Administration Signals Likely End to Medicare Bundled Payments Initiative

Posted On August 15, 2017 By OrthoSpineNews In Financial, Regulatory /

August 15, 2017- Jim Burger, Outpatient Surgery > Legal & Regulatory

Medicare’s mandatory bundled payments program for total joints appears to be on the way out.

Tom Price, MD, Secretary of the Department of Health and Human Services (HHS), has been a vocal opponent of mandatory bundles and other service delivery models, and a newly proposed rule posted on the Office of Management and Budget Website strongly suggests that HHS is looking to eliminate mandatory bundling for joint replacements and cardiac care. The programs, delayed twice since the Trump administration took over, are due to take effect in January.

The only public information available about the new proposal is its title: “Cancellation of Advancing Care Coordination through Episode Payment and Cardiac Rehabilitation Incentive Payment Models; Changes to Comprehensive Care for Joint Replacement Payment Model.”

As a Congressman from Georgia, Dr. Price claimed that the Center for Medicare and Medicaid Innovation had “exceeded its authority, failed to engage stakeholders and … upset the balance of power between the legislative and executive branches” with its proposed payment reforms.

READ THE REST HERE

SANUWAVE Health Reports Second Quarter Financial Results and Provides a Business Update

Posted On August 15, 2017 By OrthoSpineNews In Financial /

SUWANEE, GA–(Marketwired – Aug 14, 2017) – SANUWAVE Health, Inc. (OTCQB: SNWV), today reported financial results for the three and six months ended June 30, 2017 and provided a business update. The Company will host a conference call at 10:30AM Eastern Time on Tuesday, August 15, 2017.

Highlights of the second quarter and recent weeks:

The Company appointed Dr. Maj-Britt Kaltoft to its Board of Directors. Dr. Kaltoft currently heads the business development and patent functions at the Danish State Serum Institute, an institution under the Danish Ministry of Health.
The Company appointed retired Colonel Dr. Patrick Sesto to its Medical and Science Advisory Board. Dr. Sesto served 27 years active duty in the US Army and during that time was appointed by Major General Peake, US Army Surgeon General, to be his Consultant for Army Podiatry, a position he held for seven years.
SANUWAVE signed a third amendment with HealthTronics, Inc. to extend the due date of its two promissory notes from January 31, 2018 to December 31, 2018.
SANUWAVE entered into a Memorandum of Understanding with eKare, Inc. to develop novel wound care analysis and management solutions. Linking SANUWAVE’s dermaPACE wound treatment device with eKare’s inSight^® 3D wound imaging and analytics system, the two companies will strive to produce the industry’s most comprehensive wound management solution.
SANUWAVE appointed LITHOMED to act as distributors for the orthopedic products in Taiwan. LITHOMED has a wealth of experience within this specific indication in Taiwan as well as access and relationships with key opinion leaders which will prove to be of immense value for market development.
SANUWAVE appointed Alat Medika Indonesia as distributor for dermaPACE^® and liaison for clinical trials participation for their wound care product in Indonesia. It is well known that diabetes and related concerns need to be addressed within Indonesia and having access to outstanding technology such as SANUWAVE’s within the country is a positive step.
SANUWAVE appointed Interventional Concepts, Inc. to act as Territory Sales Manager for sourcing and screening of potential distributors for the Company’s products in Columbia. Interventional Concepts will give SANUWAVE access to a multidisciplinary team of life science professionals in Columbia that provide regulatory and commercial support when introducing SANUWAVE’s products.

“The second quarter came in below plan but we remain confident we will achieve our seven goals for 2017 and as you can see we make great progress toward reaching these goals,” stated Kevin Richardson, CEO and Chairman. “The seven goals that we projected for 2017 were:

1. FDA approval in late 2017 or early 2018,
2. Add 7 to 10 new countries/regions to our portfolio,
3. Expand Board of Directors members from 4 to 7,
4. Expand Medical Advisory Board members from 2 to 5,
5. Produce record international sales,
6. Launch clinical work both domestically and internationally, and
7. Obtain at least one non-medical partner.

If we can achieve these goals in 2017, we will be well prepared for a rapid sales increase in 2018 as our commercialization efforts take effect,” concluded Mr. Richardson.

Second Quarter Financial Results

Revenues for the three months ended June 30, 2017 were $111,045, compared to $203,406 for the same period in 2016, a decrease of $92,361, or 45%. Revenues resulted primarily from sales in Europe, Asia and Asia/Pacific of our orthoPACE device and related applicators. The decrease in revenues for 2017 was due to lower sales of new orthoPACE devices and applicators in Europe and Asia/Pacific in 2017.

Research and development expenses for the three months ended June 30, 2017 were $437,909, compared to $476,167 for the same period in 2016, a decrease of $38,258, or 8%. Research and development expenses decreased in 2017 due to lower payments to consultants related to the de novo petition submission to the FDA in July 2016 and lower travel costs. This was partially offset by non-cash stock compensation expense for stock options issued in June 2017.

General and administrative expenses for the three months ended June 30, 2017 were $951,908, as compared to $589,896 for the same period in 2016, an increase of $362,012, or 61%. The increase in general and administrative expenses was due non-cash stock compensation expense for stock options issued in June 2017, tradeshow attendance in Europe and related travel expenses and increase in bad debt reserve.

Net loss for the three months ended June 30, 2017 was $1,415,937, or ($0.01) per basic and diluted share, compared to a net loss of $1,122,123, or ($0.01) per basic and diluted share, for the same period in 2016, an increase in the net loss of $293,814, or 26%. The increase in the net loss for 2017 was primarily due to the stock compensation expense for stock options issued during in June 2017 and an increase in the bad debt reserve and was partially offset by lower research and development expenses as noted above.

Six Months Ended June 30, 2017 Financial Results

Revenues for the six months ended June 30, 2017 were $260,614, compared to $472,730 for the same period in 2016, a decrease of $212,116, or 45%. Revenues resulted primarily from sales in Europe, Asia and Asia/Pacific of our orthoPACE device and related applicators. The decrease in revenues for 2017 was due to lower sales of new orthoPACE devices and applicators and lower applicator refurbishments in Europe and Asia/Pacific in 2017.

Research and development expenses for the six months ended June 30, 2017 were $698,247, compared to $786,122 for the same period in 2016, a decrease of $87,875, or 11%. Research and development expenses decreased in 2017 as a result of lower payments to consultants related to the de novo petition submission to the FDA in July 2016, which was partially offset by higher audit costs related to ISO certification and non-cash stock compensation expense for stock option issued in June 2017.

General and administrative expenses for the six months ended June 30, 2017 were $1,400,514, as compared to $1,089,028 for the same period in 2016, an increase of $311,486, or 29%. The increase in general and administrative expenses was due to non-cash stock compensation expense for stock options issued in June 2017, tradeshow attendance in Europe and related travel expenses and increase in bad debt reserve.

Net loss for the six months ended June 30, 2017 was $1,909,469, or ($0.01) per basic and diluted share, compared to a net loss of $2,846,699, or ($0.03) per basic and diluted share, for the same period in 2016, a decrease in the net loss of $937,230, or 33%. The decrease in the net loss for 2017 was primarily due to a gain on the warrant valuation and lower operating expenses as noted above.

Conference Call

The Company will also host a conference call on Tuesday, August 15, 2017, beginning at 10:30AM Eastern Time to discuss the second quarter financial results, provide a business update and answer questions. Shareholders and other interested parties can participate in the conference call by dialing 866-682-6100 (U.S.) or 862-255-5401 (international) or via webcast at
http://www.investorcalendar.com/event/19907.

A replay of the conference call will be available beginning two hours after its completion through August 29, 2017, by dialing 877-481-4010 (U.S.) or 919-882-2331 (international) and entering Conference ID 19907.

About SANUWAVE Health, Inc.
SANUWAVE Health, Inc. (OTCQB: SNWV) (www.sanuwave.com) is a shock wave technology company initially focused on the development and commercialization of patented noninvasive, biological response activating devices for the repair and regeneration of skin, musculoskeletal tissue and vascular structures. SANUWAVE’s portfolio of regenerative medicine products and product candidates activate biologic signaling and angiogenic responses, producing new vascularization and microcirculatory improvement, which helps restore the body’s normal healing processes and regeneration. SANUWAVE applies its patented PACE technology in wound healing, orthopedic/spine, plastic/cosmetic and cardiac conditions. Its lead product candidate for the global wound care market, dermaPACE, is CE Marked throughout Europe and has device license approval for the treatment of the skin and subcutaneous soft tissue in Canada, Australia and New Zealand. In the U.S., dermaPACE is currently under the FDA’s de novo petition review process for the treatment of diabetic foot ulcers. SANUWAVE researches, designs, manufactures, markets and services its products worldwide, and believes it has demonstrated that its technology is safe and effective in stimulating healing in chronic conditions of the foot (plantar fasciitis) and the elbow (lateral epicondylitis) through its U.S. Class III PMA approved OssaTron^® device, as well as stimulating bone and chronic tendonitis regeneration in the musculoskeletal environment through the utilization of its OssaTron, Evotron^® and orthoPACE^® devices in Europe, Asia and Asia/Pacific. In addition, there are license/partnership opportunities for SANUWAVE’s shock wave technology for non-medical uses, including energy, water, food and industrial markets.

Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to financial results and plans for future business development activities, and are thus prospective. Forward-looking statements include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control. Actual results may differ materially from those projected in the forward-looking statements. Among the key risks, assumptions and factors that may affect operating results, performance and financial condition are risks associated with the regulatory approval and marketing of the Company’s product candidates and products, unproven pre-clinical and clinical development activities, regulatory oversight, the Company’s ability to manage its capital resource issues, competition, and the other factors discussed in detail in the Company’s periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

For additional information about the Company, visit www.sanuwave.com.


SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)


		June 30,			December 31,
		2017			2016
ASSETS
CURRENT ASSETS
	Cash and cash equivalents	$	62,069		$	133,571
	Accounts receivable, net of allowance for doubtful accounts		191,932			460,799
	Inventory, net		198,778			231,953
	Prepaid expenses		95,741			87,823
	TOTAL CURRENT ASSETS		548,520			914,146

PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation			64,860			76,938

OTHER ASSETS			13,977			13,786
	TOTAL ASSETS	$	627,357		$	1,004,870

LIABILITIES
CURRENT LIABILITIES
	Accounts payable	$	1,188,459		$	712,964
	Accrued expenses		470,585			375,088
	Accrued employee compensation		65,154			64,860
	Advances from related parties		421,690			–
	Interest payable, related parties		388,095			109,426
	Short term loan, net		100,000			47,440
	Warrant liability		816,521			1,242,120
	Notes payable, related parties, net		5,369,361			5,364,572
	TOTAL LIABILITIES		8,819,865			7,916,470

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT
PREFERRED STOCK, SERIES A CONVERTIBLE, par value $0.001, 6,175 authorized; 6,175 shares issued and 0 shares outstanding in 2017 and 2016			–			–

PREFERRED STOCK, SERIES B CONVERTIBLE, par value $0.001, 293 authorized; 293 shares issued and 0 shares outstanding in 2017 and 2016, respectively			–			–

PREFERRED STOCK – UNDESIGNATED, par value $0.001, 4,993,532 shares authorized; no shares issued and outstanding			–			–

COMMON STOCK, par value $0.001, 350,000,000 shares authorized; 139,099,843 and 137,219,968 issued and outstanding in 2017 and 2016, respectively			139,100			137,220

ADDITIONAL PAID-IN CAPITAL			93,077,145			92,436,697

ACCUMULATED DEFICIT			(101,342,917	)		(99,433,448	)

ACCUMULATED OTHER COMPREHENSIVE LOSS			(65,836	)		(52,069	)
	TOTAL STOCKHOLDERS’ DEFICIT		(8,192,508	)		(6,911,600	)
	TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	627,357		$	1,004,870


SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)

			Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
			June 30,			June 30,			June 30,			June 30,
			2017			2016			2017			2016

REVENUES			$	111,045		$	203,406		$	260,614		$	472,730

COST OF REVENUES (exclusive of depreciation and amortization shown below)				24,695			77,988			79,839			151,169

OPERATING EXPENSES
	Research and development			437,909			476,167			698,247			786,122
	General and administrative			951,908			589,896			1,400,514			1,089,028
	Depreciation			5,958			837			12,078			1,673
	Amortization			–			76,689			–			153,378
	Gain on sale of property and equipment			–			–			–			(1,000	)
		TOTAL OPERATING EXPENSES		1,395,775			1,143,589			2,110,839			2,029,201

		OPERATING LOSS		(1,309,425	)		(1,018,171	)		(1,930,064	)		(1,707,640	)

OTHER INCOME (EXPENSE)
	Gain (loss) on warrant valuation adjustment and conversion			35,410			28,250			358,633			(769,447	)
	Interest expense, net			(143,281	)		(129,334	)		(336,019	)		(363,764	)
	Gain (loss) on foreign currency exchange			1,359			(2,868	)		(2,019	)		(5,848	)
		TOTAL OTHER INCOME (EXPENSE), NET		(106,512	)		(103,952	)		20,595			(1,139,059	)

		NET LOSS		(1,415,937	)		(1,122,123	)		(1,909,469	)		(2,846,699	)

OTHER COMPREHENSIVE LOSS
	Foreign currency translation adjustments			(15,552	)		(5,684	)		(13,767	)		(2,713	)
		TOTAL COMPREHENSIVE LOSS	$	(1,431,489	)	$	(1,127,807	)	$	(1,923,236	)	$	(2,849,412	)

LOSS PER SHARE:
	Net loss – basic and diluted		$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.03	)

	Weighted average shares outstanding – basic and diluted			138,992,669			102,645,697			138,517,370			88,933,089


SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

				Six Months Ended			Six Months Ended
				June 30,			June 30,
				2017			2016

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss				$	(1,909,469	)	$	(2,846,699	)
	Adjustments to reconcile net loss to net cash used by operating activities to net cash used by operating activities
		Depreciation			12,078			1,673
		Change in allowance for doubtful accounts			116,833			5,613
		Amortization			–			153,378
		Stock-based compensation – employees, directors and advisors			482,295			116,550
		(Gain) loss on warrant valuation adjustment			(358,633	)		769,447
		Amortization of debt discount			57,349			11,472
		Amortization of debt issuance costs			–			87,548
		Loss on conversion option of promissory note payable			–			75,422
		Gain on sale of property and equipment			–			(1,000	)
		Changes in assets – (increase)/decrease
			Accounts receivable – trade		152,034			(28,313	)
			Inventory		33,175			54,002
			Prepaid expenses		(7,918	)		26,165
			Other		(191	)		(45	)
		Changes in liabilities – increase/(decrease)
			Accounts payable		475,495			(50,989	)
			Accrued expenses		95,497			(63,551	)
			Accrued employee compensation		294			167,397
			Interest payable, related parties		278,669			(131,579	)
			Promissory notes, accrued interest		–			(77,615	)
		NET CASH USED BY OPERATING ACTIVITIES			(572,492	)		(1,731,124	)

CASH FLOWS FROM INVESTING ACTIVITIES
		Proceeds from sale of property and equipment			–			1,000
		NET CASH PROVIDED BY INVESTING ACTIVITIES			–			1,000

CASH FLOWS FROM FINANCING ACTIVITIES
		Proceeds from warrant exercise			93,067			–
		Advances from related parties			421,690			–
		Proceeds from 2016 Public Offering, net			–			1,596,855
		Proceeds from convertible promissory notes, net			–			106,000
		NET CASH PROVIDED BY FINANCING ACTIVITIES			514,757			1,702,855

EFFECT OF EXCHANGE RATES ON CASH					(13,767	)		(2,713	)

		NET DECREASE IN CASH AND CASH EQUIVALENTS			(71,502	)		(29,982	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					133,571			152,930
		CASH AND CASH EQUIVALENTS, END OF PERIOD		$	62,069		$	122,948

SUPPLEMENTAL INFORMATION
		Cash paid for interest, related parties		$	–		$	392,516

CONTACT INFORMATION

Contact:
Millennium Park Capital LLC
Christopher Wynne
312-724-7845
cwynne@mparkcm.com

SANUWAVE Health, Inc.
Kevin Richardson II
Chairman of the Board
978-922-2447
investorrelations@sanuwave.com

Alphatec Holdings, Inc. Reports Second Quarter 2017 Financial Results

Posted On August 14, 2017 By OrthoSpineNews In Financial /

CARLSBAD, Calif., Aug. 10, 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 recent corporate highlights and financial results for its second quarter ended June 30, 2017.

Second Quarter 2017 Financial Highlights

Total revenues of $24.4 million; revenue from the Company’s U.S. commercial business of $21.9 million
General and administrative expenses declined by approximately $0.9 million sequentially
Cash burn improved to $6.4 million from $11.5 million sequentially; cash balance of $19.1 million at June 30, 2017
Operating loss of $0.7 million, sequential improvement from $3.4 million in the first quarter
Non-GAAP adjusted EBITDA of $1.2 million improved sequentially from $0.5 million in the first quarter
U.S. commercial gross margin of 71%

Organizational and Product Highlights

Continued transition of sales organization from non-exclusive to dedicated, building exceptional momentum with current and new potential distributors and surgeons. Sales from dedicated sales agents and distributors increased from less than 15% of U.S. commercial revenue in the first quarter to more than 18% in the second quarter
Enhanced sales, marketing and product development organizations with the addition of key sales leadership and engineering talent
Awarded patent for its innovative and novel uniplanar and monoaxial screws, currently marketed under the Arsenal Deformity product line
Awarded patent that distinguishes and protects proprietary features of the Alphatec Squadron Lateral Retractor, a key component of the Company’s Battalion Lateral System, which will be fully launched in late 2017 and will mark the Company’s entry into the $500M U.S. Lateral market

“We delivered results that were firmly in-line with our expectations,” said Terry Rich, CEO of Alphatec. “Importantly, we continued to make excellent progress executing on our priorities as we reposition the Alphatec brand. Despite our deliberate decision to disrupt short-term revenue by exiting non-strategic relationships, we continue to see positive traction from new and existing distributors. This sets us up well for revenue growth in the second half of 2017. I am extremely confident in the team, the culture we are building, and the expertise that surrounds me, and I believe that Alphatec is exceptionally well-positioned to drive future growth and shareholder value.”

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

Following is a table, comparing key second quarter 2017 results to key first quarter 2017 results. The Company believes that sequential results, at this time, are the best indicators for evaluating the Company’s core 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 Alphatec’s new leadership team.


	Three Months Ended						Change
	June 30, 2017			March 31, 2017			$000’s			%
	(unaudited)

U.S. commercial revenue	$	21,877		$	23,437		$	(1,560	)	(6.7	%)
U.S gross profit		15,521			16,269			(748	)	(4.6	%)
U.S. gross margin		70.9	%		69.4	%		1.5	%

Operating Expenses
Research and development	$	990		$	1,449		$	(459	)	(31.7	%)
Sales and marketing		10,298			11,103			(805	)	(7.3	%)
General and administrative		5,351			6,223			(872	)	(14.0	%)
Amortization of intangible assets		172			172			–
Restructuring expenses		528			1,231			(703	)	(57.1	%)
Gain on sale of assets		(856	)		–			(856	)
Total operating expenses	$	16,483			20,178		$	(3,695	)	(18.3	%)

Operating loss	$	(735	)	$	(3,399	)	$	2,664		78.4	%

Loss from continuing operations	$	(2,629	)	$	(5,424	)	$	2,795		51.5	%

Non-GAAP Adjusted EBITDA	$	1,218		$	508		$	710		139.8	%

U.S. commercial revenues for the second quarter of 2017 were $21.9 million, down $1.6 million, or approximately 7%, compared to $23.4 million in the first quarter of 2017. The sequential revenue decline was largely driven by deliberate decisions to discontinue non-strategic relationships.

U.S. gross profit and gross margin for the second quarter of 2017 were $15.5 million and 70.9%, respectively, compared to $16.3 million and 69.4%, respectively, for the first quarter of 2017. The gross margin improvement was a result of supply chain optimization and a sequential reduction in inventory kit write-offs related to distributor turnover.

Total operating expenses for the second quarter of 2017 were $16.5 million, reflecting a decrease of $3.7 million, an approximate 18% improvement over the first quarter of 2017. On a non-GAAP basis, excluding restructuring charges and a gain on sale of assets, total operating expenses in the second quarter of 2017 improved $2.1 million, or approximately 11%, compared to the first quarter of 2017. The improvements reflect the execution of operational improvement initiatives, including workforce reductions implemented in October 2016 and February 2017, consolidation of facilities, and ongoing successful efforts to reduce expenses.

GAAP loss from continuing operations for the second quarter of 2017 was $2.6 million, compared to a loss of $5.4 million for the first quarter of 2017.

Non-GAAP Adjusted EBITDA in the second quarter of 2017 was $1.2 million, compared to $0.5 million in the first 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 $33.6 million in term debt and $8.9 million outstanding under the Company’s revolving credit facility at June 30, 2017. This compares to $34.2 million in term debt and $10.4 million outstanding under the Company’s revolving credit facility at March 31, 2017.

Cash and cash equivalents were $19.1 million at June 30, 2017, compared to $25.5 million reported at March 31, 2017.

Comparison of Financial Results for the Three and Six Months Ended June 30, 2017 and 2016

Revenue decreased on a year-over-year basis, resulting from the Company’s execution of the transition of its sales organization, in addition to 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 August 11, 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 57049951. A live webcast of the conference call will be available online from the investor relations page of the Company’s corporate website at www.alphatecspine.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.alphatecspine.com.

Forward Looking Statements

This press release may contain “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 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 periodic 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.

ALPHATEC HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts – unaudited)


		Three Months Ended						Six Months Ended
		June 30,						June 30,
			2017			2016			2017			2016

	Revenues	$	24,379		$	32,242		$	52,357		$	66,448
	Cost of revenues		8,631			11,083			19,830			20,802
	Gross profit		15,748			21,159			32,527			45,646

	Operating expenses:
	Research and development		990			2,072			2,439			5,713
	Sales and marketing		10,298			12,794			21,401			27,734
	General and administrative		5,351			6,274			11,574			15,278
	Amortization of intangible assets		172			255			344			510
	Restructuring expenses		528			84			1,759			173
	Gain on sale of assets		(856	)		–			(856	)		–
	Total operating expenses		16,483			21,479			36,661			49,408
	Operating loss		(735	)		(320	)		(4,134	)		(3,762	)
	Interest and other expense, net		(1,879	)		(1,578	)		(3,855	)		(2,361	)
	Loss from continuing operations before taxes		(2,614	)		(1,898	)		(7,989	)		(6,123	)
	Income tax provision		15			11			64			34
	Loss from continuing operations		(2,629	)		(1,909	)		(8,053	)		(6,157	)
	Loss from discontinued operations		(68	)		(3,324	)		(159	)		(5,693	)
	Net loss	$	(2,697	)	$	(5,233	)	$	(8,212	)	$	(11,850	)

	Net loss per share continuing operations	$	(0.24	)	$	(0.22	)	$	(0.80	)	$	(0.73	)
	Net loss per share discontinued operations		(0.01	)		(0.39	)		(0.02	)		(0.67	)
	Net loss per share – basic and diluted	$	(0.24	)	$	(0.62	)	$	(0.82	)	$	(1.40	)

	Weighted-average shares – basic and diluted		11,047			8,488			10,033			8,477

ALPHATEC HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

	June 30,			December 31,
		2017			2016
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	19,107		$	19,593
Accounts receivable, net		13,126			18,512
Inventories, net		29,810			30,093
Prepaid expenses and other current assets		2,114			4,262
Current assets of discontinued operations		69			364
Total current assets		64,226			72,824

Property and equipment, net		14,467			15,076
Intangibles, net		5,243			5,711
Other assets		222			516
Noncurrent assets of discontinued operations		39			61
Total assets	$	84,197		$	94,188

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	2,861		$	8,701
Accrued expenses		23,917			27,589
Current portion of long-term debt		2,333			3,113
Current liabilities of discontinued operations		464			732
Total current liabilities		29,575			40,135

Total long term liabilities		62,569			71,954
Redeemable preferred stock		23,603			23,603
Stockholders’ deficit		(31,550	)		(41,504	)
Total liabilities and stockholders’ deficit	$	84,197		$	94,188

ALPHATEC HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands – unaudited)

		Three Months Ended			Three Months Ended						Six Months Ended
		March 31,			June 30,						June 30,
			2017			2017			2016			2017			2016

	Operating loss, as reported	$	(3,399	)	$	(735	)	$	(320	)	$	(4,134	)	$	(3,762	)
	Add back:
	Depreciation		1,634			1,636			1,775			3,270			4,029
	Amortization of intangible assets		234			234			270			468			540
	Total EBITDA		(1,531	)		1,135			1,725			(396	)		807

	Add back significant items:
	Stock-based compensation and stock price guarantee		808			411			659			1,219			1,523
	Restructuring and other charges		1,231			528			84			1,759			173
	Gain on sale of assets		–			(856	)		–			(856	)		–

	EBITDA, as adjusted for significant items	$	508		$	1,218		$	2,468		$	1,726		$	2,503

ALPHATEC HOLDINGS, INC.
RECONCILIATION OF GEOGRAPHIC SEGMENT REVENUES AND GROSS PROFIT
(in thousands, except percentages – unaudited)

		Three Months Ended						Six Months Ended
		June 30,						June 30,
			2017			2016			2017			2016

	Revenues by source
	U.S. commercial revenue	$	21,877		$	28,279		$	45,314		$	57,512
	Other		2,502			3,963			7,043			8,936
	Total revenues	$	24,379		$	32,242		$	52,357		$	66,448

	Gross profit by source
	U.S.	$	15,521		$	20,251		$	31,790		$	43,974
	Other		227			908			737			1,672
	Total gross profit	$	15,748		$	21,159		$	32,527		$	45,646

	Gross profit margin by source
	U.S.		70.9	%		71.6	%		70.2	%		76.5	%
	Other		9.1	%		22.9	%		10.5	%		18.7	%
	Total gross profit margin		64.6	%		65.6	%		62.1	%		68.7	%

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
jblack@alphatecspine.com

InVivo Therapeutics Announces Exchange of Certain Warrants for Common Stock

Posted On August 11, 2017 By OrthoSpineNews In Financial /

August 10, 2017

CAMBRIDGE, Mass.–(BUSINESS WIRE)–InVivo Therapeutics Holdings Corp. (NVIV) today announced that it had exchanged certain outstanding warrants that were issued as part of a financing in 2014 (the “2014 Warrants”) for shares of the company’s common stock.

The 2014 Warrants have anti-dilution features such that the exercise price of the warrants decreases if the company sells shares of its common stock for consideration below the exercise price of the 2014 Warrants, and upon certain other events. In addition, the number of warrants increases inversely to the exercise price decrease. These features can lead to extreme levels of dilution to existing shareholders and can be a significant barrier for potential new investors.

The company negotiated individual exchange agreements with certain of the holders of the 2014 warrants, whereby warrants representing the vast majority of the existing 2014 Warrants were exchanged for 2,021,419 new shares of common stock. As a result of the issuance of the shares of common stock, the exercise price and number of shares subject to the remaining 2014 Warrants were adjusted.

Mark Perrin, InVivo’s Chief Executive Officer and Chairman, said, “We believe that these exchange agreements benefit our shareholders and the company by creating a substantially cleaner balance sheet for the company and removing a significant financial overhang. This puts us in a much stronger financial position as we work toward reopening enrollment in The INSPIRE Study and delivering on our mission for spinal cord injury patients.”

About InVivo Therapeutics

InVivo Therapeutics Holdings Corp. is a research and clinical-stage biomaterials and biotechnology company with a focus on treatment of spinal cord injuries. The company was founded in 2005 with proprietary technology co-invented by Robert Langer, Sc.D., Professor at Massachusetts Institute of Technology, and Joseph P. Vacanti, M.D., who then was at Boston Children’s Hospital and who now is affiliated with Massachusetts General Hospital. In 2011, the company earned the David S. Apple Award from the American Spinal Injury Association for its outstanding contribution to spinal cord injury medicine. In 2015, the company’s investigational Neuro-Spinal Scaffold™received the 2015 Becker’s Healthcare Spine Device Award. The publicly-traded company is headquartered in Cambridge, MA. For more details, visit www.invivotherapeutics.com.

Safe Harbor Statement

Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements within the meaning of the federal securities laws. These statements can be identified by words such as “believe,” “anticipate,” “intend,” “estimate,” “will,” “may,” “should,” “expect,” “designed to,” “potentially,” and similar expressions, and include statements regarding the impact of the exchange agreements on the Company’s balance sheet and financial position. Any forward-looking statements contained herein are based on current expectations, and are subject to a number of risks and uncertainties. Factors that could cause actual future results to differ materially from current expectations include, but are not limited to, risks and uncertainties relating to the availability of substantial additional funding for the company to continue its operations and to conduct research and development, clinical studies and future product commercialization; and other risks associated with the company’s business, research, product development, regulatory approval, marketing and distribution plans and strategies identified and described in more detail in the company’s Quarterly Report of the three months ended June 30, 2017, and its other filings with the SEC, including the company’s Form 10-Qs and current reports on Form 8-K. The company does not undertake to update these forward-looking statements.

Contacts

InVivo Therapeutics Holdings Corp.
Heather Hamel, 617-863-5530
Investor Relations
Investor-relations@invivotherapeutics.com

Vericel Reports Second-Quarter 2017 Financial Results

Posted On August 11, 2017 By OrthoSpineNews In Financial /

CAMBRIDGE, Mass., Aug. 09, 2017 (GLOBE NEWSWIRE) — Vericel Corporation (NASDAQ:VCEL), a leading developer of expanded autologous cell therapies for the treatment of patients with serious diseases and conditions, today reported financial results for the second quarter ended June 30, 2017.

Total GAAP net revenues for the quarter ended June 30, 2017 were approximately $17.0 million and included approximately $12.9 million of MACI^® (autologous cultured chondrocytes on porcine collage membrane) and Carticel^® (autologous cultured chondrocytes) net revenues and approximately $4.1 million of Epicel^® (cultured epidermal autografts) net revenues, compared to $8.9 million of Carticel revenues and $3.8 million of Epicel revenues, respectively, in the second quarter of 2016. Total GAAP net revenues increased 32% compared to the second quarter of 2016, with MACI and Carticel revenues increasing 44% and Epicel revenues increasing 6%, respectively, compared to the same period in 2016.

MACI and Carticel GAAP net revenues include a partial reversal of a revenue reserve established in the first quarter of 2017. In April 2017, the company received notification of a contractual dispute between a contracted service provider and a third-party payer related to certain insurance reimbursement claims associated with Carticel and MACI surgeries performed in 2016 and 2017. This dispute was subsequently resolved and the negotiated reimbursement resulted in the company’s ability to recognize $1.4 million in additional MACI and Carticel revenue in the second quarter. Excluding the $1.4 million partial reversal of the revenue reserve, total revenues increased 21% and MACI and Carticel net revenues increased 28%, respectively, compared to the second quarter of 2016.

Gross profit for the quarter ended June 30, 2017 was $9.3 million, or 55% of net revenues, compared to $5.5 million, or 43% of net product revenues, for the second quarter of 2016.

Research and development expenses for the quarter ended June 30, 2017 were $3.0 million compared to $4.1 million in the second quarter of 2016. The reduction in second-quarter research and development expenses is primarily due to a reduction in ixCELL-DCM clinical trial expenses.

Selling, general and administrative expenses for the quarter ended June 30, 2017 were $8.8 million compared to $6.4 million for the same period a year ago. The increase in selling, general and administrative expenses is primarily due to an increase in expenses for marketing initiatives related to the launch of MACI and an increase in personnel costs primarily related to an increase in the MACI sales force.

Loss from operations for the quarter ended June 30, 2017 was $2.5 million, compared to $5.0 million for the second quarter of 2016. Material non-cash items impacting the operating loss for the quarter included $1.3 million of stock-based compensation expense and $0.8 million in depreciation expense.

Other income for the quarter ended June 30, 2017 was $0.1 million compared to $1.9 million for the same period in 2016. The change in other income for the quarter is primarily due to interest expense on the outstanding revolving credit agreement and term loans and the change in the fair value of warrants in the second quarter of 2017 compared to the same period in 2016.

Vericel’s net loss for the quarter ended June 30, 2017 was $2.4 million, or $0.07 per share, compared to a net loss of $3.0 million, or $0.22 per share, for the same period in 2016.

As of June 30, 2017, the company had $14.0 million in cash compared to $23.0 million in cash at December 31, 2016.

“We had a very strong second quarter driven by the accelerating uptake of MACI,” said Nick Colangelo, president and CEO of Vericel. “Our robust revenue growth and margin expansion reflect the success of our commercial team’s sales and marketing initiatives coupled with strong physician enthusiasm for MACI.”

Recent Business Highlights
During and since the second quarter of 2017, the company:

Achieved 28% growth in total MACI and Carticel net product revenues for the second quarter of 2017 compared to the same period in 2016, excluding the impact of a $1.4 million partial reversal of a revenue reserve;
Achieved gross margins of 51% of total net revenues in the second quarter of 2017 versus 43% in the same period in 2016, excluding the impact of a $1.4 million partial reversal of a revenue reserve;
Trained more than 350 surgeons on the MACI surgical procedures to date, with approximately 50% of trained surgeons coming from former Carticel user and non-Carticel user segments;
Increased biopsies 23% in the second quarter and 20% for the first half of 2017, respectively, compared to the same periods in 2016;
Medical benefit policies updated to include MACI at multiple commercial plans, including 18 of the top 28 commercial plans, which we believe represent approximately half of covered lives;
Executed a distribution agreement with Orsini Healthcare Services for MACI to ensure consistent and broad patient access and launched a standalone patient case management service for patient support services for MACI;
Announced the presentation of outcomes data from over 950 severe burn patients treated with Epicel demonstrating a probable survival benefit at the 49th annual meeting of the American Burn Association;
Received the FDA Regenerative Medicine Advanced Therapy (RMAT) designation for ixmyelocel-T for the treatment of patients with advanced heart failure due to ischemic dilated cardiomyopathy; and
Licensed the company’s product portfolio to Innovative Cellular Therapeutics for distribution in China, South Korea, and other countries in Southeast Asia.

“While our focus remains on our commercial portfolio, the RMAT designation for ixmyelocel-T opens up a number of exciting possibilities for the future of the program,” added Mr. Colangelo. “Likewise, the license of our product portfolio to ICT provides an opportunity to develop a global footprint for our product portfolio and to create another potential revenue stream for the company. We believe that these results position the company for strong growth in both the short and long term.”

Conference Call Information
Today’s conference call will be available live at 8:00am Eastern time in the Investors section of the Vericel website at http://investors.vcel.com/events.cfm. Please access the site at least 15 minutes prior to the scheduled start time in order to download the required audio software if necessary. To participate in the live call by telephone, please call (877) 312-5881 and reference Vericel Corporation’s second-quarter 2017 investor conference call. If calling from outside the U.S., please use the international phone number (253) 237-1173.

If you are unable to participate in the live call, the webcast will be available at http://investors.vcel.com/events.cfm until August 9, 2018. A replay of the call will also be available until 11:00am (EDT) on August 13, 2017 by calling (855) 859-2056, or from outside the U.S. (404) 537-3406. The conference ID is 54878623.

About Vericel Corporation
Vericel develops, manufactures, and markets expanded autologous cell therapies for the treatment of patients with serious diseases and conditions. The company markets two cell therapy products in the United States. Vericel is marketing MACI^® (autologous cultured chondrocytes on porcine collagen membrane), an autologous cellularized scaffold product indicated for the repair of symptomatic, single or multiple full-thickness cartilage defects of the knee with or without bone involvement in adults. Vericel is also marketing Epicel^® (cultured epidermal autografts), a permanent skin replacement for the treatment of patients with deep dermal or full thickness burns greater than or equal to 30% of total body surface area. Vericel is developing ixmyelocel-T, an autologous multicellular therapy intended to treat advanced heart failure due to ischemic dilated cardiomyopathy. For more information, please visit the company’s website at www.vcel.com.

This document contains forward-looking statements, including, without limitation, statements concerning anticipated progress, objectives and expectations regarding the commercial potential of our products and growth in revenues, intended product development, clinical activity timing, regulatory progress, and objectives and expectations regarding our company described herein, all of which involve certain risks and uncertainties. These statements are often, but are not always, made through the use of words or phrases such as “anticipates,” “intends,” “estimates,” “plans,” “expects,” “we believe,” “we intend,” and similar words or phrases, or future or conditional verbs such as “will,” “would,” “should,” “potential,” “could,” “may,” or similar expressions. Actual results may differ significantly from the expectations contained in the forward-looking statements. Among the factors that may result in differences are the inherent uncertainties associated with competitive developments, clinical trial and product development activities, regulatory approval requirements, estimating the commercial growth potential of our products and product candidates and growth in revenues and improvement in costs, market demand for our products, our ability to secure consistent reimbursement for our products, and our ability to supply or meet customer demand for our products. These and other significant factors are discussed in greater detail in Vericel’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on March 13, 2017, Quarterly Reports on Form 10-Q and other filings with the SEC. These forward-looking statements reflect management’s current views and Vericel does not undertake to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date of this release except as required by law.

VERICEL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, amounts in thousands)

	June 30,			December 31,
	2017			2016
ASSETS
Current assets:
Cash	$	14,041		$	22,978
Accounts receivable (net of allowance for doubtful accounts of $108 and $225, respectively)	14,729			17,093
Inventory	3,155			3,488
Other current assets	1,116			1,164
Total current assets	33,041			44,723
Property and equipment, net	3,493			3,875
Total assets	$	36,534		$	48,598
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,272		$	6,535
Accrued expenses	4,135			4,523
Current portion of term loan credit agreement, net of deferred costs of $110	2,112			779
Warrant liabilities	209			757
Other	215			259
Total current liabilities	12,943			12,853
Revolving and term loan credit agreement, net of deferred costs of $238 and $293, respectively	8,040			9,318
Long term deferred rent	1,567			1,687
Other long term debt	11			32
Total liabilities	22,561			23,890
COMMITMENTS AND CONTINGENCIES
Shareholders’ equity:
Series B-2 voting convertible preferred stock, no par value: shares authorized and reserved — 39, shares issued and outstanding — 0 and 12, respectively	—			38,389
Common stock, no par value; shares authorized — 75,000; shares issued and outstanding — 32,768 and 31,595, respectively	369,540			329,720
Warrants	190			190
Accumulated deficit	(355,757		)	(343,591		)
Total shareholders’ equity	13,973			24,708
Total liabilities and shareholders’ equity	$	36,534		$	48,598

VERICEL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, amounts in thousands except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Product sales, net	$	16,953		$	12,823		$	26,314		$	26,931
Cost of product sales	7,670			7,300			14,779			13,860
Gross profit	9,283			5,523			11,535			13,071
Research and development	2,971			4,058			6,438			7,594
Selling, general and administrative	8,833			6,449			17,241			12,453
Total operating expenses	11,804			10,507			23,679			20,047
Loss from operations	(2,521		)	(4,984		)	(12,144		)	(6,976		)
Other income (expense):							0
Decrease in fair value of warrants	441			1,942			548			302
Foreign currency translation loss	(13		)	(1		)	(14		)	(11		)
Interest income	3			2			4			7
Interest expense	(299		)	(3		)	(561		)	(6		)
Other income (expense)	1			—			1			(10		)
Total other income (expense)	133			1,940			(22		)	282
Net loss	$	(2,388	)	$	(3,044	)	$	(12,166	)	$	(6,694	)

Net loss per share attributable to common shareholders (Basic and Diluted)	$	(0.07	)	$	(0.22	)	$	(0.38	)	$	(0.46	)
Weighted average number of common shares outstanding (Basic and Diluted)	32,765			22,684			32,333			22,644

Global Media Contacts:
David Schull
Russo Partners LLC
+1 212-845-4271 (office)
+1 858-717-2310 (mobile)
David.schull@russopartnersllc.com

Karen Chase
Russo Partners LLC
+1 646-942-5627 (office)
+1 917-547-0434 (mobile)
Karen.chase@russopartnersllc.com

Investor Contacts: 
Chad Rubin
The Trout Group
crubin@troutgroup.com
+1 (646) 378-2947

Lee Stern
The Trout Group
lstern@troutgroup.com
+1 (646) 378-2922

Histogenics Corporation Announces Second Quarter 2017 Financial and Operating Results

Posted On August 10, 2017 By OrthoSpineNews In Financial /

WALTHAM, Mass., Aug. 10, 2017 (GLOBE NEWSWIRE) — Histogenics Corporation (Histogenics) (Nasdaq:HSGX), a regenerative medicine company focused on developing and commercializing products in the musculoskeletal space, announced its financial and operational results for the quarter ended June 30, 2017.

“We achieved a significant milestone in the second quarter of 2017 when we completed enrollment of the NeoCart Phase 3 clinical trial with a record 17 patients in the month of June and 30 patients for the quarter. Furthermore, we continue to receive positive feedback from our surgeons regarding the ease of the NeoCart procedure and the potential early pain and functional relief,” stated Adam Gridley, President and Chief Executive Officer of Histogenics. “The small lesion microfracture market continues to be underserved and our recent market research in Japan and the United States indicates a product like NeoCart, if approved, could have a meaningful impact in the market as both physicians and patients are seeking novel alternatives to treat cartilage defects. We look forward to the results from our Phase 3 study in the third quarter of 2018, and believe our robust dual threshold responder protocol, along with our one-year endpoint, may provide clear evidence of the potential for NeoCart to replace microfracture as the standard of care for these small lesions.”

Second Quarter 2017 and Recent Highlights

NeoCart Phase 3 Clinical Trial Enrollment Complete: As of June 30, 2017, Histogenics enrolled a total of 249 patients, including 30 patients in the second quarter of 2017 and 17 patients in the month of June 2017. The Phase 3 clinical trial is being conducted under a Special Protocol Assessment (SPA) with the United States Food and Drug Administration (FDA) and Histogenics expects to report top-line data from the trial in the third quarter of 2018 and file a Biologics License Application (BLA) with the FDA in the same quarter, with potential commercialization, if approved, in the second half of 2019.
Identification of Japanese Regulatory Approval Pathway for NeoCart: Histogenics reached agreement with the Japan Pharmaceuticals and Medical Devices Agency (PMDA) regarding the required regulatory pathway for NeoCart in Japan. Due to the quality, breadth and depth of the NeoCart data package, the PMDA agreed that the only additional clinical data required for full Marketing Authorization would be a small 30-patient, one-year confirmatory clinical trial in Japanese patients that compares NeoCart to microfracture. The data from this trial and the one-year U.S. Phase 3 clinical trial data for NeoCart would be appropriate for submission to and potential approval by the PMDA. The PMDA also agreed with Histogenics’ proposal to manufacture NeoCart implants for the Japanese clinical trial at its facility in Waltham, Massachusetts. Histogenics continues to explore partnership opportunities with biotechnology and pharmaceutical companies to complete the limited clinical development required to gain full marketing authorization and commercialize NeoCart in Japan.
U.S. and Japan NeoCart Market Potential: Histogenics recently conducted primary market research in both the U.S. and Japan with almost 200 orthopedic and sports medicine surgeons across both markets. The findings provide support for Histogenics’ assumptions regarding the size of each market and confirm the need in both markets for a novel cartilage repair therapy that will serve as an alternative to microfracture by potentially offering patients a more rapid recovery from pain and return to function as well as a durable treatment response. The results also showed a strong willingness to use a new therapeutic alternative with the characteristics of NeoCart, based on the data from Histogenics completed and ongoing clinical trials. In the U.S., Histogenics is targeting the 150,000 to 200,000 patients receiving microfracture each year, out of the estimated 600,000 procedures annually to treat cartilage defects. Similarly, in Japan there are an estimated 200,000 procedures annually for patients suffering from pain associated with cartilage defects in the knee.
Development of NeoCart Clinical Data and Related Publications: Histogenics continues to work with its university research collaborators on research and development activities. In the second quarter of 2017, data from a collagen and chondrocyte 3-D bioprinting study were published. Histogenics believes that these data can be used to support both process optimization for NeoCart and the NeoCart BLA filing, as well as for the future development of additional product candidates based on the NeoCart platform. Histogenics has also continued its work with Intrexon Corporation (Intrexon) to develop next-generation allogeneic products to treat cartilage defects. The companies have generated exciting proof-of-concept data by combining Intrexon’s induced Pluripotent Stem Cell (iPSC) technology and Histogenics’ NeoCart platform to manufacture next generation, NeoCart implants using iPSC-derived chondrocytes. These implants exhibited similar critical biomarkers of cartilage production and biomechanical data of both native cartilage and the current generation of NeoCart implants. The companies seek to publish the data in 2018.
Enhancement of Executive Team: In the second quarter of 2017, Histogenics appointed Donald Haut, Ph.D. as Chief Business Officer. Dr. Haut has primary responsibility for Histogenics’ commercial licensing discussions in Japan and other regions outside of the United States, commercial and product development strategies and all alliance management and business development activities. Dr. Haut has extensive experience in corporate strategy, business development and licensing, and sales and marketing.

Financial Results for the Second Quarter of 2017

Loss from operations was $(6.4) million in the second quarter of 2017, compared to $(8.0) million in the second quarter of 2016. The decrease in operating expenses was primarily driven by a reduction in research and development expenses.

Research and development expenses were $4.2 million in the second quarter of 2017, compared to $5.8 million in the second quarter of 2016. The decrease was primarily due to reductions in collaboration, consulting and temporary labor costs as well as salary and patient recruitment costs and was partially offset by a small increase in sponsored research expenses with institutions, including Cornell University and Brigham and Women’s Hospital. General and administrative expenses were $2.2 million in the second quarter of 2017, compared to $2.2 million in the second quarter of 2016. An increase in facility related costs was offset by a decrease in stock-based compensation expense.

Net loss attributable to common stockholders was $(5.5) million in the second quarter of 2017, or $(0.25) per share, compared to $(8.0) million, or $(0.61) per share, in the second quarter of 2016. The decrease in net loss attributable to common stockholders is primarily due to lower operating expenses and the allocation of a portion of the net loss to the Series A Preferred Stock.

As of June 30, 2017, Histogenics had cash, cash equivalents and marketable securities of $18.5 million, compared to $31.9 million at December 31, 2016. Histogenics believes its current cash position will be sufficient to fund its operations into the middle of 2018.

Conference Call and Webcast Information

Histogenics’ management will host a conference call on Thursday, August 10, 2017 at 8:30 a.m. EDT. A question-and-answer session will follow Histogenics’ remarks. To participate on the live call, please dial (877) 930-8064 (domestic) or (253) 336-8040 (international) and provide the conference ID “37210066” five to ten minutes before the start of the call.

A live audio webcast of the presentation will be available via the “Investor Relations” page of the Histogenics website, www.histogenics.com. A replay of the webcast will be archived on Histogenics’ website for approximately 45 days following the presentation.

About Histogenics Corporation

Histogenics is a leading regenerative medicine company developing and commercializing novel tissue therapies that may offer more rapid and durable recoveries for patients with pain and loss of function due to musculoskeletal conditions. Histogenics’ regenerative medicine platform combines expertise in cell processing, scaffolding, tissue engineering and bioadhesives to create tissue ex-vivo. Histogenics’ first investigational product candidate, NeoCart is designed to treat cartilage defects in the knee. The Company recently completed enrollment of its NeoCart Phase 3 clinical trial and expects to report top-line data in the third quarter of 2018. NeoCart is designed to exhibit characteristics of articular, hyaline cartilage prior to and upon implantation into the knee and therefore does not rely on the body to make new cartilage. As a result, NeoCart is the only product in development or on the market with a one-year primary superiority endpoint as compared to the standard of care. There are more than 500,000 or more knee cartilage procedures in the United States each year, with many healthy active adults avoiding treatment as they seek other alternatives. Left untreated, even a small cartilage defect can expand in size and progress to debilitating osteoarthritis, ultimately necessitating a joint replacement procedure. Osteoarthritis is more common in adults over the age of 50, but the condition and precursors of the condition can be observed much earlier, and cartilage damage is believed to be one of the leading contributors of this disease. For more information, please visit www.histogenics.com.

Forward-Looking Statements

Various statements in this release are “forward-looking statements” under the securities laws. Words such as, but not limited to, “anticipate,” “believe,” “can,” “could,” “expect,” “estimate,” “design,” “goal,” “intend,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “target,” “likely,” “should,” “will,” and “would,” or the negative of these terms and similar expressions or words, identify forward-looking statements. Forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions and uncertainties.

Important factors that could cause actual results to differ materially from those reflected in Histogenics’ forward-looking statements include, among others: the timing and success of Histogenics’ NeoCart Phase 3 clinical trial; possible delays in releasing the top-line data for the NeoCart Phase 3 clinical trial and timing of filing a BLA; the ability to obtain and maintain regulatory approval of NeoCart or any product candidates, and the labeling for any approved products; Histogenics’ ability to secure a development and commercialization partner for NeoCart in Japan; the scope, progress, expansion, and costs of developing and commercializing Histogenics’ product candidates; the ability to obtain and maintain regulatory approval regarding the comparability of critical NeoCart raw materials; the size and growth of the potential markets for Histogenics’ product candidates and the ability to serve those markets; Histogenics’ expectations regarding its expenses and revenue; the sufficiency of Histogenics’ cash resources and the availability of additional financing on commercially reasonable terms and other factors that are described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Histogenics’ Annual Report on Form 10-K for the year ended December 31, 2016 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, which are on file with the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at www.sec.gov. Additional factors may be set forth in those sections of Histogenics’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, to be filed with the SEC in the third quarter of 2017. In addition to the risks described above and in Histogenics’ annual report on Form 10-K and quarterly reports on Form 10-Q, current reports on Form 8-K and other filings with the SEC, other unknown or unpredictable factors also could affect Histogenics’ results.

There can be no assurance that the actual results or developments anticipated by Histogenics will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Histogenics. Therefore, no assurance can be given that the outcomes stated in such forward-looking statements and estimates will be achieved.

All written and verbal forward-looking statements attributable to Histogenics or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to herein. Histogenics cautions investors not to rely too heavily on the forward-looking statements Histogenics makes or that are made on its behalf. The information in this release is provided only as of the date of this release, and Histogenics undertakes no obligation, and specifically declines any obligation, to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.


HISTOGENICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except share and per share data)

		Three Months Ended June 30,						Six Months Ended June 30,
			2017			2016			2017			2016
Revenue		$	‒		$	‒		$	‒		$	‒

Operating expenses:
	Research and development		4,208			5,794			8,712			11,380
	General and administrative		2,166			2,161			4,492			4,373
Total operating expenses			6,374			7,955			13,204			15,753
Loss from operations			(6,374	)		(7,955	)		(13,204	)		(15,753	)

Other income (expense):
	Interest income (expense), net		40			(17	)		75			(36	)
	Other expense, net		(73	)		(66	)		(90	)		(167	)
	Change in fair value of warrant liability		(135	)		‒			(404	)		‒
Total other (expense), net			(168	)		(83	)		(419	)		(203	)
Net loss		$	(6,542	)	$	(8,038	)	$	(13,623	)	$	(15,956	)

Other comprehensive loss:
	Unrealized gain (loss) from available for sale securities		4			‒			(2	)		‒
Comprehensive Loss		$	(6,538	)	$	(8,038	)	$	(13,625	)	$	(15,956	)

Net Loss attributable to common stockholders – basic and diluted		$	(5,454	)	$	(8,038	)	$	(11,285	)	$	(15,956	)

Net Loss per common share – basic and diluted:		$	(0.25	)	$	(0.61	)	$	(0.51	)	$	(1.20	)
Weighted-average shares used to compute loss per common share – basic and diluted:			22,183,804			13,270,433			22,050,572			13,270,531

HISTOGENICS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share and per share data)

		June 30,		December 31,
		2017		2016


	Cash and cash equivalents and marketable securities	$	18,540	$	31,908
	Prepaid expenses and other current assets		304		173
	Property and equipment, net		3,146		3,860
	Other assets, net		137		137
	Total assets	$	22,127	$	36,078

	Current liabilities	$	3,827	$	5,171
	Warrant and other non-current liabilities		17,494		17,340
	Total stockholder’s equity		806		13,567
	Total liabilities and stockholders’ equity	$	22,127	$	36,078

DJO Global Announces Financial Results for Second Quarter 2017

Posted On August 10, 2017 By OrthoSpineNews In Financial /

August 10, 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 second quarter ended July 1, 2017.

Second Quarter Financial Highlights

Net sales grew 0.6% to $294.7 million, or 2.3% on a sales-per-day, constant currency basis.
Net loss attributable to DJOFL was $34.4 million compared to $23.3 million in the prior year period.
Adjusted EBITDA was $63.5 million.

Business Transformation Progress

Significant investments were made, as planned, in the Company’s transformation which remains on track to deliver 7% to 10% annual cost reduction by the end of 2018.
Transformation actions taken to date expected to contribute $15 million in annual savings over the next four quarters.

“Our results for the second quarter, and for the first half, of the year are ahead of our annual operating plan and reflect the hard work our team has contributed to growing the business while transforming our operations,” said Brady Shirley, DJO’s President and Chief Executive Officer. “Over the first half of 2017, we continued to grow our global business and we grew Adjusted EBITDA faster than revenue. We also continued to execute on our business transformation, making investments and taking actions that support our priorities of improved profitability, liquidity, growth and customer experience. Looking forward, we remain confident in both our transformation and the team that we have in place to deliver long-term value to our customers, employees and investors.”

Sales Results

DJOFL achieved net sales for the second quarter of 2017 of $294.7 million, reflecting growth of 0.6%, compared with net sales of $292.9 million for the second quarter of 2016. The second quarter of 2017 included 61 shipping days for our international business compared to 63 for the same period in 2016, while domestic shipping days remained constant at 64 for both the second quarter of 2017 and 2016. Sales in the second quarter of 2017 grew 2.3% on a sales-per-day, constant currency basis over sales in the second quarter of 2016. For the six months ending July 1, 2017, sales grew 2.0% to $583.1 million over the same period in 2016, or 2.7% on a constant currency basis.

Net sales for the Surgical Implant segment grew 17.4% in the second quarter of 2017 to $50.0 million. Sales across all three implant subcategories (knee, hip and shoulder) again grew at double digit rates compared to the prior year. For the six months ending July 1, 2017, Surgical Implant sales grew 16.3%, over the comparable period in 2016, to $99.6 million.

Net sales for DJO’s International segment were $79.6 million in the second quarter of 2017, a decline of 0.6% compared to the second quarter of 2016. On the basis of constant currency and taking into account 61 shipping days for our international business compared to 63 in the prior year, International sales grew 5.3% driven by stronger sales in the Company’s direct markets, primarily Australia, France and Spain, as well as continued growth in the Company’s export markets. For the six months ending July 1, 2017, International sales grew 1.7% to $157.8 million, or 4.3% on a constant currency basis over the comparable period in 2016.

Net sales for DJO’s Recovery Sciences segment were $38.8 million in the second quarter of 2017, reflecting growth of 0.8% compared to the second quarter of 2016. Growth in both of the segment’s major product lines, Chattanooga rehabilitation equipment and Regeneration CMF, was relatively flat in the quarter compared to the prior year period. For the six months ending July 1, 2017, Recovery Sciences sales grew 3.0% to $77.3 million.

Net sales for DJO’s Bracing and Vascular segment were $126.4 million in the second quarter of 2017, a decline of 4.1%, compared to the second quarter of 2016, reflecting general softness across the Company’s bracing and support products, as well as continued pressure in the Company’s Dr. Comfort product line. For the six months ending July 1, 2017, Bracing and Vascular sales declined 2.9% to $248.5 million.

Earnings Results

For the second quarter of 2017, DJOFL reported a net loss of $34.4 million compared to a net loss of $23.3 million for the second quarter of 2016. As detailed in the attached financial tables, the results for the current and prior year second 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 second quarter of 2017 was $63.5 million compared with Adjusted EBITDA of $63.6 million in the second quarter of 2016. Adjusted EBITDA for the first six months of 2017 was $120.8 million compared with Adjusted EBITDA of $112.5 million in the first six months of 2016. Including projected future savings from cost savings programs currently underway of $15.0 million as permitted under our credit agreement and the indentures governing our outstanding notes, Adjusted EBITDA for the twelve months ended July 1, 2017 was $258.6 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 six months ending July 1, 2017 was $38.1 million compared to a net use of cash of $10.6 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, Thursday, August 10, 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						Six Months Ended
	July 1, 2017			July 1, 2016			July 1, 2017			July 1, 2016
Net sales	$	294,746		$	292,852		$	583,135		$	571,758
Operating expenses:
Cost of sales (exclusive of amortization, see note 1)		124,885			120,474			244,454			238,557
Selling, general and administrative		135,739			121,627			269,901			243,556
Research and development		9,063			10,122			18,202			19,976
Amortization of intangible assets		16,016			19,085			34,861			38,663
		285,703			271,308			567,418			540,752
Operating income		9,043			21,544			15,717			31,006
Other (expense) income:
Interest expense, net		(43,068	)		(42,396	)		(85,755	)		(84,666	)
Other income, net		896			468			1,184			752
		(42,172	)		(41,928	)		(84,571	)		(83,914	)
Loss before income taxes		(33,129	)		(20,384	)		(68,854	)		(52,908	)
Income tax provision		(1,095	)		(3,577	)		(5,173	)		(8,990	)
Net loss from continuing operations		(34,224	)		(23,961	)		(74,027	)		(61,898	)
Net income from discontinued operations		47			855			105			665
Net loss		(34,177	)		(23,106	)		(73,922	)		(61,233	)
Net income attributable to noncontrolling interests		(206	)		(169	)		(430	)		(362	)
Net loss attributable to DJO Finance LLC	$	(34,383	)	$	(23,275	)	$	(74,352	)	$	(61,595	)

Note 1 — Cost of sales is exclusive of amortization of intangible assets of $6,980 and $13,961 for the three and six months ended July 1, 2017, and $7,080 and $14,487 for the three and six months ended July 1, 2016, respectively.


DJO Finance LLC Unaudited Condensed Consolidated Balance Sheets (In thousands)

	July 1, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	35,197		$	35,212
Accounts receivable, net		170,057			178,193
Inventories, net		148,585			151,557
Prepaid expenses and other current assets		21,300			23,650
Current assets of discontinued operations		511			511
Total current assets		375,650			389,123
Property and equipment, net		133,889			128,019
Goodwill		860,597			855,626
Intangible assets, net		637,989			672,134
Other assets		5,137			5,536
Total assets	$	2,013,262		$	2,050,438
Liabilities and Deficit
Current liabilities:
Accounts payable	$	93,514		$	63,822
Accrued interest		12,934			16,740
Current portion of debt obligations		12,557			10,550
Other current liabilities		124,227			113,265
Total current liabilities		243,232			204,377
Long-term debt obligations		2,381,701			2,392,238
Deferred tax liabilities, net		208,213			202,740
Other long-term liabilities		15,744			14,932
Total liabilities	$	2,848,890		$	2,814,287
Commitments and contingencies
Deficit:
DJO Finance LLC membership deficit:
Member capital		841,424			844,294
Accumulated deficit		(1,653,994	)		(1,579,642	)
Accumulated other comprehensive loss		(24,622	)		(30,580	)
Total membership deficit		(837,192	)		(765,928	)
Noncontrolling interests		1,564			2,079
Total deficit		(835,628	)		(763,849	)
Total liabilities and deficit	$	2,013,262		$	2,050,438


DJO Finance LLC Unaudited Segment Information (In thousands)

	Three Months Ended						Six Months Ended
	July 1, 2017			July 1, 2016			July 1, 2017			July 1, 2016
Net sales:
Bracing and Vascular	$	126,415		$	131,751		$	248,468		$	255,967
Recovery Sciences		38,774			38,449			77,277			75,024
Surgical Implant		49,991			42,575			99,583			85,625
International		79,566			80,077			157,807			155,142
	$	294,746		$	292,852		$	583,135		$	571,758
Operating income:
Bracing and Vascular	$	24,225		$	29,072		$	45,232		$	49,606
Recovery Sciences		10,709			8,056			19,616			14,501
Surgical Implant		10,062			6,053			18,202			13,282
International		13,509			14,653			27,119			23,642
Expenses not allocated to segments and eliminations		(49,462	)		(36,290	)		(94,452	)		(70,025	)
	$	9,043		$	21,544		$	15,717		$	31,006

DJO Finance LLC
Adjusted EBITDA

For the Three and Six Months Ended July 1, 2017 and 2016
(unaudited)

Our Senior Secured Credit Facilities, consisting of a $1,036.5 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 $68.0 million was outstanding as of July 1, 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						Six Months Ended						Ended
	July 1,			July 1,			July 1,			July 1,			July 1,
	2017			2016			2017			2016			2017
Net loss attributable to DJO Finance LLC	$	(34,383	)	$	(23,275	)	$	(74,352	)	$	(61,595	)	$	(299,060	)
Income from discontinued operations, net		(47	)		(855	)		(105	)		(665	)		(579	)
Interest expense, net		43,068			42,396			85,755			84,666			171,168
Income tax provision (benefit)		1,095			3,577			5,173			8,990			(10,669	)
Depreciation and amortization		26,942			29,274			56,716			59,176			115,432
Non-cash charges (a)		537			2,204			1,108			2,603			180,904
Non-recurring and integration charges (b)		25,195			8,605			43,584			15,937			76,322
Other adjustment items (c)		1,142			1,636			2,911			3,366			10,102
		63,549			63,562			120,790			112,478			243,620
Permitted pro forma adjustments applicable to the twelve month period only (d)
Future cost savings														14,988
Adjusted EBITDA	$	63,549		$	63,562		$	120,790		$	112,478		$	258,608

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

											Twelve
											Months
			Three Months Ended				Six Months Ended				Ended
			July 1,		July 1,		July 1,		July 1,		July 1,
			2017		2016		2017		2016		2017
		Stock compensation expense	$	392	$	1,316	$	846	$	1,521	$	2,513
		Loss on disposal of fixed assets and assets held for sale, net		145		783		262		890		321
		Impairment of goodwill (1)		—		—		—		—		160,000
		Inventory adjustments (2)		—		—		—		—		18,013
		Purchase accounting adjustments (3)		—		105		—		192		57
		Total non-cash charges	$	537	$	2,204	$	1,108	$	2,603	$	180,904

						(1)			Impairment of goodwill and intangible assets for the twelve months ended July 1, 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					Six Months Ended					Ended
			July 1,			July 1,		July 1,			July 1,		July 1,
			2017			2016		2017			2016		2017
		Restructuring and reorganization	$	23,273		$	1,476	$	39,069		$	3,469	$	52,478
		Acquisition related expenses and integration (1)		277			2,657		579			5,982		4,947
		Executive transition		(49	)		—		(49	)		—		4,767
		Litigation and regulatory costs and settlements, net (2)		1,290			4,472		3,392			6,486		13,468
		IT automation projects		404			—		593			—		662
		Total non-recurring and integration charges	$	25,195		$	8,605	$	43,584		$	15,937	$	76,322

						(1)			Consists of direct acquisition costs and integration expenses related to acquired businesses and costs related to potential acquisitions.
						(2)			For the twelve months ended July 1, 2017, litigation and regulatory costs consisted of $1.4 million in litigation costs related to ongoing product liability issues and $12.1 million related to other litigation and regulatory costs and settlements.

(c)	Other adjustment items are comprised of the following:

															Twelve
															Months
			Three Months Ended						Six Months Ended						Ended
			July 1,			July 1,			July 1,			July 1,			July 1,
			2017			2016			2017			2016			2017
		Blackstone monitoring fees	$	1,750		$	1,750		$	3,500		$	3,500		$	7,000
		Noncontrolling interests		206			169			430			362			691
		Other (1)		(814	)		(283	)		(1,019	)		(496	)		2,411
		Total other adjustment items	$	1,142		$	1,636		$	2,911		$	3,366		$	10,102

						(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 Investor/Media Contact:
DJO Global, Inc.
David Smith
SVP and Treasurer
(760) 734-3075
ir@djoglobal.com

AAEAAQAAAAAAAAk2AAAAJGVmNWM5MDNjLTg3NzItNDVkMC1iOGExLWQ3NTU2YmNlMDZlYw-1.png

ConforMIS Acquires Machining and Polishing Assets from Broad Peak Manufacturing

Posted On August 10, 2017 By OrthoSpineNews In Financial, Top Stories /

BILLERICA, Mass., Aug. 09, 2017 (GLOBE NEWSWIRE) — ConforMIS, Inc. (NASDAQ:CFMS), a medical technology company that offers joint replacement implants customized to fit each patient’s unique anatomy, today announced that it has acquired the machining and polishing assets of Broad Peak Manufacturing, LLC, a high-precision surface preparation and finishing facility. The purchase price for the machining and polishing assets is approximately $6.5 million consisting of $5.75 million in cash and approximately $0.75 million in common stock. Under the terms of the deal, ConforMIS will integrate most of the Broad Peak employees, acquire supplies and equipment, and lease a fully operational manufacturing facility and office space in Wallingford, Connecticut.

Broad Peak has provided polishing services for ConforMIS’ femoral implant component including iTotal® CR, iTotal® PS, iUni® and iDuo® since 2014. Starting in the first quarter of 2018, ConforMIS estimates that the integration of the Broad Peak polishing operations will result in a reduction in the cost of polishing of up to 50%, and potentially more, with a potential 200 basis point improvement in overall gross margin.

“This acquisition represents an important step in enhancing the manufacturing of our customized knee implants,” said Mark Augusti, Chief Executive Officer and President of ConforMIS. “Our goal is to continuously invest in specific areas of our business that will improve overall operational efficiencies while maintaining our commitment to quality product for our patients. Integrating Broad Peak’s proven and innovative manufacturing operation directly into ConforMIS’ operations will allow us to further reduce costs, improve gross margin, and add additional manufacturing expertise that we intend to leverage as part of our larger plan to continually improve our manufacturing operations and our gross margin.”

Under the terms of the agreement, ConforMIS will lease the manufacturing facility in Wallingford, CT, and approximately twenty Broad Peak machining and polishing personnel will join the ConforMIS team, including Ed Kilgallen, former Managing Director at Broad Peak, who has joined ConforMIS as its Vice President of Operations.

“As a highly proficient supplier of polishing services to ConforMIS, Broad Peak has a combined 70+ years’ experience in the aerospace and medical device industries, and we are extremely excited about our new role as part of the ConforMIS team,” said Mr. Kilgallen. “We look forward to playing an even larger role in the development of ConforMIS’ manufacturing technology and to continuing to help deliver high-quality customized knee implants to patients, surgeons and hospitals globally.”

“We anticipate that the integration of Broad Peak’s polishing resources and expertise will deliver rapid and potentially immediate benefits to ConforMIS,” Mr. Augusti added. “As we work to maximize the value of our existing customized knee implant systems and our planned iTotal Hip system, this transaction is just one example of the positive steps we are taking to continually improve every phase of our business.”

About ConforMIS, Inc.

ConforMIS is a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell joint replacement implants that are individually sized and shaped, or customized, to fit each patient’s unique anatomy. ConforMIS offers a broad line of customized knee implants and pre-sterilized, single-use instruments delivered in a single package to the hospital. In recent clinical studies, ConforMIS iTotal CR demonstrated superior clinical outcomes, including better function and greater patient satisfaction, compared to traditional, off-the-shelf implants. ConforMIS owns or exclusively in-licenses approximately 450 issued patents and pending patent applications that cover customized implants and patient-specific instrumentation for all major joints.

For more information, visit www.conformis.com. To receive future releases in e-mail alerts, sign up at http://ir.conformis.com/.

About Broad Peak Manufacturing, LLC

Broad Peak is a high-precision femoral finishing facility strategically located less than 100 miles from both NY Metro and Boston. Broad Peak is an ISO 9001:2008 & 13485:2003 accredited facility, providing surface enhancement solutions to a variety of femoral components. The core team at Broad Peak has a long history with femoral manufacturing stretching back to 1998. Broad Peak has provided a multitude of services to medical OEM facilities in Europe, Asia and North America including, but not limited to, Contract Manufacturing, VMI, Contract Inspection, Packaging, as well as validated Manufacturing Cell Transfers and the suite of required SPPAP documentation. Broad Peak is currently specializing in Patient Specific Femoral machining and finishing. This complex process requires modeling, programming and manufacturing of individual fixtures for these implants in order to process the components to a finished state.

Cautionary Statement Regarding Forward-Looking Statements

Any statements in this press release about future expectations, plans and prospects for ConforMIS, including statements about cost savings associated polishing of implant components, cost savings or other benefits associated with the purchase of Broad Peak assets, gross margin improvement as a result of the any manufacturing plans or gross margin improvement plans, the progress of any manufacturing plans or any gross margin improvement plans, the impact of the purchase of assets of Broad Peak on ConforMIS’ financial results, the development of the iTotal Hip implant system, economic or other impacts and advantages of using customized implants, as well as other statements containing the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” and similar expressions, constitute forward-looking statements within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make as a result of a variety of risks and uncertainties, including risks related to our product development and commercialization efforts, and the other risks and uncertainties described in the “Risk Factors” sections of our public filings with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent ConforMIS’s views as of the date hereof. ConforMIS anticipates that subsequent events and developments may cause ConforMIS’s views to change. However, while ConforMIS may elect to update these forward-looking statements at some point in the future, ConforMIS specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing ConforMIS’s views as of any date subsequent to the date hereof.

CONTACT:

Lynn Granito
Berry & Company Public Relations
lgranito@berrypr.com
(212) 253-8881

Investor Contact:
Oksana Bradley
ir@conformis.com
(781) 374-5598

AAEAAQAAAAAAAAJYAAAAJDRjNThjOTU3LWQwZDAtNDA2ZS1iMWM0LWY4NjZhZjJhMThiOA.png

InVivo Therapeutics Provides Business Update and Reports 2017 Second Quarter Financial Results

Posted On August 9, 2017 By OrthoSpineNews In Financial /

August 08, 2017

CAMBRIDGE, Mass.–(BUSINESS WIRE)–InVivo Therapeutics Holdings Corp. (NVIV) today provided a general business update and reported financial results for the quarter ended June 30, 2017.

Mark Perrin, InVivo’s Chief Executive Officer and Chairman, said, “In the second quarter, we continued to make significant progress at InVivo. During the quarter, we enrolled four more patients into INSPIRE, and we now have 16 patients in follow-up. One of these patients improved from complete AIS A SCI to motor incomplete AIS C SCI at the one-month visit. We also announced that two patients who had previously converted to AIS B had been assessed to have converted to AIS C at their 12- and 24-month visits, respectively. Of the seven total AIS grade conversions, four are AIS C conversions at this time, meaning these four patients have recovered both sensory and motor function. Given these AIS C conversions and an overall conversion rate of 54.5% (6/11) at the 6-month primary endpoint visit, we remain enthusiastic about the potential of establishing the Neuro-Spinal Scaffold™ as the foundation of a new standard of care for acute spinal cord injury.

“Last week, we announced that the most recent patient to enroll into the INSPIRE study passed away with the cause of death deemed by the Principal Investigator at the site to be unrelated to the Neuro-Spinal Scaffold™ or implantation procedure. This was the third death in the INSPIRE study. Following discussions with the company’s independent Data Safety Monitoring Board (DSMB), we elected to implement a temporary halt to enrollment as we engaged with the FDA to determine whether any changes to the protocol were needed. The FDA responded formally with its recommendations; we are working on assessing the recommendations and formulating a response that will include a protocol amendment. At this time, our primary focus at InVivo is re-opening enrollment in INSPIRE as quickly as possible so that we can continue to make progress toward our goal of redefining the life of the spinal cord injury patient.”

Financial Results

For the three-month period ended June 30, 2017, the Company reported a net loss of approximately $6.3 million, or $0.20 per diluted share, compared to a net loss of $5.2 million, or $0.16 per diluted share, for the three-month period ended June 30, 2016. The results for the three-month period ended June 30, 2017 were unfavorably impacted by increases in operating expenses of $416,000 in research and development and $724,000 in general and administrative, partially offset by a non-cash gain on the derivative warrant liability of $554,000 for the three-month period ended June 30, 2017 reflecting changes in the fair market value of the derivative warrant liability. Excluding the impact of the derivative warrant liability, adjusted net loss for the three-month period ended June 30, 2017 was $6.9 million, or $0.22 per diluted share, compared to adjusted net loss of $5.8 million, or $0.18 per diluted share, for the three-month period ended June 30, 2016.

The Company ended the quarter with $21.8 million of cash, cash equivalents, and marketable securities.

For the six-month period ended June 30, 2017, the Company reported a net loss of approximately $12.7 million, or $0.40 per diluted share, compared to a net loss of $11.8 million or $0.39 per diluted share, for the six-month period ended June 30, 2016. The results for the six-month period ended June 30, 2017 were unfavorably impacted by increases in operating expenses of $1.2 million in research and development and $1.0 in general and administrative, partially offset by a non-cash gain on the derivative warrant liability of $795,000 for the six-month period ended June 30, 2017 reflecting changes in the fair market value of the derivative warrant liability. Excluding the impact of the derivative warrant liability, adjusted net loss for the six-month period ended June 30, 2017 was $13.5 million, or $0.42 per diluted share, compared to adjusted net loss of $11.4 million, or $0.37 per diluted share, for the six-month period ended June 30, 2016.

Adjusted net loss and adjusted net loss per share are non-GAAP financial measures that exclude the impact of the derivative warrant liability. A reconciliation of these measures to the comparable GAAP measure is included with the tables contained in this release. The Company believes a presentation of these non-GAAP measures provides useful information to investors to better understand the Company’s operations, on a period-to-period comparable basis, with financial amounts both including and excluding the identified items.

About The INSPIRE Study

The INSPIRE Study: InVivo Study of Probable Benefit of the Neuro-Spinal Scaffold™ for Safety and Neurologic Recovery in Subjects with Complete Thoracic AIS A Spinal Cord Injury, is designed to demonstrate the safety and probable benefit of the Neuro-Spinal Scaffold™ for the treatment of complete T2-T12/L1 spinal cord injury in support of a Humanitarian Device Exemption (HDE) application for approval. For more information, refer to https://clinicaltrials.gov/ct2/show/study/NCT02138110.

About the Neuro-Spinal Scaffold™ Implant

Following acute spinal cord injury, surgical implantation of the biodegradable Neuro-Spinal Scaffold™ within the decompressed and debrided injury epicenter is intended to support appositional healing, thereby reducing post-traumatic cavity formation, sparing white matter, and allowing neural repair within and around the healed wound epicenter. The Neuro-Spinal Scaffold™, an investigational device, has received a Humanitarian Use Device (HUD) designation and currently is being evaluated in The INSPIRE Study for the treatment of patients with acute, complete (AIS A), thoracic traumatic spinal cord injury and a pilot study for acute, complete (AIS A), cervical (C5-T1) traumatic spinal cord injury. For more information on the cervical study, refer to https://clinicaltrials.gov/ct2/show/study/NCT03105882.

About InVivo Therapeutics

Safe Harbor Statement

Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements within the meaning of the federal securities laws. These statements can be identified by words such as “believe,” “anticipate,” “intend,” “estimate,” “will,” “may,” “should,” “expect,” “designed to,” “potentially,” and similar expressions, and include statements regarding the safety and effectiveness of the Neuro-Spinal Scaffold™ and the status of the clinical program, including the changes to the INSPIRE protocol, the timing for re-opening enrollment in the INSPIRE Study and the submission of an HDE application to the FDA. Any forward-looking statements contained herein are based on current expectations, and are subject to a number of risks and uncertainties. Factors that could cause actual future results to differ materially from current expectations include, but are not limited to, risks and uncertainties relating to the company’s ability to successfully open additional clinical sites for enrollment and to enroll additional patients; the timing of the Institutional Review Board process; the expected benefits and efficacy of the company’s products and technology in connection with the treatment of spinal cord injuries; the availability of substantial additional funding for the company to continue its operations and to conduct research and development, clinical studies and future product commercialization; and other risks associated with the company’s business, research, product development, regulatory approval, marketing and distribution plans and strategies identified and described in more detail in the company’s Quarterly Report of the three months ended June 30, 2017, and its other filings with the SEC, including the company’s Form 10-Qs and current reports on Form 8-K. The company does not undertake to update these forward-looking statements.


InVivo Therapeutics Holdings Corp.
Consolidated Balance Sheets
Unaudited

	As of
	June 30, 2017		December 31, 2016
ASSETS:

Current assets:
Cash and cash equivalents	14,322		21,464
Restricted cash	361		361
Marketable securities	7,525		11,577
Prepaid expenses and other current assets	657		451
Total current assets	22,865		33,853
Property, equipment and leasehold improvements, net	305		510
Other assets	409		421
Total assets	23,579		34,784

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Current liabilities:
Accounts payable	878		1,011
Loan payable, current portion	437		423
Derivative warrant liability	519		1,314
Deferred rent, current portion	154		141
Accrued expenses	1,893		1,959
Total current liabilities	3,881		4,848
Loan payable, net of current portion	630		852
Deferred rent, net of current portion	54		135
Other liabilities	45		—
Total liabilities	4,610		5,835

Stockholders’ equity:
Common stock, $0.00001 par value, authorized 100,000,000 shares; 32,175,179 shares issued and outstanding at June 30, 2017; 32,044,087 shares issued and outstanding at December 31, 2016	1		1
Accumulated other comprehensive loss	(1	)	—
Additional paid-in capital	188,862		185,955
Accumulated deficit	(169,893	)	(157,007	)
Total stockholders’ equity	18,969		28,949
Total liabilities and stockholders’ equity	23,579		34,784


InVivo Therapeutics Holdings Corp. Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Operating expenses:
Research and development	3,211		2,795		6,595		5,364
General and administrative	3,715		2,991		7,000		5,990
Total operating expenses	6,926		5,786		13,595		11,354
Operating loss	(6,926	)	(5,786	)	(13,595	)	(11,354	)

Other income (expense):
Interest income	52		36		109		91
Interest expense	(20	)	(29	)	(40	)	(92	)
Derivatives gain (loss)	554		595		795		(452	)
Other income (expense), net	586		602		864		(453	)
Net loss	(6,340	)	(5,184	)	(12,731	)	(11,807	)
Net loss per share, basic and diluted	(0.20	)	(0.16	)	(0.40	)	(0.39	)
Weighted average number of
common shares outstanding, basic and diluted	32,185,607		31,907,747		32,115,328		30,039,677

Other comprehensive loss:
Net loss	(6,340	)	(5,184	)	(12,731	)	(11,807	)
Other comprehensive loss:
Unrealized gain (loss) on marketable securities	1		—		(1	)	—
Comprehensive loss	(6,339	)	(5,184	)	(12,732	)	(11,807	)


Reconciliation of GAAP to non-GAAP measures
InVivo Therapeutics Holdings Corp.
(In thousands, except share and per share data)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Reported GAAP net income (loss)	(6,340	)	(5,184	)	(12,731	)	(11,807	)
Add Back: Derivative (Gain)/ Loss	(554	)	(595	)	(795	)	452
Adjusted Net Loss	(6,894	)	(5,779	)	(13,526	)	(11,355	)

Reported GAAP net loss per diluted share	(0.20	)	(0.16	)	(0.40	)	(0.39	)
Derivative loss per diluted share	(0.02	)	(0.02	)	(0.02	)	0.02
Adjusted net loss per diluted share	(0.22	)	(0.18	)	(0.42	)	(0.37	)

Contacts

InVivo Therapeutics Holdings Corp.
Heather Hamel, 617-863-5530
Investor Relations
Investor-relations@invivotherapeutics.com

RTI Surgical® Announces 2017 Second Quarter Results

Posted On August 8, 2017 By OrthoSpineNews In Financial /

August 08, 2017

ALACHUA, Fla.–(BUSINESS WIRE)–RTI Surgical Inc. (RTI) (Nasdaq: RTIX), a global surgical implant company, reported operating results for the second quarter of 2017. RTI has delivered two consecutive quarters of revenue growth as its initiatives to transform the business continue to yield improving operating performance.

In the second quarter 2017, as described in greater detail below, each of RTI’s businesses generated top-line growth, including its commercial business, which continues to show signs of stabilization. RTI also delivered double-digit revenue growth across its direct business, including its spine, surgical specialties and cardiothoracic segments, as well as continued revenue growth in its sports medicine and orthopedics segment and its International business.

“We are making tangible progress toward our plan to transform RTI and return it to a path of solid, predictable and sustainable growth,” said Camille Farhat, chief executive officer, RTI. “While we are still in the early phase of this effort and there is more work to do, we are beginning to accomplish what we set out to achieve. Our Commercial business continues to stabilize, our direct business delivered another quarter of strong performance and our Spine business continues to grow at above-market rates. We are encouraged by our strong second quarter results and remain laser-focused on implementing our strategic initiatives and generating value for our employees, customers and shareholders.”

As previously announced, RTI’s management has been implementing a series of initiatives to reduce complexity, drive operational excellence, and accelerate growth to position the company for long-term and sustainable profitability. As part of these initiatives, RTI has appointed Paul Montague as Head of Human Resources and Enrico Sangiorgio to lead the company’s international operations. Mr. Montague brings more than 15 years of global experience in senior human resources roles to RTI and Mr. Sangiorgio’s nearly two decades of leadership positions with European healthcare organizations will be instrumental in growing RTI’s International platform. The company is also actively recruiting for its top two R&D positions.

As part of its focus to reduce complexity, RTI recently completed the previously announced sale of substantially all the assets of its cardiothoracic closure business to an affiliate of A&E Medical Corporation for total consideration of up to $60 million in cash. Concurrent with the sale of the business, RTI entered into a multi-year Contract Manufacturing agreement whereby RTI will continue to support the cardiothoracic business under A&E Medical’s ownership through the manufacturing of existing products and the engineering, development and manufacturing of potential new products in the future.

RTI used the majority of the proceeds from the sale, net of transaction fees and anticipated taxes, to reduce its term loan, as it extended the maturity of its existing credit facilities. The transaction was made possible by RTI’s success growing its cardiothoracic closure business by a compounded annual growth rate of more than 25% over the last five years, through a focused R&D and disciplined direct channel strategy, and demonstrates RTI’s proven ability to create value in OEM product lines. The sale of the cardiothoracic closure business represents an important action toward RTI’s stated goals to reduce complexity in its business and devote resources to those businesses, products and markets with the greatest growth potential.

“Longer-term, our focus will continue to be to: 1) simplify our business to manage costs, specifically in tissue acquisition and processing, 2) deepen our investments in our people with a focus on R&D to accelerate growth and innovation, and 3) ensure a culture of disciplined execution to achieve sustainable profitability,” said Mr. Farhat. “The sale of our cardiothoracic closure business during the quarter was an important first step toward our effort of enhancing RTI’s platform for operational excellence. We are committed to further streamlining our business and evaluating strategic growth opportunities so that we can devote resources to the areas that align best with our long-term growth aspiration. With our talented team, dedication to our customers and innovative products, I am optimistic that RTI is on the right path to success.”

Second Quarter 2017

RTI worldwide revenues were $72.1 million for the second quarter of 2017, an increase of 7 percent. Direct revenues were $43.6 million for the second quarter of 2017, an increase of 10 percent compared to the second quarter of 2016, with double-digit growth reported in RTI’s spine, surgical specialties and cardiothoracic direct business segments. Commercial/other revenues were $28.6 million for the second quarter of 2017, an increase of 2 percent compared to the second quarter of 2016.

Net loss applicable to common shares of $2.6 million in the second quarter of 2017, or $0.04 per fully diluted common share, primarily due to a previously disclosed pre-tax charge for severance-related expenses totaling $3.4 million. As outlined in the reconciliation tables that follow, excluding these charges, adjusted net income applicable to common shares was $965,000 and adjusted net income per fully diluted common share was $0.02.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) were $8.3 million, or 11 percent of second quarter revenue.

Fiscal 2017 Outlook

The company has developed its guidance based on its ongoing restructuring and operational improvement program, its current business profile and existing market conditions.

Within this context, based on second quarter results and the transition of the cardiothoracic closure business from a direct business to a commercial business as a result of the sale, RTI expects full year revenues for 2017 to be between $274 million and $280 million compared to prior guidance of between $274 million and $285 million, with direct revenues anticipated to grow low-to-mid single digits on a percentage basis compared to 2016, while commercial/other revenues are expected to be relatively flat on a percentage basis.

As detailed in the reconciliation provided later in this release, excluding the severance-related expenses in the first half of 2017, the expected third quarter 2017 gain on the sale of the cardiothoracic closure business, and including the transition of the cardiothoracic closure business from a direct business to a commercial business as a result of the sale, RTI expects adjusted full year net income per fully diluted common share to be between $0.04 and $0.08 compared to prior guidance of between $0.05 and $0.10, based on 60 million fully diluted shares outstanding.

RTI will continue to evaluate its operating platform throughout the year and will update its top and bottom line guidance as its actions might warrant.

Conference Call

RTI will host a conference call and simultaneous audio webcast to discuss its second quarter 2017 results at 8:30 a.m. ET today. The conference call can be accessed by dialing (877) 383-7419. The webcast can be accessed through the investor section of RTI’s website at www.rtix.com. A replay of the conference call will be available on the RTI website following the call.

About RTI Surgical Inc.

RTI Surgical is a leading global surgical implant company providing surgeons with safe biologic, metal and synthetic implants. Committed to delivering a higher standard, RTI’s implants are used in sports medicine, general surgery, spine, orthopedic, trauma and cardiothoracic procedures and are distributed in nearly 50 countries. RTI is headquartered in Alachua, Fla., and has four manufacturing facilities throughout the U.S. and Europe. RTI is accredited in the U.S. by the American Association of Tissue Banks and is a member of AdvaMed. For more information, please visit www.rtix.com.

Forward Looking Statement

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations, estimates and projections about our industry, our management’s beliefs and certain assumptions made by our management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, except for historical information, any statements made in this communication about anticipated financial results, growth rates, new product introductions, future operational improvements and results or regulatory actions or approvals or changes to agreements with distributors also are forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties, including the risks described in public filings with the U.S. Securities and Exchange Commission (SEC). Our actual results may differ materially from the anticipated results reflected in these forward-looking statements. Copies of the company’s SEC filings may be obtained by contacting the company or the SEC or by visiting RTI’s website at www.rtix.com or the SEC’s website at www.sec.gov.


RTI SURGICAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except share and per share data)


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
		2017			2016			2017			2016
Revenues	$	72,120		$	67,620		$	142,059		$	134,971
Costs of processing and distribution		35,157			33,671			69,317			64,997
Gross profit		36,963			33,949			72,742			69,974

Expenses:
Marketing, general and administrative		29,496			28,402			59,167			55,954
Research and development		3,740			4,084			7,428			8,245
Severance charges		3,400			711			7,803			711
Restructuring charges		–			1,107			–			1,107
Contested proxy expenses		–			2,372			–			2,680
Total operating expenses		36,636			36,676			74,398			68,697
Operating income (loss)		327			(2,727	)		(1,656	)		1,277
Total other expense – net		(990	)		(424	)		(1,789	)		(738	)
(Loss) income before income tax (provision) benefit		(663	)		(3,151	)		(3,445	)		539
Income tax (provision) benefit		(1,026	)		859			(116	)		(430	)
Net (loss) income		(1,689	)		(2,292	)		(3,561	)		109
Convertible preferred dividend		(924	)		(870	)		(1,834	)		(1,728	)
Net loss applicable to common shares	$	(2,613	)	$	(3,162	)	$	(5,395	)	$	(1,619	)

Net loss per common share – basic	$	(0.04	)	$	(0.05	)	$	(0.09	)	$	(0.03	)
Net loss per common share – diluted	$	(0.04	)	$	(0.05	)	$	(0.09	)	$	(0.03	)
Weighted average shares outstanding – basic		58,935,786			58,215,477			58,715,791			58,065,185
Weighted average shares outstanding – diluted		58,935,786			58,215,477			58,715,791			58,065,185


RTI SURGICAL, INC. AND SUBSIDIARIES
Reconciliation of Net (Loss) Income Applicable to Commons Shares to Adjusted EBITDA
(Unaudited, in thousands)


	For the Three Months						For the Six Months
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016
Net (loss) income	$	(2,613	)	$	(3,162	)	$	(5,395	)	$	(1,619	)
Interest expense, net		915			386			1,734			746
Provision for income taxes		1,026			(859	)		116			430
Depreciation		2,652			3,454			5,324			6,836
Amortization of intangible assets		909			930			1,805			1,858
EBITDA		2,889			749			3,584			8,251
Reconciling items for Adjusted EBITDA
Preferred dividend		924			870			1,834			1,728
Non-cash stock based compensation		974			600			1,808			1,100
Foreign exchange gain		75			38			55			(8	)
Other reconciling items(1)
Severance charges excluding stock based compensation		3,400			711			7,470			711
Restructuring charges		–			1,107			–			1,107
Contested proxy expenses		–			2,372			–			2,680
Adjusted EBITDA	$	8,262		$	6,447		$	14,751		$	15,569
Adjusted EBITDA as a percent of revenues		11	%		10	%		10	%		12	%


(1)See explanations in Use of Non-GAAP Financial Measures section later in this release.


RTI SURGICAL, INC. AND SUBSIDIARIES
Reconciliation of Net Loss Applicable to Common Shares and Net Loss Per Diluted Share to
Adjusted Net Income (Loss) Applicable to Common Shares and Adjusted Net Income (Loss) Per Diluted Share
(Unaudited, in thousands, except per share data)

	For the Three Months Ended
	June 30, 2017						June 30, 2016
	Net Income Applicable to Common Shares			Amount per Diluted Share			Net Income Applicable to Common Shares			Amount per Diluted Share



As reported	$	(2,613	)	$	(0.04	)	$	(3,162	)	$	(0.05	)
Severance charges		3,400			0.06			711			0.01
Restructuring charges		–			–			1,107			0.02
Contested proxy expenses		–			–			2,372			0.04
Tax effect on adjustments		178			0.00			(1,237	)		(0.02	)
Adjusted *	$	965		$	0.02		$	(209	)	$	(0.00	)

	For the Six Months Ended
	June 30, 2017						June 30, 2016
	Net Income Applicable to Common Shares			Amount per Diluted Share			Net Income Applicable to Common Shares			Amount per Diluted Share



As reported	$	(5,395	)	$	(0.09	)	$	(1,619	)	$	(0.03	)
Severance charges		7,803			0.13			711			0.01
Restructuring charges		–			–			1,107			0.02
Contested proxy expenses		–			–			2,680			0.05
Tax effect on adjustments		(1,304	)		(0.02	)		(1,355	)		(0.02	)
Adjusted *	$	1,104		$	0.02		$	1,524		$	0.03


* See explanations in Use of Non-GAAP Financial Measures section later in this release.
Amount Per Diluted Share may not foot due to rounding.

Fiscal 2017 Outlook

Full year net income per fully diluted common share is expected to be in the range of $0.00 to $0.04, based on 60 million fully diluted shares outstanding. Excluding severance charges taken in 2017, full year net income per fully diluted common share is expected to be in the range of $0.04 to $0.08.


RTI SURGICAL, INC. AND SUBSIDIARIES
Reconciliation of GAAP Guidance Net Income Per Common Share – Diluted to
Adjusted Non-GAAP Guidance Net Income Per Common Share – Diluted
(Unaudited)


		Twelve Months Ended
		December 31, 2017
		$ Amount
		Per Common
		Share – Diluted
GAAP Guidance Net Income Per Common Share – Diluted		$ 0.00 – 0.04
Severance charges, net of tax effect		0.04
Adjusted Non-GAAP Guidance Net Income Per Common Share – Diluted		$ 0.04 – 0.08

Use of Non-GAAP Financial Measures

To supplement the Company’s unaudited condensed consolidated financial statements presented on a GAAP basis, the Company discloses certain non-GAAP financial measures that exclude certain amounts, including Adjusted EBITDA, Adjusted Net Income Applicable to Common Shares and Adjusted Net Income per Common Share – Diluted. The calculation of the tax effect on the adjustments between GAAP net (loss) income applicable to common shares and non-GAAP net income applicable to common shares is based upon our estimated annual GAAP tax rate, adjusted to account for items excluded from GAAP net (loss) income applicable to common shares in calculating Adjusted Net Income Applicable to Common Shares-Diluted. A reconciliation of the non-GAAP financial measures to the corresponding GAAP measures is included in the tables listed above.

The following is an explanation of the adjustments that management excluded as part of adjusted measures for the three and six month period ended June 30, 2017 and 2016 as well as the reason for excluding the individual items:

(1) Severance charges – This adjustment represents charges relating to the termination of former employees. Management removes the amount of these costs from our operating results to supplement a comparison to our past operating performance.

(2) Restructuring charges – This adjustment represents the closure of our French distribution and tissue procurement office. Management removes the amount of these costs from our operating results to supplement a comparison to our past operating performance.

(3) Contested proxy expenses – This adjustment represent charges relating to contested proxy expenses. Management removes the amount of these costs from our operating results to supplement a comparison to our past operating performance.

Material Limitations Associated with the Use of Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted Net Income Applicable to Common Shares and Adjusted Net Income per Common Share – Diluted should not be considered in isolation, or as a replacement for GAAP measures.

Usefulness of Non-GAAP Financial Measures to Investors

The Company believes that presenting Adjusted EBITDA, Adjusted Net Income Applicable to Common Shares and Adjusted Net Income per Common Share – Diluted in addition to the related GAAP measures provide investors greater transparency to the information used by management in its financial decision-making. The Company further believes that providing this information better enables the Company’s investors to understand the Company’s overall core performance and to evaluate the methodology used by management to assess and measure such performance.


RTI SURGICAL, INC. AND SUBSIDIARIES
Condensed Consolidated Revenues
(Unaudited, in thousands)


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016

Revenues:
Spine	$	19,419	$	17,645	$	39,757	$	34,739
Sports medicine and orthopedics		12,997		12,562		25,893		25,082
Surgical specialties		1,456		802		3,236		1,817
Cardiothoracic		3,673		2,905		6,824		5,439
International		6,005		5,663		11,662		11,180
Subtotal direct		43,550		39,577		87,372		78,257
Global commercial		25,837		24,769		49,418		50,099
Other revenues		2,733		3,274		5,269		6,615
Total revenues	$	72,120	$	67,620	$	142,059	$	134,971


RTI SURGICAL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)

	June 30,			December 31,
	2017			2016
Assets
Cash and cash equivalents	$	13,675		$	13,849
Accounts receivable – net		39,099			41,488
Inventories – net		116,773			119,743
Prepaid and other current assets		6,177			5,213
Assets held for sale		1,750			–
Total current assets		177,474			180,293

Property, plant and equipment – net		84,379			83,298
Goodwill		54,887			54,887
Other assets – net		49,854			49,553
Total assets	$	366,594		$	368,031

Liabilities and Stockholders’ Equity
Accounts payable	$	27,745		$	26,112
Accrued expenses and other current liabilities		25,668			26,772
Current portion of long-term obligations		5,779			6,080
Total current liabilities		59,192			58,964

Deferred revenue		6,176			6,612
Long-term liabilities		75,201			77,523
Total liabilities		140,569			143,099

Preferred stock, including accrued dividends		61,941			60,016

Stockholders’ equity:
Common stock and additional paid-in capital		417,886			416,570
Accumulated other comprehensive loss		(6,903	)		(8,316	)
Accumulated deficit		(246,899	)		(243,338	)
Total stockholders’ equity		164,084			164,916
Total liabilities and stockholders’ equity	$	366,594		$	368,031


RTI SURGICAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)

	For the Three Months						For the Six Months
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016
Cash flows from operating activities:
Net (loss) income	$	(1,689	)	$	(2,292	)	$	(3,561	)	$	109
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization expense		3,561			4,384			7,129			8,694
Stock-based compensation		974			600			1,808			1,100
Amortization of deferred revenue		(1,186	)		(1,217	)		(2,460	)		(2,434	)
Other items to reconcile to net cash provided by operating activities		(624	)		5,311			7,697			5,740
Net cash provided by operating activities		1,036			6,786			10,613			13,209
Cash flows from investing activities:
Purchases of property, plant and equipment		(3,877	)		(4,766	)		(7,160	)		(9,403	)
Patent and acquired intangible asset costs		(1,526	)		(195	)		(1,845	)		(1,391	)
Net cash used in investing activities		(5,403	)		(4,961	)		(9,005	)		(10,794	)
Cash flows from financing activities:
Proceeds from long-term obligations		2,000			4,000			4,000			7,000
Net payments from short-term obligations		–			(600	)		–			(849	)
Payments on long-term obligations		(3,125	)		(4,166	)		(7,375	)		(8,299	)
Other financing activities		1,467			14			1,433			(94	)
Net cash provided by (used in) financing activities		342			(752	)		(1,942	)		(2,242	)
Effect of exchange rate changes on cash and cash equivalents		102			(47	)		160			(33	)
Net (decrease) increase in cash and cash equivalents		(3,923	)		1,026			(174	)		140
Cash and cash equivalents, beginning of period		17,598			11,728			13,849			12,614
Cash and cash equivalents, end of period	$	13,675		$	12,754		$	13,675		$	12,754

Contacts

RTI Surgical Inc.
Robert Jordheim
Chief Financial Officer
rjordheim@rtix.com
or
Roxane Wergin, 386-418-8888
Director, Corporate Communications
rwergin@rtix.com