Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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 June 30, 2023


☐			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

_____________________________________________________________

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 1150

Plano,

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 class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

ITGR

New 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 filer

☐

Non-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 July 21, 2023 was: 33,308,080 shares.

INTEGER HOLDINGS CORPORATION

Form 10-Q

For the Quarterly Period Ended June 30, 2023

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION

ITEM 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets (Unaudited)	3

	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)	4



	Condensed Consolidated Statements of Cash Flows (Unaudited)	5

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	43

ITEM 4.	Controls and Procedures	43

PART II—OTHER INFORMATION

ITEM 1.	Legal Proceedings	44

ITEM 1A.	Risk Factors	44

ITEM 5.	Other Information	44

ITEM 6.	Exhibits	44

SIGNATURES		45

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTEGER HOLDINGS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


(in thousands except share and per share data)	June 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	38,615	$	24,272
Accounts receivable, net of provision for credit losses of $0.4 million and $0.3 million, respectively	236,526		224,325
Inventories	228,931		208,766
Refundable income taxes	3,030		2,003
Contract assets	80,010		71,927


Prepaid expenses and other current assets	28,816		27,005

Total current assets	615,928		558,298
Property, plant and equipment, net	348,895		317,243
Goodwill	985,982		982,192
Other intangible assets, net	797,594		819,889
Deferred income taxes	6,447		6,247
Operating lease assets	70,281		74,809
Financing lease assets	8,537		8,852
Other long-term assets	27,680		26,856

Total assets	$	2,861,344	$	2,794,386
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	5,000	$	18,188
Accounts payable	107,507		110,780
Income taxes payable	3,036		10,923

Operating lease liabilities	10,075		10,362
Accrued expenses and other current liabilities	74,214		73,499

Total current liabilities	199,832		223,752
Long-term debt	980,398		907,073
Deferred income taxes	152,926		160,671
Operating lease liabilities	59,988		64,049
Financing lease liabilities	7,677		8,006
Other long-term liabilities	14,868		13,379

Total liabilities	1,415,689		1,376,930
Commitments and contingencies (Note 10)
Stockholders’ equity:

Common stock, $0.001 par value; 100,000,000 shares authorized; 33,308,080 and 33,169,778 shares issued and outstanding, respectively	33		33
Additional paid-in capital	715,715		731,393

Retained earnings	717,737		680,701
Accumulated other comprehensive income	12,170		5,329
Total stockholders’ equity	1,445,655		1,417,456
Total liabilities and stockholders’ equity	$	2,861,344	$	2,794,386

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INTEGER HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS) (Unaudited)


	Three Months Ended				Six Months Ended
(in thousands except per share data)	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Sales	$	400,044	$	350,081	$	778,829	$	660,993
Cost of sales	294,240		257,184		576,352		486,621
Gross profit	105,804		92,897		202,477		174,372
Operating expenses:
Selling, general and administrative	45,827		41,786		87,713		81,346
Research, development and engineering	16,883		14,871		35,975		30,954
Restructuring and other charges	1,518		3,533		3,047		6,868
Total operating expenses	64,228		60,190		126,735		119,168
Operating income	41,576		32,707		75,742		55,204
Interest expense	11,459		7,773		28,713		13,741
(Gain) loss on equity investments	(134)		320		21		2,724
Other loss, net	359		191		1,119		368
Income before taxes	29,892		24,423		45,889		38,371
Provision for income taxes	5,921		3,587		8,853		6,168







Net income	$	23,971	$	20,836	$	37,036	$	32,203

Earnings per share:
Basic	$	0.72	$	0.63	$	1.11	$	0.97
Diluted	$	0.71	$	0.62	$	1.10	$	0.97











Weighted average shares outstanding:
Basic	33,312		33,111		33,285		33,101
Diluted	33,686		33,350		33,631		33,326

Comprehensive Income (Loss)
Net income	$	23,971	$	20,836	$	37,036	$	32,203
Other comprehensive income (loss):
Foreign currency translation gain (loss)	(2,901)		(27,274)		5,024		(35,161)
Change in fair value of cash flow hedges, net of tax	105		(47)		1,817		2,687

Other comprehensive income (loss), net of tax	(2,796)		(27,321)		6,841		(32,474)
Comprehensive income (loss), net of tax	$	21,175	$	(6,485)	$	43,877	$	(271)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INTEGER HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Six Months Ended
(in thousands)	June 30, 2023		July 1, 2022
Cash flows from operating activities:
Net income	$	37,036	$	32,203
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	48,569		45,753
Debt related charges included in interest expense	6,118		962
Inventory step-up amortization	—		798
Stock-based compensation	11,603		10,951

Non-cash lease expense	5,473		5,344
Non-cash loss on equity investments	21		2,724
Contingent consideration fair value adjustment	(265)		—
Other non-cash (gains) losses	(1,437)		7,510
Deferred income taxes	(4)		(969)

Changes in operating assets and liabilities, net of acquisition:
Accounts receivable	(9,742)		(37,642)
Inventories	(21,646)		(41,471)
Prepaid expenses and other assets	1,308		(783)
Contract assets	(7,983)		(6,189)
Accounts payable	797		25,554
Accrued expenses and other liabilities	1,781		(7,295)
Income taxes	(9,296)		(439)
Net cash provided by operating activities	62,333		37,011
Cash flows from investing activities:
Acquisition of property, plant and equipment	(57,416)		(22,610)

Proceeds from sale of property, plant and equipment	50		587

Acquisitions, net of cash acquired	—		(126,636)


Net cash used in investing activities	(57,366)		(148,659)
Cash flows from financing activities:
Principal payments of term loans	(398,438)		(7,625)
Proceeds from issuance of convertible notes, net of discount	486,250		—
Proceeds from revolving credit facility	229,604		160,000
Payments of revolving credit facility	(263,443)		(34,000)
Purchase of capped calls	(35,000)		—
Payment of debt issuance costs	(2,181)		—

Proceeds from the exercise of stock options	1,948		—
Tax withholdings related to net share settlements of restricted stock unit awards	(2,930)		(1,926)


Contingent consideration payments	(7,660)		(493)
Principal payments on finance leases	(557)		(353)

Net cash provided by financing activities	7,593		115,603
Effect of foreign currency exchange rates on cash and cash equivalents	1,783		(6,247)
Net increase (decrease) in cash and cash equivalents	14,343		(2,292)
Cash and cash equivalents, beginning of period	24,272		17,885
Cash and cash equivalents, end of period	$	38,615	$	15,593

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INTEGER HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)


	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Total stockholders’ equity, beginning balance	$	1,417,936	$	1,364,350	$	1,417,456	$	1,354,697

Common stock and additional paid-in capital
Balance, beginning of period	709,204		716,622		731,426		713,183
Stock awards exercised or vested	1,043		(370)		(1,031)		(1,926)
Stock-based compensation	5,501		5,956		11,603		10,951
Capped calls related to the issuance of convertible notes, net of tax	—		—		(26,250)		—
Balance, end of period	715,748		722,208		715,748		722,208





Retained earnings
Balance, beginning of period	693,766		625,691		680,701		614,324

Net income	23,971		20,836		37,036		32,203
Balance, end of period	717,737		646,527		717,737		646,527
Accumulated other comprehensive income
Balance, beginning of period	14,966		22,037		5,329		27,190
Other comprehensive income (loss)	(2,796)		(27,321)		6,841		(32,474)

Balance, end of period	12,170		(5,284)		12,170		(5,284)

Total stockholders’ equity, ending balance	$	1,445,655	$	1,363,451	$	1,445,655	$	1,363,451

The accompanying notes are an integral part of these condensed consolidated financial statements.

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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 outsource manufacturer serving the cardiac rhythm management, neuromodulation, orthopedics, vascular, advanced surgical and portable medical markets. The Company provides innovative, high-quality medical technologies that enhance the lives of patients worldwide. In addition to medical technologies, the Company develops batteries for high-end niche applications in the 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 fiscal year ended December 31, 2022.

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 second quarter and first six months of 2023 ended on June 30 and consisted of 91 days and 181 days, respectively. The second quarter and first six months of 2022 ended on July 1 and consisted of 91 days and 182 days, respectively.

Trade Accounts Receivable - Factoring Arrangements

In the second quarter of 2023, the Company entered into a receivables factoring arrangement, pursuant to which certain receivables may be sold to a financial institution without recourse in exchange for cash. Transactions under the receivables factoring arrangement 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 this arrangement, 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 (Loss). During the six months ended June 30, 2023, the Company sold, without recourse, $50.3 million of accounts receivable. Factoring fees were $0.4 million for the three and six months ended June 30, 2023.

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, 2022, that are of significance, or potential significance, to the Company.

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(2.) BUSINESS ACQUISITIONS

On April 6, 2022, the Company acquired 100% of the equity interests of Connemara Biomedical Holdings Teoranta, including its operating subsidiaries Aran Biomedical and Proxy Biomedical (collectively “Aran”), a recognized leader in proprietary medical textiles, high precision biomaterial coverings and coatings as well as advanced metal and polymer braiding. Aran delivers development and manufacturing solutions for implantable medical devices. Consistent with the Company’s strategy, the combination with Aran further increases Integer’s ability to offer complete solutions for complex delivery and therapeutic devices in high growth cardiovascular markets such as structural heart, neurovascular, peripheral vascular, and endovascular as well as general surgery. The Company funded the purchase price with borrowings under its Revolving Credit Facility. Aran is included in the Company’s Medical segment.

The total consideration transferred was $141.3 million, which includes an initial cash payment of $133.9 million ($129.3 million net of cash acquired) and $7.4 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 €10 million ($10.9 million at the exchange rate as of April 6, 2022) based on Aran’s achievement of 2022 revenue growth milestones. The earn-out period ended on December 31, 2022 and, in accordance with the terms of the share purchase agreement, full payment was made in April 2023. See Note 13 “Financial Instruments and Fair Value Measurements” for additional information related to the fair value measurement of the contingent consideration.

The cost of the acquisition was allocated to the assets acquired and liabilities assumed based upon their estimated fair value at the date of the acquisition. There were no adjustments to the initial purchase price allocation. The following table summarizes the final fair values of the assets acquired and liabilities assumed (in thousands):








Fair value of net assets acquired

Current assets	$	9,319
Property, plant and equipment	4,151
Goodwill	68,460
Definite-lived intangible assets	71,485
Operating lease assets	3,505
Other noncurrent assets	1,354
Current liabilities	(4,370)
Operating lease liabilities	(3,258)
Other noncurrent liabilities	(9,377)
Fair value of net assets acquired	$	141,269

Pro Forma (unaudited) disclosures

The following table presents (in thousands) unaudited pro forma results of operations for the three and six months ended July 1, 2022 as if Aran had been included in the Company’s financial results as of the beginning of fiscal year 2021, through the date of acquisition. The pro forma results include the historical results of operations of the Company and Aran, 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 acquisition. 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.


	Three Months Ended July 1, 2022		Six Months Ended July 1, 2022
Sales	$	350,081	$	666,356
Net income	22,101		34,228

Acquisition costs

Direct costs of this acquisition were not material for the three and six months ended June 30, 2023. During the three and six months ended July 1, 2022, direct costs of this acquisition of $1.5 million and $2.3 million were expensed as incurred and included in Restructuring and other charges in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(3.) SUPPLEMENTAL CASH FLOW INFORMATION

The following is supplemental information relating to the Condensed Consolidated Statements of Cash Flows (in thousands):


	Six Months Ended
	June 30, 2023		July 1, 2022
Noncash investing and financing activities:
Property, plant and equipment purchases included in accounts payable	$	9,059	$	6,373


Supplemental lease disclosures:
Assets acquired under operating leases	912		11,265

(4.) INVENTORIES

Inventories comprise the following (in thousands):


	June 30, 2023		December 31, 2022
Raw materials	$	102,280	$	98,640
Work-in-process	112,887		98,188
Finished goods	13,764		11,938
Total	$	228,931	$	208,766

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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 six months ended June 30, 2023 were as follows (in thousands):


	Medical		Non- Medical		Total
December 31, 2022	$	965,192	$	17,000	$	982,192


Foreign currency translation	3,790		—		3,790

June 30, 2023	$	968,982	$	17,000	$	985,982

Intangible Assets

Intangible assets comprise the following (in thousands):


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
June 30, 2023
Definite-lived:
Purchased technology and patents	$	284,921	$	(187,279)	$	97,642
Customer lists	829,550		(234,506)		595,044
Amortizing tradenames and other	21,012		(6,392)		14,620
Total amortizing intangible assets	$	1,135,483	$	(428,177)	$	707,306
Indefinite-lived:
Trademarks and tradenames					$	90,288

December 31, 2022
Definite-lived:
Purchased technology and patents	$	283,929	$	(178,844)	$	105,085
Customer lists	825,634		(216,546)		609,088
Amortizing tradenames and other	21,028		(5,600)		15,428
Total amortizing intangible assets	$	1,130,591	$	(400,990)	$	729,601
Indefinite-lived:
Trademarks and tradenames					$	90,288

Aggregate intangible asset amortization expense comprises the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Cost of sales	$	4,037	$	4,037	$	8,014	$	7,682
Selling, general and administrative expenses	9,070		8,248		18,017		16,207



Total intangible asset amortization expense	$	13,107	$	12,285	$	26,031	$	23,889

Estimated future intangible asset amortization expense based on the carrying value as of June 30, 2023 is as follows (in thousands):


	Remainder of 2023		2024		2025		2026		2027		After 2027
Amortization Expense	$	26,368	$	51,803	$	51,014	$	49,189	$	46,232	$	482,700

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(6.) DEBT

Long-term debt comprises the following (in thousands):


	June 30, 2023						December 31, 2022
	Principal Amount		UnamortizedDiscounts and Issuance Costs		Net Carrying Amount		Principal Amount		UnamortizedDiscounts and Issuance Costs		Net Carrying Amount
Senior Secured Credit Facilities:
Revolving credit facilities	$	108,640	$	—	$	108,640	$	140,300	$	—	$	140,300
Term loan A	392,500		(1,958)		390,542		455,313		(2,172)		453,141
Term loan B	—		—		—		335,625		(3,805)		331,820
Convertible Senior Notes due 2028	500,000		(13,784)		486,216		—		—		—
Total	$	1,001,140	$	(15,742)	$	985,398	$	931,238	$	(5,977)	$	925,261
Current portion of long-term debt					(5,000)						(18,188)
Long-term debt					$	980,398					$	907,073

Senior Secured Credit Facilities

On September 2, 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”). As of December 31, 2022, the Senior Secured Credit Facilities consisted of a five-year $400 million revolving credit facility (the “Revolving Credit Facility”), a five-year “term A” loan (the “TLA Facility”) and a seven-year “term B” loan (the “TLB Facility” and, together with the TLA Facility, the “Term Loan Facilities”). The TLB Facility was issued at a 0.50% discount.

Amendments to the 2021 Credit Agreement

On January 30, 2023, the Company entered into a first amendment (the “First Amendment”) to the 2021 Credit Agreement to, among other things: (i) permit the Company to issue the notes (described below under 2028 Convertible Notes and Related Capped Call Transactions) and incur indebtedness thereunder in an aggregate principal amount of up to $600 million at any time outstanding; (ii) permit the Company to enter into bond hedge and capped call transactions; (iii) permit the Company to issue call options, warrants or purchase rights relating to the Company’s common stock; provided, in each case, that the terms of any such transaction are customary for transactions of such type.

On February 15, 2023, the Company entered into a second amendment (the “Second Amendment”) to the 2021 Credit Agreement to, among other things: (i) increase the maximum borrowing capacity under the Revolving Credit Facility by $100 million from $400 million to $500 million, (ii) extend the maturity date for both the Revolving Credit Facility and the TLA Facility to February 15, 2028, (iii) allow for borrowings by the Company under the Revolving Credit Facility denominated in Euros, subject to a sublimit equal to 50% of the maximum borrowing capacity under the Revolving Credit Facility, (iv) replace the LIBOR-based reference interest rate option with a forward-looking term rate based on the secured overnight financing rate (SOFR) for the applicable interest period plus an adjustment of 0.10% per annum (“Adjusted Term SOFR”), and (v) add carveouts to certain negative covenants included within the 2021 Credit Agreement to permit the expansion of capacity in Ireland by the Company and incur indebtedness related thereto.

The information provided below reflects the First Amendment and Second Amendment (collectively the “2023 Amendments”) described above. Details of our Long-term debt as of December 31, 2022 can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Revolving Credit Facility

The Revolving Credit Facility matures on February 15, 2028. As of June 30, 2023, the Company had available borrowing capacity on the Revolving Credit Facility of $387.9 million after giving effect to $108.6 million of outstanding borrowings and $3.5 million of outstanding standby letters of credit. Borrowings under the Revolving Credit Facility will bear interest at a rate of Adjusted Term SOFR, in relation to any loan in U.S. dollars, and EURIBOR, in relation to any loan in Euros, plus a margin based on the Company’s Secured Net Leverage Ratio (as defined in the Senior Secured Credit Facilities agreement). In addition, the Company is required to pay a commitment fee on the unused portion of the Revolving Credit Facility, which will range between 0.15% and 0.25%, depending on the Company’s Secured Net Leverage Ratio. As of June 30, 2023, the weighted average interest rate on outstanding borrowings under the Revolving Credit Facility was 4.92% and the commitment fee on the unused portion of the Revolving Credit Facility was 0.18%.

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(6.) DEBT (Continued)

Term Loan Facilities

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. 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 June 30, 2023, the interest rate on the TLA Facility was 6.70%.

In February 2023, the Company used a portion of the proceeds from its notes offering (see 2028 Convertible Senior Notes and Related Capped Call Transactions) to settle in full principal and interest due under the TLB Facility.

Deferred Debt Issuance Costs and Discounts

The change in deferred debt issuance costs related to the Company’s Revolving Credit Facility is as follows (in thousands):


December 31, 2022	$	2,387
Financing costs incurred	579
Write-off of deferred debt issuance costs	(260)
Amortization during the period	(271)
June 30, 2023	$	2,435

The change in unamortized discount and deferred debt issuance costs related to the Term Loan Facilities is as follows (in thousands):


	Deferred Debt Issuance Costs		Unamortized Discount on TLB Facility		Total
December 31, 2022	$	4,569	$	1,408	$	5,977
Financing costs incurred	418		—		418
Write-off of deferred debt issuance costs and unamortized discount	(2,780)		(1,391)		(4,171)
Amortization during the period	(249)		(17)		(266)
June 30, 2023	$	1,958	$	—	$	1,958

Debt issuance costs are either deferred and amortized over the term of the associated debt or expensed as incurred. In connection with the 2023 Amendments, the Company incurred and capitalized an aggregate of $1.0 million of debt issuance costs.

In connection with the 2023 Amendments, for each separate debt instrument on a lender by lender basis, in accordance with ASC 470-50, Debt Modifications and Extinguishment, the Company performed an assessment of whether the transaction was deemed to be new debt, a modification of existing debt, or an extinguishment of existing debt.

Based on this assessment, $3.8 million of unamortized deferred debt issuance costs related to the Revolving Credit Facility and TLA Facility were deemed to be related to the issuance of new debt, or the modification of existing debt, and therefore will continue to be deferred and amortized over the term of the associated debt. The remaining $0.6 million of unamortized deferred debt issuance costs related to the Revolving Credit Facility and TLA Facility were deemed to be related to the extinguishment of debt and were expensed and included in Interest expense during the six months ended June 30, 2023. Additionally, in connection with the full repayment of the TLB Facility, the Company incurred a $3.8 million loss on extinguishment of debt from the write-off of the remaining deferred debt issuance costs and original issue discount, which were expensed and included in Interest expense during the six months ended June 30, 2023.

Covenants

The Senior Secured Credit Facilities 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 that (i) the Company maintain a Total Net Leverage Ratio not to exceed 5.50:1.00 (stepping down to 5.00:1.00 for the third fiscal quarter of 2023 through maturity and subject to increase in certain circumstances following qualified acquisitions, but shall not exceed 5.50:1.00) and (ii) the Company maintain an interest coverage ratio of at least 2.50:1.00. As of June 30, 2023, the Company was in compliance with these financial covenants.

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(6.) DEBT (Continued)

Contractual maturities under the Senior Secured Credit Facilities for the remainder of 2023 and through maturity, excluding any discounts or premiums, as of June 30, 2023 are as follows (in thousands):


	Remainder of 2023		2024		2025		2026		2027		After 2027
Future minimum principal payments	$	—	$	10,000	$	17,500	$	27,500	$	30,000	$	416,140

2028 Convertible Senior Notes and Related Capped Call Transactions

In February of 2023, the Company issued $500 million aggregate principal amount of Convertible Senior Notes due in 2028 (“2028 Notes”) 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 Notes. The 2028 Notes mature on February 15, 2028 and bear interest at a fixed rate of 2.125% per annum, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2023. The total net proceeds from the issuance of the 2028 Notes (which includes the additional proceeds from the purchasers’ option), after deducting initial purchasers' discounts and commissions and debt issuance costs, were approximately $485 million.

Conversion and Redemption Terms of the 2028 Notes

Each $1,000 principal amount of the 2028 Notes is initially convertible into 11.4681 shares of the Company’s common stock (the “2028 Conversion Option”), which is equivalent to an initial conversion price of approximately $87.20 per share of common stock, subject to standard anti-dilutive adjustments and adjustments upon the occurrence of specified events. The initial conversion price represents a premium of approximately 32.5% to the $65.81 per share closing price of the Company’s common stock on January 31, 2023.

The 2028 Notes are convertible, in multiples of $1,000 principal amount, at the option of the holders prior to the close of business on the business day immediately preceding November 15, 2027, only under the following circumstances: (1) 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; (2) 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 Notes) per $1,000 principal amount of the 2028 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; (3) if the Company calls any or all of the 2028 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) 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 Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.

Upon conversion, the 2028 Notes will be settled in cash up to the aggregate principal amount of the 2028 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 Notes being converted. If the Company undergoes a fundamental change (as defined in the indenture governing the 2028 Notes), subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their 2028 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 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 notes in connection with such corporate event or during the relevant redemption period.

As of June 30, 2023, the conditions allowing holders of the Convertible Notes to convert had not been met and, therefore, the Convertible Notes are classified as a long-term liability on the Condensed Consolidated Balance Sheets at June 30, 2023.

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(6.) DEBT (Continued)

The Company may not redeem the 2028 Notes prior to February 20, 2026. The Company may redeem for cash all or any portion of the 2028 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 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. No sinking fund is provided for the 2028 Notes.

Seniority of the 2028 Notes

The 2028 Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2028 Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

Indenture

The Company issued the Notes pursuant to an indenture dated as of February 3, 2023 (the “Indenture”) by and between the Company and Wilmington Trust, National Association, as trustee. The Indenture provides for customary events of default, which include (subject in certain cases to grace and cure periods), among others: nonpayment of principal or interest; failure by the Company to comply with its conversion obligations upon exercise of a holder’s conversion right under the Indenture; breach of covenants or other agreements in the Indenture; defaults by the Company or any significant subsidiary (as defined in the Indenture) with respect to other indebtedness in excess of a threshold amount; failure by the Company or any significant subsidiary to pay final judgments in excess of a threshold amount; and the occurrence of certain events of bankruptcy, insolvency or reorganization with respect to the Company or any significant subsidiary. Generally, if an event of default occurs and is continuing under the Indenture, either the Indenture trustee or the holders of at least 25% in aggregate principal amount of the 2028 Notes then outstanding may declare the principal amount plus accrued and unpaid interest on the Notes to be immediately due and payable.

Covenants

The 2028 Notes do not contain financial maintenance covenants.

Deferred Debt Issuance Costs and Discounts

The 2028 Notes are accounted for as a single liability measured at amortized cost. The discount and issuance costs related to the 2028 Notes are being amortized to interest expense over the contractual term of the 2028 Notes at an effective interest rate of 2.76%.

Fair Value of the 2028 Notes

The estimated fair value of the 2028 Notes was approximately $593 million as of June 30, 2023. The estimated fair value of the 2028 Notes was determined through consideration of quoted market prices. The fair value of the 2028 Notes are categorized in Level 2 of the fair value hierarchy.

Capped Call Transactions

In connection with the issuance of the 2028 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 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2028 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. The Capped Calls cover, subject to anti-dilution adjustments, approximately 5.7 million shares of the Company’s common stock, the same number of shares initially underlying the 2028 Notes. For accounting purposes, the Capped Calls are separate transactions, and not integrated with the issuance of the 2028 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 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 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.

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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 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 components and classification of stock-based compensation expense were as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022



RSUs and PRSUs	$	5,501	$	5,956	$	11,603	$	10,951


Total stock-based compensation expense	$	5,501	$	5,956	$	11,603	$	10,951

Cost of sales	$	1,155	$	837	$	2,262	$	1,606
Selling, general and administrative	4,085		4,308		8,550		7,853
Research, development and engineering	259		338		728		663
Restructuring and other charges	2		473		63		829

Total stock-based compensation expense	$	5,501	$	5,956	$	11,603	$	10,951

Stock Options

The following table summarizes the Company’s stock option activity for the six month period ended June 30, 2023:


	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (In Years)	Aggregate Intrinsic Value (In Millions)
Outstanding at December 31, 2022	240,622	$	38.51

Exercised	(68,821)	38.92

Outstanding and exercisable at June 30, 2023	171,801	$	38.35	3.3	$	8.1

Time-Based Restricted Stock Units

Most RSUs granted to employees during the six months ended June 30, 2023 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 time-based 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 six month period ended June 30, 2023:


	Time-Vested Activity	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2022	291,929	$	77.58
Granted	230,782	75.74
Vested	(100,648)	79.20
Forfeited	(40,091)	71.21
Nonvested at June 30, 2023	381,972	$	76.71

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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 depends on the achievement of financial and market-based performance conditions over three year performance periods. The financial performance conditions are based on the Company’s sales targets. 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, or contingent upon achieving specified stock price milestones over a five year performance period.

The following table summarizes PRSU activity for the six month period ended June 30, 2023:


	Performance- Vested Activity	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2022	263,906	$	90.29
Granted	105,757	74.32
Vested	(24,427)	107.26
Forfeited	(62,396)	83.39
Nonvested at June 30, 2023	282,840	$	84.38

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:


	Six Months Ended
	June 30, 2023			July 1, 2022
Weighted average fair value	$	74.29		$	97.58
Risk-free interest rate	3.79		%	1.58		%
Expected volatility	46		%	42		%
Expected life (in years)	3.0			3.9
Expected dividend yield	—		%	—		%

The valuation of the market-based PRSUs granted during 2023 and 2022 also reflects a weighted average illiquidity discount of 11.23% and 9.25%, 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.

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(8.) RESTRUCTURING AND OTHER CHARGES

The Company continuously evaluates the business and identifies opportunities to realign its resources to better serve its customers and markets, improve operational efficiency and capabilities, and lower its operating costs or improve profitability. To realize the benefits associated with these opportunities, the Company undertakes restructuring-type activities to transform its business. The Company incurs costs associated with these activities, which primarily include exit and disposal costs and other costs directly related to the restructuring initiative. Exit and disposal costs (“restructuring charges”) are expensed as incurred in accordance with ASC 420, Exit or Disposal Cost Obligations, and are classified within Restructuring and other charges, while other costs directly related to the restructuring initiatives (“restructuring-related charges”) are classified within Cost of sales, Selling, general and administrative, and Research, development and engineering expenses in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

In addition, from time to time, the Company incurs costs associated with acquiring and integrating businesses, and certain other general expenses, including asset impairments. The Company classifies costs associated with these items within Restructuring and other charges in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Restructuring and other charges comprise the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Restructuring charges	$	936	$	(5)	$	2,000	$	1,098
Acquisition and integration costs	556		3,333		938		5,269
Other general expenses	26		205		109		501
Total restructuring and other charges	$	1,518	$	3,533	$	3,047	$	6,868

The following table comprises restructuring and restructuring-related charges by classification in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Restructuring charges:
Restructuring and other charges	$	936	$	(5)	$	2,000	$	1,098
Restructuring-related expenses(a):
Cost of sales	516		179		693		334
Selling, general and administrative	1,346		384		1,587		702
Research, development and engineering	318		326		641		503
Total restructuring and restructuring-related charges	$	3,116	$	884	$	4,921	$	2,637

__________

(a) Restructuring-related expenses primarily include retention bonuses and consulting expenses.

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(8.) RESTRUCTURING AND OTHER CHARGES (Continued)

Restructuring programs

Operational excellence initiatives

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

In 2022, the Company commenced initiatives designed to reduce costs and improve operating efficiencies by relocating certain manufacturing operations.

The following table summarizes the activity for restructuring reserves (in thousands):


	Operational excellence initiatives		Strategic reorganization and alignment		Manufacturing alignment to support growth		Total
December 31, 2022	$	232	$	2,134	$	—	$	2,366
Charges incurred, net of reversals	710		979		311		2,000
Cash payments	(833)		(2,170)		—		(3,003)

June 30, 2023	$	109	$	943	$	311	$	1,363

Acquisition and integration

Acquisition and integration costs primarily consist of professional fees and other costs related to business acquisitions. During the six months ended June 30, 2023 and July 1, 2022, acquisition and integration costs of $0.9 million and $5.3 million, respectively, included expenses primarily related to the acquisitions of Oscor and Aran. Acquisition and integration costs for the six months ended June 30, 2023 and July 1, 2022, included a benefit of $0.3 million and expense of $0.1 million, respectively, 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 six months ended June 30, 2023 and July 1, 2022, the Company recorded expenses related to other initiatives not described above, which relate primarily to integration and operational initiatives to reduce future costs and improve efficiencies.

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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 second quarter of 2023 was 19.8% on $29.9 million of income before taxes compared to 14.7% on $24.4 million of income before taxes for the same period in 2022. The Company’s effective tax rate for the six months ended June 30, 2023 was 19.3% on $45.9 million of income before taxes compared to 16.1% on $38.4 million of income before taxes for the same period of 2022. The difference between the Company’s effective tax rates and the U.S. federal statutory income tax rate of 21% for the second quarter and first six months of 2023 and 2022 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 second quarter and first six months of 2023, the Company recorded discrete tax expense of $0.4 million and $0.5 million, respectively. The Company did not record discrete tax expense for the second quarter of 2022 and recorded discrete tax expense of $0.5 million for the first six months of 2022. The discrete tax expense for the second quarter and first six months of 2023 is predominately related to unfavorable return to provision adjustments attributable to certain foreign tax returns filed during the quarter. The remainder of the discrete tax amounts relate predominately to excess tax benefits recognized upon vesting of RSUs during those periods partially offset by tax expense from shortfalls recorded for the forfeiture of certain PRSUs. The discrete tax amounts for the second quarter and first six months of 2022 are predominately related to tax expense on shortfalls recorded for the forfeiture of certain PRSUs, partially offset by excess tax benefits recognized upon vesting of RSUs during those periods.

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 June 30, 2023, the Company had unrecognized tax benefits of approximately $8.0 million, of which approximately $7.9 million would favorably impact the effective tax rate, net of federal benefit on state issues, if recognized. As of June 30, 2023, the Company believes it is reasonably possible that a reduction of approximately $1.9 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.

Product Warranties

The Company generally warrants that its products will meet customer specifications and will be free from defects in materials and workmanship. The product warranty liability is presented within Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. The change in product warranty liability comprised the following (in thousands):


December 31, 2022	$	77
Additions to warranty reserve, net of reversals	7


June 30, 2023	$	84

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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				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Numerator for basic and diluted EPS:


Net income	$	23,971	$	20,836	$	37,036	$	32,203

Denominator for basic and diluted EPS:
Weighted average shares outstanding - Basic	33,312		33,111		33,285		33,101
Dilutive effect of share-based awards	374		239		346		225
Weighted average shares outstanding - Diluted	33,686		33,350		33,631		33,326




Basic EPS	$	0.72	$	0.63	$	1.11	$	0.97




Diluted EPS	$	0.71	$	0.62	$	1.10	$	0.97

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		Six Months Ended
	June 30, 2023	July 1, 2022	June 30, 2023	July 1, 2022
RSUs	—	5	2	4
PRSUs	83	165	108	165

The dilutive effect for the Company's 2028 Notes is calculated using the if-converted method. The Company is required, pursuant to the Indenture governing the 2028 Notes, to settle the principal amount of the 2028 Notes in cash and may elect to settle the remaining conversion obligation (i.e., the stock price in excess of the conversion price) in cash, shares of the Company's common stock, or a combination thereof. Under the if-converted method, the Company includes the number of shares required to satisfy the conversion obligation, assuming all the 2028 Notes are converted. Because the average closing price of the Company's common stock for the three months ended June 30, 2023, which is used as the basis for determining the dilutive effect on earnings per share, was less than the conversion price of $87.20, all associated shares were antidilutive.

In connection with the issuance of the 2028 Notes, the Company entered into privately negotiated capped call transactions with certain financial institutions. The Capped Calls cover, subject to anti-dilution adjustments substantially similar to those in the 2028 Notes, approximately 5.7 million shares of the Company's common stock, the same number of shares initially underlying the 2028 Notes, at a strike price of approximately $108.59, subject to certain adjustments under the terms of the Capped Calls. The Capped Calls will expire upon the maturity of the 2028 Notes, subject to earlier exercise or termination. Exercise of the Capped Calls would reduce the number of shares of the Company's common stock outstanding, and therefore would be antidilutive.

See Note 6 “Debt” for additional information related to 2028 Notes and Capped Calls.

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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, treasury stock and common stock outstanding for the six month periods ended June 30, 2023 and July 1, 2022:


	Six Months Ended
	June 30, 2023	July 1, 2022
Shares outstanding at beginning of period	33,169,778	33,063,336
Stock options exercised	58,413	—
Vesting of RSUs, net of shares withheld to cover taxes	79,889	58,497
Shares outstanding at end of period	33,308,080	33,121,833

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		Tax		Net-of-Tax Amount
March 31, 2023	$	(346)	$	3,927	$	12,075	$	15,656	$	(690)	$	14,966
Unrealized gain on cash flow hedges	—		2,126		—		2,126		(447)		1,679
Realized gain on foreign currency hedges	—		(1,318)		—		(1,318)		277		(1,041)
Realized gain on interest rate swap hedge	—		(675)		—		(675)		142		(533)
Foreign currency translation loss	—		—		(2,901)		(2,901)		—		(2,901)

June 30, 2023	$	(346)	$	4,060	$	9,174	$	12,888	$	(718)	$	12,170

December 31, 2022	$	(346)	$	1,760	$	4,150	$	5,564	$	(235)	$	5,329
Unrealized gain on cash flow hedges	—		5,572		—		5,572		(1,170)		4,402
Realized gain on foreign currency hedges	—		(2,010)		—		(2,010)		422		(1,588)
Realized gain on interest rate swap hedge	—		(1,262)		—		(1,262)		265		(997)
Foreign currency translation gain	—		—		5,024		5,024		—		5,024

June 30, 2023	$	(346)	$	4,060	$	9,174	$	12,888	$	(718)	$	12,170



April 1, 2022	$	(890)	$	1,170	$	21,833	$	22,113	$	(76)	$	22,037
Unrealized loss on cash flow hedges	—		(291)		—		(291)		61		(230)
Realized gain on foreign currency hedges	—		(295)		—		(295)		62		(233)
Realized loss on interest rate swap hedge	—		526		—		526		(110)		416
Foreign currency translation loss	—		—		(27,274)		(27,274)		—		(27,274)

July 1, 2022	$	(890)	$	1,110	$	(5,441)	$	(5,221)	$	(63)	$	(5,284)

December 31, 2021	$	(890)	$	(2,291)	$	29,720	$	26,539	$	651	$	27,190
Unrealized gain on cash flow hedges	—		2,565		—		2,565		(539)		2,026
Realized gain on foreign currency hedges	—		(457)		—		(457)		96		(361)
Realized loss on interest rate swap hedge	—		1,293		—		1,293		(271)		1,022
Foreign currency translation loss	—		—		(35,161)		(35,161)		—		(35,161)

July 1, 2022	$	(890)	$	1,110	$	(5,441)	$	(5,221)	$	(63)	$	(5,284)

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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 Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2023

Assets: Foreign currency hedging contracts	$	4,060	$	—	$	4,060	$	—


Liabilities: Contingent consideration	555		—		—		555

December 31, 2022
Assets: Interest rate swap	$	1,262	$	—	$	1,262	$	—
Assets: Foreign currency hedging contracts	521		—		521		—

Liabilities: Foreign currency hedging contracts	23				23
Liabilities: Contingent consideration	11,756		—		—		11,756

Derivatives Designated as Hedging Instruments

Interest Rate Swaps

The Company may periodically enter into interest rate swap agreements in order to reduce the cash flow risk caused by interest rate changes on its outstanding floating rate borrowings. Under these swap agreements, the Company pays a fixed rate of interest and receives a floating rate.

The Company had no outstanding interest rate swaps as of June 30, 2023. Information regarding the Company’s outstanding interest rate swap, designated as a cash flow hedge, as of December 31, 2022 is as follows (dollars in thousands):


Notional Amount		Maturity Date	Pay Fixed Rate		Receive Current Floating Rate		Fair Value		Balance Sheet Location
$	100,000	Jun 2023	2.1785	%	4.3869	%	$	1,262	Prepaid expenses and other current assets

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(13.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

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 June 30, 2023 is as follows (dollars in thousands):


Notional Amount		Maturity Date	$/Foreign Currency		Fair Value		Balance Sheet Location
$	18,289	Dec 2023	0.0481	MXN Peso	$	3,436	Prepaid expenses and other current assets
40,377		Dec 2023	1.0796	Euro	624		Prepaid expenses and other current assets

Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of December 31, 2022 is as follows (dollars in thousands):


Notional Amount		Maturity Date	$/Foreign Currency		Fair Value		Balance Sheet Location


$	37,175	Dec 2023	0.0489	MXN Peso	$	504	Prepaid expenses and other current assets
2,685		Mar 2023	0.0249	UYU Peso	17		Prepaid expenses and other current assets
17,309		Mar 2023	1.0751	Euro	(23)		Accrued expenses and other current liabilities

The following tables present the effect of cash flow hedge derivative instruments on other comprehensive income (loss) (“OCI”), AOCI and the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2023 and July 1, 2022 (in thousands):


	Three Months Ended
	June 30, 2023				July 1, 2022
	Total		Amount of Gain (Loss) on Cash Flow Hedge Activity		Total		Amount of Gain (Loss) on Cash Flow Hedge Activity
Sales	$	400,044	$	(83)	$	350,081	$	(371)
Cost of sales	294,240		1,384		257,184		554
Operating expenses	64,228		17		60,190		112
Interest expense	11,459		675		7,773		(526)



	Six Months Ended
	June 30, 2023				July 1, 2022
	Total		Amount of Gain (Loss) on Cash Flow Hedge Activity		Total		Amount of Gain (Loss) on Cash Flow Hedge Activity
Sales	$	778,829	$	(134)	$	660,993	$	(425)
Cost of sales	576,352		2,092		486,621		746
Operating expenses	126,735		52		119,168		136
Interest expense	28,713		1,262		13,741		(1,293)

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(13.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)


	Unrealized Gain (Loss) Recognized in OCI				Realized Gain (Loss) Reclassified from AOCI
	Three Months Ended				Location in Statements of Operations and Comprehensive Income (Loss)	Three Months Ended
	June 30, 2023		July 1, 2022			June 30, 2023		July 1, 2022
Interest rate swap	$	6	$	702	Interest expense	$	675	$	(526)
Foreign exchange contracts	364		(1,167)		Sales	(83)		(371)
Foreign exchange contracts	1,739		96		Cost of sales	1,384		554
Foreign exchange contracts	17		78		Operating expenses	17		112

	Six Months Ended				Location in Statements of Operations and Comprehensive Income (Loss)	Six Months Ended
	June 30, 2023		July 1, 2022			June 30, 2023		July 1, 2022
Interest rate swap	$	—	$	2,526	Interest expense	$	1,262	$	(1,293)
Foreign exchange contracts	513		(1,681)		Sales	(134)		(425)
Foreign exchange contracts	5,014		1,365		Cost of sales	2,092		746
Foreign exchange contracts	45		355		Operating expenses	52		136

The Company expects to reclassify net gains totaling $4.1 million related to its cash flow hedges from AOCI into earnings during the next twelve months.

Net Investment Hedges

The Company has foreign-denominated long-term debt balances that qualify as net investment hedges. Changes in the value of these net investment hedges due to foreign currency gains or losses are deferred as foreign currency translation adjustments in Other comprehensive income (loss) on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), and will remain in Accumulated other comprehensive income (loss) until the hedged investment is sold or substantially liquidated. We evaluate the effectiveness of the net investment hedges each quarter.

As of June 30, 2023, the Company had a €100 million borrowing on the Revolving Credit Facility that was designated as a net investment hedge on a portion of the Company’s net investments in certain of its entities with functional currencies denominated in the Euro. There were no net investment hedges outstanding at December 31, 2022.

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 June 30, 2023 and December 31, 2022, the Company had total gross notional amounts of $15.0 million and $12.0 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. Net 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 (Loss). The Company recorded net losses of approximately $0.1 million for the three and six months ended June 30, 2023, compared to gains of $0.4 million and $0.7 million, respectively, for the three and six months ended July 1, 2022, respectively. 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.

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(13.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

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 and six months ended June 30, 2023 and July 1, 2022 (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Fair value measurement at beginning of period	$	11,732	$	1,976	$	11,756	$	2,415
Amount recorded for current year acquisitions	—		7,375		—		7,375
Fair value measurement adjustment	—		—		(265)		54
Payments	(11,177)		—		(11,177)		(493)
Foreign currency translation	—		(279)		241		(279)
Fair value measurement at end of period	$	555	$	9,072	$	555	$	9,072

On October 7, 2019, the Company acquired certain assets and liabilities of US BioDesign, LLC (“USB”), a privately-held developer and manufacturer of complex braided biomedical structures for disposable and implantable medical devices. As of June 30, 2023 and December 31, 2022, the Company assessed the probability of meeting the required revenue threshold as unlikely and determined the fair value of the contingent consideration liability relating to the acquisition of USB was zero. The final earnout period under the asset purchase agreement for USB ends on December 31, 2023. During the six months ended July 1, 2022, the Company made a $0.5 million payment associated with the USB acquisition, resulting from achievement of revenue-based goals for the period from January 1, 2021 to December 31, 2021.

On February 19, 2020, the Company acquired certain assets and liabilities of InoMec Ltd. (“InoMec”), a privately-held company based in Israel that specializes in the research, development and manufacturing of medical devices, including minimally invasive tools, delivery systems, tubing and catheters, surgery tools, drug-device combination, laser combined devices, and tooling and production. As of June 30, 2023 and December 31, 2022, the fair value of the contingent consideration liability relating to the acquisition of InoMec was $0.6 million and $1.1 million, respectively. During the six months ended June 30, 2023, the Company made a $0.3 million payment associated with the InoMec acquisition, resulting from achievement of revenue-based goals for the period from March 1, 2022 to February 28, 2023. The final earnout period under the asset purchase agreement for InoMec ends on February 29, 2024. The remaining maximum potential undiscounted payout for the contingent consideration liability relating to the acquisition of InoMec is $0.9 million.

On April 6, 2022, the Company acquired Aran. See Note 2 “Business Acquisitions” for additional information about the Aran acquisition and related contingent consideration. During the six months ended June 30, 2023, the Company made a $10.9 million payment associated with the final earnout period under the asset purchase agreement for Aran, resulting from achievement of the maximum revenue-based goals for the year ended December 31, 2022. As of December 31, 2022, the fair value of the contingent consideration liability relating to the acquisition of Aran was $10.9 million.

The contingent consideration at June 30, 2023 is the estimated fair value of the Company’s remaining obligations under the asset purchase agreements for InoMec and USB. As of June 30, 2023, contingent consideration liabilities of $0.6 million are included in Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. As of December 31, 2022, the current portion of contingent consideration liabilities included in Accrued expenses and other current liabilities was $11.2 million and the non-current portion included in Other long-term liabilities was $0.6 million.

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(13.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

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.

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):


	June 30, 2023		December 31, 2022
Equity method investment	$	8,231	$	8,252
Non-marketable equity securities	5,637		5,637
Total equity investments	$	13,868	$	13,889

The components of (Gain) loss on equity investments for each period were as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Equity method investment (gain) loss	$	(134)	$	320	$	21	$	2,724

The Company’s equity method investment is in a venture capital fund focused on investing in life sciences companies. As of June 30, 2023, the Company owned 7.4% 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				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Segment sales by product line:
Medical
Cardio & Vascular	$	208,494	$	180,604	$	399,697	$	339,641
Cardiac Rhythm Management & Neuromodulation	153,411		135,945		298,550		259,269
Advanced Surgical, Orthopedics & Portable Medical	27,206		23,285		55,130		42,951

Total Medical	389,111		339,834		753,377		641,861
Non-Medical	10,933		10,247		25,452		19,132
Total sales	$	400,044	$	350,081	$	778,829	$	660,993

The following table presents income for the Company’s reportable segments (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Segment income:
Medical	$	68,497	$	54,580	$	123,303	$	98,728
Non-Medical	278		1,625		4,304		2,290
Total segment income	68,775		56,205		127,607		101,018
Unallocated operating expenses	(27,199)		(23,498)		(51,865)		(45,814)
Operating income	41,576		32,707		75,742		55,204
Unallocated expenses, net	(11,684)		(8,284)		(29,853)		(16,833)
Income before taxes	$	29,892	$	24,423	$	45,889	$	38,371

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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 27% of total revenue for the three and six months ended June 30, 2023, compared to 32% and 31%, respectively, for the three and six months ended July 1, 2022. 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

June 30, 2023

July 1, 2022

Customer

Medical

Non-Medical

Medical

Non-Medical

Customer A

17%

18%

Customer B

17%

Customer C

13%

14%

Customer D

20%

42%

All other customers

53%

80%

51%

58%

Six Months Ended

June 30, 2023

July 1, 2022

Customer

Medical

Non-Medical

Medical

Non-Medical

Customer A

18%

Customer B

17%

Customer C

13%

14%

Customer D

21%

37%

All other customers

52%

79%

51%

63%

__________

* Less than 10% of segment’s total revenues for the period.

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INTEGER HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(15.) REVENUE FROM CONTRACTS WITH CUSTOMERS (Continued)

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

June 30, 2023

July 1, 2022

Ship to Location

Medical

Non-Medical

Medical

Non-Medical

United States

54%

64%

52%

71%

Canada

12%

All other countries

46%

24%

48%

29%

Six Months Ended

June 30, 2023

July 1, 2022

Ship to Location

Medical

Non-Medical

Medical

Non-Medical

United States

54%

62%

51%

67%

Canada

11%

All other countries

46%

27%

49%

33%

__________

* 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):


	June 30, 2023		December 31, 2022

Contract assets	$	80,010	$	71,927
Contract liabilities	8,777		5,616

During the three and six months ended June 30, 2023, the Company recognized $1.3 million and $2.7 million, respectively, of revenue that was included in the contract liability balance as of December 31, 2022. During the three and six months ended July 1, 2022, the Company recognized $0.8 million and $1.7 million, respectively, of revenue that was included in the contract liability balance as of December 31, 2021.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q should be read in conjunction with the disclosures included in our Annual Report on Form 10-K for the year ended December 31, 2022. In addition, please read this section in conjunction with our Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements contained herein.

Forward-Looking Statements

Some of the statements contained in this Form 10-Q and other written and oral statements made from time to time by us and our representatives are not statements of historical or current fact. As such, they are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations, and these statements are subject to known and unknown risks, uncertainties and assumptions. Forward-looking statements include statements relating to:

•future sales, expenses, and profitability; customer demand; supplier performance (including delivery delays); costs (including wages, staffing levels and freight); future development and expected growth of our business and industry, including expansion of our manufacturing capacity;

•our ability to execute our business model and our business strategy, including completion and integration of current or future acquisition targets;

•having available sufficient cash and borrowing capacity to meet working capital, debt service and capital expenditure requirements for the next twelve months; and

•projected capital spending.

You can identify forward-looking statements by terminology such as “outlook,” “projected,” “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “projects” or “continue” or variations or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those stated or implied by these forward-looking statements. In evaluating these statements and our prospects, you should carefully consider the factors set forth below. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary factors and to others contained throughout this Form 10-Q.

Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from the results expressed or implied by our forward-looking statements or that may affect our future results, some of these factors and other risks and uncertainties that arise from time to time are described in Item 1A “Risk Factors” of our Annual Report on Form 10-K and in our other periodic filings with the SEC and include the following:

•operational risks, such as the duration, scope and impact of global supply chain issues and the military conflict between Russia and Ukraine, including the evolving economic, social and governmental environments and their effect on our suppliers and customers as well as the global economy; our dependence upon a limited number of customers; pricing pressures that we face from customers; our reliance on third party suppliers for raw materials, key products and subcomponents; our ability to attract, train and retain a sufficient number of qualified associates; the potential for harm to our reputation caused by quality problems related to our products; the dependence of our energy market-related revenues on the conditions in the oil and natural gas industry; interruptions in our manufacturing operations; our dependence upon our information technology systems and our ability to prevent cyber-attacks and other failures; our dependence upon our senior management team and technical personnel; and global climate change and the emphasis on ESG matters by various stakeholders;

•strategic risks, such as the intense competition we face and our ability to successfully market our products; our ability to respond to changes in technology; our ability to develop new products and expand into new geographic and product markets; and our ability to successfully identify, make and integrate acquisitions to expand and develop our business in accordance with expectations;

•financial risks, such as our significant amount of outstanding indebtedness and our ability to remain in compliance with financial and other covenants under our senior secured credit facilities; economic and credit market uncertainties that could interrupt our access to capital markets, borrowings or financial transactions; financial and market risks related to our international operations and sales; our complex international tax profile; and our ability to realize the full value of our intangible assets; and

•legal and compliance risks, such as regulatory issues resulting from product complaints, recalls or regulatory audits; the potential of becoming subject to product liability or intellectual property claims; our ability to protect our intellectual property and proprietary rights; our ability and the cost to comply with environmental regulations; our ability to comply with customer-driven policies and third party standards or certification requirements; our ability to obtain necessary licenses for new technologies; legal and regulatory risks from our international operations, including trade regulation; and the fact that the healthcare industry is highly regulated and subject to various regulatory changes; and

•other risks and uncertainties that arise from time to time.

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

Except as may be required by applicable law, the Company assumes no obligation to update forward-looking statements in this Form 10-Q whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.

In this Form 10-Q, references to “Integer,” “we,” “us,” “our” and the “Company” mean Integer Holdings Corporation and its subsidiaries, unless the context indicates otherwise.

Our Business

Integer Holdings Corporation is one of the largest medical device outsource (“MDO”) manufacturers in the world serving the cardiac, neuromodulation, vascular, orthopedics, advanced surgical and portable medical markets. We also develop batteries for high-end niche applications in the non-medical energy, military, and environmental markets. Our vision is to enhance the lives of patients worldwide by being our customers’ partner of choice for innovative technologies and services.

We organize our business into two reportable segments, Medical and Non-Medical, and derive our revenues from four principal product lines. The Medical segment includes the Cardio & Vascular, Cardiac Rhythm Management & Neuromodulation and Advanced Surgical, Orthopedics & Portable Medical product lines and the Non-Medical segment comprises the Electrochem product line. For more information on our segments, please refer to Note 14 “Segment Information” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report.

Impact of Global Events

Global economic challenges, including the impact of the war in Ukraine, severe and sustained inflation, a rising interest rate environment, fluctuations in global currencies, and supply chain disruptions may continue to cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market and product line, but specific impacts to our business include increased borrowing costs, labor shortages, disruptions in the supply chain, delayed or reduced customer orders and sales, and delays in shipments to and from certain countries. We monitor economic conditions closely. In response to potential reductions in revenue, we can take actions to align our cost structure with changes in demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions and other developments.

Business Acquisitions

On April 6, 2022, we acquired 100% of the equity interests of Connemara Biomedical Holdings Teoranta, including its operating subsidiaries Aran Biomedical and Proxy Biomedical (collectively “Aran”). A recognized leader in proprietary medical textiles, high precision biomaterial coverings and coatings as well as advanced metal and polymer braiding, Aran delivers development and manufacturing solutions for implantable medical devices. Consistent with our strategy, the combination with Aran further increases our ability to offer complete solutions for complex delivery and therapeutic devices in high growth cardiovascular markets such as structural heart, neurovascular, peripheral vascular, and endovascular as well as general surgery.

Refer to Note 2 “Business Acquisitions” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information about these acquisitions.

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

Financial Overview

Net income for the second quarter and first six months of 2023 was $24.0 million, or $0.71 per diluted share, and $37.0 million, or $1.10 per diluted share, respectively, compared to $20.8 million, or $0.62 per diluted share, and $32.2 million, or $0.97 per diluted share for the second quarter and first six months of 2022, respectively. These variances are primarily the result of the following:

•Sales for the second quarter and first six months of 2023 increased $50.0 million and $117.8 million, respectively, when compared to the same periods in 2022, driven by strong demand in our Medical product lines and an improving supply chain and labor environment.

•Gross profit for the second quarter and first six months of 2023 increased $12.9 million and $28.1 million, respectively, primarily from higher sales volume, partially offset by increased cost of sales resulting from labor and supply constraints.

•Operating expenses for the second quarter and first six months of 2023 increased $4.0 million and $7.6 million, respectively, when compared to the same periods in 2022, primarily due to higher labor costs and amortization expense, partially offset by lower restructuring and other charges.

•Interest expense for the second quarter and first six months of 2023 increased $3.7 million and $15.0 million, respectively, compared to the same periods in 2022, due to higher interest rates, higher average debt outstanding and higher losses from extinguishment of debt.

•During the second quarter and first six months of 2023, we recognized gains on equity investments of $0.1 million and losses of $0.02 million, respectively, compared to losses of $0.3 million and $2.7 million, respectively, for the second quarter and first six months of 2022. Gains and losses on equity investments are generally unpredictable in nature.

•Other loss, net for the second quarter and first six months of 2023 was $0.4 million and $1.1 million, respectively, compared to $0.2 million and $0.4 million, respectively, for the second quarter and first six months of 2022, primarily due to fluctuations in foreign currency gains and losses in the respective periods.

•We recorded provisions for income taxes for the second quarter and first six months of 2023 of $5.9 million and $8.9 million, respectively, compared with provisions for income taxes of $3.6 million and $6.2 million, respectively, for the second quarter and first six months of 2022. The change in income tax expense was primarily due to relative changes in pre-tax income and the impact of discrete tax items.

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

Our Financial Results

The following table presents selected financial information derived from our Condensed Consolidated Financial Statements, contained in Item 1 of this report, for the periods presented (dollars in thousands, except per share).


	Three Months Ended
	June 30,			July 1,			Change
	2023			2022			$		%
Medical Sales:
Cardio & Vascular	208,494			$	180,604		$	27,890	15.4	%
Cardiac Rhythm Management & Neuromodulation	153,411			135,945			17,466		12.8	%
Advanced Surgical, Orthopedics & Portable Medical	27,206			23,285			3,921		16.8	%
Total Medical Sales	389,111			339,834			49,277		14.5	%
Non-Medical	10,933			10,247			686		6.7	%
Total sales	400,044			350,081			49,963		14.3	%
Cost of sales	294,240			257,184			37,056		14.4	%
Gross profit	105,804			92,897			12,907		13.9	%
Gross profit as a % of sales	26.4		%	26.5		%
Operating expenses:
Selling, general and administrative (“SG&A”)	45,827			41,786			4,041		9.7	%
SG&A as a % of sales	11.5		%	11.9		%
Research, development and engineering (“RD&E”)	16,883			14,871			2,012		13.5	%
RD&E as a % of sales	4.2		%	4.2		%
Restructuring and other charges	1,518			3,533			(2,015)		(57.0)	%
Total operating expenses	64,228			60,190			4,038		6.7	%
Operating income	41,576			32,707			8,869		27.1	%
Operating expense as a % of sales	16.1		%	17.2		%
Operating income as a % of sales	10.4		%	9.3		%
Interest expense	11,459			7,773			3,686		47.4	%
(Gain) loss on equity investments	(134)			320			(454)		(141.9)	%
Other loss, net	359			191			168		88.0	%
Income before taxes	29,892			24,423			5,469		22.4	%
Provision for income taxes	5,921			3,587			2,334		65.1	%
Effective tax rate	19.8		%	14.7		%
Net income	$	23,971		$	20,836		$	3,135	15.0	%
Net income as a % of sales	6.0		%	6.0		%
Diluted earnings per share	$	0.71		$	0.62		$	0.09	14.5	%

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS



	Six Months Ended
	June 30,			July 1,			Change
	2023			2022			$		%
Medical Sales:
Cardio & Vascular	$	399,697		$	339,641		$	60,056	17.7	%
Cardiac Rhythm Management & Neuromodulation	298,550			259,269			39,281		15.2	%
Advanced Surgical, Orthopedics & Portable Medical	55,130			42,951			12,179		28.4	%
Total Medical Sales	753,377			641,861			111,516		17.4	%
Non-Medical	25,452			19,132			6,320		33.0	%
Total Sales	778,829			660,993			117,836		17.8	%
Cost of sales	576,352			486,621			89,731		18.4	%
Gross profit	202,477			174,372			28,105		16.1	%
Gross profit as a % of sales	26.0		%	26.4		%
Operating expenses:
SG&A	87,713			81,346			6,367		7.8	%
SG&A as a % of sales	11.3		%	12.3		%
RD&E	35,975			30,954			5,021		16.2	%
RD&E as a % of sales	4.6		%	4.7		%
Restructuring and other charges	3,047			6,868			(3,821)		(55.6)	%
Total operating expenses	126,735			119,168			7,567		6.3	%
Operating income	75,742			55,204			20,538		37.2	%
Operating expense as a % of sales	16.3		%	18.0		%
Operating income as a % of sales	9.7		%	8.4		%
Interest expense	28,713			13,741			14,972		109.0	%
Loss on equity investments	21			2,724			(2,703)		(99.2)	%
Other loss, net	1,119			368			751		204.1	%
Income before taxes	45,889			38,371			7,518		19.6	%
Provision for income taxes	8,853			6,168			2,685		43.5	%
Effective tax rate	19.3		%	16.1		%
Net income	$	37,036		$	32,203		$	4,833	15.0	%
Net income as a % of sales	4.8		%	4.9		%
Diluted earnings per share	$	1.10		$	0.97		$	0.13	13.4	%

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

Product Line Sales

For the second quarter and first six months of 2023, Cardio & Vascular (“C&V”) sales increased $27.9 million, or 15%, and $60.1 million, or 18%, respectively, versus the comparable 2022 periods. The increase in C&V sales for the second quarter and first six months of 2023 was driven by continued strong demand across all markets, growth in key products such as guidewires, new product ramps in electrophysiology, strong performance from the Oscor and Aran acquisitions, and supply chain improvements. Foreign currency exchange rate fluctuations increased C&V sales for the second quarter by $0.3 million and decreased sales for first six months of 2023 by $0.4 million, in comparison to the 2022 periods, primarily due to U.S. dollar fluctuations relative to the Euro.

For the second quarter and first six months of 2023, Cardiac Rhythm Management & Neuromodulation (“CRM&N”) sales increased $17.5 million, or 13%, and $39.3 million, or 15%, respectively, versus the comparable 2022 periods, driven by strong demand, including double-digit growth from emerging customers with PMA (premarket approval) products, and supply chain improvements. Foreign currency exchange rate fluctuations did not have a material impact on CRM&N sales during the second quarter and first six months of 2023 in comparison to 2022.

Advanced Surgical, Orthopedic & Portable Medical (“AS&O”) sales for the second quarter and first six months of 2023 increased $3.9 million, or 17%, and $12.2 million or 28%, respectively, versus the comparable 2022 periods, driven by increased price and demand as a result of the execution of the multi-year Portable Medical exit announced in 2022. Foreign currency exchange rate fluctuations did not have a material impact on AS&O sales during the second quarter and first six months of 2023 in comparison to the 2022 periods.

For the second quarter and first six months of 2023, Non-Medical sales increased $0.7 million, or 7%, and $6.3 million, or 33%, respectively, versus the comparable 2022 periods, driven by strong demand in military and environmental market segments. Foreign currency exchange rate fluctuations did not have a material impact on Non-Medical sales during the second quarter and first six months of 2023 in comparison to the 2022 periods.

Gross Profit


	Three Months Ended						Six Months Ended
	June 30, 2023			July 1, 2022			June 30, 2023		July 1, 2022
Gross profit (in thousands)	$	105,804		$	92,897		202,477		174,372
Gross margin	26.4		%	26.5		%	26.0	%	26.4	%

Gross profit as a percent of sales (“Gross margin”) for the second quarter and first six months of 2023 decreased 10 basis points and 40 basis points, respectively, compared to the comparable 2022 periods, primarily driven by incremental labor and supply chain costs related to manufacturing efficiency headwinds from supply chain volatility.

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

SG&A Expenses

Changes to SG&A expenses from the prior year were due to the following (in thousands):


	Three Months Ended
	June 30, 2023		July 1, 2022		Change
Compensation and benefits(a)	$	25,058	$	23,324	$	1,734
Amortization expense(b)	9,268		8,373		895
Professional fees(c)	3,858		3,094		764
Contract services(d)	2,852		2,348		504
Bank fees and charges(e)	797		203		594
All other SG&A	3,994		4,444		(450)
Net increase in SG&A expenses	$	45,827	$	41,786	$	4,041


	Six Months Ended
	June 30, 2023		July 1, 2022		Change
Compensation and benefits(a)	$	46,647	$	45,170	$	1,477
Amortization expense(b)	18,405		16,400		2,005
Professional fees(c)	7,329		6,267		1,062
Contract services(d)	5,684		4,599		1,085
Bank fees and charges(e)	1,191		403		788
All other SG&A	8,457		8,507		(50)
Net increase in SG&A expenses	$	87,713	$	81,346	$	6,367

__________

(a)Compensation and benefits expense increased during the second quarter and first six months of 2023. The increases were primarily due to annual merit increases and higher incentive compensation, partially offset by lower headcount.

(b)Amortization expense increased during the second quarter and first six months of 2023 compared to the same periods of 2022 primarily due to amortization of intangible assets from the Aran and Oscor acquisitions.

(c)Professional fees increased during the second quarter and first six months of 2023 primarily due to increased costs associated with third-party information technology services.

(d)Contract services expense increased during the second quarter and first six months of 2023 compared to the same periods of 2022 primarily due to higher software costs from information technology enhancements.

(e)The increase in bank fees and charges during the second quarter and first six months of 2023 was driven by increased factoring and supplier financing fees primarily due to the launch of an accounts receivable factoring arrangement during the second quarter of 2023.

RD&E

RD&E expense for the second quarter and first six months of 2023 was $16.9 million and $36.0 million, respectively, compared to $14.9 million and $31.0 million, respectively, for the second quarter and first six months of 2022. The increases in RD&E expense during the second quarter and first six months of 2023 compared to the same periods in 2022, were primarily due to higher labor costs attributed to annual merit increases and higher incentive compensation. RD&E expenses are influenced by the number and timing of in-process projects and labor hours and other costs associated with these projects. Our research and development initiatives continue to emphasize new product development, product improvements, and the development of new technological platform innovations.

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

Restructuring and Other Charges

We continuously evaluate our business and identify opportunities to realign resources to better serve our customers and markets, improve operational efficiency and capabilities, and lower operating costs. To realize the benefits associated with these opportunities, we undertake restructuring-type activities to transform our business. We incur costs associated with these activities, which primarily include exit and disposal costs and other costs directly related to the restructuring initiative. In addition, from time to time, we incur costs associated with acquiring and integrating businesses, and certain other general expenses, including asset impairments.

Restructuring and other charges comprise the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Restructuring charges(a)	$	936	$	(5)	$	2,000	$	1,098
Acquisition and integration costs(b)	556		3,333		938		5,269
Other general expenses(c)	26		205		109		501
Total restructuring and other charges	$	1,518	$	3,533	$	3,047	$	6,868

__________

(a)Restructuring charges for the first six months of 2023 and 2022 primarily consist of termination benefits associated with our operational excellence and strategic reorganization and alignment initiatives.

(b)Amounts include expenses related to the purchase of certain assets and liabilities from business acquisitions. Acquisition and integration costs for the first six months of 2023 and 2022 include a benefit of $0.3 million and expense of $0.1 million, respectively, 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. Amounts for 2022 primarily include expenses related to the Aran and Oscor acquisitions.

(c)Amounts include expenses related to other initiatives not described above, which relate primarily to integration and operational initiatives to reduce future costs and improve efficiencies.

Refer to Note 8 “Restructuring and Other Charges” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information regarding these initiatives.

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

Interest Expense

Information relating to our interest expense is as follows (dollars in thousands):


	Three Months Ended
	June 30, 2023				July 1, 2022				Change
	Amount		Rate		Amount		Rate		Amount		Rate (bp)
Contractual interest expense	$	11,059	4.33	%	$	6,679	2.73	%	$	4,380	160
(Gain) loss on interest rate swap	(675)		(0.26)		526		0.21		(1,201)		(47)
Amortization of deferred debt issuance costs and original issue discount	931		0.43		482		0.22		449		21
Losses from extinguishment of debt	38		0.02		—		—		38		2
Interest expense on borrowings	11,353		4.52	%	7,687		3.16	%	3,666		136
Other interest expense	106				86				20
Total interest expense	$	11,459			$	7,773			$	3,686



	Six Months Ended
	June 30, 2023				July 1, 2022				Change
	Amount		Rate		Amount		Rate		Amount		Rate (bp)
Contractual interest expense	$	23,621	4.69	%	$	11,326	2.49	%	$	12,295	220
(Gain) loss on interest rate swap	(1,262)		(0.25)		1,293		0.29		(2,555)		(54)
Amortization of deferred debt issuance costs and original issue discount	1,687		0.41		963		0.23		724		18
Losses from extinguishment of debt	4,431		0.89		—		—		4,431		89
Interest expense on borrowings	28,477		5.74	%	13,582		3.01	%	14,895		273
Other interest expense	236				159				77
Total interest expense	$	28,713			$	13,741			$	14,972

During 2023, contractual interest expense has increased due to higher average debt outstanding combined with increasing applicable interest rates. The higher average debt balance outstanding is the result of incremental borrowings related to the strategic change to replace some of our variable rate debt to fixed rate through issuance of the 2028 Notes. Interest rates have continued to climb due to increases in overall market rates, partially offset by a 25 basis point decrease in the interest rate margin on our Senior Secured Credit Facilities. The decrease in the interest rate margin was effective during the second quarter of 2023 based on our Secured Net Leverage Ratio.

Other components of interest expense on borrowings include gains and losses on interest rate swaps and non-cash amortization and write-off (losses from extinguishment of debt) of deferred debt issuance costs and original issue discount. Interest rate swap includes realized (gains) losses on our interest rate swap contract which fluctuate depending on the spread between the rate swap contract fixed rate and senior secured credit facility floating rate. Our outstanding interest rate swap matured as of June 30, 2023. Amortization of deferred debt issuance costs and original issue discount increased during 2023 compared to the same periods in 2022 as a result of higher unamortized balances related to new debt. The losses from extinguishment of debt during the first six months of 2023 were related to prepayments of portions of the Term Loan A facility and full repayment of our Term Loan B facility in connection with issuance of the convertible notes. We had no losses from extinguishment of debt during the first six months of 2022.

As of June 30, 2023 and December 31, 2022, approximately 50% and 11%, respectively, of our principal amount of debt are fixed rate borrowings or have been converted to fixed-rate borrowings with an interest rate swap. During February 2023, we strategically replaced about half of our variable rate debt with fixed rate debt through the issuance of the 2028 Notes at a fixed rate of 2.125% and paying down our highest rate variable debt, the Term Loan B facility, and a portion of our Revolving Credit Facility. These transactions are expected to mitigate increased borrowing costs and result in a more balanced mix of fixed and floating rates to help protect against interest rate exposure. We may enter into interest rate swap agreements in order to reduce our exposure to fluctuations in floating rates.

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

See Note 6 “Debt” and Note 13 “Financial Instruments and Fair Value Measurements” of the Notes to the Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information pertaining to our debt and interest rate swap agreement.

(Gain) Loss on Equity Investments

During the second quarter and first six months of 2023, we recognized gains on equity investments of $0.1 million and losses of $0.02 million, respectively. During the second quarter and first six months of 2022, we recognized losses of $0.3 million and $2.7 million, respectively. The amounts for both 2023 and 2022 relate to our share of equity method investee losses including unrealized appreciation/depreciation of the underlying interests of the investee. As of June 30, 2023 and December 31, 2022, the carrying value of our equity investments was $13.9 million. See Note 13 “Financial Instruments and Fair Value Measurements” of the Notes to the Condensed Consolidated Financial Statements contained in Item 1 of this report for further details regarding these investments.

Other Loss, Net

Other loss, net for the second quarter and first six months of 2023 was $0.4 million and $1.1 million, respectively, compared to $0.2 million and $0.4 million, respectively, for the second quarter and first six months of 2022. Other loss, net primarily includes gains/losses from the impact of exchange rates on transactions denominated in foreign currencies. Our foreign currency transaction gains/losses are based primarily on fluctuations of the U.S. dollar relative to the Euro, Mexican peso, Uruguayan peso, Malaysian ringgits, Dominican peso, or Israeli shekel.

The impact of exchange rates on transactions denominated in foreign currencies included in Other loss, net for the second quarter and first six months of 2023 were net losses of $0.4 million and $1.2 million, respectively, compared to net losses of $0.4 million and $0.5 million for the second quarter and first six months of 2022, respectively. We continually monitor our foreign currency exposures and seek to take steps to mitigate these risks. However, fluctuations in exchange rates could have a significant impact, positive or negative, on our financial results in the future.

Provision for Income Taxes

We recognized income tax expense of $5.9 million for the second quarter of 2023 on $29.9 million of income before taxes (effective tax rate of 19.8%), compared to an income tax expense of $3.6 million on $24.4 million of income before taxes (effective tax rate of 14.7%) for the same period of 2022. The income tax expense for the first six months of 2023 was $8.9 million on $45.9 million of income before taxes (effective tax rate of 19.3%), compared to income tax expense of $6.2 million on income before taxes of $38.4 million (effective tax rate of 16.1%) for the same period of 2022. Income tax expense for the second quarter and first six months of 2023 included discrete tax expense of $0.4 million and $0.5 million, respectively. We did not record discrete tax expense for the second quarter of 2022. Income tax expense for the first six months of 2022 included $0.5 million of discrete tax expense.

Our effective tax rate for 2023 differs from the U.S. federal statutory tax rate of 21% due principally to the estimated impact of Federal Tax Credits (including R&D credits and Foreign tax credits), stock-based compensation windfalls or shortfalls, and the impact of U.S taxes on foreign earnings, including the GILTI provision which requires us to include foreign subsidiary earnings in excess of a deemed return on a foreign subsidiary’s tangible assets in our U.S. income tax return. The U.S. tax on foreign earnings is reflected net of a statutory deduction of 50% of the GILTI inclusion (subject to limitations based on U.S. taxable income, if any) and net of FDII that provides a 37.5% deduction to domestic companies for certain foreign sales and services income. In addition, our rate is impacted by earnings realized in foreign jurisdictions with statutory rates that are different than the U.S. federal statutory rate. The primary foreign jurisdictions in which we operate and the statutory tax rate for each respective jurisdiction include Switzerland (22%), Mexico (30%), Uruguay (25%), Ireland (12.5%) and Malaysia (24%). We had been operating under a tax holiday in Malaysia, however this expired in April 2023. We acquired manufacturing operations in the Dominican Republic as part of the acquisition of Oscor, and are operating under a free trade zone agreement in the Dominican Republic through March 2034.

There is a potential for volatility of our effective tax rate due to several factors, including changes in the mix of pre-tax income and the jurisdictions to which it relates, business acquisitions, settlements with taxing authorities, changes in tax rates, and foreign currency exchange rate fluctuations. We continue to closely monitor developments related to proposed changes in tax laws and tax rates, including current proposals for U.S. Tax Reform and the 15% Minimum Global Tax Rate proposed by the Organization for Economic Cooperation and Development. In addition, we continue to explore tax planning opportunities that may have a material impact on our effective tax rate.

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

Liquidity and Capital Resources

Sources of Liquidity


(dollars in thousands)	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	38,615	$	24,272
Working capital	$	416,096	$	334,546
Current ratio	3.08		2.50

Cash and cash equivalents at June 30, 2023 increased by $14.3 million from December 31, 2022, primarily as a result of cash generated by operating activities and proceeds from net borrowings on long-term debt, partially offset by purchases of property, plant and equipment.

Working capital increased by $81.6 million from December 31, 2022, primarily from positive working capital fluctuations in cash, accounts receivable and inventory. During the first six months of 2023, accounts receivable increased mainly from an increase in sales volume, which was offset by accelerated customer collections from a new factoring arrangement, while inventory increased to support higher product demand and sales volume.

At June 30, 2023, $22.6 million of our cash and cash equivalents were held by foreign subsidiaries. We intend to limit our distributions from foreign subsidiaries to previously taxed income or current period earnings. If distributions are made utilizing current period earnings, we will record foreign withholding taxes in the period of the distribution.

As of June 30, 2023, our capital structure consisted of $985.4 million of debt, net of deferred debt issuance costs and unamortized discounts and 33 million shares of common stock outstanding. As of June 30, 2023, we had access to $387.9 million of borrowing capacity under our Revolving Credit Facility, available for normal course of business and letters of credit, and are authorized to issue up to 100 million shares of common stock and 100 million shares of preferred stock. As of June 30, 2023, our contractual debt service obligations for the remainder of 2023, consisting of interest on our outstanding debt, are estimated to be approximately $21 million. Actual principal and interest payments may be higher if, for instance, the applicable interest rates on our Senior Secured Credit Facilities increase, we borrow additional amounts on our Revolving Credit Facility, or we pay principal amounts in excess of the required minimums reflected in the contractual debt service obligations above.

Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash equivalents and borrowings under our Revolving Credit Facility are sufficient to meet our working capital, debt service and capital expenditure requirements for the next twelve months. If our future financing needs increase, we may need to arrange additional debt or equity financing. We continually evaluate and consider various financing alternatives to enhance or supplement our existing financial resources. However, we cannot be assured that we will be able to enter into any such arrangements on acceptable terms or at all.

Credit Facilities and Convertible Notes

As of June 30, 2023, we had Senior Secured Credit Facilities that consist of a $500 million Revolving Credit Facility, with an outstanding principal balance of $109 million, and a TLA Facility with an outstanding principal balance of $393 million. The Revolving Credit Facility and TLA Facility mature on February 15, 2028. The Senior Secured Credit Facilities include a mandatory prepayment provision customary for credit facilities of its nature.

During the first quarter of 2023, we issued $500 million aggregate principal amount of notes. The 2028 Notes mature on February 15, 2028 and bear interest at a fixed rate of 2.125% per annum. The total net proceeds from the issuance of the 2028 Notes, after deducting initial purchasers' discounts and commissions and debt issuance costs, were approximately $485 million. We used the net proceeds from the issuance of the 2028 Notes to settle in full principal and interest due of $336.1 million under the TLB Facility, pay down principal and interest due of $113.9 million under the Revolving Credit Facility, to pay related fees and expenses, and to pay the cost of the capped calls related to the issuance of our 2028 Notes.

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INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

The Revolving Credit Facility and TLA Facility contain covenants requiring that we maintain (i) a Total Net Leverage Ratio not to exceed 5.50:1.00 (stepping down to 5.00:1.00 for the third fiscal quarter of 2023 through maturity and subject to increase in certain circumstances following certain qualified acquisitions) and (ii) an interest coverage ratio of at least 2.50:1.00. As of June 30, 2023, we were in compliance with these financial covenants. As of June 30, 2023, our Total Net Leverage Ratio, calculated in accordance with our Senior Secured Credit Facilities agreement, was approximately 2.9 to 1.0. For the twelve month period ended June 30, 2023, our interest coverage ratio, calculated in accordance with our Senior Secured Credit Facilities agreement, was approximately 7.9 to 1.0.

Failure to comply with these financial covenants would result in an event of default as defined under the Revolving Credit Facility and TLA Facility unless waived by the lenders. An event of default may result in the acceleration of our indebtedness. As a result, management believes that compliance with these covenants is material to us.

See Note 6 “Debt” of the Notes to the Condensed Consolidated Financial Statements contained in Item 1 of this report for a further information on the Company’s outstanding debt.

Summary of Cash Flow


	Six Months Ended
(in thousands)	June 30, 2023		July 1, 2022
Cash provided by (used in):
Operating activities	$	62,333	$	37,011
Investing activities	(57,366)		(148,659)
Financing activities	7,593		115,603
Effect of foreign currency exchange rates on cash and cash equivalents	1,783		(6,247)
Net change in cash and cash equivalents	$	14,343	$	(2,292)

Operating Activities – During the first six months of 2023, we generated cash from operations of $62.3 million, compared to $37.0 million for the first six months of 2022. The increase of $25.3 million was the result of a $23.5 million increase in cash flow provided by changes in operating assets and liabilities and a $1.8 million increase in net income adjusted for non-cash items such as depreciation and amortization.

The increase in net income adjusted for non-cash items such as depreciation and amortization is primarily from higher sales volume partially offset by higher interest expense. The increase associated with changes in operating assets and liabilities is primarily related to less accounts receivable, inventory and accounts payable growth. Accounts receivable benefited from a new factoring arrangement entered into during the first six months of 2023 that accelerated accounts receivable collections. Factoring activity on accounts receivable provided an increase of approximately $23 million in cash generated from operating activities during the first six months of 2023. Inventory growth was high in the first six months of 2022 from investments to support growth and protect against supply chain risk, while accounts payable yielded less benefit to cash flow in the first six months of 2023 from lower inventory growth and the timing of supplier payments.

Investing Activities – The $91.3 million decrease in net cash used in investing activities was primarily attributable to lower cash paid for acquisitions, partially offset by increased purchases of property, plant and equipment of $57.4 million in the first six months of 2023, compared to $22.6 million in the same period last year. Investing activities for the second quarter of 2022 included net cash paid of $126.6 million for the Aran acquisition and settlement of working capital and other closing adjustments with Oscor.

Financing Activities – Net cash provided by financing activities for the first six months of 2023, was $7.6 million compared to $115.6 million for the first six months of 2022. The cash provided by financing activities for the first six months of 2023 was primarily related to the issuance of our 2028 Notes of $486.3 million, which was partially offset by $335.6 million in full repayment of our term loan B facility, $62.8 million in repayments of our term loan A facility, $33.8 million of net payments on our Revolving Credit Facility, $35.0 million of capped call purchases related to the issuance of our 2028 Notes, and $7.7 million paid to settle certain contingent consideration liabilities related to the Aran and Inomec acquisitions. The net cash inflow for 2022 included $160.0 million in borrowings on the revolving line of credit primarily to fund the Aran acquisition.

Off-Balance Sheet Arrangements

We do not currently have off balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our Condensed Consolidated Financial Statements.

- 41 -

Table of Contents

INTEGER HOLDINGS CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

Impact of Recently Issued Accounting Standards

In the normal course of business, we evaluate all new accounting pronouncements issued by the FASB, SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Condensed Consolidated Financial Statements. See Note 1 “Basis of Presentation” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information about these recently issued accounting standards and their potential impact on our financial condition or results of operations.

Critical Accounting Policies and Estimates

The preparation of our Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. Our estimates, assumptions and judgments are based on historical experience and various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amount of assets and liabilities that are not readily apparent from other sources. Making estimates, assumptions and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control. Management believes the estimates, assumptions and judgments employed and resulting balances reported in the Condensed Consolidated Financial Statements are reasonable; however, actual results could differ materially.

There have been no significant changes to the critical accounting policies and estimates as compared to those disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.

- 42 -

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to information appearing under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q. Furthermore, a discussion of market risk exposures is included in Part II, Item 7A, Quantitative and Qualitative Disclosure about Market Risk, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no material changes in reported market risk since the inclusion of this discussion in the Company’s Annual Report on Form 10-K referenced above.

ITEM 4. CONTROLS AND PROCEDURES

a. Evaluation of Disclosure Controls and Procedures

Our management, including the principal executive officer and principal financial officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) related to the recording, processing, summarization and reporting of information in our reports that we file with the Securities and Exchange Commission as of June 30, 2023. These disclosure controls and procedures have been designed to provide reasonable assurance that material information relating to us, including our subsidiaries, is made known to our management, including these officers, by our employees, and that this information is recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Based on their evaluation, as of June 30, 2023, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective.

b. Changes in Internal Control Over Financial Reporting

During the Company’s most recent fiscal quarter, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 43 -

Table of Contents

PART II—OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

There were no new material legal proceedings that are required to be reported in the quarter ended June 30, 2023, and no material developments during the quarter in the Company’s legal proceedings as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 1A.RISK FACTORS

There have been no material changes to the Company’s risk factors as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 5. OTHER INFORMATION

During the fiscal quarter ended June 30, 2023, none of the Company’s directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

ITEM 6.EXHIBITS


Exhibit Number						Description











10.1#*						Integer Holdings Corporation Director Compensation Policy (most recently amended and restated May 24, 2023).

31.1*						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.

31.2*						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.

32.1**						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*						XBRL Extension Schema Document

101.CAL*						XBRL Extension Calculation Linkbase Document

101.LAB*						XBRL Extension Label Linkbase Document

101.PRE*						XBRL Extension Presentation Linkbase Document

101.DEF*						XBRL Extension Definition Linkbase Document

104						Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).


*			Filed herewith.
**			Furnished herewith.
#			Indicates exhibits that are management contracts or compensation plans or arrangements.

- 44 -

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated:

July 27, 2023

INTEGER HOLDINGS CORPORATION

By:

/s/ Joseph W. Dziedzic

Joseph W. Dziedzic

President and Chief Executive Officer

(Principal Executive Officer)

By:

/s/ Diron Smith

Diron Smith

Vice President and Interim
Chief Financial Officer

(Principal Financial Officer)

By:

/s/ Tom P. Thomas

Tom P. Thomas

Vice President, Corporate Controller

(Principal Accounting Officer)

- 45 -

INTEGER HOLDINGS CORPORATION

Director Compensation Policy

Effective Date: May 24, 2023

Each non-employee member (each, an “Outside Director”) of the Board of Directors (the “Board”) of Integer Holdings Corporation (the “Company”) shall receive compensation made up of cash and equity as follows:

Annual Cash Retainer

The annual cash retainer payable to each Outside Director for service on the Board shall be $80,000 (“Annual Cash Retainer”). The Annual Cash Retainer will be paid in arrears on the last business day of each quarter in the Company’s fiscal year in an amount equal to one-fourth of the Annual Cash Retainer. An Outside Director serving less than a full fiscal quarter will receive a prorated portion of the Annual Cash Retainer based upon the number of months of service in the applicable fiscal quarter.

Annual Equity Retainer

Each Outside Director also will be eligible for an annual equity retainer (“Annual Equity Retainer”) consisting of restricted stock units (“RSUs”). The Annual Equity Retainer shall be granted, as of the date of the annual meeting for the election of directors of the Company (the “Annual Meeting”), to each Outside Director elected or re-elected at the Annual Meeting. The Annual Equity Retainer shall be equal in value to $180,000, and the number of RSUs to be granted shall be determined using the closing price of Company common stock as of the close of business on the grant date. The Annual Equity Retainer shall vest in four equal installments, with the first installment vesting on the three-month anniversary of the grant date, the second installment vesting on the six-month anniversary of the grant date, the third installment vesting on the nine-month anniversary of the grant date, and the last installment vesting on the earlier of (i) the one-year anniversary of the grant date and (ii) the last business day immediately preceding the next Annual Meeting, or if any such vesting date is not a business day, the next business day. In the event an Outside Director is no longer serving on the Board on the vesting date, the portion of the Annual Equity Retainer scheduled to vest after the date of termination from the Board shall no longer vest.

An Outside Director taking office other than on the date of an Annual Meeting will receive a prorated portion of the Annual Equity Retainer, as of the date he or she takes office, equal to the Annual Equity Retainer multiplied by a fraction, the numerator of which is the number of months of service expected to be provided from the date the Outside Director takes office through the one-year anniversary of the most recent Annual Meeting, and the denominator of which is 12. Any prorated Annual Equity Retainer will vest in equal installments on each regularly scheduled vesting date applicable to Outside Directors who have continuously served since the most recent Annual Meeting.

Non-Executive Chairman Cash and Equity Retainers

In addition to the Annual Cash Retainer and Annual Equity Retainer payable to each Outside Director, the Non-Executive Chairman shall be paid an additional cash retainer of $60,000 (“Non-Executive Chairman Additional Annual Cash Retainer”) and shall receive an additional equity retainer of $60,000 (“Non-Executive Chairman Additional Annual Equity Retainer”). The Non-Executive Chairman Additional Annual Cash Retainer will be paid in arrears on the last business day of each quarter in the Company’s fiscal year in an amount equal to one-fourth of the Non-Executive Chairman Additional Annual Cash Retainer. The Non-Executive Chairman Additional Annual Equity Retainer shall be granted as of the date of the Annual Meeting, shall consist of RSUs determined using the closing price of Company common stock as of the close of business on the grant date, and shall vest on the same schedule as the Annual Equity Retainer.

Committee Chair and Member Retainers

In addition to the Annual Cash Retainer and Annual Equity Retainers paid to the Outside Directors, the Chairs of Board Committees shall also be paid the following cash retainers (“Committee Chair Retainers”):

•Audit Committee Chair: $20,000

•Compensation and Organization Committee Chair: $15,000

•Corporate Governance and Nominating Committee Chair: $10,000

•Technology Strategy Committee Chair: $10,000

Members of the Audit Committee, including the Chair, shall also be paid an annual cash retainer of $10,000 (“Member Retainer”).

Pro-Rated Non-Executive Chairman, Committee Chair and Member Retainers

If an Outside Director becomes Non-Executive Chairman, a Committee Chair, or an Audit Committee Member other than on the first day of a fiscal quarter or the date of the Annual Meeting, as applicable, the related Non-Executive Chairman Additional Annual Cash Retainer, Non-Executive Chairman Additional Annual Equity Retainer, Committee Chair Retainer and Member Retainer amounts will be prorated in a manner similar to the Annual Cash Retainer and Annual Equity Retainer, as applicable.

Outside Director Stock Ownership Guidelines

It is the policy of the Board that stock ownership by Outside Directors shall conform to stock ownership guidelines adopted by the Board from time to time.

Travel Expense Reimbursement

All Directors will be reimbursed for reasonable travel expenses incurred by them in connection with attendance at meetings of the Board and its Committees.

Exhibit 31.1

CERTIFICATION

I, Joseph W. Dziedzic, certify that:


1.			I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2023 of Integer Holdings Corporation;


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


			a.			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


			b.			Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


			c.			Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and


			d.			Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.


5.			The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditor and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):


			a.			All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


			b.			Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated:	July 27, 2023	/s/ Joseph W. Dziedzic
		Joseph W. Dziedzic
		President and Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Diron Smith, certify that:


1.			I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2023 of Integer Holdings Corporation;


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


			a.			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


			b.			Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


			c.			Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and


			d.			Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.


5.			The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditor and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):


			a.			All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


			b.			Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated:	July 27, 2023	/s/ Diron Smith
		Diron Smith
		Vice President and Interim Chief Financial Officer
		(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Integer Holdings Corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.


Dated:	July 27, 2023	/s/ Joseph W. Dziedzic
		Joseph W. Dziedzic
		President and Chief Executive Officer
		(Principal Executive Officer)


Dated:	July 27, 2023	/s/ Diron Smith
		Diron Smith
		Vice President and Interim Chief Financial Officer
		(Principal Financial Officer)

This certification is being furnished solely to accompany this Form 10-Q pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and is not to be deemed incorporated by reference into any filing of the Company except to the extent the Company specifically incorporates it by reference therein.

COVER - shares	6 Months Ended
COVER - shares	Jun. 30, 2023	Jul. 21, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	1-16137
Entity Registrant Name	INTEGER HOLDINGS CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	16-1531026
Entity Address, Address Line One	5830 Granite Parkway,
Entity Address, Address Line Two	Suite 1150
Entity Address, City or Town	Plano,
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75024
City Area Code	214
Local Phone Number	618-5243
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	ITGR
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		33,308,080
Entity Central Index Key	0001114483
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 38,615	$ 24,272
Accounts receivable, net of provision for credit losses of $0.4 million and $0.3 million, respectively	236,526	224,325
Inventories	228,931	208,766
Refundable income taxes	3,030	2,003
Contract assets	80,010	71,927
Prepaid expenses and other current assets	28,816	27,005
Total current assets	615,928	558,298
Property, plant and equipment, net	348,895	317,243
Goodwill	985,982	982,192
Other intangible assets, net	797,594	819,889
Deferred income taxes	6,447	6,247
Operating lease assets	70,281	74,809
Financing lease assets	8,537	8,852
Other long-term assets	27,680	26,856
Total assets	2,861,344	2,794,386
Current liabilities:
Current portion of long-term debt	5,000	18,188
Accounts payable	107,507	110,780
Income taxes payable	3,036	10,923
Operating lease liabilities	10,075	10,362
Accrued expenses and other current liabilities	74,214	73,499
Total current liabilities	199,832	223,752
Long-term debt	980,398	907,073
Deferred income taxes	152,926	160,671
Operating lease liabilities	59,988	64,049
Financing lease liabilities	7,677	8,006
Other long-term liabilities	14,868	13,379
Total liabilities	1,415,689	1,376,930
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,308,080 and 33,169,778 shares issued and outstanding, respectively	33	33
Additional paid-in capital	715,715	731,393
Retained earnings	717,737	680,701
Accumulated other comprehensive income	12,170	5,329
Total stockholders’ equity	1,445,655	1,417,456
Total liabilities and stockholders’ equity	$ 2,861,344	$ 2,794,386

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Allowance for doubtful accounts	$ 0.4	$ 0.3
Stockholders’ equity:
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	33,308,080	33,169,778
Common stock, shares outstanding (in shares)	33,308,080	33,169,778

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Income Statement [Abstract]
Sales	$ 400,044	$ 350,081	$ 778,829	$ 660,993
Cost of sales	294,240	257,184	576,352	486,621
Gross profit	105,804	92,897	202,477	174,372
Operating expenses:
Selling, general and administrative	45,827	41,786	87,713	81,346
Research, development and engineering	16,883	14,871	35,975	30,954
Restructuring and other charges	1,518	3,533	3,047	6,868
Total operating expenses	64,228	60,190	126,735	119,168
Operating income	41,576	32,707	75,742	55,204
Interest expense	11,459	7,773	28,713	13,741
(Gain) loss on equity investments	(134)	320	21	2,724
Other loss, net	359	191	1,119	368
Income before taxes	29,892	24,423	45,889	38,371
Provision for income taxes	5,921	3,587	8,853	6,168
Net income	$ 23,971	$ 20,836	$ 37,036	$ 32,203
Earnings per share:
Basic (in dollars per share)	$ 0.72	$ 0.63	$ 1.11	$ 0.97
Diluted (in dollars per share)	$ 0.71	$ 0.62	$ 1.10	$ 0.97
Weighted average shares outstanding:
Basic (in shares)	33,312	33,111	33,285	33,101
Diluted (in shares)	33,686	33,350	33,631	33,326
Comprehensive Income (Loss)
Net income	$ 23,971	$ 20,836	$ 37,036	$ 32,203
Other comprehensive income (loss):
Foreign currency translation gain (loss)	(2,901)	(27,274)	5,024	(35,161)
Change in fair value of cash flow hedges, net of tax	105	(47)	1,817	2,687
Other comprehensive income (loss), net of tax	(2,796)	(27,321)	6,841	(32,474)
Comprehensive income (loss), net of tax	$ 21,175	$ (6,485)	$ 43,877	$ (271)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022
Cash flows from operating activities:
Net income	$ 37,036	$ 32,203
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	48,569	45,753
Debt related charges included in interest expense	6,118	962
Inventory step-up amortization	0	798
Stock-based compensation	11,603	10,951
Non-cash lease expense	5,473	5,344
Non-cash loss on equity investments	21	2,724
Contingent consideration fair value adjustment	(265)	0
Other non-cash (gains) losses	(1,437)	7,510
Deferred income taxes	(4)	(969)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable	(9,742)	(37,642)
Inventories	(21,646)	(41,471)
Prepaid expenses and other assets	1,308	(783)
Contract assets	(7,983)	(6,189)
Accounts payable	797	25,554
Accrued expenses and other liabilities	1,781	(7,295)
Income taxes	(9,296)	(439)
Net cash provided by operating activities	62,333	37,011
Cash flows from investing activities:
Acquisition of property, plant and equipment	(57,416)	(22,610)
Proceeds from sale of property, plant and equipment	50	587
Acquisitions, net of cash acquired	0	(126,636)
Net cash used in investing activities	(57,366)	(148,659)
Cash flows from financing activities:
Principal payments of term loans	(398,438)	(7,625)
Proceeds from issuance of convertible notes, net of discount	486,250	0
Proceeds from revolving credit facility	229,604	160,000
Payments of revolving credit facility	(263,443)	(34,000)
Purchase of capped calls	(35,000)	0
Payment of debt issuance costs	(2,181)	0
Proceeds from the exercise of stock options	1,948	0
Tax withholdings related to net share settlements of restricted stock unit awards	(2,930)	(1,926)
Contingent consideration payments	(7,660)	(493)
Principal payments on finance leases	(557)	(353)
Net cash provided by financing activities	7,593	115,603
Effect of foreign currency exchange rates on cash and cash equivalents	1,783	(6,247)
Net increase (decrease) in cash and cash equivalents	14,343	(2,292)
Cash and cash equivalents, beginning of period	24,272	17,885
Cash and cash equivalents, end of period	$ 38,615	$ 15,593

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common stock and additional paid-in capital	Retained earnings	Accumulated other comprehensive income
Balance, beginning of period at Dec. 31, 2021	$ 1,354,697	$ 713,183	$ 614,324	$ 27,190
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock awards exercised or vested		(1,926)
Stock-based compensation		10,951
Capped calls related to the issuance of convertible notes, net of tax		0
Net income	32,203		32,203
Other comprehensive income (loss)	(32,474)			(32,474)
Balance, ending balance at Jul. 01, 2022	1,363,451	722,208	646,527	(5,284)
Balance, beginning of period at Apr. 01, 2022	1,364,350	716,622	625,691	22,037
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock awards exercised or vested		(370)
Stock-based compensation		5,956
Capped calls related to the issuance of convertible notes, net of tax		0
Net income	20,836		20,836
Other comprehensive income (loss)	(27,321)			(27,321)
Balance, ending balance at Jul. 01, 2022	1,363,451	722,208	646,527	(5,284)
Balance, beginning of period at Dec. 31, 2022	1,417,456	731,426	680,701	5,329
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock awards exercised or vested		(1,031)
Stock-based compensation		11,603
Capped calls related to the issuance of convertible notes, net of tax		(26,250)
Net income	37,036		37,036
Other comprehensive income (loss)	6,841			6,841
Balance, ending balance at Jun. 30, 2023	1,445,655	715,748	717,737	12,170
Balance, beginning of period at Mar. 31, 2023	1,417,936	709,204	693,766	14,966
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock awards exercised or vested		1,043
Stock-based compensation		5,501
Capped calls related to the issuance of convertible notes, net of tax		0
Net income	23,971		23,971
Other comprehensive income (loss)	(2,796)			(2,796)
Balance, ending balance at Jun. 30, 2023	$ 1,445,655	$ 715,748	$ 717,737	$ 12,170

BASIS OF PRESENTATION	6 Months Ended
BASIS OF PRESENTATION	Jun. 30, 2023
Accounting Policies [Abstract]
BASIS OF PRESENTATION	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 outsource manufacturer serving the cardiac rhythm management, neuromodulation, orthopedics, vascular, advanced surgical and portable medical markets. The Company provides innovative, high-quality medical technologies that enhance the lives of patients worldwide. In addition to medical technologies, the Company develops batteries for high-end niche applications in the 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 fiscal year ended December 31, 2022. 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 second quarter and first six months of 2023 ended on June 30 and consisted of 91 days and 181 days, respectively. The second quarter and first six months of 2022 ended on July 1 and consisted of 91 days and 182 days, respectively. Trade Accounts Receivable - Factoring Arrangements In the second quarter of 2023, the Company entered into a receivables factoring arrangement, pursuant to which certain receivables may be sold to a financial institution without recourse in exchange for cash. Transactions under the receivables factoring arrangement 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 this arrangement, 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 (Loss). During the six months ended June 30, 2023, the Company sold, without recourse, $50.3 million of accounts receivable. Factoring fees were $0.4 million for the three and six months ended June 30, 2023. 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, 2022, that are of significance, or potential significance, to the Company.

BUSINESS ACQUISITIONS

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

BUSINESS ACQUISITIONS








Fair value of net assets acquired

Current assets	$	9,319
Property, plant and equipment	4,151
Goodwill	68,460
Definite-lived intangible assets	71,485
Operating lease assets	3,505
Other noncurrent assets	1,354
Current liabilities	(4,370)
Operating lease liabilities	(3,258)
Other noncurrent liabilities	(9,377)
Fair value of net assets acquired	$	141,269

Pro Forma (unaudited) disclosures


	Three Months Ended July 1, 2022		Six Months Ended July 1, 2022
Sales	$	350,081	$	666,356
Net income	22,101		34,228

Acquisition costs

SUPPLEMENTAL CASH FLOW INFORMATION

6 Months Ended

Jun. 30, 2023

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

The following is supplemental information relating to the Condensed Consolidated Statements of Cash Flows (in thousands):


	Six Months Ended
	June 30, 2023		July 1, 2022
Noncash investing and financing activities:
Property, plant and equipment purchases included in accounts payable	$	9,059	$	6,373


Supplemental lease disclosures:
Assets acquired under operating leases	912		11,265

INVENTORIES

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

INVENTORIES

Inventories comprise the following (in thousands):


	June 30, 2023		December 31, 2022
Raw materials	$	102,280	$	98,640
Work-in-process	112,887		98,188
Finished goods	13,764		11,938
Total	$	228,931	$	208,766

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The changes in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2023 were as follows (in thousands):


	Medical		Non- Medical		Total
December 31, 2022	$	965,192	$	17,000	$	982,192


Foreign currency translation	3,790		—		3,790

June 30, 2023	$	968,982	$	17,000	$	985,982

Intangible Assets

Intangible assets comprise the following (in thousands):


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
June 30, 2023
Definite-lived:
Purchased technology and patents	$	284,921	$	(187,279)	$	97,642
Customer lists	829,550		(234,506)		595,044
Amortizing tradenames and other	21,012		(6,392)		14,620
Total amortizing intangible assets	$	1,135,483	$	(428,177)	$	707,306
Indefinite-lived:
Trademarks and tradenames					$	90,288

December 31, 2022
Definite-lived:
Purchased technology and patents	$	283,929	$	(178,844)	$	105,085
Customer lists	825,634		(216,546)		609,088
Amortizing tradenames and other	21,028		(5,600)		15,428
Total amortizing intangible assets	$	1,130,591	$	(400,990)	$	729,601
Indefinite-lived:
Trademarks and tradenames					$	90,288

Aggregate intangible asset amortization expense comprises the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Cost of sales	$	4,037	$	4,037	$	8,014	$	7,682
Selling, general and administrative expenses	9,070		8,248		18,017		16,207



Total intangible asset amortization expense	$	13,107	$	12,285	$	26,031	$	23,889

Estimated future intangible asset amortization expense based on the carrying value as of June 30, 2023 is as follows (in thousands):


	Remainder of 2023		2024		2025		2026		2027		After 2027
Amortization Expense	$	26,368	$	51,803	$	51,014	$	49,189	$	46,232	$	482,700

DEBT

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

DEBT

Long-term debt comprises the following (in thousands):


	June 30, 2023						December 31, 2022
	Principal Amount		UnamortizedDiscounts and Issuance Costs		Net Carrying Amount		Principal Amount		UnamortizedDiscounts and Issuance Costs		Net Carrying Amount
Senior Secured Credit Facilities:
Revolving credit facilities	$	108,640	$	—	$	108,640	$	140,300	$	—	$	140,300
Term loan A	392,500		(1,958)		390,542		455,313		(2,172)		453,141
Term loan B	—		—		—		335,625		(3,805)		331,820
Convertible Senior Notes due 2028	500,000		(13,784)		486,216		—		—		—
Total	$	1,001,140	$	(15,742)	$	985,398	$	931,238	$	(5,977)	$	925,261
Current portion of long-term debt					(5,000)						(18,188)
Long-term debt					$	980,398					$	907,073

Senior Secured Credit Facilities

Amendments to the 2021 Credit Agreement

Revolving Credit Facility

(6.) DEBT (Continued)

Term Loan Facilities

Deferred Debt Issuance Costs and Discounts

The change in deferred debt issuance costs related to the Company’s Revolving Credit Facility is as follows (in thousands):


December 31, 2022	$	2,387
Financing costs incurred	579
Write-off of deferred debt issuance costs	(260)
Amortization during the period	(271)
June 30, 2023	$	2,435

The change in unamortized discount and deferred debt issuance costs related to the Term Loan Facilities is as follows (in thousands):


	Deferred Debt Issuance Costs		Unamortized Discount on TLB Facility		Total
December 31, 2022	$	4,569	$	1,408	$	5,977
Financing costs incurred	418		—		418
Write-off of deferred debt issuance costs and unamortized discount	(2,780)		(1,391)		(4,171)
Amortization during the period	(249)		(17)		(266)
June 30, 2023	$	1,958	$	—	$	1,958

Covenants

(6.) DEBT (Continued)


	Remainder of 2023		2024		2025		2026		2027		After 2027
Future minimum principal payments	$	—	$	10,000	$	17,500	$	27,500	$	30,000	$	416,140

2028 Convertible Senior Notes and Related Capped Call Transactions

Conversion and Redemption Terms of the 2028 Notes

(6.) DEBT (Continued)

Seniority of the 2028 Notes

Indenture

Covenants

The 2028 Notes do not contain financial maintenance covenants.

Deferred Debt Issuance Costs and Discounts

Fair Value of the 2028 Notes

Capped Call Transactions

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

Stock-based Compensation Expense

The components and classification of stock-based compensation expense were as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022



RSUs and PRSUs	$	5,501	$	5,956	$	11,603	$	10,951


Total stock-based compensation expense	$	5,501	$	5,956	$	11,603	$	10,951

Cost of sales	$	1,155	$	837	$	2,262	$	1,606
Selling, general and administrative	4,085		4,308		8,550		7,853
Research, development and engineering	259		338		728		663
Restructuring and other charges	2		473		63		829

Total stock-based compensation expense	$	5,501	$	5,956	$	11,603	$	10,951

Stock Options

The following table summarizes the Company’s stock option activity for the six month period ended June 30, 2023:


	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (In Years)	Aggregate Intrinsic Value (In Millions)
Outstanding at December 31, 2022	240,622	$	38.51

Exercised	(68,821)	38.92

Outstanding and exercisable at June 30, 2023	171,801	$	38.35	3.3	$	8.1

Time-Based Restricted Stock Units

The following table summarizes RSU activity for the six month period ended June 30, 2023:


	Time-Vested Activity	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2022	291,929	$	77.58
Granted	230,782	75.74
Vested	(100,648)	79.20
Forfeited	(40,091)	71.21
Nonvested at June 30, 2023	381,972	$	76.71

(7.) STOCK-BASED COMPENSATION (Continued)

Performance-Based Restricted Stock Units

The following table summarizes PRSU activity for the six month period ended June 30, 2023:


	Performance- Vested Activity	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2022	263,906	$	90.29
Granted	105,757	74.32
Vested	(24,427)	107.26
Forfeited	(62,396)	83.39
Nonvested at June 30, 2023	282,840	$	84.38


	Six Months Ended
	June 30, 2023			July 1, 2022
Weighted average fair value	$	74.29		$	97.58
Risk-free interest rate	3.79		%	1.58		%
Expected volatility	46		%	42		%
Expected life (in years)	3.0			3.9
Expected dividend yield	—		%	—		%

RESTRUCTURING AND OTHER CHARGES

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

RESTRUCTURING AND OTHER CHARGES

Restructuring and other charges comprise the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Restructuring charges	$	936	$	(5)	$	2,000	$	1,098
Acquisition and integration costs	556		3,333		938		5,269
Other general expenses	26		205		109		501
Total restructuring and other charges	$	1,518	$	3,533	$	3,047	$	6,868


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Restructuring charges:
Restructuring and other charges	$	936	$	(5)	$	2,000	$	1,098
Restructuring-related expenses(a):
Cost of sales	516		179		693		334
Selling, general and administrative	1,346		384		1,587		702
Research, development and engineering	318		326		641		503
Total restructuring and restructuring-related charges	$	3,116	$	884	$	4,921	$	2,637

__________

(a) Restructuring-related expenses primarily include retention bonuses and consulting expenses.

(8.) RESTRUCTURING AND OTHER CHARGES (Continued)

Restructuring programs

Operational excellence initiatives

Strategic reorganization and alignment

Manufacturing alignment to support growth

In 2022, the Company commenced initiatives designed to reduce costs and improve operating efficiencies by relocating certain manufacturing operations.

The following table summarizes the activity for restructuring reserves (in thousands):


	Operational excellence initiatives		Strategic reorganization and alignment		Manufacturing alignment to support growth		Total
December 31, 2022	$	232	$	2,134	$	—	$	2,366
Charges incurred, net of reversals	710		979		311		2,000
Cash payments	(833)		(2,170)		—		(3,003)

June 30, 2023	$	109	$	943	$	311	$	1,363

Acquisition and integration

Other general expenses

INCOME TAXES	6 Months Ended
INCOME TAXES	Jun. 30, 2023
Income Tax Disclosure [Abstract]
INCOME TAXES	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 second quarter of 2023 was 19.8% on $29.9 million of income before taxes compared to 14.7% on $24.4 million of income before taxes for the same period in 2022. The Company’s effective tax rate for the six months ended June 30, 2023 was 19.3% on $45.9 million of income before taxes compared to 16.1% on $38.4 million of income before taxes for the same period of 2022. The difference between the Company’s effective tax rates and the U.S. federal statutory income tax rate of 21% for the second quarter and first six months of 2023 and 2022 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 second quarter and first six months of 2023, the Company recorded discrete tax expense of $0.4 million and $0.5 million, respectively. The Company did not record discrete tax expense for the second quarter of 2022 and recorded discrete tax expense of $0.5 million for the first six months of 2022. The discrete tax expense for the second quarter and first six months of 2023 is predominately related to unfavorable return to provision adjustments attributable to certain foreign tax returns filed during the quarter. The remainder of the discrete tax amounts relate predominately to excess tax benefits recognized upon vesting of RSUs during those periods partially offset by tax expense from shortfalls recorded for the forfeiture of certain PRSUs. The discrete tax amounts for the second quarter and first six months of 2022 are predominately related to tax expense on shortfalls recorded for the forfeiture of certain PRSUs, partially offset by excess tax benefits recognized upon vesting of RSUs during those periods. 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 June 30, 2023, the Company had unrecognized tax benefits of approximately $8.0 million, of which approximately $7.9 million would favorably impact the effective tax rate, net of federal benefit on state issues, if recognized. As of June 30, 2023, the Company believes it is reasonably possible that a reduction of approximately $1.9 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.

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Contingent Consideration Arrangements

Litigation

Product Warranties


December 31, 2022	$	77
Additions to warranty reserve, net of reversals	7


June 30, 2023	$	84

EARNINGS PER SHARE (“EPS”)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

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				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Numerator for basic and diluted EPS:


Net income	$	23,971	$	20,836	$	37,036	$	32,203

Denominator for basic and diluted EPS:
Weighted average shares outstanding - Basic	33,312		33,111		33,285		33,101
Dilutive effect of share-based awards	374		239		346		225
Weighted average shares outstanding - Diluted	33,686		33,350		33,631		33,326




Basic EPS	$	0.72	$	0.63	$	1.11	$	0.97




Diluted EPS	$	0.71	$	0.62	$	1.10	$	0.97

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		Six Months Ended
	June 30, 2023	July 1, 2022	June 30, 2023	July 1, 2022
RSUs	—	5	2	4
PRSUs	83	165	108	165

See Note 6 “Debt” for additional information related to 2028 Notes and Capped Calls.

STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Common Stock

The following is a summary of the number of shares of common stock issued, treasury stock and common stock outstanding for the six month periods ended June 30, 2023 and July 1, 2022:


	Six Months Ended
	June 30, 2023	July 1, 2022
Shares outstanding at beginning of period	33,169,778	33,063,336
Stock options exercised	58,413	—
Vesting of RSUs, net of shares withheld to cover taxes	79,889	58,497
Shares outstanding at end of period	33,308,080	33,121,833

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		Tax		Net-of-Tax Amount
March 31, 2023	$	(346)	$	3,927	$	12,075	$	15,656	$	(690)	$	14,966
Unrealized gain on cash flow hedges	—		2,126		—		2,126		(447)		1,679
Realized gain on foreign currency hedges	—		(1,318)		—		(1,318)		277		(1,041)
Realized gain on interest rate swap hedge	—		(675)		—		(675)		142		(533)
Foreign currency translation loss	—		—		(2,901)		(2,901)		—		(2,901)

June 30, 2023	$	(346)	$	4,060	$	9,174	$	12,888	$	(718)	$	12,170

December 31, 2022	$	(346)	$	1,760	$	4,150	$	5,564	$	(235)	$	5,329
Unrealized gain on cash flow hedges	—		5,572		—		5,572		(1,170)		4,402
Realized gain on foreign currency hedges	—		(2,010)		—		(2,010)		422		(1,588)
Realized gain on interest rate swap hedge	—		(1,262)		—		(1,262)		265		(997)
Foreign currency translation gain	—		—		5,024		5,024		—		5,024

June 30, 2023	$	(346)	$	4,060	$	9,174	$	12,888	$	(718)	$	12,170



April 1, 2022	$	(890)	$	1,170	$	21,833	$	22,113	$	(76)	$	22,037
Unrealized loss on cash flow hedges	—		(291)		—		(291)		61		(230)
Realized gain on foreign currency hedges	—		(295)		—		(295)		62		(233)
Realized loss on interest rate swap hedge	—		526		—		526		(110)		416
Foreign currency translation loss	—		—		(27,274)		(27,274)		—		(27,274)

July 1, 2022	$	(890)	$	1,110	$	(5,441)	$	(5,221)	$	(63)	$	(5,284)

December 31, 2021	$	(890)	$	(2,291)	$	29,720	$	26,539	$	651	$	27,190
Unrealized gain on cash flow hedges	—		2,565		—		2,565		(539)		2,026
Realized gain on foreign currency hedges	—		(457)		—		(457)		96		(361)
Realized loss on interest rate swap hedge	—		1,293		—		1,293		(271)		1,022
Foreign currency translation loss	—		—		(35,161)		(35,161)		—		(35,161)

July 1, 2022	$	(890)	$	1,110	$	(5,441)	$	(5,221)	$	(63)	$	(5,284)

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables provide information regarding assets and liabilities recorded at fair value on a recurring basis (in thousands):


	Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2023

Assets: Foreign currency hedging contracts	$	4,060	$	—	$	4,060	$	—


Liabilities: Contingent consideration	555		—		—		555

December 31, 2022
Assets: Interest rate swap	$	1,262	$	—	$	1,262	$	—
Assets: Foreign currency hedging contracts	521		—		521		—

Liabilities: Foreign currency hedging contracts	23				23
Liabilities: Contingent consideration	11,756		—		—		11,756

Derivatives Designated as Hedging Instruments

Interest Rate Swaps


Notional Amount		Maturity Date	Pay Fixed Rate		Receive Current Floating Rate		Fair Value		Balance Sheet Location
$	100,000	Jun 2023	2.1785	%	4.3869	%	$	1,262	Prepaid expenses and other current assets

(13.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

Foreign Currency Contracts

Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of June 30, 2023 is as follows (dollars in thousands):


Notional Amount		Maturity Date	$/Foreign Currency		Fair Value		Balance Sheet Location
$	18,289	Dec 2023	0.0481	MXN Peso	$	3,436	Prepaid expenses and other current assets
40,377		Dec 2023	1.0796	Euro	624		Prepaid expenses and other current assets

Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of December 31, 2022 is as follows (dollars in thousands):


Notional Amount		Maturity Date	$/Foreign Currency		Fair Value		Balance Sheet Location


$	37,175	Dec 2023	0.0489	MXN Peso	$	504	Prepaid expenses and other current assets
2,685		Mar 2023	0.0249	UYU Peso	17		Prepaid expenses and other current assets
17,309		Mar 2023	1.0751	Euro	(23)		Accrued expenses and other current liabilities


	Three Months Ended
	June 30, 2023				July 1, 2022
	Total		Amount of Gain (Loss) on Cash Flow Hedge Activity		Total		Amount of Gain (Loss) on Cash Flow Hedge Activity
Sales	$	400,044	$	(83)	$	350,081	$	(371)
Cost of sales	294,240		1,384		257,184		554
Operating expenses	64,228		17		60,190		112
Interest expense	11,459		675		7,773		(526)



	Six Months Ended
	June 30, 2023				July 1, 2022
	Total		Amount of Gain (Loss) on Cash Flow Hedge Activity		Total		Amount of Gain (Loss) on Cash Flow Hedge Activity
Sales	$	778,829	$	(134)	$	660,993	$	(425)
Cost of sales	576,352		2,092		486,621		746
Operating expenses	126,735		52		119,168		136
Interest expense	28,713		1,262		13,741		(1,293)

(13.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)


	Unrealized Gain (Loss) Recognized in OCI				Realized Gain (Loss) Reclassified from AOCI
	Three Months Ended				Location in Statements of Operations and Comprehensive Income (Loss)	Three Months Ended
	June 30, 2023		July 1, 2022			June 30, 2023		July 1, 2022
Interest rate swap	$	6	$	702	Interest expense	$	675	$	(526)
Foreign exchange contracts	364		(1,167)		Sales	(83)		(371)
Foreign exchange contracts	1,739		96		Cost of sales	1,384		554
Foreign exchange contracts	17		78		Operating expenses	17		112

	Six Months Ended				Location in Statements of Operations and Comprehensive Income (Loss)	Six Months Ended
	June 30, 2023		July 1, 2022			June 30, 2023		July 1, 2022
Interest rate swap	$	—	$	2,526	Interest expense	$	1,262	$	(1,293)
Foreign exchange contracts	513		(1,681)		Sales	(134)		(425)
Foreign exchange contracts	5,014		1,365		Cost of sales	2,092		746
Foreign exchange contracts	45		355		Operating expenses	52		136

The Company expects to reclassify net gains totaling $4.1 million related to its cash flow hedges from AOCI into earnings during the next twelve months.

Net Investment Hedges

Derivatives Not Designated as Hedging Instruments

(13.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

Contingent Consideration


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Fair value measurement at beginning of period	$	11,732	$	1,976	$	11,756	$	2,415
Amount recorded for current year acquisitions	—		7,375		—		7,375
Fair value measurement adjustment	—		—		(265)		54
Payments	(11,177)		—		(11,177)		(493)
Foreign currency translation	—		(279)		241		(279)
Fair value measurement at end of period	$	555	$	9,072	$	555	$	9,072

(13.) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Equity Investments

Equity investments comprise the following (in thousands):


	June 30, 2023		December 31, 2022
Equity method investment	$	8,231	$	8,252
Non-marketable equity securities	5,637		5,637
Total equity investments	$	13,868	$	13,889

The components of (Gain) loss on equity investments for each period were as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Equity method investment (gain) loss	$	(134)	$	320	$	21	$	2,724

The Company’s equity method investment is in a venture capital fund focused on investing in life sciences companies. As of June 30, 2023, the Company owned 7.4% of this fund.

SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

SEGMENT INFORMATION

The following table presents sales by product line (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Segment sales by product line:
Medical
Cardio & Vascular	$	208,494	$	180,604	$	399,697	$	339,641
Cardiac Rhythm Management & Neuromodulation	153,411		135,945		298,550		259,269
Advanced Surgical, Orthopedics & Portable Medical	27,206		23,285		55,130		42,951

Total Medical	389,111		339,834		753,377		641,861
Non-Medical	10,933		10,247		25,452		19,132
Total sales	$	400,044	$	350,081	$	778,829	$	660,993

The following table presents income for the Company’s reportable segments (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Segment income:
Medical	$	68,497	$	54,580	$	123,303	$	98,728
Non-Medical	278		1,625		4,304		2,290
Total segment income	68,775		56,205		127,607		101,018
Unallocated operating expenses	(27,199)		(23,498)		(51,865)		(45,814)
Operating income	41,576		32,707		75,742		55,204
Unallocated expenses, net	(11,684)		(8,284)		(29,853)		(16,833)
Income before taxes	$	29,892	$	24,423	$	45,889	$	38,371

REVENUE FROM CONTRACTS WITH CUSTOMERS

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregated Revenue

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

June 30, 2023

July 1, 2022

Customer

Medical

Non-Medical

Medical

Non-Medical

Customer A

17%

18%

Customer B

17%

Customer C

13%

14%

Customer D

20%

42%

All other customers

53%

80%

51%

58%

Six Months Ended

June 30, 2023

July 1, 2022

Customer

Medical

Non-Medical

Medical

Non-Medical

Customer A

18%

Customer B

17%

Customer C

13%

14%

Customer D

21%

37%

All other customers

52%

79%

51%

63%

__________

* Less than 10% of segment’s total revenues for the period.

(15.) REVENUE FROM CONTRACTS WITH CUSTOMERS (Continued)

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

June 30, 2023

July 1, 2022

Ship to Location

Medical

Non-Medical

Medical

Non-Medical

United States

54%

64%

52%

71%

Canada

12%

All other countries

46%

24%

48%

29%

Six Months Ended

June 30, 2023

July 1, 2022

Ship to Location

Medical

Non-Medical

Medical

Non-Medical

United States

54%

62%

51%

67%

Canada

11%

All other countries

46%

27%

49%

33%

__________

* 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):


	June 30, 2023		December 31, 2022

Contract assets	$	80,010	$	71,927
Contract liabilities	8,777		5,616

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Pay vs Performance Disclosure
Net income	$ 23,971	$ 20,836	$ 37,036	$ 32,203

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

BASIS OF PRESENTATION (Policies)	6 Months Ended
BASIS OF PRESENTATION (Policies)	Jun. 30, 2023
Accounting Policies [Abstract]
Interim Basis of Accounting	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.
Trade Accounts Receivable - Factoring Arrangements	Trade Accounts Receivable - Factoring ArrangementsIn the second quarter of 2023, the Company entered into a receivables factoring arrangement, pursuant to which certain receivables may be sold to a financial institution without recourse in exchange for cash. Transactions under the receivables factoring arrangement 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 this arrangement, 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 (Loss).
Recent Accounting Pronouncements	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, 2022, that are of significance, or potential significance, to the Company.
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.
Equity Investments	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.

BUSINESS ACQUISITIONS (Tables)

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Final Allocation of Purchase Consideration

The following table summarizes the final fair values of the assets acquired and liabilities assumed (in thousands):








Fair value of net assets acquired

Current assets	$	9,319
Property, plant and equipment	4,151
Goodwill	68,460
Definite-lived intangible assets	71,485
Operating lease assets	3,505
Other noncurrent assets	1,354
Current liabilities	(4,370)
Operating lease liabilities	(3,258)
Other noncurrent liabilities	(9,377)
Fair value of net assets acquired	$	141,269

Schedule of Business Acquisition, Pro Forma Information

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.


	Three Months Ended July 1, 2022		Six Months Ended July 1, 2022
Sales	$	350,081	$	666,356
Net income	22,101		34,228

SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

6 Months Ended

Jun. 30, 2023

Supplemental Cash Flow Elements [Abstract]

Schedule of Cash Flow, Supplemental Disclosures

The following is supplemental information relating to the Condensed Consolidated Statements of Cash Flows (in thousands):


	Six Months Ended
	June 30, 2023		July 1, 2022
Noncash investing and financing activities:
Property, plant and equipment purchases included in accounts payable	$	9,059	$	6,373


Supplemental lease disclosures:
Assets acquired under operating leases	912		11,265

INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventories comprise the following (in thousands):


	June 30, 2023		December 31, 2022
Raw materials	$	102,280	$	98,640
Work-in-process	112,887		98,188
Finished goods	13,764		11,938
Total	$	228,931	$	208,766

GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The changes in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2023 were as follows (in thousands):


	Medical		Non- Medical		Total
December 31, 2022	$	965,192	$	17,000	$	982,192


Foreign currency translation	3,790		—		3,790

June 30, 2023	$	968,982	$	17,000	$	985,982

Schedule of Finite-Lived Intangible Assets, Major Class

Intangible assets comprise the following (in thousands):


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
June 30, 2023
Definite-lived:
Purchased technology and patents	$	284,921	$	(187,279)	$	97,642
Customer lists	829,550		(234,506)		595,044
Amortizing tradenames and other	21,012		(6,392)		14,620
Total amortizing intangible assets	$	1,135,483	$	(428,177)	$	707,306
Indefinite-lived:
Trademarks and tradenames					$	90,288

December 31, 2022
Definite-lived:
Purchased technology and patents	$	283,929	$	(178,844)	$	105,085
Customer lists	825,634		(216,546)		609,088
Amortizing tradenames and other	21,028		(5,600)		15,428
Total amortizing intangible assets	$	1,130,591	$	(400,990)	$	729,601
Indefinite-lived:
Trademarks and tradenames					$	90,288

Schedule of Indefinite-Lived Intangible Assets

Intangible assets comprise the following (in thousands):


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
June 30, 2023
Definite-lived:
Purchased technology and patents	$	284,921	$	(187,279)	$	97,642
Customer lists	829,550		(234,506)		595,044
Amortizing tradenames and other	21,012		(6,392)		14,620
Total amortizing intangible assets	$	1,135,483	$	(428,177)	$	707,306
Indefinite-lived:
Trademarks and tradenames					$	90,288

December 31, 2022
Definite-lived:
Purchased technology and patents	$	283,929	$	(178,844)	$	105,085
Customer lists	825,634		(216,546)		609,088
Amortizing tradenames and other	21,028		(5,600)		15,428
Total amortizing intangible assets	$	1,130,591	$	(400,990)	$	729,601
Indefinite-lived:
Trademarks and tradenames					$	90,288

Schedule of Finite-Lived Intangible Assets, Amortization Expense

Aggregate intangible asset amortization expense comprises the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Cost of sales	$	4,037	$	4,037	$	8,014	$	7,682
Selling, general and administrative expenses	9,070		8,248		18,017		16,207



Total intangible asset amortization expense	$	13,107	$	12,285	$	26,031	$	23,889

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Estimated future intangible asset amortization expense based on the carrying value as of June 30, 2023 is as follows (in thousands):


	Remainder of 2023		2024		2025		2026		2027		After 2027
Amortization Expense	$	26,368	$	51,803	$	51,014	$	49,189	$	46,232	$	482,700

DEBT (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long-term debt comprises the following (in thousands):


	June 30, 2023						December 31, 2022
	Principal Amount		UnamortizedDiscounts and Issuance Costs		Net Carrying Amount		Principal Amount		UnamortizedDiscounts and Issuance Costs		Net Carrying Amount
Senior Secured Credit Facilities:
Revolving credit facilities	$	108,640	$	—	$	108,640	$	140,300	$	—	$	140,300
Term loan A	392,500		(1,958)		390,542		455,313		(2,172)		453,141
Term loan B	—		—		—		335,625		(3,805)		331,820
Convertible Senior Notes due 2028	500,000		(13,784)		486,216		—		—		—
Total	$	1,001,140	$	(15,742)	$	985,398	$	931,238	$	(5,977)	$	925,261
Current portion of long-term debt					(5,000)						(18,188)
Long-term debt					$	980,398					$	907,073

Schedule of Deferred Financing Costs

Deferred Debt Issuance Costs and Discounts

The change in deferred debt issuance costs related to the Company’s Revolving Credit Facility is as follows (in thousands):


December 31, 2022	$	2,387
Financing costs incurred	579
Write-off of deferred debt issuance costs	(260)
Amortization during the period	(271)
June 30, 2023	$	2,435

The change in unamortized discount and deferred debt issuance costs related to the Term Loan Facilities is as follows (in thousands):


	Deferred Debt Issuance Costs		Unamortized Discount on TLB Facility		Total
December 31, 2022	$	4,569	$	1,408	$	5,977
Financing costs incurred	418		—		418
Write-off of deferred debt issuance costs and unamortized discount	(2,780)		(1,391)		(4,171)
Amortization during the period	(249)		(17)		(266)
June 30, 2023	$	1,958	$	—	$	1,958

Schedule of Maturities of Long-term Debt


	Remainder of 2023		2024		2025		2026		2027		After 2027
Future minimum principal payments	$	—	$	10,000	$	17,500	$	27,500	$	30,000	$	416,140

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Employee Service Share-Based Compensation, Allocation of Recognized Period Costs

The components and classification of stock-based compensation expense were as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022



RSUs and PRSUs	$	5,501	$	5,956	$	11,603	$	10,951


Total stock-based compensation expense	$	5,501	$	5,956	$	11,603	$	10,951

Cost of sales	$	1,155	$	837	$	2,262	$	1,606
Selling, general and administrative	4,085		4,308		8,550		7,853
Research, development and engineering	259		338		728		663
Restructuring and other charges	2		473		63		829

Total stock-based compensation expense	$	5,501	$	5,956	$	11,603	$	10,951

Schedule of Share-Based Compensation, Stock Options Activity

The following table summarizes the Company’s stock option activity for the six month period ended June 30, 2023:


	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (In Years)	Aggregate Intrinsic Value (In Millions)
Outstanding at December 31, 2022	240,622	$	38.51

Exercised	(68,821)	38.92

Outstanding and exercisable at June 30, 2023	171,801	$	38.35	3.3	$	8.1

Schedule of Share-Based Compensation, Restricted Stock and Restricted Stock Units Activity

The following table summarizes RSU activity for the six month period ended June 30, 2023:


	Time-Vested Activity	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2022	291,929	$	77.58
Granted	230,782	75.74
Vested	(100,648)	79.20
Forfeited	(40,091)	71.21
Nonvested at June 30, 2023	381,972	$	76.71

The following table summarizes PRSU activity for the six month period ended June 30, 2023:


	Performance- Vested Activity	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2022	263,906	$	90.29
Granted	105,757	74.32
Vested	(24,427)	107.26
Forfeited	(62,396)	83.39
Nonvested at June 30, 2023	282,840	$	84.38

Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions

The weighted average fair value and assumptions used to value the PRSU awards granted with market-based performance conditions are as follows:


	Six Months Ended
	June 30, 2023			July 1, 2022
Weighted average fair value	$	74.29		$	97.58
Risk-free interest rate	3.79		%	1.58		%
Expected volatility	46		%	42		%
Expected life (in years)	3.0			3.9
Expected dividend yield	—		%	—		%

RESTRUCTURING AND OTHER CHARGES (Tables)

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Charges

Restructuring and other charges comprise the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Restructuring charges	$	936	$	(5)	$	2,000	$	1,098
Acquisition and integration costs	556		3,333		938		5,269
Other general expenses	26		205		109		501
Total restructuring and other charges	$	1,518	$	3,533	$	3,047	$	6,868


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Restructuring charges:
Restructuring and other charges	$	936	$	(5)	$	2,000	$	1,098
Restructuring-related expenses(a):
Cost of sales	516		179		693		334
Selling, general and administrative	1,346		384		1,587		702
Research, development and engineering	318		326		641		503
Total restructuring and restructuring-related charges	$	3,116	$	884	$	4,921	$	2,637

__________

(a) Restructuring-related expenses primarily include retention bonuses and consulting expenses.

Schedule of Changes in Restructuring Reserves

The following table summarizes the activity for restructuring reserves (in thousands):


	Operational excellence initiatives		Strategic reorganization and alignment		Manufacturing alignment to support growth		Total
December 31, 2022	$	232	$	2,134	$	—	$	2,366
Charges incurred, net of reversals	710		979		311		2,000
Cash payments	(833)		(2,170)		—		(3,003)

June 30, 2023	$	109	$	943	$	311	$	1,363

COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Product Warranty Liability

The change in product warranty liability comprised the following (in thousands):


December 31, 2022	$	77
Additions to warranty reserve, net of reversals	7


June 30, 2023	$	84

EARNINGS PER SHARE (“EPS”) (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

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				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Numerator for basic and diluted EPS:


Net income	$	23,971	$	20,836	$	37,036	$	32,203

Denominator for basic and diluted EPS:
Weighted average shares outstanding - Basic	33,312		33,111		33,285		33,101
Dilutive effect of share-based awards	374		239		346		225
Weighted average shares outstanding - Diluted	33,686		33,350		33,631		33,326




Basic EPS	$	0.72	$	0.63	$	1.11	$	0.97




Diluted EPS	$	0.71	$	0.62	$	1.10	$	0.97

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

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		Six Months Ended
	June 30, 2023	July 1, 2022	June 30, 2023	July 1, 2022
RSUs	—	5	2	4
PRSUs	83	165	108	165

STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Common Stock Outstanding Roll Forward

The following is a summary of the number of shares of common stock issued, treasury stock and common stock outstanding for the six month periods ended June 30, 2023 and July 1, 2022:


	Six Months Ended
	June 30, 2023	July 1, 2022
Shares outstanding at beginning of period	33,169,778	33,063,336
Stock options exercised	58,413	—
Vesting of RSUs, net of shares withheld to cover taxes	79,889	58,497
Shares outstanding at end of period	33,308,080	33,121,833

Schedule of Accumulated Other Comprehensive Income (Loss)

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		Tax		Net-of-Tax Amount
March 31, 2023	$	(346)	$	3,927	$	12,075	$	15,656	$	(690)	$	14,966
Unrealized gain on cash flow hedges	—		2,126		—		2,126		(447)		1,679
Realized gain on foreign currency hedges	—		(1,318)		—		(1,318)		277		(1,041)
Realized gain on interest rate swap hedge	—		(675)		—		(675)		142		(533)
Foreign currency translation loss	—		—		(2,901)		(2,901)		—		(2,901)

June 30, 2023	$	(346)	$	4,060	$	9,174	$	12,888	$	(718)	$	12,170

December 31, 2022	$	(346)	$	1,760	$	4,150	$	5,564	$	(235)	$	5,329
Unrealized gain on cash flow hedges	—		5,572		—		5,572		(1,170)		4,402
Realized gain on foreign currency hedges	—		(2,010)		—		(2,010)		422		(1,588)
Realized gain on interest rate swap hedge	—		(1,262)		—		(1,262)		265		(997)
Foreign currency translation gain	—		—		5,024		5,024		—		5,024

June 30, 2023	$	(346)	$	4,060	$	9,174	$	12,888	$	(718)	$	12,170



April 1, 2022	$	(890)	$	1,170	$	21,833	$	22,113	$	(76)	$	22,037
Unrealized loss on cash flow hedges	—		(291)		—		(291)		61		(230)
Realized gain on foreign currency hedges	—		(295)		—		(295)		62		(233)
Realized loss on interest rate swap hedge	—		526		—		526		(110)		416
Foreign currency translation loss	—		—		(27,274)		(27,274)		—		(27,274)

July 1, 2022	$	(890)	$	1,110	$	(5,441)	$	(5,221)	$	(63)	$	(5,284)

December 31, 2021	$	(890)	$	(2,291)	$	29,720	$	26,539	$	651	$	27,190
Unrealized gain on cash flow hedges	—		2,565		—		2,565		(539)		2,026
Realized gain on foreign currency hedges	—		(457)		—		(457)		96		(361)
Realized loss on interest rate swap hedge	—		1,293		—		1,293		(271)		1,022
Foreign currency translation loss	—		—		(35,161)		(35,161)		—		(35,161)

July 1, 2022	$	(890)	$	1,110	$	(5,441)	$	(5,221)	$	(63)	$	(5,284)

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables provide information regarding assets and liabilities recorded at fair value on a recurring basis (in thousands):


	Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2023

Assets: Foreign currency hedging contracts	$	4,060	$	—	$	4,060	$	—


Liabilities: Contingent consideration	555		—		—		555

December 31, 2022
Assets: Interest rate swap	$	1,262	$	—	$	1,262	$	—
Assets: Foreign currency hedging contracts	521		—		521		—

Liabilities: Foreign currency hedging contracts	23				23
Liabilities: Contingent consideration	11,756		—		—		11,756

Information regarding the Company’s outstanding interest rate swap, designated as a cash flow hedge, as of December 31, 2022 is as follows (dollars in thousands):


Notional Amount		Maturity Date	Pay Fixed Rate		Receive Current Floating Rate		Fair Value		Balance Sheet Location
$	100,000	Jun 2023	2.1785	%	4.3869	%	$	1,262	Prepaid expenses and other current assets

Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of June 30, 2023 is as follows (dollars in thousands):


Notional Amount		Maturity Date	$/Foreign Currency		Fair Value		Balance Sheet Location
$	18,289	Dec 2023	0.0481	MXN Peso	$	3,436	Prepaid expenses and other current assets
40,377		Dec 2023	1.0796	Euro	624		Prepaid expenses and other current assets

Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of December 31, 2022 is as follows (dollars in thousands):


Notional Amount		Maturity Date	$/Foreign Currency		Fair Value		Balance Sheet Location


$	37,175	Dec 2023	0.0489	MXN Peso	$	504	Prepaid expenses and other current assets
2,685		Mar 2023	0.0249	UYU Peso	17		Prepaid expenses and other current assets
17,309		Mar 2023	1.0751	Euro	(23)		Accrued expenses and other current liabilities

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)


	Three Months Ended
	June 30, 2023				July 1, 2022
	Total		Amount of Gain (Loss) on Cash Flow Hedge Activity		Total		Amount of Gain (Loss) on Cash Flow Hedge Activity
Sales	$	400,044	$	(83)	$	350,081	$	(371)
Cost of sales	294,240		1,384		257,184		554
Operating expenses	64,228		17		60,190		112
Interest expense	11,459		675		7,773		(526)



	Six Months Ended
	June 30, 2023				July 1, 2022
	Total		Amount of Gain (Loss) on Cash Flow Hedge Activity		Total		Amount of Gain (Loss) on Cash Flow Hedge Activity
Sales	$	778,829	$	(134)	$	660,993	$	(425)
Cost of sales	576,352		2,092		486,621		746
Operating expenses	126,735		52		119,168		136
Interest expense	28,713		1,262		13,741		(1,293)


	Unrealized Gain (Loss) Recognized in OCI				Realized Gain (Loss) Reclassified from AOCI
	Three Months Ended				Location in Statements of Operations and Comprehensive Income (Loss)	Three Months Ended
	June 30, 2023		July 1, 2022			June 30, 2023		July 1, 2022
Interest rate swap	$	6	$	702	Interest expense	$	675	$	(526)
Foreign exchange contracts	364		(1,167)		Sales	(83)		(371)
Foreign exchange contracts	1,739		96		Cost of sales	1,384		554
Foreign exchange contracts	17		78		Operating expenses	17		112

	Six Months Ended				Location in Statements of Operations and Comprehensive Income (Loss)	Six Months Ended
	June 30, 2023		July 1, 2022			June 30, 2023		July 1, 2022
Interest rate swap	$	—	$	2,526	Interest expense	$	1,262	$	(1,293)
Foreign exchange contracts	513		(1,681)		Sales	(134)		(425)
Foreign exchange contracts	5,014		1,365		Cost of sales	2,092		746
Foreign exchange contracts	45		355		Operating expenses	52		136

Schedule of Estimated Fair Values for Contingent Consideration


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Fair value measurement at beginning of period	$	11,732	$	1,976	$	11,756	$	2,415
Amount recorded for current year acquisitions	—		7,375		—		7,375
Fair value measurement adjustment	—		—		(265)		54
Payments	(11,177)		—		(11,177)		(493)
Foreign currency translation	—		(279)		241		(279)
Fair value measurement at end of period	$	555	$	9,072	$	555	$	9,072

Schedule of Equity Method Investments

Equity investments comprise the following (in thousands):


	June 30, 2023		December 31, 2022
Equity method investment	$	8,231	$	8,252
Non-marketable equity securities	5,637		5,637
Total equity investments	$	13,868	$	13,889

The components of (Gain) loss on equity investments for each period were as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Equity method investment (gain) loss	$	(134)	$	320	$	21	$	2,724

SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Schedule of Reconciliation of Revenue from Segments to Consolidated

The following table presents sales by product line (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Segment sales by product line:
Medical
Cardio & Vascular	$	208,494	$	180,604	$	399,697	$	339,641
Cardiac Rhythm Management & Neuromodulation	153,411		135,945		298,550		259,269
Advanced Surgical, Orthopedics & Portable Medical	27,206		23,285		55,130		42,951

Total Medical	389,111		339,834		753,377		641,861
Non-Medical	10,933		10,247		25,452		19,132
Total sales	$	400,044	$	350,081	$	778,829	$	660,993

Schedule of Reconciliation of Operating Profit (Loss) from Segments to Consolidated

The following table presents income for the Company’s reportable segments (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Segment income:
Medical	$	68,497	$	54,580	$	123,303	$	98,728
Non-Medical	278		1,625		4,304		2,290
Total segment income	68,775		56,205		127,607		101,018
Unallocated operating expenses	(27,199)		(23,498)		(51,865)		(45,814)
Operating income	41,576		32,707		75,742		55,204
Unallocated expenses, net	(11,684)		(8,284)		(29,853)		(16,833)
Income before taxes	$	29,892	$	24,423	$	45,889	$	38,371

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Revenue by Major Customers by Reporting Segments

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

June 30, 2023

July 1, 2022

Customer

Medical

Non-Medical

Medical

Non-Medical

Customer A

17%

18%

Customer B

17%

Customer C

13%

14%

Customer D

20%

42%

All other customers

53%

80%

51%

58%

Six Months Ended

June 30, 2023

July 1, 2022

Customer

Medical

Non-Medical

Medical

Non-Medical

Customer A

18%

Customer B

17%

Customer C

13%

14%

Customer D

21%

37%

All other customers

52%

79%

51%

63%

__________

* Less than 10% of segment’s total revenues for the period.

(15.) REVENUE FROM CONTRACTS WITH CUSTOMERS (Continued)

Schedule of Revenue by Ship To Location

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

June 30, 2023

July 1, 2022

Ship to Location

Medical

Non-Medical

Medical

Non-Medical

United States

54%

64%

52%

71%

Canada

12%

All other countries

46%

24%

48%

29%

Six Months Ended

June 30, 2023

July 1, 2022

Ship to Location

Medical

Non-Medical

Medical

Non-Medical

United States

54%

62%

51%

67%

Canada

11%

All other countries

46%

27%

49%

33%

__________

* Less than 10% of segment’s total revenues for the period.

Schedule of Contract with Customer, Asset and Liability

The opening and closing balances of the Company’s contract assets and contract liabilities are as follows (in thousands):


	June 30, 2023		December 31, 2022

Contract assets	$	80,010	$	71,927
Contract liabilities	8,777		5,616

BASIS OF PRESENTATION (Details) $ in Millions	3 Months Ended	6 Months Ended
BASIS OF PRESENTATION (Details) $ in Millions	Jun. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)
Accounting Policies [Abstract]
Amount of accounts receivable sold	$ 50.3	$ 50.3
Factoring fee	$ 0.4	$ 0.4

BUSINESS ACQUISITIONS (Narrative) (Details) € in Millions		3 Months Ended		6 Months Ended
BUSINESS ACQUISITIONS (Narrative) (Details) € in Millions	Apr. 06, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jul. 01, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jul. 01, 2022 USD ($)	Apr. 06, 2022 EUR (€)
Business Acquisition [Line Items]
Net of cash acquired				$ 0	$ 126,636,000
Aran Acquisition
Business Acquisition [Line Items]
Percentage of voting interests acquired	100.00%					100.00%
Consideration transferred	$ 141,300,000
Payments to acquire business	133,900,000			10,900,000
Net of cash acquired	129,300,000
Fair value of contingent consideration	7,400,000
Contingent consideration liability, current	$ 10,900,000					€ 10
Oscor Inc
Business Acquisition [Line Items]
Acquisition related costs		$ 0	$ 1,500,000	$ 0	$ 2,300,000

BUSINESS ACQUISITIONS (Allocation Of The Provisional Purchase Price) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Apr. 06, 2022
Business Acquisition [Line Items]
Goodwill	$ 985,982	$ 982,192
Aran Acquisition
Business Acquisition [Line Items]
Current assets			$ 9,319
Property, plant and equipment			4,151
Goodwill			68,460
Definite-lived intangible assets			71,485
Operating lease assets			3,505
Other noncurrent assets			1,354
Current liabilities			(4,370)
Operating lease liabilities			(3,258)
Other noncurrent liabilities			(9,377)
Fair value of net assets acquired			$ 141,269

BUSINESS ACQUISITIONS (Pro Forma Information) (Details) - Oscor Inc - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 01, 2022	Jul. 01, 2022
Business Combination, Separately Recognized Transactions [Line Items]
Sales	$ 350,081	$ 666,356
Net income	$ 22,101	$ 34,228

SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022
Noncash investing and financing activities:
Property, plant and equipment purchases included in accounts payable	$ 9,059	$ 6,373
Supplemental lease disclosures:
Assets acquired under operating leases	$ 912	$ 11,265

INVENTORIES (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 102,280	$ 98,640
Work-in-process	112,887	98,188
Finished goods	13,764	11,938
Total	$ 228,931	$ 208,766

GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Schedule of Goodwill) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Goodwill [Roll Forward]
Opening goodwill	$ 982,192
Foreign currency translation	3,790
Closing goodwill	985,982
Medical
Goodwill [Roll Forward]
Opening goodwill	965,192
Foreign currency translation	3,790
Closing goodwill	968,982
Non-Medical
Goodwill [Roll Forward]
Opening goodwill	17,000
Foreign currency translation	0
Closing goodwill	$ 17,000

GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Schedule of Definite-Lived and Indefinite-Lived Intangible Assets, Major Class) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,135,483	$ 1,130,591
Accumulated Amortization	(428,177)	(400,990)
Net Carrying Amount	707,306	729,601
Trademarks and tradenames
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived	90,288	90,288
Purchased technology and patents
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	284,921	283,929
Accumulated Amortization	(187,279)	(178,844)
Net Carrying Amount	97,642	105,085
Customer lists
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	829,550	825,634
Accumulated Amortization	(234,506)	(216,546)
Net Carrying Amount	595,044	609,088
Amortizing tradenames and other
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	21,012	21,028
Accumulated Amortization	(6,392)	(5,600)
Net Carrying Amount	$ 14,620	$ 15,428

GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Schedule of Finite-Lived Intangible Assets, Amortization Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Finite-Lived Intangible Assets [Line Items]
Total intangible asset amortization expense	$ 13,107	$ 12,285	$ 26,031	$ 23,889
Cost of sales
Finite-Lived Intangible Assets [Line Items]
Total intangible asset amortization expense	4,037	4,037	8,014	7,682
Selling, general and administrative
Finite-Lived Intangible Assets [Line Items]
Total intangible asset amortization expense	$ 9,070	$ 8,248	$ 18,017	$ 16,207

GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Schedule of Finite-Lived Intangible Assets, Future Amortization Expense) (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Amortization Expense
Remainder of 2023	$ 26,368
2024	51,803
2025	51,014
2026	49,189
2027	46,232
After 2027	$ 482,700

DEBT (Schedule of Long-Term Debt) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Feb. 28, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Principal Amount	$ 1,001,140		$ 931,238
UnamortizedDiscounts and Issuance Costs	(15,742)		(5,977)
Net Carrying Amount	985,398		925,261
Current portion of long-term debt	(5,000)		(18,188)
Long-term debt	980,398		907,073
Convertible Debt \| 2028 Convertible Senior Notes
Debt Instrument [Line Items]
Net Carrying Amount		$ 65,000
Revolving Credit Facility \| Line of Credit
Debt Instrument [Line Items]
Principal Amount	108,640		140,300
UnamortizedDiscounts and Issuance Costs	0		0
Net Carrying Amount	108,640		140,300
Secured Debt \| Loans Payable \| Term Loan A (TLA) Facility
Debt Instrument [Line Items]
Principal Amount	392,500		455,313
UnamortizedDiscounts and Issuance Costs	(1,958)		(2,172)
Net Carrying Amount	390,542		453,141
Secured Debt \| Loans Payable \| Term Loan B (TLB) Facility
Debt Instrument [Line Items]
Principal Amount	0		335,625
UnamortizedDiscounts and Issuance Costs	0		(3,805)
Net Carrying Amount	0		331,820
Secured Debt \| Convertible Debt \| 2028 Convertible Senior Notes
Debt Instrument [Line Items]
Principal Amount	500,000		0
UnamortizedDiscounts and Issuance Costs	(13,784)		0
Net Carrying Amount	$ 486,216		$ 0

DEBT (Narrative) (Details) $ / shares in Units, shares in Millions				1 Months Ended	6 Months Ended	12 Months Ended
	Feb. 15, 2023 USD ($)	Feb. 03, 2023	Sep. 02, 2021	Feb. 28, 2023 USD ($) d $ / shares shares	Jun. 30, 2023 USD ($) $ / shares	Dec. 31, 2022 USD ($)	Feb. 14, 2023 USD ($)	Jan. 31, 2023 $ / shares	Jan. 30, 2023 USD ($)
Debt Instrument [Line Items]
Debt issuance costs, net					$ 15,742,000	$ 5,977,000
Long-term debt					$ 985,398,000	$ 925,261,000
Conversion premium on share price (in dollars per share) \| $ / shares								$ 65.81
Capped Call Options
Debt Instrument [Line Items]
Capped call (in shares) \| shares				5.7
Capped Call Options
Debt Instrument [Line Items]
Conversion price (in dollars per share) \| $ / shares				$ 108.59
Capped call (in shares) \| shares				5.7
Deferred tax assets				$ 8,800,000
Derivative, cost of hedge				35,000,000
Secured Debt \| Term Loan A (TLA) Facility
Debt Instrument [Line Items]
Debt instrument term						5 years
Debt weighted average interest rate					6.70%
Debt issuance costs, net					$ 1,958,000	$ 5,977,000
Write off of debt issuance cost					2,780,000
Secured Debt \| Term Loan B (TLB) Facility
Debt Instrument [Line Items]
Debt instrument term						7 years
Discount percentage			0.50%
Write off of debt issuance cost					3,800,000
Secured Debt \| Revolving Credit Facility And Term Loan A (TLA) Faility
Debt Instrument [Line Items]
Debt issuance costs, net					3,800,000
Write off of debt issuance cost					$ 600,000
Convertible Debt \| 2028 Convertible Senior Notes
Debt Instrument [Line Items]
Debt principal payments				500,000,000
Long-term debt				$ 65,000,000
Stated interest rate				2.125%
Convertible debt				$ 485,000,000
Conversion price (in dollars per share) \| $ / shares				$ 87.20	$ 87.20
Conversion premium interest rate								0.325
Trading days \| d				20
Consecutive trading days \| d				30
Percentage of stock price				130.00%
Number of preceding days				2 days
Redemption price, percentage				100.00%
Percent of holders to declare debt and interest immediately payable					25.00%
Effective Interest rate				2.76%
Conversion ratio		0.0114681
Convertible Debt \| 2028 Convertible Senior Notes \| Significant Other Observable Inputs (Level 2)
Debt Instrument [Line Items]
Fair value					$ 593,000,000
Convertible Debt \| 2028 Convertible Senior Notes \| Measurement Period
Debt Instrument [Line Items]
Trading days \| d				5
Consecutive trading days \| d				10
Percentage of stock price				98.00%
Revolving Credit Facility \| Line of Credit
Debt Instrument [Line Items]
Debt instrument term						5 years
Line of credit facility, maximum borrowing capacity	$ 500,000,000						$ 400,000,000		$ 600,000,000
Increase in maximum borrowing capacity	$ 100,000,000
Borrowing capacity sublimit percentage	50.00%
Remaining borrowing capacity					387,900,000
Outstanding borrowings					$ 108,600,000
Commitment fee on unused portion					0.18%
Debt weighted average interest rate					4.92%
Debt issuance costs	$ 1,000,000
Debt issuance costs, net					$ 0	$ 0
Write off of debt issuance cost					260,000
Long-term debt					$ 108,640,000	140,300,000
Revolving Credit Facility \| Line of Credit \| Minimum
Debt Instrument [Line Items]
Commitment fee on unused portion					0.15%
Revolving Credit Facility \| Line of Credit \| Maximum
Debt Instrument [Line Items]
Commitment fee on unused portion					0.25%
Revolving Credit Facility \| Line of Credit \| Adjusted Term Secured Overnight Financing Rate (SOFT)
Debt Instrument [Line Items]
Variable rate basis spread	0.10%
Revolving Credit Facility \| Line of Credit \| Term Loan A (TLA) Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity						$ 400,000,000
Revolving Credit Facility \| Secured Debt \| Term Loan A (TLA) Facility
Debt Instrument [Line Items]
Interest expense ratio					2.50
Revolving Credit Facility \| Secured Debt \| Term Loan A (TLA) Facility \| Through Maturity
Debt Instrument [Line Items]
Net leverage ratio incremental increase option					5.50
Revolving Credit Facility \| Secured Debt \| Term Loan A (TLA) Facility \| Third Fiscal Quarter of 2023
Debt Instrument [Line Items]
Net leverage ratio incremental increase option					5.00
Standby Letters of Credit
Debt Instrument [Line Items]
Letters of credit outstanding amount					$ 3,500,000

Debt (Schedule of Deferred Financing Costs) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022
Debt Instrument [Line Items]
Total, beginning balance	$ 5,977
Total, Amortization during the period	(6,118)	$ (962)
Total, ending balance	15,742
Line of Credit \| Revolving Credit Facility
Debt Instrument [Line Items]
Debt issuance costs, beginning balance	2,387
Financing costs incurred	579
Write-off of debt issuance costs and unamortized discount	(260)
Amortization during the period	(271)
Debt issuance costs, ending balance	2,435
Total, beginning balance	0
Total, ending balance	0
Secured Debt \| Term Loan A (TLA) Facility
Debt Instrument [Line Items]
Debt issuance costs, beginning balance	4,569
Financing costs incurred	418
Write-off of debt issuance costs and unamortized discount	(2,780)
Amortization during the period	(249)
Debt issuance costs, ending balance	1,958
Unamortized discount on TLB Facility, beginning balance	1,408
Unamortized discount on TLB Facility, Financing costs incurred	0
Unamortized discount on TLB Facility, Write-off during the period	(1,391)
Unamortized discount on TLB Facility, Amortization during the period	(17)
Unamortized discount on TLB Facility, ending balance	0
Total, beginning balance	5,977
Total, Financing costs incurred	418
Total, Write-off during the period	(4,171)
Total, Amortization during the period	(266)
Total, ending balance	$ 1,958

DEBT (Long-term Debt Maturity Schedule) (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Debt Disclosure [Abstract]
Remainder of 2023	$ 0
2024	10,000
2025	17,500
2026	27,500
2027	30,000
After 2027	$ 416,140

STOCK-BASED COMPENSATION (Allocation of Recognized Period Costs) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based payment arrangement, expense	$ 5,501	$ 5,956	$ 11,603	$ 10,951
Cost of sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based payment arrangement, expense	1,155	837	2,262	1,606
Selling, general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based payment arrangement, expense	4,085	4,308	8,550	7,853
Research, development and engineering
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based payment arrangement, expense	259	338	728	663
Restructuring and other charges
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based payment arrangement, expense	2	473	63	829
RSUs and PRSUs
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based payment arrangement, expense	$ 5,501	$ 5,956	$ 11,603	$ 10,951

STOCK-BASED COMPENSATION (Stock Options Activity) (Details) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($) $ / shares shares
Number of Stock Options
Options outstanding, beginning balance (in shares) \| shares	240,622
Exercised (in shares) \| shares	(68,821)
Options outstanding, ending balance (in shares) \| shares	171,801
Options exercisable at period end (in shares ) \| shares	171,801
Weighted Average Exercise Price
Options outstanding, beginning (in dollars per share) \| $ / shares	$ 38.51
Exercised (in dollars per share) \| $ / shares	38.92
Options outstanding, ending (in dollars per share) \| $ / shares	38.35
Options exercisable at period end (in dollars per share) \| $ / shares	$ 38.35
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Options Outstanding, Weighted Average Remaining Contractual Life	3 years 3 months 18 days
Options Exercisable, Aggregate Intrinsic Value \| $	$ 8.1

STOCK-BASED COMPENSATION (Narrative) (Details)	6 Months Ended
STOCK-BASED COMPENSATION (Narrative) (Details)	Jun. 30, 2023	Jul. 01, 2022
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period	3 years
RSUs \| Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period	1 year
PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period	3 years
Performance period	5 years
Weighted average illiquidity discount	11.23%	9.25%
Restriction period	6 months	6 months

STOCK-BASED COMPENSATION (Restricted Stock and Restricted Stock Units Activity) (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
RSUs
Time-Vested and Performance-Vested Activity
Nonvested, beginning (in shares) \| shares	291,929
Granted (in shares) \| shares	230,782
Vested (in shares) \| shares	(100,648)
Forfeited (in shares) \| shares	(40,091)
Nonvested, ending (in shares) \| shares	381,972
Weighted Average Grant Date Fair Value
Nonvested, beginning (in dollars per share) \| $ / shares	$ 77.58
Granted (in dollars per share) \| $ / shares	75.74
Vested (in dollars per share) \| $ / shares	79.20
Forfeited (in dollars per share) \| $ / shares	71.21
Nonvested, ending (in dollars per share) \| $ / shares	$ 76.71
PRSUs
Time-Vested and Performance-Vested Activity
Nonvested, beginning (in shares) \| shares	263,906
Granted (in shares) \| shares	105,757
Vested (in shares) \| shares	(24,427)
Forfeited (in shares) \| shares	(62,396)
Nonvested, ending (in shares) \| shares	282,840
Weighted Average Grant Date Fair Value
Nonvested, beginning (in dollars per share) \| $ / shares	$ 90.29
Granted (in dollars per share) \| $ / shares	74.32
Vested (in dollars per share) \| $ / shares	107.26
Forfeited (in dollars per share) \| $ / shares	83.39
Nonvested, ending (in dollars per share) \| $ / shares	$ 84.38

STOCK-BASED COMPENSATION (Valuation Assumptions) (Details) - PRSUs - $ / shares	6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value (in dollars per share)	$ 74.29	$ 97.58
Risk-free interest rate	3.79%	1.58%
Expected volatility	46.00%	42.00%
Expected life (in years)	3 years	3 years 10 months 24 days
Expected dividend yield	0.00%	0.00%

RESTRUCTURING AND OTHER CHARGES (Schedule of Restructuring And Other Charges Components) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Restructuring and Related Activities [Abstract]
Restructuring charges	$ 936	$ (5)	$ 2,000	$ 1,098
Acquisition and integration costs	556	3,333	938	5,269
Other general expenses	26	205	109	501
Total restructuring and other charges	$ 1,518	$ 3,533	$ 3,047	$ 6,868

RESTRUCTURING AND OTHER CHARGES (Schedule of Restructuring Restructuring-Related Costs) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Restructuring charges:
Restructuring and other charges	$ 936	$ (5)	$ 2,000	$ 1,098
Total restructuring and restructuring-related charges	3,116	884	4,921	2,637
Cost of sales
Restructuring charges:
Total restructuring and restructuring-related charges	516	179	693	334
Selling, general and administrative
Restructuring charges:
Total restructuring and restructuring-related charges	1,346	384	1,587	702
Research, development and engineering
Restructuring charges:
Total restructuring and restructuring-related charges	$ 318	$ 326	$ 641	$ 503

RESTRUCTURING AND OTHER CHARGES (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Restructuring Cost and Reserve [Line Items]
Acquisition and integration costs	$ 556	$ 3,333	$ 938	$ 5,269
Oscor And Aran Acquisitions
Restructuring Cost and Reserve [Line Items]
Acquisition and integration costs			900	5,300
(Benefit) expense to adjust the fair value of acquisition related contingent consideration			$ (300)	$ 100

RESTRUCTURING AND OTHER CHARGES (Schedule of Restructuring Reserve By Type of Cost) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Restructuring Reserve [Roll Forward]
Beginning balance			$ 2,366
Charges incurred, net of reversals	$ 936	$ (5)	2,000	$ 1,098
Cash payments			(3,003)
Ending balance	1,363		1,363
Operational excellence initiatives
Restructuring Reserve [Roll Forward]
Beginning balance			232
Charges incurred, net of reversals			710
Cash payments			(833)
Ending balance	109		109
Strategic reorganization and alignment
Restructuring Reserve [Roll Forward]
Beginning balance			2,134
Charges incurred, net of reversals			979
Cash payments			(2,170)
Ending balance	943		943
Manufacturing alignment to support growth
Restructuring Reserve [Roll Forward]
Beginning balance			0
Charges incurred, net of reversals			311
Cash payments			0
Ending balance	$ 311		$ 311

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate	19.80%	14.70%	19.30%	16.10%
Income before provision for income taxes	$ 29,892	$ 24,423	$ 45,889	$ 38,371
Discrete tax benefits	400	$ 500	500
Unrecognized tax benefits	8,000		8,000
Unrecognized tax benefits that would impact effective tax rate	7,900		7,900
Significant change in unrecognized tax benefits is reasonably possible, amount of unrecorded benefit	$ 1,900		$ 1,900

COMMITMENTS AND CONTINGENCIES (Schedule of Product Warranty Liability) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 77
Additions to warranty reserve, net of reversals	7
Balance at end of period	$ 84

EARNINGS PER SHARE (“EPS”) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022	Feb. 28, 2023
Numerator for basic and diluted EPS:
Net income	$ 23,971	$ 20,836	$ 37,036	$ 32,203
Denominator for basic and diluted EPS:
Weighted average shares outstanding - Basic (in shares)	33,312	33,111	33,285	33,101
Dilutive effect of share-based awards (in shares)	374	239	346	225
Weighted average shares outstanding - Diluted (in shares)	33,686	33,350	33,631	33,326
Basic EPS (in dollars per share)	$ 0.72	$ 0.63	$ 1.11	$ 0.97
Diluted EPS (in dollars per share)	0.71	$ 0.62	1.10	$ 0.97
Capped Call Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion price (in dollars per share)					$ 108.59
Capped call (in shares)					5,700
Strike price (in dollars per share)			108.59
2028 Convertible Senior Notes \| Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion price (in dollars per share)	$ 87.20		$ 87.20		$ 87.20
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from calculation of earnings per share (in shares)	0	5	2	4
PRSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from calculation of earnings per share (in shares)	83	165	108	165
Capped Call Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Capped call (in shares)					5,700

STOCKHOLDERS' EQUITY (Shares Issued and Outstanding) (Details) - shares	6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022
Class Of Stock [Roll Forward]
Shares outstanding at beginning of period (in shares)	33,169,778
Shares outstanding at ending of period (in shares)	33,308,080
Common Stock
Class Of Stock [Roll Forward]
Shares outstanding at beginning of period (in shares)	33,169,778	33,063,336
Stock options exercised (in shares)	58,413	0
Shares outstanding at ending of period (in shares)	33,308,080	33,121,833
Restricted Stock \| Common Stock
Class Of Stock [Roll Forward]
Vesting of RSUs, net of shares withheld to cover taxes (in shares)	79,889	58,497

STOCKHOLDERS' EQUITY (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period	$ 1,417,936	$ 1,364,350	$ 1,417,456	$ 1,354,697
Unrealized gain (loss) on cash flow hedges	1,679	(230)	4,402	2,026
Balance, ending balance	1,445,655	1,363,451	1,445,655	1,363,451
Foreign exchange contracts
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Unrealized gain (loss) on cash flow hedges	(1,041)	(233)	(1,588)	(361)
Interest rate swap
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Unrealized gain (loss) on cash flow hedges	(533)	416	(997)	1,022
Defined Benefit Plan Liability
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period	(346)	(890)	(346)	(890)
Balance, ending balance	(346)	(890)	(346)	(890)
Cash Flow Hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period	3,927	1,170	1,760	(2,291)
Reclassification from AOCI, before tax	2,126	(291)	5,572	2,565
Reclassification from AOCI, tax	(447)	61	(1,170)	(539)
Balance, ending balance	4,060	1,110	4,060	1,110
Cash Flow Hedges \| Foreign exchange contracts
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Reclassification from AOCI, before tax	(1,318)	(295)	(2,010)	(457)
Reclassification from AOCI, tax	277	62	422	96
Cash Flow Hedges \| Interest rate swap
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Reclassification from AOCI, before tax	(675)	526	(1,262)	1,293
Reclassification from AOCI, tax	142	(110)	265	(271)
Foreign Currency Translation Adjustment
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period	12,075	21,833	4,150	29,720
Reclassification from AOCI, before tax	(2,901)	(27,274)	5,024	(35,161)
Reclassification from AOCI, tax	0	0	0	0
Unrealized gain (loss) on cash flow hedges	(2,901)	(27,274)	5,024	(35,161)
Balance, ending balance	9,174	(5,441)	9,174	(5,441)
Total Pre-Tax Amount
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period	15,656	22,113	5,564	26,539
Balance, ending balance	12,888	(5,221)	12,888	(5,221)
Tax
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period	(690)	(76)	(235)	651
Balance, ending balance	(718)	(63)	(718)	(63)
Net-of-Tax Amount
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period	14,966	22,037	5,329	27,190
Balance, ending balance	$ 12,170	$ (5,284)	$ 12,170	$ (5,284)

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Assets and Liabilities Recorded at Fair Value on a Recurring Basis) (Details) - Fair Value - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets: Interest rate swap		$ 1,262
Assets: Foreign currency hedging contracts	$ 4,060	521
Liabilities: Foreign currency hedging contracts		23
Liabilities: Contingent consideration	555	11,756
Quoted Prices in Active Markets (Level 1)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets: Interest rate swap		0
Assets: Foreign currency hedging contracts	0	0
Liabilities: Foreign currency hedging contracts
Liabilities: Contingent consideration	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets: Interest rate swap		1,262
Assets: Foreign currency hedging contracts	4,060	521
Liabilities: Foreign currency hedging contracts		23
Liabilities: Contingent consideration	0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets: Interest rate swap		0
Assets: Foreign currency hedging contracts	0	0
Liabilities: Foreign currency hedging contracts
Liabilities: Contingent consideration	$ 555	$ 11,756

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Schedule of Interest Rate Swaps) (Details) - Interest Rate Swap Maturing June 2023 - Prepaid expenses and other current assets	Dec. 31, 2022 USD ($)
Derivatives, Fair Value [Line Items]
Notional Amount	$ 100,000,000
Pay Fixed Rate	2.1785%
Receive Current Floating Rate	4.3869%
Fair Value	$ 1,262,000

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Schedule of Foreign Currency Contracts) (Details) - Designated as Hedging Instrument $ in Thousands	Jun. 30, 2023 USD ($) $ / $ $ / €	Dec. 31, 2022 USD ($) $ / $ $ / $ $ / €
Foreign Exchange Contract Maturing December Two Thousand Twenty Three, Contract One \| Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Notional Amount	$ 18,289
$/Foreign currency (in dollars per foreign currency) \| $ / $	0.0481
Fair Value	$ 3,436
Foreign Exchange Contract Maturing September Two Thousand Twenty Three, Contract \| Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Notional Amount	$ 40,377
$/Foreign currency (in dollars per foreign currency) \| $ / €	1.0796
Fair Value	$ 624
Foreign Exchange Contract Maturing December Two Thousand Twenty Three, Contract Two \| Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Notional Amount		$ 37,175
$/Foreign currency (in dollars per foreign currency) \| $ / $		0.0489
Fair Value		$ 504
Foreign Exchange Contract Maturing March Two Thousand Twenty Three, Contract Two \| Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Notional Amount		$ 2,685
$/Foreign currency (in dollars per foreign currency) \| $ / €		0.0249
Fair Value		$ 17
Foreign Exchange Contract Maturing March Two Thousand Twenty Three, Contract Three \| Accrued expenses and other current liabilities
Derivatives, Fair Value [Line Items]
Notional Amount		$ 17,309
$/Foreign currency (in dollars per foreign currency) \| $ / $		1.0751
Fair Value		$ (23)

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Impact of Cash Flow Hedges on Other Comprehensive Income (Loss), AOCI and the Condensed Consolidated Statements of Operations) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Total sales	$ 400,044	$ 350,081	$ 778,829	$ 660,993
Cost of sales	294,240	257,184	576,352	486,621
Operating expenses	64,228	60,190	126,735	119,168
Interest expense	11,459	7,773	28,713	13,741
Sales
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Gain (Loss) on Cash Flow Hedge Activity	(83)	(371)	(134)	(425)
Sales \| Foreign exchange contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Unrealized Gain (Loss) Recognized in OCI	364	(1,167)	513	(1,681)
Cost of sales
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Gain (Loss) on Cash Flow Hedge Activity	1,384	554	2,092	746
Cost of sales \| Foreign exchange contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Unrealized Gain (Loss) Recognized in OCI	1,739	96	5,014	1,365
Operating expenses
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Gain (Loss) on Cash Flow Hedge Activity	17	112	52	136
Operating expenses \| Foreign exchange contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Unrealized Gain (Loss) Recognized in OCI	17	78	45	355
Interest expense
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Gain (Loss) on Cash Flow Hedge Activity	675	(526)	1,262	(1,293)
Interest expense \| Interest rate swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Unrealized Gain (Loss) Recognized in OCI	$ 6	$ 702	$ 0	$ 2,526

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Narrative) (Details)		3 Months Ended		6 Months Ended
	Apr. 06, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jul. 01, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jul. 01, 2022 USD ($)	Jun. 30, 2023 EUR (€)	Dec. 31, 2022 USD ($)	Apr. 06, 2022 EUR (€)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative instruments net loss to be reclassified to net income during next twelve months				$ 4,100,000
Chinese Venture Capital Fund
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Equity method investment ownership		7.40%		7.40%		7.40%
Accrued expenses and other current liabilities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration liability, current		$ 600,000		$ 600,000			$ 11,200,000
Prepaid expenses and other current assets
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration liability, noncurrent		600,000		600,000			600,000
USB Acquisition
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Liabilities: contingent consideration		0		0			0
Consideration transferred					$ 500,000
InoMec Ltd
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Liabilities: contingent consideration		600,000		600,000			1,100,000
Payments to acquire business				300,000
Contingent consideration, range of outcomes, value, high		900,000		900,000
Aran Acquisition
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Liabilities: contingent consideration							10,900,000
Consideration transferred	$ 141,300,000
Payments to acquire business	133,900,000			10,900,000
Contingent consideration liability, current	$ 10,900,000							€ 10,000,000
Designated as Hedging Instrument \| Revolving Credit Facility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Outstanding borrowings \| €						€ 100,000,000
Foreign exchange contracts \| Not Designated as Hedging Instrument
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
National amount		15,000,000		15,000,000			$ 12,000,000
Unrealized gain on cash flow hedges, pretax		$ 100,000	$ 400,000	$ 100,000	$ 700,000

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Estimated Fair Values for Contingent Consideration) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value measurement at beginning of period	$ 11,732	$ 1,976	$ 11,756	$ 2,415
Amount recorded for current year acquisitions	0	7,375	0	7,375
Fair value measurement adjustment	0	0	(265)	54
Payments	(11,177)	0	(11,177)	(493)
Foreign currency translation	0	(279)	241	(279)
Fair value measurement at end of period	$ 555	$ 9,072	$ 555	$ 9,072

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Equity Method Investments) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Equity method investment	$ 8,231		$ 8,231		$ 8,252
Non-marketable equity securities	5,637		5,637		5,637
Total equity investments	13,868		13,868		$ 13,889
Equity method investment (gain) loss	$ (134)	$ 320	$ 21	$ 2,724

SEGMENT INFORMATION (Narrative) (Details)	6 Months Ended
SEGMENT INFORMATION (Narrative) (Details)	Jun. 30, 2023 segment
Segment Reporting [Abstract]
Number of reportable segments	2

SEGMENT INFORMATION (Reconciliation of Revenue from Segments to Consolidated) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Segment Reporting, Revenue Reconciling Item [Line Items]
Total sales	$ 400,044	$ 350,081	$ 778,829	$ 660,993
Operating Segments \| Medical
Segment Reporting, Revenue Reconciling Item [Line Items]
Total sales	389,111	339,834	753,377	641,861
Operating Segments \| Medical \| Cardio & Vascular
Segment Reporting, Revenue Reconciling Item [Line Items]
Total sales	208,494	180,604	399,697	339,641
Operating Segments \| Medical \| Cardiac Rhythm Management & Neuromodulation
Segment Reporting, Revenue Reconciling Item [Line Items]
Total sales	153,411	135,945	298,550	259,269
Operating Segments \| Medical \| Advanced Surgical, Orthopedics & Portable Medical
Segment Reporting, Revenue Reconciling Item [Line Items]
Total sales	27,206	23,285	55,130	42,951
Operating Segments \| Non-Medical
Segment Reporting, Revenue Reconciling Item [Line Items]
Total sales	$ 10,933	$ 10,247	$ 25,452	$ 19,132

SEGMENT INFORMATION (Reconciliation of Operating Profit (Loss) from Segments to Consolidated) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Segment Reporting Information [Line Items]
Operating income	$ 41,576	$ 32,707	$ 75,742	$ 55,204
Unallocated expenses, net	(11,684)	(8,284)	(29,853)	(16,833)
Income before taxes	29,892	24,423	45,889	38,371
Operating Segments
Segment Reporting Information [Line Items]
Operating income	68,775	56,205	127,607	101,018
Operating Segments \| Medical
Segment Reporting Information [Line Items]
Operating income	68,497	54,580	123,303	98,728
Operating Segments \| Non-Medical
Segment Reporting Information [Line Items]
Operating income	278	1,625	4,304	2,290
Segment Reconciling Items
Segment Reporting Information [Line Items]
Operating income	$ (27,199)	$ (23,498)	$ (51,865)	$ (45,814)

REVENUE FROM CONTRACTS WITH CUSTOMERS (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Concentration Risk [Line Items]
Revenue recognized that was included in contract liability balance at beginning of period	$ 1.3	$ 0.8	$ 2.7	$ 1.7
Revenue Benchmark \| Product Concentration Risk \| Transferred over Time
Concentration Risk [Line Items]
Concentration risk percentage	27.00%	32.00%	27.00%	31.00%

REVENUE FROM CONTRACTS WITH CUSTOMERS (Disaggregated Revenue) (Details) - Revenue from contract with customer benchmark - Customer Concentration Risk	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Medical \| Customer A
Disaggregation of Revenue [Line Items]
Concentration risk percentage	17.00%	18.00%	18.00%	18.00%
Medical \| Customer B
Disaggregation of Revenue [Line Items]
Concentration risk percentage	17.00%	17.00%	17.00%	17.00%
Medical \| Customer C
Disaggregation of Revenue [Line Items]
Concentration risk percentage	13.00%	14.00%	13.00%	14.00%
Medical \| All other customers
Disaggregation of Revenue [Line Items]
Concentration risk percentage	53.00%	51.00%	52.00%	51.00%
Non-Medical \| Customer D
Disaggregation of Revenue [Line Items]
Concentration risk percentage	20.00%	42.00%	21.00%	37.00%
Non-Medical \| All other customers
Disaggregation of Revenue [Line Items]
Concentration risk percentage	80.00%	58.00%	79.00%	63.00%

REVENUE FROM CONTRACTS WITH CUSTOMERS (Schedule of Revenue by Ship To Location) (Details) - Geographic Concentration Risk - Revenue from contract with customer benchmark	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2023	Jul. 01, 2022
Medical \| United States
Disaggregation of Revenue [Line Items]
Concentration risk percentage	54.00%	52.00%	54.00%	51.00%
Medical \| All other countries
Disaggregation of Revenue [Line Items]
Concentration risk percentage	46.00%	48.00%	46.00%	49.00%
Non-Medical \| United States
Disaggregation of Revenue [Line Items]
Concentration risk percentage	64.00%	71.00%	62.00%	67.00%
Non-Medical \| Canada
Disaggregation of Revenue [Line Items]
Concentration risk percentage	12.00%		11.00%
Non-Medical \| All other countries
Disaggregation of Revenue [Line Items]
Concentration risk percentage	24.00%	29.00%	27.00%	33.00%

REVENUE FROM CONTRACTS WITH CUSTOMERS (Assets and Liability) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Contract assets	$ 80,010	$ 71,927
Contract liabilities	$ 8,777	$ 5,616

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