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| Statement |
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| As we move past the first quarter headwinds, we expect to see our organic growth improve during the year as we relaunch Boston and resolve the supply constraint on Integra Skin |
| Looking back at 2023, we saw our unique technologies and commercial strength deliver resilient growth across several parts of our portfolio |
| Although the Boston recall weighed on our financial results for the year, we're pleased with the significant and steady progress we have made towards bringing the Boston portfolio back on the market by mid to late second quarter |
| As we strengthen our operational resilience, advance our organic portfolio and successfully execute on our M&A imports we're well positioned to deliver strong top and bottom line growth and realize our full potential as a profitable innovator of life-saving technologies worldwide |
| We are actively adding additional resources to launch projects in 2024 aimed at extracting the value that we've talked about that exists in terms of improving our margins through better operational efficiency as well as yield and productivity improvements |
| When we look at the broader performance of our business, excluding Boston, we are encouraged by our results and resilience of our markets and the strength of our broad portfolio |
| They feel good about winning our customers back |
| We have strengthened our quality management system with critical investments in talent and process capabilities across our manufacturing network |
| Organic growth, excluding the impact from Boston, which landed at 5.5% for the year, continues to give us confidence in the growth potential of our markets and our portfolio |
| Outside the U.S., we expanded our international portfolio and footprint and strengthened our commercial execution focus, fueling double-digit growth in our international business in 2023 |
| On the one hand, it comes with proven track record of driving profitable growth businesses and, at the same time, further building out a high-performing organization |
| For the full year, we expect our adjusted EPS to be in the range of $3.15 to $3.25 per share, reflecting the positive organic growth of the business, first quarter impact from the supply constraints, modest gross margin improvement and OpEx normalization |
| Our forecast performance reflects continued strong global demand for our products, more than offset by an unfavorable $15 million comp in the Q1 2023 Boston revenue and the supply constraint on Integra Skin |
| We remain focused on our drive for operational excellence and resiliency and exited 2023 better positioned for the future |
| Our balance sheet remains strong with ample liquidity to support our short and long-term plans |
| So Codman actually had really strong growth |
| There is strong demand for our broad and diverse portfolio of products, with several parts of our business growing by double digits, and we continue to make investments that will deliver value to shareholders |
| Excluding Boston, organic growth across the remainder of our business was approximately 5.5%, demonstrating the continued robustness of our diverse portfolio and the markets that we serve |
| We delivered double-digit growth across many product lines in our portfolio |
| Excluding the impact of the Boston recall, private label sales were up 12.5%, reflecting strong demand from our partners in the quarter |
| Our sales force feels strongly they can win their customers back based on the strength of that portfolio |
| We remain encouraged by the broad resilience of our portfolio, which continues to provide us with confidence in the long-term growth potential of our custom Wound Reconstruction business |
| On top of that, there are these additional projects that I mentioned that we're launching in 2024 to extract additional value out of our supply chain and operational efficiency that should also contribute to gross margin improvement in 2025 over 2024 |
| And so that's what we're doing from perspective of strengthening our sales capability |
| Strength in the quarter was driven by double-digit growth in China, Canada and Australia and high single-digit growth in Japan |
| That said, we have grown our CUSA installed base since the launch of CUSA Clarity, and the funnels for CUSA Clarity capital remains strong |
| We saw another strong quarter from our international business and CSF with low double-digit growth |
| In Tissue Technologies, we delivered double-digit growth in DuraSorb, Gentrix and MediHoney |
| In terms of international, we had a great international year |
| During the second half of 2023, we saw strong demand for Integra Skin, which tightened our inventory |
| Statement |
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| The second theme was the impact of the Boston recall, which drove significant operational challenges in 2023 |
| So I think the Q1 guidance was obviously well below expectations |
| Finally, international sales in Tissue Technologies were down low double digits due to the Boston recall |
| Fourth quarter sales in the Wound Reconstruction franchise decreased by 11% |
| The Boston recall impacted gross margins by approximately 150 basis points due to roughly $20 million in product returns, unfavorable mix from the lost revenue and remediation costs |
| And I think the other dimension is from some of the supply constraints on Integra Skin, it is also creating a headwind for our gross margins |
| Our adjusted EPS for the quarter was $0.89, down 5.3% compared to 2022 |
| Our decline in adjusted EBITDA margin primarily reflects the decrease in gross margins that I mentioned earlier |
| The Boston recall negatively impacted full year adjusted EPS by approximately $0.42, including the impact of spending reductions we implemented during the year |
| For the first quarter, we expect adjusted EPS to be $0.53 to $0.57, down from the prior year, driven by the supply constraints referenced previously |
| As we move into 2024, we do -- we'll have to overcome some of the headwinds that I've talked about in Q1, which will actually drive our trailing 12-month conversion down slightly |
| Total sales for the fourth quarter were $397 million, representing a year-over-year organic decline of 1.2%, or growth of 3.6% if we exclude the Boston products |
| Gross margins were impacted by approximately 50 basis points from the Boston recall and 60 basis points from a supply constraint on Integra Skin |
| Tissue Technologies was down 6% on a reported basis and 8% on an organic basis compared to the prior year |
| So on a full year basis, gross margins were down 110 basis points |
| Our adjusted EPS for the year was $3.10, down 7.7% versus 2022 and within the guidance range communicated in October |
| Lower CUSA capital sales in the quarter drove a low single-digit decline in advanced energy |
| And at the same time, we experienced a capacity constraint on one of the several production lines we have for Integra Skin |
| The Boston recall represented an approximate $67 million headwind to our reported revenues |
| Our full year adjusted EBITDA margins were 24%, down 240 basis points compared to 2022 |
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