All right. Well, everyone, thank you for coming. My name is Zach Conte. I'm with JP Morgan's Healthcare Investment Banking Group. It's my pleasure to introduce Integer Holdings. Today, we're joined by Joe Dziedzic, CEO. There'll be a presentation followed by a short Q&A. Thank you.
Thank you, Zach. Appreciate it. All right, let's see if that works. Welcome, everybody. Thanks for being here. I've got a handful of slides. I'm gonna give you a little bit of an overview of Integer. We've got a little bit of new information. I think most of what I'm gonna present, you will find, we filed a couple hours ago when the markets closed. So I'll start with Integer is one of the world's... we think the world's largest medical device outsourcer, at $1.6 billion. About half of our business, sales are in the cardio and vascular space, and about 40% are in the cardiac rhythm management and neuromodulation space. We have a very global footprint.
We have R&D and manufacturing facilities that are co-located in the med tech hubs in the U.S. and Ireland. We have what we think is a very strong, low-cost manufacturing footprint around the world, that lets us co-develop products with our customers, for our customers, in the locations where they want to do so, and then ramp them in the locations where they want, whether that be co-located, co-developed, or in a low-cost location. Our 500-plus R&D engineers enable us to fulfill our vision of enhancing patients' lives, which is very much aligned with our industry and our customers. So let me just 30 seconds on our investment thesis. So we think we have a strong investment proposition.
Our objective is to earn a valuation premium for and by our investors. We think our strong portfolio strategy and product line strategy, which defines how we win in the markets we serve, and our operational strategy that defines how we achieve excellence in everything we do, including how we serve our customers, how we manage our cost, and how we create and promote the culture that is defined by our values of how we engage with each other. We've laid out three very clear and specific financial objectives of our strategy, and that is to deliver sales growth that's at least 200 basis points faster than the markets we serve. The markets we serve, our WAMGR, is about 4%-6%.
We want to grow our operating profit at least twice as fast as our sales. So if organic sales are 4%-6%, and we're 200 basis points faster, that's 6%-8%, and that means operating profit will be 12%-16%. That's our strategic objectives, while maintaining debt leverage in the 2.5-3.5 range, which we think most investors find comfortable enough. We think we have a very resilient business model. We have a compelling growth strategy and growth story, and a performance culture that we think will enable us to deliver sustained outperformance, which we expect will then deliver and earn a premium valuation for investors. We've been on a journey to excellence since our strategy started in strategy development in 2017 and launched in 2018.
First thing we did was we looked at the markets we were serving, assessed the attractiveness, unattractiveness, looked at whether we were performing in those markets, and then decided whether we wanted to do with those markets. The first meaningful step was in 2018. We divested our advanced surgical and orthopedic business. At that time, it was $400 million of our $1.5 billion in sales. That enabled us to focus on the targeted growth markets, the higher-end growth, faster-growing markets, as well as meaningfully deleverage after a significant acquisition in 2015. We have a very clear product line strategy. Those product line strategies are developed by what we call growth teams. You can think of them maybe as more traditional product management organizations.
They are organized as cross-functional teams. They are aligned and focused on individual, very specific end markets. What they do is they develop the value proposition. Back in 2017, 2018, we did product teardowns to look at the markets we were serving and assess the differentiated capabilities required to serve our customers in those therapies with those products. Then we set out to systematically close any gaps in capabilities, and that's where you see a little bit of the highlights here on the acquisitions that either compounded existing capability that was needed to serve customers in those faster-growing end markets, or to add the capabilities that we lacked. I'll talk a little more about acquisitions in a few minutes.
We have an operational strategy that's organized around the Integer Production System, which is our version of lean manufacturing, and that's the way in which we expect to be able to grow operating profit twice as fast as sales. Pre-pandemic, we had made meaningful progress in expanding margins, almost 300 basis points from 2017 to 2019. Like most manufacturing companies during the pandemic, the supply chain and direct labor inefficiencies impacted us. 2023, we're back on the margin expansion trajectory, and we expect to be able to continue doing that. Again, our strategies deliver sustained outperformance and earn that valuation premium. I think it's... When you think about our journey and you think about accelerating revenue growth, it's helpful to just reflect for a minute on the cycle times.
How long does it take from the time you win business to the co-develop, co-design products or components, sub-assemblies with our customers, and then get that through any regulatory approval or clinical, if necessary, and ramp into manufacturing? And so I'll highlight in the middle of the slide, 510(k) products. We have Class II products, typically take three-five years from the time you start the development to the time you start to see any meaningful manufacturing revenue... And for our Class III, premarket approval, active implantable medical device, you're looking at five-nine plus years. Oftentimes, it can be longer, depending upon the iterative process of demonstrating efficacy.
It's important to reflect on this because when you think about our strategy that we developed in 2017 and 2018, some of these programs that were from 2019 and 2020, that have now been through the development process, are now starting to launch into the marketplace. And those programs are what give us the confidence that we can sustain an above-market growth rate. And so these cycle times are impactful and important to understand. So now let me talk about the markets that we're focused on. This is a growth curve that lays out the cardiovascular markets. The curve reflects the maturity of the technology. So far left is early maturity, early development of therapies. Far right is much more mature.
You can imagine the growth rate is really in the ramp period, which is in the blue box. These are the markets that we're very focused on. You won't be surprised to see on the bottom there, the target growth market, Structural Heart being one of them. This is an example of a catheter delivery system that we can do full vertical integration of this delivery system based on our capabilities across our global footprint. The Electrophysiology is a fast-growing market, where, again, we could do full vertical integration and complete finished device assembly of electrophysiology catheters. And then Neurovascular is also another area where we can fully vertically integrate and serve our customers in the co-development and manufacturing of finished devices. So the blue box is our focus area.
We've been very disciplined and structured in everything we do. The growth team's focus is on these markets. They build the value proposition, they assess the market trends, they develop the targeting that we do with customers. All of our acquisitions are aligned with focus on these growth markets. This is the cardiovascular, and now let me show you the cardiac rhythm management and neuromodulation picture. What you see here, the darker blue is neuromodulation, and you'll see a lot of the smaller emerging therapies, sleep apnea, you see Parkinson's, incontinence, cochlear, epilepsy, deep brain stim, pain management, spinal cord stim, a much more mature therapy on the far right.
In the lighter blue, you see cardiac rhythm management, and on the far right, you see traditional pacing, which is a very big market, but a slower growth, more mature technology. There are growth shoots within cardiac rhythm management. On the far left, you see the dual-chamber leadless pacing. Single-chamber is closer to the middle. And you see ventricular assist and cardiac monitoring as other growth shoots within cardiac rhythm management. We look at these businesses together because it's the same technology and capability, and our ability to vertically integrate components and design and develop and manufacture complete IPGs for customers, complete lead systems. We can do the full device, the full kit for customers, as well as delivery systems.
And so our focus within Cardiac Rhythm Management is to serve our existing customers in the large, traditional pacing market, while leveraging those existing capabilities to serve early-stage customers, more innovative single-product customers in Neuromodulation that are developing new and innovative therapies to meet unmet patient need. So we're excited about the growth spurts with the growth shoots within Cardiac Rhythm Management, especially excited about Neuromodulation, with the number of growth investments that our customers are making, and excited to partner with them and bring full end-to-end capabilities to help them design and develop their product, help them through clinical trials, regulatory approvals, and to high-volume manufacturing. So let's reflect on now, you know, the markets and what our objectives are, how are we doing? And so the left side of this page, it gives you the...
gives you a measure of the number of the amount of growth that we've had in programs or products that we're getting designed into. So this is our development sales from 2017 to 2023, and you can see it's grown 230%. This is exactly what our strategy was designed to do. We decided back in 2017 and 2018, the way in which we were going to deliver sustainable growth year after year was getting designed into programs. I shared with you the cycle times, 3-5+ years for the 510(k), 5-9+ years for a PMA Class III. It takes time. So when I said we are on a journey of executing our strategy, this is an example.
Those are now starting to come to fruition, and this is evidence of getting designed into more of our customers' products. We've done that by demonstrating to them the capabilities, adding capabilities, helping them with vertical integration, speed to market, and enabling their success. The left side is the quantity measure, the right side is the quality measure. We, we wanted to shift the focus and, and the number of programs into higher growth markets. So in 2017, we were roughly half of our programs were in faster-growing end markets, half of our programs were in the more mature, slower growth markets. That is now 80% in the faster-growing end markets. That is by design. That is evidence of the discipline and rigor of our strategy.
So our strategy of being designed into more of our customers' programs, on the left, and the higher growth end markets, the targeted growth markets that have inherent tailwinds that meet greater patient need, on the right, these are the programs our customers are innovating the most in, investing the most in, and that drive their growth. So we're enabling their success by participating in more of their most critical programs... So that's the, that was the organic story. Now let's talk for a couple minutes maybe about the inorganic story.
So on the left-hand side, when you look at the free cash flow that we generate every year, you look at the organic growth in EBITDA, and you look at the acquired EBITDA from acquisitions, we estimate we have between $250 million and $300 million of available acquisition capacity every year. And we can spend that while maintaining our debt leverage in the 2.5-3.5 range that we think is so important for investors. The acquisition criteria, we have a very disciplined acquisition targeting process, and we start by, we need the acquisition targets to have differentiated capability.
And if they have differentiated capability, then they're going to be focusing on the targeted growth markets, because it's the capabilities that serve those markets that are most important to us. Of course, we want accretive growth on the top line. We want accretive, accretive margins on the bottom line. If we don't have those at the time of acquisition, we need a very clear path through commercial and operational synergies to achieve that. We have found with the tuck-in size acquisitions that we do, we do bring significant commercial and operational synergies to the, to these acquisitions. Many times they can't scale to high volume. Customers won't trust them with critical programs, scaling them. Oftentimes, we will see the smaller customers doing development work, and then when it comes time for ramping into production, the customer will oftentimes look for somewhere else.
With Integer as the owner, we can scale that, and we find that customers are very receptive and want us to help these companies, and they, and they love the technology that they have, but the scalability of them is oftentimes a concern, and so we get significant operational synergies and commercial synergies. We oftentimes have pipelines that we can funnel into these businesses to help them grow even faster than what they were growing before. So we see $250 million-$300 million of acquisition capacity every year to keep executing on the tuck-in acquisitions that we so value. So how are we doing with our acquisition strategy? We've closed four acquisitions in the last 25 months. I'll start on the right-hand side of the page. Oscor was, was an acquisition in December of 2021.
We've shown you the focus, the primary markets where their sales were concentrated. Again, Electrophysiology, Neuromodulation, Peripheral Vascular, Structural Heart. Our target growth markets is where Oscor was. This was a steerable sheath, introducer, implantable leads, design, development, manufacturing company that has their own products that they bring to market, branded with through them or branded with the customer. It's been a highly successful acquisition for us. We brought significant commercial and operational synergies to that business. And really excited about the performance of Oscor. Aran Biomedical, we closed in April 2022, a biomaterials business that enabled us to now get designed into the implant. We've been very good with access and delivery systems in that space, but now we have biomaterials that can be designed into the implant that gets us on the actual implant.
You can see structural heart and neurovascular being the key focus markets for Aran Biomedical. It's also been a great acquisition, strong technology, very differentiated capabilities. In October of last year, three plus months ago, we closed on InNeuroCo. This is a neurovascular design and development company that's prior strategy had been to design and develop and bring to market complete devices with regulatory approval and then sell them and perform the manufacturing. Our strategy with them will be to co-develop and design devices for our, for our customers, for the leading players in that space. Aspiration catheters, thrombectomy, delivery catheters, steerable microcatheters, a wide range of capabilities that's very unique in this space.
As neurovascular products become more and more outsourced, we're really excited about InNeuroCo's capability and the very strong pipeline we have of programs that we can leverage their capability and drive operational and commercial synergies. Pulse Technologies is an acquisition that a couple hours ago, when we filed this slide in the press release, we announced that we closed last Friday, so it's a brand-new acquisition for us. You can see the markets. Again, it's right in our wheelhouse for the targeted high-growth markets, leadless pacing, neuromodulation, heart pumps, electrophysiology, structural heart, peripheral vascular.
So these four acquisitions will generate about $170 million on an annualized basis, and we believe we can continue to execute on these acquisitions at very fair, competitive prices, and allows us to drive operational commercial synergies and get significant return on these investments. Compounding capability we already have or adding new capability, but always focused in those targeted growth end markets and getting either automatic at acquisition or shortly after acquisition, being accretive to both the growth rate and the margin rate. So let's take a minute on Pulse. Pulse Technologies is a leader in precision micro machining, closed on Friday. They finished 2023 with $42 million in sales, $11 million in EBITDA.
We paid $140 million, that's before the $15 million in net present value of tax benefits, so $125 million after you factor in the $15 million of tax benefits. We'll stay within our 2.5-3.5 times leverage when we close; first quarter is our expectation. So you can see this is a, this is a really good entry multiple for us. It's already accretive on the EBITDA margin rates. We have a significant pipeline of precision micromachining business that we can funnel into the existing capacity that Pulse Technologies has. They're working, and they've been long-standing partners with the leading customers in our space.
Our customers have been very excited to hear about us acquiring them, and we expect that to open up even more capabilities for them. Because, again, as a $42 million company, there was only so much concentration some of our customers were willing to put with a company that size. With Integer's backing now, lots of confidence in their ability now to scale, and we will be helping them accelerate their growth, and we expect this to be accretive to sales and EBITDA, obviously, day one, in 2024. So we're really excited and excited to welcome the 250 Pulse Technologies associates that are based in Pennsylvania. So let me just reinforce for you, this is a...
I just showed you the growth curves for cardiac rhythm management neuromodulation, as well as for cardiovascular. The green circles around these bars just reinforces these are the markets that Pulse Technologies sales are concentrated in today. This is where they're winning business and the customers they're serving. You can see it's right in the targeted blue box. They do have customers on the far right that they've been serving for a long time. So, great customer overlap, great technology and capability. We look forward to helping Pulse Technologies accelerate their growth and expand margins through our operational synergies. Very excited to welcome Pulse Technologies to the Integer family. So let me wrap up. If you look at Integer before the pandemic, 2016-2019, we were growing at about 5%.
5% is right in the middle of that 4%-6% market growth that when you do the weighted average market growth rates. In the middle here, what you see is the top slide, where I showed you that we have increased the number of programs we're being designed into with our customers by 230% in the last six years. On the right side, it shows you that 80% of those programs that we're working on today are in the targeted, faster growth end markets. The bottom half, the bottom slide is the inorganic acquisition strategy that I just laid out for you, that we are executing very successfully with four acquisitions in the last 25 months.
Staying within our 2.5-3.5 times leverage, generating $170 million of annualized sales, bringing accretive sales growth rate and accretive margins to Integer. 2022, we grew 13%. That was roughly half and half organic, inorganic. 2023, we've grown 15%, rounded up, maybe 16%. We believe looking forward, we can be a very consistent, high single-digit, low double-digit grower on the top line, as you consider both organic and inorganic strategies that we have in place, that we believe we're demonstrating successfully that we can execute. That's what we expect to be able to do going forward. Thank you for your time. And maybe I'll turn it over to Zach to see what questions the audience has.
Yeah. Please, if you have any questions, just raise your hand, and there's a mic going around.
It seems like you have an acquisition target a lot. So in terms of the criteria screening, the target on the page number 10, which one would be the, like, the most—the best criteria that you put it as the highest priority?
I think I missed part of it there.
I mean, when you're screening the acquisition target-
Yes.
Yeah, which criteria you think is the most important when you're screening the target?
When you say category, maybe-
Yeah, that's right.
Which of these criteria?
Yes.
Well, they have to have differentiated technology, differentiated capability. Without differentiated technology, differentiated capability, they're not going to be able to deliver innovation to customers, and they're not going to be able to get designed in to the targeted growth markets. The targeted growth markets require a level of innovation and a level of differentiation. So without that, it's a go, no-go. That's a binary. We also need them to be focused and designed into or have a pipeline in the faster-growing end markets. Now, maybe they could have some, maybe a lower mix of the faster-growing end markets, but differentiated capability, and we could accelerate that transition, like we have with an Integer, to accelerate the transition to more development programs and more manufacturing sales into those faster-growing end markets.
But it starts with differentiation and innovation capability. That's binary. We obviously want those faster-growing end markets in the pipeline because that's your growth pipeline. And I shared with you the cycle times. If it's three-five years on a 510(k) to get the designed in, developed, and get to manufacturing, it's a much longer payback if you're not already in those markets, and it's a much longer payback if you're not already in that development cycle. And so those both could become somewhat binary, but it starts with differentiation.
If we have differentiated capability and they're designing into the faster-growing end markets, maybe they, those programs haven't matured to the point where they're ramping the sales, but you can see that, you can see the pathway to it, well, then that could still be a great acquisition. But it would be tough to buy a company with just great technology and then start that three-five or five-nine-year cycle. That would be very, very challenging to do to get an acceptable return.
I guess I have one question. You talked a lot about the target growth markets, target growth end markets. Are there any, like, sub-markets within those that you guys are kind of honing in on and really focusing for growth? And then part two would be: within those sub-markets, do you see that it's more advantageous to go at that organically versus inorganically, or is there no real difference?
Yeah, great, great, great question. So I'll just point to the cardiovascular. I mean, Pulsed Field Ablation is an emerging technology that three or four years ago we were working on.
Mm-hmm.
But with recent clinical data, says now this has the potential to be a much more significant share of ablation technology capability. So our growth teams are studying where our customers are investing. They're working with our customers to understand where they're investing, where they're innovating, and it really starts by: where's their unmet patient need?
Right.
Which is where they start, where they can introduce a therapy, expand a TAM-
Mm-hmm
... by bringing a new therapy to market that currently wasn't available. And so structural heart has significant opportunities there with tricuspid repair, replacement, as an example. So we are studying with our customer where they're innovating and where they need help, and we're targeting getting in, designed in early in those faster-growing sub-markets. We feel like we already have a strong position in electrophysiology. Our capabilities to vertically integrate and design and assemble a finished device and deliver that for our customers exist today. When you think about pulse field ablation, those capabilities really are the same capabilities.
Mm-hmm.
We're working on a number of different programs, and we feel that Pulse Field Ablation can be a strong tailwind for us, as that comes into the marketplace. If you think about neuromodulation and just stare at the different innovative therapies that are coming to market here-
Right
... we have a process where we have 15-20 different customers that are in development stage, where they're working to prove efficacy-
Mm-hmm
... on devices. And once we get they get through that phase, we'll then help them take them through clinical trials, build the clinical units for them, support them through regulatory to high volume manufacturing. And we have expanded to be much, much more than just spinal cord stim. You know, if you go five or six years ago, we were predominantly spinal cord stim and neuromod, and now spinal cord stim is only about half of our neuro business, and the majority of our bets are in non-SCS with non-SCS customers and therapy. So we're incredibly excited about those customers. We call them our emerging customers in pre-market approval, PMA, and we've shared the historical revenue growth on those. And we have nine...
I think it's nine customers that are in manufacturing ramp or launch phase. And we had shared that in 2020, we had, I think it was $20 million of sales with that group. In 2022, we had $50 million of sales with those nine customers, and we have a forecast that we provided for 2024 that's $80 million-$100 million.
Wow.
The idea is just to show that as those customers-
Sure
get to their products to market, they begin to accelerate and ramp, and you know, we're on a trajectory to deliver on that $80 million-$100 million. And so we have a lot of different sub-markets that we're focused on.
Yeah.
That's what's guiding the programs we're getting designed into. And I'll just reiterate, the 230% growth in the number of programs or the dollars of revenue, it's a proxy for number of programs.
Mm-hmm.
80% is in the faster-growing end markets with those very specific sub-markets. Neurovascular is another one.
Mm-hmm.
Especially with the acquisition of InNeuroCo, the capability they bring, we had a strong development pipeline, and the expertise within InNeuroCo is also a big enabler for us to capitalize on that strong pipeline.
Hi, just a very quick question on the backlog. You had about $1 billion of backlog. That's really, really strong. Where did that land, I guess, exiting 2023? You talked about 200 basis points of growth coming above your longer. Shouldn't that elevated backlog help you, you know, grow even faster than that in the near term? And just lastly, related to that, we're hearing, like, med tech companies talk about inventory reduction to free up cash. You touched upon this topic at a prior conference.
Mm-hmm.
Just curious, how has that trended in the last quarter, and why shouldn't your backlog serve as a buffer from seeing inventory reduction? Thank you.
Great. So I'll try to hit all of those. Our backlog, which we think of as an order book. These are specific orders from customers by SKU, by quantity, with a delivery date. It remains very, very strong. I can't remember the exact number that we ended with, but I think we had said it was about $1 billion. It's still about $1 billion. It hasn't meaningfully changed in the last few months since I last referenced that. That gives us tremendous visibility to what our customers want. That gives us great visibility for the next really six months. To your question on inventory management of our customers, we've heard the same thing.
I think I shared on our third quarter earnings call that we saw customers taking action on inventory back during the summer of 2023, and we felt the impact of some of that in the third quarter. And we had also shared that in the fourth quarter, we had already factored into, at that time, our earnings guidance. What we observed is kind of normal year-end inventory management that we observed before the pandemic, that we saw certain customers, certain sites doing that. You can look at our fourth quarter results. We did release a range for the fourth quarter, which was $411-$414 on the sales, 10%-11% sales growth.
I think the high end of our sales guidance for the fourth quarter was $410? $411?
$411. So the high end of our guidance was $411, and we landed and we've just given an update, $411-$414. So we were just slightly above the high end of our sales guidance. So the quarter played out largely as we expected and how we with slightly better than what we guided to. And so with that order book that you described, it gives us great visibility looking into 2024. At our earnings call, we'll update on our fourth quarter earnings call February fifteenth. The rest of the income statement, we're still in the closing process, so we don't have an update to share on that. We'll do that on the fourth quarter earnings call, February fifteenth.
We'll give you an update also on 2024 guidance. Did I, did I answer everything?
All right, thank you. Thank you. Multi-part question there. Thanks.
Other questions?
Thanks. Do you need any exposure to, to any of the sort of digital technology or sensors roadmap of the, of your end clients to kind of maintain that growth going forward? So obviously, there's a lot of buzz about the med techs integrating, you know, AI and processing. But just wondering how you sort of how you prepare for that, or whether you're more isolated from that trend.
Yeah, it's a great, great question. Your question is digital technologies, artificial intelligence, and are we leveraging that or seeing that? We've not seen demand from that. I think one of our large customers just announced that they're going to be leveraging AI going forward, and it sounds like I thought I interpreted that to say they're starting, but they haven't done much with it. That's obviously an area of interest and an area that we'll monitor, but at the moment, we're not doing anything in that space, but it's something that we'll be monitoring and looking at for how we might be able to leverage it.
Our information technology team has ideas and thoughts on how we might be able to leverage it to operate the business more effectively, and so we'll certainly be looking for that if we can leverage it for operational efficiencies. Thank you for the question.
So you had touched on, you know, you, you guys closed on 4 acquisitions in the last 25 months. You know, how were you able to execute that? That's a good amount of acquisitions for you guys. And I guess my next question would be, 25 months in the future, you know, how do you guys see your ability to continue to execute on these acquisitions?
Yeah, great, great, great question. We believe we can continue to execute on these top-end acquisitions. We think we're in a very unique position in our industry to be able to identify and diligence these acquisitions. Many of the acquisitions we're doing are under the radar of what I would call the investment banking profession because of the size of them. The amount of investment it would take for investment banking to identify, curate, and study these kinds of acquisitions wouldn't justify the payoff that they would receive. Which is perfect for us, because it leaves the whole pool and the landscape open to us. But we are oftentimes suppliers to these-
Mm-hmm
... to these acquisitions. We oftentimes can identify when we see an unusual growth spurt with these particular customers. We compete with these acquisitions as well. Our customers actually share with us the potential opportunities for us to acquire them, because they value what we do. And when they see really differentiated capability and service in a customer that's smaller than they would like to make a big award a big chunk of business, they offer it to us. "Hey, you know, this looks like a great technology. You guys could take them and scale them, and we'd love to do more business with them." And so there's a lot of different ways and sources that we identify.
We also think we're in an incredibly unique position to be able to diligence these businesses by virtue of our knowledge of the industry. Most of the programs that the acquisition targets are on or serving, we're on those programs too, with other components, and we're working with those customers, so we almost always already have an understanding of the programs, of the products, and where they are in the development cycle and the launch cycle. So we come in with a level of understanding already, to very quickly determine whether or not the what the target thinks they're doing or thinks their growth is, we already have our own independent view from having from working with those customers as well. So we find that puts us in a very unique position.
I've said this many times: I think the best decisions we've ever made in M&A have been No.
Mm-hmm.
And then we watch to see how they play out over time, and we learn from that. But our knowledge is a key differentiator, and it's really the breadth of how we serve our customers and the breadth of programs that we are on with our customers, that enables us to do that very quickly, because it can be very, very time-consuming and labor-intensive to do that diligence. But our knowledge of the industry and the programs and existing customers enables us to move very quickly and draw a conclusion on whether it's going to be has the potential to be, A, differentiated technology, B, accretive to our sales-
Mm
... and profitability with operational and commercial synergy. So we have confidence in our inorganic strategy, our acquisition strategy.
Mm.
It's been honed over the last six or seven years. You know, Greatbatch, previous to becoming Integer, had done a lot of acquisitions as well.
Mm-hmm.
We've got a team that does the integrations, and we think we've got a really good operating cadence to that. And we've been successful with the acquisitions we've done today, and we believe we'll be able to continue to do that.
... Then I guess, like, you kind of touched on this throughout, but, you know, you mentioned pre-pandemic, you guys were around 5% growth, and then now you're forecasting high single-digit, low double-digit. Because of all the things you just touched on from inorganic and then also the backlog and the pipeline, do you-- are you guys confident that this is gonna be sustainable, both inorganically and organically, going forward?
We absolutely are, and that—I think that's the key is, we've demonstrated with four acquisitions in the last 25 months that bring $170 million of sales to Integer. We have a very robust pipeline of these acquisitions. Many of these acquisitions, we curate over multiple years. I'll use Oscor as an example. In December of 2021, we had been working with the individual owner of Oscor for five years, and we had stayed close to them for five years. And we found the right window, without bankers on either side, to get together and come to what we thought was a fair price for the business. And that's been a grand slam business for us in terms of the return.
The operational synergies we've been able to bring, the commercial synergies, that business is an absolute grand slam. And the seller is still incredibly happy because they knew and understood that they couldn't take the business to where we've taken it because of our customer relationships and the pipeline of opportunities we had and the commercial or the operational synergies that we were able to bring. So we curate these opportunities over many years, and when you have mostly founder, family-led business or individual owners, when it comes down, at the end of the day, they care what happens to their legacy of their business.
That doesn't mean they're gonna accept a below-market price necessarily, but when it comes down to who do they, who do they pick, who do they lean on, we—it's oftentimes, "Who's gonna take care of my business and grow it and invest in it?" Because our objective is to invest and grow the businesses, and we think we've demonstrated a history of that. We have a reputation in the industry for doing that. And there's been enough acquisitions where they've seen that result that sellers get. We also think we get a very fair price, and because most of our deals are not through a formalized process-
Yeah
... we don't end up paying an excessive premium, that can sometimes happen with a very competitive process. So we're confident in our ability to continue to execute our M&A strategy.
And then last question, you know, if you have an elevator pitch on why to invest in Integer now, you know, you guys have shown a lot of exciting things going forward, but I guess, why would you invest now, and what are you excited about in the upcoming year?
I'm excited about the development pipeline that we're already designed into. It's been a journey.
Mm.
This is 7 years as CEO. We laid out in the beginning of 2018 what everyone looked at me and said, "Well, those seem fairly aspirational, to grow 200 basis points faster than your markets when you've been growing at the market, maybe, in some cases, sometimes a tad below the market, and you wanna grow profit twice as fast as sales when you haven't been expanding margins. And oh, by the way, you're 6x levered." That was 2017, 2018. We knew we could deliver this. We knew the cycle times would take, for 510(k)s, 3-5 years, for PMAs, 5-9+ years. We knew it would take time, and it has taken time, but the evidence is in the number of programs we're developed into.
The evidence is in 13% sales growth in 2022, 16% sales growth in 2023, a strong development pipeline, eighty percent in the targeted growth markets, acquisitions that are bringing accretion, accretive sales and profitability growth rate, while all maintaining a 2.5-3.5 times debt leverage, which is so important to, to investors. I'm excited about the growth trajectory, customer relationships, and the associates at Integer, who are fulfilling their vision of enhancing patients' lives and doing it while delivering excellence.
Well, thank you, Joe, and good luck in the future.
Thank for that .