our large global commercial footprint puts us in a great position to capitalize upon high-growth markets like China, Japan. Lastly, our strong innovation pipeline and continued investment in clinical evidence generation puts us in a good spot to compete in adjacencies like ICH and MIS tumor. I firmly believe that one of our foundational strengths is our comprehensive portfolio. Codman's deep history as a trusted brand is backed by its proven track record of providing high-quality neurosurgical products. We offer a portfolio of well-known and reliable leading brands in neurosurgery, such as DuraGen and DuraSeal for dura repair and sealing; CUSA Clarity for ultrasonic tissue debulking in tumor cases; CUSA Excel for liver resection; MAYFIELD for cranial stabilization and fixation; and CERTAS Plus programmable valves for the treatment of hydrocephalus. Since 2019, we have launched 19 new products across our disease state platforms. This cadence of innovation has and will to continue to fuel our organic growth. We have balanced our approach to deliver to the market both internally designed and acquired products. As I mentioned earlier, the recent acquisitions in Arkis and Rebound are the beginning of an acceleration with this innovation strategy. We will continue to build upon our broad portfolio, which spans the neuro continuum of care. Touching on the focus of clinical efficacy and economic value. Our portfolio is backed by rich clinical legacy of over 400 publications and over 7 million patients helped annually. We have a proven clinical leadership in areas such as CSF leakage prevention, ultrasonic tissue ablation, advanced EVD catheter and shunt technology, to name just a few. A great example of such leadership is our BactiSeal antimicrobial catheter, which was recently featured in the BASICS Trial, a multicenter trial sponsored by the NIH in the United Kingdom. The study concluded that antimicrobial catheters reduce infection by 62%, which, in turn, result in a cost savings of $186,000 per infection avoided. Speaking of cost savings and additional clinical efficacy, our solution is designed to increase economic value to our customers through increasing efficiency and reducing cost of care, as illustrated in some of the examples on this page. This combination of clinical efficacy and economic value puts us in a great position to expand globally and provide value to our customers worldwide. Our commercial channel and global infrastructure are significant assets for Integra. As the world leader in neurosurgery, it is critical that we serve the major markets of the world. This channel allows us to maximize both internally and externally developed innovations. In the last 3 years, we have focused on further developing commercial strengths in our international markets. We have invested in creating a strong infrastructure and attracting top talent. As a result, our international performance has been strong and is positioned to accelerate growth. Our international commercial capabilities, combined with our well-established and proven U.S. commercial team, gives us a great foundation for today and for the future. Taking a look at our teams around the globe. In the U.S., we have over 220 highly focused direct representatives as well as specialist teams focused on the key areas for growth. In major countries of Western Europe, we also have a direct team with over 100 representatives. We have experienced rapid growth in China through our commercial go-to-market model. This model leverages in-country logistics partners who support our of 65 representatives who drive demand within the country. Our Japanese business has delivered solid growth and is served by 50 direct representatives. In most markets where we sell direct, we also have highly focused product specialists. In addition, we have a strong focus in our indirect markets where we strategically partner with our distributor partners to deliver our products. Our commercial channel and our investments into this asset have allowed us to drive deep focus and penetration into our key growth platforms. We feel our ability to focus deeply on a few clinical areas while targeting winnable adjacencies is one of our key strengths. Staying on the topic of global infrastructure, I would like to provide an update on the commercial growth and strength of Japan and China. You may recall at our last Investor Day the complexity of accelerating our commercial efforts in these 2 countries and the integration required was a clear risk for the organization. Today, we are pleased to showcase both countries as a well-established market leaders with strong organic growth. Let's take a deeper look at Integra Japan. We have strengthened and broadened our portfolio through a robust cadence of NPIs, led by products such as DuraGen, CUSA Clarity and multiple CSF extensions launched between the fourth quarter of 2019 and targeted to carry through to 2022. This has and will continue to drive significant growth by expanding into new market segments and sustaining category leadership. The strategic decision to convert the CUSA Excel business to a fully direct sales forced has enabled us to call in a new segment focused on liver surgery, expand our sales team and more effectively migrate customers from Excel to CUSA Clarity. We have established more extensions and effective sales coverage in the form of a newly formed general surgery team in hydrocephalus product specialist group. We have also added resources and focus on professional education, which has led to higher utilization of products in our key procedures. Japan has an attractive market growth rate of 3%, and we are outpacing the market with growth in the high single digits. For China, near-term growth is primarily driven by market development and expansion in the Tier 2 and 3 markets by leveraging our best-in-class market access and professional education. As you think about China, traditional neurosurgery was mainly performed in the large Tier 1 cities, examples being Beijing and Shanghai with over 20 million people each. Our focus in supporting neurosurgery in Tier 2 and Tier 3 markets will allow us to serve additional patients in these large and quickly growing markets. Our mid- to longer-term growth will be driven by an attractive pipeline of new products, which will upgrade our current generation and allow us to enter new segments. We are also actively targeting locally sourced products to supplement our existing portfolio. As we look forward, we will be able to sustain the growth that I've discussed through a compelling pipeline of new product introductions designed to tackle some of the biggest unmet needs in neurosurgery. We plan to introduce a cadence of new products within the next 3 years across the various disease states that I've outlined previously. This, combined with the accelerated global registrations and advancement of our recent NPIs to peak revenue potential, enables us to drive above-market growth in the long term. Our NPIs will account for an estimated 25% of our organic revenue for the next several years. Now I'd like to focus on the future. Our Aurora platform will initially target 2 market segments: minimally invasive tumor removal; and surgical intervention for intracerebral hemorrhage. Both of which will utilize similar product methods. I'd like to provide a high-level overview on the Aurora platform and discuss our approach within both of these segments. I will dedicate most of my time describing ICH, which is a devastating disease, and how Aurora can play a strong impact in transforming patient care. Let's take a deeper look into Aurora technology. As we think of long-term growth, faster-growing segments like minimally invasive neurosurgery presents an exciting opportunity for us to not only transform neurosurgery, but also bring a new standard of care to the treatment of ICH. The MIS brain tumor opportunity is more near-term opportunity with a relatively established market in place. In 2021, we will conduct a limited launch in the U.S. The ICH opportunity nascent and requires market development to fully realize its potential. The next 2 years will be heavily focused on creating the clinical data needed to support the value proposition for this product. These 2 opportunities represent close to a $1 billion market potential, and the Aurora portfolio that came to us through the Rebound acquisition puts us on an innovation-centric journey to capitalize on these 2 very different opportunities. We also see this opportunity as a key revenue driver for us, contributing over $200 million annually in revenue by 2030. The animation you see showcases the transformation from the MIS operating room of today and the MIS OR of the future as Aurora comes to market. The adoption of the MIS approaches in neurosurgery have been slow going, predominantly due to the limitations of existing technology, requiring complex and extensive capital equipment in a crowded OR. By elegantly integrating light source and camera directly into the access sheet, the Aurora Surgiscope and Evacuator can replace numerous complex systems with a simple, easy-to-use disposable solution, therefore -- thereby providing superior visualization for the surgeon while removing complexity and cost from the OR. This will allow more ORs to address both the ICH and MIS tumors, which will benefit the payer, provider and patient. In the next few slides, we'll take a deeper dive into intracerebral hemorrhage and how Aurora is well positioned to transform care, save lives and improve outcomes in this space. ICH is a deadly disease, afflicting more than 100,000 people annually in the U.S. alone, and about 50% of patients that suffer from ICH will die within 30 days. And only 20% of survivors are expected to recover fully functionally. Let's hear from Dr. Chris Kellner, System Professor of Neurosurgery and Director of the ICH program for Mount Sinai Health Systems in New York City. Dr. Kellner is one of the leading voices in surgical intervention for ICH, the current standard of care and the potential to transform this space through minimally invasive surgery.

This is a very devastating disease where the brain hemorrhage usually leads someone to become comatose or minimally responsive. And you can imagine the most severe strokes you've seen in movies or TV where people are passing out or unable to speak and unable to move half their body. So these are very, very sick patients. And the best thing we have right now is blood pressure control to keep the hematoma from expanding, and support of care in the ICU to make sure that someone doesn't have any additional complications. The Aurora system is a minimally invasive evacuation system that consists of a Surgiscope, which is a revolutionary new device that is a tube with a camera at the back of the tube. So as you're working through this tube, you don't have an endoscope obstructing your path and you don't have a camera behind your shoulder obstructing your path. So it's really made it much easier to perform the surgery while maintaining good visibility of what you're evacuating inside the brain. Obviously, that's very important. And then the other part of it is an evacuator that you can put down the port and you can see the hematoma as you're aspirating enough. 40% of people die in the first month. So it's very rare to have a good outcome, and I've had some very good outcomes with this tool that are extremely motivating to keep me going.

Early surgical intervention for ICH patients using a minimally invasive streamlined solution like Aurora offers a viable clinical and economic option for ICH treatment globally. In addition to the clinical transformation, Aurora also brings economic value by way of both reducing cost of care as well as eliminating the need for complex and expensive capital equipment. Dr. Adnan Siddiqui, a world-renowned neurosurgeon for the Kaleida Health Gates Institute in Buffalo, New York, shares his views on the global disease burden as well as the clinical and economic value of intervening surgically.

Intracerebral hemorrhage is not a U.S. disease or North American disease. It's a global disease. The cost burden of intracerebral hemorrhage is significant. We still deal with close to 50% mortality. We still deal with the majority of patients who survive with significant disability. And it's really been an area where we have not made significant progress in the last few decades. This concept that early intervention can remove the clot burden and, therefore, reduce delayed injury is substantial. I believe that Aurora Surgiscope could really transform the care of neurosurgical patients by using this minimally invasive methodology in conjunction with visualization, which is built into the system. My hope is that this minimally invasive approach using the Surgiscope is the best of both worlds in terms of providing a small enough access point and a fast enough, simple enough, effective enough access point to remove these clots in these patients very early soon after their presentation and change the course of the natural history from the severely morbid or high-mortality disease that it is right now to something that can allow many of these patients to return to normal function.

The combination of our well-differentiated Aurora platform, innovation pipeline and strong KOL network puts us in a unique position to develop the MIS surgical intervention market for ICH. The most crucial element of the market development in this space is a generation of clinical evidence, and we have significant investment in this area. We have embarked upon a 3-pronged approach to evidence generation: early clinical data collection through a registry called MIRROR, which is currently in progress; a multicenter trial sponsored by the Australian government called EVACUATE; and an Integra-sponsored randomized clinical trial, which will kick off in 2022. Dr. Bruce Campbell is a vascular neurologist and Head of Stroke for the Royal Melbourne Hospital in Australia and is one of the principal investigators of the Evacuator trial. Dr. Campbell will now share his thoughts on the clinical trial, history of ICH and why more recent trials like EVACUATE that allow for early intervention using MIS techniques have a stronger chance of showing outcome benefit for ICH patients.

In the past, there've been treatments trialed, surgery, for instance, that haven't been successful. One of the issues with previous surgical trials is they involved a major operation with a craniotomy to remove a large flap of skull and then delving down into the brain tissue to access the blood clot and remove it. And that probably causes some disruption and damage to the surrounding brain tissue that doesn't improve outcome. In the EVACUATE trial, we're aiming to have a minimally invasive surgical approach performed ultra early. We believe that those are the 2 key things to getting a successful treatment for intracerebral hemorrhage. The EVACUATE trial will run at 15 sites around Australia. It's aiming to recruit between 240 and 434 patients over the next few years. And it's funded by a mixture of government funding from the Australian government and Integra supplying the Aurora Surgiscope.

We are very excited about this opportunity to transform neurosurgery for both ICH and deep-seated tumor removal. The combined $1 billion market potential significantly raises the addressable market ceiling for us. It puts us in a great position to realize our long-term growth ambitions. We have a thoughtful market development and market penetration approach starting in the U.S. and then expanding globally. We estimate that by 2030, Aurora will contribute over $200 million in revenue. This is an exciting journey for us to have the opportunity to transform care as well as realize Aurora's potential as one of our largest growth drivers. CSS is focused on leveraging our position as the leader in the global neurosurgical market. We will continue to invest in innovation, both internally powered and externally acquired, to drive us to above-market growth. This approach, combined with our strength in critical global markets provides the foundation to deliver organic growth at the high end of our range. CSS will continue to invest in the disease state areas where we have a strong opportunity to gain market leadership. And as shown, we will continue to add adjacencies in areas that will accelerate our growth rates and complement our portfolio. I'm excited by our ability to execute and our robust innovation pipeline. We have a clear line of sight to achieve growth in the 3% to 5% range. Thank you. I'm now pleased to introduce Carrie Anderson, our Chief Financial Officer.

Thanks, Mike, and good morning, everyone. I'm Carrie Anderson, Executive Vice President and Chief Financial Officer at Integra. I joined Integra in 2019 and I'm excited to be participating in my first Investor Day. Prior to joining Integra, I was fortunate to have worked with a few large diversified organizations, including Dover, Delphi and General Motors. This morning, I'm going to walk you through our financial strategy and the steps we are taking to create long-term value for our shareholders. Let's start with our key financial messages. Since our last Investor Day and despite the challenges brought on by COVID, Integra has posted solid financial performance, including margin expansion and improving free cash flow conversion. We have also focused on specific initiatives that will drive continued performance, including ongoing profit improvement initiatives, more efficient use of our working capital and strategic capital deployment. We have strengthened our balance sheet in 2020 and are positioned to generate strong cash flow over the next few years that will allow us to reinvest in our core growth markets and leverage our strength in M&A. And today, we are announcing that based on April sales performance, we expect to be at the higher end of our Q2 revenue guidance range. At this time, we are reaffirming our 2021 guidance and we'll reassess this range during our July earnings call. Today's focus is aimed at helping you understand how we will achieve our short-term and long-term financial targets. I hope that after hearing from my other colleagues, we have instilled confidence in you in our ability to organically grow our revenue in the 5% to 7% range. My focus is to instill that same confidence in our ability to achieve our gross margin, EBITDA margin, EPS and cash flow goals. To set the stage, I want to spend a few minutes talking about the changes we've made since I assumed the CFO role in 2019 to build on the financial foundation that Glenn Coleman began in 2014. It was a solid foundation with good talent. My initial areas of focus were to build on this foundation by enhancing financial processes and bring rigor to improve our forecast accuracy, incorporate KPIs and bring additional attention to manage working capital. Furthermore, I took a fresh look at our human capital within my finance team and reallocated and elevated certain roles to promote greater accountability. We leveraged and enhanced our IT systems and spent time developing incremental analytics that would drive greater business decision support. We automated processes where we could to enable our finance teams to spend more time analyzing data and less time creating it. One of the key digital tools my team now uses is the Global Integra Financial Dashboard, supported by Power BI. It provides easy drill-down capabilities for daily sales, organic growth as well as numerous other financial metrics from the highest total consolidated company level to the country level and even all the way down to the customer order level. It's been a quick 2 years but I'm excited about the significant progress we have made to enhance reporting and develop greater analytical capabilities. This will be a continuous improvement process for the finance organization. And I'm confident that the progress we have already made and our solution-oriented mindset will enhance this foundation. This slide takes a quick look at the 3-year performance for our key financial targets. Our performance from 2018 to 2019 was strong, with a gross margin improvement of 90 basis points and an EBITDA margin gain of 110 basis points and adjusted earnings grew double digits. While COVID clearly caused some challenges and disrupted our progress in 2020, we took decisive actions to manage our expenses. In the second quarter of 2020, at the worst of the pandemic, our revenues declined by 30% from the prior year. For the full year, revenues declined about 10%. And despite this, we were still able to expand our gross margins by 50 basis points and our EBITDA margin by 10 basis points over 2019. I credit our organization and the culture at Integra. And with that, I'd like to highlight a few of those specific accomplishments on the next slide. 2020 was not a normal year, and because of COVID, we needed to make a lot of tough decisions. We are proud of the fact that we were able to make these decisions with 2 goals in mind: first was preserving jobs and second was protecting critical growth programs. So with these as our focus, we tightly controlled our expenses and prioritized investments. In early 2020, we strengthened our balance sheet by extending our credit facility to 2025. And in June of last year, we amended our facility to allow for an additional half turn during a time of great uncertainty. We also returned $100 million to our shareholders through our first accelerated share repurchase program. 1.9 million shares were repurchased at an average cost of $48. I mentioned a minute ago that at the height of the pandemic in the second quarter of 2020, our revenues declined by 30%. Because of our financial flexibility and with the support of our global workforce, we were able to adjust our operating expenses by a similar 30%. So while the impact was severe, we were largely able to mitigate the impact on our margins. And as Pete and Glenn already discussed, we took many other actions and when combined with our ability to maintain a strong balance sheet, we were able to begin 2021 in a stronger position than before the pandemic started. Here's a look at our first quarter balance sheet, which reflects the completion of the divestiture of Ortho and the acquisition of ACell. We have approximately $409 million of cash on hand, and our total debt as of March 31 was unchanged from December 31, 2020. On the right, you can see that we have no significant debt maturities until 2025. We do have a $100 million accounts receivable securitization program that is maturing at the end of 2021, but we are well along in the process of extending this maturity out several years. This activity is expected to conclude by the end of Q2. We have consistently indicated we are comfortable operating with a total consolidated leverage ratio in a range of 2.5x to 3.5x EBITDA. Today, we are near the low end of that range at 2.8x. We don't know when the next crisis is going to hit and we are still living with the current pandemic, but I do hope we have demonstrated to you our organizational discipline and our commitment to our balance sheet. That strength and flexibility of our balance sheet is critical to support sustainable growth. And now I'd like to dive a little deeper into why this is so important to us. On this slide, we take a look at our historical use of cash. Clearly, the acquisition of Codman stands out in 2017. It was the largest acquisition in our history at just over $1 billion. This was a unique and opportunistic acquisition that transformed the company. In 2018, immediately following the purchase of Codman, we balanced the allocation of capital between debt reduction to pay down the borrowings used to purchase Codman and internal reinvestment. In 2019, with our debt back in our operating range, we again prioritized capital to organic growth and M&A with the purchases of both Arkis and Rebound. And finally, in 2020, given the strength of our balance sheet, we were able to return $100 million to shareholders through stock repurchases while also reinvesting in our organic growth opportunities. So as you can see, our balance sheet affords us the ability to allocate capital among internal investment, M&A, debt reduction and share repurchases, all aimed at enhancing shareholder value. Throughout this morning's presentation, you have heard about our new product innovations and market expansion initiatives. On this slide, I want to provide some insight into how we look at evaluating M&A opportunities that can supplement our own internal development efforts. As Glenn mentioned, we have a strong business development team and a long successful track record of acquisitions. Starting on the left, there are overarching strategic considerations that are important to us: considerations for scale, portfolio breadth, market or adjacency expansion and technology differentiation. We also have financial considerations that go into the decision-making process. As a growth company, accretion to both our top and bottom line is important. But as we look to drive long-term sustainable growth, we are open to selectively investing in strategic assets that may be dilutive in the near term and might move us temporarily away from our financial targets in the short term but can generate long-term shareholder value. We've highlighted our most recent acquisition on the right side of the slide to demonstrate how these filters are applied. Arkis and Rebound were both pre-revenue technology acquisitions. Both required additional investments in R&D and manufacturing. And although they are not immediately accretive, as Mike discussed earlier, they have great potential for revenue and profit growth. In the case of ACell, this was a highly complementary product portfolio so a great strategic fit and with accretion set to be reached in 2022. This is our primary focus for acquisitions, and when combined with an experienced integration team, we hope to do many more tuck-in deals. We'll continue to be opportunistic with a focus towards bending the curve of our long-term growth profile upwards. Turning to our financials. As I mentioned earlier, we've had a good start to the second quarter. And given our April sales, we do expect to reach the higher end of our Q2 revenue range of $372 million to $378 million. We are not yet changing our full year 2021 guidance. Our good start to the second quarter is very encouraging but we're taking a more conservative approach, given that COVID is not completely behind us. And we'd like to have better visibility into Q3 to become a bit more bullish on the year. We expect 2021 revenues in the range of $1.525 billion to $1.535 billion, which represents reported growth of approximately 11% to 12% and organic growth of 12% to 13% over 2020. This includes revenue for ACell in the range of $83 million to $88 million. And adjusted EPS is expected at the higher end of our range of $2.86 to $2.93. In addition, I'd like to share more details on a few of our other key metrics. We expect adjusted gross margin to improve throughout 2021 and reach a range of 68.2% to 68.5% for the full year. Our first half gross margins have been impacted by COVID-related idle capacity costs but our margins are expected to improve in the second half. EBITDA margin is expected to be in the range of 24.5% to 25% and show sequential improvement moving from Q2 through Q4. And finally, our operating cash flow is expected at approximately $250 million and free cash flow conversion of greater than 70%. The key enablers for achieving our 2021 guidance are listed at the right of the slide, and I'm going to highlight 3 of these enablers: number one, our expectation for a gradual post-COVID recovery across both our global segments; number two, the accelerated integration of ACell; and number three, the upcoming global launch of CereLink. All of these revenue drivers listed on the slide are supported by the normalization of our spending and CapEx for the balance of the year. Today, we are reaffirming our long-term financial targets. We are more confident in our ability to achieve consistent 5% to 7% organic growth. With that confidence on the top line, the other financial targets listed on this page are reachable. However, COVID has changed the time line to reach these targets as COVID interrupted our revenue growth path and leverage opportunities. Our original expectations set during the December 2017 Investor Day was to reach these gross margin and EBITDA margin goals by 2022. Our expectation is now a 1-year shift to 2023, where we believe we can reach the low end of these margin ranges. Our key margin and EPS drivers remain intact and include revenue and volume growth. Other tailwinds that will contribute include: the completion of our portfolio simplification actions. This will be the last significant year discontinuing lower growth and lower-margin noncore products from our portfolio. Favorable mix. This is driven by both the contribution of faster-growing and higher-margin NPIs as well as the growing contribution of Tissue Technologies, which also carries higher margins; and our manufacturing footprint optimization plans, including the exit of the Codman TMA agreement at the end of this year. So what does this look like at the segment level? Bob and Mike covered the highlights on this slide already, but this shows you the respective contributions of each segment that drive our consolidated 5% to 7% organic growth. In CSS, we are reconfirming our expectations for 3% to 5% organic growth. In TT, we have optimized the portfolio and now have a singular focus on fast-growing regenerative tissue end markets, and our expectation for Tissue Technologies is to grow in a range of 7% to 9%. As a subset of both Mike and Bob's revenue plans is a mid-single-digit growth expectation in our international markets. Now I'd like to turn to some of the components that are driving our margin opportunities. As I mentioned earlier, we expect gross margins to improve in 2021 but likely only in the range of approximately 20 to 50 basis points due to the first half timing of January's portfolio actions and some idle capacity costs related to COVID impacts on our workforce that I had previously discussed on our Q1 earnings call. Gross margins are expected to move higher in the second half of the year, and we expect further expansion in 2022 and beyond as the growth from our NPIs and our Tissue Tech businesses accelerate, we complete our SKU rationalization actions and we further optimize our global manufacturing footprint. Again, we expect to reach 70% by 2023, which represents the low end of our 70% to 72% range, but with additional revenue growth beyond 2023, we will have the opportunity to drive this higher. Turning to our SG&A. As our company grows, we have an opportunity to further leverage SG&A. The path to 39% SG&A will be enabled by the full realization of the ACell synergies and the increased scale and leverage driven by our revenue growth. While on the surface, it does not look like we made much improvement in 2020 and 2021, I am pleased that our 2020 SG&A percent did not increase even though sales declined 10%. This was a result of our strong management of expenses. For 2021, as you recall, we divested our Ortho business, which was a heavy SG&A burden business, and we added in ACell. 2021 is a year focused on integrating ACell and bringing back spending gradually as our revenue recovers. As Pete and Glenn discussed, in a post-COVID world, we expect to benefit from many of the digital initiatives that were put in place across the organization as well as a smarter approach to our spending decisions. Following up on my earlier comments about disciplined capital allocation decisions, strategic investments in our R&D programs are critical to our growth plans. Within our long-term organic growth target of 5% to 7%, we believe that 25% of that organic growth will come from new product introductions. We expect to spend about 5.5% of sales on R&D today, which is roughly in line with the 2020 percent of sales. However, given the divestiture of Ortho and the acquisition of ACell, the absolute dollars we are now spending on our core Tissue Technologies platforms have increased year-over-year. The disproportionate R&D spend that was going to Ortho is now redeployed to core TT. We are targeting an increase in R&D spend to approximately 6% by 2023. This increase will continue to support early pipeline research as well as new product launches and investments in clinical studies to support and differentiate our products. Our expectations for gross margin, SG&A and R&D come together to help form our view of EBITDA margin expansion. Based on this, we expect to reach 28%, which is the low end of our EBITDA margin target by 2023, with again, opportunity to drive this higher beyond 2023 with further revenue growth. As we expand our business, we expect operating cash flow and free cash flow to increase through 2023. This is primarily driven through higher EBITDA, moderating capital expenditures and lower onetime cash uses that include reductions in current acquisition integration costs, lower EU MDR expenses and lower manufacturing footprint optimization cost. In addition, we have ongoing initiatives focused on driving managed working capital improvements. As a result, we expect operating cash flow of greater than $330 million and free cash flow conversion of approximately 90% in 2023. Overall, we are convinced that Integra is well positioned to drive faster, more profitable and more consistent growth. The strength of our operating model and enhanced financial rigor creates a clearer path to deliver our long-term financial commitments. This, coupled with the flexibility in our balance sheet and the strength of our cash flow, will allow us to both support organic and M&A opportunities, which in turn could accelerate our growth profile at an even faster pace. That wraps up my prepared remarks, and I'd like to turn the presentation back over to Pete.

Thanks, Carrie. And I'd like to thank all of our presenters today that did a great job as well as our clinician partners. There's nothing better than hearing directly from the words of our clinicians about many of these programs that they're very passionate about. I'd also like to thank you, our investors, for sticking in this morning with us and hearing our story in much more detail than you normally would in our annual -- excuse me, on our quarterly updates. I think this is very helpful to dig in deeper. And obviously, we'll have some more opportunities to speak here in Q&A and then also later. But as the chart says here, we're very well positioned for long-term profitable growth. I think if you think about '21 today in the second quarter, we've talked about being at the higher end of our top line revenue as well as our profit growth. But for the year, we're well positioned to make those numbers or actually exceed them. I think secondly, for '22 and '23, we want to spend a good amount of time to understand the underlying changes we've made in the business, the process, the capabilities, the channel changes, the programs that we have in place. And we feel very confident in '22 and '23 to be in those ranges that we've laid out. And I would say beyond that, when you think about the pipeline, this has got to be the best pipeline we've had really in the last 10 years. If you think about the big 5, the ICP monitoring, minimally invasive neurosurgery, the peripheral nerve opportunity, intracerebral hemorrhage and breast, those 5 alone, we've been obviously looking at it at different levels in the last 2 to 5 years. But what's different here is they've moved from ideas into funded programs that are well on their way beyond prototypes into clinic, into actual patients that we believe are going to have some substantial impact on our business in the next few years. So that's why we're super excited and glad you can join us here this morning. Now we're going to switch back to Q&A here for the time that we have remaining. We've had quite a few questions submitted. You can still submit questions, as Mike went through, clicking on the screen and adding those in, and we'll get to as many of those as we can. But I think right now, let's jump into some of the questions. And Mike, why don't we open it up?

Okay. Thanks, Pete. So the first question comes for Carrie. You seem to be off to a good start for the year. Can you give some color around the second quarter trends? And can you explain why you didn't raise your annual guidance? And what will give you the confidence to do so?

Sure, Mike. Thanks for the question. So I'll start with the Q2 trends. I'd say very encouraging at this point. Both April and into May have trended well. One of the things that was a little still soft for us in Q1 was our procedure-based parts of the business. We've seen some nice recovery of that. We expected that to see some sequential improvement and indeed, it's happening. And then also, I would say where we had a little bit of weakness in Q1 was around U.S. capital. And what we're seeing in Q2 is some nice performance coming out of our U.S. capital side of the business. And so that gives us confidence in the high end of the second quarter range. As it relates to the full year, I would say that at this time, we are reaffirming our 2021 guidance, and we'll assess this range during our July earnings call. So give us another couple of months here ahead of the July call. Again, I would say Q2, it really is a good start to the quarter. It's very encouraging but we are taking a more conservative approach, just given that COVID is not completely behind us, and we'd like to have some better visibility into how we close out Q2 and the early part of Q3 on our call. Part of what we want to understand is a bit more is on the capital sales timing. We saw a bolus of capital that helped us in the first quarter and certainly looking to help us here in the second quarter. So we'd like to understand those trends a bit more as it shapes the full year. Thanks, Mike.

Okay. Thank you. I have a couple more finance-related questions. One is on gross margin. So you expect to deliver on the low end of your LRP margin target for both gross margins and EBITDA margin in 2023. Can you discuss the annual cadence? And how should we think about the peak levels for your business beyond that?

Yes. So let me step back a moment and just talk about the fact that you've heard all day today that we have a high degree of confidence in our ability to achieve the consistent 5% to 7%. And for me, that translates into a confidence that on the bottom line as well that says these financial targets are definitely reachable. But COVID has changed the time line to reach the targets. So we originally said that we could get to these targets by 2022, and COVID has interrupted. There was a certain amount of volume leverage that was needed in order to get to the targets. But our expectation is now a 1-year shift into 2023, where we believe we can reach the low end of these margin targets. And certainly, with additional revenue growth beyond 2023, we'll have the opportunity to get into those ranges of that 70% to 72% in gross margins, 28% to 30% on EBITDA margins. In terms of cadence, I would expect some nice improvement in 2022, maybe not perfectly linear, but I would expect some improvement in 2022 on our path to the 2023 targets. The other thing I want to mention on the 200 bps ranges that we've provided, that does -- it's purposeful in terms of why we've given a range in our long-term guidance for gross margins and EBITDA margins. It does provide us some flexibility to ensure that we are making the right trade-offs between pursuing faster revenue growth opportunities that may require additional internal investment versus driving margin expansion on current business. So we do want to see a little bit of flexibility in those. Thank you, Mike.

Thanks, Carrie. I'll ask you one more financial question and then we'll move on. How do you think about investing internally versus growing through acquisitions? And how are you allocating capital between CSS and Tissue Technologies?

Yes. Well, we -- I wouldn't say we have necessarily a target capital allocation that we're following, but rather, we consider projects more holistically and based on each project's ROI and feasibility. M&A definitely will remain a key pillar of Integra's long-term strategy. Acquisitions will not always be the size of Codman but tuck-in deals are going to remain a priority for us. Reinvestment, also in the form of R&D or CapEx, is also going to be a key priority over the next few years to drive that innovation that you've heard about in that organic growth, including investments in our facilities to improve our supply and investments in key R&D initiatives associated, for example, like Arkis and Rebound. And certainly, Mike talked a lot about the opportunity in Rebound and the Aurora Surgiscope. I would say in terms of the specific question for allocation between CSS and TT, we believe there are good M&A and internal investments in both segments. For CSS, we already have the scale and we would look for M&A opportunities and internal investment opportunities that really expand our markets or offer that near-term adjacency growth opportunity. They may bring us technology acceleration and/or international expansion. And for TT, I would say all of those same strategic filters apply to both M&A and internal investments for TT, but we would also be looking to continue to add scale and portfolio breadth as well. Thanks, Mike.

Great. Thanks, Carrie. So we're going to shift to the Codman Specialty Surgical business with Mike. Mike, first question is what's your neurosurgery market share in the markets in which we compete?

Yes. Thanks for the question, Mike. So let me recap, for everybody's benefit, just the categories we play in and then I'll get to the -- to answer the question. So when you think about market share for us, you really need to think about hydrocephalus, neuro critical care, our advanced energy and ablation business, our grafting business, DuraSeal as well as electro surgery. So the best way to kind of frame it is a global perspective is our shares of those categories are 35%-plus. So some are bigger, none are smaller but we live in that 1/3 of the market and bigger as the market leader. As I mentioned, we do have some that are higher than that share, but that's a good estimate to use for a global range across our franchises. And with the acquisition of Codman, we're clearly the global leader so that reflects in the numbers in those shares.

Great. Thanks, Mike. The next question has to do with the rationale for the acquisition of Codman. Was that the pipeline was under-invested? And at the time, it grew less than 3%. Can you discuss where you are against those targets on Codman?

Yes, sure. Happy to. And from a personal level, because I transitioned from the Codman business at J&J, I've had a front-row seat to all of this from the U.S. as well as my prior role OUS. So I think the way you have to talk about it is the Codman integration and what we hoped for has been just a great success for us. And when you think about it from a growth range, if you think about our 3% to 5% range as a CSS business, the Codman products live on that high end of the range. They've been very successful in Integra's hands. And just a couple of examples to bring that to life. One area is hydrocephalus. Pre deal, the Codman business was growing in the 2%, maybe 3% range. And through new product introductions that came from Codman and the new commercial organization of the 2 combined sales forces, we pushed growth in high single digits in hydrocephalus. And we've got more to come in that area. For example, we have a new product launch coming in Japan that is a shunting product focused more on the lumbar spine area that will really help us in that market as well. And then when you look at CereLink, another product that was in development from Codman with that launch coming up in the near future, we'll continue to pile on that growth.

Yes, Mike. And I would also just add, I think we underappreciated even the benefit we're seeing with these larger commercial teams outside the U.S. and the impact these new product launches are having. So if we just look at Japan as an example, a commercial organization that's approaching 80 people, launching a product through that now versus a team of 5 or 10 people, huge difference. And just DuraGen alone, first full year launched, $12 million of sales. If you look at other products we're launching in Japan as an example, we're really seeing an accelerated benefit of these big channels. And I used Japan as an example but I could also point to China and some of our direct markets in Europe as well, especially with the launch of CereLink coming up.

Yes. Thanks, Glenn. I think it's a very good add. The global expansion has gone really well, and that's, I think, even driven us beyond where this -- we thought this could go. And I will kind of close my answer with -- it gave us an additional benefit, which is the scale Codman gave us globally has allowed us to do other things, for example, 2 earlier-stage acquisitions in Arkis and Rebound, that, that scale and that foundation really is what set that up. So there was even benefits beyond just faster market growth in year-to-year.

Okay. Thanks, Mike. We're going to tunnel down now into a couple of product family portfolio questions, starting with CereLink. Do you see pent-up demand for CereLink? And can you talk about the installed base of neuromonitors?

Yes, it's a really good question. We -- it really hasn't been a major innovation launched in this category in quite some time. So I do believe there's definitely demand out there. And I think to answer the question on installed bases, we estimate there's approximately 9,000 neuro critical care monitors around the globe, ours and competitive products that are all available for upgrade. And so as we think about this launch, so as we've -- I mentioned in my comments this morning, we're well suited to launch in the near future. We have our CE Mark. We have our 510(k) clearance. Just tying up some final things as far as getting used to go out the door. And if we think about this business the next 3 or 4 years, we had an advanced monitor prior, and that business was about a $30 million business for us. We think we'll get back to that level in the next 3, 4 years. And then this market really will expand in 2025. And the reason why is about half of those 9,000 units are in China, and we're scheduled to launch in China at that point. So I think we've got a nice runway for the next 3 years or 4 years. And then we have a big growth lift when China comes online.

Great. Thanks, Mike. So now shifting to Certas Plus and the hydrocephalus market. Can you walk us through that? Are you gaining share? What opportunities or markets do you see or that you continue to have growth in?

Yes. I think -- so hydrocephalus, obviously, is a critical franchise for us, and Certas Plus is our premier flagship product in that area. And it's been a very strong success for us. So we're growing this business, right now, high single digits. We are taking share. We're outgrowing the marketplace. And that was fueled really by 2 things. I think when we acquired Codman, we went to a much larger commercial footprint. I think we got much stronger outside the United States. Codman was a strong OUS player. And we launched 3 new products, 2 new valves as well as a programmer to do valve setting changes. And so we've continued to grow. And then also Integra really brought strong marketing to this product. We've done a couple of unique things around a guarantee in this area and also research around how these products perform with MRI and setting changes as patients travel through the hospital for other comorbidities and the MRI exposure they have, the ability to have that valve stay at the setting and know that, we've spent a lot of time and energy doing research and marketing that information to physician. OUS, as I mentioned earlier, we've got new innovation coming to market in a valve that can be used in the lumbar spine area. High share in Japan. And then the next big thing launch for us is 2024, China that Certas Plus will come to that marketplace. We are already in Japan and we have a share north of 60% and business is doing quite well.

Okay. Thanks, Mike. We're going to jump a bit now and go to Glenn. There's a question on, what are the benefits for the company of divesting the Orthopedics business in terms of company culture, operational excellence, strategic refocus?

Yes. When we think about the Orthopedics business, just keep in mind, it was relatively small from a revenue perspective, around 6% to 7% of our consolidated revenues. But when you look at the bandwidth and complexity, it was a huge drain on our resources. I think it had about 25% of our SKUs across the company, excess inventory, lots of consigned inventory. And so our ability to divest this business should be viewed as a much bigger thing from a management bandwidth perspective. And obviously, from a financial point of view, it's going to be immediately accretive to our top and bottom line numbers because it was a business that was subscale and unprofitable in our hands. So we are happy to now be more focused on our core businesses of neurosurgery, specialty instruments and Tissue Tech. And clearly, you're going to see the benefits of that with the increased focus moving forward.

Okay. Thanks, Glenn. Carrie, we have another financial question. And the question is you have a solid SG&A leverage goal over the next 2 years. What are the 1 or 2 biggest opportunities that drive your confidence in that leverage?

Yes. Thanks for the question. Well, I have an SG&A bridge slide that was in the deck, and I would say, certainly, the most near-term one is the ACell synergies, right? When we acquired that company, ACell was at breakeven. So very nice gross margin business but a lot of operating expense there that resulted in a company that was at breakeven. So the opportunity, as we bring that in, is to really integrate that into our infrastructure, our back office, our sales channels. And we talked about that, that's one of the major lifts as we think about 2022 margins is getting that to more run-rate savings. And I commented about taking about 40% of that operating cost out of ACell as it moves into our structure. So that's going to be a big piece of some of that SG&A leverage. But I think the other opportunity that COVID has afforded us is to thinking about how do we bring back spending back? We took a lot of spending out in 2020, so we have now the opportunity to think about more smartly bringing that spending back in and making sure that it's much more geared towards really driving growth. So it's a combination of a lot of other areas like leveraging scale with that revenue growth, continue back office, productivity initiatives, sales channel productivity as well as digitization and automation opportunities. Thanks, Mike.

Thanks, Carrie. We're going to jump back to Mike McBreen now. The question is on the Aurora platform. How should we think about the 2 opportunities in MIS and ICH? And can you characterize the rollout?

Yes. As I'm sure -- hopefully, it showed from our comments today, we're excited about what we have here. It's a different technology for us that it's going to need a bit of time to develop. So let me kind of walk you through some of that. I referenced earlier that we think this could be a $200 million business for us by 2030. But it's a business that needs to be developed, right? There's clinical work and things we need to do. And so we start passing through some of those gates. The fact is we think it could be bigger than that as we gain confidence, as we go through these market development efforts, be it clinical trials or registries, our confidence, we hope, will build, and we'll be able to portray new outlook. But we feel at least that level of revenue for us. So we should think about Aurora, you want to really get grounded on Aurora as a platform. It's really an access platform and that the product for ICH and the product for MIS tumor are different products that both live under that platform. And I share that because their timing is a bit different. So we'll be out first with tumor. And I think we'll be out towards second half of this year with some -- with limited launches in the right clinical institutions to gain learnings with tumor. And then ICH will follow a little further behind because we have more clinical work to do. It's just needed because it's a brand-new technology so we just need that to make sure that we have the background we need for submissions, for regulatory approvals, for reimbursement. So we're going to be more methodical with ICH. But when you look at both of those, I think you'll start to see contributions more of a meaningful level. I put it down as 2023. We've got some development on both of those. And one of the benefits to this, too, from a hospital's perspective is there's cost savings. If you looked -- the presentation I made this morning had the animation on the OR of the future with Aurora. And the reality is there's a lot of capital equipment that isn't going to be needed for those types of procedures. So we think we offer advantage to hospitals. But we're really excited about this one, and we've got some work to do, and we hope -- we'll update you on our progress and as we pass through these gates.

Great. Thanks, Mike. So I've got another question for Glenn. And the question is with all the new product launches and BLA submissions, there's potential and potential long-term growth drivers. What are you doing to mitigate the execution risk, the regulatory risks for all these opportunities?

Yes. Thanks, Mike, for the question. If I go back to take a look at why we had challenges in getting NPIs out on a timely basis, it really blows down to one big thing for me. And that is we did not have adequate sustained engineering people in the organization. So what that meant was when we had a day-to-day execution issue or something that had to be addressed, we pulled some of our best people that were working on NPI programs off those programs to deal with these day-to-day execution issues. So a big part of this is making sure we're resourced appropriately, which we've now addressed both for NPI and sustained engineering. And then the other part of it is obviously just making sure we have better day-to-day execution, which you mentioned earlier, a big part of my presentation was going through why we're more confident in that. So those are really the big reasons behind it, Mike, and very confident moving forward, we're going to have much better execution on NPI programs. I would also say that we've got really good program management on these programs as well moving forward. So we've got an identified project leader, regular readouts to the executive team and ensuring that we've got all the support and visibility into how these are progressing.

Thanks, Glenn. I have a follow-up for you and perhaps, Carrie, on -- does all this innovation and work imply higher targets for R&D, clinical spending and things of that nature?

Yes. Clearly, when you look at the dollars of spend across the company, it's gone up pretty dramatically. We still haven't gotten to the 6% of sales level, but we have a lot of clinical studies that we need to advance, partly because of just compliance reasons with EU MDR. But we've got a lot of other programs we need to advance when you think about getting a breast indication, some of these nerve programs. Mike mentioned Aurora and some of the clinical studies that we need to do around that. So clinical studies are clearly going to be a bigger part of our R&D spend moving forward. Carrie, I don't know if you want to also comment, or Pete?

Yes. One of the things that I wanted to point out is one of the R&D slides that I had was also to say that we've been able to redeploy some of that spend. It was going to Ortho and with the Ortho divestiture, all of that now has been redeployed into the Tissue Technologies area, so the amount of now spend that's dedicated to Tissue Technologies going forward is a significant move. And when you think about the 5.5% that we're spending about today, moving to 6%, that's essentially another $20 million of R&D investment that we're expecting to allocate to innovation, to clinical investments as well. So a significant move.

Thanks, Carrie. I have another question on M&A that both Glenn and Carrie can probably answer. With all the meaningful steps we've taken repositioning the portfolio, how do you think about acquisitions and further divestitures going forward? What are some of the parameters that you consider? And are there white spaces that you see out there that might be opportunities for Integra to get into?

Yes. I think Carrie and I probably hit a lot of this in our prepared remarks, but just to go back to a couple of key points to highlight. I think first and foremost, again, M&A is a core competency of Integra. We've done 50 deals since our origin. We have really strong integration and separation capabilities when you think about acquisitions and divestitures. And so I think that's an important part of our culture and our DNA. Why it's so important though is, again, to ensure we get relevant scale in a top 2 position across our portfolio. If we're going to be successful as a midsized -- mid-cap company in medtech, we absolutely have to be at top 2 position. And so that's why it's so important in terms of our acquisition strategy. And the way I think about it is we're going to go deeper versus wider. So we're going to continue to go in areas of our core expertise, continue to look at tuck-in acquisitions. We talked about the reasons why we do acquisitions. It could be getting us an acceleration of our technology platforms, moving into new markets, expanding our distribution outside the U.S. So lots of different reasons behind that. Financially, we talked about return on invested capital exceeding our cost of capital in the first 3 to 5 years of a deal being accretive to our top and bottom line. And we have a very strong balance sheet. I mean the great thing about Carrie and the finance team is they've really positioned us well to support this acquisition strategy moving forward. So we feel we're well positioned then to continue to go deeper in the areas that I mentioned. So Carrie, I don't know if you want to add anything else to -- that's it, okay. Okay. And I would just say on the divestiture front, getting rid of Ortho was really the last big move in the portfolio. I would just describe it now as we've got a winning portfolio moving forward. We feel really good about our go-forward position in Tissue Technologies, in neuro and specialty instruments. So in terms of what's next on the divestiture front, all the heavy lifting is now behind us and we've got a winning portfolio moving forward.

Okay. Thanks, Glenn. We have -- we actually have a follow-up question from this morning's presentation for Bob Davis related to Gentrix. Bob, why is Gentrix so good in robotic repairs? And are there other products in -- that we can use in those cases?

Yes, Mike. So look, I would say Gentrix really complements and fits nicely the SurgiMend portfolio for complex hernia repair, particularly for laparoscopic indications, which is -- this offers up this new indication for us, including the robotics use. Gentrix has real nice benefits around handling characteristics, and it's been conformable to allow the ease of insertion through the trocar and it's easily manipulated for placement within the abdomen. And if you remember when Dr. Shieh spoke, he said that's probably where some of the other grafts, including biological grafts, have difficulty and they get snagged on the trocar and sometimes you end up tearing the graft. So pretty powerful saying there. And look, Gentrix also opens up Integra's opportunity to be more competitive in more routine hernia repair, so it really buys us increased access to more procedures.

Okay. Thanks, Bob. So I'm going to turn the floor back over to Pete, who is going to give some closing remarks.

Thanks, Mike. Yes, look, it was great. A lot of good questions. I know we'll have some opportunities together with many of you one-on-one here over the next few days as you kind of dig through this. I know it's a meaty deck. And hopefully, you appreciate the construct of it. It will be accessible and we wanted to make sure we got the deck to you earlier in the day. So I also want to thank you for being patient with us about placing questions once they've been -- the presenters have gone up, but we want to make sure you had all the information early. I would just leave you with, again, this fact that we've got a really nice portfolio coming together on both of these areas of TT as well as in CSS. I think the team's kind of laid out that case for you. As I just commented before questions, this is probably our best innovation pipeline that we've had. And again, the difference here is some of these things you've heard about in previous years, the difference is all of these, all of them are in program development programs either in clinical, in far along, either in submission approaches or in the realm of being launched, such as the minimally invasive neurosurgery product, which basically entails a significant amount of work that's been going on over the past few years while we've also been retooling the company. And so I sometimes get asked about the questions of what keeps you up at night. Not a lot does. But in the previous years, it was about a lot of moving parts and keeping an eye on them. We've solved a lot of those problems by getting things fixed and reducing that. On the go-forward basis, it's really tracking ahead of the changes in healthcare. And that's why we're investing more aggressively on those things that will affect therapy and make a difference, honestly, in economic outcomes. We realize the cost of care is going up in many places at too high of a rate. Many of our solutions actually take down the cost of care, whether you heard about Integra being used in versus flat procedures. The opportunity with the Aurora Surgiscope, I think, is just tremendous about reducing millions of dollars of capital needed and having a device that's a disposable that could be used in Southeast Asia, Topeka, Kansas or at the Cleveland Clinic. And so those are the type of things that we're funding and going after. And I'll just leave you with kind of the 7 points that we think about are the catalysts over the next 12 to 18 months, and we've talked about this. One is this procedural normalization, getting back to normal rates. We were hit probably harder than anybody during COVID. Why? 70% of our cases were tied to an ICU bed being available. All of you know that ICU beds became very much a needed commodity during COVID. International expansion. Glenn and his team, working with the 2 divisions, have done a great job expanding. And we see lots of opportunities and upside as we continue to expand internationally. So that's just kind of the table stakes. Then ACell, acceleration of the first half rates into the second half by combo selling, the indications that we have with our products as well as our new CE Mark as well that we've gained. So that's three. Four is really the capital recovery and particularly the launch of CereLink, which is going to coincide actually very well with the capital recovery. So that's a $30,000-type device, our CUSA in the couple of hundreds. They're in that small- to medium-sized capital range. We think we're well positioned with a 9,000-plus base of older technology out there and us really being the only new product coming out. PriMatrix DFU study, you heard about that. You might have missed some of the details. It's a big deal for us. It's been a successful study. The published results will be coming out, very good results. Why does it matter? Really can open up private pay in the DFU market for us, which we really don't have reimbursement today for PriMatrix. NeuraGen in early '22. And then Aurora for MIS neurosurgery. And we don't have much baked in at all for this over the next 12 to 18 months, but I think we'll be able to update you quarter-by-quarter, how things are going, what we're learning. But this one's a big one. There hasn't been a breakthrough to reduce the trauma created in neurosurgery in a long, long time. So this is a definite change in practice opportunity to actually reduce the amount of good tissue affected while you're taking out the bad. So we're pretty pumped. I really want to thank you guys for your time today. We're looking forward to having one-on-ones with you. Thank you very much but that concludes our discussion today. Thank you for attending.