2q17 earnings conference call€¦ · 1q16. 2q16. 3q16. 4q16. 1q17. 2q17. 1q16. 2q16. 3q16. 4q16....

2Q17 Earnings Conference Call

July 27, 2017

Presentation of Financial Information & Forward Looking Statements

Historical financial and operating data in this presentation reflect the consolidated results of Integer for the periodsindicated.

This presentation includes financial information prepared in accordance with accounting principles generally accepted inthe United States, or GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financialmeasures in this presentation, which include Adjusted Net Income, Adjusted Diluted EPS, Earnings Before Interest TaxesDepreciation and Amortization (EBITDA), Adjusted EBITDA, and organic growth rates should be considered in addition to,but not as substitutes for, the information prepared in accordance with GAAP. For reconciliations of these non-GAAPfinancial measures to the most comparable GAAP measures, please refer to the appendix to this presentation and theearnings release associated with this quarterly period which can be found in the investor relations section of our corporatewebsite (investor.integer.net).

Statements made in this presentation whether written or oral may be “forward-looking statements” within the meaning ofSection 27A of the Securities Act of 1933, as amended, and Section 21E of Securities Exchange Act of 1934, asamended, and involve a number of risks and uncertainties. These statements can be identified by terminology such as“may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or“continue” or “variations” or the negative of these terms or other comparable terminology. These statements are based onthe company’s current expectations and speak only as of July 27, 2017. The Company’s actual results could differmaterially from those stated or implied by such forward-looking statements. The Company assumes no obligation toupdate forward-looking information, including information in this presentation, to reflect changed assumptions, theoccurrence of unanticipated events or changes in future operating results, financial conditions or prospects.

ITGR: 2Q17 Earnings Conference Call / July 27, 2017 / Page 2

Agenda

• Opening Comments

• Financial Results

• Product Line Review

• Vision & Strategy

• Question & Answer Period


Opening Comments

Quarterly Results Reflect Continued Progress


“Another quarter of

solid sales growth

gives us confidence

that we are back on

an annual growth

trajectory”

Second Quarter Highlights• 2Q17 organic sales up 4.5% … Trailing 4 quarters up 2%• Adjusted Results

‒ EBITDA increased 9% organically

‒ Net Income increased 34% organically

• Strong Cash Flow and Debt Repayment

Full Year Outlook• Increasing low end of Sales guidance• Adjusted EPS outlook from business operations unchanged,

updating for foreign currency losses• Approximately $150 million of Cash Flow from Operations

4Q15 4Q16 1Q17 2Q17 4Q17

Sales Recovery – Growth in 2017


[1% to 3%]

(2)%

(4)%

2%

Org

anic

Gro

wth

Sales – Trailing 4 Quarters

Sales trajectory continues to improve

OutlookTrailing 4-quarter Actuals

(5)%

5%

0%

(1)%

Improving Sales Trend Across All Product Lines


0%

Sales - Trailing 4-quarterMedical Segment Non-Medical Segment

0%

• Sales recovery from both share gain and market volume

• 2H17 outlook positive … challenging 4Q year over year comparison

10%

(10)%

10%

(35)% (30)%

(22)%

1%

Trailing 4-quarter Actuals

4Q16 1Q17 2Q17

Cardio & Vascular

Adv. Surgical, Ortho &Portable Medical

Cardiac & Neuro

Trailing 4-quarter Actuals

4Q16 1Q17 2Q17

(6)%

(1)%(0)%

(5)%

(5)%

(2)%

7%

2%

5%

Financial Results

$18 $20

$4 $69 $70 $6

2Q17 Adjusted Financial Results(1)


($ in millions, except per share amounts)

(1) Refer to the appendix of this presentation for a reconciliation of Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and organic growth rates to the most directly comparable GAAP measure(2) Organic growth for Sales excludes the impact of foreign exchange(3) Organic growth for Adjusted EBITDA and Adjusted Net Income exclude the impact of foreign currency gain (loss) reported in other (income) loss, net

Sales Adjusted EBITDA Adjusted Net Income

2Q16 2Q17 2Q16 2Q172Q16 2Q17

4.5% organic(2)

$24

AdjEPS $0.56 $0.62

% Growth4.1% reported

9% organic(3)

2% reported34% organic(3)

13% reported

$348

$363

$364 $76

Foreign currency impact on reported GAAP and Non-GAAP numbersAs reported GAAP and Non-GAAP numbers

Reported

ReportedReported Reported

ReportedReported

FX Adjusted

FX Adjusted

FX Adjusted

FX

FX

-50%-30%-10%10%30%50%

-20%

-10%

0%

10%

-10%

-5%

0%

5%

10%

15%

-20%

-10%

0%

10%

-15%

-10%

-5%

0%

5%

10%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

YOY Sales Improvement Continues in 2Q17


(7.6)%

(0.6)% (0.4)%

4.8% 4.5%

0%

Integer(1)0%

0%

Advanced Surgical, Orthopedics & Portable Medical

0%

Cardiac & Neuromodulation

Non-Medical (Electrochem)

(1) Excludes impact from changes in foreign currency exchange rates

Qua

rterly

YO

Y %

Cha

nge

–as

Rep

orte

d

Qua

rterly

YO

Y %

Org

anic

Cha

nge

0%

Cardio & Vascular

2Q16 3Q16 4Q16 1Q17 2Q171Q16

(7.5)%

Strong Organic Growth in Adjusted EBITDA & Adjusted EPS


(1) Organic amounts exclude the YOY impact of foreign currency gain (loss) reported in other (income) loss, net

Adjusted EBITDA

($ in millions except per share amounts)

Adjusted EPS

$0.56

$0.18 $(0.12)

$0.62

2Q16 2Q17

$17.5Adjusted

Net Income

$6.2 $(4.0) $19.7

Organic(2)FX

2Q16 2Q17

$69 $70$(5.0)$6.5

Organic(2) FX

$11

$(8)

$21 $22 $26 $28

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

$30

$4

$38 $34

$39 $39

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

1Q17 2Q17

$12 $30 $38 $120

$230

$913

$360

2017 2018 2019 2020 2021 2022 2023

DebtPayments

Continued Strong & Steady Cash Flow Generation


($ in millions)

(1) Free Cash Flow defined as Cash from Operations less Capital Expenditures

($ in millions)Cash Flow From Operations Free Cash Flow

($ in millions)

Future Mandatory Debt Repayment Schedule($ in millions)

$8

$31

$40

Accelerated RepaymentRequired Repayment

$29

$18

$11

• Generating cash flow well in excess of current debt obligations

• Focused on accelerating debt repayment to reduce leverage

• Repaid $40M of debt in 2Q17 – $69Mrepaid YTD

• Total payments of $113M since acquisition

• Near-term mandatory debt repayments very manageable

• No significant maturities until 2020

• 33% fixed rate

• Well within covenant compliance requirements

2016 2017 2016 2017 2016 2017

Revised Full-Year 2017 Outlook


Sales Adjusted EPS Cash Flow from Operations

$1,386

$2.68

$1,400 - $1,430

$2.55 - $2.95$106

~$150

Outlook Outlook

($ in millions except per share amounts)

1% - 3% organic(1)%Growth 1% - 3% reported

7% - 22% organic(2)

(5)% - 10% reported42% reported

Outlook

(1) Organic growth for Sales excludes the impact of foreign currency exchange rates(2) Organic growth Adjusted EPS excludes the impact of foreign currency gain (loss) reported in other (income) loss, net for both years presented

Product Line Review

Trailing 4-Qtr Sales YoY %

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Advanced Surgical, Orthopedics & Portable Medical


Providing a wide range of technologies and solutions to the Advanced Surgical and Orthopedic markets

0%

Quarterly YOY Growth 7%

(5)% (3)% (3)%

% C

hang

e

Orthopedic Implants & Instruments

Biopsy & Drug Delivery

Portable Medical (Power Solutions)

Laparoscopy &General Surgery

Arthroscopy Products(1)%

2Q16 3Q16 4Q16 1Q17 2Q171Q16

(12)%

• 2Q17 Sales slightly down YOY, primarily driven by timing of customer demand, full year outlook unchanged

• Trailing 4-quarter Sales stabilizing now that facility transfers are complete

• Expect limited 2H17 Sales growth with some new product launches

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Trailing 4-Quarter Sales

$421 $418 $415 $421 $421$427

(6)% (1)% (0)%

Offering a full-range of products and services for catheter-based interventional vascular devices and a suite of supply chain solutions to support the

development and manufacturing of complex components, sub-assemblies and finished devices

-10%

-5%

0%

5%

10%

15%

Cardio & Vascular


Steerable Sheaths Catheters & Sheaths Guidewires, Stylets & Accessories

Introducers

0%

10%

0%2%

9%

Quarterly YOY Growth

% C

hang

e

8%

2Q16 3Q16 4Q16 1Q17 2Q171Q16

(2)%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17


$478 $480 $491$502 $512

$478

• Another solid quarter of YOY growth in 2Q17 driven by strong demand for Integer-owned product lines and increasing demand for contract manufactured products

• Trailing 4-quarter Sales demonstrating continued growth driven by strength in most recent quarters

• 2H17 growth remains positive at a slower pace versus harder comparisons from 2H16

2% 5% 7%Trailing 4-Qtr Sales YoY %

Providing technology solutions for the active implantable medical device industry by partnering with customers to bring high-quality products to

established and emerging markets – from initial concept through to high-volume manufacturing

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Cardiac & Neuromodulation


Pulse Generator Components &

Assemblies

Leads & Lead Components, Adaptors & Assemblies

Pulse Generators & External Solutions (Programmers,

Chargers, Patient Devices)

Quarterly YOY Growth(1)

0%

(3)%

(13)%

3%

(5)%

(1) Excludes the results of Nuvectra Corporation prior to its spin-off on March 14, 2016

% C

hang

e

(1)%

2Q16 3Q16 4Q16 1Q17 2Q171Q16

(4)%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17


• 2Q17 shows continued stabilization YOY from recovery in CRM and growth in neuromodulation

• Trailing 4-quarter Sales also stabilizing after 2016 declines

• Second half of year will be a more challenging comparable as 4Q16 was the strongest quarter of 2016

$441 $444 $438 $435 $434$458

(5)% (5)% (2)%Trailing 4-Qtr Sales YoY %

-50%

-30%

-10%

10%

30%

50%

70%

Electrochem


Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications

Battery Packs0%

(3)%

Battery ChargersBattery Cells

(41)%(26)%

(14)%

Quarterly YOY Growth

% C

hang

e

60%

(34)%

2Q16 3Q16 4Q16 1Q17 2Q171Q16

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17


$47$44 $42 $41

$47$53

• 2Q17 Sales growth driven by strong momentum from increased North American customer activity and market share gains.

• North American market driven by energy market recovery and improved efficiencies utilizing Electrochem technology

• Continue to aggressively pursue new and expanded market opportunities – gaining traction with new and existing customers

• Trailing 4-quarter Sales turned positive with strong 2Q performance

• Positive outlook for 2H17(30)% (23)% 1%Trailing 4-Qtr Sales YoY %

Vision & Strategy

Our Vision and Strategy

Executing our Strategy … to Realize our Vision• Serving the needs of our customers as their preferred

global device outsource partner

• Leveraging our global presence and breadth of capabilities to provide high quality manufactured products – from components to finished devices

• Delivering innovative design, process solutions and services

And to Deliver• Sales Growth … above market

• EBITDA and Cash Flow Growth … accelerate

• Earn a Valuation Premium


“Our vision is to

enhance the lives of

patients worldwide

by being our

customers’ partner of

choice for innovative

technologies and

services.”

Question & Answer Period

APPENDIX

$114 $122 $129 $126 $125 $132

$107 $107 $108 $116 $104 $106

$98 $109 $100 $107 $105 $109

$12 $10 $9

$11 $11

$16

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Historical Financial Results


Sales(1) Adjusted EPS(1)(2)(4)

$345$331

$348 $347$360

Non-Medical

Cardiac & Neuro

Cardio & Vascular

Adv. Surgical, Ortho &Portable Medical

(1) Sales and Adjusted EPS information provided on a comparable basis. Comparable basis amounts for 2016 exclude the results of Nuvectra Corporation (“Nuvectra”) prior to its spin-off on March 14, 2016. Refer to the investor relations section of our website for historical pro forma information that contains a reconciliation of 1Q16 comparable amounts to as reported amounts.

(2) Refer to the appendix of this presentation for a reconciliation of Adjusted EPS to the most directly comparable GAAP measure(3) Excludes impact of foreign currency gain (loss) reported in other (income) loss, net(4) The quarterly and annual EPS numbers are calculated independently and may not sum to the total

$( in millions, except per share amounts)

$363

Impact of foreign currency gain (loss) reported in other (income) loss, net

Adjusted EPS, as reported

OrganicAdjusted

EPS(3)

$0.42 $0.56

$0.83 $0.87

$0.41 0.62

$(0.06)

$0.02

$(0.08)

$0.03

$0.14

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

$0.44$0.36 $0.58 $0.83 $0.79 $0.76

Working Capital


Working Capital$( in millions)

(1) Inventory Turns calculated as “COGS divided by quarterly Average Inventory multiplied by 4” to reach an annualized number

$318 $317 $325 $332 $325 $328

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Inventory $267 $276 $262 $225 $231 $236

Inventory Turns(1) 3.7 3.7 3.7 4.4 4.5 4.5

Capital Expenditures $19 $12 $17 $11 $12 $10

2Q17 Slides -->

Rolling Revenue

Quarterly Amounts1Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q17

Amy Wakeham: Amy Wakeham:RF64Q17

Amy Wakeham: Amy Wakeham:RF64Q154Q161Q172Q174Q17

Cardio and Vascular$ 116$ 122$ 127$ 115$ 114$ 122$ 129$ 126$ 125$ 132$ 133$ 1233%

Cardiac/Neuromodulation$ 112$ 123$ 105$ 121$ 107$ 107$ 108$ 116$ 104$ 106$ 113$ 108-2%-4%-1%2%0%

Advanced Surgical, Orthopedics & Portable Medical$ 112$ 115$ 104$ 110$ 98$ 109$ 100$ 107$ 105$ 109$ 116$ 111

Non-Medical$ 18$ 17$ 12$ 13$ 12$ 10$ 9$ 11$ 11$ 16$ 14$ 14

$ 358$ 377$ 348$ 360$ 331$ 348$ 347$ 360$ 345$ 363$ 375$ 356

Rolling 4-Quarter Amounts4Q151Q162Q163Q164Q161Q172Q173Q17

Amy Wakeham: Amy Wakeham:RF6



Cardio and Vascular$ 481$ 478$ 478$ 480$ 491$ 502$ 512$ 515$ 1,390

Cardiac/Neuromodulation$ 462$ 458$ 441$ 444$ 438$ 435$ 434$ 43940

Advanced Surgical, Orthopedics & Portable Medical$ 441$ 427$ 421$ 418$ 415$ 421$ 421$ 436

Non-Medical$ 59$ 53$ 47$ 44$ 42$ 41$ 47$ 52

$ 1,443$ 1,416$ 1,387$ 1,386$ 1,386$ 1,400$ 1,414$ 1,443$ 1,430

-4%-1%2%4%

Rolling 4-Quarter Revenue

Cardio and Vascular

4Q151Q162Q163Q164Q161Q172Q173Q174Q17480.70099999999996477.90799999999996478.18199999999996480.298490.85700000000003502.29500000000002512.27299999999991515.425999999999931390Cardiac/Neuromodulation

$1,430

4Q151Q162Q163Q164Q161Q172Q173Q174Q17461.78899999999999457.53000000000003441.16899999999998443.86799999999999438.36099999999999434.82099999999997434.08699999999999439.3400000000000340Advanced Surgical, Orthopedics & Portable Medical

4Q151Q162Q163Q164Q161Q172Q173Q174Q17440.899427.17999999999995421.45800000000003417.89700000000005414.70100000000002421.48500000000001420.654436.05100000000004Non-Medical

4Q151Q162Q163Q164Q161Q172Q173Q174Q1759.44899999999999853.41100000000000146.68500000000000243.57800000000000341.67899999999999541.35299999999999447.27700000000000152.007000000000005

4Q154Q161Q172Q174Q170.034Q154Q161Q172Q174Q17-0.02-0.04-1.1352168634964268E-21.9313236669852286E-20

Advanced Surgical, Orthopedics & Portable Medical1Q162Q163Q164Q161Q172Q17427.17999999999995421.45800000000003417.89700000000005414.70100000000002421.48500000000001420.654

Cardio and Vascular1Q162Q163Q164Q161Q172Q17477.90799999999996478.18199999999996480.298490.85700000000003502.29500000000002512.27299999999991

Cardiac/Neuromodulation1Q162Q163Q164Q161Q172Q17457.53000000000003441.16899999999998443.86799999999999438.36099999999999434.82099999999997434.08699999999999

Non-Medical1Q162Q163Q164Q161Q172Q1753.41100000000000146.68500000000000243.57800000000000341.67899999999999541.35299999999999447.277000000000001

Key Financial Results


2Q161Q172Q17FY15FY16

Sales$ 348$ 347$ 363$ 1,443$ 1,3864.1%

Gross Margin27.6%26.6%27.4%26.4%27.2%(0.54)

Operating Expenses$ 67$ 64$ 60$ 302$ 270-10.8%-7.3%

% of Sales19.2%18.5%16.4%20.9%19.5%

GAAP Net Income (Loss)$ (1)$ (4)$ 3$ (39)$ 6

Adjusted Net Income$ 18$ 14$ 20$ 98$ 8412.5%

EBITDA$ 51$ 50$ 55$ 161$ 203

Adjusted EBITDA$ 69$ 65$ 70$ 304$ 2802.1%

% of Sales19.8%18.8%19.4%21.1%20.2%

GAAP Diluted EPS$ (0.03)$ (0.11)$ 0.09$ (1.27)$ 0.19

Adjusted Diluted EPS$ 0.56$ 0.43$ 0.62$ 3.11$ 2.6810.7%44.2%

Cash Flow from Operations$ 39--$ 106

2Q162Q17

Revenue$ 348$ 3634.1%

Adjusted EBITDA$ 69$ 702.1%

Adjusted Net Income$ 18$ 2012.5%

2Q16Revenue348.382000000000012Q17Revenue362.7

2Q16Adjusted EBITDA68.9270000000000072Q17Adjusted EBITDA70.403000000000006

2Q16Adjusted Net Income17.5450000000000022Q17Adjusted Net Income19.742999999999999

Revenue

Revenue Details1Q174Q163Q16

1Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q17YOY%QOQ%LTMYOY%QOQ%YTD%YOY%QOQ%YTD%

Cardio and Vascular$ 116$ 122$ 127$ 115$ 114$ 122$ 129$ 126$ 125$ 132$ 133$ 12310%-0%5%9.2%-2.9%2.1%1.7%5.8%-0.1%

Cardiac/Neuromodulation$ 112$ 123$ 105$ 121$ 107$ 107$ 108$ 116$ 104$ 106$ 113$ 108-3%-10%-5%-4.5%7.2%-5.1%2.6%1.1%-5.3%

Advanced Surgical, Orthopedics & Portable Medical$ 112$ 116$ 104$ 112$ 98$ 109$ 100$ 107$ 105$ 109$ 116$ 1117%-1%-2%-4.3%6.5%-6.5%-3.6%-8.4%-7.2%

Non-Medical$ 17$ 16$ 12$ 13$ 12$ 10$ 9$ 11$ 11$ 16$ 14$ 14-3%0%-22%-12.2%27.6%-28.7%-27.4%-9.7%-33.4%

$ 358$ 377$ 349$ 361$ 331$ 348$ 347$ 360$ 345$ 363$ 375$ 3564%-4%-1%-0.6%3.8%-4.1%-0.6%-0.5%-5.3%

Integer-7.5%-7.6%-0.6%-0.4%4.8%

Amy Wakeham: Amy Wakeham:organic growth4.5%

Amy Wakeham: Amy Wakeham:Organic growth8%-1%

C&V-2%0%2%9%10%8%2%-2%

CRMN-4%-13%3%-5%-3%-1%5%-7%

ASO-12%-5%-4%-4%7%-1%15%4%

ELECTROCHEM-33%-39%-27%-12%-3%60%53%22%

Integer

1Q162Q163Q164Q161Q172Q17

-7%-8%-1%-0%5%5%

1Q162Q163Q164Q161Q172Q17

C&V-2%0%2%9%10%8%

CRMN-4%-13%3%-5%-3%-1%

ASO-12%-5%-4%-4%7%-1%

ELECTROCHEM-33%-39%-27%-12%-3%60%

Cardio and Vascular

1Q162Q163Q164Q161Q172Q17113.67100000000001122.253129.34700000000001125.586125.10899999999999132.23099999999999Cardiac/Neuromodulation

1Q162Q163Q164Q161Q172Q17107.35299999999999106.919108.14700000000001115.94199999999999103.813106.185Advanced Surgical, Orthopedics & Portable Medical

1Q162Q163Q164Q161Q172Q1798.361999999999995109.39100000000001100.203106.745105.146108.56Non-Medical

1Q162Q163Q164Q161Q172Q1711.6720000000000019.81900000000000088.869999999999999211.31811.34615.743

1Q162Q163Q164Q161Q172Q17-7.4673808684708187E-2-7.5644292632672777E-2-6.405718604899204E-3-3.652959428889269E-34.8000000000000001E-24.4999999999999998E-2

C&V1Q162Q163Q164Q161Q172Q17-2.3983038760478703E-22.2426566653200586E-31.66329269161383E-29.1796637234067613E-20.100623729887130298.1617629015238849E-2

CRMN1Q162Q163Q164Q161Q172Q17-3.8156745751215963E-2-0.13271747507193942.5596977582260951E-2-4.5343014394381174E-2-3.2975324397082451E-2-6.8650099608114053E-3

ASO1Q162Q163Q164Q161Q172Q17-0.12425733651490105-5.4206126549724315E-2-3.5664963616465276E-2-4.3032193455063462E-26.8969724080437639E-2-7.5966030112166729E-3

ELECTROCHEM1Q162Q163Q164Q161Q172Q17-0.3284268265558879-0.38520907670907634-0.27377123970736439-0.12185873875025538-2.7930089102124786E-20.60332009369589557

PL Revenue


1Q152Q153Q154Q151Q162Q163Q164Q161Q17YOY%QOQ%LTMYOY%QOQ%YTD%YOY%QOQ%YTD%

Cardio and Vascular$ 116$ 122$ 127$ 115$ 114$ 122$ 129$ 126$ 12510%-0%5%9.2%-2.9%2.1%1.7%5.8%-0.1%

Cardiac/Neuromodulation$ 112$ 123$ 105$ 121$ 109$ 107$ 108$ 116$ 104-4%-10%-5%-4.5%7.2%-4.8%2.6%1.1%-4.9%

Advanced Surgical, Orthopedics & Portable Medical$ 112$ 116$ 104$ 112$ 98$ 110$ 100$ 107$ 1057%-2%-2%-4.3%6.6%-6.4%-3.6%-8.6%-7.2%

Non-Medical$ 17$ 16$ 12$ 13$ 12$ 10$ 9$ 11$ 11-3%0%-22%-12.3%27.3%-29.0%-27.3%-7.9%-33.7%

$ 358$ 377$ 349$ 361$ 332$ 348$ 347$ 360$ 3454%-4%-1%-0.6%3.8%-4.0%-0.6%-0.5%-5.2%

Integer-7%-8%-1%-0%5%

C&V-2%0%2%9%10%

CRMN-3%-13%3%-5%-4%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Cardio and Vascular

1Q162Q163Q164Q161Q17113.671185105071122.253359585129129.346703008486125.585570224169125.108809338637Cardiac/Neuromodulation

1Q162Q163Q164Q161Q17108.533106.91896797919399108.146981976204115.941976250189103.813140284005Advanced Surgical, Orthopedics & Portable Medical

1Q162Q163Q164Q161Q1798.3309374606539109.56532849119201100.18804689810401106.757068819778105.14561129859Non-Medical

1Q162Q163Q164Q161Q1711.6720000000000019.64499527000000088.884881760000000711.30614017000000111.34579473

Cardio and Vascular1Q162Q163Q164Q161Q17113.671185105071122.253359585129129.346703008486125.585570224169125.108809338637

Cardiac/Neuromodulation1Q162Q163Q164Q161Q17108.533106.91896797919399108.146981976204115.941976250189103.813140284005

Advanced Surgical, Orthopedics & Portable Medical1Q162Q163Q164Q161Q1798.3309374606539109.56532849119201100.18804689810401106.757068819778105.14561129859

Non-Medical1Q162Q163Q164Q161Q1711.6720000000000019.64499527000000088.884881760000000711.30614017000000111.34579473

Adjusted EBITDA Walk

4Q151Q162Q163Q164Q161Q172Q17BaseFallRise

Adjusted EBITDA$ 79$ 65$ 69$ 75$ 71$ 64$ 70-2%2Q16$ - 0$ 69$ 68.927

Sales331348347360345363Operations$ 69$ - 0$ 6$ 6.452

% of Sales20%20%22%20%19%19%Unrealized FX$ 70$ 5$ - 0$ (4.976)

2Q17$ 70$ 70.4037%

Adjusted EBITDA

1Q162Q163Q164Q161Q172Q1765.3768.92700000000000775.01699999999999670.53499999999999764.25670.403000000000006

Base2Q16OperationsUnrealized FX2Q1768.92700000000000770.40300000000000670.403000000000006Fall2Q16OperationsUnrealized FX2Q17004.976Rise2Q16OperationsUnrealized FX2Q1768.9270000000000076.45199999999999820

Adjusted EPS Walk

Adjusted EPS

Historical Adjusted EPS

BaseFallRise1Q162Q163Q164Q161Q172Q17

2Q16$ - 0$ 0.56$ 0.56Reported$ 0.42$ 0.56$ 0.83$ 0.87$ 0.410.62

Operations$ 0.56$ - 0$ 0.20$ 0.20Unrealized FX-0.060.02000.030.14

Unrealized FX$ 0.62$ 0.14$ - 0$ (0.14)Reported table 20.360.560.830.870.410.62

2Q17$ 0.62$ 0.62Unrealized FX table 20.060.02000.030.14

Reported EPS Table 1Rerported EPS Table 2


1Q162Q163Q164Q161Q172Q170.420.560000000000000050.830.870.410.62

Reported table 21Q162Q163Q164Q161Q172Q170.360.560000000000000050.830.870.410.62Unrealized FX table 21Q162Q163Q164Q161Q172Q170.060.02000.030.14000000000000001

Cash Flows

4Q151Q162Q163Q164Q161Q172Q174Q151Q162Q163Q164Q161Q172Q17

Cash Flow from Operations$ - 0$ 30$ 4$ 38$ 34$ 39$ 39Free Cash Flow$ - 0$ 11$ (8)$ 21$ 22$ 26$ 28

Free Cash Flow$ - 0$ 11$ (8)$ 21$ 22$ 26$ 28Capex$ 19$ 12$ 17$ 11$ 12$ 10

Cash Flow from Operations$ - 0$ 30$ 4$ 38$ 34$ 39$ 39

Cash Flow from Operations

2Q163Q164Q161Q173.895999999999999938.04500000000000233.73299999999999738.625Free Cash Flow

2Q163Q164Q161Q17-7.738000000000000421.47899999999999922.41626.297000000000001

Free Cash Flow

1Q162Q163Q164Q161Q172Q1711.09-7.738000000000000421.47899999999999922.41626.29700000000000128.43


1Q162Q163Q164Q161Q172Q1729.8580000000000013.895999999999999938.04500000000000233.73299999999999738.62538.54

Debt

Debt Repayment Schedule

2H1620172018201920202021202220231Q162Q163Q164Q16FY161Q172Q17

Payment$ 15$ 12$ 30$ 38$ 120$ 230$ 913$ 360Req'd Debt Payments7.37.37.37.329.010.78.3

Add'l Payments2.0

Amy Wakeham: Amy Wakeham:borrowed and repaid in same quarter5.010.017.018.531.4

7.39.312.317.346.029.239.7

Payment

201720182019202020212022202311.718753038120230913360

Req'd Debt Payments1Q172Q1710.6518.266Add'l Payments1Q172Q1718.531.420999999999999

BS Metrics

4Q151Q162Q163Q164Q161Q172Q17

Free Cash Flow$11$11($8)$21$22$26$28

Days Sales Outstanding0505050525653

Inventory$252$267$276$262$225$231$236

Inventory Turns(1)4.53.73.73.74.44.54.5

Capital Expenditures$13$19$12$17$11$12$10

Days Payables Outstanding0313632273233

Sales359,634331,058348,382346,567359,591345,413362,719

COGS282,377240,770252,351248,658266,700254,187263,447

Accounts Receivable183,563192,121191,409204,626213,610212,607

EOP Net Inventory252,166267,380276,279262,232225,151231,292235,562

BOP Net Inventory252,166267,380267,380276,279276,279262,232262,232225,151231,292

Average Inventory259,773133,690271,830138,140269,256131,116243,692228,222233,427

Accounts Payable83,30699,13586,29077,89690,71395,123

Cash flow from operationsERROR:#DIV/0!29,8583,89638,04533,73338,62538,540

Capex18,76811,63416,56611,31712,32810,110

Guidance

Supplemental Financial Items Affecting Cash Flow

GAAPNon-GAAP(in millions, except effective tax rate):

As ReportedGrowthAdjusted BasisGrowth2017 Outlook2016 Actual201620172016201720162017

Revenue$1,390 to $1,4300% to 3%$1,390 to $1,4300% to 3%Capital expenditures$50 - $60$59Revenue$ 1,386$ 1,400Adjusted EPS$ 2.68$ 2.70Cash Flow From Operations$ 106150

Earnings per Diluted Share$1.03 to $1.43favorable$2.70 to $3.10 1% to 16%Depreciation and amortization$95 - $100$91$ 30$ 0.400

Cash Flow from Operations~$150~43%----Stock-based compensation~$13$8

Working capital decrease$10 - $20$29

Other operating expense$25 - $30$62

Adjusted effective tax rate~25%23%

Cash Taxes~$10~$7

Revenue20162017138614002016201730

Adjusted EPS201620172.682.7201620170.39999999999999991

Cash Flow From Operations20162017105.532150201620170

Appendix -->

Working Capital

4Q151Q162Q163Q164Q161Q172Q17FY15FY16

Current Assets$ 575$ 534$ 534$ 525$ 517$ 528$ 524$ 575$ 517

Current Liabilities$ 214$ 217$ 217$ 200$ 185$ 203$ 196$ 214$ 185

Working Capital$ 361$ 318$ 317$ 325$ 332$ 325$ 328$ 361$ 332

Current Ratio2.72.52.52.62.82.62.72.72.8

$ (29)

Working Capital

1Q162Q163Q164Q161Q172Q17317.89699999999993316.61099999999999325.15800000000002332.08699999999999325.005328.14399999999995

OOE

Three Months EndedTwelve Months EndedThree Months EndedYTDThree Months Ended

2Q162Q171/1/1612/30/16NOTES:1Q162Q163Q164Q16FY161Q172Q17

2014 Investments in Capacity and Capabilities$5.1$1.3$23.0$17.2Portable Medical and Vascular product line transfers2014 Investments in Capacity and Capabilities$4.2$5.1$4.5$3.3$17.2$1.6$1.3

Legacy Lake Region Medical Consolidation and Optimization$2.1$1.5$2.0$8.6Legacy Lake Region Medical Consolidation and Optimization$2.4$2.1$2.9$1.2$8.6$0.7$1.5

Acquisition and Integration Costs$7.8$3.0$33.5$28.3Lake Region Medical and CCC Medical DevicesAcquisition and Integration Costs$10.0$7.8$5.3$5.2$28.3$4.8$3.0

Asset Dispositions, Severance, and Other$0.3$1.1$6.6$6.9Asset Dispositions, Severance, and Other$4.5$0.3$0.3$1.9$6.9$4.6$1.1

Other consolidation and disposition initiatives$0.2$0.1$18.2-$1.1Other consolidation and disposition initiatives$0.1$0.2$0.3$0.1$0.7$0.1$0.1

TOTAL OOE$15.5$6.9$83.3$59.9TOTAL OOE$21.1$15.5$13.4$11.7$61.7$11.8$6.9

(1)Details of Other Operating Expenses (OOE) provided on a comparable basis. Comparable basis amounts for 2016 exclude the results of Nuvectra Corporation (“Nuvectra”) prior to its spin-off on March 14, 2016. Comparable basis amounts for 2015 exclude the results of Nuvectra and include the results of the former Lake Region Medical. Historical pro forma information, which was filed with the SEC on Form 8-K on February 29, 2016, contains a reconciliation of 2015 comparable amounts to as reported amounts.

Guidance-recon table

GAAPAdjusted Comparable Basis

HighLowHighLow

Revenue$1,430$1,390$1,430$1,390

Earnings per Diluted Share$1.50$1.10$3.10$2.70

Debt Covenants

Mechanics of Financial Covenant Calculations

Financial Covenant Calculations(1)(2)

Leverage Ratio (< 6.25 @ 4Q16)

Leverage Ratio = Net Debt / R12 Bank EBITDA

Interest Coverage Ratio (> 2.50 @ 4Q16)

Interest Coverage Ratio = R12 Bank EBITDA / R12 Cash Interest Expense(3)

Net Debt

Net DEBT = Total Debt - Cash & Cash Equivalents (not to exceed $50M)

Bank EBITDA

R12 Bank EBITDA = R12 Adjusted EBITDA + Future Synergies and Cost Savings(4)

Other Operating Expenses - Historical


YTD

1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17

2014 Investments in Capacity and Capabilities $4.2 $5.1 $4.5 $3.3 $17.2 $1.6 $1.3

Legacy Lake Region Medical Consolidation and Optimization $2.4 $2.1 $2.9 $1.2 $8.6 $0.7 $1.5

Acquisition and Integration Costs $10.0 $7.8 $5.3 $5.2 $28.3 $4.8 $3.0

Asset Dispositions, Severance, and Other $4.5 $0.3 $0.3 $1.9 $6.9 $4.6 $1.1

Other consolidation and disposition initiatives $0.1 $0.2 $0.3 $0.1 $0.7 $0.1 $0.1

TOTAL OOE $21.1 $15.5 $13.4 $11.7 $61.7 $11.8 $6.9

Three Months Ended Three Months Ended

2Q17 Slides -->

Rolling Revenue

Quarterly Amounts1Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q17


Amy Wakeham: Amy Wakeham:RF64Q154Q161Q172Q174Q17

Cardio and Vascular$ 116$ 122$ 127$ 115$ 114$ 122$ 129$ 126$ 125$ 132$ 133$ 1233%

Cardiac/Neuromodulation$ 112$ 123$ 105$ 121$ 107$ 107$ 108$ 116$ 104$ 106$ 113$ 108-2%-4%-1%2%0%

Advanced Surgical, Orthopedics & Portable Medical$ 112$ 116$ 104$ 112$ 98$ 109$ 100$ 107$ 105$ 109$ 116$ 111

Non-Medical$ 18$ 17$ 12$ 13$ 12$ 10$ 9$ 11$ 11$ 16$ 14$ 14

$ 358$ 377$ 349$ 361$ 331$ 348$ 347$ 360$ 345$ 363$ 375$ 356

Rolling 4-Quarter Amounts4Q151Q162Q163Q164Q161Q172Q173Q17




Cardio and Vascular$ 481$ 478$ 478$ 480$ 491$ 502$ 512$ 515$ 1,390

Cardiac/Neuromodulation$ 462$ 458$ 441$ 444$ 438$ 435$ 434$ 43940

Advanced Surgical, Orthopedics & Portable Medical$ 443$ 429$ 423$ 420$ 415$ 421$ 421$ 436

Non-Medical$ 59$ 53$ 47$ 44$ 42$ 41$ 47$ 52

$ 1,445$ 1,418$ 1,389$ 1,387$ 1,386$ 1,400$ 1,414$ 1,443$ 1,430

-1%2%4%

Rolling 4-Quarter Revenue

Cardio and Vascular

4Q151Q162Q163Q164Q161Q172Q173Q174Q17480.70099999999996477.90799999999996478.18199999999996480.298490.85700000000003502.29500000000002512.34199999999998515.4951390Cardiac/Neuromodulation

$1,430

4Q151Q162Q163Q164Q161Q172Q173Q174Q17461.78899999999999457.53000000000003441.16899999999998443.86799999999999438.36099999999999434.82099999999997434.00199999999995439.25540Advanced Surgical, Orthopedics & Portable Medical

4Q151Q162Q163Q164Q161Q172Q173Q174Q17443.43299999999999429.47699999999998423.20700000000005419.50099999999998414.70100000000002421.48500000000001420.69399999999996436.09100000000001Non-Medical

4Q151Q162Q163Q164Q161Q172Q173Q174Q1759.44899999999999853.41100000000000146.68500000000000243.57800000000000341.67899999999999541.35299999999999447.33400000000000352.064

4Q154Q161Q172Q174Q170.034Q154Q161Q172Q174Q17-0.02-0.04-1.2953298465937903E-21.8088268215135966E-20

$1,386

$1,400

$1,385

$1,387

$1,417

$1,444



2Q161Q172Q17FY15FY16

Sales$ 348$ 347$ 363$ 1,443$ 1,3864.1%

Gross Margin27.6%26.6%27.4%26.4%27.2%(0.54)

Operating Expenses$ 67$ 64$ 60$ 302$ 270-10.8%-7.3%

% of Sales19.2%18.5%16.4%20.9%19.5%

GAAP Net Income (Loss)$ (1)$ (4)$ 3$ (39)$ 6

Adjusted Net Income$ 18$ 14$ 20$ 98$ 8412.5%

EBITDA$ 51$ 50$ 55$ 161$ 203

Adjusted EBITDA$ 69$ 65$ 70$ 304$ 2802.1%

% of Sales19.8%18.8%19.4%21.1%20.2%

GAAP Diluted EPS$ (0.03)$ (0.11)$ 0.09$ (1.27)$ 0.19

Adjusted Diluted EPS$ 0.56$ 0.43$ 0.62$ 3.11$ 2.6810.7%44.2%

Cash Flow from Operations$ 39--$ 106

2Q162Q17

Revenue$ 348$ 3634.1%

Adjusted EBITDA$ 69$ 702.1%

Adjusted Net Income$ 18$ 2012.5%

2Q16Revenue348.382000000000012Q17Revenue362.7

2Q16Adjusted EBITDA68.9270000000000072Q17Adjusted EBITDA70.403000000000006

2Q16Adjusted Net Income17.5450000000000022Q17Adjusted Net Income19.742999999999999

Revenue


1Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q17YOY%QOQ%LTMYOY%QOQ%YTD%YOY%QOQ%YTD%

Cardio and Vascular$ 116$ 122$ 127$ 115$ 114$ 122$ 129$ 126$ 125$ 132$ 133$ 12310%-0%5%9.2%-2.9%2.1%1.7%5.8%-0.1%

Cardiac/Neuromodulation$ 112$ 123$ 105$ 121$ 107$ 107$ 108$ 116$ 104$ 106$ 113$ 108-3%-10%-5%-4.5%7.2%-5.1%2.6%1.1%-5.3%

Advanced Surgical, Orthopedics & Portable Medical$ 112$ 116$ 104$ 112$ 98$ 109$ 100$ 107$ 105$ 109$ 116$ 1117%-1%-2%-4.3%6.5%-6.5%-3.6%-8.4%-7.2%

Non-Medical$ 17$ 16$ 12$ 13$ 12$ 10$ 9$ 11$ 11$ 16$ 14$ 14-3%0%-22%-12.2%27.6%-28.7%-27.4%-9.7%-33.4%

$ 358$ 377$ 349$ 361$ 331$ 348$ 347$ 360$ 345$ 363$ 375$ 3564%-4%-1%-0.6%3.8%-4.1%-0.6%-0.5%-5.3%

Integer-7%-8%-1%-0%4%4%8%-1%

C&V-2%0%2%9%10%8%2%-2%

CRMN-4%-13%3%-5%-3%-1%5%-7%

ASO-12%-5%-4%-4%7%-1%15%4%

ELECTROCHEM-33%-39%-27%-12%-3%61%53%22%

Integer

1Q162Q163Q164Q161Q172Q17

-7%-8%-1%-0%4%4%

1Q162Q163Q164Q161Q172Q17

C&V-2%0%2%9%10%8%

CRMN-4%-13%3%-5%-3%-1%

ASO-12%-5%-4%-4%7%-1%

ELECTROCHEM-33%-39%-27%-12%-3%61%

Cardio and Vascular

1Q162Q163Q164Q161Q172Q17113.67100000000001122.253129.34700000000001125.586125.10899999999999132.30000000000001Cardiac/Neuromodulation

1Q162Q163Q164Q161Q172Q17107.35299999999999106.919108.14700000000001115.94199999999999103.813106.1Advanced Surgical, Orthopedics & Portable Medical

1Q162Q163Q164Q161Q172Q1798.361999999999995109.39100000000001100.203106.745105.146108.6Non-Medical

1Q162Q163Q164Q161Q172Q1711.6720000000000019.81900000000000088.869999999999999211.31811.34615.8

1Q162Q163Q164Q161Q172Q17-7.4673808684708187E-2-7.5644292632672777E-2-6.405718604899204E-3-3.652959428889269E-34.336400268230943E-24.1385605456079839E-2

C&V1Q162Q163Q164Q161Q172Q17-2.3983038760478703E-22.2426566653200586E-31.66329269161383E-29.1796637234067613E-20.100623729887130298.218203234276468E-2

CRMN1Q162Q163Q164Q161Q172Q17-3.8156745751215963E-2-0.13271747507193942.5596977582260951E-2-4.5343014394381174E-2-3.2975324397082451E-2-7.6600043023223431E-3

ASO1Q162Q163Q164Q161Q172Q17-0.12425733651490105-5.4206126549724315E-2-3.5664963616465276E-2-4.3032193455063462E-26.8969724080437639E-2-7.230942216453008E-3

ELECTROCHEM1Q162Q163Q164Q161Q172Q17-0.3284268265558879-0.38520907670907634-0.27377123970736439-0.12185873875025538-2.7930089102124786E-20.60912516549546791

PL Revenue


1Q152Q153Q154Q151Q162Q163Q164Q161Q17YOY%QOQ%LTMYOY%QOQ%YTD%YOY%QOQ%YTD%

Cardio and Vascular$ 116$ 122$ 127$ 115$ 114$ 122$ 129$ 126$ 12510%-0%5%9.2%-2.9%2.1%1.7%5.8%-0.1%

Cardiac/Neuromodulation$ 112$ 123$ 105$ 121$ 109$ 107$ 108$ 116$ 104-4%-10%-5%-4.5%7.2%-4.8%2.6%1.1%-4.9%

Advanced Surgical, Orthopedics & Portable Medical$ 112$ 116$ 104$ 112$ 98$ 110$ 100$ 107$ 1057%-2%-2%-4.3%6.6%-6.4%-3.6%-8.6%-7.2%

Non-Medical$ 17$ 16$ 12$ 13$ 12$ 10$ 9$ 11$ 11-3%0%-22%-12.3%27.3%-29.0%-27.3%-7.9%-33.7%

$ 358$ 377$ 349$ 361$ 332$ 348$ 347$ 360$ 3454%-4%-1%-0.6%3.8%-4.0%-0.6%-0.5%-5.2%

Integer-7%-8%-1%-0%5%

C&V-2%0%2%9%10%

CRMN-3%-13%3%-5%-4%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Cardio and Vascular

1Q162Q163Q164Q161Q17113.671185105071122.253359585129129.346703008486125.585570224169125.108809338637Cardiac/Neuromodulation

1Q162Q163Q164Q161Q17108.533106.91896797919399108.146981976204115.941976250189103.813140284005Advanced Surgical, Orthopedics & Portable Medical

1Q162Q163Q164Q161Q1798.3309374606539109.56532849119201100.18804689810401106.757068819778105.14561129859Non-Medical

1Q162Q163Q164Q161Q1711.6720000000000019.64499527000000088.884881760000000711.30614017000000111.34579473

Cardio and Vascular1Q162Q163Q164Q161Q17113.671185105071122.253359585129129.346703008486125.585570224169125.108809338637

Cardiac/Neuromodulation1Q162Q163Q164Q161Q17108.533106.91896797919399108.146981976204115.941976250189103.813140284005

Advanced Surgical, Orthopedics & Portable Medical1Q162Q163Q164Q161Q1798.3309374606539109.56532849119201100.18804689810401106.757068819778105.14561129859

Non-Medical1Q162Q163Q164Q161Q1711.6720000000000019.64499527000000088.884881760000000711.30614017000000111.34579473

Adjusted EBITDA Walk

4Q151Q162Q163Q164Q161Q172Q17BaseFallRise

Adjusted EBITDA$ 79$ 65$ 69$ 75$ 71$ 64$ 70-2%2Q16$ - 0$ 69$ 68.927

Sales331348347360345363Operations$ 69$ - 0$ 6$ 6.452

% of Sales20%20%22%20%19%19%Unrealized FX$ 70$ 5$ - 0$ (4.976)

2Q17$ 70$ 70.4037%

Adjusted EBITDA

1Q162Q163Q164Q161Q172Q1765.3768.92700000000000775.01699999999999670.53499999999999764.25670.403000000000006


Adjusted EPS Walk

Adjusted EPS

Historical Adjusted EPS

BaseFallRise1Q162Q163Q164Q161Q172Q17

2Q16$ - 0$ 0.56$ 0.56$ 0.42$ 0.56$ 0.83$ 0.87$ 0.410.62

Operations$ 0.56$ - 0$ 0.20$ 0.20

Unrealized FX$ 0.62$ 0.14$ - 0$ (0.14)

2Q17$ 0.62$ 0.62


1Q162Q163Q164Q161Q172Q170.420.560000000000000050.830.870.410.62

Cash Flows

4Q151Q162Q163Q164Q161Q172Q174Q151Q162Q163Q164Q161Q172Q17

Cash Flow from Operations$ - 0$ 30$ 4$ 38$ 34$ 39Free Cash Flow$ - 0$ 11$ (8)$ 21$ 27$ (12)

Free Cash Flow$ - 0$ 11$ (8)$ 21$ 27$ (12)Capex$ 19$ 12$ 17$ 6$ 51

Cash Flow from Operations$ - 0$ 30$ 4$ 38$ 34$ 39


2Q163Q164Q161Q173.895999999999999938.04500000000000233.73299999999999738.625Free Cash Flow

2Q163Q164Q161Q17-7.738000000000000421.47899999999999927.308000000000007-12.327999999999999

Free Cash Flow

1Q162Q163Q164Q161Q172Q1711.09-7.738000000000000421.47899999999999927.308000000000007-12.327999999999999


1Q162Q163Q164Q161Q172Q1729.8580000000000013.895999999999999938.04500000000000233.73299999999999738.625

Debt

Debt Repayment Schedule

2H1620172018201920202021202220231Q162Q163Q164Q16FY161Q172Q17

Payment$ 15$ 12$ 30$ 38$ 120$ 230$ 913$ 360Req'd Debt Payments7.37.37.37.329.010.78.3

Add'l Payments2.0

Amy Wakeham: Amy Wakeham:borrowed and repaid in same quarter5.010.017.018.531.4

7.39.312.317.346.029.239.7

Payment

201720182019202020212022202311.718753038120230913360

Req'd Debt Payments1Q172Q1710.6518.266Add'l Payments1Q172Q1718.531.420999999999999

BS Metrics

4Q151Q162Q163Q164Q161Q172Q17

Free Cash Flow$11$11($8)$21$27($12)

Days Sales Outstanding0505050525653

Inventory$252$267$276$262$225$231$236

Inventory Turns(1)4.53.73.73.74.44.54.5

Capital Expenditures$13$19$12$17$11$12

Days Payables Outstanding0313632273233

Sales359,634331,058348,382346,567359,591345,413362,719

COGS282,377240,770252,351248,658266,700254,187263,447

Accounts Receivable183,563192,121191,409204,626213,610212,607

EOP Net Inventory252,166267,380276,279262,232225,151231,292235,562

BOP Net Inventory252,166267,380267,380276,279276,279262,232262,232225,151231,292

Average Inventory259,773133,690271,830138,140269,256131,116243,692228,222233,427

Accounts Payable83,30699,13586,29077,89690,71395,123

ERROR:#DIV/0!

Guidance

Supplemental Financial Items Affecting Cash Flow

GAAPNon-GAAP(in millions, except effective tax rate):

As ReportedGrowthAdjusted BasisGrowth2017 Outlook2016 Actual201620172016201720162017

Revenue$1,390 to $1,4300% to 3%$1,390 to $1,4300% to 3%Capital expenditures$50 - $60$59Revenue$ 1,386$ 1,400Adjusted EPS$ 2.68$ 2.70Cash Flow From Operations$ 106150

Earnings per Diluted Share$1.03 to $1.43favorable$2.70 to $3.10 1% to 16%Depreciation and amortization$95 - $100$91$ 30$ 0.400

Cash Flow from Operations~$150~43%----Stock-based compensation~$13$8

Working capital decrease$10 - $20$29

Other operating expense$25 - $30$62

Adjusted effective tax rate~25%23%

Cash Taxes~$10~$7

Revenue20162017138614002016201730

Adjusted EPS201620172.682.7201620170.39999999999999991

Cash Flow From Operations20162017105.532150201620170

Appendix -->

Working Capital

4Q151Q162Q163Q164Q161Q172Q17FY15FY16

Current Assets$ 575$ 534$ 534$ 525$ 517$ 528$ 524$ 575$ 517

Current Liabilities$ 214$ 217$ 217$ 200$ 185$ 203$ 196$ 214$ 185

Working Capital$ 361$ 318$ 317$ 325$ 332$ 325$ 328$ 361$ 332

Current Ratio2.72.52.52.62.82.62.72.72.8

$ (29)

Working Capital

1Q162Q163Q164Q161Q172Q17317.89699999999993316.61099999999999325.15800000000002332.08699999999999325.005328.14399999999995

OOE

Three Months EndedTwelve Months EndedThree Months EndedYTDThree Months Ended

2Q162Q171/1/1612/30/16NOTES:1Q162Q163Q164Q16FY161Q172Q17

2014 Investments in Capacity and Capabilities$5.1$1.3$23.0$17.2Portable Medical and Vascular product line transfers2014 Investments in Capacity and Capabilities$4.2$5.1$4.5$3.3$17.2$1.6$1.3

Legacy Lake Region Medical Consolidation and Optimization$2.1$1.5$2.0$8.6Legacy Lake Region Medical Consolidation and Optimization$2.4$2.1$2.9$1.2$8.6$0.7$1.5

Acquisition and Integration Costs$7.8$3.0$33.5$28.3Lake Region Medical and CCC Medical DevicesAcquisition and Integration Costs$10.0$7.8$5.3$5.2$28.3$4.8$3.0

Asset Dispositions, Severance, and Other$0.3$1.1$6.6$6.9Asset Dispositions, Severance, and Other$4.5$0.3$0.3$1.9$6.9$4.6$1.1

Other consolidation and disposition initiatives$0.2$0.1$18.2-$1.1Other consolidation and disposition initiatives$0.1$0.2$0.3$0.1$0.7$0.1$0.1

TOTAL OOE$15.5$6.9$83.3$59.9TOTAL OOE$21.1$15.5$13.4$11.7$61.7$11.8$6.9

(1)Details of Other Operating Expenses (OOE) provided on a comparable basis. Comparable basis amounts for 2016 exclude the results of Nuvectra Corporation (“Nuvectra”) prior to its spin-off on March 14, 2016. Comparable basis amounts for 2015 exclude the results of Nuvectra and include the results of the former Lake Region Medical. Historical pro forma information, which was filed with the SEC on Form 8-K on February 29, 2016, contains a reconciliation of 2015 comparable amounts to as reported amounts.

Guidance-recon table

GAAPAdjusted Comparable Basis

HighLowHighLow

Revenue$1,430$1,390$1,430$1,390

Earnings per Diluted Share$1.50$1.10$3.10$2.70

Debt Covenants

Mechanics of Financial Covenant Calculations

Financial Covenant Calculations(1)(2)

Leverage Ratio (< 6.25 @ 4Q16)

Leverage Ratio = Net Debt / R12 Bank EBITDA

Interest Coverage Ratio (> 2.50 @ 4Q16)

Interest Coverage Ratio = R12 Bank EBITDA / R12 Cash Interest Expense(3)

Net Debt

Net DEBT = Total Debt - Cash & Cash Equivalents (not to exceed $50M)

Bank EBITDA

R12 Bank EBITDA = R12 Adjusted EBITDA + Future Synergies and Cost Savings(4)


Non-GAAP ReconciliationNet Income and Diluted EPS Reconciliation – QTD

See the Footnotes to this table on Slide 31 of this presentation

Three Months Ended June 30, 2017 July 1, 2016

Pre-Tax Net

Income

Per Diluted Share Pre-Tax

Net Income (Loss)

Per Diluted Share

As reported (GAAP) $ 4,116 $ 2,990 $ 0.09 $ 687 $ (770 ) $ (0.03 Adjustments:

Amortization of intangibles(a) 11,046 7,815 0.24 9,514 6,732 0.22 IP related litigation (SG&A)(a)(b) 915 595 0.02 285 185 0.01 Consolidation and optimization expenses (OOE)(a)(c) 2,832 2,093 0.07 7,376 5,975 0.19 Acquisition and integration expenses (OOE)(a)(d) 2,970 2,037 0.06 7,859 5,145 0.16 Asset dispositions, severance and other (OOE)(a)(e) 1,118 727 0.02 259 197 0.01 Loss on cost and equity method investments, net(a) 4,427 2,877 0.09 124 81 — Loss on extinguishment of debt(a)(f) 935 608 0.02 — — — Taxes(a) (8,617 ) — — (8,559 ) — —

Adjusted (Non-GAAP) $ 19,742 $ 0.62 $ 17,545 $ 0.56

Diluted weighted average shares for adjusted EPS(h) 31,982 31,228

Three Months Ended

June 30, 2017

July 1, 2016

Pre-Tax

Net

Income

Per

Diluted

Share

Pre-Tax

Net

Income (Loss)

Per

Diluted

Share

As reported (GAAP)

$

4,116

$

2,990

$

0.09

$

687

$

(770

)

$

(0.03

)

Adjustments:

Amortization of intangibles(a)

11,046

7,815

0.24

9,514

6,732

0.22

IP related litigation (SG&A)(a)(b)

915

595

0.02

285

185

0.01

Consolidation and optimization expenses (OOE)(a)(c)

2,832

2,093

0.07

7,376

5,975

0.19

Acquisition and integration expenses (OOE)(a)(d)

2,970

2,037

0.06

7,859

5,145

0.16

Asset dispositions, severance and other (OOE)(a)(e)

1,118

727

0.02

259

197

0.01

Loss on cost and equity method investments, net(a)

4,427

2,877

0.09

124

81

—

Loss on extinguishment of debt(a)(f)

935

608

0.02

—

—

—

Taxes(a)

(8,617

)

—

—

(8,559

)

—

—

Adjusted (Non-GAAP)

$

19,742

$

0.62

$

17,545

$

0.56

Diluted weighted average shares for adjusted EPS(h)

31,982

31,228


Non-GAAP ReconciliationNet Income and Diluted EPS Reconciliation – YTD


Six Months EndedJune 30, 2017 July 1, 2016

Pre-Tax

NetIncome(Loss)

PerDilutedShare Pre-Tax

NetIncome (Loss)

PerDilutedShare

As reported (GAAP) $ (79) $ (1,349) $ (0.04) $ (12,075) $ (13,430) $ (0.44)

Adjustments:

Amortization of intangibles(a) 22,024 15,561 0.49 18,978 13,423 0.43

IP related litigation (SG&A)(a)(b) 1,292 840 0.03 2,192 1,425 0.05

Consolidation and optimization expenses (OOE)(a)(c) 5,227 3,992 0.13 14,025 11,289 0.36

Acquisition and integration expenses (OOE)(a)(d) 7,790 5,170 0.16 17,824 11,656 0.37

Asset dispositions, severance and other (OOE)(a)(e) 5,674 3,684 0.12 4,785 4,423 0.14(Gain) loss on cost and equity method investments, net(a) 4,825 3,136 0.10 (1,177) (765) (0.02)

Loss on extinguishment of debt(a)(f) 2,494 1,621 0.05 — — —

Nuvectra results prior to spin-off(a)(g) — — — 4,037 2,624 0.08

Taxes(a) (16,592) — — (17,944) — —

Adjusted (Non-GAAP) $ 32,655 $ 1.03 $ 30,645 $ 0.98

Diluted weighted average shares for adjusted EPS(h) 31,833 31,257

Non-GAAP Reconciliation2Q17 Net Income and Diluted EPS Reconciliation



GAAP Non-GAAP

Income Statement 2Q17 Actual Amortization

Litigation Related

Charges(b)Consolidation & Optimization(c)(e)

Acquisition & Integration(d)

Debt / Investment

Related Charges(f) 2Q17 Adjusted

Sales 362,719$ 362,719$ Cost of sales 263,447 (4,111) 259,336

Gross profit 99,272$ 4,111$ -$ -$ -$ -$ 103,383$ Gross margin 27.4% 28.5%

Operating expenses:SG&A 39,724 (6,799) (915) 32,010

SG&A as a % of revenues 11.0% 8.8%Research, development & engineering 12,889 (136) 12,753

RD&E as a % of revenues 3.6% 3.5%Other operating expense 6,920 (3,950) (2,970) -

Operating income 39,739$ 11,046$ 915$ 3,950$ 2,970$ -$ 58,620$ Operating margin 11.0% 16.2%

Other (income) & expenses:Interest expense 25,647 (935) 24,712 Interest income - - Other (income) loss, net 9,976 (4,427) 5,549

Loss before income taxes 4,116$ 11,046$ 915$ 3,950$ 2,970$ 5,362$ 28,359$ Provision for income taxes 1,126 3,231 320 1,130 933 1,877 8,617 Effective tax rate 27.36% 30.39%

Net income (loss) 2,990$ 7,815$ 595$ 2,820$ 2,037$ 3,485$ 19,742$ Net margin 0.8% 5.4%

Weighted Average Shares O/S (h) 31,982 31,982 31,982 31,982 31,982 31,982 31,982 EPS 0.09$ 0.24$ 0.02$ 0.09$ 0.06$ 0.11$ 0.62$

Non-GAAP Adj.(a)

Adjusted P&L-->

Combined 16 - 17

Integer Holdings Corporation

Non-GAAP Adjustments

Non-GAAPNon-GAAP2017 vs 2016 YoY Var $'s2017 vs 2016 YoY Var %'s

Income Statement1Q17 Actual2Q17 RF43Q17 RF44Q17 RF4FY17 RF41Q16 Actual2Q16 Actual3Q16 Actual4Q16 ActualFY16 Actual1Q2Q3Q4QTY1Q2Q3Q4QTY

Sales3453633653471,4203313483473601,386141418(13)344%4%5%(4%)2%

Cost of sales2502592552461,011236248244263991141111(17)206%5%4%(6%)2%

Gross profit9510311010140995100102973940374150%3%7%4%4%

Operating expenses:

SG&A3232343413233323132128(1)(0)324(2%)(1%)11%6%3%

RD&E13131414531413111352(1)(1)212(8%)(5%)20%9%3%

Other operating expense0000000000

Operating income5059625322448556052215242194%7%3%1%4%

Other (income) & expenses:

Interest expense2725252510228282828111(0)(3)(3)(3)(9)(1%)(11%)(10%)(11%)(8%)

Interest income0000000000

Other (income) loss, net16007(2)10(3)(5)45(0)312(160%)909%(100%)(100%)(239%)

Loss before income taxes2128372911522263228109(2)2516(7%)9%14%3%6%

Provision for income taxes898731997125(1)0176(15%)1%18%1057%26%

Net income (loss)13202921831318262784(0)23(6)(0)(1%)13%13%(21%)(1%)

Weighted Average Shares O/S31.732.031.731.731.731.331.231.231.331.2011001%2%2%1%2%

EPS$ 0.41$ 0.62$ 0.92$ 0.67$ 2.62$ 0.42$ 0.56$ 0.83$ 0.87$ 2.68$ (0.01)$ 0.06$ 0.09$ (0.20)$ (0.05)(3%)10%11%(23%)(2%)

Non-GAAPNon-GAAP2017 vs 2016 YoY Var $'s

Key Metrics1Q17 Actual2Q17 RF43Q17 RF44Q17 RF4FY17 RF41Q16 Actual2Q16 Actual3Q16 Actual4Q16 ActualFY16 Actual1Q2Q3Q4QTY

Gross margin27.6%28.5%30.0%29.0%28.8%28.7%28.8%29.5%27.0%28.5%(1.1%)(0.3%)0.6%2.1%0.3%

SG&A as a % of revenues9.4%8.8%9.3%9.7%9.3%10.0%9.2%8.8%8.9%9.2%(0.6%)(0.4%)0.5%0.9%0.1%

RD&E as a % of revenues3.8%3.5%3.7%3.9%3.8%4.3%3.9%3.3%3.5%3.7%(0.5%)(0.4%)0.5%0.5%0.0%

Operating Income margin14.4%16.2%17.0%15.4%15.7%14.4%15.7%17.4%14.6%15.5%(0.0%)0.5%(0.4%)0.8%0.2%

Effective tax rate38.2%30.4%20.8%25.4%27.5%41.7%32.8%20.1%2.3%23.1%(3.6%)(2.4%)0.6%23.1%4.4%

Net Income margin3.7%5.4%8.0%6.2%5.9%4.0%5.0%7.4%7.6%6.0%(0.2%)0.4%0.6%(1.4%)(0.2%)

Combined 15 - 17


Non-GAAP Adjustments

Non-GAAPNon-GAAPNon-GAAP2017 vs 2016 YoY Var $'s2017 vs 2016 YoY Var %'s2016 vs 2015 YoY Var $'s2016 vs 2015 YoY Var %'s

Income Statement1Q17 Actual2Q17 RF43Q17 RF44Q17 RF4FY17 RF41Q16 Actual2Q16 Actual3Q16 Actual4Q16 ActualFY16 Actual1Q15 Actual2Q15 Actual3Q15 Actual4Q15 ActualFY15 Actual1Q2Q3Q4QTY1Q2Q3Q4QTY1Q2Q3Q4QTY1Q2Q3Q4QTY

Sales3453633653471,4203313483473601,3863583773483601,443141418(13)344%4%5%(4%)2%(27)(29)(2)(0)(57)(7%)(8%)(1%)(0%)(4%)

Cost of sales2502592552461,0112362482442639912552662452551,021141111(17)206%5%4%(6%)2%(19)(18)(1)8(30)(7%)(7%)(0%)3%(3%)

Gross profit9510311010140995100102973941031111031054220374150%3%7%4%4%(8)(11)(1)(8)(27)(8%)(10%)(1%)(7%)(6%)

Operating expenses:

SG&A323234341323332313212837383331139(1)(0)324(2%)(1%)11%6%3%(4)(6)(3)1(11)(10%)(15%)(8%)3%(8%)

RD&E131314145314131113521211131046(1)(1)212(8%)(5%)20%9%3%32(2)2624%20%(12%)25%13%

Other operating expense000000000000000

Operating income505962532244855605221555625763237242194%7%3%1%4%(7)(7)3(11)(22)(13%)(12%)6%(17%)(9%)


Interest expense272525251022828282811127272727107(0)(3)(3)(3)(9)(1%)(11%)(10%)(11%)(8%)111143%4%4%5%4%

Interest income0000000000

Other (income) loss, net16007(2)10(3)(5)(1)04(2)145(0)312(160%)909%(100%)(100%)(239%)(1)0(4)(1)(6)111%62%(99%)57%(809%)

Loss before income taxes212837291152226322810929352639129(2)2516(7%)9%14%3%6%(6)(9)6(11)(20)(22%)(25%)22%(28%)(16%)

Provision for income taxes8987319971257761131(1)0176(15%)1%18%1057%26%220(10)(6)35%31%3%(94%)(19%)

Net income (loss)132029218313182627842228202898(0)23(6)(0)(1%)13%13%(21%)(1%)(9)(11)6(1)(14)(41%)(38%)28%(2%)(15%)

Weighted Average Shares O/S31.732.031.731.731.731.331.231.231.331.231.331.431.531.831.5011001%2%2%1%2%(0)(0)(0)(1)(0)(0%)(0%)(1%)(2%)(1%)

EPS$ 0.41$ 0.62$ 0.92$ 0.67$ 2.62$ 0.42$ 0.56$ 0.83$ 0.87$ 2.68$ 0.71$ 0.90$ 0.64$ 0.87$ 3.11$ (0.01)$ 0.06$ 0.09$ (0.20)$ (0.05)(3%)10%11%(23%)(2%)$ (0.29)$ (0.33)$ 0.19$ (0.00)$ (0.44)(41%)(37%)29%(0%)(14%)

Non-GAAPNon-GAAPNon-GAAP2017 vs 2016 YoY Var $'s2016 vs 2015 YoY Var $'s

Key Metrics1Q17 Actual2Q17 RF43Q17 RF44Q17 RF4FY17 RF41Q16 Actual2Q16 Actual3Q16 Actual4Q16 ActualFY16 Actual1Q15 Actual2Q15 Actual3Q15 Actual4Q15 ActualFY15 Actual1Q2Q3Q4QTY1Q2Q3Q4QTY

Gross margin27.6%28.5%30.0%29.0%28.8%28.7%28.8%29.5%27.0%28.5%28.8%29.5%29.5%29.1%29.2%(1.1%)(0.3%)0.6%2.1%0.3%(0.1%)(0.7%)(0.1%)(2.1%)(0.8%)

SG&A as a % of revenues9.4%8.8%9.3%9.7%9.3%10.0%9.2%8.8%8.9%9.2%10.2%10.1%9.6%8.6%9.6%(0.6%)(0.4%)0.5%0.9%0.1%(0.3%)(0.9%)(0.7%)0.3%(0.4%)

RD&E as a % of revenues3.8%3.5%3.7%3.9%3.8%4.3%3.9%3.3%3.5%3.7%3.3%3.0%3.7%2.8%3.2%(0.5%)(0.4%)0.5%0.5%0.0%1.1%0.9%(0.4%)0.7%0.6%

Operating Income margin14.4%16.2%17.0%15.4%15.7%14.4%15.7%17.4%14.6%15.5%15.3%16.4%16.3%17.7%16.4%(0.0%)0.5%(0.4%)0.8%0.2%(0.9%)(0.7%)1.1%(3.1%)(0.9%)

Effective tax rate38.2%30.4%20.8%25.4%27.5%41.7%32.8%20.1%2.3%23.1%23.9%18.9%23.8%28.5%23.9%(3.6%)(2.4%)0.6%23.1%4.4%17.8%13.9%(3.6%)(26.2%)(0.9%)

Net Income margin3.7%5.4%8.0%6.2%5.9%4.0%5.0%7.4%7.6%6.0%6.2%7.5%5.8%7.7%6.8%(0.2%)0.4%0.6%(1.4%)(0.2%)(2.2%)(2.4%)1.6%(0.2%)(0.8%)

2015

Integer 2015 Actual Results - Comparable Basis2015 Actual Results - Adjusted Comparable Basis

Q1Q2Q3Q4FY 2015Q1Q2Q3Q4FY 2015

Actual - ComparableActual - ComparableActual - ComparableActual - ComparableActual - ComparableActual - ComparableActual - ComparableActual - ComparableActual - ComparableActual - Comparable

Sales357,867376,917348,420359,6341,442,838357,867376,917348,420359,6341,442,838

COGS259,660270,470250,073282,3771,062,580254,905265,741245,465255,1331,021,244

Gross Profit98,207106,44798,34777,257380,258102,962111,176102,955104,501421,594

Gross Margin27.4%28.2%28.2%21.5%26.4%28.8%29.5%29.5%29.1%29.2%

SG&A44,51046,77041,72738,117171,12436,63538,11933,40730,992139,153

Net RD&E (incl Qual & Reg)11,75111,39012,88310,14546,16911,64811,28712,79510,02745,757

Operating Expenses (excl OOE)56,26158,16054,61048,262217,29348,28349,40646,20241,019184,910

Other Operating Expenses (OOE)11,83413,19019,15240,52884,704- 0- 0- 0- 0- 0

Operating Income30,11235,09724,585(11,533)78,26154,67961,77056,75363,482236,684

Adjusted Operating Income (AOI)42,64649,74644,86430,126167,382

AOI %

Interest26,85326,78731,50640,576125,72226,85326,78726,71826,647107,005

Other expense(1,148)3403,54116,83919,572(1,148)3403,541(2,025)708

Realized (gain) loss on foreign currency(498)(42)(4,579)1,769(3,350)- 0- 0- 0- 0- 0

Income before taxes4,9058,012(5,883)(70,717)(63,683)28,97434,64326,49438,860128,971

Tax Rate7%-9%21%33%39%24%19%24%28%24%

Tax $356(713)(1,240)(23,228)(24,825)6,9356,5566,30311,07330,867

GAAP Net Income4,5498,725(4,643)(47,489)(38,858)22,03928,08720,19127,78798,104

GAAP EPS0.150.28(0.15)(1.49)(1.23)0.710.900.640.873.11

Shares31,25931,35331,48131,80531,504

Inventory Step Up Amortization- 0- 0- 015,60515,605

IP Related Litigation (AVX)4559487337352,871

Amortization of Intangibles8,2118,2048,1157,22531,755

Consolidation and optimization (income) costs (OOE)6,9307,8656,9345,12726,856

Acquisition and integration (income) expenses1,2401,2225,92923,61232,003

Asset dispositions, severance and other5487202,5571,7965,621

Lake Region Medical transaction costs (interest)- 0- 03,1129,05412,166

R&D Tax Credit430430430(1,290)- 0

Loss on debt extinguishment- 0- 0- 012,26212,262

Loss (gain) on cost and equity method investments, net(324)(27)(2,976)1,150(2,177)

Nuvectra Costs (Net of OOE) - 0

Tax Adj- 0- 0- 0- 0- 0

Adj. NI22,03928,08720,19127,78798,104

Adj. EPS0.710.900.640.873.11

Pre-Tax ANI Adjustments

Income before taxes4,9058,012(5,883)(70,717)(63,683)

Inventory Step Up Amortization- 0- 0- 022,98622,986

IP Related Litigation (AVX)7001,4591,1271,1314,417

Amort of Intangibles - COGS4,7554,7294,6084,25818,350

Amort of Intangibles - SG&A7,1757,1927,1935,99427,554

Amort of Intangibles - RD&E10310388118412



Asset dispositions, severance and other7981,1163,3002,1807,394

Lake Region Medical transaction costs (interest)- 0- 04,78813,92918,717

Loss on debt extinguishment- 0- 0- 018,86418,864

Loss (gain) on cost and equity method investments, net(498)(42)(4,579)1,769(3,350)

Nuvectra Costs (Net of OOE) - 0

Tax Adj- 0- 0- 0- 0- 0

Adj. NI before Taxes28,97434,64326,49438,860128,971

R&D Tax Credit430430430(1,290)- 0

Taxes6,5056,1265,87312,36330,867

Adj. NI22,03928,08720,19127,78798,104

% AETR22%18%22%32%24%

Adj EBITDA Estimate

GAAP NI4,5498,725(4,643)(47,489)(38,858)

Interest26,85326,78731,50640,576125,722

Income Taxes356(713)(1,240)(23,228)(24,825)

Depr & Amortization25,61925,62424,97023,13399,346

Inventory Step up Amortization- 0- 0- 022,98622,986

IP Related Litigation7001,4591,1271,1314,417

Stock Comp2,6324,7193,77444111,566



Asset dispositions, severance and other7981,1163,3002,1807,394

Loss on Debt Extinguishment- 0- 0- 018,86418,864

Loss (gain) on cost and equity method investments, net(498)(42)(1,178)1,993275

Nuvectra EBITDA Addback- 0- 0- 0- 0- 0

Adj EBITDA72,04579,74973,46878,935304,197

GB Amort - COGS1,4711,4451,3243,163

GB Amort - SG&A1,8131,8301,8314,207

GB Amort - RD&E10310388118

Total GB Amort3387337832437488

LRM Amort - COGS3284328432841095

LRM Amort - SG&A5362536253621787

12033120241188910370

Loss (gain) on cost and equity method investments, net-498-42-45791769

Lake Region Medical transaction costs (interest)4788

1Q16


Non-GAAP Adj. Net Income - 2 views

1Q16

ALTERNATE VIEW

THREE MONTHS ENDEDGAAPNon-GAAP Adj.(c)Non-GAAPTHREE MONTHS ENDEDGAAPNon-GAAP Adj.Non-GAAPNon-GAAP Adj.Non-GAAP

Income Statement1Q16 ActualAmortization(a)Litigation Related Charges(b)Consolidation & Optimization(d)(f)Acquisition & Integration(e)NuvectraSpin(k)Debt / Investment Related Charges(g)1Q16 AdjustedIncome Statement1Q16 ActualAmortization(a)Litigation Related Charges(b)Consolidation & Optimization(d)(f)Acquisition & Integration(e)Debt / Investment Related Charges(g)1Q16 Adjusted as reportedNuvectraSpin(k)1Q16 Adjusted revised

Sales$ 332,238$ (1,180)$ 331,058Sales$ 332,238$ 332,238$ (1,180)$ 331,058

Cost of sales240,770(4,240)(526)236,004Cost of sales240,770(4,240)236,530(526)236,004

Gross profit$ 91,468$ 4,240$ - 0$ - 0$ - 0$ (654)$ - 0$ 95,054Gross profit$ 91,468$ 4,240$ - 0$ - 0$ - 0$ - 0$ 95,708$ (654)$ 95,054

Gross margin27.5%28.7%Gross margin27.5%28.8%28.7%

Operating expenses:Operating expenses:

SG&A41,888(5,136)(1,907)(1,861)32,984SG&A41,888(5,136)(1,907)34,845(1,861)32,984

SG&A as a % of revenues12.6%10.0%SG&A as a % of revenues12.6%10.5%10.0%

Research, development & engineering17,306(88)(2,830)14,388Research, development & engineering17,306(88)17,218(2,830)14,388

RD&E as a % of revenues5.2%4.3%RD&E as a % of revenues5.2%5.2%4.3%

Other operating expense21,140(11,175)(9,965)- 0- 0Other operating expense21,140(11,175)(9,965)- 0- 0- 0

Operating income$ 11,134$ 9,464$ 1,907$ 11,175$ 9,965$ 4,037$ - 0$ 47,682Operating income$ 11,134$ 9,464$ 1,907$ 11,175$ 9,965$ - 0$ 43,645$ 4,037$ 47,682

Operating margin3.4%14.4%Operating margin3.4%13.1%14.4%

Other (income) & expenses:Other (income) & expenses:

Interest expense27,61727,617Interest expense27,61727,61727,617

Interest income- 0- 0Interest income- 0- 0- 0

Other (income) loss, net(3,721)1,301(2,420)Other (income) loss, net(3,721)1,301(2,420)(2,420)

Loss before income taxes$ (12,762)$ 9,464$ 1,907$ 11,175$ 9,965$ 4,037$ (1,301)$ 22,485Loss before income taxes$ (12,762)$ 9,464$ 1,907$ 11,175$ 9,965$ (1,301)$ 18,448$ 4,037$ 22,485

Provision for income taxes(c)(102)2,7736671,6353,4541,413(455)9,385Provision for income taxes(c)(102)2,7736671,6353,454(455)7,9721,4139,385

Effective tax rate0.80%41.74%Effective tax rate0.80%43.21%41.74%

Net income (loss)$ (12,660)$ 6,691$ 1,240$ 9,540$ 6,511$ 2,624$ (846)$ 13,100Net income (loss)$ (12,660)$ 6,691$ 1,240$ 9,540$ 6,511$ (846)$ 10,476$ 2,624$ 13,100

Net margin-3.8%4.0%Net margin-3.8%3.2%4.0%

Weighted Average Shares O/S(j)30,71831,25331,25331,25331,25331,25331,25331,253Weighted Average Shares O/S(j)30,71831,25331,25331,25331,25331,25331,25331,25331,253

EPS(i)$ (0.41)$ 0.21$ 0.04$ 0.31$ 0.21$ 0.08$ (0.03)$ 0.42EPS(i)$ (0.41)$ 0.21$ 0.04$ 0.31$ 0.21$ (0.03)$ 0.34$ 0.08$ 0.42

2Q16


Non-GAAP Adjustments - 2 views

2Q16

THREE MONTHS ENDEDGAAPNon-GAAP Adj.Non-GAAPSIX MONTHS ENDEDGAAPNon-GAAP Adj.Non-GAAPNon-GAAP Adj.Non-GAAP

Income Statement2Q16 ActualAmortizationLitigation RelatedCharges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)Debt / Investment RelatedCharges2Q16 AdjustedIncome Statement2Q16 ActualAmortizationLitigation RelatedCharges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)Debt / Investment RelatedCharges2Q16 Adjusted as reportedNuvectraSpin(i)2Q16 Adjusted revised

Sales$ 348,382$ 348,382Sales$ 680,620$ - 0$ - 0$ - 0$ - 0$ - 0$ 680,620$ (1,180)$ 679,440

Cost of sales252,351(4,240)248,111Cost of sales493,121(8,480)- 00- 0- 0484,641(526)484,115

Gross profit$ 96,031$ 4,240$ - 0$ - 0$ - 0$ - 0$ 100,271Gross profit$ 187,499$ 8,480$ - 0$ - 0$ - 0$ - 0$ 195,979$ (654)$ 195,325

Gross margin27.6%28.8%Gross margin27.5%28.8%28.7%


SG&A37,628(5,123)(285)32,220SG&A79,516(10,259)(2,192)- 0- 0- 067,065(1,861)65,204

SG&A as a % of revenues10.8%9.2%SG&A as a % of revenues22.8%9.9%9.6%

Research, development & engineering13,640(151)13,489Research, development & engineering30,946(239)- 0- 0- 0- 030,707(2,830)27,877

RD&E as a % of revenues3.9%3.9%RD&E as a % of revenues8.9%4.5%4.1%

Other operating expense15,494(7,635)(7,859)- 0Other operating expense36,634- 0- 0(18,810)(17,824)- 0- 0- 0- 0

Operating income$ 29,269$ 9,514$ 285$ 7,635$ 7,859$ - 0$ 54,562Operating income$ 40,403$ 18,978$ 2,192$ 18,810$ 17,824$ - 0$ 98,207$ 4,037$ 102,244

Operating margin8.4%15.7%Operating margin5.9%14.4%15.0%


Interest expense27,90827,908Interest expense55,525- 0- 00- 0- 055,525- 055,525

Interest income- 0Interest income- 0- 0- 0- 0- 0- 0- 0- 0- 0

Other (income) loss, net674(124)550Other (income) loss, net(3,047)- 0- 00- 01,177(1,870)- 0(1,870)

Loss before income taxes$ 687$ 9,514$ 285$ 7,635$ 7,859$ 124$ 26,104Loss before income taxes$ (12,075)$ 18,978$ 2,192$ 18,810$ 17,824$ (1,177)$ 44,552$ 4,037$ 48,589

Provision for income taxes(a)1,4572,7821001,4632,714438,559Provision for income taxes(a)1,3555,5557673,0986,168(412)16,5311,41317,944

Effective tax rate212.08%32.79%Effective tax rate-11.22%37.10%36.93%

Net income (loss)$ (770)$ 6,732$ 185$ 6,172$ 5,145$ 81$ - 0$ 17,545Net income (loss)$ (13,430)$ 13,423$ 1,425$ 15,712$ 11,656$ (765)$ - 0$ 28,021$ 2,624$ 30,645

Net margin-0.2%5.0%Net margin-2.0%4.1%4.5%

Weighted Average Shares O/S(h)30,76731,22831,22831,22831,22831,22831,228Weighted Average Shares O/S(h)30,74331,25731,25731,25731,25731,25731,25731,25731,257

EPS(g)$ (0.03)$ 0.22$ 0.01$ 0.20$ 0.16$ 0.00$ 0.56EPS(g)$ (0.44)$ 0.43$ 0.05$ 0.50$ 0.37$ (0.02)$ 0.90$ 0.08$ 0.98

3Q16



3Q16

THREE MONTHS ENDEDGAAPNon-GAAP Adj.(a)Non-GAAPNINE MONTHS ENDEDGAAPNon-GAAP Adj.(a)Non-GAAP

Income Statement3Q16 ActualAmortizationLitigation RelatedCharges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)TaxAdjustment(g)Debt / Investment RelatedCharges3Q16 AdjustedIncome Statement3Q16 ActualAmortizationLitigation RelatedCharges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)NuvectraSpin(h)TaxAdjustment(g)Debt / Investment RelatedCharges3Q16 Adjusted

Sales$ 346,567$ 346,567Sales$ 1,027,187$ - 0$ - 0$ - 0$ - 0$ (1,180)$ - 0$ - 0$ 1,026,007

Cost of sales248,658(4,228)244,430Cost of sales741,779(12,708)- 0- 0- 0(526)- 0- 0728,545

Gross profit$ 97,909$ 4,228$ - 0$ - 0$ - 0$ - 0$ 102,137Gross profit$ 285,408$ 12,708$ - 0$ - 0$ - 0$ (654)$ - 0$ - 0$ 297,462

Gross margin28.3%29.5%Gross margin27.8%29.0%


SG&A36,265(5,109)(499)30,657SG&A115,781(15,368)(2,691)- 0- 0(1,861)- 0- 095,861

SG&A as a % of revenues10.5%8.8%SG&A as a % of revenues33.4%9.3%

Research, development & engineering11,412(136)11,276Research, development & engineering42,358(375)- 0- 0- 0(2,830)- 0- 039,153

RD&E as a % of revenues3.3%3.3%RD&E as a % of revenues12.2%3.8%

Other operating expense13,370(8,051)(5,319)- 0Other operating expense50,004- 0- 0(26,861)(23,143)- 0- 0- 0- 0

Operating income$ 36,862$ 9,473$ 499$ 8,051$ 5,319$ - 0$ - 0$ 60,204Operating income$ 77,265$ 28,451$ 2,691$ 26,861$ 23,143$ 4,037$ - 0$ - 0$ 162,448

Operating margin10.6%17.4%Operating margin7.5%15.8%


Interest expense27,87027,870Interest expense83,395- 0- 0- 0- 0- 0- 0- 083,395

Interest income- 0- 0Interest income- 0- 0- 0- 0- 0- 0- 0- 0- 0

Other (income) loss, net275(245)30Other (income) loss, net(2,772)- 0- 0- 0- 0- 0- 0932(1,840)

Loss before income taxes$ 8,717$ 9,473$ 499$ 8,051$ 5,319$ - 0$ 245$ 32,304Loss before income taxes$ (3,358)$ 28,451$ 2,691$ 26,861$ 23,143$ 4,037$ - 0$ (932)$ 80,893

Provision for income taxes(2,741)2,7711751,6061,8272,784866,508Provision for income taxes(1,386)8,3269424,7047,9951,4132,784(326)24,452

Effective tax rate-31.44%20.15%Effective tax rate41.27%30.23%

Net income (loss)$ 11,458$ 6,702$ 324$ 6,445$ 3,492$ (2,784)$ 159$ - 0$ 25,796Net income (loss)$ (1,972)$ 20,125$ 1,749$ 22,157$ 15,148$ 2,624$ (2,784)$ (606)$ 56,441

Net margin3.3%7.4%Net margin-0.2%5.5%

Weighted Average Shares O/S31,15331,15331,15331,15331,15331,15331,15331,153Weighted Average Shares O/S(i)(j)30,75631,21131,21131,21131,21131,21131,21131,21131,211

EPS$ 0.37$ 0.22$ 0.01$ 0.21$ 0.11$ (0.09)$ 0.01$ 0.83EPS$ (0.06)$ 0.64$ 0.06$ 0.71$ 0.49$ 0.08$ (0.09)$ (0.02)$ 1.81

4Q16



4Q16

THREE MONTHS ENDEDGAAPNon-GAAP Adj.(a)Non-GAAPTWELVE MONTHS ENDEDGAAPNon-GAAP Adj.(a)Non-GAAP

Income Statement4Q16 ActualAmortizationLitigation Related Charges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)Tax Adjustments(g)Debt / Investment Related Charges4Q16 AdjustedIncome Statement4Q16 ActualAmortizationLitigation Related Charges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)Tax Adjustments(g)Debt / Investment Related Charges4Q16 Adjusted

Sales$ 359,591$ 359,591Sales

Cost of sales266,700(4,061)262,639Cost of sales

Gross profit$ 92,891$ 4,061$ - 0$ - 0$ - 0$ - 0$ 96,952Gross profit

Gross margin25.8%27.0%Gross margin


SG&A37,510(5,213)(349)31,948SG&A

SG&A as a % of revenues10.4%8.9%SG&A as a % of revenues

Research, development & engineering12,643(137)12,506Research, development & engineering

RD&E as a % of revenues3.5%3.5%RD&E as a % of revenues

Other operating expense11,733(6,560)(5,173)- 0Other operating expense

Operating income$ 31,005$ 9,411$ 349$ 6,560$ 5,173$ - 0$ - 0$ 52,498Operating income

Operating margin8.6%14.6%Operating margin


Interest expense27,87527,875Interest expense

Interest (income) Loss1,765(1,765)- 0Interest (income) Loss

Other (income) loss, net(3,178)(3,178)Other (income) loss, net

Loss before income taxes$ 4,543$ 9,411$ 349$ 6,560$ 5,173$ - 0$ 1,765$ 27,801Loss before income taxes

Provision for income taxes(3,390)2,7651221,3751,767(2,630)618627Provision for income taxes

Effective tax rate-74.62%2.26%Effective tax rate

Net income (loss)$ 7,933$ 6,646$ 227$ 5,185$ 3,406$ 2,630$ 1,147$ - 0$ 27,174Net income (loss)

Net margin2.2%7.6%Net margin

Weighted Average Shares O/S(j)31,25431,25431,25431,25431,25431,25431,25431,254Weighted Average Shares O/S

EPS(h)$ 0.25$ 0.21$ 0.01$ 0.17$ 0.11$ 0.08$ 0.04$ 0.87EPS

FY16



Full-Year 2016

TWELVE MONTHS ENDEDGAAPNon-GAAP Adj.(a)Non-GAAP

Income StatementFY16 ActualAmortizationLitigation RelatedCharges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)NuvectraSpin(i)TaxAdjustment(g)Debt / Investment RelatedChargesFY16 Adjusted

Sales$ 1,386,778$ (1,180)$ - 0$ - 0$ 1,385,598

Cost of sales1,008,479(16,769)- 00- 0(526)- 0- 0991,184

Gross profit$ 378,299$ 16,769$ - 0$ - 0$ - 0$ (654)$ - 0$ - 0$ 394,414

Gross margin27.3%28.5%

Operating expenses:

SG&A153,291(20,581)(3,040)- 0- 0(1,861)- 0- 0127,809

SG&A as a % of revenues11.1%9.2%

Research, development & engineering55,001(512)- 0- 0- 0(2,830)- 0- 051,659

RD&E as a % of revenues4.0%3.7%

Other operating expense61,737- 0- 0(33,421)(28,316)- 0- 0- 0- 0

Operating income$ 108,270$ 37,862$ 3,040$ 33,421$ 28,316$ 4,037$ - 0$ - 0$ 214,946

Operating margin7.8%15.5%


Interest expense111,270- 0- 0- 0- 0- 0- 0111,270

Interest income1,765- 0- 0- 0- 0- 0(1,765)- 0

Other (income) loss, net(5,950)- 0- 0- 0- 0- 0932(5,018)

Loss before income taxes$ 1,185$ 37,862$ 3,040$ 33,421$ 28,316$ 4,037$ - 0$ 833$ 108,694

Provision for income taxes(4,776)11,0911,0646,0799,7621,41315429225,079

Effective tax rate-403.04%23.07%

Net income (loss)$ 5,961$ 26,771$ 1,976$ 27,342$ 18,554$ 2,624$ (154)$ 541$ - 0$ 83,615

Net margin0.4%6.0%

Weighted Average Shares O/S(j)30,97331,22231,22231,22231,22231,22231,22231,22231,222

EPS(h)$ 0.19$ 0.86$ 0.06$ 0.88$ 0.59$ 0.08$ (0.01)$ 0.02$ 2.68

1Q17



1Q17

THREE MONTHS ENDEDGAAPNon-GAAP Adj.(a)Non-GAAPNon-GAAP

Income Statement1Q17 ActualAmortizationLitigation Related Charges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)Debt / Investment Related Charges(f)1Q17 Adjusted1Q16 Adjusted

Sales$ 345,413$ 345,413$ 331,058

Cost of sales254,187(4,084)250,103236,004

Gross profit$ 91,226$ 4,084$ - 0$ - 0$ - 0$ - 0$ 95,310$ 95,0540.3%

Gross margin26.4%27.6%28.7%

Operating expenses:

SG&A39,499(6,758)(377)32,36432,932

SG&A as a % of revenues11.4%9.4%9.9%

Research, development & engineering13,411(136)13,27514,440

RD&E as a % of revenues3.9%3.8%4.3%

Other operating expense11,771(6,951)(4,820)- 0- 0

Operating income$ 26,545$ 10,978$ 377$ 6,951$ 4,820$ - 0$ 49,671$ 47,6824.2%

Operating margin7.7%14.4%14.4%


Interest expense28,893(1,559)27,33427,617

Interest income- 0- 0- 0

Other (income) loss, net1,847(398)1,449(2,420)3,869

Loss before income taxes$ (4,195)$ 10,978$ 377$ 6,951$ 4,820$ 1,957$ 20,888$ 22,485-7.1%

Provision for income taxes1443,2321322,0951,6876857,9759,385

Effective tax rate-3.43%38.18%41.74%

Net income (loss)$ (4,339)$ 7,746$ 245$ 4,856$ 3,133$ 1,272$ - 0$ 12,913$ 13,100-1.4%

Net margin-1.3%3.7%4.0%

Weighted Average Shares O/S(h)31,01631,68531,68531,68531,68531,68531,68531,253

EPS$ (0.14)$ 0.24$ 0.01$ 0.15$ 0.10$ 0.04$ 0.41$ 0.42

Net Income AdjustmentsPost-TAXPre-TAX$ 0.04$ (0.06)$ 0.10

Inventory step-up amortization- 0- 01,159(1,936.0)3,095

Amortization of intangibles7,74610,97814,07211,1642,90826%

IP related litigation 245377$ 0.45$ 0.36$ 0.0927%

Consolidation and optimization expenses (OOE)1,8992,395

Acqusition and integration expenses (OOE)3,1334,820

Asset dispositions, severance and other (OOE)2,9574,556

Lake Region Medical transaction costs

Loss (gain) on cost and equity method investments, net 259398

Loss on extinguishment of debt1,0131,559

Tax adjustments- 0

Comparable basis adjustments, net- 0

Adjusted Net Income (Non-GAAP)$ 12,913

Adjusted EPS (Non-GAAP)$ 0.42

2Q17


Non-GAAP Adj. Net Income

2Q17

GAAPNon-GAAP Adj.(a)Non-GAAPNon-GAAP

Income Statement2Q17 ActualAmortizationLitigation Related Charges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)Debt / Investment Related Charges(f)2Q17 Adjusted2Q16 Adjusted

Sales$ 362,719$ 362,719$ 348,3824.1%

Cost of sales263,447(4,111)259,336248,111

Gross profit$ 99,272$ 4,111$ - 0$ - 0$ - 0$ - 0$ 103,383$ 100,2713.1%


Operating expenses:

SG&A39,724(6,799)(915)32,01032,220




Other operating expense6,920(3,950)(2,970)- 0- 0

Operating income$ 39,739$ 11,046$ 915$ 3,950$ 2,970$ - 0$ 58,620$ 54,5627.4%



Interest expense25,647(935)24,71227,908


Other (income) loss, net9,976(4,427)5,5495504,999413

Loss before income taxes$ 4,116$ 11,046$ 915$ 3,950$ 2,970$ 5,362$ 28,359$ 26,1048.6%0.01

Provision for income taxes1,1263,2313201,1309331,8778,6178,559

Effective tax rate27.36%30.39%32.79%

Net income (loss)$ 2,990$ 7,815$ 595$ 2,820$ 2,037$ 3,485$ - 0$ 19,742$ 17,54512.5%

Net margin0.8%5.4%5.0%


EPS$ 0.09$ 0.24$ 0.02$ 0.09$ 0.06$ 0.11$ 0.62$ 0.56

3Q17



3Q17


Income Statement3Q17 RF4AmortizationLitigation Related Charges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)Debt / Investment Related Charges(f)3Q17 RF4 Adjusted3Q16 Adjusted

Sales$ 364,870$ 364,870$ 346,567

Cost of sales259,379(4,054)255,325244,430

Gross profit$ 105,491$ 4,054$ - 0$ - 0$ - 0$ - 0$ 109,546$ 102,1377.3%


Operating expenses:

SG&A41,717(6,887)(800)34,03030,657




Other operating expense5,459(5,459)- 0- 0- 0

Operating income$ 44,731$ 10,975$ 800$ 5,459$ - 0$ - 0$ 61,965$ 60,2042.9%



Interest expense25,131- 025,13127,870


Other (income) loss, net- 0- 0- 030(30)

Loss before income taxes$ 19,600$ 10,975$ 800$ 5,459$ - 0$ - 0$ 36,834$ 32,30414.0%

Provision for income taxes2,2763,2922801,802- 0- 07,6506,508


Net income (loss)$ 17,324$ 7,682$ 520$ 3,658$ - 0$ - 0$ - 0$ 29,184$ 25,79613.1%



EPS$ 0.55$ 0.24$ 0.02$ 0.12$ - 0$ - 0$ 0.92$ 0.83

4Q17



4Q17


Income Statement4Q17 RF4AmortizationLitigation Related Charges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)Debt / Investment Related Charges(f)4Q17 RF4 Adjusted4Q16 Adjusted

Sales$ 346,741$ 346,741$ 331,058

Cost of sales250,080(4,054)246,025236,004

Gross profit$ 96,662$ 4,054$ - 0$ - 0$ - 0$ - 0$ 100,716$ 95,0546.0%


Operating expenses:

SG&A41,050(6,885)(400)33,76532,932




Other operating expense4,688(4,688)- 0- 0- 0

Operating income$ 37,212$ 10,973$ 400$ 4,688$ - 0$ - 0$ 53,273$ 47,68211.7%



Interest expense24,674- 024,67427,617


Other (income) loss, net- 0- 0- 0(2,420)2,420

Loss before income taxes$ 12,538$ 10,973$ 400$ 4,688$ - 0$ - 0$ 28,599$ 22,48527.2%

Provision for income taxes2,2763,2921401,547- 0- 07,2559,385


Net income (loss)$ 10,262$ 7,681$ 260$ 3,141$ - 0$ - 0$ - 0$ 21,344$ 13,10062.9%



EPS$ 0.32$ 0.24$ 0.01$ 0.10$ - 0$ - 0$ 0.67$ 0.42

FY17



Full-Year 2017

GAAPNon-GAAP Adj.Non-GAAPNon-GAAP

Income StatementFY17 RF4AmortizationLitigation Related ChargesConsolidation & OptimizationAcquisition & IntegrationDebt / Investment Related ChargesFY17 RF4 AdjustedFY16 Adjusted

Sales$ 1,419,744$ 1,419,744$ 1,385,598

Cost of sales1,027,093(16,304)- 0- 0- 0- 01,010,789991,186

Gross profit$ 392,651$ 16,304$ - 0$ - 0$ - 0$ - 0$ 408,955$ 394,412


Operating expenses:

SG&A161,991(27,329)(2,492)- 0- 0- 0132,170127,757


Research, development & engineering53,595(339)- 0- 0- 0- 053,25651,709


Other operating expense28,838- 0- 0(21,048)(7,790)- 0- 0- 0

Operating income$ 148,227$ 43,972$ 2,492$ 21,048$ 7,790$ - 0$ 223,529$ 214,946



Interest expense104,345- 0- 00- 0(2,494)101,851111,270

Interest income- 0- 0- 0- 0- 0- 0- 0- 0

Other (income) loss, net11,823- 0- 00- 0(4,825)6,998(5,018)

Loss before income taxes$ 3

2q17 earnings conference call€¦ · 1q16. 2q16. 3q16. 4q16. 1q17. 2q17. 1q16. 2q16. 3q16. 4q16....

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