The Global Market for Orthopedic Technologies to Reach $56.2 Billion by 2023

WELLESLEY, Mass., Aug. 06, 2018 (GLOBE NEWSWIRE) — Due to the high demand for medical centers that can provide care for sports related injuries, along with a general need for patient implants, the global market for orthopedic technologies is growing, according to a new report from BCC Research.

In 2018, the global market for orthopedic technologies was valued at $44.7 billion. However, BCC Research estimates that it will be worth $56.2 billion by 2023, indicating a compound annual growth rate (CAGR) of 4.7%, according to the report Advanced Orthopedic Technologies, Implants and Regenerative Products.

Human bone products will lead the repair segment of the industry with a CAGR of 5.0%, followed by synthetic bone replacements at 4.5%.

Research Highlights

  • Spinal implants are anticipated to experience the highest CAGR, in terms of product, at 5.9%. In addition, these implants will reach a value of $7.0 billion by 2023.
  • The Asia-Pacific region will be valued at $13.2 billion by 2023, indicating the largest geographical CAGR of 5.3%.
  • In 2017, joint replacement, implants and regenerative products represented 59.3% of orthopedic technologies that were available on the market.

“Continuous technological innovation in the orthopedic implants industry is set to drive the market at an exponential rate,” the report notes. “The emergence of natural biomaterials-based orthopedic implants has revolutionized orthopedic implants as these have several advantages compared to synthetic biomaterials. These natural biomaterials are biocompatible, do not cause toxicity, and may also carry specific protein binding sites, or other biochemical signals that may assist in tissue healing or integration.”

About BCC Research

BCC Research is a publisher of market research reports that provide organizations with intelligence to drive smart business decisions. By partnering with industry experts worldwide, BCC Research provides unbiased measurements and assessments of global markets covering major industrial and technology sectors, including emerging markets. For more information about BCC Research, please visit bccresearch.com. Follow BCC Research on Twitter at @BCCResearch.

Editors/reporters requesting analyst interviews should contact Eric Surber at press@bccresearch.com.

Centinel Spine Announces that UnitedHealthcare Will Now Cover prodisc L Anterior Lumbar Total Disc Replacement

NEW YORKAug. 7, 2018 /PRNewswire/ — Centinel Spine, LLC is pleased to announce that UnitedHealthcare®, the nation’s second largest commercial insurer, has issued a positive medical policy for Lumbar Total Disc Replacement (TDR).  This decision affects over 16 million patients covered through UnitedHealthcare, and means that three out of the four largest US commercial providers now have positive policies for the company’s prodisc® L Anterior Lumbar Total Disc Replacement system.

This is the second major policy change for Lumbar TDR since May 2018, and follows the recent TRICARE® policy change that added 9.5 million covered lives.  These combined decisions provide over 25 million additional patients with access to this life-changing technology.  This trend of positive coverage decisions is bolstered by the long-term clinical outcomes and economic value that TDR provides to both patients and the healthcare system.

prodisc is the most studied Total Disc Replacement technology in the world, with over 400 publications demonstrating its long-term effectiveness in over 125,000 patients.  This recent decision by UnitedHealthcare is the culmination of over 30 years of clinical evidence generated by Centinel Spine and its originators, multiple FDA studies, and long-term clinical success supporting the effectiveness of the prodisc technology. This recent coverage change further solidifies Centinel Spine as the worldwide leading company addressing spinal disease through anterior access to the spine.

“The impending positive coverage decision by UnitedHealthcare will soon allow millions of Americans access to lumbar disc replacement, a technology that has proven itself over the past 30+ years globally. High-level scientific evidence from FDA studies in the US have clearly shown the safety, effectiveness, decreased adjacent level degeneration, and durability of improvement when properly-selected patients are implanted with a lumbar disc replacement instead of having a fusion, ” stated spine surgeon Jack Zigler, M.D., Texas Back Institute, Plano, TX.

“We believe the recent TRICARE and UnitedHealthcare policy decisions further validate the clinical outcomes of lumbar total disc replacement.  These positive decisions provide millions of additional patients with access to a proven, life-changing technology.  Centinel Spine remains focused on providing surgeons and patients with the widest breadth of technology platforms to address spinal disease by an anterior approach.  To that end, we plan to continue to invest in motion-preserving solutions and expand the clinical body of evidence and global adoption of lumbar disc replacement,” stated John Viscogliosi, CEO of Centinel Spine.

About Centinel Spine

Centinel Spine, LLC is the largest privately-held spine company, focused on anterior column reconstruction. For more information on Centinel Spine products and technologies, please visit the Company’s web site at www.CentinelSpine.com.

The company began operations in August 2008, through the merger-acquisition of two pioneering medical device companies: Raymedica, LLC and Surgicraft, LTD. Today, Centinel Spine still embraces the pioneering culture developed at both originating companies, and continues its corporate mission of becoming the leading anterior column support spine franchise, providing elegantly simple implants and instruments that are tissue-sparing and generate superior clinical outcomes.

Centinel Spine derived its name from the “Sentinel Sign”, the radiographic confirmation of a successful fusion anterior to the interbody device.

For more information, please contact:

Varun Gandhi

SVP, Corporate Finance & Strategic Planning

Centinel Spine, LLC

900 Airport Road, Suite 3B

West Chester, PA 19380

Phone: 484-887-8871

Email: v.gandhi@centinelspine.com

Wendy F. DiCicco

Chief Operating and Chief Financial Officer

Centinel Spine, LLC

900 Airport Road, Suite 3B

West Chester, PA 19380

Phone: 484-887-8837

Email: w.dicicco@centinelspine.com

SOURCE Centinel Spine / (PRNewsfoto/Centinel Spine)

Related Links

http://www.centinelspine.com

SI-BONE, Inc. Announces 23 Commercial Health Insurance Plans Now “Exclusively” Cover Triangular iFuse Implant System®

SAN JOSE, Calif.Aug. 7, 2018 /PRNewswire/ — SI-BONE, Inc., a medical device company that pioneered the minimally invasive surgical (MIS) treatment of the sacroiliac (SI) joint with the iFuse Implant System® (“iFuse”) announced that 23 commercial health plans have published exclusive positive coverage policies for the triangular iFuse Implant System.  These exclusive positive coverage policies provide access to MIS SI joint fusion using the iFuse Implant System for over 35 million health plan members in the following plans:

1.    BCBS Florida

13.  BCBS-Louisiana

2.    BCBS-Illinois (HCSC)

14.  BCBS-Massachusetts

3.    BCBS-New Mexico (HCSC)

15.  BCBS-Minnesota

4.    BCBS-Oklahoma (HCSC)

16.  BCBS-Mississippi

5.    BCBS-Texas (HCSC)

17.  BCBS-New Jersey (Horizon)

6.    BCBS-Montana (HCSC)

18.  BCBS-NY (HealthNow)

7.    BCBS-Idaho

19.  BCBS-Tennessee

8.    BCBS-Kansas City

20.  BCBS-Wyoming

9.    BCBS-Independence

21.  BCBS-Capital

10.  BCBS-Regence

22.  Select Health

11.  BCBS-South Carolina

23.  AmeriHealth

12.  BCBS-Kansas

In addition to the above exclusive iFuse coverage policies, in July, eviCore healthcare, which according to their web site manages over 100 million lives, published a positive recommendation for exclusive use of the triangular iFuse ImplantTM  that takes effect October 22, 2018.  Also, on January 1, 2018, Blue Cross Blue Shield Association (BCBSA), a national federation of 36 independent, community-based and locally-operated Blue Cross and Blue Shield companies that collectively provide healthcare coverage for more than 106 million members across all 50 states, the District of Columbia and Puerto Rico, published their “triangular only” recommendation for MIS SI joint fusion.  And on May 16th, AIM Specialty Health, which is owned by Anthem, published their exclusive iFuse policy that became effective July 1, 2018.

“Payers continually tell us that long-term outcomes data from well-designed, well-executed randomized controlled trials are critically important when determining coverage for new procedures or technologies,” said Jeffrey Dunn, President, CEO and Chairman of SI-BONE.  “The threshold for positive coverage includes a reliable diagnostic algorithm combined with a broadly adoptable treatment that is safe and clinically effective with a low revision rate and is cost-effective.  The iFuse Implant, that’s been available in the U.S. since 2009,  has been the subject of 58 peer-reviewed publications demonstrating safety, effectiveness, biomechanical and economic benefits, including 2 randomized studies.1,2  Based on this extensive body of published evidence, many payers have concluded that the iFuse Implant is the only SI joint fusion device that meets the evidence threshold and have established exclusive coverage.  We remain committed to continued investments in education and clinical evidence development in order to further expand access to all those who can benefit from surgical treatment of SI joint disorders.”

About SI joint dysfunction

The SI joint has been attributed as a source of pain in 15-30 percent of patients with chronic low back pain3-6, and in up to 43 percent of patients with new onset or persistent low back pain after lumbar fusion.7  SI joint dysfunction is often misdiagnosed and the resulting pain can be incorrectly attributed to other causes.  SI joint dysfunction can be identified when a patient points to the source of their pain directly over the posterior superior iliac spine (PSIS), known as the Fortin Finger Test8, combined with a number of positive provocative maneuvers that stress the SI joint and elicit pain, followed by image-guided diagnostic injections to confirm the diagnosis.  The SI joint is the largest of the eight major joints in the human body and the last to have a proven surgical treatment.

About iFuse

The iFuse Implant™, available since 2009, is the only SI joint fusion device known to be supported by multiple prospective clinical studies, including two randomized controlled trials, showing that the device improves pain, patient function and quality of life.  The extensive body of peer-reviewed published clinical evidence, unique to the iFuse Implant, has enabled government and private payors to establish positive coverage exclusive to the iFuse triangular implant.  There are over 55 peer-reviewed publications supporting the safety, effectiveness, biomechanical and economic benefits of this iFuse Implant. (www.si-bone.com/results).

The iFuse Implant System is intended for sacroiliac fusion for conditions including sacroiliac joint dysfunction that is a direct result of sacroiliac joint disruption and degenerative sacroiliitis.  This includes conditions whose symptoms began during pregnancy or in the peripartum period and have persisted postpartum for more than 6 months.  There are potential risks associated with the iFuse Implant System.  It may not be appropriate for all patients and all patients may not benefit.  For information about the risks, visit: www.si-bone.com/risks

SI-BONE and iFuse Implant System are registered trademarks of SI-BONE, Inc. ©2018 SI-BONE, Inc. All Rights Reserved. 10218.080718

  1. Polly DW, Swofford J, Whang PG, Frank CJ, Glaser JA, Limoni RP, Cher DJ, Wine KD, Sembrano JN, and the INSITE Study Group. Two-Year Outcomes from a Randomized Controlled Trial of Minimally Invasive Sacroiliac Joint Fusion vs. Non-Surgical Management for Sacroiliac Joint Dysfunction. Int J Spine Surg. 2016;10:Article 28. DOI: 10.14444/3028
  2. Dengler J, Kools D, Pflugmacher R, Gasbarrini A, Prestamburgo D, Gaetani P, Van Eeckhoven E, Cher D, Sturesson B. 1-Year Results of a Randomized Controlled Trial of Conservative Management vs. Minimally Invasive Surgical Treatment for Sacroiliac Joint Pain. Pain Physician. 2017;20:537-550.
  3. Bernard TN, Kirkaldy-Willis WH. Recognizing Specific Characteristics of Nonspecific Low Back Pain. Clin Orthop Relat Res. 1987;217:266–80.
  4. Schwarzer AC, Aprill CN, Bogduk N. The Sacroiliac Joint in Chronic Low Back Pain. Spine. 1995;20:31–7.
  5. Maigne JY, Aivaliklis A, Pfefer F. Results of Sacroiliac Joint Double Block and Value of Sacroiliac Pain Provocation Tests in 54 Patients with Low Back Pain. Spine. 1996;21:1889–92.
  6. Sembrano JN, Polly DW Jr. How Often is Low Back Pain Not Coming From The Back? Spine. 2009;34:E27–32.
  7. DePalma M, Ketchum JM, Saullo TR. Etiology of Chronic Low Back Pain Patients Having Undergone Lumbar Fusion. Pain Med. 2011;12:732–9.
  8. Fortin JD, Falco FJ. The Fortin finger test: an indicator of sacroiliac pain. Am J Orthop (Belle Mead NJ). 1997;26(7):477–480.

SOURCE SI-BONE, Inc.

Related Links

http://www.si-bone.com

Orthofix Reports Second Quarter 2018 Financial Results

August 06, 2018

LEWISVILLE, Texas–(BUSINESS WIRE)–Orthofix Medical Inc. (previously Orthofix International N.V.) (NASDAQ:OFIX) today reported its financial results for the second quarter ended June 30, 2018. Net sales were $111.5 million, diluted earnings per share from continuing operations was $0.05 and adjusted earnings per share from continuing operations was $0.42.

“During the second quarter, we made excellent progress on our operating and margin improvement goals despite the impact of unexpected currency headwinds and order timing on topline growth,” commented Brad Mason, Orthofix president and Chief Executive Officer. “Adjusted EBITDA performance in the period demonstrated our progress in driving efficiency to reduce operating expenses and achieve our stated goal of increasing Adjusted EBITDA margin in our organic business by at least 100 basis points this year and in each of the next two years. Operationally, we completed the acquisition and integration of Spinal Kinetics, realigned our business unit structure to help further accelerate long-term growth, positioned the company for the move of our corporate domicile from Curaçao to Delaware, that was completed July 31st, and significantly reduced inventories (excluding Spinal Kinetics) over prior year. We anticipate that these accomplishments will benefit Orthofix for many years to come.”

Corporate Realignment and Domestication to Delaware

In June, the Company realigned its four strategic business units around two pillars, Spine and Extremities. The distribution, branding and leadership of our bone growth therapy, spinal implants, biologics and Spinal Kinetics business units are being combined into one Orthofix Global Spine business to maximize opportunities from the acquisition of Spinal Kinetics and, in the long-term, better leverage the full spine portfolio to achieve both revenue acceleration and cost synergies.

On July 31, subsequent to shareholder approval, the Company’s corporate domicile was moved from Curaçao to Delaware. As a result of this transition, we are reducing our non-GAAP long-term effective tax rate from 35% to 29%, simplifying our operational structure and improving financial flexibility. Additionally, the name of the Company was changed from Orthofix International N.V. to Orthofix Medical Inc.

Financial Results Overview

The following table provides net sales by strategic business unit (“SBU”):

Three Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands) 2018 2017 Change Constant

Currency

Change

BioStim $ 48,211 $ 47,174 2.2 % 2.2 %
Spine Fixation 23,880 21,360 11.8 % 11.3 %
Biologics 14,668 15,661 (6.3 %) (6.3 %)
Extremity Fixation 24,788 24,747 0.2 % (4.0 %)
Net sales $ 111,547 $ 108,942 2.4 % 1.3 %

 

Gross margin increased 80 basis points compared to the prior year period primarily driven by continued improvement related to inventory management initiatives, partially offset by the addition of Spinal Kinetics acquisition-related inventory fair value adjustments. Non-GAAP net margin, an internal metric that the Company defines as gross profit less sales and marketing expenses, was $37.2 million compared to $35.3 million in the prior year period. As a percentage of net sales, non-GAAP net margin increased to 33.3% as compared to 32.4% in the prior year period, primarily due to the improvement in gross margin.

Net income from continuing operations was $0.9 million, or $0.05 per share, compared to $4.7 million, or $0.26 per share in the prior year period. Adjusted net income from continuing operations was $7.9 million, or $0.42 per share, compared to adjusted net income of $7.8 million, or $0.42 per share in the prior year period. Excluding the impact of the Spinal Kinetics operating loss in the period, adjusted net income was $8.5 million, or $0.45 per share, a 7.1% increase over prior year.

EBITDA was $6.8 million, compared to $14.0 million in the prior year period. Adjusted EBITDA was $22.0 million, or 19.7% of net sales, for the second quarter, compared to $20.5 million, or 18.8% of net sales, in the prior year period.

Liquidity

As of June 30, 2018, cash and cash equivalents were $45.7 million compared to $81.2 million as of December 31, 2017. As of June 30, 2018, the Company had no outstanding indebtedness and borrowing capacity of $125 million under its existing credit facility. Cash flow from operations was $13.0 million, an increase of $17.7 million, and free cash flow was 6.4 million, an increase of $19.6 million when compared to the same prior year period.

2018 Updated Outlook

For the year ending December 31, 2018, the Company expects the following results, assuming exchange rates are the same as those currently prevailing.

(Unaudited, U.S. Dollars, in millions, except per share data) Low High Low High
Previous Full Year 2018 Outlook Full Year 2018 Outlook
Net sales $ 458.0 $ 464.0 $ 450.0 (1 ) $ 456.0 (1 )
Net income from continuing operations $ 24.8 $ 27.1 $ 18.3 (2 ) $ 19.7 (2 )
Adjusted EBITDA $ 85.5 $ 88.0 $ 85.0 (3 ) $ 87.0 (3 )
EPS from continuing operations $ 1.31 $ 1.43 $ 0.97 (4 ) $ 1.04 (4 )
Adjusted EPS from continuing operations9 $ 1.58 $ 1.68 $ 1.66 (5 ) $ 1.72 (5 )
3rd Quarter of 2018 Outlook
Net sales $ 110.0 (6 ) $ 113.0 (6 )
EPS from continuing operations $ 0.18 (7 ) $ 0.22 (7 )
Adjusted EPS from continuing operations9 $ 0.35 (8 ) $ 0.37 (8 )

1 Represents a year-over-year increase of 3.7% to 5.1% on a reported basis

2 Represents a year-over-year increase of 151.0% to 170.2%

3 Represents a year-over-year increase of 4.2% to 6.7%

4 Represents a year-over-year increase of 148.7% to 166.7%

5 Represents a year-over-year increase of 2.5% to 6.2%

6 Represents a year-over-year increase of 4.5% to 7.4% on a reported basis

7 Represents a year-over-year increase of 0.0% to 22.2%

8 Represents a year-over-year decrease of 16.7% to 11.9%

9 Calculated using a non-GAAP tax rate of 35% for the first and second quarters of 2018 and 29% for the third and fourth quarters of 2018 to reflect the expected impact of changing the Company’s jurisdiction of organization from Curaçao to the State of Delaware

Conference Call

Orthofix will host a conference call today at 4:30 PM Eastern time to discuss the Company’s financial results for the second quarter of 2018. Interested parties may access the conference call by dialing (844) 809-1992 in the U.S. and (612) 979-9886 outside the U.S., and referencing the conference ID 5556977. A replay of the call will be available for two weeks by dialing (855) 859-2056 in the U.S. and (404) 537-3406 outside the U.S., and entering the conference ID 5556977. A webcast of the conference call may be accessed by going to the Company’s website at www.orthofix.com, by clicking on the Investors link and then the Events and Presentations page.

About Orthofix

Orthofix Medical Inc. is a global medical device company focused on musculoskeletal products and therapies. The Company’s mission is to improve patients’ lives by providing superior reconstruction and regenerative musculoskeletal solutions to physicians worldwide. Headquartered in Lewisville, Texas, Orthofix’s spine and orthopedic extremities products are distributed in over seventy countries via the Company’s sales representatives and distributors. For more information, please visit www.orthofix.com.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “intends,” “predicts,” “potential,” or “continue” or other comparable terminology. These forward-looking statements are not guarantees of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. Therefore, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to further update any such statement, or the risk factors described in Part I, Item 1A under the heading Risk Factors in our Form 10-K for the year ended December 31, 2017 and other SEC filings, to reflect new information, the occurrence of future events or circumstances or otherwise.

ORTHOFIX MEDICAL INC.
Condensed Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, June 30,
(Unaudited, U.S. Dollars, in thousands, except share and per share data) 2018 2017 2018 2017
Net sales $ 111,547 $ 108,942 $ 220,256 $ 211,680
Cost of sales 22,835 23,177 46,982 45,758
Gross profit 88,712 85,765 173,274 165,922
Sales and marketing 51,529 50,471 101,797 99,003
General and administrative 22,268 20,409 41,752 38,691
Research and development 7,891 6,887 14,828 14,311
Operating income 7,024 7,998 14,897 13,917
Interest income (expense), net (251 ) 76 (434 ) 121
Other income (expense), net (4,752 ) 585 (1,840 ) (3,763 )
Income before income taxes 2,021 8,659 12,623 10,275
Income tax expense (1,088 ) (3,924 ) (6,461 ) (7,848 )
Net income from continuing operations 933 4,735 6,162 2,427
Discontinued operations
Loss from discontinued operations (1,300 ) (3 ) (1,827 )
Income tax benefit (expense) (8 ) 418 (8 ) 599
Net loss from discontinued operations (8 ) (882 ) (11 ) (1,228 )
Net income $ 925 $ 3,853 $ 6,151 $ 1,199
Net income per common share—basic
Net income from continuing operations $ 0.05 $ 0.26 $ 0.33 $ 0.13
Net loss from discontinued operations (0.05 ) (0.06 )
Net income per common share—basic $ 0.05 $ 0.21 $ 0.33 $ 0.07
Net income per common share—diluted
Net income from continuing operations $ 0.05 $ 0.26 $ 0.32 $ 0.13
Net loss from discontinued operations (0.05 ) (0.06 )
Net income per common share—diluted $ 0.05 $ 0.21 $ 0.32 $ 0.07
Weighted average number of common shares:
Basic 18,413,756 18,050,551 18,409,331 18,015,308
Diluted 18,835,560 18,343,038 18,811,356 18,288,050

 

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DJO Global Announces Financial Results for Second Quarter 2018

August 06, 2018

SAN DIEGO–(BUSINESS WIRE)–DJO Global, Inc. (“DJO” or the “Company”), a leading global provider of medical technologies designed to get and keep people moving, today announced financial results for its public reporting subsidiary, DJO Finance LLC (“DJOFL”), for the second quarter ended June 30, 2018.

On January 1, 2018, DJO adopted Accounting Standards Update 2014-09, Revenue From Contracts with Customers, (ASC 606). As a result of the adoption, in the second quarter the Company reclassified $5.4 million of year-to-date costs from selling, general and administrative costs to net sales. The table below summarizes net sales and growth rates with, and without, the adoption of ASC 606.

$000’s

Q2 2018 Net Sales Overview

Including ASC 606 Adoption Excluding ASC 606 Adoption Currency Constant
Revenue Growth Revenue Growth Impact Currency
Surgical $ 53,918 7.9 % $ 53,918 7.9 % 0.0 % 7.9 %
International 86,953 9.3 % 86,953 9.3 % 5.8 % 3.5 %
Recovery Sciences 37,454 -3.4 % 37,454 -3.4 % 0.0 % -3.4 %
Bracing and Vascular 126,512 0.1 % 131,942 4.4 % 0.0 % 4.4 %
Total DJO Global $ 304,837 3.4 % $ 310,267 5.3 % 1.6 % 3.7 %

Second Quarter Highlights

  • Net sales grew 5.3% to $310.3 million, or $304.8 million as reported with the adoption of ASC 606, compared to $294.7 million in the prior year period.
  • Operating income increased 296% to $35.8 million from $9.0 million in the prior year period.
  • Net loss attributable to DJOFL was $13.7 million, compared to a net loss of $34.4 million in the prior year period.
  • Adjusted EBITDA continued to expand, increasing 19.0% over the prior year quarter to $75.6 million.

Business Transformation

  • The previously announced business transformation continues to drive profitability, pushing Adjusted EBITDA margins up 280 basis points (excluding the impact of ASC 606 adoption) in the second quarter of 2018 compared to the prior year, and remains on track to deliver 7% to 10% annual cost reductions by end of 2018.
  • Including $24.8 million in future annual run-rate savings from transformation actions taken to date, Adjusted EBITDA for the twelve months ended June 30 was $312.6 million.

“We executed well in the second quarter, continuing to deliver sustainable value from our transformation efforts, accelerating new product introductions and overcoming market headwinds on elective procedures,” said Brady Shirley, DJO’s President and Chief Executive Officer. “I am encouraged by the momentum in our revenue growth and expanding margins, and continue to anticipate a stronger trajectory for the balance of our fiscal year.”

Mike Eklund, Chief Financial Officer and Chief Operating Officer of DJO, added, “We continue to work aggressively toward our profitability goals and are realizing the benefits, with Adjusted EBITDA for the quarter increasing 19%, or 3.6 times the growth in revenue, and margins improving about 280 basis points. Our team has worked hard on our transformation initiatives to improve operational efficiency, service levels and customer experience. This quarter’s financial metrics are continued indicators of our success.”

Sales Results

Net sales for DJOFL for the second quarter of 2018 were $310.3 million, an increase of 5.3% from the prior year period, or $304.8 million with the adoption of ASC 606. On a constant currency basis, sales increased 3.7%. For the six months ending June 30, 2018, net sales increased 3.4% to $602.9 million, or $597.5 million with the adoption of ASC 606. On a constant currency basis, net sales for the first half of 2018 increased 1.1% over net sales in the first half of 2017. The number of selling days in the quarter was the same as in the prior year period.

Net sales for DJO’s Surgical Implant segment grew 7.9% in the quarter to $53.9 million. The company’s shoulder implant product line was a key contributor with strong double-digit growth compared to the same quarter in the prior year. For the six months ending June 30, 2018, the Surgical Implant segment grew 8.0% over the prior year period to $107.5 million.

Net sales for DJO’s International segment grew 9.3% in the second quarter to $87.0 million, or 3.5% on a constant currency basis. The company’s sales growth in Germany, France and Australia were partially offset by market conditions in Canada and the United Kingdom. For the six months ending June 30, 2018, the International segment revenue was $175.6 million, an increase of 11.3%, or 2.8% on a constant currency basis.

Net sales for DJO’s Recovery Sciences segment were $37.5 million in the second quarter, a year-over-year decrease of 3.4%. Strong growth in the segment’s Regeneration CMF product line was offset by softness in the Chattanooga product line compared to the prior year period. For the six months ending June 30, 2018, the Recovery Sciences segment declined 5.1% to $73.3 million.

Net sales for DJO’s Bracing and Vascular segment grew 4.4% to $131.9 million in the second quarter, or $126.5 with the adoption of ASC 606. There was strong growth in the segment’s DonJoy product line, partially offset by weakness in the Dr. Comfort footwear product line. Strong demand for new products, strength in acute care and continued progress in transformation initiatives to improve service levels contributed to the results. For the six months ending June 30, 2018, Bracing and Vascular net sales were $246.4 million, a decline of 0.8% from the first half of 2017, or $241.0 million with the adoption of ASC 606.

Earnings Results

Operating income was $35.8 million in the quarter, an increase of 296% over the prior year period. For the six months ending June 30, 2018, operating income was $69.3 million, an increase of 341% over the prior year. Net loss attributable to DJOFL was $13.7 million in the quarter compared to $34.4 million in the prior year period. For the six months ended June 30, net loss was $31.3 million compared to $74.4 million in the six month ended July 1, 2017.

Adjusted EBITDA for the second quarter was $75.6 million, an increase of 19.0% from the prior year period, or 17.0% on the basis of constant currency. For the six months ended June 30, 2018, Adjusted EBITDA was $140.4 million, up 16.2% from the prior year, or 14.5% on a constant currency basis. Including projected future run-rate savings of $24.8 million from cost savings programs currently underway as permitted under our credit agreement and the indentures governing our outstanding notes, Adjusted EBITDA for the twelve months ended June 30, 2018 was $312.6 million.

Net cash provided by continuing operating activities was $9.0 million for the six months ended June 30, 2018 compared to $38.1 million for the six months ended July 1, 2017. The change in cash flow was primarily attributable to higher inventory balances to allow for the modernization and consolidation of distribution facilities as part of the Company’s transformation initiatives, and to the payment in 2018 of certain non-recurring costs accrued in 2017.

The Company defines Adjusted EBITDA as net (loss) income attributable to DJOFL plus net interest expense, income tax provision (benefit), and depreciation and amortization, further adjusted for certain non-cash items, non-recurring items and other adjustment items as permitted in calculating covenant compliance under the Company’s secured term loan and revolving credit facilities (“Senior Secured Credit Facilities”) and the indentures governing its 8.125% second lien notes and its 10.75% third lien notes. A reconciliation between net loss attributable to DJOFL and Adjusted EBITDA is included in the attached financial tables.

Conference Call Information

DJO has scheduled a conference call to discuss this announcement beginning at 4:30 pm, Eastern Time Monday, August 6, 2018. Individuals interested in listening to the conference call may do so by dialing (866) 394-8509 (International callers please use (346) 265-0698), using the reservation code 22322226. A telephone replay will be available for 48 hours following the conclusion of the call by dialing (855) 859-2056 and using the above reservation code. The live conference call and replay will be available via the Internet at www.DJOglobal.com.

About DJO Global

DJO Global is a leading global provider of medical technologies designed to get and keep people moving. The Company’s products address the continuum of patient care from injury prevention to rehabilitation, enabling people to regain or maintain their natural motion. Its products are used by orthopaedic surgeons, primary care physicians, pain management specialists, physical therapists, podiatrists, chiropractors, athletic trainers and other healthcare professionals. In addition, many of the Company’s medical devices and related accessories are used by athletes and patients for injury prevention and at-home physical therapy treatment. The Company’s product lines include rigid and soft orthopaedic bracing, hot and cold therapy, bone growth stimulators, vascular therapy systems and compression garments, therapeutic shoes and inserts, electrical stimulators used for pain management and physical therapy products. The Company’s surgical division offers a comprehensive suite of reconstructive joint products for the hip, knee and shoulder. DJO Global’s products are marketed under a portfolio of brands including Aircast®, Chattanooga, CMF™, Compex®, DonJoy®, ProCare®, DJO® Surgical, Dr. Comfort® and ExosTM. For additional information on the Company, please visit www.DJOglobal.com.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements relate to, among other things, the Company’s expectations for improved liquidity, estimated cost reductions associated with the execution of its business transformation plans and improved efficiencies. The words “believe,” “will,” “should,” “expect,” “target,” “intend,” “estimate” and “anticipate,” variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. These forward-looking statements are based on the Company’s current expectations and are subject to a number of risks, uncertainties and assumptions, many of which are beyond the Company’s ability to control or predict. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The important factors that could cause actual operating results to differ significantly from those expressed or implied by such forward-looking statements include, but are not limited to the successful execution of the Company’s business transformation plans, including achievement of planned actions to improve liquidity, improvements in operational effectiveness, optimization of the Company’s procurement activities, improvements in manufacturing, distribution, sales and operations planning, and actions to improve the profitability of the mix of our product and customers. Other important factors that could cause actual operating results to differ significantly from those expressed or implied by such forward-looking statements include, but are not limited to: business strategies relative to our Bracing and Vascular, Recovery Sciences, International and Surgical Implant segments; the continued growth of the markets the Company addresses and any impact on these markets from changes in global economic conditions; the impact of potential reductions in reimbursement levels and coverage by Medicare and other governmental and commercial payers; the Company’s highly leveraged financial position; the Company’s ability to successfully develop, license or acquire, and timely introduce and market new products or product enhancements; risks relating to the Company’s international operations; resources needed and risks involved in complying with government regulations and government investigations; the availability and sufficiency of insurance coverage for pending and future product liability claims; and the effects of healthcare reform, Medicare competitive bidding, managed care and buying groups on the prices of the Company’s products. These and other risk factors related to DJO are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on March 16, 2018. Many of the factors that will determine the outcome of the subject matter of this press release are beyond the Company’s ability to control or predict.

DJO FINANCE LLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Three Months Ended Six Months Ended

June 30,
2018

July 1,
2017

June 30,
2018

July 1,
2017

Net sales $ 304,837 $ 294,746 $ 597,466 $ 583,135
Operating expenses:
Cost of sales (exclusive of amortization of intangible assets of $6,635 and $13,293 for the three and six months ended June 30, 2018, respectively and $6,980 and $13,961 for the three and six months ended July 1, 2017, respectively) 126,443 124,885 246,379 244,454
Selling, general and administrative 117,626 135,739 232,942 269,901
Research and development 9,707 9,063 18,988 18,202
Amortization of intangible assets 15,289 16,016 29,888 34,861
269,065 285,703 528,197 567,418
Operating income 35,772 9,043 69,269 15,717
Other (expense) income:
Interest expense, net (45,779 ) (43,068 ) (89,701 ) (85,755 )
Other (expense) income, net 1,054 896 (487 ) 1,184
(44,725 ) (42,172 ) (90,188 ) (84,571 )
Loss before income taxes (8,953 ) (33,129 ) (20,919 ) (68,854 )
Income tax provision 4,635 1,095 10,019 5,173
Net loss from continuing operations (13,588 ) (34,224 ) (30,938 ) (74,027 )
Net income from discontinued operations 178 47 321 105
Net loss (13,410 ) (34,177 ) (30,617 ) (73,922 )
Net income attributable to noncontrolling interests (276 ) (206 ) (638 ) (430 )
Net loss attributable to DJO Finance LLC $ (13,686 ) $ (34,383 ) $ (31,255 ) $ (74,352 )

DJO FINANCE LLC

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30,
2018

December 31,
2017

ASSETS
Current assets:
Cash and cash equivalents $ 26,789 $ 31,985
Accounts receivable, net 179,611 190,324
Inventories, net 177,273 169,137
Prepaid expenses and other current assets 32,144 20,218
Current assets of discontinued operations 511 511
Total current assets 416,328 412,175
Property and equipment, net 137,496 133,522
Goodwill 878,963 864,112
Intangible assets, net 585,268 607,088
Other assets 5,242 5,128
Total assets $ 2,023,297 $ 2,022,025
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable $ 105,144 $ 98,331
Accrued interest 18,615 18,015
Current portion of debt obligations 26,022 15,936
Other current liabilities 116,071 126,360
Total current liabilities 265,852 258,642
Long-term debt obligations 2,414,519 2,398,184
Deferred tax liabilities, net 146,108 142,597
Other long-term liabilities 20,968 13,080
Total liabilities $ 2,847,447 $ 2,812,503
Commitments and contingencies (Note 14)
Deficit:
DJO Finance LLC membership deficit:
Member capital 845,708 844,115
Accumulated deficit (1,646,850 ) (1,615,536 )
Accumulated other comprehensive loss (25,579 ) (21,072 )
Total membership deficit (826,721 ) (792,493 )
Noncontrolling interests 2,571 2,015
Total deficit (824,150 ) (790,478 )
Total liabilities and deficit $ 2,023,297 $ 2,022,025

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

DJO FINANCE LLC

UNAUDITED SEGMENT INFORMATION

(in thousands)

Three Months Ended Six Months Ended

June 30,
2018

July 1,
2017

June 30,
2018

July 1,
2017

Net sales:
Bracing and Vascular $ 126,512 $ 126,415 $ 241,001 $ 248,468
Recovery Sciences 37,454 38,774 73,347 77,277
Surgical Implant 53,918 49,991 107,537 99,583
International 86,953 79,566 175,581 157,807
$ 304,837 $ 294,746 $ 597,466 $ 583,135
Operating income:
Bracing and Vascular $ 29,257 $ 24,225 $ 49,255 $ 45,232
Recovery Sciences 9,656 10,709 18,249 19,616
Surgical Implant 11,166 10,062 22,930 18,202
International 19,436 13,509 38,849 27,119
Expenses not allocated to segments and eliminations (33,743 ) (49,462 ) (60,014 ) (94,452 )
$ 35,772 $ 9,043 $ 69,269 $ 15,717

DJO Finance LLC
Adjusted EBITDA

For the Six Months Ended June 30, 2018 and July 1, 2017
(unaudited)

Our Senior Secured Credit Facilities, consisting of a $1,055.0 million term loan facility (including a $20.0 million delayed draw term loan facility) and a $150.0 million asset-based revolving credit facility, under which $87.5 million was outstanding as of June 30, 2018, and the Indentures governing our $1,015.0 million of 8.125% second lien notes and $298.5 million of 10.75% third lien notes (collectively, the “notes”) represent significant components of our capital structure. Under our Senior Secured Credit Facilities, we are required to maintain a specified senior secured first lien leverage ratio, which is determined based on our Adjusted EBITDA. If we fail to comply with the senior secured first lien leverage ratio under our Senior Secured Credit Facilities, we would be in default. Upon the occurrence of an event of default under the Senior Secured Credit Facilities, the lenders could elect to declare all amounts outstanding under the Senior Secured Credit Facilities to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under the Senior Secured Credit Facilities could proceed against the collateral granted to them to secure that indebtedness. We have pledged substantially all of our assets as collateral under the Senior Secured Credit Facilities and under the notes. Any acceleration under the Senior Secured Credit Facilities would also result in a default under the Indentures governing the notes, which could lead to the note holders electing to declare the principal, premium, if any, and interest on the then outstanding notes immediately due and payable. In addition, under the Indentures governing the notes, our and our subsidiaries’ ability to engage in activities such as incurring additional indebtedness, making investments, refinancing subordinated indebtedness, paying dividends and entering into certain merger transactions is governed, in part, by our ability to satisfy tests based on Adjusted EBITDA. Our ability to meet the covenants specified in the Senior Secured Credit Facilities and the Indentures governing those notes will depend on future events, some of which are beyond our control, and we cannot assure you that we will meet those covenants.

Adjusted EBITDA is defined as net income (loss) attributable to DJOFL plus interest expense, net, income tax provision (benefit), and depreciation and amortization, further adjusted for certain non-cash items, non-recurring items and other adjustment items as permitted in calculating covenant compliance and other ratios under our Senior Secured Credit Facilities and the Indentures governing the notes. We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about the calculation of, and compliance with, certain financial covenants and other ratios in our Senior Secured Credit Facilities and the Indentures governing the notes. Adjusted EBITDA is a material component of these calculations.

Adjusted EBITDA should not be considered as an alternative to net income (loss) attributable to DJOFL or other performance measures presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), or as an alternative to cash flow from operations as a measure of our liquidity. Adjusted EBITDA does not represent net income (loss) attributable to DJOFL or cash flow from operations as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. In particular, the definition of Adjusted EBITDA under our Senior Secured Credit Facilities and the Indentures governing the notes allows us to add back certain non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating net income (loss) attributable to DJOFL. However, these are expenses that may recur, vary greatly and are difficult to predict. While Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation.

The following table provides reconciliation between net income (loss) attributable to DJOFL and Adjusted EBITDA (in thousands):

Twelve
Months
Three Months Ended Six Months Ended Ended
June 30, July 1, June 30, July 1, June 30,
2018 2017 2018 2017 2018
Net loss attributable to DJO Finance LLC $ (13,686 ) $ (34,383 ) $ (31,255 ) $ (74,352 ) $ 7,203
Income loss from discontinued operations, net (178 ) (47 ) (321 ) (105 ) (525 )
Interest expense, net 45,779 43,068 89,701 85,755 178,184
Income tax provision (benefit) 4,635 1,095 10,019 5,173 (55,873 )
Depreciation and amortization 27,871 26,942 53,376 56,716 107,921
Non-cash charges (a) 524 537 749 1,108 4,742
Non-recurring and integration charges (b) 10,737 25,195 16,257 43,584 41,922
Other adjustment items (c) (68 ) 1,142 1,888 2,911 4,242
75,614 63,549 140,414 120,790 287,816
Permitted pro forma adjustments applicable to the twelve-month period only – Note 1
Future cost savings 24,810
Adjusted EBITDA $ 75,614 $ 63,549 $ 140,414 $ 120,790 $ 312,626

________________________________________

Note 1 — Permitted pro forma adjustments include future cost savings from cost reduction actions related to our business transformation initiative, recognized as permitted under our credit agreement and the indentures governing our notes.

(a) Non-cash charges are comprised of the following (in thousands):

Twelve
Months
Three Months Ended Six Months Ended Ended
June 30, July 1, June 30, July 1, June 30,
2018 2017 2018 2017 2018
Stock compensation expense $ 447 $ 392 $ 895 $ 846 $ 3,745
(Gain) loss on disposal of fixed assets and assets held for sale, net 77 145 (146 ) 262 997
Total non-cash charges $ 524 $ 537 $ 749 $ 1,108 $ 4,742

(b) Non-recurring and integration charges are comprised of the following (in thousands):

Twelve
Months
Three Months Ended Six Months Ended Ended
June 30, July 1, June 30, July 1, June 30,
2018 2017 2018 2017 2018
Restructuring and reorganization (1) $ 7,823 $ 23,273 $ 11,492 $ 39,069 $ 32,665
Acquisition related expenses and integration (2) 379 277 749 579 2,276
Executive transition (49 ) (49 )
Litigation and regulatory costs and settlements, net 2,535 1,290 4,016 3,392 6,881
IT automation projects 404 593 100
Total non-recurring and integration charges $ 10,737 $ 25,195 $ 16,257 $ 43,584 $ 41,922

(1) Consist of costs related to the Company’s business transformation projects to improve the Company’s operational profitability and liquidity.
(2) Consists of direct acquisition costs and integration expenses related to acquired businesses and costs related to potential acquisitions.

(c) Other adjustment items before permitted pro forma adjustments are comprised of the following (in thousands):

Twelve
Months
Three Months Ended Six Months Ended Ended
June 30, July 1, June 30, July 1, June 30,
2018 2017 2018 2017 2018
Blackstone monitoring fees $ $ 1,750 $ $ 3,500 $ 2,725
Non-controlling interests 276 206 638 430 1,007
Foreign currency transaction losses (gains) and other expense (income) (1,054 ) 487 (444 )
Franchise and other tax 710 763 954
Other (1) (814 ) (1,019 )
Total other adjustment items $ (68 ) $ 1,142 $ 1,888 $ 2,911 $ 4,242

(1) Other adjustments consist primarily of net realized and unrealized foreign currency translation gains and losses.

Contacts

DJO Investor/Media Contact:
DJO Global, Inc.
David Smith
SVP and Treasurer
760.734.3075
ir@djoglobal.com

TransEnterix, Inc. Reports Operating and Financial Results for the Second Quarter 2018

August 07, 2018

RESEARCH TRIANGLE PARK, N.C.–(BUSINESS WIRE)–TransEnterix, Inc. (NYSE American:TRXC), a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery, today announced its operating and financial results for the second quarter 2018.

Recent Highlights

  • Total revenue of $6.4 million, including the sale of four Senhance Systems
  • Received FDA clearance for expanded indications for use for Senhance System
  • Filed FDA 510(k) submission for additional Senhance System Instruments including 3mm diameter instruments
  • Entered into financing agreement providing the company with up to $40 million in term loans

“Our performance during the second quarter was solid as we continued to drive system sales both in the U.S. and abroad, while simultaneously making significant progress towards our 2018 goals, including the expansion of Senhance’s indications for use and broadening our portfolio of instruments,” said Todd M. Pope, President and CEO at TransEnterix. “We look forward to leveraging the significant progress we made during the first half of the year to drive increased global adoption of our Senhance System.”

Commercial and Clinical Update

In the quarter ended June 30, 2018, the Company sold four Senhance Systems, with one sold in the U.S. and three sold in the EMEA (Europe, Middle East, and Africa) region.

On May 29, 2018, the Company received FDA 510(k) clearance for expanded indications of its Senhance System for laparoscopic inguinal hernia and laparoscopic cholecystectomy (gallbladder removal) surgery. There are approximately 760,000 inguinal hernia and 1.2 million laparoscopic cholecystectomy procedures performed annually in the U.S. With this clearance, Senhance System’s total addressable annual procedures in the U.S. has more than doubled to over three million.

On June 7, 2018, the Company announced that it had filed an FDA 510(k) submission for additional Senhance System instruments, including 3 millimeter diameter instruments.

Second Quarter Financial Highlights

For the three months ended June 30, 2018, the Company reported revenue of $6.4 million as compared to revenue of $1.6 million in the three months ended June 30, 2017. Revenue in the second quarter of 2018 included $4.7 million in system sales, $1.5 million in instruments and accessories, and $200 thousand in services.

For the three months ended June 30, 2018, total net operating expenses were $18.5 million, as compared to $13.1 million in the three months ended June 30, 2017.

For the three months ended June 30, 2018, net loss was $34.2 million, or $0.17 per share, as compared to a net loss of $14.7 million, or $0.11 per share, in the three months ended June 30, 2017.

For the three months ended June 30, 2018, adjusted net loss was $11.7 million, or $0.06 per share, as compared to an adjusted net loss of $11.2 million, or $0.08 per share in the three months ended June 30, 2017, after adjusting for expenses related to the sale of SurgiBot assets, loss on extinguishment of debt, and non-cash charges for amortization of intangible assets, change in fair value of contingent consideration, and change in fair value of warrant liabilities.

On May 23, 2018, the Company entered into a loan and security agreement providing the company with up to $40.0 million in term loans. The initial tranche of the term loan, $20 million, was received at closing. The Company will be eligible to draw on the second tranche of $10 million upon achievement of certain Senhance System revenue-related milestones for its 2018 fiscal year, and a third tranche of $10 million upon achievement of designated trailing six months GAAP net revenue from Senhance sales. On the date of closing, the Company repaid all amounts owed under their previous loan provider.

The Company had cash and restricted cash of approximately $98.5 million as of June 30, 2018. The Company now anticipates that it has sufficient cash to fund the business into 2020, exclusive of the $20 million in potential future debt tranches.

Conference Call

TransEnterix, Inc. will host a conference call on Tuesday, August 7, 2018 at 8:30 AM ET to discuss its second quarter 2018 operating and financial results. To listen to the conference call on your telephone, please dial (844) 804-5261 for domestic callers or (612) 979-9885 for international callers and reference conference ID 4388237 approximately ten minutes prior to the start time. To access the live audio webcast or archived recording, use the following link http://ir.transenterix.com/events.cfm. The replay will be available on the Company’s website.

About TransEnterix

TransEnterix is a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery by addressing the clinical and economic challenges associated with current laparoscopic and robotic options in today’s value-based healthcare environment. The Company is focused on the commercialization of the Senhance™ Surgical System, which digitizes laparoscopic minimally invasive surgery. The system allows for robotic precision, haptic feedback, surgeon camera control via eye sensing and improved ergonomics while offering responsible economics. The Senhance Surgical System is available for sale in the US, the EU and select other countries. For more information, visit www.transenterix.com.

Non-GAAP Measures

The adjusted net loss and adjusted net loss per share presented in this press release are non-GAAP measures. The adjustments relate to the gain from sale `of SurgiBot assets, amortization of intangible assets, change in fair value of contingent consideration, change in fair value of warrant liabilities, and loss on extinguishment of debt. These financial measures are presented on a basis other than in accordance with U.S. generally accepted accounting principles (“Non-GAAP Measures”). In the tables that follow under “Reconciliation of Non-GAAP Measures,” we present adjusted net loss and adjusted net loss per share, reconciled to their comparable GAAP measures. These items are adjusted because they are not operational or because these charges are non-cash or non-recurring and management believes these adjustments are meaningful to understanding the Company’s performance during the periods presented. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.

Forward-Looking Statements

This press release includes statements relating to the 2018 second quarter results and plans for 2018 and beyond. These statements and other statements regarding our future plans and goals constitute “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control and which may cause results to differ materially from expectations and include whether we have made significant progress towards our 2018 goals, including the expansion of Senhance’s indications for use and broadening our portfolio of instruments; whether we can leverage the significant progress from the first half of the year to drive increased global adoption of our Senhance System and whether the Company has sufficient cash to fund the business into 2020, exclusive of the $20 million in potential future debt tranches. For a discussion of the risks and uncertainties associated with TransEnterix’s business, please review our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 8, 2018 and our other filings we make with the SEC. You are cautioned not to place undue reliance on these forward looking statements, which are based on our expectations as of the date of this press release and speak only as of the origination date of this press release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

TransEnterix, Inc.

Consolidated Statements of Operations and Comprehensive Loss
(in thousands except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Revenue $ 6,389 $ 1,584 $ 11,156 $ 3,530
Cost of revenue 3,732 972 6,287 2,306
Gross profit 2,657 612 4,869 1,224
Operating Expenses (Income)
Research and development 5,281 5,070 10,546 11,925
Sales and marketing 6,046 3,749 12,016 7,472
General and administrative 3,627 2,719 6,303 5,768
Amortization of intangible assets 2,743 1,687 5,570 3,323
Change in fair value of contingent consideration 812 (774 ) 1,439 453
Issuance costs for warrants 627 627
Gain from sale of SurgiBot assets, net 37 (11,959 )
Total Operating Expenses (Income) 18,546 13,078 23,915 29,568
Operating Loss (15,889 ) (12,466 ) (19,046 ) (28,344 )
Other Income (Expense)
Change in fair value of warrant liabilities (17,507 ) (2,326 ) (15,678 ) (2,326 )
Interest expense, net (1,736 ) (622 ) (2,122 ) (956 )
Other income (expense) 1 (40 ) (57 ) (100 )
Total Other Income (Expense), net (19,242 ) (2,988 ) (17,857 ) (3,382 )
Loss before income taxes $ (35,131 ) $ (15,454 ) $ (36,903 ) $ (31,726 )
Income tax benefit 883 741 1,773 1,599
Net loss $ (34,248 ) $ (14,713 ) $ (35,130 ) $ (30,127 )
Other comprehensive loss
Foreign currency translation (loss) gain (4,398 ) 5,430 (2,090 ) 6,563
Comprehensive loss $ (38,646 ) $ (9,283 ) $ (37,220 ) $ (23,564 )
Net loss per share – basic and diluted $ (0.17 ) $ (0.11 ) $ (0.17 ) $ (0.24 )

Weighted average common shares outstanding – basic and

diluted

204,504 132,386 202,214 127,052
TransEnterix, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
June 30, December 31,
2018 2017
(unaudited)
Assets
Current Assets
Cash and cash equivalents $ 97,743 $ 91,217
Accounts receivable, net 2,210 1,536
Inventories 11,040 10,817
Interest receivable 104 80
Other current assets 7,243 9,344
Total Current Assets 118,340 112,994
Restricted cash 750 6,389
Property and equipment, net 6,676 6,670
Intellectual property, net 45,909 52,638
Goodwill 70,813 71,368
Other long term assets 259 192
Total Assets $ 242,747 $ 250,251
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable $ 4,108 $ 3,771
Accrued expenses 10,270 10,974
Deferred revenue 1,083 1,088
Deferred gain from sale of SurgiBot assets 7,500
Contingent consideration – current portion 547 719
Notes payable – current portion, net of debt discount 4,788
Total Current Liabilities 16,008 28,840
Long Term Liabilities
Contingent consideration – less current portion 12,915 11,699
Notes payable – less current portion, net of debt discount 18,952 8,385
Warrant liabilities 22,708 14,090
Net deferred tax liabilities 6,446 8,389
Total Liabilities 77,029 71,403
Commitments and Contingencies
Stockholders’ Equity
Common stock $0.001 par value, 750,000,000 shares authorized at

June 30, 2018 and December 31, 2017; 207,712,291 and 199,282,003

shares issued and outstanding at June 30, 2018 and

December 31, 2017, respectively

207 199
Additional paid-in capital 645,332 621,261
Accumulated deficit (482,759 ) (447,640 )
Accumulated other comprehensive income 2,938 5,028
Total Stockholders’ Equity 165,718 178,848
Total Liabilities and Stockholders’ Equity $ 242,747 $ 250,251
TransEnterix, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six Months Ended
June 30,
2018 2017
Operating Activities
Net loss $ (35,130 ) $ (30,127 )
Adjustments to reconcile net loss to net cash and cash equivalents used in

operating activities:

Gain from sale of SurgiBot assets, net (11,959 )
Depreciation 1,277 1,142
Amortization of intangible assets 5,570 3,323
Amortization of debt discount and debt issuance costs 495 43
Stock-based compensation 4,204 3,679
Deferred tax benefit (1,799 ) (1,580 )
Loss on extinguishment of debt 1,400 308
Change in fair value of warrant liabilities 15,678 2,326
Change in fair value of contingent consideration 1,439 453
Changes in operating assets and liabilities:
Accounts receivable (762 ) (487 )
Interest receivable (24 ) 39
Inventories (1,560 ) (862 )
Other current and long term assets 1,905 (1,473 )
Accounts payable 404 (1,909 )
Accrued expenses (359 ) (390 )
Deferred revenue 31
Net cash and cash equivalents used in operating activities (19,190 ) (25,515 )
Investing Activities
Proceeds related to sale of SurgiBot assets, net 4,496
Purchase of property and equipment (358 ) (1,397 )
Purchase of intellectual property (398 )
Proceeds from sale of property and equipment 32
Net cash and cash equivalents provided by (used in) investing activities 4,170 (1,795 )
Financing Activities
Payment of notes payable (15,305 ) (13,343 )
Proceeds from issuance of debt and warrants, net of issuance costs 18,870 13,196
Payment of contingent consideration (395 )
Proceeds from issuance of common stock and warrants, net of issuance costs 2 29,193
Taxes paid related to net share settlement of vesting of restricted stock units (168 )
Proceeds from issuance of common stock related to sale of SurgiBot assets 3,000
Proceeds from exercise of stock options and warrants 9,813
Net cash and cash equivalents provided by financing activities 15,985 28,878
Effect of exchange rate changes on cash and cash equivalents (78 ) 2
Net increase in cash, cash equivalents and restricted cash 887 1,570
Cash, cash equivalents and restricted cash, beginning of period 97,606 34,590
Cash, cash equivalents and restricted cash, end of period $ 98,493 $ 36,160
Supplemental Disclosure for Cash Flow Information
Interest paid $ 599 $ 368
Supplemental Schedule of Noncash Investing and Financing Activities
Transfer of inventories to property and equipment $ 1,055 $
Issuance of common stock as contingent consideration $ $ 5,227
Relative fair value of warrants issued with debt $ $ 300
Reclass of warrant liability to common stock and additional paid-in capital $ 7,060 $
TransEnterix, Inc.
Reconciliation of Non-GAAP Measures
Adjusted Net Loss and Net Loss per Share
(in thousands except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,

2018

2017

2018

2017

(Unaudited, U.S. Dollars, in thousands)
Net loss $ (34,248) $ (14,713) $ (35,130) $ (30,127)
Adjustments
Gain from sale of SurgiBot assets, net 37 (11,959)
Amortization of intangible assets 2,743 1,687 5,570 3,323
Change in fair value of contingent consideration 812 (774) 1,439 453
Change in fair value of warrant liabilities 17,507 2,326 15,678 2,326
Loss on extinguishment of debt 1,400 308 1,400 308
Adjusted net loss $ (11,749) $ (11,166) $ (23,002) $ (23,717)
Three Months Ended Six Months Ended
June 30, June 30,
(Unaudited, per diluted share)

2018

2017

2018

2017

Net loss per share $ (0.17) $ (0.11) $ (0.17) $ (0.24)
Adjustments
Gain from sale of SurgiBot assets 0.00 (0.06)
Amortization of intangible assets 0.01 0.02 0.03 0.03
Change in fair value of contingent consideration 0.00 (0.01) 0.00 0.00
Change in fair value of warrant liabilities 0.09 0.02 0.08 0.02
Loss on extinguishment of debt 0.01 0.00 0.01 0.00
Adjusted net loss per share $ (0.06) $ (0.08) $ (0.11) $ (0.19)

The non-GAAP financial measures for the three and six months ended June 30, 2018 and 2017 provide management with additional insight into its results of operations and are calculated using the following adjustments:

a) Gain from sale of SurgiBot assets relates to amounts received from Great Belief International Limited in excess of the carrying amount of the assets sold.

b) Intangible assets that are amortized consist of developed technology and purchased patent rights recorded at cost and amortized over 5 to 10 years.

c) Contingent consideration in connection with the acquisition of the Senhance System in 2015 is recorded as a liability and is the estimate of the fair value of potential milestone payments related to business acquisitions. Contingent consideration is measured at fair value using a discounted cash flow model utilizing significant unobservable inputs including the probability of achieving each of the potential milestones and an estimated discount rate associated with the risks of the expected cash flows attributable to the various milestones. Significant increases or decreases in any of the probabilities of success or changes in expected timelines for achievement of any of these milestones would result in a significantly higher or lower fair value of these milestones, respectively, and commensurate changes to the associated liability. The contingent consideration is revalued at each reporting period and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss.

d) The Company’s Series A and Series B Warrants are measured at fair value using a simulation model which takes into account, as of the valuation date, factors including the current exercise price, the expected life of the warrant, the current price of the underlying stock, its expected volatility, holding cost and the risk-free interest rate for the term of the warrant. The warrant liability is revalued at each reporting period and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss.

e) In May 2018 in connection with its entrance into the Hercules Loan Agreement, the Company repaid its existing loan and security agreement with Innovatus Life Sciences Lending Fund I, LP. The Company recognized a loss of $1.4 million on the extinguishment of notes payable which is included in interest expense on the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2018. In May 2017 in connection with its entrance into the Innovatus Loan Agreement, the Company repaid its then-existing credit facility with Silicon Valley Bank and Oxford Finance LLC. The Company recognized a loss of $308,000 on the extinguishment of notes payable which is included in interest expense on the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2017.

Contacts

For TransEnterix, Inc.
Investors:
Mark Klausner, +1 443-213-0501
invest@transenterix.com
or
Media:
Joanna Rice, +1 951-751-1858
joanna@greymattermarketing.com

Fuse Medical, Inc. Completes Acquisition of Maxim Surgical

August 03, 2018

RICHARDSON, Texas–(BUSINESS WIRE)–Fuse Medical, Inc. (OTC: FZMD) (“Fuse” or the “Company”), announced the completion of the acquisition of Palm Springs Partners, LLC d/b/a Maxim Surgical (“Maxim”), a manufacturing company in the spinal fusion device market and full-service medical device and distribution company (the “Acquisition”). The effective date of Acquisition was August 1, 2018.

Formed in April 2011, Maxim designs and manufactures its own spinal interbody spacers and distributes a wide variety of spine, sports medicine, and biologics product lines. Inclusive in the Maxim portfolio of spinal implant products is the Maxim Surgical X-Treme Interbody Fusion System that previously received 510(k) clearance from the U.S. Food & Drug Administration (“FDA”). Maxim’s long-term strategy is to bring more innovative spinal implant products to market for retail and wholesale distribution.

Management Commentary on Acquisition

Christopher C. Reeg, Chief Executive Officer of Fuse said, “We are very excited that Maxim has become part of the Fuse family. Maxim’s portfolio of products bolsters our strategy of expanding Fuse into medical device design and manufacturing.”

“We believe that integrating Maxim with our operations will enhance Fuse’s earnings immediately and allow us to be even better positioned to meet our customers’ needs,” added Mr. Reeg.

About Fuse Medical, Inc.

Fuse provides a broad portfolio of orthopedic implants including internal and external fixation products; upper and lower extremity plating; total joint reconstruction; soft tissue fixation and augmentation for sports medicine procedures; full spinal implants for trauma, degenerative disc disease, and deformity indications. Our biologics offerings include human allografts, substitute bone materials, and tendons, as well as, regenerative tissues and fluids to augment orthopedic surgeries. For more information about Fuse, please visit:www.fusemedical.com.

About Maxim Surgical

Maxim Surgical, based in Richardson, Texas, is a privately-held medical device manufacturing company which is focused on the development of innovative solutions for the spinal fusion device market. Founded in 2011, the company’s primary mission is to provide surgeons and their patients with high-quality medical implants with a value approach. Maxim has close partnerships with key industry leaders and a world-class development team to manufacture cutting-edge implant products at a cost savings for the surgical spinal fusion market. Learn more at www.maximsurgical.com.

Forward Looking Statements

Certain statements in this press release, including those related to an anticipated purchase of all of the outstanding membership units and plans for the consolidated company, constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend,” or similar expressions or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based only on information available to the Company as of the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in the Company’s filings with the Securities and Exchange Commission; the failure of the Company to close the transaction; and integration issues with the consolidated company. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events, or otherwise, except as required by law.

Contacts

Fuse Medical, Inc.
Devon Peddie, 469-862-3030
Investor Relations Analyst
Facsimile: 469-862-3035
info@Fusemedical.com

Mazor Robotics Reports Second Quarter and First Half 2018 Results

Newly Published Data Demonstrate Bone In-Growth Potential of Stryker’s 3D-Printed Tritanium® Cage

August 02, 2018

ALLENDALE, N.J.–(BUSINESS WIRE)–Stryker’s Spine division today announced the publication of a pre-clinical animal study comparing the performance of spinal implants made from a variety of materials, which illustrated the bone in-growth and biological fixation capabilities of its 3D-printed Tritanium cages. The study was published in the July issue of The Spine Journal.

The purpose of the study was to compare the bone in-growth and biomechanical differences of interbody cages with various material technologies in an ovine lumbar interbody fusion model. The cages involved in this study included traditional PEEK cages, plasma-sprayed titanium-coated PEEK cages, and Stryker’s 3D-printed porous Tritanium cages.1

The results demonstrated that the Tritanium cages exhibited significantly greater total bone volume within the graft window at both 8 and 16 weeks compared to the PEEK cages (p<0.01).1Tritanium cages also were the only cages that showed a decrease in range of motion and an increase in stiffness across all three loading directions (axial rotation, flexion-extension, and lateral bending) between the 8-week and 16-week time points (p-value ≤0.01). 1

“The results of this study provide an evidence-based approach to decision-making regarding interbody materials for spinal fusion, as there is significant variability in the materials commonly used for interbody cages in spine surgery,” said Sigurd H. Berven, M.D., orthopaedic surgeon at the University of California, San Francisco. “The study showed the potential for bone in-growth into and around the Tritanium cages.”

According to Michael Carter, vice president and general manager of Stryker’s Spine division, 3D printing, also known as additive manufacturing, allows the creation of a material with “precisely randomized”2 porous structures designed to mimic bone.2 “Stryker’s proprietary Tritanium Technology, a novel, highly porous titanium alloy material designed for bone in-growth and biological fixation, is based on additive manufacturing techniques for orthopaedic surgery pioneered by Stryker over 15 years ago,” Carter said. “This important study reinforces the value of our growing line of Tritanium interbody cages and demonstrates Stryker’s commitment to bringing the latest in advanced technologies to our customers.”

The study titled “Bony Ingrowth Potential of 3D Printed Porous Titanium Alloy: A Direct Comparison of Interbody Cage Materials in an In Vivo Ovine Lumbar Fusion Model,” can be accessed here.

About Stryker

Stryker is one of the world’s leading medical technology companies and, together with its customers, is driven to make healthcare better. The company offers innovative products and services in Orthopaedics, Medical and Surgical, and Neurotechnology and Spine that help improve patient and hospital outcomes. More information is available at stryker.com and builttofuse.com. Follow the Spine division on Twitter @stryker_spine.

References

  1. McGilvray, Kirk C., et al. Bony ingrowth potential of 3D printed porous titanium alloy: a direct comparison of interbody cage materials in an in vivo ovine lumbar fusion model, Spine J. 2018; Volume 18, Issue 7, 1250-1260.
  2. Karageorgiou V, Kaplan D. (2005) Porosity of 3D biomaterial scaffolds and osteogenesis. Biomaterials, 26, 5474-5491.

Content ID TRITA-PB-2_18140

Dr. Berven is a paid consultant of Stryker. His statements represent his own opinions based on personal experience and are not necessarily those of Stryker. Individual experiences may vary. A surgeon must always rely on his or her own professional clinical judgment when deciding whether to use a particular product when treating a particular patient. Stryker does not dispense medical advice and recommends that surgeons be trained in the use of any particular product before using it in surgery.

The information presented is intended to demonstrate the breadth of Stryker product offerings. A surgeon must always refer to the package insert, product label and/or instructions for use before using any Stryker product. Products may not be available in all markets because product availability is subject to the regulatory and/or medical practices in individual markets. Please contact your Stryker representative if you have questions about the availability of Stryker products in your area.

Contacts

Sullivan & Associates
Andrea Sampson, 714-374–6174
asampson@sullivanpr.com

BONESUPPORT Signs Agreement with MTF Biologics to Expand US Product Offering

Lund, Sweden, 08:00am CET, 2 August 2018 – BONESUPPORT™, an emerging leader in orthobiologics for the management of bone voids, has signed an agreement with MTF Biologics, the world’s largest tissue bank, to extend and strengthen its US product offering.

The agreement will give BONESUPPORT US rights to two forms of bone graft materials comprised of 100% demineralized bone matrix (DBM), which offer improved osteoinductivity when compared to many other DBM products. These products, which are both osteoinductive and osteoconductive, complement CERAMENT BVF (osteoconductive) and the products gained from the Company’s recent strategic agreement with Collagen Matrix Inc. (osteoinductive and osteogenic)

BONESUPPORT plans to launch the products supplied by MTF Biologics under the BONESUPPORT brand name and through its own US distribution network.

MTF Biologics is a non-profit service organization dedicated to providing clinically sound, safe allograft tissue. MTF Biologics is comprised of a national consortium of academic medical institutions, organ procurement organizations and tissue recovery organizations. It is based in Edison, NJ, USA.

Emil Billbäck, CEO of BONESUPPORT said, “Today’s deal with MTF Biologics is a further important step in creating the broad and complementary US product offering that will address the needs of orthopedic surgeons managing bone voids. We are pleased that MTF Biologics, the world’s leading tissue bank, has chosen to partner with BONESUPPORT, and we look forward to marketing products based on their high-quality demineralized bone matrix. With our expanded product portfolio and new broad US distribution channel, that we are on track to have in place in late October, we are well placed to significantly improve our competitive position and rapidly grow sales ahead of the planned US launch of CERAMENT G in 2021.”

“MTF Biologics is pleased to be partnering with BONESUPPORT on the promotion of our demineralized bone matrix fiber technology. We are excited for this opportunity to work together to deliver biologic solutions that serve the needs of surgeons and their patients.” said Tom Shaffer, MTF Biologics EVP, Global Sales & Marketing.

For more information contact:

Emil Billbäck, CEO

+46 (0) 46 286 53 70

Björn Westberg, CFO

+46 (0) 46 286 53 60

ir@bonesupport.com

Citigate Dewe Rogerson

Pip Batty, David Dible, Shabnam Bashir

+44 (0)20 7282 1022

bonesupport@citigatedewerogerson.com

About MTF Biologics

MTF Biologics is a nonprofit organization based in Edison, N.J. It is a national consortium comprised of leading organ procurement organizations, tissue recovery organization and academic medical institutions, and governed by a board of surgeons who are leading experts in tissue transplantation. As the world’s largest tissue bank, MTF Biologics saves and heals lives by honoring donated gifts, serving patients and advancing science. Since its inception in 1987, the organization has received tissue from more than 120,000 donors and distributed more than 7.5 million allografts for transplantation. Through its IIAM subsidiary, it has placed more than 55,000 non-transplantable organs for research. Through its Statline subsidiary, it has managed more than 10 million donor referrals.

For more information, visit www.mtf.org.

About BONESUPPORT™

BONESUPPORT is an innovative and rapidly growing commercial stage orthobiologics company, based in Lund, Sweden. The Company develops and commercializes innovative injectable bio-ceramic bone graft substitutes that remodel to the patient’s own bone and have the capability of eluting drugs directly into the bone void.

BONESUPPORT’s bio-ceramic bone graft substitutes CERAMENT® BONE VOID FILLER (BVF), CERAMENT® G* and CERAMENT® V* are all based on the Company’s novel and proprietary technology platform.

The Company’s products are targeting a large addressable market opportunity across trauma, chronic osteomyelitis (bone infection), revision arthroplasty (replacement of a joint prosthesis) and infected diabetic foot.

BONESUPPORT’s total sales increased from SEK 62 million in 2015 to SEK 129 million in 2017, representing a compound annual growth rate of 45%.

The Company’s research and development is focused on the continuing development and refinement of its CERAMENT technology to extend its use into additional indications by the elution of drugs and therapeutic agents. The Company currently has a pipeline of pre-clinical product candidates that have been designed to promote bone growth.

In addition, BONESUPPORT is looking to expand its product offering in the US and has entered into strategic agreements with Collagen Matrix Inc. and MTF Biologics to market and distribute products that are complementary to CERAMENT BVF.

BONESUPPORT is listed on Nasdaq Stockholm and trades under the ticker “BONEX” (ISIN code: SE0009858152). Further information is available at www.bonesupport.com

*CERAMENT G: Not available in the United States, for investigational use only.
CERAMENT V: Not available in the United States.

BONESUPPORT™ and CERAMENT® are registered trademarks.

This information is such information as BONESUPPORT HOLDING AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08.00 CET on 2 August 2018.