<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended September 30, 1996

                         Commission file number 0-26224

                        INTEGRA LIFESCIENCES CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                                          51-0317849
   -------------------------------                          ------------------
   (State or other jurisdiction of                           (I.R.S. Employer
    incorporation or organization)                          Identification No.)

           105 Morgan Lane
        Plainsboro, New Jersey                                    08536
- ----------------------------------------                       ----------
(Address of principal executive offices)                       (Zip code)

                                 (609) 275-0500
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                                                       [x] - Yes         [ ]- No

         As of November 10, 1996, the registrant had outstanding 28,551,315 
shares of Common Stock, $.01 par value.


<PAGE>

                        INTEGRA LIFESCIENCES CORPORATION


                                     INDEX



<TABLE>
<CAPTION>
                                                                                Page Number
                                                                                -----------
<S>                                                                             <C>        

PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets as of September 30, 1996
            and December 31, 1995 (Unaudited)                                           3

         Condensed Consolidated Statements of Operations for the
            three and nine months ended September 30, 1996 and 1995 (Unaudited)         4

         Condensed Consolidated Statements of Cash Flows for the
            nine months ended September 30, 1996 and 1995 (Unaudited)                   5

         Notes to Unaudited Condensed Consolidated Financial
            Statements                                                                  6


Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                                   7



PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K                                              11


SIGNATURES                                                                             12

Exhibits                                                                               13
</TABLE>


                                       2


<PAGE>



PART I.  FINANCIAL INFORMATION


Item 1.   Financial Statements


               INTEGRA LIFESCIENCES CORPORATION AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)




<TABLE>
<CAPTION>
                                                    September 30, 1996       December 31, 1995
                                                    ------------------       -----------------
<S>                                                     <C>                     <C>           
ASSETS
Current Assets:
     Cash and cash equivalents.....................     $    8,037,079          $    4,512,434
     Short-term investments........................         24,265,905               1,197,812
     Accounts receivable, net......................          2,174,144               1,768,099
     Inventories...................................          3,059,632               1,372,313
     Prepaid expenses and other current assets.....            481,179                 468,547
                                                        --------------          --------------
         Total current assets......................         38,017,939               9,319,205
 Property and equipment, net.......................          8,836,013               9,605,796
 Investments.......................................          4,006,280                    --
 Intangibles and other assets......................             79,065                 452,719
                                                        --------------          --------------

    Total assets...................................     $   50,939,297          $   19,377,720
                                                        ==============          ==============


LIABILITIES AND STOCKHOLDERS' EQUITY 
Current Liabilities:
     Accounts payable, trade.......................     $      292,544          $      321,304
     Accrued expenses..............................          1,739,164               1,261,771
     Deferred revenue..............................             10,650                  10,650
     Other current liabilities.....................            129,731                 148,173
     Short-term debt-related party.................               --                    10,314
     Accrual for plant closing.....................               --                    90,914
                                                        --------------          --------------
         Total current liabilities.................          2,172,089               1,843,126
 Other liabilities.................................            133,468                 107,908
                                                        --------------          --------------

         Total liabilities.........................          2,305,557               1,951,034
                                                        --------------          --------------

 Commitments and contingencies


 Stockholders' Equity:
 Preferred stock, $.01 par value (15,000,000
     authorized shares; no shares issued or out-
     standing).....................................               --                      --
 Common stock, $.01 par value (60,000,000
     authorized shares; 28,551,315 and 23,493,916
     issued and outstanding at September 30, 1996
     and December 31, 1995, respectively)..........            285,513                 234,939
 Additional paid-in capital........................        105,092,464              68,730,310
 Notes receivable - related parties................            (34,875)                (84,875)
 Unrealized losses on investments..................            (72,243)                    -
 Accumulated deficit...............................        (56,637,119)            (51,453,688)
                                                        ---------------         ---------------

         Total stockholders' equity................         48,633,740              17,426,686
                                                        --------------          --------------

 Total liabilities and stockholders' equity........     $   50,939,297          $   19,377,720
                                                        ==============          ==============
</TABLE>


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

                                       3


<PAGE>


               INTEGRA LIFESCIENCES CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                      Three Months Ended September 30,          Nine Months Ended September 30,
                                                   --------------------------------------   ---------------------------------------
                                                         1996                 1995                1996                 1995
                                                   -----------------    -----------------   -----------------    ------------------
<S>                                                  <C>                  <C>                 <C>                  <C>          
REVENUE
Product sales.....................................   $   2,590,560        $   1,764,278       $   8,132,165        $   5,814,262
Research grants...................................         176,447              219,840             609,982              739,853
Product license fees..............................            --                500,000             500,000              500,000
Royalties.........................................          66,416               43,975             204,409              164,332
Contract product development......................          42,270               25,350              76,136               25,350
                                                   -----------------    -----------------   -----------------    ------------------
    Total revenue.................................       2,875,693            2,553,443           9,522,692            7,243,797

COSTS AND EXPENSES
Cost of product sales.............................       1,574,780              833,831           4,461,665            2,854,785
Research and development..........................       1,591,424            1,556,534           4,814,159            3,590,639
Selling, general and administrative...............       2,349,426            1,596,639           6,873,956            4,407,458
Acquired in-process research and development......            --             19,592,567                --             19,592,567
                                                   -----------------    -----------------   -----------------    -----------------
    Total costs and expenses......................       5,515,630           23,579,571          16,149,780           30,445,449

Operating income (loss)...........................      (2,639,937)         (21,026,128)         (6,627,088)         (23,201,652)
Interest income...................................         490,159               94,705           1,331,684              175,090
Interest expense - related party..................            --                (60,008)               (126)            (187,591)
Loss on sale of investments.......................            --                   --               (26,176)                --
Gain on sale of assets............................          72,736                 --               138,275                5,387
                                                   -----------------    -----------------   -----------------    -----------------

Net income (loss).................................   $  (2,077,042)       $ (20,991,431)      $  (5,183,431)       $ (23,208,766)
                                                   =================    =================   =================    =================

Net income (loss) per share.......................   $       (0.07)       $       (0.97)      $       (0.19)       $       (1.15)
                                                   =================    =================   =================    =================
Weighted average number of common and common
    equivalent shares outstanding.................      28,535,093           21,694,627          27,966,990           20,257,688
                                                   =================    =================   =================    ==================
</TABLE>


                    The accompany notes are an integral part
               of the condensed consolidated financial statements

                                       4


<PAGE>


               INTEGRA LIFESCIENCES CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                          Nine Months Ended September 30,
                                                                       --------------------------------------
                                                                             1996                 1995
                                                                       -----------------    -----------------
<S>                                                                      <C>                  <C>           
OPERATING ACTIVITIES:
    Net loss........................................................     $  (5,183,431)       $ (23,208,766)
    Adjustments to reconcile net income (loss) to net cash used in
       operating activities:
       Depreciation and amortization................................         1,554,084              849,970
       Gain on sale of assets.......................................          (119,258)              (5,387)
       Loss on sale of investments..................................            26,176                 --
       Amortization of discount and interest on investments.........          (780,600)              (4,197)
       Common stock issued and stock options vested
          for services rendered.....................................            56,404               70,000
       Acquired in-process research and development.................              --             19,592,567
       Deferred revenue.............................................              --               (350,000)
       Changes in assets and liabilities:
          Accounts receivable.......................................          (406,045)            (250,826)
          Inventories...............................................        (1,687,319)            (429,475)
          Prepaids and other current assets.........................           (12,633)             (14,833)
          Non-current assets........................................           141,479              (19,875)
          Accounts payable, accrued expenses and other liabilities..           539,441             (625,903)
                                                                       -----------------    -----------------

       Net cash used in operating activities........................        (5,871,702)          (4,396,722)
                                                                       -----------------    -----------------

INVESTING ACTIVITIES:
    Cash acquired in business acquisition...........................              --             13,116,670
    Proceeds from sale of assets....................................           301,389               12,628
    Payments of acquired bankruptcy claims and acquisition costs....           (10,409)          (2,085,318)
    Purchases of investments........................................       (39,530,332)          (1,176,844)
    Proceeds from the sales/maturities of investments...............        13,138,142                   -
    Purchases of property and equipment.............................        (9,889,348)          (2,418,126)
                                                                       -----------------    -----------------

       Net cash used in investing activities........................       (27,090,144)           7,449,010
                                                                       -----------------    -----------------

FINANCING ACTIVITIES:
    Principal payment on notes payable..............................              --                 (4,000)
    Payments of long-term debt......................................           (10,314)          (2,177,578)
    Principal payment on notes receivable - related parties.........            50,000                   -
    Proceeds from long-term debt....................................              --              1,937,591

    Proceeds from exercised stock options...........................           785,343               54,855
    Proceeds from sale of common stock..............................        35,661,462            1,000,001
                                                                       -----------------    -----------------

       Net cash provided by financing activities....................        36,486,491              810,869
                                                                       -----------------    -----------------

Net (decrease) increase in cash and cash equivalents................         3,524,645            3,863,157

Cash and cash equivalents at beginning of period....................         4,512,434            3,331,445
                                                                       -----------------    -----------------

Cash and cash equivalents at end of period..........................     $   8,037,079        $   7,194,602
                                                                       =================    =================
- ----------------------------
Supplemental disclosure of non-cash investing and financing activities:
       Debt to equity conversion....................................              --          $   1,500,005
       Common stock issued in business acquisition..................              --             30,912,877
</TABLE>


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

                                       5


<PAGE>


               INTEGRA LIFESCIENCES CORPORATION AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.   In the opinion of management, the September 30 unaudited condensed
     consolidated financial statements contain all adjustments (consisting only
     of normal recurring accruals) which the Company considers necessary for a
     fair presentation of the financial position and results of operations of
     the Company. Operating results for the interim periods ended September 30,
     1996 are not necessarily indicative of the results to be expected for the
     entire year. Certain information and footnote disclosures normally
     included in financial statements prepared in accordance with generally
     accepted accounting principles have been condensed or omitted. The
     preparation of financial statements in conformity with generally accepted
     accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities,
     including disclosures of contingent assets and liabilities, and the
     reported amounts of revenues and expenses during the reporting periods.
     Actual results could differ from those estimates. These unaudited
     condensed consolidated financial statements should be read in conjunction
     with the Company's consolidated financial statements for the year ended
     December 31, 1995 included in the Company's Annual Report on Form 10-K.

2.   The Company's current investment policy is to invest available cash
     balances in high quality debt securities with maturities not to exceed 18
     months. As of September 30, 1996, the Company's marketable securities,
     which are all classified as available-for-sale, are comprised of the
     following:


<TABLE>
<CAPTION>
                                                    Amortized         Unrealized          Fair
                                                       Cost             Losses           Value
                                                 --------------      -----------     -------------
<S>                                               <C>                <C>             <C>          
     U.S. Government securities.................  $   2,054,801      $   (6,896)     $   2,047,905
     U.S. Government agency securities..........     26,289,627         (65,346)        26,224,281
                                                  -------------      -----------     -------------
         Total investments......................     28,344,428         (72,242)        28,272,186
     Short-term portion of investments..........  $  24,344,428      $  (78,522)     $  24,265,906
                                                  =============      ===========     =============
     Long-term portion of investments...........  $   4,000,000      $     6,280     $   4,006,280
                                                  =============      ===========     =============
</TABLE>


      All long-term investments are securities with call options within one
year.

3.    Inventories consist of the following:



<TABLE>
<CAPTION>
                                               September 30, 1996          December 31, 1995
                                               ------------------          -----------------
<S>                                            <C>                         <C>          
      Finished goods.......................    $         889,469           $         480,343
      Work-in-process......................            1,750,730                     516,840
      Raw materials........................              419,433                     375,130
                                               -----------------           -----------------
                                               $       3,059,632           $       1,372,313
                                               =================           =================
</TABLE>


4.   On February 1, 1996, the Company completed the issuance of 4,671,250
     shares of common stock through a public offering resulting in net proceeds
     of approximately $35.6 million.

5.   Net loss per share is based on the weighted average number of common and
     common equivalent shares outstanding during the periods. Options and
     warrants have been excluded in the calculation of common and common
     equivalent shares for the periods they are antidilutive.

                                       6

<PAGE>



Item 2.      Management's Discussion and Analysis of Financial Condition
                  and Results of Operations

     The following discussion contains trend information and other
forward-looking statements related to the future use of INTEGRA(Trademark) 
Artificial Skin and anticipated expenditure levels and are made pursuant to 
the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such
statements involve risks and uncertainties which may cause results to differ
materially from those set forth in these statements. In addition, the economic,
competitive, governmental, technological and other factors identified in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission could affect such results.

General

     The Company is engaged in the manufacturing and sale of collagen and other
biomaterials-based medical products and related product development, and in the
development of collagen and other biomaterials-based regenerative medicine
technologies. The Company's business strategy has been to selectively acquire a
number of synergistic biomaterials and extracellular matrix-based technologies.
The Company acquired ABS LifeSciences, Inc. in November 1990, Colla-Tec, Inc.
in September 1991, Vitaphore Corporation in April 1993, Biomat Corporation in
September 1993, another company's interest in a joint venture with Vitaphore in
December 1993 and Telios Pharmaceuticals, Inc. ("Telios") in August 1995. As a
result of the Company's acquisition of Telios, the consolidated financial
results for the periods presented below may not be directly comparable.



Results of Operations

Three Months Ended September 30, 1996 Compared to Three Months Ended 
September 30, 1995

     Total revenues increased to approximately $2.9 million for the three
months ended September 30, 1996 from $2.6 million for the three months ended
September 30, 1995. Increases in product sales, royalty revenue and contract
product development revenue were offset by a decrease in product license fees
and research grant revenue. Product sales increased to $2.6 million for the
three months ended September 30, 1996 from $1.8 million for the three months
ended September 30, 1995, due primarily to sales of the INTEGRA(Trademark)
Artificial Skin product ("INTEGRA(Trademark)"). Sales of INTEGRA(Trademark) for
the three months ended September 30, 1996 were $860,000 compared to $20,000 in
international sales for the three months ended September 30, 1995, which was
prior to the U.S. Food and Drug Administration (FDA) approval of the Company's
Premarket Approval Application in March 1996. During the three-month period
ended September 30, 1996, the Company believes approximately 85 patients were
treated with INTEGRA(Trademark). The Company has determined the approximate
patient total by reviewing sales information as well as case information
supplied by physicians to the extent such information is made available to the
Company. The number of patients treated quarterly may not necessarily be
comparable to INTEGRA(Trademark) sales due to the timing of orders, the amount
of INTEGRA(Trademark) use per patient and customer stocking levels, particularly
internationally where the Company sells through distributors. The Company
believes that the primary application of INTEGRA(Trademark) has been for
patients with severe life-threatening burns, but is aware of its application in
reconstructive and wound healing procedures, primarily outside the United
States. Factors influencing the use and sale of INTEGRA(Trademark) include
physician training prior to product use, the collection of pharma-economic data
to address initial product reimbursement issues, additional positive clinical
results and the Company's ability to obtain FDA approvals for additional
indications.

     Product sales of the Company's other medical devices were approximately
$1.7 million for the three month periods ended September 30, 1996 and 1995,
with an increase in the Company's dental product line offset by decreases in
its ophthalmic and surgical and hemostasis product lines. The dental product
line increase came from the Company's BioMend product which commenced market
roll-out in August 

                                       7


<PAGE>

1995. The Company's ophthalmic product sales decreased because of production
difficulties, and surgical and hemostasis product sales decreased largely due
to timing differences in orders shipped to contract distributors. The Company
is currently evaluating its ophthalmic product line production difficulties
which, if not remedied, could continue to affect the Company's future sales.
Sales of the Company's other medical devices can vary significantly on a
quarter to quarter basis depending on the timing of shipments to contract
distributors. Export sales for the three months ended September 30, 1996
increased to $570,000 from $300,000 for the three months ended September 30,
1995, and included $330,000 in INTEGRA(Trademark) sales.


     Research grant revenue decreased for the three-month period ended
September 30, 1996 compared to the same period in 1995 due to the completion of
funding under a Contraceptive Research and Development ("CONRAD") program grant
received in 1995. The Company recently received $570,000 in grant funding under
five separate grants, three of which are Phase 1 Small Business Innovative
Research grants from the National Institute of Health. The two other grants are
a matching State of New Jersey grant in collaboration with Rutgers University
and an additional CONRAD reproductive health grant. The Company did not receive
any licensing fees during the three-month period ended September 30, 1996
compared to $500,000 received during the three-month period ended September 30,
1995 when its BioMend(Trademark) product received 510(k) approval. The Company
continues to seek research grants, licensing and development funding for several
of its technologies. The timing and amount of this funding, if any, can not be
predicted.

     Cost of product sales increased to approximately $1.6 million (61% of
product sales) for the three months ended September 30, 1996 from $830,000 (47%
of product sales) for the three months ended September 30, 1995. The increase
in cost of product sales as a percentage of sales is primarily attributable to
$450,000 in inventory write-offs largely from in-process production
difficulties in the Company's ophthalmic product line. Excluding the inventory
write-offs, the Company's gross margin for the three months ended September 30,
1996 would have improved compared to the three months ended September 30, 1995
due to increased sales of higher gross margin products, including
INTEGRA(Trademark). The Company is currently evaluating the in-process
production difficulties in its ophthalmic product line, and any delay in the
resolution of these difficulties could continue to negatively impact the
Company's gross margin. The Company believes that its current capacity to
produce INTEGRA(Trademark) and its other medical device products is sufficient
to support significant growth, and the utilization of this capacity will affect
its gross margin on product sales.

     Research and development expense was approximately $1.6 million for the
three-month periods ended September 30, 1996 and 1995. Research and development
expense incurred by the Company's Telios operation increased to $590,000 for
the three months ended September 30, 1996 from $430,000 for the three months
ended September 30, 1995, which included only six weeks of Telios'
post-acquisition activity. The Company's research and development efforts
involving INTEGRA(Trademark) decreased significantly between the 1995 and 1996
periods as a result of the transfer of the product to manufacturing. Additional
increases in other research and development projects partially offset the
decrease related to the INTEGRA(Trademark) transfer. These increases included
costs associated with the addition of full-time and part-time research and
development staff and increased expenditures for outside contract research
activities for the Company's regenerative medicine technologies. The Company
expects the level of research and development expenditures in 1996 to continue
to remain at or exceed 1995 expenditures due to expenditures related to a
planned post approval study of INTEGRA(Trademark) and clinical trials for the
Company's regenerative and matrix medicine technologies. The amount of resources
and the allocation of those resources to fund research and development will vary
depending upon a number of factors, including the progress of development of the
Company's technologies, changing competitive conditions and determinations with
respect to the commercial potential of the Company's technologies.


                                       8


<PAGE>


     Selling, general and administrative expense increased to approximately
$2.3 million for the three-month period ended September 30, 1996 from $1.6
million for the three-month period ended September 30, 1995, due in part to an
increase of $200,000 in general and administrative expense incurred by the
Company's Telios operation. A significant portion of Telios' administrative
expense is maintaining its intellectual property and for the three-month period
ended September 30,1996 included significant expenditures related to patent
infringement litigation. Sales and marketing expenses increased by $420,000 as
a result of the domestic and international market introduction of 
INTEGRA(Trademark), which included approximately seven domestic and 
international surgeon training programs during the third quarter of 1996. These
costs were partially offset by a decrease in costs resulting from a reduction in
the size of the Company's direct sales force for certain medical product lines.
The Company is anticipating selling, general and administrative expense to
remain higher than 1995 levels due to the ongoing introduction of
INTEGRA(Trademark) and Telios' patent infringement litigation.

Nine Months Ended September 30, 1996 Compared to Nine Months Ended 
September 30, 1995

     Total revenues increased to approximately $9.5 million for the nine months
ended September 30, 1996 from $7.2 million for the nine months ended September
30, 1995. Increases in product sales, royalty revenue and contract product
development revenue were offset by a decrease in research grant revenue.
Product sales increased to $8.1 million for the nine months ended September 30,
1996 from $5.8 million for the nine months ended September 30, 1995, due
primarily to $1.8 million in INTEGRA(Trademark) sales. During the nine-month
period ended September 30, 1996, the Company believes approximately 159 patients
were treated with INTEGRA(Trademark). The number of patients treated over any
given period may not necessarily be comparable to INTEGRA(Trademark) sales due
to the factors mentioned previously.

     Product sales of the Company's other medical devices increased to
approximately $6.3 million for the nine months ended September 30, 1996 from
$5.8 million for the nine months ended September 30, 1995, with increases in
the Company's infection control and dental product lines partially offset by
decreases in its wound care, ophthalmic, and surgical and hemostasis product
lines. The largest sales increases were in the Company's BioMend and BioPatch
products both of which are sold under private label distribution contracts. The
surgical and hemostasis product sales decreased because of lower requirement
levels under a private label distribution contract and price decreases in its
direct distribution products. The Company has also recently introduced
additional surgical and hemostasis product sizes under its direct distribution
product lines. The ophthalmic product line decrease was a result of production
difficulties experienced during 1996. Export sales for the nine months ended
September 30, 1996 increased to $1.3 million from $790,000 for the nine months
ended September 30, 1995, and included $620,000 in INTEGRA(Trademark) sales in
over ten countries during the 1996 period.


     Research grant revenue decreased for the nine-month period ended September
30, 1996 compared to the same period in 1995 due primarily to the completion of
funding under a CONRAD Program grant. The increase in contract product
development revenue is related to a wound care product development agreement
which expired in October 1996.

     Cost of product sales increased to approximately $4.5 million (55% of
product sales) for the nine months ended September 30, 1996 from $2.9 million
(49% of product sales) for the nine months ended September 30, 1995. The
increase in costs of product sales is attributable to higher product sales,
costs associated with scale-up of the INTEGRA(Trademark) manufacturing process
during the first quarter of 1996 and inventory write-offs during the third
quarter of 1996.

     Research and development expense increased to approximately $4.8 million
for the nine-month period ended September 30, 1996 from $3.6 million for the
nine-month period ended September 30, 1995, due primarily to $1.6 million in
research and development expense incurred by the Company's Telios operation.
The Company's research and development efforts involving INTEGRA(Trademark)
decreased significantly between the 1995 and 1996 periods as a result of the
transfer of the product to 

                                       9


<PAGE>


manufacturing. Additional increases in other research and development projects
partially offset the decrease related to the INTEGRA(Trademark) transfer. These
increases included costs associated with the addition of full-time and
part-time research and development staff and increased expenditures for outside
contract research activities related to the Company's regenerative medicine
technologies.

     Selling, general and administrative expense increased to approximately
$6.9 million for the nine-month period ended September 30, 1996 from $4.4
million for the nine-month period ended September 30, 1995, due in part to an
increase of $1.3 million in general and administrative expense incurred by the
Company's Telios operation. Sales and marketing expenses increased by $1.1
million as a result of the domestic and international market introduction of
INTEGRA(Trademark), which included approximately 21 domestic and international
surgeon training programs during the first nine months of 1996. These costs were
partially offset by a decrease in costs resulting from a reduction in the size
of the Company's direct sales force for certain medical product lines.
Additional smaller increases in expenses were incurred in administrative and
regulatory areas related to the expansion of the Company's business and public
company reporting requirements.

Liquidity and Capital Resources

     At September 30, 1996, the Company had cash and cash equivalents of
approximately $8.0 million, short-term and long-term investments totaling $28.3
million and no long-term debt. The Company's principal sources of liquidity
during the nine-month period ended September 30, 1996 were the receipt of $35.6

million in proceeds from an underwritten public offering of the Company's
common stock, $790,000 from the exercise of stock options under the Company's
stock option plans and $300,000 from the sale of fixed assets. The principal
uses of funds during the period were $5.9 million for operations and $990,000
in purchases of property and equipment. As a result of the public offering, the
Company's revolving line of credit terminated in accordance with its terms.

     The Company anticipates that it will continue to use its liquid assets to
fund operations until sufficient revenues can be generated through product
sales and collaborative arrangements. The Company also expects that it will
need to fund additional growth in its accounts receivable and inventory in
conjunction with INTEGRA(Trademark). There can be no assurance that the Company
will be able to generate sufficient revenues to obtain profitability.

                                      10


<PAGE>



P
ART II.  OTHER INFORMATION



Item 6.   Exhibits and Reports on Form 8-K

(a) Exhibits

         11       Statement re Computation of Per Share Amounts

         27       Financial Data Schedule


(b) Reports on Form 8-K
         None


                                      11


<PAGE>



                                   SIGNATURES


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



                              INTEGRA LIFESCIENCES CORPORATION






Date: November 14, 1996       /s/  Richard E. Caruso
                              -----------------------------------------------
                              Richard E. Caruso, Ph.D.
                              Chairman, President and Chief Executive Officer




Date: November 14, 1996       /s/  John R. Emery
                              -----------------------------------------------
                              John R. Emery
                              Senior Vice President, Operations and Finance







<PAGE>


<TABLE>
<CAPTION>
                                                                                                                Exhibit 11

Statement of Computation of Per Share Amounts

                                                         Three Months Ended September 30,    Nine Months Ended September 30,
                                                         --------------------------------    -------------------------------
                                                                1996           1995                1996           1995
                                                            ------------   ------------        ------------   ------------
<S>                                                         <C>            <C>                 <C>            <C>          
Primary:

     Net loss for the period.............................   $(2,077,042)   $(20,991,431)       $(5,183,431)   $(23,208,766)
                                                            ------------   ------------        ------------   ------------
     Weighted average number of shares of common  stock
           outstanding...................................     28,535,093     21,694,627          27,966,990     20,257,688
     Shares issuable upon exercise of outstanding
          options and warrants...........................           --             --                  --             --  
     Shares assumed to be acquired in accordance  with
          the treasury stock method......................           --             --                  --             --  
                                                            ------------   ------------        ------------   ------------
     Shares used in computing per share loss.............     28,535,093     21,694,627          27,966,990     20,257,688
                                                            ------------   ------------        ------------   ------------
     Net loss per share..................................   $     (0.07)   $     (0.97)        $     (0.19)   $     (1.15)
                                                            ============   ============        ============   ============

Fully
Diluted:

     Net loss for the period.............................   $(2,077,042)   $(20,991,431)       $(5,183,431)   $(23,208,766)
                                                            ============   =============       ============   =============
     Weighted average number of shares of common  stock
           outstanding...................................     28,535,093     21,694,627          27,966,990     20,257,688
     Shares issuable upon exercise of outstanding
           options and warrants..........................      1,366,996      3,227,241           3,371,462      3,366,863
     Shares assumed to be acquired in accordance
           with the treasury stock method................       (57,319)    (1,408,367)         (1,549,637)    (1,467,270)
                                                            ------------   ------------        ------------   ------------
     Shares used in computing per share loss.............     29,844,770     23,513,501          29,788,815     22,157,281
                                                            ------------   ------------        ------------   ------------
     Net loss per share..................................   $     (0.07)   $     (0.89)        $     (0.17)   $     (1.05)
                                                            ============   ============        ============   ============
</TABLE>


                                      13






<TABLE> <S> <C>


<ARTICLE>      5
<MULTIPLIER>   1
       
<S>                                                <C>
<PERIOD-TYPE>                                      9-MOS
<FISCAL-YEAR-END>                                  DEC-31-1996
<PERIOD-START>                                     JAN-01-1996
<PERIOD-END>                                       SEP-30-1996
<CASH>                                               8,037,079
<SECURITIES>                                        28,272,185
<RECEIVABLES>                                        2,174,144
<ALLOWANCES>                                                 0
<INVENTORY>                                          3,059,632
<CURRENT-ASSETS>                                    38,017,939
<PP&E>                                              12,651,020
<DEPRECIATION>                                       3,815,007
<TOTAL-ASSETS>                                      50,939,297
<CURRENT-LIABILITIES>                                2,172,089
<BONDS>                                                      0
<PREFERRED-MANDATORY>                                        0
<PREFERRED>                                                  0
<COMMON>                                               285,513
<OTHER-SE>                                          48,348,227
<TOTAL-LIABILITY-AND-EQUITY>                        50,939,297
<SALES>                                              8,132,165
<TOTAL-REVENUES>                                     9,522,692
<CGS>                                                4,461,665
<TOTAL-COSTS>                                        4,461,665
<OTHER-EXPENSES>                                             0
<LOSS-PROVISION>                                             0
<INTEREST-EXPENSE>                                         126
<INCOME-PRETAX>                                    (5,183,431)
<INCOME-TAX>                                                 0
<INCOME-CONTINUING>                                (5,183,431)
<DISCONTINUED>                                               0
<EXTRAORDINARY>                                              0
<CHANGES>                                                    0
<NET-INCOME>                                       (5,183,431)
<EPS-PRIMARY>                                            (.19)
<EPS-DILUTED>                                            (.19)
        


</TABLE>