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DJO Global Announces Financial Results for Third Quarter 2017

Posted On November 15, 2017 By OrthoSpineNews In Financial /  

November 14, 2017

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 third quarter ended September 30, 2017.

Third quarter Financial Highlights

  • Net sales grew 1.3% to $290.9 million, or 0.3% at constant currency rates.
  • Net loss attributable to DJOFL was $22.7 million compared to $22.6 million in the prior year period.
  • Adjusted EBITDA increased 5.5% to $66.8 million.

Business Transformation Progress

  • Company’s transformation remains on track to deliver 7% to 10% annual cost reduction by the end of 2018.
  • Transformation actions taken to date expected to contribute $33 million savings over the next four quarters.

“The third quarter was another period of significant progress on DJO’s overall business transformation,” said Brady Shirley, DJO’s President and Chief Executive Officer. “Nine months into our journey, we are starting to see tangible results from our team’s hard work. Throughout this year we have continued to grow our global brands and our year-to-date results show the impact of our transformation, with Adjusted EBITDA growing at over three times the rate of revenue growth—the first time in many years we have had such sustained productivity improvement. Our productivity momentum will enable us to invest for even stronger growth as we exit 2017 and begin 2018. With clear evidence that our strategy is working, we remain committed to the rigorous execution of the initiatives that are critical to improving our operations, growing our global business and improving our customer experience.”

Sales Results

DJOFL achieved net sales for the third quarter of 2017 of $290.9 million, reflecting growth of 1.3%, or 0.3% on a constant currency basis. The Company estimates that net sales were negatively impacted by approximately $3.0 million as a result of the severe hurricanes in the U.S. during the third quarter of 2017. For the third quarter 2017, domestic and international shipping days did not differ materially from the third quarter of 2016. For the nine months ending September 30, 2017, sales grew 1.8% over the comparable period in 2016 to $874.0 million, or 2.4% on a sales per day, constant currency basis. The nine months ending September 30, 2017 included one less shipping day compared to the same period in 2016.

Net sales for the Surgical Implant segment grew 14.1% in the third quarter of 2017 to $46.6 million. Sales across all three implant subcategories (knee, hip and shoulder) again grew at double digit rates compared to the prior year. For the nine months ending September 30, 2017, Surgical Implant sales grew 15.6% over the comparable period in 2016, to $146.2 million.

Net sales for DJO’s International segment were $76.9 million in the third quarter of 2017, reflecting growth of 6.9% compared to the third quarter of 2016, or 2.6% on a constant currency basis. Growth was driven by stronger sales in the Company’s direct markets, primarily France, Australia, and Scandinavia. For the nine months ending September 30, 2017, International sales grew 3.4% to $234.8 million, or 4.5% on a sales per day, constant currency basis over the comparable period in 2016.

Net sales for DJO’s Recovery Sciences segment were $39.3 million in the third quarter of 2017, a decline of 1.1% compared to the third quarter of 2016. Growth in the segment’s Chattanooga rehabilitation equipment and consumer product line were offset by a decline in Regeneration CMF product in the quarter compared to the prior year period. For the nine months ending September 30, 2017, Recovery Sciences sales grew 1.6% over the comparable period in 2016 to $116.6 million.

Net sales for DJO’s Bracing and Vascular segment were $128.0 million in the third quarter of 2017, a decline of 4.8%, compared to the third quarter of 2016, reflecting moderate weakness across the Company’s bracing and support products, as well as continued pressure in the Company’s Dr. Comfort product line. For the nine months ending September 30, 2017, Bracing and Vascular sales declined 3.6% from the comparable period in 2016 to $376.4 million.

Earnings Results

For the third quarter of 2017, DJOFL reported a net loss of $22.7 million, compared to a net loss of $22.6 million for the third quarter of 2016. As detailed in the attached financial tables, the results for the current and prior year third quarter periods and the current and prior year twelve-month periods were impacted by significant non-cash items, non-recurring items and other adjustments.

Adjusted EBITDA for the third quarter of 2017 was $66.8 million compared with Adjusted EBITDA of $63.3 million in the third quarter of 2016. For the nine months ending September 30, 2017, Adjusted EBITDA was $187.6 million compared with Adjusted EBITDA of $175.8 million in the first nine months of 2016. Including projected future savings from cost savings programs currently underway of $33.0 million as permitted under our credit agreement and the indentures governing our outstanding notes, Adjusted EBITDA for the twelve months ended September 30, 2017 was $280.1 million.

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.

Net cash provided by continuing operating activities for the nine months ending September 30, 2017 was $61.7 million compared to $19.9 million for the same period of 2016. The improvement in cash flow was primarily attributable to working capital initiatives executed as part of the Company’s overall business transformation.

Conference Call Information

DJO has scheduled a conference call to discuss this announcement beginning at 4:30 pm, Eastern Time, Tuesday, November 14, 2017. Individuals interested in listening to the conference call may do so by dialing (866) 394-8509 (International callers please use (706) 643-6833), 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 Exos™. 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 payors; 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, 2016, filed with the Securities and Exchange Commission on March 15, 2017. 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 Nine Months Ended
September September September September
30, 30, 30, 30,
2017 2016 2017 2016
Net sales $ 290,876 $ 287,040 $ 874,011 $ 858,798
Operating expenses:
Cost of sales (exclusive of amortization, see note 1) 122,325 122,533 366,779 361,090
Selling, general and administrative 122,066 114,788 391,967 358,344
Research and development 8,864 8,481 27,066 28,457
Amortization of intangible assets 15,852 18,994 50,713 57,657
269,107 264,796 836,525 805,548
Operating income 21,769 22,244 37,486 53,250
Other (expense) income:
Interest expense, net (43,691 ) (42,683 ) (129,446 ) (127,349 )
Other income (expense), net 824 (20 ) 2,008 732
(42,867 ) (42,703 ) (127,438 ) (126,617 )
Loss before income taxes (21,098 ) (20,459 ) (89,952 ) (73,367 )
Income tax provision (1,504 ) (2,166 ) (6,677 ) (11,156 )
Net loss from continuing operations (22,602 ) (22,625 ) (96,629 ) (84,523 )
Net income from discontinued operations 123 142 228 807
Net loss (22,479 ) (22,483 ) (96,401 ) (83,716 )
Net income attributable to noncontrolling interests (214 ) (99 ) (644 ) (461 )
Net loss attributable to DJO Finance LLC $ (22,693 ) $ (22,582 ) $ (97,045 ) $ (84,177 )

Note 1 — Cost of sales is exclusive of amortization of intangible assets of $6,981 and $20,942 for the three and nine months ended September 30, 2017 and $7,057 and $21,544 for the three and nine months ended September 30, 2016, respectively.
DJO Finance LLC
Unaudited Condensed Consolidated Balance Sheets

(In thousands)
September 30, December 31,
2017 2016
Assets
Current assets:
Cash and cash equivalents $ 39,018 $ 35,212
Accounts receivable, net 175,031 178,193
Inventories, net 158,928 151,557
Prepaid expenses and other current assets 24,218 23,650
Current assets of discontinued operations 511 511
Total current assets 397,706 389,123
Property and equipment, net 134,538 128,019
Goodwill 863,011 855,626
Intangible assets, net 622,460 672,134
Other assets 6,109 5,536
Total assets $ 2,023,824 $ 2,050,438
Liabilities and Deficit
Current liabilities:
Accounts payable $ 93,102 $ 63,822
Accrued interest 41,738 16,740
Current portion of debt obligations 14,593 10,550
Other current liabilities 130,941 113,265
Total current liabilities 280,374 204,377
Long-term debt obligations 2,372,850 2,392,238
Deferred tax liabilities, net 210,772 202,740
Other long-term liabilities 15,330 14,932
Total liabilities $ 2,879,326 $ 2,814,287
Commitments and contingencies
Deficit:
DJO Finance LLC membership deficit:
Member capital 841,907 844,294
Accumulated deficit (1,676,688 ) (1,579,642 )
Accumulated other comprehensive loss (22,551 ) (30,580 )
Total membership deficit (857,332 ) (765,928 )
Noncontrolling interests 1,830 2,079
Total deficit (855,502 ) (763,849 )
Total liabilities and deficit $

2,023,824

 $ 2,050,438
DJO Finance LLC
Unaudited Segment Information

(In thousands)
Three Months Ended Nine Months Ended
September September September September
30, 30, 30, 30,
2017 2016 2017 2016
Net sales:
Bracing and Vascular $ 127,971 $ 134,421 $ 376,439 $ 390,388
Recovery Sciences 39,346 39,793 116,622 114,817
Surgical Implant 46,613 40,852 146,197 126,477
International 76,946 71,974 234,753 227,116
$ 290,876 $ 287,040 $ 874,011 $ 858,798
Operating income:
Bracing and Vascular $

27,060

 $ 30,393 $

72,292

 $

79,999
Recovery Sciences 11,322 7,683 30,938 22,184
Surgical Implant 9,126 7,908 27,328 21,190
International 14,894 11,657 42,013 35,299
Expenses not allocated to segments and eliminations (40,633 ) (35,397

)

 (135,085

)

 (105,422 )
$ 21,769 $ 22,244 $ 37,486 $ 53,250

DJO Finance LLC
Adjusted EBITDA

For the Three and Nine Months Ended September 30, 2017 and 2016
(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 $55.0 million was outstanding as of September 30, 2017, 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 loss attributable to DJOFL and Adjusted EBITDA (in thousands):

Twelve
Months
Three Months Ended Nine Months Ended Ended
September September September September September
30, 30, 30, 30, 30,
2017 2016 2017 2016 2017
Net loss attributable to DJO Finance LLC $ (22,693 ) $ (22,582 ) $ (97,045 ) $ (84,177 ) $ (299,172 )
Income from discontinued operations, net (123 ) (142 ) (228 ) (806 ) (560 )
Interest expense, net 43,691 42,683 129,446 127,349 172,176
Income tax provision (benefit) 1,504 2,166 6,677 11,156 (11,330 )
Depreciation and amortization 26,285 29,031 83,001 88,208 112,686
Non-cash charges (a) 1,204 338 2,312 2,941 181,770
Non-recurring and integration charges (b) 15,712 9,895 59,296 25,832 82,139
Other adjustment items (c) 1,249 1,938 4,160 5,302 9,413
66,829 63,327 187,619 175,805 247,122
Permitted pro forma adjustments applicable to the twelve month period only (d)
Future cost savings 32,967
Adjusted EBITDA $ 66,829 $ 63,327 $ 187,619 $ 175,805 $ 280,089

(a) Non-cash charges are comprised of the following:
Twelve
Months
Three Months Ended Nine Months Ended Ended
September September September September September
30, 30, 30, 30, 30,
2017 2016 2017 2016 2017
Stock compensation expense $ 483 $ 285 $ 1,329 $ 1,806 $ 2,711

Loss on disposal of fixed assets and assets held for sale, net

 721 (4 ) 983 886 1,046
Impairment of goodwill (1) — — — — 160,000
Inventory adjustments (2) — — — — 18,013
Purchase accounting adjustments (3) — 57 — 249 —
Total non-cash charges $ 1,204 $ 338 $ 2,312 $ 2,941 $ 181,770
(1) Impairment of goodwill and intangible assets for the twelve months ended September 30, 2017 consisted of goodwill impairment charges of $99.0 million and $61.0 million related to the CMF and Vascular reporting units, respectively. The impairment charge for our CMF reporting unit resulted from reductions in our projected operating results and estimated future cash flows due to disruption caused by our exit of the Empi business. The impairment charge for our Vascular reporting unit resulted from reductions in our projected operating results and estimated future cash flows due to a loss of revenue caused by disruption as we transitioned our Dr. Comfort therapeutic footwear manufacturing and distribution to a new ERP system and market pressure in the therapeutic shoe market.
(2) In the fourth quarter of fiscal 2016, current management implemented a new strategy relating to our procurement, manufacturing and liquidation philosophies in order to significantly reduce inventory levels. Historically, our strategy was to purchase inventory in large quantities to capture purchase discounts and rebates and provide an expansive mix of products for our customers. Our new strategy aims to integrate our supply chain services with customer demand through focused forecasted consumption and sales efforts, therefore limiting the range of SKUs we plan to offer. As a result of these changes, the Company recorded a charge to cost of sales and corresponding reduction in inventory of approximately $18.0 million. The E&O reserve expense in fiscal 2016 included $5.7 million related to the Company’s decision to discontinue certain SKUs mainly within the Bracing and Vascular product lines, $8.3 million related to holding inventory for shorter periods and the planned scrapping of long-dated inventory, $2.0 million related to new Surgical Implant products that changed the expected life cycle of its current product portfolio, and $2.0 million of slow moving consigned inventory within certain OfficeCare clinics for which management has decided not to strategically relocate.
(3) Purchase accounting adjustments consisted of amortization of fair market value inventory adjustments for all periods presented.

(b)

Non-recurring and integration charges are comprised of the following:
Twelve
Months
Three Months Ended Nine Months Ended Ended
September September September September September
30, 30, 30, 30, 30,
2017 2016 2017 2016 2017
Restructuring and reorganization (1) $ 11,391 $ 1,177 $ 50,441 $ 3,998 $ 64,089
Acquisition related expenses and integration (2) 879 2,873 1,457 8,855 2,952
Executive transition — 914 (49 ) 954 1,048
Litigation and regulatory costs and settlements, net (3) 3,336 4,576 6,748 11,062 12,248
Other non-recurring items — 287 — 895 —
IT automation projects 106 68 699 68 1,802
Total non-recurring and integration charges $ 15,712 $ 9,895 $ 59,296 $ 25,832 $ 82,139
(1) Consists of costs related to the Company’s business transformation projects to improve the Company’s liquidity and profitability and to improve the Company’s customer’s experiences.
(2) Consists of direct acquisition costs and integration expenses related to acquired businesses and costs related to potential acquisitions.
(3) For the twelve months ended September 30, 2017, litigation and regulatory costs consisted of $3.3 million in litigation costs related to ongoing product liability issues and $8.9 million related to other litigation and regulatory costs and settlements.

(c)

Other adjustment items are comprised of the following:
Twelve
Months
Three Months Ended Nine Months Ended Ended
September September September September September
30, 30, 30, 30, 30,
2017 2016 2017 2016 2017
Blackstone monitoring fees $ 1,750 $ 1,750 $ 5,250 $ 5,250 $ 7,000
Non-controlling interests 214 99 644 461 806
Other (1) (715 ) 89 (1,734 ) (409 ) 1,607
Total other adjustment items $ 1,249 $ 1,938 $ 4,160 $ 5,302 $ 9,413
(1) Other adjustments consist primarily of net realized and unrealized foreign currency transaction gains and losses.
(d) Permitted pro forma adjustments include future cost savings related to the exit of our Empi business and our business transformation initiative.

Contacts

DJO Global, Inc.
David Smith
SVP and Treasurer
760.734.3075
ir@djoglobal.com

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Alphatec Holdings, Inc. Reports Third Quarter 2017 Financial Results

Posted On November 13, 2017 By OrthoSpineNews In Financial /  

CARLSBAD, Calif., Nov. 09, 2017 (GLOBE NEWSWIRE) — Alphatec Holdings, Inc. (“Alphatec” or the “Company”) (Nasdaq:ATEC), a provider of innovative spine surgery solutions with a mission to improve patient lives through the relentless pursuit of superior outcomes, announced today financial results for its third quarter ended September 30, 2017 and recent corporate highlights.

Third Quarter 2017 Financial Highlights

  • Total revenue of $23.1 million; U.S. commercial revenue of $20.7 million;
  • Cash burn improved to $3.7 million from $6.4 million sequentially;
  • Operating expenses improved $0.7 million sequentially; non-GAAP operating expenses improved $1.2 million sequentially.

Organizational, Commercial, and Product Highlights

  • Enhanced senior leadership team with the appointment of Patrick Miles, a globally recognized spine visionary, to the position of Executive Chairman;
  • Expanded the Board of Directors with the appointments of seasoned medical device executive, Quentin Blackford, and capital markets expert, Ward Woods;
  • Continued to drive momentum in transition of sales organization from non-exclusive to dedicated with third quarter sales from dedicated sales agents and distributors of over 30%, up significantly from just over 18% last quarter;
  • Commercially launched the Alphatec SquadronTM Lateral Retractor, a key component of the Battalion® Lateral System, in October.

“I am pleased with the execution of our team during the third quarter. Our financial results were in line with our pre-announced ranges.  In spite of the revenue challenges presented by weather and the sequential loss of two selling days in the quarter, we successfully managed operating expenses and improved cash burn,” said Terry Rich, CEO.   “We also drove momentum in the transition of our sales channel and made excellent progress on the initiatives that remain priorities as we reimagine Alphatec, keeping us on track to grow revenue sequentially in the fourth quarter.”

“I am especially excited to welcome Pat Miles, one of the spine industry’s most respected leaders, to our team,” added Rich. “Under his leadership, and with his passionate contribution to Alphatec’s product development, marketing, and surgeon engagement, we will lead the industry in terms of spine experience, driving innovation that improves the surgical experience and patient outcomes.  We are exceptionally well-positioned to take market share in U.S. spine.”

Comparison of Financial Results for the Third Quarter 2017 to Second Quarter 2017

Following is a table, comparing key third quarter 2017 results to second quarter 2017 results.  At this time, the Company believes that sequential results are the best indicators of performance. These are the comparisons management uses in its own evaluation of continuing operating performance given the re-focus of the Company’s strategy under a new leadership team.

Three Months Ended Change
September 30, 2017   June 30, 2017 $000’s   %
(unaudited)
U.S. commercial revenue $ 20,662 $ 21,877 $ (1,215 ) (5.6 %)
U.S gross profit 14,280 15,521 (1,241 ) (8.0 %)
U.S. gross margin 69.1 % 70.9 %
Operating Expenses
Research and development $ 1,044 $ 990 $ 54 5.5 %
Sales and marketing 10,015 10,298 (283 ) (2.8 %)
General and administrative 4,403 5,351 (948 ) (17.7 %)
Amortization of intangible assets 172 172 –
Restructuring expenses 139 528 (389 ) (73.7 %)
Gain on sale of assets – (856 ) 856
Total operating expenses $ 15,773 16,483 $ (710 ) (4.3 %)
Operating loss $ (1,261 ) $ (735 ) $ (526 ) (71.6 %)
Loss from continuing operations $ (3,076 ) $ (2,629 ) $ (447 ) (17.0 %)
Non-GAAP Adjusted EBITDA $ 1,126 $ 1,218 $ (92 ) (7.6 %)

U.S. commercial revenue for the third quarter of 2017 was $20.7 million, down $1.2 million compared to $21.9 million in the second quarter of 2017.  The sequential decline was driven primarily by the impact of two less surgery days in the third quarter, weather-related impacts, and deliberate decisions to discontinue non-strategic relationships.

U.S. gross profit and gross margin for the third quarter of 2017 were $14.3 million and 69.1%, respectively, compared to $15.5 million and 70.9%, respectively, for the second quarter of 2017. The decrease in gross margin was due to lower sales volume, changes in product mix, and the impact of variations in inventory write-offs as the Company continues to optimize its supply chain.

Total operating expenses for the third quarter of 2017 were $15.8 million, reflecting a decrease of $0.7 million compared to $16.5 million in the second quarter of 2017.  On a non-GAAP basis, excluding restructuring charges and a gain on sale of assets, total operating expenses in the third quarter improved by $1.2 million compared to the second quarter of 2017. The improvements reflected the execution of operational improvement initiatives, including workforce reductions, facilities consolidation, and the success of ongoing efforts to reduce expenses.

GAAP loss from continuing operations for the third quarter of 2017 was $3.1 million, compared to a loss of $2.6 million for the second quarter of 2017.

Non-GAAP Adjusted EBITDA in the third quarter of 2017 was $1.1 million, compared to $1.2 million in the second quarter of 2017.  For more detailed information, please refer to the table, ”Alphatec Holdings, Inc. Reconciliation of Non-GAAP Financial Measures,” that follows.

Current and long-term debt includes $33.0 million in term debt and $9.2 million outstanding under the Company’s revolving credit facility at September 30, 2017. This compares to $33.6 million in term debt and $8.9 million outstanding under the Company’s revolving credit facility at June 30, 2017.

Cash and cash equivalents were $15.4 million at September 30, 2017, compared to $19.1 million reported at June 30, 2017.  In October 2017, the Company secured a commitment for additional equity investments of $3.5 million to $4.0 million, payable on or before January 1, 2018, and generated cash proceeds of $1.7 million from the exercise of warrants.

Comparison of Financial Results for the Three and Nine Months Ended September 30, 2017 and 2016

Revenue decreased on a year-over-year basis as a result of the Company’s execution of its sales organization transition and the impact of lost revenue related to the financial and operational challenges the Company faced in 2016 prior to the sale of its international business.  The year-over-year improvement in operating expenses is the result of a comprehensive initiative to reduce costs and drive operational efficiencies.  For additional information, please reference the following financial statement tables and the Company’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on November 10, 2017.

Non-GAAP Information

To supplement the Company’s financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company reports certain non-GAAP financial measures such as Adjusted EBITDA.  Adjusted EBITDA included in this press release is a non-GAAP financial measure that represents net income (loss), excluding the effects of interest, taxes, depreciation, amortization, stock-based compensation expenses, and other non-recurring income or expense items, such as sale of assets, impairments, restructuring expenses, severance expenses and transaction-related expenses.  The Company believes that non-GAAP Adjusted EBITDA provides investors with an additional tool for evaluating the Company’s core performance, which management uses in its own evaluation of continuing operating performance, and a baseline for assessing the future earnings potential of the Company.  For completeness, management uses non-GAAP Adjusted EBITDA in conjunction with GAAP earnings and earnings per common share measures. The Company’s Adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies in the industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. Adjusted EBITDA should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Included below are reconciliations of the non-GAAP financial measures to the comparable GAAP financial measure.

Investor Conference Call

Alphatec will hold a conference today at 1:30 p.m. PT / 4:30 p.m. ET to discuss the results. The dial-in numbers are (877) 556-5251 for domestic callers and (720) 545-0036 for international callers. The conference ID number is 4698936. A live webcast of the conference call will be available online from the investor relations page of the Company’s corporate website at www.atecspine.com.

About Alphatec Holdings, Inc.

Alphatec Holdings, Inc., through its wholly owned subsidiary Alphatec Spine, Inc., is a medical device company that designs, develops, and markets spinal fusion technology products and solutions for the treatment of spinal disorders associated with disease and degeneration, congenital deformities, and trauma. The Company’s mission is to improve lives by providing innovative spine surgery solutions through the relentless pursuit of superior outcomes. The Company markets its products in the U.S. via independent sales agents and a direct sales force.

Additional information can be found at www.atecspine.com.

Forward Looking Statements 

This press release contains ”forward-looking statements“ within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainty. Such statements are based on management’s current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Forward-looking statements include the references to the Company’s strategy in significantly repositioning the Alphatec brand and turning the Company into a growth organization.  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 uncertainty of success in developing new products or products currently in the Company’s pipeline; the uncertainties in the Company’s ability to execute upon its strategic operating plan; the uncertainties regarding the ability to successfully license or acquire new products, and the commercial success of such products; failure to achieve acceptance of the Company’s products by the surgeon community, including Battalion and Arsenal Deformity; failure to obtain FDA or other regulatory clearance or approval for new products, or unexpected or prolonged delays in the process; continuation of favorable third party reimbursement for procedures performed using the Company’s products; unanticipated expenses or liabilities or other adverse events affecting cash flow or the Company’s ability to successfully control its costs or achieve profitability; uncertainty of additional funding; the Company’s ability to compete with other competing products and with emerging new technologies; product liability exposure; an unsuccessful outcome in any material litigation in which the Company is a defendant; patent infringement claims; claims related to the Company’s intellectual property and the Company’s ability to meet its financial obligations under its credit agreements and the Orthotec settlement agreement. The words “believe,” “will,” “should,” “expect,” “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.  A further list and description of these and other factors, risks and uncertainties can be found in the Company’s most recent annual report, and any subsequent quarterly and current reports, filed with the Securities and Exchange Commission. Alphatec disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.

Investor/Media Contact:

Zack Kubow
The Ruth Group
(646) 536-7000
alphatec@theruthgroup.com

Company Contact:

Jeff Black
Executive Vice President and Chief Financial Officer
Alphatec Holdings, Inc.
(760) 431-9286
ir@atecspine.com

 

ALPHATEC HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  (in thousands, except per share amounts – unaudited) 
Three Months Ended Nine Months Ended
September 30,  September 30, 
2017 2016 2017 2016
Revenues $ 23,099 $ 26,711 $ 75,456 $ 93,158
Cost of revenues 8,587 10,849 28,417 31,651
Gross profit 14,512 15,862 47,039 61,507
Operating expenses:
Research and development 1,044 1,087 3,483 6,799
Sales and marketing 10,015 11,764 31,416 39,498
General and administrative 4,403 4,136 15,977 19,416
Amortization of intangible assets 172 83 516 593
Restructuring expenses 139 1,605 1,898 1,736
Goodwill and intangible asset impairment 1,736 1,778
Gain on sale of assets – – (856 ) –
Total operating expenses 15,773 20,411 52,434 69,820
Operating loss (1,261 ) (4,549 ) (5,395 ) (8,313 )
Interest and other expense, net (1,822 ) (10,511 ) (5,677 ) (12,869 )
Loss from continuing operations before taxes (3,083 ) (15,060 ) (11,072 ) (21,182 )
Income tax provision (7 ) (4,997 ) 57 (4,962 )
Loss from continuing operations (3,076 ) (10,063 ) (11,129 ) (16,220 )
Loss from discontinued operations (61 ) (3,658 ) (220 ) (9,351 )
Net loss $ (3,137 ) $ (13,721 ) $ (11,349 ) $ (25,571 )
Net loss per share continuing operations $ (0.22 ) $ (1.17 ) $ (0.98 ) $ (1.91 )
Net loss per share discontinued operations (0.01 ) (0.43 ) (0.02 ) (1.10 )
Net loss per share  – basic and diluted $ (0.23 ) $ (1.60 ) $ (1.00 ) $ (3.01 )
Weighted-average shares – basic and diluted 13,938 8,560 11,349 8,505
ALPHATEC HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) 
September 30, December 31,
2017 2016
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 15,437 $ 19,593
Accounts receivable, net 13,303 18,512
Inventories, net 29,747 30,093
Prepaid expenses and other current assets 2,019 4,262
Current assets of discontinued operations 236 364
Total current assets 60,742 72,824
Property and equipment, net 13,275 15,076
Intangibles, net 5,482 5,711
Other assets 222 516
Noncurrent assets of discontinued operations 52 61
Total assets $ 79,773 $ 94,188
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable $ 2,865 $ 8,701
Accrued expenses 22,606 27,589
Current portion of long-term debt 3,037 3,113
Current liabilities of discontinued operations 283 732
Total current liabilities 28,791 40,135
Total long term liabilities 60,894 71,954
Redeemable preferred stock 23,603 23,603
Stockholders’ deficit (33,515 ) (41,504 )
Total liabilities and stockholders’ deficit $ 79,773 $ 94,188

 

ALPHATEC HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands – unaudited) 
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Operating loss, as reported $ (1,261 ) $ (4,549 ) $ (5,395 ) $ (8,313 )
Add back:
Depreciation 1,564 1,623 4,834 5,652
Amortization of intangible assets 234 306 702 915
Total EBITDA 537 (2,620 ) 141 (1,746 )
Add back significant items:
Stock-based compensation and stock price guarantee 450 (12 ) 1,669 1,510
Restructuring and other charges 139 1,605 1,898 1,778
Goodwill and intangible asset impairment – 1,736 – 1,736
Gain on sale of assets – – (856 ) –
Adjusted EBITDA $ 1,126 $ 709 $ 2,852 $ 3,278

 

ALPHATEC HOLDINGS, INC.
RECONCILIATION OF GEOGRAPHIC SEGMENT REVENUES AND GROSS PROFIT
(in thousands, except percentages – unaudited) 
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Revenues by source
U.S. commercial revenue $ 20,662 $ 25,189 $ 65,976 $ 82,445
Other 2,437 1,522 9,480 10,713
Total revenues $ 23,099 $ 26,711 $ 75,456 $ 93,158
Gross profit by source
U.S. $ 14,280 $ 15,209 $ 46,070 $ 56,430
Other 232 653 969 5,077
Total gross profit $ 14,512 $ 15,862 $ 47,039 $ 61,507
Gross profit margin by source
U.S. 69.1 % 60.4 % 69.8 % 68.4 %
Other 9.5 % 42.9 % 10.2 % 47.4 %
Total gross profit margin 62.8 % 59.4 % 62.3 % 66.0 %
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Amedica Announces Reverse Stock Split

Posted On November 13, 2017 By OrthoSpineNews In Financial /  

SALT LAKE CITY, Nov. 10, 2017 (GLOBE NEWSWIRE) — Amedica Corporation (Nasdaq:AMDA), an innovative biomaterial company that develops and manufactures silicon nitride as a platform for biomedical applications, today announced a 1-for-12 reverse stock split of its issued and outstanding common stock. The Company’s common stock will open for trading on a split-adjusted basis on Friday, November 10, 2017 (the “Effective Time”).  The split-adjusted shares of Amedica’s common stock will continue trading on the Nasdaq Capital Market under the Company’s existing symbol “AMDA.”  A new CUSIP number of 023435407 has been assigned to the Company’s common stock as a result of the reverse split.

The reverse stock split will reduce the number of shares of common stock outstanding from approximately 36,264,881 million to approximately 3,022,073 million upon commencement of trading on the Effective Time.  The reverse stock split affects all issued and outstanding shares of the Company’s common stock immediately prior to the Effective Time of the reverse stock split. The number of authorized shares of the Company’s common stock will remain unchanged.

American Stock Transfer and Trust Company, Amedica’s transfer agent, will instruct certificate shareholders on the exchange process once the reverse stock split takes effect.  Shareholders holding their shares in book-entry form or in brokerage accounts need not take any action in connection with the reverse stock split.  Beneficial holders are encouraged to contact their bank, broker or custodian with any procedural questions.  No fractional shares will be issued.  Stockholders who otherwise would be entitled to receive fractional shares because they hold a number of shares not evenly divisible by 12, will automatically receive one whole share of common stock in lieu of the fractional share. No stockholders will receive cash in lieu of fractional shares.

About Amedica Corporation

Amedica is focused on the development and application of spinal interbody implants made with medical-grade silicon nitride ceramic. Amedica markets spinal fusion products and is developing implants for other biomedical applications, such as wear- and corrosion-resistant hip and knee bearings, and dental implants. The Company’s products are manufactured in its ISO 13485 certified manufacturing facility, and it has a partnership with Kyocera, one of the world’s largest ceramic manufacturers. Amedica’s FDA-cleared and CE-marked spine products are currently marketed in the U.S. and select markets in Europe and South America through its distributor network, and OEM and private label partnerships.

For more information on Amedica or its silicon nitride material platform, please visit www.amedica.com.

Forward-Looking Statements

This press release contains statements that constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated within this press release. A discussion of those risks and uncertainties can be found in Amedica’s Risk Factors disclosure in its Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on September 20, 2017, and in Amedica’s other filings with the SEC. Amedica disclaims any obligation to update any forward-looking statements.

Contacts:
Amedica IR
801-839-3502
IR@amedica.com
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OrthoPediatrics Corp. Reports Third Quarter 2017 Financial Results

Posted On November 10, 2017 By OrthoSpineNews In Financial /  

WARSAW, Ind., Nov. 08, 2017 (GLOBE NEWSWIRE) — OrthoPediatrics Corp. (“OrthoPediatrics”) (NASDAQ:KIDS), a company exclusively focused on advancing the field of pediatric orthopedics, announced today its financial results for the third quarter ended September 30, 2017.

Third Quarter and Recent Highlights

  • Total revenue of $12.4 million, up 22% as compared to the third quarter of fiscal year 2016
  • Launched PediFrag™ Pediatric Specific Clavicle Plate in August and Medial Patella Femoral Ligament Reconstruction System in October, expanding our product portfolio offering to 22 surgical systems
  • Secured exclusive distribution rights for FIREFLY® Pedicle Screw Navigation Guides in pediatric hospitals in the United States
  • Completed our initial public offering, raising $59.8 million in gross proceeds, primarily to fund commercial expansion
  • Signed a Letter of Intent to amend debt agreement with Squadron Capital LLC, which lowers interest rate and extends term until 2023

“We delivered strong results in the third quarter, highlighted by 22% total revenue growth and the expansion of gross margin to 77%. This included consistent growth in both the U.S. and international markets and across all of our product categories. We were particularly pleased with the performance of our U.S. spine business, which was our fastest growing domestic category this quarter, driven by increased demand for our RESPONSE and BandLoc products,” said Mark Throdahl, Chief Executive Operator of OrthoPediatrics. “We also continued to expand our product portfolio with the launch of two new products and the addition of innovative, 3D printed, patient-specific FIREFLY® Pedicle Screw Navigation Guides, expanding our offering to 22 systems that address the $2.5 billion global market for pediatric orthopedic products. In October, we completed our initial public offering, raising $59.8 million in gross proceeds that will allow us to invest in implant and instrument sets and research and development initiatives to support future growth.”

Third Quarter Financial Results
Total revenue for the third quarter of 2017 was $12.4 million, a 22.1% increase compared to $10.1 million for the same period last year. U.S. revenue for the third quarter of 2017 was $9.6 million, a 21.3% increase compared to $7.9 million for the same period last year, representing 77.2% of total revenue. International revenue for the third quarter of 2017 was $2.8 million, a 24.7% increase compared to $2.3 million for the same period last year, representing 22.8% of total revenue.

Trauma and deformity revenue for the third quarter of 2017 was $8.7 million, a 21.8% increase compared to $7.2 million for the same period last year. Spine revenue for the third quarter of 2017 was $3.3 million, a 20.9% increase compared to $2.7 million for the same period last year. ACL reconstruction/other revenue for the third quarter of 2017 was $0.3 million, a 45.4% increase compared to $0.2 million for the same period last year.

Gross profit for the third quarter of 2017 was $9.5 million, a 32.6% increase compared to $7.2 million for the same period last year. Gross margin percentage for the third quarter of 2017 was 76.7%, compared to 70.6% for the same period last year.

Total operating expenses for the third quarter of 2017 were $10.2 million, a 33.4% increase compared to $7.7 million for the same period last year. Within operating expenses, research and development expenses for the third quarter of 2017 were $1.1 million, a 125.0% increase compared to $0.5 million for the same period last year. Operating loss for the third quarter of 2017 was $(0.8) million, a 44.6% increase in loss realized compared to $(0.5) million for the same period last year.

Interest expense for the third quarter of 2017 was $0.8 million, a 90.7% increase compared to $0.4 million dollars for the same period last year due to incremental debt incurred.

Net loss for the third quarter of 2017 was $(1.5) million, compared to $(0.8) million for the same period last year. Net loss per share attributable to common stockholders for the third quarter of 2017 was $(1.70) per basic and diluted share, or $(1.38) per basic and diluted share, for the same period last year.

The weighted average number of diluted shares outstanding as of September 30, 2017 was 1,773,385 shares.

Purchases of property and equipment during the third quarter of 2017 were $1.1 million, a 34.4% increase compared to $0.8 million for the same period last year. The primary driver of this increase was the deployment of consigned sets, which include product specific instruments as well as cases and trays.

As of September 30, 2017, cash and cash equivalents were $2.2 million, compared to $2.3 million as of June 30, 2017.

Capitalization Update
In October, OrthoPediatrics completed its initial public offering of 4,600,000 shares of its common stock at a public offering price of $13.00 per share, raising $59.8 million in gross proceeds, before underwriting expenses and commissions and offering expenses.

On November 8, 2017, the Company signed a Letter of Intent to amend its current debt agreement with its largest shareholder, Squadron Capital LLC (“Squadron”), to modify and extend the terms of its existing term notes and revolving credit facility. The Letter of Intent consolidates a majority of the term note amounts into a $20.0 million term loan and reestablishes a $15.0 million revolver. Both facilities will have an interest rate equal to the three month LIBOR plus 8.61%, which in total equals 10.0%, compared to a previous interest rate of 10.0% for the term notes and 11.0% for the revolving credit facility. The Letter of Intent extends the loan period through January 31, 2023 (previously May 31, 2019 or May 31, 2020 based on revenue). As of September 30, 2017, the Company had approximately $27.6 million in total outstanding indebtedness, including $7.5 million outstanding under the revolving credit facility, of which the Company expects to convert $1.6 million to term notes plus pay back $2.5 million in the near term, leaving over $11.0 million in available capacity.

Fred Hite, Chief Financial Officer of OrthoPediatrics, commented, “We are pleased to have signed a Letter of Intent to amend our loan agreement with Squadron, which will provide for a more favorable interest rate and extend the length of the agreement. It demonstrates Squadron’s commitment and confidence in our business and its long-term dedication to supporting the Company.”

Conference Call
OrthoPediatrics will host a conference call on Thursday, November 9, 2017 at 8:00 a.m. ET to discuss its financial results. The dial-in numbers are (855) 289-4603 for domestic callers and (614) 999-9389 for international callers. The conference ID number is 9169647. A live webcast of the conference call will be available online at OrthoPediatrics’ investor relations website, ir.orthopediatrics.com.

A replay of the webcast will remain available online at OrthoPediatrics’ investor relations website, ir.orthopediatrics.com, until OrthoPediatrics releases its fourth quarter and full year 2017 financial results. In addition, a telephonic replay of the conference call will be available until November 16, 2017. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. The replay conference ID number is 9169647.

About OrthoPediatrics Corp.
Founded in 2006, OrthoPediatrics is the only diversified orthopedic company focused exclusively on providing a comprehensive product offering to the pediatric orthopedic market. OrthoPediatrics is dedicated to the cause of improving the lives of children with orthopedic conditions. OrthoPediatrics currently markets 22 surgical systems that serve three of the largest categories within the pediatric orthopedic market. This offering spans trauma & deformity, complex spine and ACL reconstruction procedures. OrthoPediatrics’ global sales organization is focused exclusively on pediatric orthopedics and distributes its products in the United States and 35 countries outside the United States.

Investor Contact
The Ruth Group
Zack Kubow
(646) 536-7020
zkubow@theruthgroup.com

ORTHOPEDIATRICS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands, Except Share Data)
September 30, December 31,
2017 2016
ASSETS
Current assets:
Cash $ 2,238 $ 1,609
Accounts receivable – trade, less allowance for doubtful accounts of $148 and $152, respectively 5,686 4,098
Inventories, net 18,434 13,962
Inventories held by international distributors, net 579 924
Deferred charges 1,339 —
Prepaid expenses and other current assets 615 233
Total current assets 28,891 20,826
Property and equipment, net 9,749 8,592
Other assets:
Amortizable intangible assets, net 2,183 998
Other intangible assets 260 260
Total other assets 2,443 1,258
Total assets $ 41,083 $ 30,676
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable – trade 5,102 3,543
Accrued compensation and benefits 2,288 2,219
Current portion of long-term debt with affiliate 111 107
Other current liabilities 2,915 1,382
Total current liabilities 10,416 7,251
Long-term liabilities:
Long-term debt with affiliate, net of current portion 19,986 12,931
Revolving credit facility with affiliate 7,500 4,500
Total long-term liabilities 27,486 17,431
Total liabilities 37,902 24,682
Commitments and contingencies
Redeemable convertible preferred stock:
Series A preferred stock, $0.00025 par value; $8,874 cumulative preferred dividends, September 30, 2017 and $7,439 December 31, 2016; 1,000,000 shares authorized, issued and outstanding 24,874 23,439
Series B preferred stock, $0.00025 par value; $11,793 cumulative preferred dividends, September 30, 2017 and $8,864 December 31, 2016; 6,000,000 shares authorized; 4,446,978 shares issued and outstanding 50,793 47,864
Stockholders’ deficit:
Common stock, $0.00025 par value; 8,040,000 shares authorized; 2,487,589 shares and 2,421,599 shares issued and outstanding as of September 30, 2017 and December 31, 2016 1 1
Additional paid-in capital 9,541 12,824
Accumulated deficit (82,221 ) (78,134 )
Accumulated other comprehensive income 193 —
Total stockholders’ deficit (72,486 ) (65,309 )
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit $ 41,083 $ 30,676
ORTHOPEDIATRICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Share and Per Share Data)
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net revenue $ 12,375 $ 10,135 $ 33,939 $ 27,880
Cost of revenue 2,884 2,978 8,321 7,913
Gross profit 9,491 7,157 25,618 19,967
Operating expenses:
Sales and marketing 5,633 4,289 15,122 12,401
General and administrative 3,487 2,890 10,282 8,842
Research and development 1,127 501 2,482 1,599
Total operating expenses 10,247 7,680 27,886 22,842
Operating loss (756 ) (523 ) (2,268 ) (2,875 )
Other expenses:
Interest expense 761 399 1,857 1,056
Other expense (income) 20 (77 ) (38 ) (992 )
Total other expenses 781 322 1,819 64
Net loss $ (1,537 ) $ (845 ) $ (4,087 ) $ (2,939 )
Net loss attributable to common stockholders $ (3,021 ) $ (2,405 ) $ (8,451 ) $ (7,229 )
Weighted average common shares – basic and diluted 1,773,385 1,744,356 1,754,576 1,744,356
Net loss per share attributable to common stockholders – basic and diluted $ (1.70 ) $ (1.38 ) $ (4.82 ) $ (4.14 )
ORTHOPEDIATRICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
For the Nine Months Ended
September 30,
2017 2016
OPERATING ACTIVITIES
Net loss $ (4,087 ) $ (2,939 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 1,748 1,402
Stock-based compensation 1,081 951
Research and development fee obligation termination — (889 )
Changes in certain current assets and liabilities:
Accounts receivable – trade (1,588 ) (74 )
Inventories (3,276 ) (2,834 )
Inventories held by international distributors 345 1,588
Prepaid expenses and other current assets (382 ) (232 )
Accounts payable – trade 1,559 1,798
Accrued expenses and other liabilities 513 (579 )
Research and development fee obligation — (628 )
Other 193 0
Net cash used in operating activities (3,894 ) (2,436 )
INVESTING ACTIVITIES
Purchases of licenses (1,337 ) (406 )
Purchases of property and equipment (3,949 ) (2,617 )
Net cash used in investing activities (5,286 ) (3,023 )
FINANCING ACTIVITIES
Proceeds from issuance of debt with affiliate 10,139 3,500
Payments on mortgage notes (80 ) (77 )
Payments of deferred offering costs (250 ) (527 )
Net cash provided by financing activities 9,809 2,896
NET INCREASE (DECREASE) IN CASH 629 (2,563 )
Cash, beginning of year 1,609 3,878
Cash, end of period $ 2,238 $ 1,315
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 1,856 $ 1,056
Accretion of redeemable convertible preferred stock $ 4,364 $ 4,290
Transfer of instruments from property and equipment to inventory $ 1,196 $ 196

Net Revenue
The following tables set forth our net revenue by geography and product category for the three and nine months ended September 30, 2017 and 2016:

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
Product sales by geographic location: 2017 2016 2017 2016
U.S. $ 9,556 $ 7,875 $ 26,085 $ 21,565
International 2,819 2,260 7,854 6,315
Total $ 12,375 $ 10,135 $ 33,939 $ 27,880
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
Product sales by category: 2017 2016 2017 2016
Trauma and deformity $ 8,730 $ 7,168 $ 24,339 $ 20,184
Spine 3,299 2,729 8,652 6,940
ACL reconstruction/other 346 238 948 756
Total $ 12,375 $ 10,135 $ 33,939 $ 27,880
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Misonix Reports First Quarter Fiscal Year 2018 Financial Results

Posted On November 8, 2017 By OrthoSpineNews In Financial /  

FARMINGDALE, N.Y., Nov. 7, 2017 /PRNewswire/ — Misonix, Inc. (Nasdaq: MSON), a provider of minimally invasive therapeutic ultrasonic medical devices that enhance clinical outcomes, announced today financial results for the first quarter of fiscal year 2018, ended September 30, 2017.

Financial Highlights for the First Quarter:

  • Revenue for the first quarter of fiscal year 2018 was $7.3 million, an increase of 18% compared with $6.2 million in the previous year’s first quarter.
  • Consumables sales in the United States increased 25% to $4.1 million in the first quarter of the new fiscal year compared to $3.3 million in the comparable quarter of fiscal 2017.
  • The gross profit percentage for the quarter was 70.1% primarily from a strong mix of higher margin consumables, compared to 69.0% in last year’s first quarter.
  • For the first quarter of fiscal year 2018, the Company reported a net loss of $(1.2) million, or $(0.14) per diluted share, compared to a net loss of $(0.5) million, or $(0.07) per diluted share, in the first quarter of fiscal year 2017.
  • At September 30, 2017, the Company maintained cash of $10.5 million with no long-term debt.

Stavros Vizirgianakis, President and Chief Executive Officer of Misonix, said, “Sales orders continued to be strong in the first quarter of fiscal year 2018, with double-digit revenue growth, picking up where we left off in fiscal 2017. Total revenue increased 18% in the first quarter of the new year primarily attributable to a 25% increase in domestic consumables sales. A significant contribution to the increase in domestic sales was made by the addition of new clinical sales specialists to support the sales activities of our distribution channel. The channel, coupled with our team of 28 clinical sales specialists, was successful in driving a 35% increase in BoneScalpel revenue in the U.S. over the prior year. We are making steady progress with the surgical community, and the hospitals where they practice, to further embed our technology in their respective surgical suites.”

“At the recent 32nd Annual Meeting of the North American Spine Society,” Mr. Vizirgianakis continued, “Dr. Wade Jensenof the Center for Neurosciences, Orthopaedics & Spine (“CNOS”) presented data showing a significant reduction in the use of bone grafting material when the Misonix BoneScalpel is employed compared to the use of standard power drill instruments. An estimated $1.9 billion is spent annually on bone graft substitutes. This is valuable data as we are able to show that our products contribute significant value to the overall healthcare system by reducing costs in spinal fusion procedures.”

The Company also recently entered into its most significant license, royalty and manufacturing agreement with Hunan Xing Hang Rui Kang Bio-Technologies Co., Ltd., a Chinese corporation, where Misonix will receive at least $11 million in revenue and royalties over the next four years, and further strengthen its balance sheet.

Conference Call
The Company has scheduled a conference call for Tuesday, November 7, 2017, at 4:30 pm ET to review the results.

Interested parties can access the conference call by dialing (844) 861-5497 or (412) 317-6579 or can listen via a live Internet webcast, which is available in the Investor Relations section of the Company’s website at www.misonix.com.

A teleconference replay of the call will be available for three days at (877) 344-7529 or (412) 317-0088, confirmation # 10113569. A webcast replay will be available in the Investor Relations section of the Company’s website at www.misonix.com for 30 days.

Safe Harbor Statement
With the exception of historical information contained in this press release, content herein may contain “forward looking statements” that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Investors are cautioned that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include general economic conditions, delays and risks associated with the performance of contracts, risks associated with international sales and currency fluctuations, uncertainties as a result of research and development, acceptable results from clinical studies, including publication of results and patient/procedure data with varying levels of statistical relevancy, risks involved in introducing and marketing new products, potential acquisitions, consumer and industry acceptance, litigation and/or court proceedings, including the timing and monetary requirements of such activities, the timing of finding strategic partners and implementing such relationships, regulatory risks including approval of pending and/or contemplated 510(k) filings, the ability to achieve and maintain profitability in the Company’s business lines, the impact of the pending investigation by the Department of Justice and Securities Exchange Commission, and other factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company disclaims any obligation to update its forward-looking relationships.

Financial Tables to Follow

MISONIX INC. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

For the three months ended

September 30,

2017

2016

Net sales

$    7,280,723

$   6,171,625

Cost of goods sold

2,177,355

1,912,007

Gross profit

5,103,368

4,259,618

Operating expenses:

 Selling expenses

3,570,713

3,325,687

 General and administrative expenses

2,573,131

1,931,821

 Research and development expenses

901,274

492,084

Total operating expenses

7,045,118

5,749,592

Loss from operations

(1,941,750)

(1,489,974)

Other income (expense):

 Interest income

13

19

 Royalty income and license fees

452,971

944,068

 Other

(4,458)

(1,996)

Total other income

448,526

942,091

Loss from operations before income taxes

(1,493,224)

(547,883)

Income tax benefit

(281,000)

(26,000)

Net loss

$   (1,212,224)

$    (521,883)

Net loss per share – Basic

$            (0.14)

$          (0.07)

Net loss per share – Diluted

$            (0.14)

$          (0.07)

Weighted average shares – Basic

8,958,405

7,809,385

Weighted average shares – Diluted

8,958,405

7,809,385

MISONIX INC. and Subsidiaries

Consolidated Balance Sheets

September 30,

June 30,

2017

2017

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$    10,528,041

$ 11,557,071

Accounts receivable, less allowance for doubtful accounts of $96,868 and $96,868, respectively

4,153,511

5,133,389

Inventories, net

5,206,025

4,992,434

Prepaid expenses and other current assets

504,653

918,899

Total current assets

20,392,230

22,601,793

Property, plant and equipment, net of accumulated amortization and depreciation of $8,134,134 and $7,794,580, respectively

3,842,419

3,730,203

Patents, net of accumulated amortization of $1,025,930 and $995,568, respectively

715,177

719,136

Goodwill

1,701,094

1,701,094

Intangible and other assets

280,684

282,876

Deferred income tax 

5,524,422

4,334,547

Total assets

$    32,456,026

$ 33,369,649

Liabilities and shareholders’ equity

Current liabilities:

Accounts payable

$      2,106,506

$  1,861,228

Accrued expenses and other current liabilities

1,815,527

3,346,138

Total current liabilities

3,922,033

5,207,366

Deferred lease liability

7,016

9,354

Deferred income

8,989

13,087

Total liabilities

3,938,038

5,229,807

Commitments and contingencies 

Shareholders’ equity:

Common stock, $.01 par value-shares authorized 20,000,000; 9,365,666 and 9,357,166 shares issued and outstanding in each period, respectively

93,657

93,572

Additional paid-in capital

37,490,220

36,808,810

Accumulated deficit

(9,065,889)

(8,762,540)

Total shareholders’ equity

28,517,988

28,139,842

Total liabilities and shareholders’ equity

$    32,456,026

$ 33,369,649

Corporate Contact

Investor Contact

Joe Dwyer

Joe Diaz

Misonix, Inc.

Lytham Partners

631-927-9113

602-889-9700

jdwyer@misonix.com

mson@lythampartners.com

 

SOURCE Misonix, Inc.

Related Links

http://www.misonix.com

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Mazor Robotics Reports Record Third Quarter 2017; Revenue More Than Doubles to $17.2 Million

Posted On November 7, 2017 By OrthoSpineNews In Financial /  

November 07, 2017

CAESAREA, Israel–(BUSINESS WIRE)–Mazor Robotics Ltd. (TASE: MZOR; NASDAQGM: MZOR), a pioneer and a leader in the field of robotic guidance systems, reported record third quarter revenue of $17.2 million. As previously announced, the Company received purchase orders for 22 systems in the 2017 third quarter, including 19 Mazor X systems.

Recent Significant Highlights

  • Entered the next phase of its strategic partnership with Medtronic assuming exclusive worldwide distribution of the Mazor X system, and Medtronic making a $40 million third tranche investment in Mazor. On November 1, Mazor and Medtronic completed the transfer of Mazor X capital sales, clinical sales and support activities to Medtronic and the absorption of 29 former Mazor employees into the Medtronic robotic sales team.
  • Received CE approval of the Mazor X system, allowing Medtronic to market the Mazor X in the European Union, as well as other countries that recognize the CE Mark.
  • Interim data from the first multi-center prospective study of spinal surgical robotics was presented at the North American Spine Society (NASS) annual meeting, demonstrating that spinal surgeries performed using Mazor Robotics’ proprietary Mazor Core™ technology have a five-fold reduction in surgical complications and a seven-fold reduction in revision surgeries, compared to freehand-based minimally invasive lumbar fusion surgeries.

“We delivered record quarterly revenue and more than doubled last year’s Q3 results,” commented Ori Hadomi, Chief Executive Officer. “Our performance demonstrates that we are executing our objectives to drive market penetration and increased utilization of our systems. We entered the next phase with Medtronic, our commercial partner, for the Mazor X system and the smooth transition ensures continued sales momentum while significantly lowering our operating costs beginning Q4 2017. In addition to the operational achievements, the recent prospective data results that were presented at NASS are a game changer for Mazor as it validates the strength of our proprietary Mazor Core ™ technology and reinforces the patient value and economic proposition of our systems.”

THIRD QUARTER 2017 FINANCIAL RESULTS ON IFRS BASIS (“GAAP”)

Revenue for the three months ended September 30, 2017 increased 126% to $17.2 million compared to $7.6 million in the year-ago third quarter. U.S. revenue increased 170% to $15.4 million compared to $5.7 million in the year-ago third quarter, as the Company recognized revenue from 17 systems (16 Mazor X and one Renaissance) compared to six systems (three Mazor X and three Renaissance) in the third quarter of 2016. International revenue was $1.8 million compared to $1.9 million in the year-ago third quarter. Recurring revenue from kits sales, services and other increased 63% to $7.0 million in the third quarter of 2017 compared to $4.3 million in the year-ago third quarter, which is primarily attributed to the higher system installed base. The Company ended the quarter with a backlog of 17 systems (15 Mazor X and two Renaissance). As of September 18, 2017, Medtronic assumed exclusive worldwide distribution of the Mazor X under the Exclusive Lead Sharing and Distribution Agreement signed between the parties. The contracted pricing with Medtronic is at a lower rate than Mazor realized through its direct sales channel.

The Company’s gross margin for the three months ended September 30, 2017 was 69.2% compared to 65.7% in the year-ago third quarter. Total operating expenses were $15.7 million compared to $10.6 million in the year-ago third quarter primarily reflecting the Company’s increased investment in sales and marketing activities. The Company’s sales and marketing expenses are now expected to decrease as Medtronic assumed commercial responsibility for the Mazor X, effective September 18, 2017. Operating loss was $3.8 million compared to an operating loss of $5.6 million in the year-ago third quarter. Net loss for the third quarter of 2017 was $3.7 million, or $0.07 per share, compared to a net loss of $5.2 million, or $0.11 per share, for the year-ago third quarter.

Cash used in operating activities during the 2017 third quarter was $2.9 million compared to $4.6 million used in operating activities in the year-ago third quarter. The lower cash use is due to the significantly higher revenue in the 2017 third quarter. As of September 30, 2017, cash, cash equivalents and investments totaled $98.8 million.

THIRD QUARTER 2017 FINANCIAL RESULTS ON NON-GAAP BASIS

The tables below include reconciliation of the Company’s GAAP results to non-GAAP results. The reconciliation relates to non-cash expenses in the amount of $2.6 million with respect to share-based payments and amortization of intangible assets recorded in the third quarter of 2017. On a non-GAAP basis, the net loss in the third quarter of 2017 was $1.0 million, or $0.02 per share, compared to $4.9 million, or $0.11 per share, for the year-ago third quarter.

NINE MONTHS ENDED SEPTEMBER 30, 2017 FINANCIAL RESULTS ON IFRS BASIS (“GAAP”)

For the nine months ended September 30, 2017, revenue increased 99% and totaled $44.4 million compared to $22.3 million for the nine months ended September 30, 2016, due to higher system sales and an increase in recurring revenue. Recurring revenue totaled $18.5 million, an increase of 50% compared to $12.3 million in the nine months ended September 30, 2016. The growth in recurring revenue is attributed to the increase in the installed base and high utilization of the Company’s robotic guidance systems, both in the U.S. and globally. Gross margin for the nine months ended September 30, 2017 was 68.0% compared with 72.3% in the nine months ended September 30, 2016. This expected decrease is attributed mainly to the higher manufacturing costs of the Mazor X compared to the Renaissance system. Net loss for the nine months ended September 30, 2017 was $12.6 million, or $0.26 per share, compared to a net loss of $14.4 million, or $0.33 per share, in the first nine months of 2016.

NINE MONTHS ENDED SEPTEMBER 30, 2017 FINANCIAL RESULTS ON NON-GAAP BASIS

On a non-GAAP basis, the net loss for the first nine months of 2017 was $7.3 million, or $0.15 per share, compared to a net loss of $12.9 million, or $0.29 per share, in the first nine months of 2016.

CONFERENCE CALL INFORMATION

The Company will host a conference call to discuss its third quarter financial results as well as recent corporate developments on November 7, 2017 at 8:30 AM EST (3:30 PM IST). Investors within the United States interested in participating are invited to call 800-298-0498. Participants in Israel can use the toll-free dial-in number 1-80-924-6042. All other international participants can use the dial-in number 719-457-2654. For all callers, refer to Conference ID 5718138.

A replay of the event will be available for two weeks following the conclusion of the call. To access the replay, callers in the United States can call 1-866-375-1919 and reference the Replay Access Code: 5718138. All international callers can dial +1 719-457-0820, using the same Replay Access Code. To access the webcast, please visit www.mazorrobotics.com and select ‘Investor Relations.’

Use of Non-GAAP Measures

In addition to disclosing financial results calculated in accordance with generally accepted accounting principles in conformity with International Financial Reporting Standards (GAAP), this press release contains Non-GAAP financial measures for gross profit, operating expenses, operating loss, net loss and basic and diluted earnings per share that exclude the effects of capitalization of development costs, non-cash expense of amortization of intangible assets and share-based payments. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performance that enhances management’s and investors’ ability to evaluate the Company’s net income and earnings per share and to compare them to historical net income and earnings per share.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when operating and evaluating the Company’s business internally and therefore decided to make these non-GAAP adjustments available to investors.

About Mazor

Mazor Robotics (TASE: MZOR; NASDAQGM: MZOR) believes in healing through innovation by developing and introducing revolutionary technologies and products aimed at redefining the gold standard of quality care. Mazor Robotics Guidance System enables surgeons to conduct spine and brain procedures in an accurate and secure manner. For more information, please visit www.MazorRobotics.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Any statements in this release about future expectations, plans or prospects for the Company, including without limitation, statements regarding continued sales momentum and significantly lower operating costs beginning Q4 2017, the recent prospective data results presented at NASS being a game changer for the Company, the expected decrease in sales and marketing expenses, and other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions are forward-looking statements. These statements are only predictions based on Mazor’s current expectations and projections about future events. There are important factors that could cause Mazor’s actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Those factors include, but are not limited to, the impact of general economic conditions, competitive products, product demand and market acceptance risks, reliance on key strategic alliances, fluctuations in operating results, and other factors indicated in Mazor’s filings with the Securities and Exchange Commission (SEC) including those discussed under the heading “Risk Factors” in Mazor’s annual report on Form 20-F filed with the SEC on May 1, 2017 and in subsequent filings with the SEC. For more details, refer to Mazor’s SEC filings. Mazor undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in our expectations, except as may be required by law

Mazor Robotics Ltd.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(in thousands, except per share data)
(UNAUDITED)
Nine month period Three month period
ended September 30, ended September 30,
2017 2016 2017 2016
Revenue $ 44,378 $ 22,336 $ 17,204 $ 7,633
Cost of revenue $ 14,180 $ 6,182 $ 5,305 $ 2,616
Gross profit $ 30,198 $ 16,154 $ 11,899 $ 5,017
Operating expenses:
Research and development, net $ 5,692 $ 4,027 $ 1,658 $ 785
Selling and marketing, net $ 32,638 $ 22,781 $ 12,429 $ 8,125
General and administrative $ 5,310 $ 4,072 $ 1,653 $ 1,660
Total operating cost and expenses $ 43,640 $ 30,880 $ 15,740 $ 10,570
Loss from operations $ (13,442) $ (14,726) $ (3,841) $ (5,553)
Financing income, net $ 631 $ 345 $ 188 $ 142
Loss before taxes on income $ (12,811) $ (14,381) $ (3,653) $ (5,411)
Income tax expense (benefit) $ (250) $ 21 $ – $ (188)
Net loss $ (12,561) $ (14,402) $ (3,653) $ (5,223)
Net loss per share – Basic and diluted $ (0.26) $ (0.33) $ (0.07) $ (0.11)
Weighted average common shares outstanding – Basic and diluted 48,334 43,981 49,011 46,159
Mazor Robotics Ltd.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF
(U.S. Dollars in thousands)
September 30, December 31,
2017 2016
(Unaudited) (Audited)
Current assets
Cash and cash equivalents $ 49,028 $ 14,954
Short-term investments 44,280 37,862
Trade receivables 6,185 8,225
Other current assets 2,011 1,728
Inventory 8,382 4,715
Total current assets 109,886 67,484
Non-current assets
Long-term investments 5,471 9,017
Property and equipment, net 4,146 3,615
Intangible assets, net 2,009 2,258
Other non-current assets 989 351
Total non-current assets 12,615 15,241
Total assets $ 122,501 $ 82,725
Current liabilities
Trade payables $ 1,654 $ 5,018
Deferred revenue 3,717 4,031
Other current liabilities 10,740 8,462
Total current liabilities 16,111 17,511
Non-current liabilities
Employee benefits 448 325
Total non-current liabilities 448 325
Total liabilities 16,559 17,836
Equity
Share capital 134 124
Share premium 217,145 174,647
Amounts allocated to warrants 9,629 –
Capital reserve for share-based payment transactions 11,336 9,859
Foreign currency translation reserve 2,119 2,119
Accumulated loss (134,421) (121,860)
Total equity 105,942 64,889
Total liabilities and equity $ 122,501 $ 82,725
Mazor Robotics Ltd.
CONSOLIDATED CASH FLOW STATEMENTS
(U.S. Dollars in thousands)
(UNAUDITED)
Nine months ended Three months ended
September 30, September 30,
2017 2016 2017 2016
Cash flows from operating activities:
Loss for the period $ (12,561) $ (14,402) $ (3,653) $ (5,223)
Adjustments:
Depreciation and amortization $ 1,107 $ 476 $ 393 $ 180
Gain on sale of property and equipment $ – $ (6) $ – $ (6)
Finance income, net $ (328) $ (313) $ (209) $ (140)
Share-based expenses $ 4,975 $ 3,378 $ 2,553 $ 1,244
Income tax expense (tax benefit) $ (250) $ 21 $ – $ (188)
$ 5,504 $ 3,556 $ 2,737 $ 1,090
Change in inventory $ (3,967) $ (1,288) $ (1,017) $ (557)
Change in trade and other accounts receivable $ 1,774 $ 2,076 $ 514 $ (301)
Change in prepaid lease fees $ (30) $ (18) $ (8) $ (14)
Change in trade and other accounts payable $ (940) $ 1,635 $ (1,732) $ 302
Change in employee benefits $ 123 $ 39 $ (13) $ (29)
$ (3,040) $ 2,444 $ (2,256) $ (599)
Interest received $ 432 $ 235 $ 249 $ 98
Income tax paid $ (15) $ (38) $ – $ 1
$ 417 $ 197 $ 249 $ 99
Net cash used in operating activities $ (9,680) $ (8,205) $ (2,923) $ (4,633)
Cash flows from investing activities:
Proceeds from (investment in) short-term investments and deposits, net $ 1,416 $ (11,617) $ (9,019) $ (9,240)
Purchase of long-term investments $ (4,288) $ (8,906) $ (3,665) $ (7,781)
Proceeds in long-term investments $ – $ 498 $ – $ 498
Purchase of property and equipment $ (1,557) $ (1,735) $ (244) $ (628)
Capitalization of development costs $ – $ (1,517) $ – $ (920)
Net cash used in investing activities $ (4,429) $ (23,277) $ (12,928) $ (18,071)
Cash flows from financing activities:
Proceeds from issuance of ADRs, net $ 40,000 $ 31,416 $ 40,000 $ 19,521
Proceeds from exercise of share options by employees $ 8,293 $ 3,587 $ 4,574 $ 3,464
Proceeds from exercise of share options and warrants, net $ – $ 481 $ – $ –
Net cash provided by financing activities $ 48,293 $ 35,484 $ 44,574 $ 22,985
Net increase in cash and cash equivalents $ 34,184 $ 4,002 $ 28,723 $ 281
Cash and cash equivalents at the beginning of the period $ 14,954 $ 13,519 $ 20,347 $ 17,277
Effect of exchange rate differences on balances of cash and cash equivalents $ (110) $ 76 $ (42) $ 39
Cash and cash equivalents at the end of the period $ 49,028 $ 17,597 $ 49,028 $ 17,597
Supplementary cash flows information:
Purchase of property and equipment in credit $ (96) $ (68) $ (96) $ (68)
Issuance costs in credit $ (22) $ (385) $ (22) $ (385)
Capitalization of development expenses on credit $ – $ (20) $ – $ (20)
Classification of inventory to fixed assets $ 300 $ – $ 300 $ –
Mazor Robotics Ltd.
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
(U.S. Dollars in thousands, except per share data)
(UNAUDITED)
Nine month period Three month period
ended September 30, ended September 30,
2017 2016 2017 2016
GAAP gross profit $ 30,198 $ 16,154 $ 11,899 $ 5,017
Amortization of intangible assets 250 – 85 –
Share-based payments 248 170 140 87
Non-GAAP gross profit $ 30,696 $ 16,324 $ 12,124 $ 5,104
GAAP gross profit as percentage of revenues 68.0% 72.3% 69.2% 65.7%
Non-GAAP gross profit as percentage of revenues 69.2% 73.1% 70.5% 66.9%
GAAP operating expenses $ 43,640 $ 30,880 $ 15,740 $ 10,570
Share-based payments:
Research and development $ 641 $ 695 $ 289 $ 348
Selling and marketing $ 2,363 $ 1,972 $ 1,512 $ 757
General and administrative $ 1,723 $ 971 $ 612 $ 482
Development costs capitalization $ – $ (2,332) $ – $ (1,321)
Non-GAAP operating expenses $ 38,913 $ 29,574 $ 13,327 $ 10,304
GAAP operating loss $ (13,442) $ (14,726) $ (3,841) $ (5,553)
Non-GAAP operating loss $ (8,217) $ (13,250) $ (1,203) $ (5,200)
GAAP net loss $ (12,561) $ (14,402) $ (3653) $ (5,223)
Amortization of intangible assets $ 250 $ – $ 85 $ –
Share-based payments $ 4,975 $ 3,808 $ 2,553 $ 1,674
Development costs capitalization $ – $ (2,332) $ – $ (1,321)
Non-GAAP net loss $ (7,336) $ (12,926) $ (1,015) $ (4,870)
GAAP basic and diluted loss per share $ (0.26) $ (0.33) $ (0.07) $ (0.11)
Non-GAAP basic and diluted loss per share $ (0.15) $ (0.29) $ (0.02) $ (0.11)

Contacts

EVC Group
Investors
Michael Polyviou, 212-850-6020
mpolyviou@evcgroup.com
or
Doug Sherk, 646-445-4800
dsherk@evcgroup.com

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OrthoPediatrics Could Win By Tapping A Massive, Underserved Market, Says Stifel

Posted On November 6, 2017 By OrthoSpineNews In Financial, Top Stories /  

Shanthi Rexaline , Benzinga Staff Writer /November 6, 2017

Orthopediatrics Corp KIDS 4.9% is poised to achieve strong top-line growth due to its exclusive focus on the sizeable and largely underserved $2.5 billion pediatric orthopedic market, according to Stifel.

Stifel initiated coverage of Orthopediatrics with a Buy rating and a $23 price target for the shares. The valuation represents a 5.5 times enterprise value to revenue multiple, applied to Stifel’s 2019 revenue estimate for Orthopediatrics of $63.6 billion and discounted 10 percent to the end of 2018.

The pediatric orthopedic market, including trauma and deformity, complex spine and sports medicine, offers the most comprehensive and still-expanding portfolio of pediatric orthopedic implants and instruments to treat a wide array of orthopedic conditions, said analyst Rick Wise.

Capitalizing on this opportunity, Wise said the firm can deliver top-line CAGR in the solid high teens, suggesting revenues that would icrease from an estimated $45 million this year to $98.5 million in 2022. This would put Orthopediatrics above the average revenue growth among its peers.

 

READ THE REST HERE

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Hologic to retain CEO MacMillan | Personnel Moves – November 3, 2017

Posted On November 6, 2017 By OrthoSpineNews In Financial, Top Stories /  

NOVEMBER 3, 2017/ BY 

Hologic (NSDQ:HOLX) said this week its current prez and CEO Stephen MacMillan will stay on with the company, resolving rumors that he may depart it to take up the corner office at Zimmer Biomet (NYSE:ZBH).

In an SEC filing, the Marlborough, Mass.-based company’s board said it approved a special “performance-based retention equity grant” to MacMillan after he had begun to receive interest from other medical device firms.

“Mr. MacMillan has led a dramatic turnaround of Hologic since joining in December 2013. The company’s performance has increased significantly under his leadership and he personally has recruited a large number of leaders to the company. In light of his long track record of success, other larger medical device companies have expressed interest over time in retaining him to serve as chief executive officer. Mr. MacMillan recently received such an offer from a large medical device company. The independent members of the company’s board of directors considered the potential for disruption to Hologic and its business should Mr. MacMillan leave, and determined that it was in the best interests of Hologic and its stockholders to retain him as chairman, president and chief executive officer. Accordingly, the independent members of the board, after careful consideration and discussions with Mr. MacMillan and the compensation committee’s compensation consultant, awarded him a special retention equity grant, all of which is performance-based. He has formally declined the other more substantial offer, reaffirmed his full commitment to Hologic, and will remain as chairman, president and chief executive officer of Hologic,” the company wrote in an SEC filing.

 

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Smith & Nephew Third Quarter 2017 Trading Report

Posted On November 6, 2017 By OrthoSpineNews In Financial /  

Smith & Nephew plc (LSE:SN, NYSE:SNN) trading report for the third quarter ended 30 September
2017.

Highlights2

Q3 revenue was $1,152 million, up 3% on both a reported and underlying basis
• Revenue growth was 1% in the Established Markets, with US up 2%
• Emerging Markets up 9%, maintaining improved performance achieved in first half of 2017
• Reconstruction revenue up 4%, with 6% growth in Knee Implants, continuing strong, market-beating
performance, and Hip Implants up 1%, returning to growth
• Advanced Wound Management revenue grew 2%, reflecting recovery in Bioactives offset by Wound
Care
• Full year outlook at the lower end of guidance range
• Review of cost base initiated to further Simplify and Improve our Operating Model

Post-quarter events
• Chief Executive Officer’s intention to retire by the end of 2018 announced
• Agreement signed to acquire Rotation Medical, Inc., the developer of a novel tissue regeneration
technology for shoulder rotator cuff repair

Commenting on Q3, Olivier Bohuon, Chief Executive Officer of Smith & Nephew, said:

“I am pleased with what we have achieved so far in 2017, where our focus on execution is delivering
improvements in performance. Of particular note is the sustained nature of the market-beating growth
from our Knee Implants franchise and the strong Emerging Markets recovery across the year. We
delivered 3% revenue growth in the quarter, in-line with guidance despite the recent natural disasters in
the Americas delaying some procedures.

“After the quarter end we announced an agreement to acquire Rotation Medical. Its pioneering
bioinductive implant is a novel tissue regeneration technology for shoulder repair that treats an unmet
clinical need and is highly complementary to our leading Sports Medicine shoulder portfolio.

“Looking ahead, our focus on accelerating the top-line is unchanged and we are also starting the next
stage in our continuing drive to improve efficiency across the Group. I am as determined as ever to keep
pushing for further success, and to leave Smith & Nephew an even better company.”

Enquiries

Investors
Ingeborg Øie +44 (0) 20 7960 2285
Smith & Nephew

Media
Charles Reynolds +44 (0) 1923 477314
Smith & Nephew

Deborah Scott / Simon Conway +44 (0) 20 3727 1000
FTI Consulting

Analyst conference call
A conference call to discuss Smith & Nephew’s third quarter results will be held today at 8.00am GMT /
4.00am EDT, details of which can be found at www.smith-nephew.com/results.

Notes

1. All numbers given are for the quarter and nine months ended 30 September 2017 unless stated otherwise.

2. Unless otherwise specified as ‘reported’ all revenue growth throughout this document is ‘underlying’ after adjusting for the effects of currency translation and including the comparative impact of acquisitions and excluding disposals. All percentages compare to the equivalent 2016 period.

Underlying revenue growth is used to compare the revenue in a given period to the comparative period on a like-for-like basis. Underlying revenue growth reconciles to reported revenue growth, the most directly comparable financial measure calculated in accordance with IFRS, by making adjustments for the effect of acquisitions and disposals and the impact of movements in exchange rates (currency impact), as described below.

The effect of acquisitions and disposals measures the impact on revenue from newly acquired material business combinations, technologies and recent material business disposals. This is calculated by comparing the current year, constant currency actual revenue (which include acquisitions and exclude disposals from the relevant date of completion) with prior year, constant currency actual revenue, adjusted to include the results of acquisitions and exclude disposals for the commensurate period in the prior year.

Currency impact measures the increase/decrease in revenue resulting from currency movements on non-US Dollar sales and is measured as the difference between: 1) the increase/decrease in current year revenue translated into US Dollars at the current year average rate and the prior year revenue translated at the prior year average rate; and 2) the increase/decrease being measured by translating current and prior year revenue into US Dollars using a constant fixed rate.

Forward calendar

The full year results will be released on 8 February 2018

 

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Osiris Therapeutics, Inc. Announces Resolution of SEC Investigation

Posted On November 3, 2017 By OrthoSpineNews In Financial, Top Stories /  

COLUMBIA, Md., Nov. 02, 2017 (GLOBE NEWSWIRE) — Osiris Therapeutics, Inc. (OTC Pink:OSIR) (the “Company”), a leading regenerative medicine company focused on developing and marketing products for wound care, orthopedics, and sports medicine, today announced the resolution of the previously disclosed investigation by the Securities and Exchange Commission (the “SEC”) into the Company’s historical accounting practices.

The Company has agreed to settle with the SEC, without admitting or denying the allegations of the SEC, by consenting to the entry of a final judgment, subject to court approval, that permanently restrains and enjoins the Company from violating certain provisions of the federal securities laws. As part of the resolution, the Company also has agreed to pay a civil penalty in the amount of $1,500,000.  This resolution, if approved by the Court, will resolve, as to the Company, the matters alleged by the SEC in the complaint.

The Company cooperated fully with the SEC during its investigation. Since the SEC’s investigation began, the Company has made numerous important changes to its internal control over financial reporting and disclosure practices, hired a new chief executive officer, chief financial officer and general counsel, and enhanced staff in its accounting and finance departments.

“We are very pleased to have reached the resolution announced today, which relates to activities that occurred during the tenure of the Company’s former management team,” said Peter Friedli, Chairman of the Board of the Company. “We have instituted broad remedial measures designed to detect and prevent the issues that led to the matter being resolved, and this resolution allows us to continue moving forward with the Company’s critical mission of making advances in the area of cellular and regenerative medicine.”

The resolution announced today relates only to the SEC.  As previously disclosed, there is an ongoing criminal investigation being conducted by the U.S. Attorney’s Office for the Southern District of New York relating to matters that were also investigated by the SEC, and the Company is cooperating fully with the investigation by the U.S. Attorney’s Office.

About Osiris Therapeutics

Osiris Therapeutics, Inc., based in Columbia, Maryland, is a world leader in researching, developing, and marketing regenerative medicine products that improve health and lives of patients and lower overall healthcare costs. Having developed the world’s first approved stem cell drug, the Company continues to advance its research and development in biotechnology by focusing on innovation in regenerative medicine — including bioengineering, stem cell research and viable tissue based products. Osiris has achieved commercial success with products in wound care, orthopedics, and sports medicine, including Grafix®, Stravix®, BIO4® (available exclusively through Stryker), and Cartiform® (available exclusively through Arthrex). Osiris, Grafix, Stravix and Cartiform are registered trademarks of Osiris Therapeutics, Inc., and BIO4 is a registered trademark of Howmedica Osteonics Corp. Osiris makes no claims concerning functional activities of Grafix or Stravix. Although well characterized in scientific literature and studies, preservation of tissue integrity including cells may not be indicative of clinical outcome. More information can be found on the Company’s website, www.Osiris.com. (OSIR-G)

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking statements include statements about the Company’s expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “ongoing,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. Such forward-looking statements include, without limitation, statements regarding the Company’s ability to move forward with its business activities, the effectiveness of the Company’s remediation measures, including the effectiveness of completed and planned improvements in its internal control over financial reporting.  Forward-looking statements are subject to known and unknown risks and uncertainties and could cause actual results to differ materially from those expressed or implied by the forward-looking statements. Several factors could cause actual results to differ materially from those expressed in or contemplated by the forward-looking statements. Such factors include, but are not limited to, the identification of additional errors in the restatement process for the 2015 quarterly and interim periods, changes or additional errors uncovered by the Company or its independent registered accounting firm, changes in the scope or focus of the accounting adjustments, the risk that additional information may arise prior to the expected filing with the SEC of the Company’s audited financial statements for 2015, 2016 and 2017 or subsequent events that would require us to make adjustments.  In addition, the Company’s independent registered accounting firm may determine that other adjustments or errors exist in previously reported 2015 interim periods or other prior periods.  Other risk factors affecting the Company are discussed in detail in the Company’s filings with the SEC, including its Form 10-K/A for 2014.  Accordingly, you should not unduly rely on these forward-looking statements. The Company undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this press release or to reflect the occurrence of unanticipated events, except as required by law.

For additional information, please contact:

Diane Savoie
Osiris Therapeutics, Inc.
(443) 545-1834
OsirisPR@Osiris.com

 

Source: Osiris Therapeutics, Inc.

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