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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _____________________________________________________________ 
FORM 10-Q
 _____________________________________________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 1-16137
 _____________________________________________________________ 
itgrlogo20190925a07.jpg
INTEGER HOLDINGS CORPORATION
(Exact name of Registrant as specified in its charter)
 _____________________________________________________________ 
Delaware 16-1531026
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
5830 Granite Parkway,Suite 1150Plano,Texas 75024
(Address of principal executive offices) (Zip Code)
(214) 618-5243
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareITGRNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  Accelerated filerNon-accelerated filer
Smaller reporting company  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
The number of shares outstanding of the Company’s common stock, $0.001 par value per share, as of April 19, 2024 was: 33,503,719 shares.



INTEGER HOLDINGS CORPORATION
Form 10-Q
For the Quarterly Period Ended March 29, 2024
TABLE OF CONTENTS

- 2 -

PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTEGER HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands except share and per share data)March 29,
2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents$42,156 $23,674 
Accounts receivable, net of provision for credit losses of $0.2 million and $0.4 million, respectively
237,154 238,277 
Inventories262,869 239,716 
Refundable income taxes2,848 1,998 
Contract assets90,873 85,871 
Prepaid expenses and other current assets32,673 28,132 
Total current assets668,573 617,668 
Property, plant and equipment, net448,712 407,954 
Goodwill1,043,876 1,011,007 
Other intangible assets, net828,854 783,146 
Deferred income taxes7,026 7,001 
Operating lease assets83,243 81,632 
Financing lease assets12,630 11,828 
Other long-term assets23,095 22,417 
Total assets$3,116,009 $2,942,653 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$116,220 $120,293 
Income taxes payable5,963 3,896 
Operating lease liabilities8,550 8,692 
Accrued expenses and other current liabilities70,696 88,088 
Total current liabilities201,429 220,969 
Long-term debt1,140,724 959,925 
Deferred income taxes145,199 145,625 
Operating lease liabilities74,294 72,339 
Financing lease liabilities10,928 10,388 
Other long-term liabilities18,424 14,365 
Total liabilities1,590,998 1,423,611 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,503,719 and 33,329,648 shares issued and outstanding, respectively
34 33 
Additional paid-in capital725,247 727,435 
Retained earnings791,859 771,351 
Accumulated other comprehensive income7,871 20,223 
Total stockholders’ equity1,525,011 1,519,042 
Total liabilities and stockholders’ equity$3,116,009 $2,942,653 
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 3 -

INTEGER HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (Unaudited)
 Three Months Ended
(in thousands except per share data)March 29,
2024
March 31,
2023
Sales$414,805 $378,785 
Cost of sales304,965 282,112 
Gross profit109,840 96,673 
Operating expenses:
Selling, general and administrative46,929 41,886 
Research, development and engineering15,753 19,092 
Restructuring and other charges7,881 1,529 
Total operating expenses70,563 62,507 
Operating income39,277 34,166 
Interest expense14,671 17,254 
(Gain) loss on equity investments(1,136)155 
Other loss, net1,007 760 
Income before taxes 24,735 15,997 
Provision for income taxes4,227 2,932 
Net income$20,508 $13,065 
Earnings per share:
Basic$0.61 $0.39 
Diluted$0.59 $0.39 
Weighted average shares outstanding:
Basic33,478 33,258 
Diluted34,993 33,575 
Comprehensive Income
Net income$20,508 $13,065 
Other comprehensive income (loss):
Foreign currency translation gain (loss)(13,438)7,925 
Change in fair value of cash flow hedges, net of tax1,086 1,712 
Other comprehensive income (loss)(12,352)9,637 
Comprehensive income$8,156 $22,702 
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 4 -

INTEGER HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 Three Months Ended
(in thousands)March 29,
2024
March 31,
2023
Cash flows from operating activities:
Net income$20,508 $13,065 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization26,185 24,126 
Debt related charges included in interest expense931 5,149 
Inventory step-up amortization1,056  
Stock-based compensation6,848 6,102 
Non-cash lease expense2,295 2,741 
Non-cash (gain) loss on equity investments(1,136)155 
Contingent consideration fair value adjustment (265)
Other non-cash (gains) losses805 (1,417)
Deferred income taxes (5)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable7,667 (24,206)
Inventories(17,271)(17,016)
Prepaid expenses and other assets(4,208)1,657 
Contract assets(5,255)(8,819)
Accounts payable2,669 12,877 
Accrued expenses and other liabilities(19,026)(7,773)
Income taxes1,171 (183)
Net cash provided by operating activities23,239 6,188 
Cash flows from investing activities:
Acquisition of property, plant and equipment(29,072)(24,694)
Acquisitions, net of cash acquired(139,126) 
Net cash used in investing activities(168,198)(24,694)
Cash flows from financing activities:
Principal payments of term loans (390,938)
Proceeds from issuance of convertible notes, net of discount 486,250 
Proceeds from revolving credit facility192,000 208,689 
Payments of revolving credit facility(12,000)(232,500)
Purchase of capped calls (35,000)
Payment of debt issuance costs (1,055)
Proceeds from the exercise of stock options313 555 
Tax withholdings related to net share settlements of restricted stock unit awards(9,348)(2,610)
Principal payments on finance leases(8,386)(275)
Other financing activities715  
Net cash provided by financing activities163,294 33,116 
Effect of foreign currency exchange rates on cash and cash equivalents147 1,722 
Net increase in cash and cash equivalents18,482 16,332 
Cash and cash equivalents, beginning of period23,674 24,272 
Cash and cash equivalents, end of period$42,156 $40,604 
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 5 -

INTEGER HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
 Three Months Ended
(in thousands)March 29,
2024
March 31,
2023
Total stockholders’ equity, beginning balance$1,519,042 $1,417,456 
Common stock and additional paid-in capital
Balance, beginning of period727,468 731,426 
Stock awards exercised or vested(9,035)(2,074)
Stock-based compensation6,848 6,102 
Capped calls related to the issuance of convertible notes, net of tax (26,250)
Balance, end of period725,281 709,204 
Retained earnings
Balance, beginning of period771,351 680,701 
Net income20,508 13,065 
Balance, end of period791,859 693,766 
Accumulated other comprehensive income
Balance, beginning of period20,223 5,329 
Other comprehensive income (loss)(12,352)9,637 
Balance, end of period7,871 14,966 
Total stockholders’ equity, ending balance$1,525,011 $1,417,936 
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 6 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1.)    BASIS OF PRESENTATION
Integer Holdings Corporation (together with its consolidated subsidiaries, “Integer” or the “Company”) is a publicly-traded corporation listed on the New York Stock Exchange under the symbol “ITGR.” Integer is a medical device contract development and manufacturing organization primarily serving the cardiac rhythm management, neuromodulation, and cardio and vascular markets. Integer is committed to enhancing the lives of patients worldwide by providing innovative, high-quality products and solutions. The Company also develops custom power solutions for high-end niche applications in energy, military, and environmental markets. The Company’s customers include large multi-national original equipment manufacturers (“OEMs”) and their affiliated subsidiaries.
The accompanying condensed consolidated financial statements are presented in accordance with the rules and regulations of the United States ("U.S.") Securities and Exchange Commission ("SEC") and do not include all of the disclosures normally required by U.S. generally accepted accounting principles (“U.S. GAAP”) as contained in the Company’s Annual Report on Form 10-K. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2023.
In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of the Company for the periods presented. The results for interim periods are not necessarily indicative of results or trends that may be expected for the fiscal year as a whole. The condensed consolidated financial statements were prepared using U.S. GAAP, which require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, certain components of equity, sales, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ materially from these estimates.
The first quarters of 2024 and 2023 ended on March 29 and March 31, respectively, and consisted of 89 days and 90 days, respectively.
Factoring Arrangements
The Company has receivable factoring arrangements, pursuant to which certain receivables may be sold on a non-recourse basis to financial institutions. Transactions under the receivables factoring arrangements are accounted for as sales under ASC 860, Transfers and Servicing of Financial Assets, with the sold receivables removed from the Company’s balance sheet. Under these arrangements, the Company does not maintain any beneficial interest in the receivables sold. Once sold, the receivables are no longer available to satisfy creditors in the event of bankruptcy. Sale proceeds are reflected in Cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows. Factoring fees are recorded in Selling, general, and administrative expenses in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income. During the three months ended March 29, 2024, the Company sold accounts receivable of $57.6 million and recorded factoring fees of $0.4 million. The Company did not utilize receivable factoring arrangements during the three months ended March 31, 2023.
Supplier Financing Arrangements
The Company utilizes supplier financing arrangements with financial institutions to sell certain accounts receivable on a non-recourse basis. These transactions are treated as a sale of, and are accounted for as a reduction to, accounts receivable. The agreements transfer control and risk related to the receivables to the financial institutions. The Company has no continuing involvement in the transferred receivables subsequent to the sale. Fees for supplier financing arrangements are recorded in Selling, general, and administrative expenses in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income. During the three months ended March 29, 2024 and March 31, 2023, the Company sold and de-recognized accounts receivable and collected cash of $36.3 million and $31.9 million, respectively, and recorded costs associated with the supplier financing arrangements of $0.5 million and $0.4 million, respectively.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standard Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). The Company evaluated all recent accounting pronouncements issued, including those that are currently effective, and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company. There have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, that are of significance, or potential significance, to the Company.
- 7 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(2.)    BUSINESS ACQUISITIONS
2024 Acquisition
On January 5, 2024, the Company acquired 100% of the outstanding capital stock of Pulse Technologies, Inc. (“Pulse”), a privately-held technology, engineering and contract manufacturing company focused on complex micro machining of medical device components for high growth structural heart, heart pump, electrophysiology, leadless pacing, and neuromodulation markets. Based in Pennsylvania, Pulse also provides proprietary advanced technologies, including hierarchical surface restructuring (HSRTM), scratch-free surface finishes, and titanium nitride coatings. Consistent with the Company’s tuck-in acquisition strategy, the acquisition of Pulse further increases the Company’s end-to-end development capabilities and manufacturing footprint in targeted growth markets and provides customers with expanded capabilities, capacity and resources to accelerate the time to market for customer products. The Company funded the purchase price with borrowings under its Revolving Credit Facility (as defined below) during the first quarter of 2024. Pulse is included in the Company’s Medical segment.
The total consideration transferred was $142.3 million, including contingent consideration, working capital and other purchase price adjustments. The Company recorded contingent consideration with an estimated acquisition date fair value of $3.6 million, representing the Company’s obligation, under the purchase agreement, to make an additional payment of up to $20.0 million based on a specified revenue growth milestone being met in 2025.
The Company has preliminarily estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisition. The determination of estimated fair value required management to make significant estimates and assumptions based on information that was available at the time the Condensed Consolidated Financial Statements were prepared. The amounts reported are considered preliminary as the Company is completing the valuations that are required to allocate the purchase price in areas such as property and equipment, intangible assets, liabilities and goodwill. As a result, the preliminary allocation of the purchase price may change in the future, including in ways which could be material.
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed (in thousands):
Fair value of net assets acquired
Current assets (excluding inventory)$7,456 
Inventory8,612 
Property, plant and equipment25,950 
Goodwill38,094 
Definite-lived intangible assets64,000 
Finance lease assets7,964 
Current liabilities(1,822)
Finance lease liabilities(7,936)
Fair value of net assets acquired$142,318 
The preliminary fair values of the assets acquired were determined using one of three valuation approaches: market, income or cost. The selection of a particular method for a given asset depended on the reliability of available data and the nature of the asset, among other considerations.
Current Assets and Liabilities
The fair value of current assets and liabilities, excluding inventory, was assumed to approximate their carrying value as of the acquisition date due to the short-term nature of these assets and liabilities.
The fair value of in-process and finished goods inventory acquired was estimated by applying a version of the income approach called the comparable sales method. This approach estimates the fair value of the assets by calculating the potential revenue generated from selling the inventory and subtracting from it the costs related to the completion and sale of that inventory and a reasonable profit allowance for these remaining efforts. Net book value was deemed to be a reasonable proxy for the fair value of raw materials. Based upon this methodology, the Company recorded the inventory acquired at fair value resulting in an increase in inventory of $1.1 million.
- 8 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(2.)    BUSINESS ACQUISITIONS (Continued)
Property, Plant and Equipment
The fair value of Property, Plant and Equipment (“PP&E”) acquired was estimated by applying the cost approach for personal property and leasehold improvements. The cost approach was applied by developing a replacement cost and adjusting for economic depreciation and obsolescence.
Leases
The Company recognized a finance lease liability and finance lease right-of-use asset for a manufacturing facility in accordance with ASC 842, Leases. The lease terms were determined to be at-market as of the acquisition date.
Goodwill
The excess of the purchase price over the fair value of net tangible and intangible assets acquired and liabilities assumed was allocated to goodwill. The goodwill resulting from the transaction is primarily attributable to future customer relationships and the assembled workforce of the acquired business. The goodwill acquired in connection with the Pulse acquisition was allocated to the Medical segment and is deductible for tax purposes.
Intangible Assets
The purchase price was allocated to intangible assets as follows (dollars in thousands):
Definite-lived Intangible AssetsFair Value AssignedWeighted Average Amortization Period
(Years)
Weighted Average Discount Rate
Customer lists$48,000 20.013.0%
Technology16,000 10.013.0%
$64,000 
Customer Lists - Customer lists represent the estimated fair value of contractual and non-contractual customer relationships Pulse had as of the acquisition date. These relationships were valued separately from goodwill at the amount that an independent third party would be willing to pay for these relationships. The fair value of customer lists was determined using the multi-period excess-earnings method, a form of the income approach. The estimated useful life of the existing customer base was based upon the historical customer annual attrition rate of 5.0%, as well as management’s understanding of the industry and product life cycles.
Technology - Technology consists of technical processes, patented and unpatented technology, manufacturing know-how, trade secrets and the understanding with respect to products or processes that have been developed by Pulse and that will be leveraged in current and future products. The fair value of technology acquired was determined utilizing the relief from royalty method, a form of the income approach, with a royalty rate of 7.5%. The estimated useful life of the technology is based upon management’s estimate of the product life cycle associated with the technology before it will be replaced by new technologies.
Contingent Consideration - As part of the Pulse acquisition, the Company may be required to pay additional consideration based on a specified revenue growth milestone being met in 2025. Any amounts earned will be payable in 2026. The contingent consideration is classified as Level 3 in the fair value hierarchy and the fair value is measured based on a Monte Carlo simulation utilizing projections about future performance. Significant inputs include revenue volatility of 11%, a discount rate of 12% and projected financial information. See Note 13, “Financial Instruments and Fair Value Measurements,” for additional information related to the fair value measurement of the contingent consideration.
2023 Acquisition
Effective as of October 1, 2023, the Company acquired substantially all of the assets and assumed certain liabilities of InNeuroCo, Inc. (“InNeuroCo”), a privately-held company based in Florida. InNeuroCo is a recognized leader in neurovascular catheter innovation with strong development and manufacturing capabilities. InNeuroCo’s expertise and highly differentiated neurovascular catheter innovation complements the Company’s existing capabilities and market focus. Consistent with the Company’s strategy, the addition of InNeuroCo further increases Integer’s ability to provide enhanced solutions to its customers in the neurovascular catheter space. The Company funded the purchase price with borrowings under its Revolving Credit Facility. InNeuroCo is included in the Company’s Medical segment.
- 9 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(2.)    BUSINESS ACQUISITIONS (Continued)
The total consideration transferred was $44.5 million, which consists of an initial cash payment of $43.6 million and $0.9 million in estimated fair value of contingent consideration. The contingent consideration represents the estimated fair value of the Company’s obligation, under the purchase agreement, to make additional payments of up to $13.5 million based on specified annual revenue growth milestones being met through 2027, and a one-time contingent payment to be made based on cumulative revenue amounts through 2027 exceeding a specified revenue target.
The cost of the acquisition was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition. From the date of acquisition through the quarter ended March 29, 2024, the Company recorded measurement period adjustments to update the allocation of the purchase price to certain current assets and, based on analysis of information as of the acquisition date, reduced goodwill by $2.2 million. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed (in thousands):
Fair value of net assets acquired
Current assets (excluding inventory)$6,924 
Inventory5,376 
Property, plant and equipment3,436 
Goodwill20,989 
Definite-lived intangible assets9,200 
Operating lease assets2,072 
Current liabilities(2,331)
Operating lease liabilities(1,157)
Fair value of net assets acquired$44,509 
Intangible Assets
The purchase price was allocated to intangible assets as follows (dollars in thousands):
Definite-lived Intangible AssetsFair Value Assigned
Customer lists$4,000 
Technology5,200 
$9,200 
Actual and Pro Forma disclosures
The following table presents (in thousands) pro forma results of operations for the three months ended March 31, 2023 as if Pulse and InNeuroCo had been included in the Company’s financial results as of the beginning of fiscal year 2023. The pro forma results include the historical results of operations of the Company, Pulse and InNeuroCo, as well as adjustments for additional amortization of the assets acquired, additional interest expense related to the financing of the transactions and other transactional adjustments. The pro forma results do not include efficiencies, cost reductions or synergies expected to result from the acquisitions. These pro forma results do not purport to be indicative of the results that would have been obtained, or to be a projection of results that may be obtained in the future.
Sales$395,510 
Net income6,668 
The results of operations from the Pulse acquisition have been included in the Company’s Medical segment since the acquisition date. From the date of acquisition through the quarter ended March 29, 2024, sales related to Pulse were $10.6 million and earnings were not material.
- 10 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Acquisition costs
During the three months ended March 29, 2024, direct costs of the Pulse and InNeuroCo acquisitions of $5.6 million were expensed as incurred and included in Restructuring and other charges in the Condensed Consolidated Statements of Operations and Comprehensive Income. There were no direct costs incurred for these acquisitions for the three months ended March 31, 2023.
(3.)    SUPPLEMENTAL CASH FLOW INFORMATION
The following is supplemental information relating to the Condensed Consolidated Statements of Cash Flows (in thousands):
Three Months Ended
March 29,
2024
March 31,
2023
Noncash investing and financing activities:
Property, plant and equipment purchases included in accounts payable$12,792 $13,434 
Debt issuance costs incurred but not yet paid 1,125 
Supplemental lease disclosures:
Assets acquired under operating leases4,092 325 
Assets acquired under finance leases1,349 110 
(4.)    INVENTORIES
Inventories comprise the following (in thousands):
March 29,
2024
December 31,
2023
Raw materials$127,668 $115,887 
Work-in-process117,958 106,032 
Finished goods17,243 17,797 
Total$262,869 $239,716 
- 11 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(5.)     GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill
The changes in the carrying amount of goodwill by reportable segment for the three months ended March 29, 2024 were as follows (in thousands):
MedicalNon- MedicalTotal
December 31, 2023$994,007 $17,000 $1,011,007 
Pulse acquisition (Note 2)38,094  38,094 
Foreign currency translation(5,225) (5,225)
March 29, 2024$1,026,876 $17,000 $1,043,876 
As of December 31, 2023, the fair value of the Non-Medical reporting unit did not significantly exceed its carrying value. The Company has continued, and will continue, to monitor the performance of the Non-Medical reporting unit, as benchmarked against its long-term financial plan, and evaluate industry and Company-specific circumstances which affect the financial results of this reporting unit. At March 29, 2024, the Company concluded that no events or changes in circumstances have occurred which would indicate that the fair value of the Non-Medical reporting unit has more likely than not been reduced below its carrying amount.
The long-term financial plan for the Non-Medical reporting unit, which underlies the above conclusion, contains numerous assumptions including, but not limited to: macro-economic conditions, market and industry conditions, cost factors, the competitive environment, and the operational stability and overall financial performance of the reporting unit. If the Non-Medical reporting unit does not achieve the financial performance that the Company expects, it is reasonably possible that an impairment of goodwill may result.
Intangible Assets
See Note 2, “Business Acquisitions” for additional details regarding intangible assets acquired during 2024. Intangible assets comprise the following (in thousands):
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
March 29, 2024
Definite-lived:
Purchased technology and patents$305,080 $(199,372)$105,708 
Customer lists879,388 (260,172)619,216 
Amortizing tradenames and other20,451 (6,809)13,642 
Total amortizing intangible assets$1,204,919 $(466,353)$738,566 
Indefinite-lived:
Trademarks and tradenames$90,288 
December 31, 2023
Definite-lived:
Purchased technology and patents$291,142 $(196,388)$94,754 
Customer lists837,453 (253,267)584,186 
Amortizing tradenames and other21,035 (7,117)13,918 
Total amortizing intangible assets$1,149,630 $(456,772)$692,858 
Indefinite-lived:
Trademarks and tradenames$90,288 
- 12 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(5.)     GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Aggregate intangible asset amortization expense comprises the following (in thousands):
 Three Months Ended
 March 29,
2024
March 31,
2023
Cost of sales$4,349 $3,977 
Selling, general and administrative expenses9,088 8,947 
Total intangible asset amortization expense$13,437 $12,924 
Estimated future intangible asset amortization expense based on the carrying value as of March 29, 2024 is as follows (in thousands):
Remainder of 20242025202620272028After 2028
Amortization Expense$41,493 $54,158 $53,437 $51,941 $50,130 $487,407 
(6.)     DEBT
Long-term debt comprises the following (in thousands):
 March 29, 2024December 31, 2023
Principal AmountUnamortizedDiscounts and Issuance CostsNet Carrying AmountPrincipal AmountUnamortizedDiscounts and Issuance CostsNet Carrying Amount
Senior Secured Credit Facilities:
Revolving credit facilities$279,000 $ $279,000 $99,000 $ $99,000 
Term loan A375,000 (1,593)373,407 375,000 (1,687)373,313 
2028 Convertible Notes500,000 (11,683)488,317 500,000 (12,388)487,612 
Total$1,154,000 $(13,276)$1,140,724 $974,000 $(14,075)$959,925 
Current portion of long-term debt  
Long-term debt$1,140,724 $959,925 
In September 2021, the Company entered into a credit agreement (the “2021 Credit Agreement”), governing the Company’s senior secured credit facilities (the “Senior Secured Credit Facilities”). In February 2023, the Company issued $500 million aggregate principal amount of 2.125% Convertible Senior Notes due in 2028 (the “2028 Convertible Notes”). For additional details about the Senior Secured Credit Facilities and the 2028 Convertible Notes, refer to Note 8, “Debt” of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Senior Secured Credit Facilities
As of March 29, 2024, the Company maintained Senior Secured Credit Facilities consisting of a five-year $500 million revolving credit facility (the “Revolving Credit Facility”) and a five-year “term A” loan (the “TLA Facility”).
- 13 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(6.)     DEBT (Continued)
Revolving Credit Facility
The Revolving Credit Facility matures on February 15, 2028. As of March 29, 2024, the Company had available borrowing capacity on the Revolving Credit Facility of $217.5 million after giving effect to $279.0 million of outstanding borrowings and $3.5 million of outstanding standby letters of credit. Borrowings under the Revolving Credit Facility bear interest at a rate based on the secured overnight financing rate for the applicable interest period plus an adjustment of 0.10% per annum, in relation to any loan in U.S. dollars, and the Euro Interbank Offered Rate, in relation to any loan in Euros, plus a margin based on the Company’s Secured Net Leverage Ratio (as defined in the 2021 Credit Agreement). In addition, the Company is required to pay a commitment fee on the unused portion of the Revolving Credit Facility, which ranges between 0.15% and 0.25%, depending on the Company’s Secured Net Leverage Ratio. As of March 29, 2024, the weighted average interest rate on outstanding borrowings under the Revolving Credit Facility was 6.93% and the commitment fee on the unused portion of the Revolving Credit Facility was 0.18%.
TLA Facility
The TLA Facility matures on February 15, 2028, and requires quarterly installments. The quarterly principal installments under the TLA Facility increase over the term of the loan. During 2023, the Company prepaid the contractual amounts due on the TLA Facility through the second quarter of 2025. The interest rate terms for the TLA Facility are the same as those above for the Revolving Credit Facility borrowings in U.S. dollars. As of March 29, 2024, the interest rate on the TLA Facility was 6.93%.
Covenants
The 2021 Credit Agreement contains customary terms and conditions, including representations and warranties and affirmative and negative covenants, as well as financial covenants for the benefit of the lenders under the Revolving Credit Facility and the TLA Facility, which require the Company to not exceed a specified maximum Total Net Leverage Ratio (as defined in the 2021 Credit Agreement) and an interest coverage ratio as of the end of each fiscal quarter. As of March 29, 2024, the Company was in compliance with these financial covenants.
Contractual principal maturities under the Senior Secured Credit Facilities as of March 29, 2024, are as follows (in thousands):
Remainder of 20242025202620272028
Future minimum principal payments$ $10,000 $27,500 $30,000 $586,500 
2028 Convertible Notes
In February 2023, the Company issued the 2028 Convertible Notes with an aggregate principal amount of $500 million in a private offering, which aggregate principal amount included the exercise in full of the initial purchasers’ option to purchase up to an additional $65 million principal amount of the 2028 Convertible Notes. The 2028 Convertible Notes were issued pursuant to an indenture dated as of February 3, 2023, by and between the Company and Wilmington Trust, National Association, as trustee.
The 2028 Convertible Notes are senior unsecured obligations of the Company, which bear interest at a fixed rate of 2.125% per annum, payable semiannually in arrears on February 15 and August 15 of each year. The 2028 Convertible Notes will mature on February 15, 2028 unless repurchased, redeemed, or converted in accordance with their terms prior to such date and do not contain financial maintenance covenants. The 2028 Convertible Notes are convertible at an initial conversion rate of 11.4681 shares of the Company’s common stock per $1,000 principal amount of the 2028 Convertible Notes, which is equivalent to an initial conversion price of approximately $87.20 per share of common stock. The conversion rate is subject to standard anti-dilutive adjustments and adjustments upon the occurrence of specified events.
The Company may not redeem the 2028 Convertible Notes prior to February 20, 2026. The Company may redeem for cash all or any portion of the 2028 Convertible Notes, at its option, on or after February 20, 2026 and prior to February 15, 2028, if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending not more than two trading days immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2028 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
- 14 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(6.)     DEBT (Continued)
Holders of the 2028 Convertible Notes may convert all or a portion of their 2028 Convertible Notes at their option prior to November 15, 2027, in multiples of $1,000 principal amounts, only under the following circumstances:
during any calendar quarter commencing after the calendar quarter ending on March 31, 2023 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
during the five business day period after any ten consecutive trading day period (the “Measurement Period”) in which the trading price (as defined in the indenture governing the 2028 Convertible Notes) per $1,000 principal amount of the 2028 Convertible Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate in effect on each such trading day;
if the Company calls any or all of the 2028 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or
upon the occurrence of specified corporate events.
On or after November 15, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2028 Convertible Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.
Upon conversion, the 2028 Convertible Notes will be settled in cash up to the aggregate principal amount of the 2028 Convertible Notes to be converted, and in cash, shares of the Company’s common stock or a combination thereof, at the Company’s option, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the 2028 Convertible Notes being converted. If the Company undergoes a fundamental change (as defined in the indenture governing the 2028 Convertible Notes), subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their 2028 Convertible Notes, in principal amounts of $1,000 or a multiple thereof, at a fundamental change repurchase price equal to 100% of the principal amount of the 2028 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events or if the Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their 2028 Convertible Note in connection with such corporate event or during the relevant redemption period.
As of March 29, 2024, the conditions allowing holders of the 2028 Convertible Notes to convert had not been met and, therefore, the 2028 Convertible Notes were not eligible for conversion and are classified as a long-term liability on the Condensed Consolidated Balance Sheets at March 29, 2024.
The 2028 Convertible Notes are accounted for as a single liability measured at amortized cost. The discount and issuance costs related to the 2028 Convertible Notes are being amortized to interest expense over the contractual term of the 2028 Convertible Notes at an effective interest rate of 2.76%.
Capped Call Transactions
In connection with the issuance of the 2028 Convertible Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain financial institutions. The Capped Calls are expected generally to reduce the potential dilution to the Company’s common stock in connection with any conversion of the 2028 Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2028 Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap based on strike price of written warrants. The initial upper strike price of the Capped Calls is $108.59 per share and is subject to certain adjustments under the terms of the Capped Calls.
For accounting purposes, the Capped Calls are separate transactions, and not integrated with the issuance of the 2028 Convertible Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The 2028 Convertible Notes and the Capped Calls will be integrated for tax purposes. The accounting impact of this tax treatment results in the Capped Calls being deductible as original issue discount for tax purposes over the term of the 2028 Convertible Notes, which generates an $8.8 million deferred tax asset recognized through equity. The cost to the Company of the Capped Calls was $35 million, which was recorded, net of tax, as a reduction to additional paid-in capital.
- 15 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(7.)     STOCK-BASED COMPENSATION
The Company maintains certain stock-based compensation plans that were approved by the Company’s stockholders and are administered by the Board of Directors (the “Board”) or the Compensation and Organization Committee (the “Compensation Committee”) of the Board. The stock-based compensation plans provide for the granting of stock options, restricted stock awards, performance awards, time-based restricted stock units (“RSUs”), performance-based RSUs (“PRSUs”), stock appreciation rights and stock bonuses to employees, non-employee directors, consultants, and service providers.
Stock-based Compensation Expense
The classification of stock-based compensation expense was as follows (in thousands):
 Three Months Ended
 March 29,
2024
March 31,
2023
Cost of sales$1,261 $1,107 
Selling, general and administrative5,116 4,465 
Research, development and engineering451 469 
Restructuring and other charges20 61 
Total stock-based compensation expense$6,848 $6,102 
Stock Options
The following table summarizes the Company’s stock option activity for the three month period ended March 29, 2024:
Number of
Stock
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life
(In Years)
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at December 31, 2023158,089 $40.35 
Exercised(7,018)44.72 
Outstanding and exercisable at March 29, 2024151,071 $40.14 2.8$11.6 
Time-Based Restricted Stock Units
Most RSUs granted to employees during the three months ended March 29, 2024 vest over a period of three years from the grant date, subject to the recipient’s continuous service to the Company. RSUs are issued to members of the Board as a portion of their annual retainer and vest quarterly over a period of one year. The grant-date fair value of all RSUs is equal to the closing market price of Integer common stock on the date of grant.
The following table summarizes RSU activity for the three month period ended March 29, 2024:
Time-Vested
Activity
Weighted
Average
Grant Date Fair Value
Nonvested at December 31, 2023349,755 $76.63 
Granted117,866 104.02 
Vested(111,777)77.47 
Forfeited(5,895)79.33 
Nonvested at March 29, 2024349,949 $85.54 
- 16 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(7.)     STOCK-BASED COMPENSATION (Continued)
Performance-Based Restricted Stock Units
For the Company’s PRSUs, in addition to service conditions, the ultimate number of shares to be earned (0% to 200% of the target award) depends on the achievement of financial and market-based performance conditions. The financial performance conditions are based on the Company’s sales targets over a three year performance period. The market-based performance conditions are based on the Company’s achievement of a relative total shareholder return performance requirement, on a percentile basis, compared to a defined group of peer companies over a three year performance period, or contingent upon achieving specified stock price milestones over a five year performance period.
The following table summarizes PRSU activity for the three month period ended March 29, 2024:
Performance-
Vested
Activity
Weighted
Average
Grant Date Fair Value
Nonvested at December 31, 2023275,503 $84.57 
Granted78,246 110.54 
Performance adjustment(a)
75,388 85.16 
Vested(186,978)90.06 
Forfeited(2,399)76.12 
Nonvested at March 29, 2024239,760 $89.03 
__________
(a)Represents additional PRSUs earned related to above-target achievement of performance conditions, the achievement of which was based upon predefined performance targets established by the Compensation Committee at the initial grant date.
The Company uses a Monte Carlo simulation model to determine the grant-date fair value of awards with market-based performance conditions. The grant-date fair value of all other PRSUs is equal to the closing market price of Integer common stock on the date of grant. The weighted average fair value and assumptions used to value the PRSU awards granted with market-based performance conditions are as follows:
 Three Months Ended
 March 29,
2024
March 31,
2023
Weighted average fair value$117.96 $74.29 
Risk-free interest rate4.13 %3.79 %
Expected volatility34 %46 %
Expected life (in years)3.03.0
Expected dividend yield % %
The valuation of the market-based PRSUs granted during 2024 and 2023 also reflects a weighted average illiquidity discount of 8.00% and 11.23%, respectively, related to the six-month period that recipients are restricted from selling, transferring, pledging or assigning the underlying shares, in the event of vesting.
- 17 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(8.)     RESTRUCTURING AND OTHER CHARGES
Restructuring and other charges comprise the following (in thousands):
 Three Months Ended
 March 29,
2024
March 31,
2023
Restructuring charges$1,428 $1,064 
Acquisition and integration costs
6,335 382 
Other general expenses118 83 
Total restructuring and other charges
$7,881 $1,529 
Restructuring programs
Operational excellence
The Company’s operational excellence initiatives mainly consist of costs associated with executing on its sales force, manufacturing, business process and performance excellence operational strategic imperatives. These projects focus on changing the Company’s organizational structure to match product line growth strategies and customer needs, transitioning its manufacturing process into a competitive advantage and standardizing and optimizing its business processes.
Strategic reorganization and alignment
The Company’s strategic reorganization and alignment initiatives primarily include those that align resources with market conditions and the Company’s strategic direction in order to enhance the profitability of its portfolio of products.
Manufacturing alignment to support growth
The Company’s manufacturing alignment to support growth initiatives are designed to reduce costs, improve operating efficiencies or increase capacity to accommodate growth, which may involve relocation or consolidation of manufacturing operations.
The following table comprises restructuring and restructuring-related charges by classification in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (in thousands):
 Three Months Ended
 March 29,
2024
March 31,
2023
Restructuring charges:
Restructuring and other charges
$1,428 $1,064 
Restructuring-related expenses(a):
Cost of sales339 177 
Selling, general and administrative137 241 
Research, development and engineering1 323 
Total restructuring and restructuring-related charges
$1,905 $1,805 
__________
(a) Restructuring-related expenses primarily include retention bonuses, consulting expenses and professional fees.
- 18 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(8.)     RESTRUCTURING AND OTHER CHARGES (Continued)
The following table summarizes the activity for restructuring reserves (in thousands):
Operational
excellence
Strategic reorganization and alignmentManufacturing alignment to support growthTotal
December 31, 2023$21 $125 $1,290 $1,436 
Charges incurred, net of reversals503 121 804 1,428 
Cash payments(456)(172)(1,588)(2,216)
Non-cash adjustments  (206)(206)
March 29, 2024$68 $74 $300 $442 
Acquisition and integration costs
Acquisition and integration costs primarily consist of professional fees and other costs related to business acquisitions. During the three months ended March 29, 2024, acquisition and integration costs primarily related to the Pulse and InNeuroCo acquisitions. During the three months ended March 31, 2023, acquisition and integration costs primarily related to the Aran and Oscor acquisitions. Acquisition and integration costs for the three months ended March 31, 2023 included a benefit of $0.3 million to adjust the fair value of acquisition-related contingent consideration liabilities. See Note 13, “Financial Instruments and Fair Value Measurements” for additional information related to the fair value measurement of the contingent consideration.
Other general expenses
During the three months ended March 29, 2024 and March 31, 2023, the Company recorded expenses related to other initiatives not described above, which primarily include gains and losses in connection with the disposal of property, plant and equipment.
- 19 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(9.)    INCOME TAXES
The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including discrete items, changes in the mix and amount of pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, business reorganizations, settlements with taxing authorities and foreign currency fluctuations. In addition, the Company continues to explore tax planning opportunities that may have a material impact on its effective tax rate.
The Company’s effective tax rate for the first quarter of 2024 was 17.1% on $24.7 million of income before taxes compared to 18.3% on $16.0 million of income before taxes for the same period in 2023. The difference between the Company’s effective tax rates and the U.S. federal statutory income tax rate of 21% for the first quarter of 2024 and 2023 is due principally to the net impact of the Company’s earnings outside the U.S., which are generally taxed at rates that differ from the U.S. federal rate, the Global Intangible Low-Taxed Income (“GILTI”) tax, the Foreign Derived Intangible Income (“FDII”) deduction, the availability of tax credits and the recognition of certain discrete tax items. For the first quarter of 2024, the Company recorded discrete tax benefits of $0.8 million, compared to discrete tax expense of $0.1 million for the first quarter of 2023. The discrete tax benefits for the first quarter of 2024 relate predominately to excess tax benefits, net of deductibility limitations, recognized upon vesting of RSUs. The discrete tax expense for the first quarter of 2023 relates to tax shortfalls recorded for the forfeiture of certain PRSUs, partially offset by excess tax benefits recognized upon vesting of RSUs.
On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Framework. The effective dates are January 1, 2024 and January 1, 2025, for different aspects of the directive. A significant number of other countries are expected to also implement similar legislation with varying effective dates in the future. The Company is continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries. The Company’s 2024 provision for income taxes includes the impact of the Pillar Two 15% Global Minimum Tax, with an enactment date of January 1, 2024.
Unrecognized tax benefits reflect the difference between positions taken or expected to be taken on income tax returns and the amounts reflected in the financial statements. As of March 29, 2024, the Company had unrecognized tax benefits of approximately $6.5 million, substantially all of which would favorably impact the effective tax rate, net of federal benefit on state issues, if recognized. As of March 29, 2024, the Company believes it is reasonably possible that a reduction of approximately $0.6 million of the balance of unrecognized tax benefits may occur within the next 12 months as a result of various statute expirations, audit closures, and/or tax settlements.
(10.)    COMMITMENTS AND CONTINGENCIES
Contingent Consideration Arrangements
The Company records contingent consideration liabilities related to the earn-out provisions for certain acquisitions. See Note 13, “Financial Instruments and Fair Value Measurements” for additional information.
Litigation
The Company is subject to litigation arising from time to time in the ordinary course of its business. The Company does not expect that the ultimate resolution of any pending legal actions will have a material effect on its consolidated results of operations, financial position, or cash flows. However, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action, which the Company currently believes to be immaterial, will not become material in the future.
- 20 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(11.)    EARNINGS PER SHARE (“EPS”)
The following table sets forth a reconciliation of the information used in computing basic and diluted EPS (in thousands, except per share amounts):
 Three Months Ended
March 29,
2024
March 31,
2023
Numerator for basic and diluted EPS:
Net income$20,508 $13,065 
Denominator for basic and diluted EPS:
Weighted average shares outstanding - Basic33,478 33,258 
Dilutive effect of share-based awards487 317 
Dilutive impact of convertible notes1,028  
Weighted average shares outstanding - Diluted34,993 33,575 
Basic EPS$0.61 $0.39 
Diluted EPS$0.59 $0.39 
The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations or the performance criteria have not been met (in thousands):
 Three Months Ended
March 29,
2024
March 31,
2023
RSUs1 3 
PRSUs42 133 
The dilutive effect for the Company's 2028 Convertible Notes is calculated using the if-converted method. The Company is required, pursuant to the indenture governing the 2028 Convertible Notes, to settle the principal amount of the 2028 Convertible Notes in cash and may elect to settle the remaining conversion obligation (the in-the-money portion) in cash, shares of the Company's common stock, or a combination thereof. Because the principal amount of the 2028 Convertible Notes must be settled in cash, the dilutive impact of applying the if-converted method is limited to the in-the-money portion, if any, of the 2028 Convertible Notes. During the three months ended March 31, 2023, the 2028 Convertible Notes were not included in the diluted earnings per share calculation because the conversion feature in the 2028 Convertible Notes was out of the money.
- 21 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(12.)     STOCKHOLDERS’ EQUITY
Common Stock
The following is a summary of the number of shares of common stock issued and outstanding for the three month periods ended March 29, 2024 and March 31, 2023:
Three Months Ended
March 29,
2024
March 31,
2023
Shares outstanding at beginning of period33,329,648 33,169,778 
Stock options exercised7,018 25,376 
Vested and settled RSUs and PRSUs, net of shares withheld to cover taxes167,053 70,236 
Shares outstanding at end of period33,503,719 33,265,390 
Accumulated Other Comprehensive Income
Accumulated other comprehensive income (“AOCI”) comprises the following (in thousands):
Defined
Benefit
Plan
Liability
Cash
Flow
Hedges
Foreign
Currency
Translation
Adjustment
Total
Pre-Tax
Amount
TaxNet-of-Tax
Amount
December 31, 2023$(28)$2,153 $18,529 $20,654 $(431)$20,223 
Unrealized gain on cash flow hedges— 1,806 — 1,806 (379)1,427 
Realized gain on foreign currency hedges— (431)— (431)90 (341)
Foreign currency translation loss— — (13,438)(13,438) (13,438)
March 29, 2024$(28)$3,528 $5,091 $8,591 $(720)$7,871 
December 31, 2022$(346)$1,760 $4,150 $5,564 $(235)$5,329 
Unrealized gain on cash flow hedges— 3,446 — 3,446 (723)2,723 
Realized gain on foreign currency hedges— (692)— (692)145 (547)
Realized gain on interest rate swap hedge— (587)— (587)123 (464)
Foreign currency translation gain— — 7,925 7,925  7,925 
March 31, 2023$(346)$3,927 $12,075 $15,656 $(690)$14,966 
- 22 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Fair value measurement standards apply to certain financial assets and liabilities that are measured at fair value on a recurring basis (each reporting period). For the Company, these financial assets and liabilities include its derivative instruments and contingent consideration. The Company does not have any nonfinancial assets or liabilities that are measured at fair value on a recurring basis.
The Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency exchange rates, and may use derivatives to manage these exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading or speculative purposes. All derivatives are recorded at fair value on the Condensed Consolidated Balance Sheets.
The following tables provide information regarding assets and liabilities recorded at fair value on a recurring basis (in thousands):
Fair ValueQuoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
March 29, 2024
Assets: Foreign currency hedging contracts$3,528 $ $3,528 $ 
Liabilities: Contingent consideration4,454   4,454 
December 31, 2023
Assets: Foreign currency hedging contracts2,153  2,153  
Liabilities: Contingent consideration876   876 
Derivatives Designated as Hedging Instruments
Foreign Currency Contracts
The Company periodically enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate fluctuations in its international operations. The Company has designated these foreign currency forward contracts as cash flow hedges.
Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of March 29, 2024 is as follows (dollars in thousands):
Notional AmountMaturity Date$/Foreign CurrencyFair ValueBalance Sheet Location
$38,963 Dec 20241.0823Euro$120 Prepaid expenses and other current assets
43,191 Dec 20240.0562MXN Peso$2,306 Prepaid expenses and other current assets
14,791 Dec 20240.0247UYU Peso1,102 Prepaid expenses and other current assets
Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of December 31, 2023 is as follows (dollars in thousands):
Notional AmountMaturity Date$/Foreign CurrencyFair ValueBalance Sheet Location
$51,389 Dec 20241.0831Euro$1,389 Prepaid expenses and other current assets
19,392 Dec 20240.0566MXN Peso182 Prepaid expenses and other current assets
19,201 Dec 20240.0248UYU Peso582 Prepaid expenses and other current assets
- 23 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
The following tables present the effect of cash flow hedge derivative instruments on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 29, 2024 and March 31, 2023 (in thousands):
Three Months Ended
March 29, 2024March 31, 2023
TotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge Activity
Sales$414,805 $10 $378,785 $(51)
Cost of sales304,965 357 282,112 708 
Operating expenses70,563 64 62,507 35 
Interest expense14,671  17,254 587 
Unrealized Gain (Loss) Recognized in OCIRealized Gain (Loss) Reclassified from AOCI
Three Months Ended
Location in Statements of Operations and Comprehensive
 Income
Three Months Ended
March 29,
2024
March 31,
2023
March 29,
2024
March 31,
2023
Interest rate swap$ $(6)Interest expense$ $587 
Foreign exchange contracts(1,259)149 Sales10 (51)
Foreign exchange contracts2,716 3,275 Cost of sales357 708 
Foreign exchange contracts349 28 Operating expenses64 35 
The Company expects to reclassify net gains totaling $3.5 million related to its cash flow hedges from AOCI into earnings during the next twelve months.
Derivatives Not Designated as Hedging Instruments
The Company also has foreign currency exposure on balances, primarily intercompany, that are denominated in a foreign currency and are adjusted to current values using period-end exchange rates. To minimize foreign currency exposure, the Company enters into foreign currency contracts with a one month maturity. At March 29, 2024 and December 31, 2023, the Company had total gross notional amounts of $24.0 million and $23.0 million, respectively, of foreign currency contracts outstanding that were not designated as hedges. The fair value of derivatives not designated as hedges was not material for any period presented. Gains/losses on foreign currency contracts not designated as hedging instruments are included in Other loss, net on the Condensed Consolidated Statements of Operations and Comprehensive Income. The Company recorded a loss of $0.9 million for the three months ended March 29, 2024, compared to a gain of $0.1 million for the three months ended March 31, 2023. Each of the foreign currency contracts not designated as hedging instruments will have approximately offsetting effects from the underlying intercompany loans subject to foreign exchange remeasurement.
Contingent Consideration
The following table presents the changes in the estimated fair values of the Company’s liabilities for contingent consideration measured using significant unobservable inputs (Level 3) for the three months ended March 29, 2024 and March 31, 2023 (in thousands):
 Three Months Ended
March 29,
2024
March 31,
2023
Fair value measurement at beginning of period$876 $11,756 
Amount recorded for current year acquisitions
3,578  
Fair value measurement adjustment (265)
Foreign currency translation 241 
Fair value measurement at end of period$4,454 $11,732 
- 24 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
The contingent consideration at March 29, 2024 is the estimated fair value of the Company’s remaining obligations, under the purchase agreements for Pulse and InNeuroCo, to make additional payments if certain revenue goals are met. As of March 29, 2024 and December 31, 2023, the contingent consideration liability of $4.5 million and $0.9 million, respectively, was non-current and included in Other long-term liabilities on the Condensed Consolidated Balance Sheets.
On January 5, 2024, the Company acquired 100% of the outstanding capital stock of Pulse. The fair value of the contingent consideration liability relating to the acquisition of Pulse was $3.6 million at the date of acquisition and at March 29, 2024. See Note 2, “Business Acquisitions,” for additional information about the Pulse acquisition and related contingent consideration.
Effective as of October 1, 2023, the Company acquired certain assets and assumed certain liabilities of InNeuroCo. The fair value of the contingent consideration liability relating to InNeuroCo acquisition was $0.9 million at the date of acquisition and at March 29, 2024. See Note 2, “Business Acquisitions,” for additional information about the InNeuroCo acquisition and related contingent consideration.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Fair value standards also apply to certain assets and liabilities that are measured at fair value on a nonrecurring basis. The carrying amounts of cash, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short-term nature of these items.
Borrowings under the Company’s Revolving Credit Facility and TLA Facility accrue interest at a floating rate tied to a standard short-term borrowing index, selected at the Company’s option, plus an applicable margin. The carrying amount of this floating rate debt approximates fair value based upon the respective interest rates adjusting with market rate adjustments.
As of March 29, 2024 and December 31, 2023, the estimated fair value of the 2028 Convertible Notes was approximately $715 million and $635 million, respectively. The estimated fair value of the 2028 Convertible Notes was determined through consideration of quoted market prices. The fair value of the 2028 Convertible Notes is categorized in Level 2 of the fair value hierarchy.
Equity Investments
The Company holds long-term, strategic investments in companies to promote business and strategic objectives. These investments are included in Other long-term assets on the Condensed Consolidated Balance Sheets.
Equity investments comprise the following (in thousands):
March 29,
2024
December 31,
2023
Equity method investment$8,907 $7,771 
Non-marketable equity securities427 427 
Total equity investments
$9,334 $8,198 
The components of (Gain) loss on equity investments for each period were as follows (in thousands):
Three Months Ended
March 29,
2024
March 31,
2023
Equity method investment (gain) loss$(1,136)$155 
The Company’s equity method investment is in a venture capital fund focused on investing in life sciences companies. As of March 29, 2024, the Company owned 7.3% of this fund.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(14.)     SEGMENT INFORMATION
The Company organizes its business into two reportable segments: (1) Medical and (2) Non-Medical. This segment structure reflects the financial information and reports used by the Company’s management, specifically its Chief Operating Decision Maker, to make decisions regarding the Company’s business, including resource allocations and performance assessments. This segment structure reflects the Company’s current operating focus in compliance with ASC 280, Segment Reporting. For purposes of segment reporting, intercompany sales between segments are not material.
The following table presents sales by product line (in thousands):
 Three Months Ended
March 29,
2024
March 31,
2023
Segment sales by product line:
Medical
Cardio & Vascular$221,836 $191,203 
Cardiac Rhythm Management & Neuromodulation
156,257 145,139 
Advanced Surgical, Orthopedics & Portable Medical29,121 27,924 
Total Medical407,214 364,266 
Non-Medical7,591 14,519 
Total sales$414,805 $378,785 
The following table presents income for the Company’s reportable segments (in thousands):
 Three Months Ended
March 29,
2024
March 31,
2023
Segment income:
Medical$72,353 $54,806 
Non-Medical299 4,026 
Total segment income72,652 58,832 
Unallocated operating expenses
(33,375)(24,666)
Operating income39,277 34,166 
Unallocated expenses, net(14,542)(18,169)
Income before taxes$24,735 $15,997 
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(15.)    REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregated Revenue
In general, the Company’s business segmentation is aligned according to the nature and economic characteristics of its products and customer relationships and provides meaningful disaggregation of each business segment’s results of operations. For a summary by disaggregated product line sales for each segment, refer to Note 14, “Segment Information.”
Revenue recognized from products and services transferred to customers over time represented 33% of total revenue for the three months ended March 29, 2024, compared to 28% for the three months ended March 31, 2023. Substantially all of the revenue recognized from products and services transferred to customers over time during the periods presented was within the Medical segment.
The following tables present revenues by significant customers, which are defined as any customer who individually represents 10% or more of a segment’s total revenues.
Three Months Ended
March 29, 2024March 31, 2023
CustomerMedicalNon-Medical MedicalNon-Medical
Customer A17%*18%*
Customer B14%*16%*
Customer C14%*14%*
Customer D*17%*22%
Customer E*13%**
All other customers55%70%52%78%
__________
* Less than 10% of segment’s total revenues for the period.
The following tables present revenues by significant ship to location, which is defined as any country where 10% or more of a segment’s total revenues are shipped.
Three Months Ended
March 29, 2024March 31, 2023
Ship to LocationMedicalNon-Medical MedicalNon-Medical
United States58%56%55%60%
United Kingdom*14%*
Canada*12%**
All other countries42%18%45%40%
__________
* Less than 10% of segment’s total revenues for the period.
Contract Balances
The opening and closing balances of the Company’s contract assets and contract liabilities are as follows (in thousands):
March 29,
2024
December 31,
2023
Contract assets$90,873 $85,871 
Contract liabilities5,931 6,142 
During the three months ended March 29, 2024, the Company recognized $1.5 million of revenue that was included in the contract liability balance as of December 31, 2023. During the three months ended March 31, 2023, the Company recognized $1.3 million of revenue that was included in the contract liability balance as of December 31, 2022.
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