Good afternoon, everyone. I'm Robbie Marcus, the MedTech Analyst at J.P. Morgan. I'm very happy to introduce our next speaker, Peter Arduini, the CEO of Integra LifeSciences. Peter.
Thanks, Robbie, and good afternoon, everyone. I'll start off and kind of give an overview here of the company. First, just we've got in our deck here some safe harbor statements, and I'll be using some non-GAAP financials as well to talk a little bit about the business. So Integra, by the numbers, if you take a look at the company, if you follow this or not, we're about a $5 billion enterprise company that runs the business in two major global segments: Orthopedics and Tissue Technologies, as well as a division called Codman Specialty Surgical. If you think about orthopedics and tissue clinically, orthopedics, extremities, orthopedics, I'll go into that a little bit further. Wound care, both inpatient and outpatient wound care, and plastic and reconstructive surgery. We also have a private label business that leverages a lot of our regenerative technologies into areas that we're not primarily focused.
That, again, is about 35% of the business, or about just under $500 million. The majority of the business, 65%, is Codman Specialty Surgical, enhanced its size last year with our acquisition of the Codman Neurosurgery business from Johnson & Johnson, which we've been successfully integrating here over the last, really, 18 months and have a little bit of work still in front of us, but going quite well. That business is primarily neurosurgery with a component of specialty instrumentation, from general instruments to retractors and such that we've been enhancing. You can see our guidance here for 2018. I'll talk a little bit about our pre-announced, which was positive as well, but 24% reported growth, organic above 4%, and our adjusted EBITDA margins at 23%-24% with EPS over 20%.
The company, at its core, has a significant amount of focus on our organic development, particularly around regenerative products, which represent about 40% of the company revenues, and those span across the Codman Specialty business, actually, into the OTT business, everything from dural repair products through dermal repair. Our international sales represents about 30%. If you followed us just a few years ago, this was probably about 15%. We've doubled the scale. Probably one of the big benefits of the Codman integration is the platform it creates, and we think that tees us up quite well for future growth around the globe, so as I'd mentioned on Tuesday morning, pre-market, we announced some positive news that we would be at our higher end of our revenue range, the revenue range you can see here at $378-$383 million, and that our organic growth would be slightly above 4%.
We'll come out with our full audited financials, GAAP and adjusted here, when we report at the end of February, and so but we felt compelled here, even with the early beginning of J.P. Morgan, to be able to bring out some of that good news and be able to talk a little bit more about the quarter. From a business and market composition standpoint, this gives you a flavor of kind of the markets underneath where we play. CSS, abbreviation for Codman Specialty Surgical. You can see neurosurgery and precision tools and instruments. Now, neurosurgery represents about 46% of our overall business. If you look on the far right, you can see the growth of the markets, roughly a 3%-5% grower in our biggest market areas. In Asia, we have some markets that are growing high single, even to double digits in subsegments.
As an aggregate, we see this as a 3%-5% grower. I think the key point on this, though, is it's very sensitive to the leader in product development. Since now, with our acquisition of Codman and being the number one player, this is an opportunity to grow this market faster with the right level of product investment and innovation. Precision tools and instruments, which, again, is a broad category from instrumentation, lighting, retractors, and such, growing about 3%, a very good, stable business, more focused, the majority of the business in the United States, but also some nice opportunities around the globe. You can see that's just under 20%.
And then if you move down to the Orthopedics and Tissue business, two big areas, the regenerative portfolio, which, again, are products that actually help heal wounds, whether they be diabetic or venous leg ulcers, or they are surgery-induced or trauma, a portion of products that are used in plastic and reconstructive procedures, either in abdomen repair or upper chest walls, as an example, or burn. And then we also have a chunk of business, as I'd mentioned, within private label. And that's just under about 30% of our portfolio. You see the growth areas there, high single- to double-digit areas. We see these markets continuing to grow, a lot of exciting investment happening in this area around cells, everything from the stem cell area to broader arrays that tie into proteins and signals around the matrices.
And again, an area of our core competency and an area of investment as well for us for the future. And then the extremities business is about 70% of our 7% of our business. And again, this is primarily focused on shoulder arthroplasty and lower extremity arthroplasty around the ankle, as well as fixation. Both of these are very healthy markets. I'll talk a little bit more about some of the channel changes and things we've done that we believe will position us to take advantage of some of the growth of these markets. And then lastly, the international business at 30%. Again, as I had said, this is one of the big benefactors was the addition of Codman. Traditionally, our largest portion was neuro, and it's only gained in scale.
We have a large opportunity here with OTT, but the base business for us around the world is our neuro business within the international platform. Codman Specialty Surgical, a little bit closer look. Now, when you bring Integra and the Codman brand together, we have 14, a little over 14 brands that have number one leading positions. So any neurosurgery center really around the world, the probability of them using our products is very high. We also have the largest neurosurgery sales force now around the world. And the increased numbers you see, 30% increase in the U.S. and 50% outside the United States, is already in place. This was completed with the acquisition and the retooling, if you will, of all the sales territories.
On the pie chart, you can see this is just under $1 billion of revenue, large business with diverse components, everything from dural access and repair, so opening up the skull to the closure of the dura, the tools and instrumentations that are primarily used by the neurosurgeon, neuromonitoring products, and assorted items that you would use in the neuro ICU. You can see our CSF management for managing all types of pressure associated with these procedures, as well as congenital issues related to management of CSF management, which is quite a nice business that we think that we can grow, that we picked up in the Codman deal, and advanced energy, which is a combination of all types of cutting technologies, particularly led by our CUSA product, which is an ultrasonic ablation device.
And then on the far right hand, you can see is our discussion about growth drivers. Now that we have this large, stable sales force, you'll see some of the new product introductions we have. We have about seven impactful launches coming out this year. And I think the important part here and kind of emblematic of how well the integration has gone is these were all advanced on time, on budget, while we're integrating the largest deal in the history of the company. So let me talk a little bit about this. This gives you a snapshot of the integration. It's been a successful integration to date. We've made a lot of progress since the close, full integration of the R&D function, rationalization of the projects, and then funding them at the right level so that we'd have these launches this year.
We exited many of the transition services agreements. These are primarily the back-end service support for running a commercial operation in the United States. You can see New Zealand, Canada, and China in 2018, and we've done a big chunk of IT systems transfer. What we have left is really a big chunk now of TSAs outside the United States, and I'd say at the end of Q1, this is really one of our largest milestones where we'll convert the final ERP transitions outside the United States. Western European countries that are on TSAs, such as the U.K. and France, will convert to the Integra systems, and day two countries, which are smaller, typically indirect countries, will take ownership of a large portion of those at the end of Q1, and by mid-year, we substantially have most of the risks associated with the integration behind us.
You can see we still have some manufacturing product transfers that will take place over the next few years. But I view those as lower risk as we'll move those line by line. We actually have built out a new facility about 20 minutes away from the legacy J&J transfer facility, and we'll be able to do that in a rather methodical-paced capability. So that's a view on the integration. Doing a carve-out of any company is rather difficult. The teams have really done a nice job with it, and we feel confident that we can bring it home.
In Orthopedics and Tissue Technologies, similar to the chart you saw for Codman, we've got some large number one positions around the regenerative space, whether it be in burns or skin substitutes, used throughout different disease state scenarios, whether it be trauma or wound or burn, and multiple products that kind of wrap around those typical disease states. As you can see on the pie chart, regenerative technologies is a large portion of this business, which is about $500 million, and touches on the specific areas that I had mentioned before. I think one of the biggest changes that we implement in 2018 that we will see the benefit in 2019 and beyond is this focusing of our channels. We typically, in the past, had one to two channels, an indirect and a direct channel that had a lot of commingled products.
And what we were able to do is divide those up to end up with four very specific targeted channels as we exit 2018 and really as we're fully staffed as we start 2019. So a dedicated channel on inpatient wound reconstruction and burn, a dedicated outpatient wound care group that calls into the wound care clinic area, a surgical reconstruction group that calls into plastics, typically associated with broader inner body plastic reconstruction work, and then an extremities orthopedic team that actually has two parts to it, a distributor-based shoulder sales force, and then a direct controlled lower extremities force. In the past, these were pretty much co-mingled. And our efficiency for a rep to be able to call on four different clinical expertise areas, compete against some of the companies in the marketplace that are even subspecialized, just wasn't that effective.
We did quite well and grew that business, but we believe these focus channels now will really set us up well to accelerate growth in the next few years. And so as we start 2019, one of the biggest catalysts are these expanded stable territories. And that'll be complemented with some new product introductions and also clinical studies, which I'll mention here shortly. On international, again, a composite of all those businesses, I want you to look at the upper left-hand corner. You can see back in 2015, we were about $200 million in sales, and now in 2018, we'll be north of $400 million. So it's had a pretty substantial step up for us, heavily driven by the Codman acquisition. Again, as I'd mentioned before, 30% of our sales coming now in these international markets. And key markets in Western Europe, we have scale.
We have the growth and the capabilities now with the infrastructure, either in product distribution, customer service, to add more products into that basket and leverage that infrastructure, which we're building out now. Two markets we highlight here, Japan and China, both growth vehicles for us. In many cases, you may not see Japan as a growth market on someone's chart, but in neurosurgery, the older you live, the more the higher the probability that you'll have some type of a neuro-based event, whether it be trauma or other. And this is a market area that we think is going to be actually a substantial growth opportunity for us here over the next few years. We were not present as far as direct resources just a few years ago. Two years ago, we had seven individuals. Now we have 70, and we're completely direct.
And so that allows us also to bring a lot of legacy products we've never introduced into Japan, such as our dural closure products that now we'll be able to bring direct. Similar story for China for different dynamics and very good opportunities across the board on both sides of our product lines, both OTT as well as in our Codman Specialty Surgical business. So from a product standpoint, this is just a snapshot of our new products, some clinical indications work, as well as registrations.
First of all, when you look at some of the products we're exiting out of 2017 into 2018, many of those products were launched at the end of the year window, so they haven't even really completed a full year cycle, whether it be the SurgiMend MP products or in the case of CUSA Clarity, really only about just over a year into its initial launch, with many of these products having a good four-to-five-year life of growth, peaking around year three-to-four, pending on the technology. But what we show here is we actually have teed up about five launches in OTT with two key clinical studies and seven pretty consequential launches tied to the CSS business.
You can see our ankle revision product here that is new within the line, just launched here at the end of the year, allows us to revise any really competitive ankle in the marketplace. That coupled with our two proprietary ankles gives us quite a portfolio now integrated into that dedicated channel. We've got some different fixation products and also adaptations to our shoulder products that are also going to enhance it. Some of you might have also seen we dropped a press release this week about an agreement on doing a short stem, a stemless product. These are, again, investments that we're making in our orthopedics business to build out our overall capabilities there. I'll point to a couple of other products. We have a product there listed as AmnioExcel Plus, which we believe is going to be a great product.
It's a three-ply Amnio product that has extended shelf life on it. It's got great capabilities. We're just ramping that up. We've also had a clinical study underway on that that will be completed here in the first half of the year, and with positive outcomes on that, we'll be in a position to publish in the second half. Why is that important? We think this will be a leadership Amnio product in the marketplace for the wound area and have the right type of clinical data to be able to have private and public reimbursement across the board. Many of you know that we have a wide array of other matrices for wound care, and we've had some amniotic products, but we haven't had it all together where we've had the right characteristics and all of the reimbursement, and so this is an exciting year to get that completed.
On the CSS side, a lot of the devices you see here are all in that area, whether it be a brand new ICP intracranial pressure monitoring device called CereLink, be state of the art with a 20-year-old installed base that we inherited from J&J, we'll be able to go after to convert new features and upgrades to our CUSA Clarity platform, the world's leading number one product for removing tumors, brain tumors, and also a whole new electrosurgery platform that will integrate into our business. If you think about the biggest value component of when we bought Codman, it was really around shunting or the management of pressure of CSF in the brain. The Certas Plus is our newest valve. We came out and finished out funding a couple of different configurations, one that enables growth in pediatrics where we were somewhat limited by, and a new toolkit.
A new toolkit may seem like that's not a big deal, but the toolkit is really the item that the neurosurgeon uses constantly. It's the tool that they use to adjust pressure, do their job. Like most things, if it feels like it's in DOS or it feels like it's the most elegant tool they've used, it has an impact on do they choose your product line. We've had a rather, I would say, not the most user-friendly tool compared to some of our competition. We believe this will not only bring us into parity, but will bring us beyond that and be an accelerant for growth. Again, this is just a flavor of some of the new products, indications, and registrations.
And I just make the point, DuraGen Japan, you see down below, we're in the final stretches here of getting the regulatory approval and the reimbursement structure to bring the first dural onlay repair ever into the country of Japan with DuraGen. And that'll be a nice lift in growth vehicle. And again, we would have done that before through a distributor sales force. Now that we have a direct sales force, we can capture all that value with the launch. So from just a near-term growth drivers and maybe tie together a little bit of our pre-announced discussion, you can see here on the bar charts that roughly finishing up 2018 at about $1.47 billion of revenue and moving, as I had mentioned in some comments in Q3, that we saw guidance at the low end of our range appropriate for 2019.
We'll give more details on that in February, but that's roughly about a 5% organic growth. From a reported standpoint, that'll be roughly around 3.5%. What's the difference there? You've been hearing a lot of this from other companies as well. FX, primarily in the first half of the year, is a big component of that. And also, we received some TSA payments to us for the products that we had divested that will drop off in 2019. So that's fundamentally the difference between the 5% organic and the 3.5% reported that we roughly see. And again, we'll give more color and detail by segment and area and also our profitability here in our February call.
I would say the other aspect of it is with the integration that I mentioned that we have going on in the first quarter and the launches of all these new products in the first half, our year for the most part will have a ramp with Q1 being our lower growth quarter, picking up in Q2 and having faster acceleration in the second half, and we feel quite confident on that just based on this larger sales force that we now have in place around the world that has the tenure, has the growth, and candidly was able to put up the kind of numbers that were positive and allowed us to pre-announce our revenues here in the fourth quarter.
The other parts of the chart here, the Codman Specialty Surgical, you can see we see a market here growing in our hands, a business growing 3%-5% with our new product introductions and stuff, hopefully moving us into that far end, the higher end of the range, and also with our Orthopedics and Tissue business, primarily driven by our wound reconstruction and outpatient products growing in that high single- to low double-digit area, and last but not least, international growing in the high single-digits area. Clearly, more of that being second half loaded.
And again, a big part of that is as we transition from these TSAs in Western Europe, a sales rep has a big part of that transition, meaning that if you've been ordering into the J&J system for years, making sure you know how to get into the Integra system, the Integra customer service group. And so we've modeled in for the first half of the year, or really primarily the first quarter for most countries, that there will be a little bit more or less selling time just based on that work to convert. But we feel quite good about these near-term drivers and what that enables us here going into the back half and candidly what that means into 2020 and beyond.
And so, when you look at that, our financial targets that we've communicated just over 18 months ago, we feel very good about our revenue growth range and organically of 5%-7%, growing consistently above that with tuck-in acquisitions, gross margins moving at 70%-70% or above, and our EBITDA margins growing about 650 basis points by 2022 up to the 28%-30% range. We've got quite a few levers to enable that. Some of that tied to top line with gross margin and mix accretion. We still have quite a bit of opportunities on facility footprint optimization and our platform, or excuse me, our portfolio as well. Kind of wrapping up, where are we going from here?
If you look at organic opportunities, leadership position in neurosurgery positions as well to grow from these new product investments, as well as to tuck in acquisitions into this larger install base. Regen is a really exciting market area for us where we play a leadership role, and we believe there's a lot of disease states and opportunities to expand in from that standpoint. New product introductions and global registrations, I kind of gave you a taste of it today, a big enabler here for organic growth. And from a margin expansion standpoint, again, the mix component alone is a big lever.
But again, some of our portfolio rationalization and optimization plans are just underway, let alone as we move off of some of the manufacturing agreements that we have with Codman. We believe we'll be able to make the products at or below the costs we're inheriting them at and also not be paying the upcharge on it, so that will have some benefits in gross margins in some of the outer years.
And then, from a financial strength, the capital allocation, the team's done a really nice job this year with the balance sheet moving from four times leverage to below three, taking our interest rate risk from a high variable component to hedging that to having a primarily fixed rate debt and putting us in a position that we exited this year actually with very strong cash flow, but after a few one-timers we have in the beginning of the year of inventory buys and such to be really on a great trajectory here for cash flow generation in the second half.
And so, again, from capital allocation, not to be surprised, I think once we get through the integration in Q1, M&A tuck-in deals are high on the list, continued debt reduction, but also on our priority list as well is share buyback based on how the market plays out for us. And just as a last snapshot, you take a look at our 2022 numbers. We're very optimistic about the ability to grow the top line, solid businesses, top one or two positions within those markets, and at the same time, find 650 basis points to move us closer to a 30% EBITDA company. So with that, let's wrap up and say thank you for your time.