Thank you for standing by, and welcome to Integra LifeSciences' Fourth Quarter and Full Year 2022 Financial Results Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephones. I would now like to hand the call over to Chris Ward, Senior Director, Investor Relations. Please go ahead. Thank you, Lateef. Good morning. Thank you for joining the Integra LifeSciences fourth quarter and full year 2022 earnings conference call. Joining me on the call this morning are Jan De Witte, President and Chief Executive Officer, Jeffrey Mosebrook, Chief Accounting Officer, and Mathieu P. Aussermeier, Vice President, Corporate FP&A, Investor Relations, and Treasurer. Earlier today, we issued a press release announcing our fourth quarter 2022 and full year 2022 financial results. The release and corresponding earnings presentation, which we will feature during the call, are available at integralifesciences.com under Investors, Events and Presentations in a file named Fourth Quarter 2022 Earnings Call Presentation. Before we begin, I would like to remind you that many of the statements made during this call may be considered 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 and in the release. In our prepared remarks, we will refer to both reported and organic revenue growth. Organic revenue growth excludes the effects of foreign currency, acquisitions, divestitures, as well as discontinued products. Unless otherwise stated, all disaggregated and franchise-level revenue growth rates are based on organic performance. Lastly, our comments today will include certain non-GAAP financial measures. Reconciliations of any non-GAAP financial measures can be found in today's press release, which is an exhibit to Integra's current report on Form 8-K filed with the SEC. With that, I will now turn the call over to Jan. Thank you, Chris, and good morning to all of you joining us today. We'll take you through our accomplishments and financial results for 2022, as well as our plans and financial guidance for 2023. Please turn to slide four. 2022 was a year of many challenges for all of us, especially from the macro environment. I'm proud of our colleagues for having demonstrated themselves to be responsible stewards of our business in a challenging economic and supply environment. Remain focused on doing right by our customers and patients while delivering on our financial commitments to our shareholders. We met our full-year organic growth targets, exceeded our original adjusted EPS guidance, advanced our strategic initiatives, and bolstered key capabilities. Let me start by highlighting several of these accomplishments in 2022, including key new product introductions, commercial optimization, and strategic M&A that not only expanded our portfolio, but also strengthened our capabilities to catalyze for growth. In our Codman Specialty Surgical Division, we added important line extensions to our CUSA portfolio with the recent launch laparoscopic tip and with clearance of our bone tip in late Q4. Although the direct contribution to our revenues in 2003 from these products will be modest, they illustrate the continued differentiation of our CUSA product line with new functionalities that enhance the utility of this technology platform. We also launched the AURORA Evacuator plus Coagulation tip in the U.S. as we continue to partner with surgeons to address their needs and expands the Aurora platform. Within our Tissue Technologies division, we launched NeuraGen 3D, a unique mid-gap nerve repair product. We also successfully completed the integration of the ACell portfolio through the expansion of our wound reconstruction sales team. As planned a year ago, we returned the ACell portfolio to growth and grew double digits in the second half of 2022. Now that MicroMatrix, Cytal, and Gentrix are fully integrated into our wound care business, we are well-positioned for strong sales growth and to deliver on our long-term expectations for that business. We made substantial progress on our PMA for the use of SurgiMend in implant-based breast reconstruction, and we remain on track with the approval timeline we discussed during the last earnings call and at a recent J.P. Morgan Healthcare Conference. In December, we acquired Surgical Innovation Associates, or SIA, makers of DuraSorb, an innovative resorbable synthetic mesh. With DuraSorb, we strengthen our strategy for the high-growth breast reconstruction market. Now with DuraSorb and SurgiMend, we have a path to securing the first and second PMA products in the market. By offering two distinct product solutions to plastic and reconstructive surgeons, Integra can build a leading position by addressing various clinical, contracting, and economic needs across different sides of care. SIA was the first deal that came from our new M&A game board, which we completed in connection with our in-depth reviews of our divisional product market strategies. With our game board, we have laid out clear roadmaps for where and how M&A will contribute to our growth strategy. In line with our focus on differentiated regenerative technologies, we divested our non-core Traditional Wound Care business or TWC, in the third quarter of last year. In addition to our performance commercial priorities, we continued to build out capabilities in our operations and organization. We closed the high cost manufacturing facility in France and outsourced select back-office activities, which enabled us to increase profitability and redeploy resources to our strategic imperatives. We strengthened our organization with key executive leadership additions, including the appointments of Mark Jesser, company's first chief digital officer, as well as Harvinder Singh, who is heading up our international business and is the first executive VP located outside the U.S. We also added talent more broadly, particularly within our strategic marketing, manufacturing, and quality organizations with the ambition to strengthen our innovation capabilities and operational efficiency. We continue to invest in talent development across the organization, focused on further stepping up engagement and inclusion to maximize the potential of our organization. Within our culture, we have embraced sustainability as a guiding principle in how we produce and deliver life-saving technologies to surgeons and patients while providing financial returns to our shareholders. We formalized our sustainability roadmap last year when we issued our inaugural ESG report. Our commitment to our culture was once again called out by several external organizations, recognizing Integra for being a great place to work. Clearly, we accomplished a lot for the year and believe this positions us well for 2023 and beyond. Let's turn now to slide six with the highlights of our 2022 financial performance. Despite the challenging environment, we delivered solid results for the year. As I stated before, I'm proud of our colleagues for skillfully navigating through these hurdles in 2022. Our full-year revenues were $1.56 billion, approximately 1% growth on a reported basis, inclusive of the TWC divestiture and a $38 million or 250 basis points unfavorable impact from foreign exchange compared to last year. We delivered 4.2% organic growth for the year. Excluding SteriLink, organic growth across the remainder of our business was approximately 4.7%, demonstrating the strength of our diverse portfolio. Throughout the year, we saw consistent demand recovery in our markets and procedures ended the year at near pre-COVID levels. This provides a solid foundation for 2023 as we further mitigate supply challenges and prepare for the relaunch of SteriLink by the end of the second quarter. We delivered above our February guidance range, full-year adjusted earnings per share of $3.36, representing growth of 5.7%. We overcame both higher than expected FX headwinds as well as the second half SteriLink recall impacts. We increased our EBITDA margin by 40 basis points while continuing to invest in both our operations and key strategic growth priorities. Also delivered solid cash flows for the year with $264 million in operating cash flow and 79% free cash flow conversion. Please turn to slide seven now for additional insights into our fourth quarter revenue performance. Fourth quarter total revenues were $398 million, representing a decrease of 1.8% on a reported basis, inclusive of the $11 million unfavorable impact from FX and the impact of the TWC divestiture. On an organic basis, we delivered 2.9% growth compared to the prior year. Overall, we saw solid demand recovery across our various segments and key product lines, including double-digit growth from ACell. The growth across our business in the quarter was tempered by supply challenges, the SteriLink recall, and normalization of private label orders. If you turn to slide eight, we'll take a deeper dive into our CSS revenue highlights for the fourth quarter. Reported fourth quarter revenues in CSS were $265 million, an increase of 1.8% on an organic basis from the prior year. Excluding SteriLink, organic growth was 3.5% across the remaining parts of the CSS portfolio, led by CSS management and advanced energy product lines. Global neurosurgery sales were up 1.8%. Within that CSS management group, low double digits driven by growth in our programmable valves. Advanced energy grew low single digits driven by CUSA Capital and small capital sales. Dural access and repair was down low single digits as a result of supply challenges, including packaging material availability. Neuro monitoring declined mid-single digits due to the SteriLink recall. Sales and instruments grew low single digits in line with our long-term growth expectations for this franchise. International sales of CSS increased low single digits with mid-single digits growth coming from Japan, China, and our indirect markets. Moving to our tissue technology segment on slide nine. Reported Q4 sales in tissue tech were $133 million, an increase of 5% on an organic basis from the prior year. Wound reconstruction grew 8.2% on an organic basis compared to 2021. Its solid performance across the portfolio led by Integra Skin, PriMatrix, MicroMatrix, and SUTEL. We're pleased with the accelerated momentum of ACell, delivering double-digit growth in the quarter and for the second half of the year as we finalized the integration of ACell and benefited from the increased capacity and productivity of the combined sales team. Sales in private label were down 4% for the quarter compared to 2021. You may recall that we saw double-digit growth in private label through the first half of the year because our partners increased their safety stocks to protect their supply chains. We have since seen these inventory levels begin to normalize, resulting in lower sales versus the prior year. Turning to slide 10, I'll cover the highlights of the P&L for the fourth quarter and the full year. Adjusted gross margin in Q4 was 66.3%, down 50 basis points compared to 2021. More than expected as our supply chain challenges impacted some of our higher gross margin products, and we also saw impacts from the CereLink recall and inflation. Our Q4 adjusted EBITDA margin was 27.6% compared to 26% in the prior year. Significant improvement of 160 basis points. We carefully managed our operating expenses by restructuring and redeploying overhead costs to investments in our key strategic growth drivers. Our disciplined spending management allowed us to improve our full year adjusted EBITDA margin by 40 basis points. Adjusted earnings per share for the fourth quarter were $0.94, up $0.10 versus 2021. Our full year adjusted EPS grew by 5.7%. Careful spending allowed us to offset full year effects as well as the several recall headwinds, and also enabled us to deliver full year EPS above the high end of our original guides. If you turn to slide 11 for a brief update on our balance sheet and cash items. Operating cash flow in the quarter was $85 million, and free cash flow $71 million, with 90% free cash flow conversion. On a full year basis, operating cash flow was $264 million, and free cash flow was $222 million. As of December 31st, our net debt was approximately $1 billion, and total leverage ratio was 2.2 x below our target range of 2.5-3 x. The company had total liquidity of $1.76 billion, including $457 million in cash, and the remainder available under our revolving credit facility. With the strong cash flow, we have been able to pay down debt and return additional value to shareholders as we executed a $125 million share repurchase at the beginning of 2022, and commenced a $150 million share repurchase in 2023. With 2022 behind us, let us now move to 2023 and turn to slide 11. What will drive Integra in 2023 is a further acceleration of growth, strengthened margin accretion, and stepped-up investment in strategic initiatives to support future growth. On the revenue side, as I mentioned earlier, we exited the year with procedures near pre-COVID levels, providing us a solid foundation for growth in 2023. Our outlook reflects this procedural demand, along with the gradual improvement of supply, including sourcing reliability of components and packaging. We also expect overall demand for our products to further grow, and we are excited at the prospect of relaunching CereLink by the end of the second quarter. Our new products are expected to contribute to the company's growth, along with DuraSorb, the offerings from SIA, our most recent acquisition. We intend to drive profitable growth in 2023 with strong gross margin improvements driven by favorable product mix, focus on price capture, and increased efficiencies within our manufacturing sites. We'll also benefit from the full-year impacts of our TWC divestiture and the closure of our high-cost manufacturing site in France. With that profitable growth, we will reinvest in our business by stepping up our strategic investments and strengthening our core capabilities to position ourselves well for future growth. These key growth accelerators include, first, PMA readiness for SurgiMend and DuraSorb, by which I mean execution on the clinical studies, delivery of the PMA submissions, and preparation of our relevant manufacturing sites to produce PMA-level products. Second, further advancements of our Aurora platform, and lastly, enhanced generation of clinical evidence to support regulatory approval and strong reimbursement of our portfolio around the world. We will also invest in the expansion of our international business and our first digital pilots. Turning to slide 13 to translate these drivers into financial expectations for 2023. For the full year, we expect revenues to be in the range of $1.602 billion-$1.620 billion, representing reported growth of 2.9%-4% and organic growth of 4%-5.2%. Our revenue range accounts for a 40 basis points headwind from effects, which reflects the lower impact compared to 2022. As a result of the strengthening of major foreign currencies versus the U.S. dollars over the past few months. If you look in more detail at full year revenue, we expect to see higher growth contribution in the second half of the year compared to the first half of the year, mainly as a result of a number of 2022 timing items. First, as mentioned previously, we expect a gradual improvement in supply, which will contribute more heavily to the second half of the year. Next, we have the year-over-year impact of the SteriLink recall of the third quarter of 2022, and we anticipate relaunching at the end of second quarter 2023. Third, we expect private label to continue to normalize in 2023, resulting in tougher comps in the front half of the year. Lastly, we expect a larger contribution from our China business in the second half, given the end of rolling lockdowns late last year. Overall, at midpoint of guidance, we expect organic growth of approximately 3% in the first half and approximately 6% in the second half of 2023. On a reported basis, we will see the timing from the TWC divestiture create an unfavorable comp in the first eight months of 2023. Turning to our profit outlook for the year, we expect adjusted earnings per share to be in the range of $3.43 to $3.51. You turn to slide 14 for a look at our guidance for the first quarter of 2023. For the first quarter, we expect revenues to be in the range of $370 million-$376 million, representing reported growth of approximately -1.5% to flat, and organic growth of 2% to 3.5%. Expect the first quarter to be most impacted by the year-over-year comps I highlighted before. Turning to adjusted earnings guidance for the first quarter 2023, we expect adjusted EPS to be in the range of $0.72-$0.76, flat year-over-year at the midpoint of the guidance. If you turn to slide 15, I'll conclude with a brief look at our strategic pillars and a summary of our prepared remarks. As we outlined earlier this year, we've rallied the business around five strategic pillars for 2023 and beyond. The first three pillars are our biggest growth levers, driving stronger innovation for outcomes, catching up on our growth potential in international, and broadening our impact across the care pathways in the therapeutic areas on which we focus. The last two pillars are key enablers, driving operations and customer excellence and cultivating a high-performance culture. These five pillars are a great way to understand how and where we're prioritizing our investments to achieve our 2023 results and building towards our long-range plan. We look forward to going deeper into our strategy and how we will execute at our May 4rth, Investor Day. Let's move now to the last slide 16, to conclude our prepared remarks. In 2022, we were able to capitalize on the recovering markets with our resilient and diverse global portfolio of products and great brands. We delivered above 4% organic growth for the full year in what was still a tough operating environment. Our execution in 2022 points towards clear path of organic growth within the range of our long-range plan. Utilizing a broad set of operating levers, including price capture, operational efficiencies, careful restructuring, and cost management, we exceeded our profitability commitment for the year, and we delivered additional value to shareholders in the form of share repurchases, a more focused portfolio, and a strategic acquisition expected to strengthen our position in one of the most exciting growth markets in implant-based breast reconstruction. We are positioned in 2023 and beyond to accelerate our organic growth rates and improve our gross margins. For 2023, a portion of that margin improvement will be redeployed to investments in our growth catalysts, which will temper our EBITDA and EPS growth. However, these investments will further strengthen our core capabilities and operational resilience while building capability to develop and deliver life-saving technologies and products for our customers, the fuel to enable us to meet our long-range plan targets. That brings us to the end of the prepared remarks. I will hand it back now to Chris and the operator, and Matthieu Aussermeier and Jeff Mosebrook are gonna join me for the Q and A. Chris? Thank you. Latif, we can open the line up for Q and A, please. Yes, sir. As a reminder to ask a question, you will need to press star one one on your telephone. Again, that's star one one on your telephone to ask a question. Please stand by while we compile the Q and A roster. Our first question comes from the line of Vik Chopra of Wells Fargo. Your question, please, Vik. Hey, good morning. Thanks for taking the question. Just a couple from me. I guess the first one is Can you provide an update on the CFO search? What's the criteria for the candidates and any timeline that would be helpful. My second question is on margins. Jan, thanks for the comments that were helpful. How should we think about growth and EBITA margins in 2023? Thank you. Okay. Let me take the first one, and I'll ask Jeff to go a bit deeper into the margin question. On the CFO search, we started late January with the search with an executive search company looking for a CFO who, yeah, provides a good balance between on the one side, the operational capabilities. I mean, Integra is a heavy operational business, many dimensions of operational excellence and I would say complexity. Also, yeah, on the other end of the balance, a strong strategic capability and a capability to engage in M&A. It's clear that at this point in time, we are an acquisition firm company, and we will continue to be an acquisition company. Yeah, we're looking for a CFO that has that balance. At this point in time, we are with the executive search company making, yeah, long lists of candidates. I expect that I'm gonna be busy interviewing during the month of March. How that translates into candidate being feet on the ground, can take between three to four months. That's on the CFO. I'll hand it to Jeff to give a bit of view at the margin evolution in 2023. As I communicated during my prepared remarks, we definitely made a choice to reinvest some of our strong gross margin improvement in 2023 to reinvest in several of the investment areas that all of them support our growth capability. I'll let Jeff go a bit deeper the elements. Thanks, Jan. Vic, to kind of walk through your question, let's maybe start first on the gross margin. You know, Jan, in his pre-prepared remarks and what he just highlighted, a lot of positive things, we see across gross margin. When you start first on the revenue side, you see the benefits that we're gonna drop through in 2023 with the product mix and the price capture. Couple that with the benefit that we'll see for the full year for the TWC divestiture, we'll drive benefits there along with what we're seeing with manufacturing efficiencies that we hope to gain in 2023. Some of them, was mentioned around the closure of a high-cost facility in France as well too. Overall, when we look at gross margin, we see that improvement being around 100 basis points mid of improvement there. That's gonna be the capture that we're expecting going into 2023. As you move to the operating expenses, as Jan had mentioned, we're really trying to apply that and make sure that we're redeploying and we're looking at our strategic investments. We mentioned a couple of kind of key areas there, the SurgiMend and the DuraSorb PMAs, you know, new products, R&D and clinical, international expansion, along with some R&D along the digital pilot site. What you're gonna see from an EBITA is really modest, EBITA margin expansion as the offset really to the gross margin expansion will be within the operating expense as we continue to invest into the growth levers of our business. Thank you. Our next question comes from the line of Robbie Marcus of J.P. Morgan. Your question, please, Robbie. Hi, this is Alan on for Robbie. I had a quick one on the quarter and then on 2023. Starting with the quarter, you know, we were just talking about gross margin, but from our perspective, it looks like it actually came in a little bit softer than expected, especially when you look at, you know, the kind of fact that it, you know, worsened year-over-year and also sequentially, despite the fact that, you know, macro, you know, currency macro was generally, you know, still pressured, but not as bad as expected. Can you just dive into, you know, what drove that relative softness and, you know, whether or not there's upside to that 100 basis points you just called out? I understood you're talking about gross margin, right? For the fourth quarter, Robbie? Yes, that's correct. Yeah. If you look at, there's an impact of the mix, right? As a result of the supply shortages, specifically, packaging materials, we fell short or we have higher backorders than we wanted on our durable access and repair, which is a higher profitability product. That mix pushed the wrong side. There's of course still a bit impact from the SteriLink recall cost we're making during the quarter. Third, impact from, on a comparative basis, impact from inflation that was hitting us on the gross market side, inflation that came through our factories during the year. Okay. Those are the three main levers playing in the fourth quarter. Yeah. Jan, I just probably would add there, again, you had mentioned about the FX. We still look at the FX in a year-over-year. It was significantly worse first Q4 from the prior year. As Jan mentioned, relative to some of our costs, what we see is some of the inefficiency with our manufacturing that happened in the earlier part of the year, those amounts get deferred and then expensed in Q4. The gross margins came in lighter in Q4, but that was within our guidance and within our expectations. Got it. Looking to 2023, when you look at your organic growth range, you know, 4%-5.2%, at the top end, you're coming at the very low end of the LRP. I know there's still some puts and takes to the year, with, you know, you have CereLink coming back in the first half, so you have difficult comps in the first half offset by easy comps in the back half, recognizing that it will take time to get that going. Also, you'll be working on integrating, you know, SIA. I guess, you know, what gives you confidence that you can continue to kind of drive that re-acceleration and back to growing, you know, sustainably within your LRP and hopefully getting, you know, closer to the high end of the LRP? Thank you. Yeah. I would give you the short answer, and if you want to go a bit deeper, we can. First, and as I communicate before, we have our two portfolios and the markets they're in. I think in tissue technology, clearly in 2022, proves to be that 7%-9% growth business, definitely with ACell really starting to pull hard, but also the rest of the portfolio delivering well. We see a normalization of our private label. That definitely carried more than its weight in 2022, but it's going to normalize in 2023. Overall, that portfolio is doing what we expect it to do. The neuro portfolio at 3%-5% market, which, if you look at the portfolio in 2022, excluding Sterling, definitely delivered that. With Sterling coming back, that will contribute to its rightful weight in the portfolio. If you take those two together, we're a 5%+ business, and that's what, you know, we're working towards in 2023. A couple of the year-over-year comparisons make that a bit more difficult with different ups and downs in 2022. That gives me confidence in the portfolio that we have in the 5%-7% range that we have set as our long range plan. On top of that, there's a couple of NPIs that were launched in 2022, which will start to deliver more, increasingly more over 2023. I'm thinking about Aurora, NeuraGen 3D, two of the 2022 launches that will show up in 2023. It is important also to note that from a Sterling perspective, we're really counting on revenue in the second half as we're looking at our guidance range. Next please. Thank you. Our next question comes from the line of Steven Lichtman of Oppenheimer. Your line is open, Steven. Great. Thank you. Morning, guys. I wanted to ask on a couple topics. One, on product pipeline of the medium term. Can you give us an update on both SurgiMend and Aurora? What are the key sort of milestones that we should be looking for on both in terms of your discussions with FDA on SurgiMend, and on the Aurora rollout? Jan, maybe on the second question, if you just flesh out a little bit more on what you see as the international opportunity and, you know, what should we be looking for from Integra in 2023 as you really, you know, continue to build that out? Thanks. Yeah. First on the question on the product pipeline. One, SurgiMend, as we communicated last time, we're well on track to do our submission in, it's gonna be August of this year. That's submission of further data that we've been working together with the FDA will be submitted. We're well on track to do that, and that should lead, and we feel good about our prospects to get PMA somewhere over 2024. With Aurora, at this point in time, it's about putting further instruments in the field to drive utilization and drive experience with the surgeons. Last year, 2022, I mean, low revenues was not the target. We expect in 2023 to have the first, yeah, call it material revenues. Yeah, also Aurora to show up on the pipeline. That's on the products. In terms of international opportunity, one, the international historically has been and will continue to be high single digits growth driver, strong growth in Asia, Japan, China for sure. Also if you look at our indirect markets in the Middle East, Latin America, Canada, good drivers. In parallel, we're working different investments into international. First, more feet on the street. There are still some regions where we're underrepresented versus what we could with our current portfolio. Second, we're building out our global portfolio in international. We just launched early in January the ACell portfolio in Europe. That's existing products in new market that will add to the international growth. We're further exploring opportunities for tissue technologies in Europe, but also in select Asian countries. From a neurosurgery perspective there, given we're well positioned in Europe, looking for further opportunities in Asia, places like China, to bring more of our neurosurgery products, yeah, into the market. Two mixes. One, it's a good market, and we're feeding the good markets, yeah, with the products we have. Second, we're introducing products that we have into both Europe and Asia, while in parallel, we're not excluding, yeah, M&A opportunities to further build out our footprint international. That's helpful. Thanks, Jan. Thank you. Our next question comes from the line of Matthew Taylor of Jefferies. Your line is open, Matt. Is that Matthew Taylor? I don't know. Yes, sir. Okay, great. Thanks, guys. I just wanted to ask a question about some of the factors that are going to help you in the second half of the year. I guess, could you quantify the amount of contribution that you expect from CereLink? Understanding that you'll be in the 6% range implied in the second half of the year, you're within your LRP targets. Do you think that's a good jumping off point to be able to consistently grow in that range as you move into 2024? Yeah. Matt, this is Matthieu here. Again, when you look at our first half, second half, and kind of the ramp from the 3%-6%, you know, CereLink, we're not banking on any revenue in the first half and coming back in the second half. If you look at what we have seen historically in terms of sales coming back from CereLink, we think we're gonna be gradually coming back to this in the second half and then entering 2024, with, again, a stronger base for growth, in that year. In general, in terms of trends into 2024, I think we'll continue to make progress towards our long-term plan, which is really that 3%-5% on the CSS side. It's that 7%-9% on tissue tech, and we expect to make strides going forward 2023, 2024 and onward to achieve those long-term targets. Okay, great. Maybe just one follow-up. You talked about the private label normalization a few times. Can you be more specific about how you expect private label to grow in 23 because of the tough comps in the first half? Yeah. I'll give that again to Matthieu. Yeah. you know, first half when you look at private label, I mean, we definitely expect a year-over-year comp that's gonna be down. First half 2022 was really our strong half, I would say, of 2022. As you go into the second half, we expect it to be, you know, slightly down to flattish, bringing the year on a year-over-year comparison to down low single to mid-single digit on the private label segment. Great. overall, Matt- Thank you very much. Private label is mid-single digit, yeah, growth business. Yes. That's where we'll be back at those levels, as of 2023, and we'll continue in the out years. Okay, great. Thanks for the clarification there. Thank you. Thank you. Our next question comes from the line of Ryan Zimmerman of BTIG. Please go ahead, Ryan. Okay. Good morning. Thanks for taking our questions. I guess I want a little more clarity on the margin line, because as I think about the long range plan, you know, when do we get to kind of that low teens or double-digit EPS growth? The 100 basis points of margin expansion you're expecting, is that absolute for 23? I guess I'm curious if there's anything baked in in terms of inflation headwinds or, you know, other, you know, effects that you're talking about. Should we assume that you're gonna get 100 basis points of margin expansion in 23 on an absolute basis kind of all in? Just as a second to that, when do we get back to kind of that low double-digit EPS growth? If I look at, you know, kind of where margins are going, coupled with some of the you know, the sales and marketing structure, it doesn't look like we're gonna see a double-digit number, you know, in 2024 as well, just looking at kind of where the margins are at today. Let me I'm gonna hand it back Ryan to Jeff, but also to clarify a couple of things more on the gross margin, which I think you fully captured. Jeff? Yeah, Ryan. Going back to that 100 basis points, that was a discussion around the gross margin side. Where we see gross margin improving, you know, 100 basis points, 100 basis points mid relative to kind of those drivers we mentioned before. When we talk about kind of year-over-year and modest EBITDA improvement, keep in mind within our OpEx, you know, the redeployment that Jan was speaking of, which is a reset kind of coming out of our expense management that we had in the second half of the year. You also have to couple that with the SIA acquisition we did at the end of December. That acquisition brought within operating expense, and we mentioned within that deal that it would be dilutive. It's adding the additional R&D and commercial with that business to make sure that we support it going forward, both from the PMA perspective and commercial execution there as well too. I think, you know, relative to 2023, you gotta keep in mind there's a lot of moving parts on the top line with timing and that's creating some noise in the first half and the second half, and then also on the operating expense side, the investments that we're making along with SIA as well too, that is making our EBITDA growth more on the modest side. Again, gross margin growing at 100 mid basis points offset on the operating expense with those investments that we talked about. Maybe, Ryan, just to add to that, because, I mean, Jeff used the term 100 basis points mid, yeah, by which he means, yeah, well above 100. Correct. Yeah. Okay. That's one. We definitely for 2023 are driving strong gross margin accretion as a result of on one hand some of the mix portfolio changes we've done and focus on operational efficiencies. That's one. Second, in terms of what I flagged as we're investing in growth, if you look back at our OpEx pattern, first half, second half last year, you'll see that the second half were significantly lower on OpEx. At that point in time, I told our investors that this is preparing not just to compensate for Sterling, but also preparing to redeploy, which we're doing. You will see that OpEx come back, and more, part is the SIA acquisition, but part is that we're reinvesting the money we redeployed last year. I would say in total, there's about $35 million of redeployed money that we're reinvesting in 2023. That brings our OpEx level back to a bit more normal level, I would say like the first half of 2022, plus the SIA acquisition and some labor inflation. Those two elements, that's essentially the re-step-up of our OpEx that is keeping our EBITDA progress in 2023 at a modest time. Okay. Let me ask about market growth then. I'm gonna ask, you know, a little bit away from the P&L for a second. As you think about the puts and takes of the business, and I know CereLink's coming back and so forth, what are you assuming for overall market growth, be it neurosurgery or tissue tech? Are those markets at depressed levels right now in your view? You know, if they're not, then you are losing share, I guess, relative to your market in the first half of this year. If they are at depressed levels, you know, when are you assuming they come back? Is that in coordination with the product drivers you're talking about? Why, you know, why not get more of a boost, I guess, in the back half of the year? We see the markets pretty much back at their normal levels, we see in Q4, except for a couple of countries, we're pretty much back to normal. The growths that you see, we don't think we're losing share. I think there's definitely with Sterling not in the market, not growing at that market, but the other parts of the portfolio are doing as we expect them to do. Even in several areas when I look at our capital, when I look at our CSF, I mean, we're definitely capturing share. I think the numbers you see, I mean, have several elements of year-over-year comparison that may make you think differently, but that's definitely not the case. Market, yeah, we see the market as back and good. Yeah, we see our position strong in the markets. Okay. Thank you. Thank you. Our next question comes from the line of Richard Newitter of Truist. Your line is open, Rich. Hi. Thank you for taking the questions. Just maybe sticking with the margin outlook, you know, I think I heard you say earlier in the call modest EBITDA margin expansion or operating margin expansion. I guess I'm just for the full year, I'm trying to figure out how you get there. Earnings growth is effectively in line more or less with the top line and you have a repo in there. Maybe help flesh out are there below the line non-operating items and tax interests that are, you know, considerations there, that would lead to modest expansion? I'm getting more to flat, maybe even slight deleveraging. Secondly, on the cadence of margin improvement, it sounds like, you know, you're going to step up the spending back to quote normalized levels pretty immediately starting in the first half. That's where growth is on the top line a little bit lower between the first half and the second half. Should we be thinking about, you know, a different margin delevering and levering profiles in the first half and second half? Any color you can provide on kind of the margin cadence moving through the year? Yeah. Thanks, Rich. Maybe just walking down the rest below EBITDA. I think to keep in mind as you're kind of modeling through the EPS with the range that we gave, walking down kind of on the tax rate, that's an area to call out. We did have in 2022 a benefit from stock comp that we don't see will be reoccurring in 2023. We're modeling our tax rate around 19% for the year. That's, you know, year-over-year about 100, a little bit over 100 basis points of increase in tax rate. You had mentioned the share count, but that is a key point as well too. as we initiated in early Q1 a $150 million share repurchase. You have to factor that into an updated share count for the rest of the year, and that really kind of drives to our EPS guidance that you mentioned. Again, recall on the operating expense as well too is the deployment of those additional investments that Jan had mentioned, plus the addition of the SIA acquisition that was in December that's adding the additional expenses and contributing to the modest EBITDA improvement. Okay. On the cadence question. Yeah. Yeah, no. On your cadence question, as you kind of asked, I think you're correct. You'll see a little bit of the drive and the profitability match and the revenue. You know, we had, you know, provided the guide of the walk of the first half at 3% versus second half at 6%. That will align with some of the profits as well too, as the OpEx investments will be fairly evenly throughout the year with maybe a slight uptick in the second half. You'll see more profit driven more in the second half of the year. Okay. Thank you. Maybe just one on SteriLink. you know, as we think of the products return to market, should we be thinking about the incremental revenue contribution at least in 2023 as more just getting supply back to existing customers or are you banking or is your guidance assuming actually, you know, opening new accounts and incremental revenue beyond some baseline level that you get back to? We definitely count on opening new accounts. As I communicated before, our manufacturing capabilities is ready. Yeah, we have the different parts, ready to start manufacturing. Capacity is not really gonna be a bottleneck. At this point in time on SteriLink, we are running the validation verification of the new technical fix, generating statistical significant data to then take it to the FDA and get back into the market, you know, after submission. Okay. Thank you. Thank you. Our next question comes from the line of Jayson Bedford of Raymond James. Your line is open, Jason. Hi. Good morning. Just maybe a couple quick ones. You mentioned price capture as part of the stronger margin profile. Can you just provide a little bit more detail as to price, the discussions, any pushback you're getting, and what's the contribution to revenue growth in 23? Thanks for the question, Jayson. In terms of price, we communicated last year that typically we've always gotten some price in the range of 1%. Last year, we aimed for more, and we succeeded in getting more. This year, given the realities of inflation that we saw last year and some of inflation that is hanging, we're aiming next step higher. As far as we see, customers understand, we're not the only med tech company that is adding price to deal with the inflationary prices. We're on a path to get more than last year, which definitely is significantly more than what we would get in a typical year. Jan, that's on a net basis, meaning if I just look at kinda your $1.5 billion in revenue in 2022, you expect to get, you know, north of 1% in price in 2023 across the portfolio? Yes. Okay. Okay, then just quickly, second one, the mid-single digit decline in dural access repair, it sounds like much of it is supply chain related. Are there any demand issues, or are there any kind of competitive market share dynamics at play as well? Thanks. Oh, no. This is all, supply, and then primarily packaging material, unpredictable availability. Let's call it that way. We're losing some manufacturing capacity, yeah, as a result. When's this expected to be alleviated, the supply chain dynamics? We'll definitely expect it to take all of the first half to bit by bit improve. This is about the supply chain getting back to its capacity. We are developing and have developed parallel suppliers of some of these packaging materials. We're alleviating some of the roots cause. For some, we will have to continue working with supplier to bit by bit get back to the capacity of material supply that. Jayson, this is Matthew. This is also, I would say, kind of a good example of what we're going to see throughout 2023 in terms of gradual supply recovery, right? What you mentioned here from a dual access and repair perspective is really in line with how we kind of look at 2023 and the step up of supply recovery. Got it. Thank you. Thank you. Our next question comes from the line of Joanne Wuensch of Citi. Your question please, Joanne. Hi, this is actually Anthony on for Joanne. Thank you for taking our questions. First, Codman in China grew mid-single digits this quarter, despite what we've seen with the COVID wave with the reopening. Can you just talk about maybe what's specifically driving the growth there, and then what your outlook is for growth in China this year? I'll ask my follow-up just that you could discuss what you're seeing in terms of hospital appetite for new capital. Thank you. I got your second question. Well, the first one, not sure, Anthony. Could you repeat? Yeah, sorry. Just asking about the Codman growth in the quarter. I believe you said was mid-single digits in China. Just curious maybe what specifically you're seeing in China, what's driving the growth there, and then your expectations for China growth in 2023. Okay. What we saw in China over the fourth quarter is still some impact of the rolling lockdowns. Now we still saw in the fourth quarter mid-single digit growth, that's compared to what the double-digit growth we are expected to see from China. From China, we expect as of the second quarter of this year to be back to that double digits growth rhythm. The first quarter still gonna be a bit of a mix with some of the Chinese New Year and some of the January COVID wave that passed through the country. We definitely saw impact. Although coming out of Chinese New Year, I think most people are pleasantly surprised on how the ripples flattened out quite quickly. First quarter do not expect double digit yet, but as of the second quarter, I see China back into a normal rhythm. Which is driven by the further growth of healthcare in that country, but also our drive to move from tier one to tier two and three hospitals. We are spreading our geographic coverage in China. That's the second beyond the market, that's the second big growth driver for our Codman portfolio there. The question on capital. Capital in the fourth quarter has been solid, remains solid. We ended the year with very healthy funnels, and we pretty much have seen this healthy capital all over 2023. The only thing that we've seen a bit different over the years that decision timings have become longer, that's primarily driven by just the administrative processes that seem to run or turn a bit slower. We do not expect that to accelerate quite rapidly, we consider we're at the new steady state where decisions will take longer. You know, the pipeline is well filled, we'll get the deals out of that pipeline at a steady growth pace that we've seen last year. Thank you. Our next question comes from the line of David Turkaly of JMP Securities. Your question please, Dave. Yeah. Great. Jan, I'd just like to get your thoughts on sort of valuations out there. It seems like a lot of the private companies are compressed, and if that's true, I'll just add the second part in here. You're a little below the LRP on top line and you're under-leveraged. Why do you think the $150 million buyback is the right all-allocation choice right now? Thank you. I think you know us as a discipline with our balance sheets. When we initiated the $150 million buyback, there were two drivers. One, given what we have in our M&A objectives, what we also have on the balance sheet, we felt that we both could give the capital back and still not impact our M&A planning. Second, from a timing perspective, when we did the SIA acquisition, we knew first year $0.06 dilutive. With that buyback, we wanted to isolate our shareholders from that impact. I see it more as a strength of our balance sheet that we can do both, do M&As. At the same time also, if we have excess capital, to not let it linger on the balance sheet, but bring it back. What you say on the depressed valuations, we're, yeah, very aware of that. Yeah, we definitely know, yeah, what are the targets that we wanna go after, yeah, for this year and the, and the next years. Thank you. Thank you. Our next question comes from the line of Matthew O'Brien of Piper Sandler. Your line is open, Matthew. Okay. Thanks for taking the question. Just to follow up on Dave's question there a little bit, Jan. You know, you've got your Game Board, you're not that levered, but you're making a lot of investments in the organic business this year, and the inorganic acquisition from last year. Is it fair to think that the likelihood of a chunkier deal this year is lower just because of all you've got going on right now, we should expect more, you know, technology or very smaller tuck-in acquisitions versus something bigger? I do have one quick follow-up. I would not make that translation to only smaller deals. Definitely on our game board, which is driven by strategy, there's deals that are more tuck-in like. There's also more significant objectives. Our balance sheet is not keeping us from having to make a selection on which we can which we can afford. Okay. The timing is mainly driven by whether on both sides of the table there's a willingness to transact. Okay, thanks for that. You know, ACell was an acquisition that was done that was challenging to start with, but so, you know, based on the results here recently, is really perking up. Can you just maybe deconstruct a little bit of some of where that growth is coming from, and then the confidence level and the durability that you're seeing there on the low double-digit growth side effect? Thanks. The simple story on ACell is that, as part of the first moves on the acquisition, we essentially had to reduce that sales force. This was linked to a CIA agreement that was on this business that we did not wanna take over. We essentially had to rebuild parts, yeah, of that ACell sales force. That took, yeah, time and investing in bringing new people on board, starting end of 2021. Okay. As we communicated over the first quarter and the second quarter, where we said, "Look, we're bringing people on board, we're getting them up and running. It's gonna take six months before they hit the streets. I mean, all of that pretty much played out as we projected, and we saw the results in the second half. This product today, yeah, in the acute wound and reconstruction clearly has its place, yeah, to fill or to care for deep wounds. Yeah, we also see a bit of a combination effect where some of the ACell products, yeah, pulls some of the other tissue technology products. Overall, when I look back, I think the strategy for this product was right. It's a product that fits in our portfolio. I think the startup was a bit of a down and then back up as we had to rebuild that sales force. Yeah, I mean, clearly also to me, yeah, our sales teams have proven that they understand how to build and run a sales organization. Okay. Thank you. Thank you. This concludes Integra LifeSciences' fourth quarter and full year 2022 financial results call. Thank you for participating. You may now disconnect.