Integra LifeSciences Reports $1.7 Million Net Income on 61% Growth in Revenues.

Business Editors

PLAINSBORO, N.J.--(BUSINESS WIRE)--Nov. 8, 2000

Earnings Before Interest, Taxes, Depreciation and Amortization

Totals $3.4 Million

Integra LifeSciences Holdings Corporation (Nasdaq: IART) today reported financial results for the third quarter ended September 30, 2000. Revenues for the quarter were $19.6 million, an increase of approximately $7.4 million, or 61 percent, from revenues of $12.1 million for the comparable quarter ended September 30, 1999. Product sales for the quarter grew by more than $5.4 million, or 47 percent, to $16.9 million, as a result of sales growth in existing product lines and sales from product lines acquired earlier this year. Other revenues for the quarter increased $2.0 million to $2.7 million, as the Company earned $2.2 million of revenues under various licensing and distribution agreements.

For the third quarter of 2000, the Company reported income from operations of $2.0 million, which included $668,000 of amortization of goodwill and other intangibles, the first time in the Company's history that it has reported an operating profit. This compares to the $2.7 million operating loss reported in the third quarter of 1999, which included $270,000 of goodwill and intangible amortization and $740,000 of non-recurring costs associated with acquisitions.

Net income for the third quarter of 2000 was $1.7 million, or $0.07 per share, as compared to a net loss of $2.0 million, or $0.14 per share, in the comparable prior year quarter. Included in the per share amounts for both quarters is a $0.02 per share effect of dividends on preferred stock.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of 2000 were $3.4 million, as compared to a negative $1.8 million in the comparable prior year quarter.

Product sales for the Integra NeuroSciences division were $11.9 million during the third quarter of 2000, an increase of $4.8 million over the comparable quarter of 1999. Sales of the DuraGen(TM) Dural Graft Matrix, which was launched in the third quarter of 1999, increased to $1.7 million during the third quarter of 2000, while sales of the recently acquired Clinical Neuro Systems(TM) line of external drainage products and Selector(R) Integra Ultrasonic Aspirator and Ruggles(TM) surgical instrumentation product lines totaled $2.9 million.

The Integra NeuroSciences division also includes the Camino(R) and Ventrix(R) lines of intracranial pressure monitors, the Integra Coblation(R) Neurosurgical Systems for tumor removal, the Heyer-Schulte(R) line of hydrocephalus management products, Neuro Navigational(TM) flexible endoscopes for minimally invasive neurosurgery, and the Redmond(TM) line of surgical instruments for brain and spine surgery.

"The success of our DuraGen(TM) product and the new products acquired through recent acquisitions are leading the growth in the Integra NeuroSciences business," said Stuart Essig, President and Chief Executive Officer of Integra. "Our broad line of innovative, life saving products and the experience of our direct sales force of approximately 50 neurospecialists in the United States and England have made Integra a leader in the neurosurgery market."

Product sales for the Integra LifeSciences division were $5.0 million, an increase of $0.6 million from the third quarter of 1999. Sales growth in the Integra LifeSciences business was led by sales of collagen matrices to the Genetics Institute division of American Home Products Corporation for use in their human recombinant bone morphogenetic protein-2 ("rhBMP-2") program for various orthopedic and periodontal applications, and $0.5 million of sales of the recently acquired Spembly Medical line of cyrosurgery products.

The Integra LifeSciences division includes all of the Company's products sold outside the neurosurgery market, including INTEGRA(R) Dermal Regeneration Template, tyrosine polycarbonate materials for the manufacture of resorbable orthopedic implants, collagen matrices for use in Genetics Institute's and Medtronic Sofamor Danek's rhBMP-2 programs, the Spembly Medical line of cryosurgery products, a broad line of hemodynamic shunting products, VitaCuff(TM) and BioPatch(TM) infection control devices, Biomend(TM) products for guided tissue repair following periodontal surgery, and Helistat(R) and various other collagen hemostatic agents for general and dental surgery.

"Sales of Integra LifeSciences division products through our strategic marketing and distribution partners continue to be strong, and operating results have benefited from sales growth and from the research funding received from strategic partners and government grants," said Mr. Essig. "In the third quarter, the Integra LifeSciences division financed more than 60% of its research and development expenses through funding received from strategic partners and government grants."

Consolidated gross margins on product sales increased to 57% of product sales in the third quarter of 2000 from 52% of product sales in the third quarter of 1999, after adjusting for fair value acquisition related charges recorded in that quarter. Consolidated other operating expenses (excluding cost of product sales) increased $1.5 million from $8.8 million in the third quarter of 1999 to $10.3 million in the third quarter of 2000. In the third quarter of 2000, total operating expenses in the Integra NeuroSciences division increased $2.4 million to $10.2 million, with the division reporting a $1.9 million operating profit, and total operating expenses in the Integra LifeSciences division increased $0.1 million to $5.3 million, with the division reporting a $2.2 million operating profit. Corporate operating expenses decreased $0.1 million to $1.5 million, while intangible asset amortization increased $0.4 million to $0.7 million.

"Integra had an outstanding quarter and for the first time in the Company's history reported income from operations, with both the Integra NeuroSciences and Integra LifeSciences divisions reporting operating profits," remarked Mr. Essig. "This quarter was a turning point in the Company's history and, through a continued focus on sales growth and operating cost containment, I expect that we will continue to show profitable results in the future."

The Company has scheduled a conference call for 9:00 am EST today, November 8, 2000, to discuss the financial results for this quarter. The call is open to all listeners and will be followed by a question and answer session. Access to the live conference call is available by dialing [phone] in the United States or [phone] for international listeners. Access to the call will also be available through a live webcast of the call via a link provided in the Investor Relations section of Integra's website at www.Integra-LS.com. Listeners participating via the live webcast will not be able to ask questions in the question and answer session following the call.

Integra LifeSciences Holdings Corporation develops, manufactures and markets medical devices, implants and biomaterials primarily used in the treatment of spinal and cranial disorders, soft tissue repair and orthopedics. Integra is a leader in applying the principles of biotechnology to medical devices that improve the patient's quality of life. The Company sells its products in approximately 80 countries. Its corporate headquarters are located in Plainsboro, New Jersey, and major facilities are located in San Diego, California, Andover, England, and Anasco, Puerto Rico. The Company has approximately 485 permanent employees. Please visit the Company's website at (http://www.integra-LS.com).

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ from predicted results. Forward-looking factors include, but are not limited to, statements concerning future profits, market potential, potential therapeutic applications, growth in product sales as well as operating cost containment. In addition, the economic, competitive, governmental, technological and other factors identified under the heading "Risk Factors" included in the Business section of Integra's Annual Report on Form 10-K for the year ended December 31, 1999 and information contained in subsequent filings with the Securities and Exchange Commission could affect actual results.

               INTEGRA LIFESCIENCES HOLDINGS CORPORATION
                   CONSOLIDATED FINANCIAL RESULTS
                (In thousands, except per share data)
                               (UNAUDITED)

STATEMENT OF OPERATIONS DATA:

                               Three Month Period   Nine Month Period
                               Ended September 30   Ended September 30
                                 2000      1999       2000      1999

Product sales                  $16,890   $11,464    $45,810    $28,202
Other revenue                    2,669       663      5,071      1,443
Total revenue                   19,559    12,127     50,881     29,645

Cost of product sales
 (including depreciation of
 $473, $276, $1,272, and
 $914, respectively)             7,345     6,051     20,999     16,434
Research and development         1,741     2,198      5,497      6,393
Selling and marketing            4,072     2,409     10,856      6,883
General and administrative       3,481     3,584     10,830      9,771
Amortization and other
   depreciation                    964       582      2,609      1,221
Total costs and expenses        17,603    14,824     50,791     40,702

Operating income (loss)          1,956    (2,697)        90   (11,057)

Gain on disposition of
 product line                       --        --      1,146     4,161
Other (expense) income, net       (159)      127       (195)      389

Net pre-tax income (loss)        1,797    (2,570)     1,041    (6,507)

Income tax expense (benefit)        80      (541)       303    (1,322)

Net income (loss)              $ 1,717   $(2,029)    $  738   $(5,185)

Net income (loss) per
 Common share
  - Basic                       $ 0.07    $(0.14)    $(0.26)   $(0.34)
  - Diluted                     $ 0.07    $(0.14)    $(0.26)   $(0.34)

Weighted average Common
 shares outstanding
  - Basic                       17,439    16,810     17,335    16,792
  - Diluted                     19,534    16,810     17,335    16,792


DIVISIONAL REPORTING DATA:
Integra NeuroSciences
 Revenues                      $12,127   $ 7,046    $32,420   $14,961
 Operating expenses             10,203     7,846     28,321    18,391
 Operating income (loss)         1,924     (800)      4,099   (3,430)

Integra LifeSciences
 Revenues                        7,432     5,081     18,461    14,684
 Operating expenses              5,257     5,132     16,062    17,074
 Operating income (loss)         2,175      (51)      2,399    (2,390)

Corporate operating expenses     1,475     1,574      4,590     4,740
Intangible amortization            668       272      1,818       497

Consolidated operating
 income (loss)                   1,956    (2,697)        90   (11,057)


BALANCE SHEET DATA:
                                               30-SEP          31-DEC
                                                 2000          1999

Cash, cash equivalents & investments           $17,054        $ 23,612
Working capital                                 25,761          28,014
Total assets                                    85,760          66,253
Long-term debt                                   6,954           7,625
Total stockholders' equity                      51,127          37,989


SOURCE:  Integra LifeSciences Holdings Corporation