MedTech Industry Lost Nearly 29k Jobs While Device Tax In Effect

Posted On February 10, 2017 By OrthoSpineNews In Financial /

February 8, 2017

WASHINGTON, D.C. – The U.S. medical technology industry saw its jobs ranks fall by nearly 29,000 while the medical device excise tax was in effect, according to the latest figures from the U.S. Department of Commerce. Specifically, from 2012 to 2015, the number of U.S. medtech jobs declined from 401,472 to 372,638 – a loss of 28,834 jobs or a 7.2 percent decrease for the time period.

“These numbers reveal just how devastating of an impact the device tax had on our industry and underscore the urgent need for permanent repeal,” said Scott Whitaker, president and CEO of the Advanced Medical Technology Association (AdvaMed). “At a time when American device manufacturers are ready to grow and create jobs, the best message this Congress and the Administration can send is through a full and permanent repeal.”

Based on data updated by the Commerce Department last month (Jan. 19), the chart below shows year-to-year changes, with job losses beginning to drop in 2012 in anticipation of the device tax going into effect the next year. The drop rapidly accelerated in 2014 with an additional reduction of 27,022 job losses. The medical device tax was suspended for two years beginning late 2015.

Annual Change in Total Medtech Employment: 2010-2015

Year	Total Medtech Jobs	Y-o-Y Change	Y-o-Y % Change
2010	400,232
2011	401,820	1,588	0.4%
2012	401,472	-348	-0.1%
2013	397,058	-4,414	-1.1%
2014	370,036	-27,022	-6.8%
2015	372,638	2,602	0.7%

Medtech Job Losses from 2012 to 2015 US Dept. of Commerce		-28,834	-7.2%

Last month, AdvaMed released data showing just how the industry was re-investing and producing jobs in the wake of the tax’s suspension, even as analysts were predicting greater growth with full repeal.

“While it was a positive step, suspending the device tax is only a half measure,” Whitaker warned. “For medtech companies to plan for further job creation and development of the next generation of treatments and cures, they need the certainty that this onerous tax will be gone for good.

“Bipartisan majorities in both the House and Senate are on record in support of full and permanent repeal. There is no reason for delay. We urge the Congress and Administration to take action now.”

PRESS RELEASE

CONTACT:

Mark E. Brager

202-434-7244

mbrager@advamed.org

NuVasive Reports Fourth Quarter And Full Year 2016 Financial Results

Posted On February 9, 2017 By OrthoSpineNews In Financial /

SAN DIEGO, Feb. 9, 2017 /PRNewswire/ — NuVasive, Inc. (NASDAQ: NUVA), a leading medical device company focused on transforming spine surgery with minimally disruptive, procedurally-integrated solutions, announced today financial results for the quarter and full year ended December 31, 2016. Key performance highlights included:

Fourth Quarter 2016 Highlights:

Revenue increased 25.9% to $271.1 million, or 25.5% on a constant currency basis;
GAAP operating profit margin of 11.1%; Non-GAAP operating profit margin up 90 basis points to 18.0%; and
GAAP diluted earnings per share of $0.11; Non-GAAP diluted earnings per share increase of 51.4% to $0.53.

Full Year 2016 Highlights:

Revenue increased 18.6% to $962.1 million, or 18.4% on a constant currency basis;
GAAP operating profit margin of 12.8%; Non-GAAP operating profit margin up 70 basis points to 16.1%; and
GAAP diluted earnings per share of $0.69; Non-GAAP diluted earnings per share increase of 26.7% to $1.66.

“NuVasive delivered record fourth quarter results and exceeded expectations for the full year 2016. By all measures, the Company had a tremendous year executing against our market-share taking initiatives, delivering strong revenue growth, including a return to 20% year-over-year growth in our core International markets. We exceeded our profitability targets and integrated strategic acquisitions to augment our leadership in spine and deliver the substantial growth we forecasted as part of the deal models,” said Gregory T. Lucier, chairman and chief executive officer of NuVasive. “In 2017, we are committed to driving further market expansion, especially in the spine deformity area, while significantly increasing our in-sourced manufacturing capabilities and focusing on streamlining our operations to drive scale and profitability in our business.”

A full reconciliation of non-GAAP to GAAP measures can be found in the tables of this news release.

Fourth Quarter 2016 Results NuVasive reported fourth quarter 2016 total revenue of $271.1 million, a 25.9% increase compared to $215.3 million for the fourth quarter 2015. On a constant currency basis, fourth quarter 2016 total revenue increased 25.5% compared to the same period last year.

Gross profit for the fourth quarter 2016 was $204.2 million on a GAAP and non-GAAP basis, while GAAP and non-GAAP gross margin was 75.3%. These results compared to gross profit of $164.0 million on a GAAP and non-GAAP basis, and GAAP and non-GAAP gross margin of 76.2% for the fourth quarter 2015. Total GAAP and non-GAAP operating expenses for the fourth quarter 2016 were $174.1 million and $155.4 million, respectively. These results compared to GAAP and non-GAAP operating expenses of $134.5 million and $127.3 million, respectively, for the fourth quarter 2015.

The Company reported a GAAP net income of $6.4 million, or $0.11 per share, for the fourth quarter 2016 compared to a GAAP net income of $11.5 million, or $0.22 per share, for the fourth quarter 2015. On a non-GAAP basis, the Company reported net income of $27.6 million, or $0.53 per share, for the fourth quarter 2016 compared to net income of $18.0 million, or $0.35 per share, for the fourth quarter 2015.

Full Year 2016 Results NuVasive reported full year 2016 total revenue of $962.1 million, an 18.6% increase compared to $811.1 million for the full year 2015. On a constant currency basis, full year 2016 total revenue increased 18.4% compared to the same period last year.

Total GAAP and non-GAAP gross profit for the full year 2016 was $722.0 million and $736.7 million, respectively, while GAAP and non-GAAP gross margin of 75.0% and 76.6%, respectively. These results compared to gross profit of $616.6 million on a GAAP and non-GAAP basis and a GAAP and non-GAAP gross margin of 76.0% for the full year 2015. Total GAAP and non-GAAP operating expenses for the full year 2016 were $598.5 million and $581.6 million, respectively. These results compared to $477.6 million and $492.0 million, respectively, for the full year 2015.

The Company reported a GAAP net income of $37.1 million, or $0.69 per share, for the full year 2016 compared to a GAAP net income of $66.3 million, or $1.26 per share, for the full year 2015. On a non-GAAP basis, the Company reported net income of $86.5 million, or $1.66 per share, for the full year 2016 compared to net income of $66.9 million, or $1.31 per share, for the full year 2015.

Cash, cash equivalents and short and long-term marketable securities were approximately $153.6 million at December 31, 2016.

Annual Financial Guidance for 2017 The Company provided the following updated projections to its full year 2017 guidance:


		2017 Guidance ¹
	(in Million’s; except %’s and EPS)	GAAP	Non-GAAP
	Revenue	$ 1,065	$ 1,065
	% Growth – Reported	10.7%	10.7%
	% Growth – Constant Currency ²		11.7%
	Operating margin	12.6%	17.1%
	Earnings per share	$ 1.16	$ 2.00
	EBITDA	23.6%	26.7%
	Tax Rate	~35%	~35%

¹	Current guidance reflects guidance provided February 9, 2017, as updated for the expected changes in currency.

²	Constant currency is a measure that adjusts US GAAP revenue for the impact of currency over the same period in the prior year.

Revenue of $1.065 billion, which includes approximately $10 million in year-over-year currency headwinds, and reflects 10.7% growth on a reported basis and 11.7% growth on a constant currency basis compared to revenue of $962.1 million for 2016;
Non-GAAP diluted earnings per share of $2.00, an increase of 20% compared to non-GAAP diluted earnings per share of $1.66 for 2016;
Non-GAAP operating profit margin of 17.1%, an increase of 100 basis points compared to 16.1% for 2016; and
Adjusted EBITDA margin of 26.7%, an increase of 150 basis points compared to 25.2% for 2016.

Supplementary Financial Information For additional financial detail, please visit the Investor Relations section of the Company’s website at www.nuvasive.com to access Supplementary Financial Information.


Reconciliation of Full Year EPS Guidance
		2016 Actuals	2017 Guidance ¹
	GAAP net income per share	$ 0.69	$ 1.16
	Impact of change to diluted share count	0.02	0.07
	GAAP net income per share, adjusted to diluted Non-GAAP share count	$ 0.71	$ 1.23
	Litigation liability gain	(0.83)	–
	Business transition costs ²	0.35	0.05
	Non-cash interest expense on convertible notes	0.38	0.33
	Non-cash purchase accounting adjustments on acquisitions ³	0.28	–
	Loss on repurchase of convertible notes	0.37	–
	Amortization of intangible assets ⁴	0.78	0.83
	Tax effect of adjustments ⁵	(0.38)	(0.44)
	Non-GAAP earnings per share	$ 1.66	$ 2.00

	GAAP Weighted shares outstanding – basic	50,077	50,967
	GAAP Weighted shares outstanding – diluted	54,102	56,269
	Non-GAAP Weighted shares outstanding – diluted	51,981	53,069

¹	Current guidance reflects guidance provided February 9, 2017, as updated for the expected changes in currency. Effective tax expense rate of ~35% applied to GAAP earnings and ~35% applied to Non-GAAP earnings.

²	Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities.

³	Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.

⁴	Excludes the amortization associated with non-controlling interest.

⁵	The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. The Company also includes those adjustments that would have benefited the tax rate in lieu of the above adjustments as part of the Company’s tax filings. The impact of the changes to the tax rate results in an annual estimated rate of ~35% on a non-GAAP basis.


Reconciliation of Non-GAAP Operating Margin %

	(in thousands, except %)	2016 Actuals	2017 Guidance ¹
	Non-GAAP Gross Margin % [A]	76.6%	76.1%
	Non-cash purchase accounting adjustments on acquisitions ²	(1.5%)	0.0%
	GAAP Gross Margin [B]	75.0%	76.1%

	GAAP & Non-GAAP Sales, Marketing & Administrative Expense [C]	55.5%	54.0%

	Non-GAAP Research & Development Expense [D]	5.0%	5.0%
	In-process research & development	0.0%	0.0%
	GAAP Research & Development Expense [E]	5.0%	5.0%

	Litigation liability [F]	(4.5%)	0.0%
	Amortization of intangible assets [G] ³	4.4%	4.3%
	Business transition costs [H] ⁴	1.9%	0.3%

	Non-GAAP Operating Margin % [A – C – D]	16.1%	17.1%

	GAAP Operating Margin % [B – C – E – F – G – H]	12.8%	12.6%

¹	Current guidance reflects guidance provided February 9, 2017, as updated for the expected changes in currency.

²	Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.

³	Excludes the amortization associated with non-controlling interest.

⁴	Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities.


Reconciliation of EBITDA %

	(in thousands, except %)	2016 Actuals	2017 Guidance ¹
	Net Income / (Loss)	3.9%	6.1%
	Interest (income) / expense, net ²	6.1%	3.5%
	Provision for income taxes	3.0%	3.1%
	Depreciation and amortization ³	10.5%	10.8%
	EBITDA	23.5%	23.6%
	Non-cash stock based compensation	2.8%	2.9%
	Business transition costs ⁴	1.9%	0.3%
	Non-cash purchase accounting adjustments on acquisitions ⁵	1.5%	0.0%
	In-process research & development	0.0%	0.0%
	Litigation liability gain	(4.5%)	0.0%
	Adjusted EBITDA	25.2%	26.7%

¹	Current guidance reflects guidance provided February 9, 2017, as updated for the expected changes in currency.

²	Interest (income) / expense, net for the quarter and year ended December 31, 2016 includes loss on extinguishment of debt for $1.6 million and $19.1 million, respectively.

³	Excludes the amortization associated with non-controlling interest.
⁴	Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities.

⁵	Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.

Reconciliation of Non-GAAP Information

Management uses certain non-GAAP financial measures such as non-GAAP earnings per share, non-GAAP net income, non-GAAP operating expenses and non-GAAP operating profit margin, which exclude amortization of intangible assets, leasehold related charges, integration related expenses associated with acquired businesses, one-time restructuring and acquisition related items, CEO transition related costs, certain litigation charges and non-cash interest expense (excluding debt issuance cost) and or losses on convertible notes. Management also uses certain non-GAAP measures which are intended to exclude the impact of foreign exchange currency fluctuations. The measure constant currency is the use of an exchange rate that eliminates fluctuations when calculating financial performance numbers.

The Company also uses measures such as free cash flow, which represents cash flow from operations less cash used in the acquisition and disposition of capital. Additionally, the Company uses an adjusted EBITDA measure which represents earnings before interest, taxes, depreciation and amortization and excludes the impact of stock-based compensation, leasehold related charges, integration related expenses associated with acquired businesses, CEO transition related costs, certain litigation liabilities, acquisition related items and other significant one-time items. Management calculates the non-GAAP financial measures provided in this earnings release excluding these costs and uses these non-GAAP financial measures to enable it to further and more consistently analyze the period-to-period financial performance of its core business operations. Management believes that providing investors with these non-GAAP measures gives them additional information to enable them to assess, in the same way management assesses, the Company’s current and future continuing operations. These non-GAAP measures are not in accordance with, or an alternative for, GAAP, and may be different from non-GAAP measures used by other companies. Set forth below are reconciliations of the non-GAAP financial measures to the comparable GAAP financial measure.


Reconciliation of Fourth Quarter 2016 Results
GAAP Net Income per Share to Non-GAAP Earnings per Share

	(in thousands, except per share data)	Adjustments	Diluted Earnings Per Share
	GAAP net income	$ 6,376	$ 0.11

	Loss on extinguishment of debt	1,641
	Business transition costs ¹	6,624
	Non-cash interest expense on convertible notes	4,992
	Amortization of intangible assets ²	11,767
	Tax effect of adjustments ³	(3,843)
	Adjustments to GAAP net income	21,181
	Non-GAAP earnings	$ 27,557	$ 0.53


	GAAP weighted shares outstanding – diluted		55,913
	Non-GAAP weighted shares outstanding – diluted		52,399

¹	Costs related to acquisition, integration and business transition activities which includes severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities.

²	Excludes the amortization associated with non-controlling interest.

³	The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. The Company also includes those adjustments that would have benefited the tax rate in lieu of the above adjustments as part of the Company’s tax filings. The impact of the changes to the tax rate results in an annual estimated rate of 37% on a non-GAAP basis. The result of these adjustments is a change in the annual effective tax rate from 29% to 37%. The Company adopted ASU 2016-09 Stock Compensation in Q2 2016 which was effective as of January 1, 2016 with retrospective adjustment. The result of the retrospective adjustment resulted in a change in the Q1 2016 quarterly effective tax rate on a non-GAAP basis from 41% to 36%.


Reconciliation of Year To Date 2016 Results
GAAP Net Income per Share to Non-GAAP Earnings per Share

	(in thousands, except per share data)	Adjustments	Diluted Earnings Per Share
	GAAP net income	$ 37,147	$ 0.69

	Litigation liability gain	(43,310)
	Business transition costs ¹	18,138
	Non-cash interest expense on convertible notes	19,539
	Non-cash purchase accounting adjustments on acquisitions ²	14,747
	Loss on repurchases of convertible notes	19,085
	Amortization of intangible assets ³	40,712
	Tax effect of adjustments ⁴	(19,602)
	Adjustments to GAAP net income	49,309
	Non-GAAP earnings	$ 86,456	$ 1.66


	GAAP weighted shares outstanding – diluted		54,102
	Non-GAAP weighted shares outstanding – diluted		51,981

¹	Costs related to acquisition, integration and business transition activities which includes severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities.
²	Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.
³	Excludes the amortization associated with non-controlling interest.
⁴	The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. The Company also includes those adjustments that would have benefited the tax rate in lieu of the above adjustments as part of the Company’s tax filings. The impact of the changes to the tax rate results in an annual estimated rate of approximately 37% on a non-GAAP basis. The result of these adjustments is a change in the annual effective tax rate from approximately 29% to 37%. The Company adopted ASU 2016-09 Stock Compensation in Q2 2016 which was effective as of January 1, 2016 with retrospective adjustment. The result of the retrospective adjustment resulted in a change in the Q1 2016 quarterly effective tax rate on a non-GAAP basis from approximately 41% to 36%.


Reconciliation of Fourth Quarter and Twelve Months 2016 Results
GAAP net income to Adjusted EBITDA

	(in thousands, except per share data)	Three months ended December 31, 2016	Twelve months ended December 31, 2016
	GAAP net income	$ 6,376	$ 37,147
	Interest (income) / expense, net ¹	12,006	58,514
	Provision for income taxes	11,899	29,282
	Depreciation and Amortization ²	28,573	101,438
	EBITDA	$ 58,854	$ 226,381
	Litigation liability gain	—	(43,310)
	Non-cash purchase accounting related charges ³	—	14,747
	Business transition costs⁴	6,624	18,138
	Non-cash stock based compensation	7,279	26,924
	Adjusted EBITDA	$ 72,757	$ 242,880
	As a percentage of revenue	26.8%	25.2%

¹	Interest (income) / expense, net for the quarter and year ended December 31, 2016 includes loss on extinguishment of debt for $1.6 million and $19.1 million, respectively.

²	Excludes the amortization associated with non-controlling interest.

³	Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.

⁴	Costs related to acquisition, integration and business transition activities which includes severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities.

Investor Conference Call The Company will hold a conference call today at 4:30 p.m. ET / 1:30 p.m. PT to discuss the results of its fourth quarter and full year 2016 financial performance. The dial-in numbers are 1-877-407-9039 for domestic callers and 1-201-689-8470 for international callers. A live webcast of the conference call will be available online from the Investor Relations page of the Company’s website at www.nuvasive.com.

After the live webcast, the call will remain available on NuVasive’s website through March 9, 2017. In addition, a telephone replay of the call will be available until February 16, 2017. The replay dial-in numbers are 1-844-512-2921 for domestic callers and 1-412-317-6671 for international callers. Please use pin number: 13652783.

About NuVasive NuVasive, Inc. (NASDAQ: NUVA) is a world leader in minimally invasive, procedurally-integrated spine solutions. From complex spinal deformity to degenerative spinal conditions, NuVasive is transforming spine surgery with innovative technologies designed to deliver reproducible and clinically proven surgical outcomes. NuVasive’s highly differentiated, procedurally-integrated solutions include access instruments, implantable hardware and software systems for surgical planning and reconciliation technology that centers on achieving the global alignment of the spine. With $962 million in revenues (2016), NuVasive has an approximate 2,300 person workforce in more than 40 countries around the world. For more information, please visit www.nuvasive.com.

Forward-Looking Statements NuVasive cautions you that statements included in this news release or made on the investor conference call referenced herein that are not a description of historical facts are forward-looking statements that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause NuVasive’s results to differ materially from historical results or those expressed or implied by such forward-looking statements. In addition, this news release contains selected financial results from the fourth quarter and full year 2016, as well as projections for 2017 financial guidance and longer-term financial performance goals. The Company’s results for the fourth quarter and full year 2016 are prior to the completion of review and audit procedures by the Company’s external auditors and are subject to adjustment. In addition, the Company’s projections for 2017 financial guidance and longer-term financial performance goals represent initial estimates, and are subject to the risk of being inaccurate because of the preliminary nature of the forecasts, the risk of further adjustment, or unanticipated difficulty in selling products or generating expected profitability. The potential risks and uncertainties which contribute to the uncertain nature of these statements include, among others, risks associated with acceptance of the Company’s surgical products and procedures by spine surgeons, spine surgeons, development and acceptance of new products or product enhancements, clinical and statistical verification of the benefits achieved via the use of NuVasive’s products (including the iGA™ platform), the Company’s ability to effectually manage inventory as it continues to release new products, its ability to recruit and retain management and key personnel, and the other risks and uncertainties more fully described in the Company’s news releases and periodic filings with the Securities and Exchange Commission. NuVasive’s public filings with the Securities and Exchange Commission are available at www.sec.gov. NuVasive assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.

NuVasive, Inc.
Consolidated Statements of Operations
*(in thousands, except per share data)*

	Three Months Ended December 31,		Year Ended December 31,
	2016	2015	2016	2015
	(Unaudited)	(Unaudited)
Revenue	$ 271,109	$ 215,282	$ 962,072	$ 811,113
Cost of goods sold (excluding below amortization of intangible assets)	66,926	51,233	240,093	194,479
Gross profit	204,183	164,049	721,979	616,634
Operating expenses:
Sales, marketing and administrative	142,413	118,837	533,624	457,280
Research and development	12,983	8,606	47,999	35,833
Amortization of intangible assets	12,089	3,479	42,001	12,516
Litigation liability (gain) loss	—	681	(43,310)	(41,826)
Business transition costs	6,624	2,902	18,138	13,748
Total operating expenses	174,109	134,505	598,452	477,551
Interest and other expense, net:
Interest income	167	464	1,091	1,589
Interest expense	(10,532)	(7,403)	(40,520)	(29,078)
Loss on repurchases of convertible notes	(1,641)	—	(19,085)	—
Other (expense) income, net	(203)	(105)	(305)	425
Total interest and other expense, net	(12,209)	(7,044)	(58,819)	(27,064)
Income before income taxes	17,865	22,500	64,708	112,019
Income tax expense	(11,899)	(11,397)	(29,282)	(46,729)
Consolidated net income	$ 5,966	$ 11,103	$ 35,426	$ 65,290
Add back net loss attributable to non-controlling interests	$ (410)	$ (400)	$ (1,721)	$ (1,001)
Net income attributable to NuVasive, Inc.	$ 6,376	$ 11,503	$ 37,147	$ 66,291
Net income per share attributable to NuVasive, Inc.:
Basic	$ 0.13	$ 0.23	$ 0.74	$ 1.36
Diluted	$ 0.11	$ 0.22	$ 0.69	$ 1.26
Weighted average shares outstanding:
Basic	50,394	49,205	50,077	48,687
Diluted	55,913	53,087	54,102	52,424

NuVasive, Inc.
Consolidated Balance Sheets
*(in thousands, except par values and share amounts)*

	December 31,
	2016	2015
ASSETS
Current assets:
Cash and cash equivalents	$ 153,643	$ 192,339
Short-term marketable securities	—	165,423
Accounts receivable, net of allowances of $8,912and $5,320, respectively	171,595	127,595
Inventory, net	208,249	168,140
Prepaid income taxes	31,926	40,540
Prepaid expenses and other current assets	10,030	8,790
Total current assets	575,443	702,827
Property and equipment, net	181,524	141,441
Long-term marketable securities	—	112,332
Intangible assets, net	291,143	85,076
Goodwill	485,685	154,281
Deferred tax assets	5,810	83,691
Restricted cash and investments	7,405	5,615
Other assets	23,794	17,404
Total assets	$ 1,570,804	$ 1,302,667
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$ 77,585	$ 60,986
Contingent consideration liabilities	49,742	—
Accrued payroll and related expenses	51,000	37,640
Income tax liabilities	2,469	990
Short-term senior convertible notes	61,701	—
Total current liabilities	242,497	99,616
Long term senior convertible notes	564,412	372,920
Deferred and income tax liabilities, non-current	18,607	8,602
Non-current litigation liabilities	—	88,261
Other long-term liabilities	44,764	14,425
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized, none outstanding	—	—
Common stock, $0.001 par value; 120,000,000 shares authorized at December 31, 2016 and December 31, 2015, 55,184,660and 52,616,471 issued and outstanding at December 31, 2016 and December 31, 2015, respectively	55	53
Additional paid-in capital	1,010,238	989,387
Accumulated other comprehensive loss	(10,631)	(12,112)
Accumulated deficit	(66,859)	(104,006)
Treasury stock at cost; 4,758,828shares and 3,316,794 shares at December 31, 2016 and December 31, 2015, respectively	(237,867)	(161,788)
Total NuVasive, Inc. stockholders’ equity	694,936	711,534
Non-controlling interests	5,588	7,309
Total equity	700,524	718,843
Total liabilities and equity	$ 1,570,804	$ 1,302,667

NuVasive, Inc.
Consolidated Statements of Cash Flows
*(in thousands)*

	Year Ended December 31,
	2016	2015
Operating activities:
Consolidated net income	$ 35,426	$ 65,290
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	102,713	65,915
Deferred income tax expense	26,265	34,757
Loss on repurchases of convertible notes	19,085	—
Amortization of non-cash interest	22,721	17,851
Stock-based compensation	26,924	26,203
Reserves on current assets	11,408	9,454
Other non-cash adjustments	16,928	17,581
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(33,250)	(9,463)
Inventory	(22,636)	(25,984)
Prepaid expenses and other current assets	(5,665)	1,239
Accounts payable and accrued liabilities	11,854	7,742
Accrued royalties	471	(46,092)
Accrued payroll and related expenses	8,849	(192)
Litigation liability	(88,450)	(36,270)
Income taxes	23,652	(39,304)
Net cash provided by operating activities	156,295	88,727
Investing activities:
Acquisition of Ellipse Technologies, net of cash acquired	(380,080)	—
Other acquisitions and investments	(108,591)	(1,357)
Purchases of intangible assets	(5,918)	(32,020)
Proceeds from sales of property and equipment	—	40
Purchases of property and equipment	(88,372)	(75,772)
Purchases of marketable securities	(128,956)	(427,945)
Proceeds from sales of marketable securities	407,032	411,471
Proceeds from sales of restricted investments	—	180,694
Purchases of restricted investments	—	(62,625)
Net cash used in investing activities	(304,885)	(7,514)
Financing activities:
Incremental tax benefits related to stock-based compensation awards	—	15,185
Proceeds from the issuance of common stock	9,492	12,106
Payment of contingent consideration	(422)	(514)
Purchase of treasury stock	(24,734)	(56,929)
Proceeds from issuance of convertible debt, net of issuance costs	634,140	—
Proceeds from sale of warrants	44,850	—
Purchase of convertible note hedge	(111,150)	—
Repurchases of convertible notes	(439,519)	—
Proceeds from revolving line of credit	50,000	—
Repayments on revolving line of credit	(50,000)	—
Other financing activities	(1,834)	(192)
Net cash provided by (used in) financing activities	110,823	(30,344)
Effect of exchange rate changes on cash	(929)	(917)
(Decrease) increase in cash and cash equivalents	(38,696)	49,952
Cash and cash equivalents at beginning of year	192,339	142,387
Cash and cash equivalents at end of year	$ 153,643	$ 192,339

Contact: Stefanie Mazer 1-858-320-5243 smazer@nuvasive.com

SOURCE NuVasive, Inc.

Manufacturer hiring 200+ at Dayton-area facility

Posted On February 9, 2017 By OrthoSpineNews In Financial, Spine /

Feb 9, 2017 – Tristan Navera, Dayton Business Journal

With plans to bring a 180,000-square-foot bio-tech manufacturing facility online in Dayton, San Diego’s NuVasive Inc. says it’s hiring 200 or more people locally this year.

NuVasive (NYSE: NUVA) is in the middle of setting up a $45 million manufacturing facility in West Carrollton, which will be where all of its medical implants and other devices around the world are produced. The company is moving some operations from a Fairborn site to Liberty Lane where it will make spinal implants and other things for its growing global business.

“We intend to front-load all of the recruiting and in-sourcing so we can get a good year of production,” said Reuen Perez, NuVasive’s senior director of manufacturing. “We have been making good progress by and large considering volume, we want to reinforce our brand in the community.”

The company is 25 to 30 positions behind where it’s looking to be, and it’s re-tooling its strategy to attract more people and ensure it doesn’t fall behind schedule, from local advertisement to more grassroots recruiting such as hitting happy hour spots.

NuVasive wrapped up 2016 with 49 local workers, and in the first quarter it must hire 70 people. For the rest of the year it will add another 120 to 150 people to reach about 300 by year’s end — close to full-scale operations as the plant hits 85 percent to 90 percent of start-up.

READ THE REST HERE

Acelity Announces Debt Reduction with Proceeds from Sale of LifeCell Business and Entry into New Credit Agreement

Posted On February 7, 2017 By OrthoSpineNews In Financial /

February 07, 2017

SAN ANTONIO–(BUSINESS WIRE)–Acelity L.P. Inc. (“Acelity”), a global advanced wound care company, today announced that, on February 3, 2017, its wholly-owned operating subsidiaries, Kinetic Concepts, Inc. and KCI USA, Inc. (collectively, the “Borrowers” or the “Issuers”) repaid in full their existing credit facilities and redeemed all outstanding principal amounts of their 9.625% Second Lien Senior Secured Notes due 2021 and their 12.5% Senior Notes due 2019.

Additionally, the Borrowers, together with certain of Acelity’s other subsidiaries, entered into a new credit agreement which provides for a $1,085 million dollar term facility, €239 million euro term facility and a $300 million revolving facility. The term loan facilities will mature on February 3, 2024, and the revolving facility will mature on February 3, 2022.

“The completion of the sale of LifeCell and subsequent repayment of debt bolsters our balance sheet and significantly reduces our interest expense,” said Joe Woody, Acelity President and Chief Executive Officer. “This further positions us to focus on our leading advanced wound therapeutics business and the many opportunities we have to drive growth.”

About Acelity

Acelity L.P. Inc. and its subsidiaries are a global advanced wound care company that leverages the strengths of Kinetic Concepts, Inc. and Systagenix Wound Management, Limited. Available in more than 80 countries, the innovative and complementary ACELITY™ product portfolio delivers value through solutions that speed healing and lead the industry in quality, safety and customer experience. Headquartered in San Antonio, Texas, Acelity employs nearly 5,000 people around the world.

Forward-Looking Statements

Certain statements included in this press release may be considered “forward-looking statements”, which are based on information available to Acelity on the date of this release. Words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative versions of these words and or similar terms and phrases are used to identify these forward looking statements. Forward-looking statements are based on management’s current expectations and are subject to various risks and uncertainties. Acelity cannot assure you that future developments affecting Acelity will be those that have been anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market regulatory and other factors, many of which are beyond Acelity’s control, as well as other risks described from time to time under “Risk Factors” in Acelity’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q (available at www.sec.gov). Any forward-looking statement speaks only as of the date of this press release. Factors or events that could cause Acelity’s actual results to differ may emerge from time to time, and it is not possible to predict all of them. Acelity may not actually achieve the plans, intentions or expectations disclosed in the forward-looking statements and you should not place undue reliance on the forward-looking statements. Acelity’s forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or other strategic transactions Acelity may make. Acelity undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

Contacts

Acelity L.P. Inc.
Corporate Communications
Cheston Turbyfill, +1 210-515-7757
cheston.turbyfill@acelity.com
or
Investor Relations
Caleb Moore, +1 210-255-6433
caleb.moore@acelity.com

MiMedx Board of Directors Authorizes $10 Million Increase to the Company’s Share Repurchase Program

Posted On February 7, 2017 By OrthoSpineNews In Financial /

MARIETTA, Ga., Feb. 6, 2017 /PRNewswire/ — MiMedx Group, Inc. (MDXG), the leading regenerative medicine company utilizing human amniotic tissue and patent-protected processes to develop and market advanced products and therapies for the Wound Care, Surgical, Orthopedic, Spine, Sports Medicine, Ophthalmic, and Dental sectors of healthcare, announced today the decision of its Board of Directors to authorize an increase in the Company’s Share Repurchase Program.

This action by the MiMedx Board of Directors authorizes an increase of $10 million to the Company’s Share Repurchase Program. This action brings the total authorized to $76 million since the Share Repurchase Program commenced in May 2014. The Company reported that in light of the prevailing market conditions, the Company’s available resources and other factors, the MiMedx Board of Directors believes the stock repurchases are a favorable investment for the Company. The Board agreed to review this program again at its scheduled meeting on February 22^nd, and to consider a substantial additional commitment to this beneficial program.

Parker H. “Pete” Petit, Chairman and CEO, stated, “Since the Share Repurchase Program commenced, our program has acquired approximately $65 million of our shares, which has proven to be very anti-dilutive. When we acquire shares at these very low prices, our high growth profile in both revenues and now profits produces an extremely anti-dilutive result. It is my personal belief that the Company’s stock price is very undervalued at present. Many investment bankers have told us they have this same opinion. Therefore, I would expect we will continue to take advantage of these current low prices to enhance shareholder value as permitted.”

Petit continued, “MiMedx management is just as frustrated with the volatility of our shares as are our shareholders. We know there are ongoing issues associated with naked short selling in our stock. These naked short selling practices are illegal, and we are continuing to be diligent in bringing to light the perpetrators of these illegal activities.”

“We believe the ‘fake allegations and fake news’ should be discredited when the Company publishes the key findings of the Report from the Audit Committee and the 2016 audited financial results on February 22nd,” concluded Petit.

About MiMedx

MiMedx® is an integrated developer, processor and marketer of patent protected and proprietary regenerative biomaterial products and bioimplants processed from human amniotic membrane and other human birth tissues, such as amniotic fluid, umbilical cord and placental collagen, and human skin and bone. “Innovations in Regenerative Biomaterials” is the framework behind our mission to give physicians products and tissues to help the body heal itself. We process the human amniotic membrane utilizing our proprietary PURION® Process, to produce a safe and effective implant. MiMedx proprietary processing methodology employs aseptic processing techniques in addition to terminal sterilization. MiMedx is the leading supplier of amniotic tissue, having supplied over 700,000 allografts to date for application in the Wound Care, Burn, Surgical, Orthopedic, Spine, Sports Medicine, Ophthalmic and Dental sectors of healthcare.

Safe Harbor Statement

This press release includes statements that look forward in time or that express management’s beliefs, expectations or hopes. Such statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, that the Company’s stock repurchases are a favorable investment for the Company, the belief that the Company’s stock price is very undervalued at present, the Company’s expectations to continue the use of the share repurchase program to enhance shareholder value, the Company’s belief that there are ongoing issues associated with naked short selling in the Company’s stock, and the current rumors should dissipate considerably when the Company publishes the key findings of the Report from its Audit Committee and the Company’s 2016 audited financial results. These statements are based on current information and belief, and are not guarantees of future performance. Among the risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking statements include that the stock repurchases may not be a favorable investment for the Company, the Board may not consider a substantial new commitment to the share repurchase program at its February 22, 2017 meeting, the Company’s stock price may not be undervalued, the Company’s continued use of the share repurchase program may not enhance shareholder value or the Company may not continue to use the share repurchase program, there may not be ongoing issues associated with naked short selling or the issues may not be impacting the Company as believed, the current rumors and news may not dissipate considerably when the Company publishes the key findings of the Report from its Audit Committee and the Company’s 2016 audited financial results, and the risk factors detailed from time to time in the Company’s periodic Securities and Exchange Commission filings, including, without limitation, its 10-K filing for the fiscal year ended December 31, 2015, and its most recent Form 10Q filing. By making these forward-looking statements, the Company does not undertake to update them in any manner except as may be required by the Company’s disclosure obligations in filings it makes with the Securities and Exchange Commission under the federal securities laws.

THE OLD MUTUAL GLOBAL INVESTORS UK LTD. INVESTS $901,000 IN ANIKA THERAPEUTICS INC. (ANIK)

Posted On February 6, 2017 By OrthoSpineNews In Financial /

February 2, 2017 – Jamie Williams

Old Mutual Global Investors UK Ltd. purchased a new position in Anika Therapeutics Inc. (NASDAQ:ANIK) during the third quarter, according to its most recent disclosure with the Securities and Exchange Commission. The firm purchased 18,841 shares of the company’s stock, valued at approximately $901,000. Old Mutual Global Investors UK Ltd. owned about 0.13% of Anika Therapeutics at the end of the most recent quarter.

A number of other hedge funds and other institutional investors have also made changes to their positions in the company. Chicago Equity Partners LLC acquired a new position in shares of Anika Therapeutics during the third quarter worth about $294,000. Texas Permanent School Fund raised its position in shares of Anika Therapeutics by 2.7% in the third quarter. Texas Permanent School Fund now owns 11,258 shares of the company’s stock worth $539,000 after buying an additional 300 shares during the period. Great West Life Assurance Co. Can raised its position in shares of Anika Therapeutics by 7.3% in the third quarter. Great West Life Assurance Co. Can now owns 20,075 shares of the company’s stock worth $960,000 after buying an additional 1,366 shares during the period. HL Financial Services LLC raised its position in shares of Anika Therapeutics by 23.4% in the third quarter. HL Financial Services LLC now owns 57,551 shares of the company’s stock worth $2,754,000 after buying an additional 10,920 shares during the period. Finally, Louisiana State Employees Retirement System raised its position in shares of Anika Therapeutics by 3.2% in the third quarter. Louisiana State Employees Retirement System now owns 6,500 shares of the company’s stock worth $311,000 after buying an additional 200 shares during the period. Institutional investors own 76.01% of the company’s stock.

READ THE REST HERE

Flower Orthopedics Launches FlowerAdvantage, an Ambulatory Surgery Center Efficiency and Savings Partnership

Posted On February 3, 2017 By OrthoSpineNews In Extremities, Financial /

HORSHAM, Pa., Feb. 3, 2017 /PRNewswire/ — Flower Orthopedics, the leader in Ready-For-Surgery™ extremity implant systems, announces the release of its FlowerAdvantage™ Program, a multi-level initiative designed to reduce the costs of providing care in the ambulatory surgery center setting. “The FlowerAdvantage™ Program has four pillars that generate costs savings and positively impact the operations of surgery centers, while providing patients with the highest standard of care,” said Oliver Burckhardt, President and CEO of Flower Orthopedics.

The four pillars of costs savings in the FlowerAdvantage™ Program are FlowerBucketPrice™ where all components needed for the case are identified, bundled and sold without any hidden or extra costs; Flower ECO Implant™ Line is a value based implant portfolio capable of accommodating challenging reimbursement scenarios; FlowerBuyBack™ Program allows the surgery center to sell back to Flower used single-use instruments from the case; and Flower Ready-For-Surgery™ eliminates operational costs associated with processing trays, inherent case delays & cancellations, and infection risks.

“The FlowerAdvantage™ Program meets a significant unmet need in the outpatient surgery market. With bundled payments and other initiatives driving down reimbursements, surgery centers must find other means to cut costs without diminishing patient care,” said Mr. Burckhardt. The FlowerAdvantage™ Program provides costs savings through the efficiency-based value proposition that other companies cannot provide. The Ready-For-Surgery FlowerCube™ relieves the burden of the surgery center to clean, sterilize, track and manage implant trays, saving considerable time and cost. Flower is focused on providing its customers with many options that improve the level of patient care, while reducing the costs incurred by the healthcare system as a whole.

About Flower: Flower Orthopedics was founded in 2012 to develop technologies that drive efficiencies translating into cost savings for all stakeholders in healthcare. Flower’s development team works tirelessly with leading surgeons to create advanced implant and instrument systems, that are always Ready-For-Surgery™.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/flower-orthopedics-launches-floweradvantage-an-ambulatory-surgery-center-efficiency-and-savings-partnership-300402105.html

SOURCE Flower Orthopedics

Mazor Robotics to Report Fourth Quarter and Full Year Financial Results on February 16, 2017

Posted On February 3, 2017 By OrthoSpineNews In Financial /

February 02, 2017

CAESAREA, Israel–(BUSINESS WIRE)–Mazor Robotics Ltd. (TASE:MZOR; NASDAQGM:MZOR), a pioneer and a leader in the field of surgical guidance systems, announced today that it will report financial results for the fourth quarter and full year ended December 31, 2016, before the U.S. markets open on Thursday, February 16, 2017.

The company will host a conference call to discuss these results on Thursday, February 16, 2017, at 8:30 AM ET (3:30 PM IST). Investors within the United States interested in participating are invited to call 888-312-3052. Participants in Israel can use the toll free dial-in number 1 80 924 5905. All other international participants can use the dial-in number 719-457-2695.

A replay of the event will be available for two weeks following the conclusion of the call. To access the replay, callers in the United States can call 1-866-375-1919 and reference the Replay Access Code: 2887710. All international callers can dial +1 719-457-0820, using the same Replay Access Code. To access the webcast, please visit www.mazorrobotics.com and select ‘Investor Relations.’

About Mazor

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

Contacts

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

CONMED Corporation Announces Fourth Quarter and Fiscal Year 2016 Financial Results

Posted On February 3, 2017 By OrthoSpineNews In Financial /

February 01, 2017

UTICA, N.Y.–(BUSINESS WIRE)–CONMED Corporation (Nasdaq:CNMD) today announced financial results for the fourth quarter and fiscal year ended December 31, 2016.

Fourth Quarter 2016 Highlights

Sales of $204.1 million increased 6.8% as reported compared to the fourth quarter of 2015. On a constant currency basis, sales increased 9.1% but declined 1.5% organically.
International reported revenue grew 6.0% year over year and 0.4% organically. On an organic constant currency basis, international markets increased 4.8%, delivering a third consecutive quarter of growth across all three reporting categories.
Domestic General Surgery sales grew 33.4% as reported, driven by continued strength in the AirSeal^® platform. On an organic basis, domestic General Surgery sales increased 1.5%.
Diluted net earnings per share (GAAP) were $0.24, compared to diluted net earnings per share (GAAP) of $0.28 in the fourth quarter of 2015.
Adjusted diluted net earnings per share⁽¹⁾ were $0.54 versus $0.60 in the prior-year period.

Fiscal Year 2016 Highlights

Sales of $763.5 million increased 6.2% as reported compared to the full year 2015. On a constant currency basis, sales increased 8.6% but declined 1.1% organically.
AirSeal^® contribution of $68.4 million to full year 2016 sales exceeded the Company’s forecasted range of $62 to $67 million.
Diluted net earnings per share (GAAP) were $0.52, compared to $1.09 in 2015.
Adjusted diluted net earnings per share⁽¹⁾ were $1.84 versus $1.98 in the prior-year period.

“Our International business and the domestic General Surgery category, which represent 78% of our total revenue, exited the year with positive momentum. Overall, we are demonstrating consistent and improving performance across these areas. Clearly, these successes were offset by ongoing challenges in domestic Orthopedics, where we believe we are taking the appropriate steps to drive improvement in this business over the coming quarters,” commented Curt R. Hartman, CONMED’s President and Chief Executive Officer.

Sales Analysis

For the quarter ended December 31, 2016, domestic sales, which represented 51.5% of total revenue, increased 7.6%, despite declines in Orthopedics and Visualization, due to continued strength in General Surgery, as the SurgiQuest acquisition and organic growth contributed to 33.4% year-over-year growth in the business. International sales, which represented 48.5% of total revenue, increased 6.0% compared to the fourth quarter of 2015 on a reported basis. Foreign currency exchange rates, including the effects of the FX hedging program, had a negative impact of $4.4 million on fourth quarter sales. In constant currency, international sales increased 10.7% versus the prior-year period.

For the fiscal year ended December 31, 2016, domestic sales, which represented 52.3% of total revenue, increased 10.4% as positive results in General Surgery, driven by AirSeal^® sales growth, were partially offset by weaker than expected sales in Orthopedics and, to a lesser extent, Visualization. International sales, which represented 47.7% of total revenue, increased 1.9% compared to 2015 on a reported basis. Foreign currency exchange rates, including the effects of the FX hedging program, had a negative impact of $17.3 million on fiscal year 2016 sales. In constant currency, international sales increased 6.7% versus the prior-year period.

Earnings Analysis

For the quarter ended December 31, 2016, reported net earnings totaled $6.7 million, compared to reported net earnings of $7.9 million a year ago. Reported diluted net earnings per share were $0.24 in the quarter, compared to reported diluted net earnings per share of $0.28 in the prior-year period. Reported net earnings for both 2016 and 2015 include business acquisition and restructuring costs. The effect of each of these items on reported net earnings and reported diluted net earnings per share appears in the reconciliation of GAAP to non-GAAP measures below.

The Company excludes the after-tax costs of special items including acquisitions, restructuring, the gain on the sale of an asset and debt refinancing, as well as amortization of intangible assets, net of tax, from its adjusted diluted net earnings per share. Excluding the impact of these items, adjusted net earnings⁽²⁾ of $15.1 million decreased 8.8% year over year and adjusted diluted net earnings per share⁽¹⁾ of $0.54 decreased 10.0% year over year. The decrease in adjusted net earnings resulted primarily from unfavorable impact of foreign exchange rates, partially offset by a lower tax rate during the quarter.

For the fiscal year ended December 31, 2016, reported net earnings totaled $14.7 million, compared to reported net earnings of $30.5 million in the prior year. Reported diluted net earnings per share were $0.52, compared to $1.09 in the prior-year period. Excluding the impact of the special items as described above and as provided in the reconciliation of GAAP to non-GAAP measures below, adjusted net earnings⁽²⁾ of $51.4 million decreased 6.4% year over year and adjusted diluted net earnings per share⁽¹⁾ of $1.84 decreased 7.1% from the prior year.

2017 Outlook

The Company expects 2017 constant currency sales growth in the range of 1% to 3%. Based on exchange rates as of January 27, 2017, the negative impact to 2017 sales from foreign exchange is anticipated to be approximately 0.5%.

In addition, the Company forecasts adjusted diluted net earnings per share in the range of $1.85 to $1.95, which includes an estimated negative impact from foreign exchange based on exchange rates as of January 27, 2017. The adjusted diluted net earnings per share estimates for 2017 exclude the cost of special items including acquisition costs and restructuring costs, which are estimated in the range of $8.0 to $10.0 million, net of tax, and amortization of intangible assets, which are estimated in the range of $12 to $14 million, net of tax.

Supplemental Financial Disclosures

⁽¹⁾A reconciliation of reported diluted net earnings per share to adjusted diluted net earnings per share, a non-GAAP financial measure, appears below.

⁽²⁾A reconciliation of reported net earnings to adjusted net earnings, a non-GAAP financial measure, appears below.

In conjunction with this earnings press release, CONMED has prepared a supplemental financial disclosure, which is available on the home page of the “Investors – Financial Reports” section of the Company’s website at www.conmed.com.

Conference Call

The Company’s management will host a conference call today at 4:30 p.m. ET to discuss its fourth quarter and fiscal year 2016 results.

To participate in the conference call, dial 844-889-7792 (domestic) or 661-378-9936 (international) and enter the passcode 46955565.

This conference call will also be webcast and can be accessed from the “Investors” section of CONMED’s web site at www.conmed.com. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.

A recording of the call will also be available from 7:30 p.m. ET on Wednesday, February 1, 2017, until 7:30 p.m. ET on Wednesday, February 15, 2017. To hear this recording, dial 855-859-2056 (domestic) or 404-537-3406 (international) and enter the passcode 46955565.

About CONMED Corporation

CONMED is a medical technology company that provides surgical devices and equipment for minimally invasive procedures. The Company’s products are used by surgeons and physicians in a variety of specialties, including orthopedics, general surgery, gynecology, neurosurgery and gastroenterology. The Company distributes its products worldwide from several manufacturing locations. CONMED has a direct selling presence in 17 countries, and international sales constitute approximately 50% of the Company’s total sales. Headquartered in Utica, New York, the Company employs approximately 3,300 people. For more information, visit www.conmed.com.

Forward-Looking Statements

This press release and today’s conference call may contain forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties, which could cause actual results, performance, or trends to differ materially from those expressed in the forward-looking statements herein or in previous disclosures. For example, in addition to general industry and economic conditions, factors that could cause actual results to differ materially from those in the forward-looking statements may include, but are not limited to, the risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Any and all forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and relate to the Company’s performance on a going-forward basis. The Company believes that all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management’s expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct.

Supplemental Information – Reconciliation of GAAP to Non-GAAP Financial Measures

The Company supplements the reporting of its financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; adjusted gross profit; cost of sales excluding specified items; adjusted selling and administrative expenses; adjusted operating income; adjusted income tax expense; adjusted effective income tax rate; adjusted net earnings and adjusted diluted net earnings per share (EPS). The Company believes that these non-GAAP measures provide meaningful information to assist investors and shareholders in understanding our financial results and assessing our prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures described above are important indicators of our operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results and provide a baseline for analyzing trends in the Company’s underlying business. Further, the presentation of EBITDA is a non-GAAP measurement that management considers useful for measuring aspects of the Company’s cash flow. Management uses these non-GAAP financial measures for reviewing the operating results and analyzing potential future business trends in connection with our budget process and bases certain management incentive compensation on these non-GAAP financial measures.

To measure percentage sales growth in constant currency, the Company removes the impact of changes in foreign currency exchange rates that affect the comparability and trend of sales. To measure earnings performance on a consistent and comparable basis, the Company excludes certain items that affect the comparability of operating results and the trend of earnings. These adjustments are irregular in timing, may not be indicative of our past and future performance and are therefore excluded to allow investors to better understand underlying operating trends.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, cost of sales, selling and administrative expenses, operating income, income tax expense, effective income tax rate, net earnings and diluted net earnings per share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the reconciliations to corresponding GAAP financial measures below, provide a more complete understanding of our business. The Company strongly encourages investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.


Consolidated Condensed Statements of Income (in thousands, except per share amounts, unaudited)

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2016		2015		2016		2015

Net sales	$	204,094	$	191,017	$	763,520	$	719,168
Cost of sales		97,135		88,641		355,190		337,466
Gross profit		106,959		102,376		408,330		381,702
% of sales		52.4%		53.6%		53.5%		53.1%
Selling and administrative expense		86,719		82,668		338,400		303,091
Research & development		7,634		6,741		32,254		27,436
Income from operations		12,606		12,967		37,676		51,175
% of sales		6.2%		6.8%		4.9%		7.1%
Other expense		–		–		2,942		–
Interest expense		3,911		1,578		15,359		6,031
Income before income taxes		8,695		11,389		19,375		45,144
Provision for income taxes		1,987		3,537		4,711		14,646
Net income	$	6,708	$	7,852	$	14,664	$	30,498

Basic EPS	$	0.24	$	0.28	$	0.53	$	1.10
Diluted EPS		0.24		0.28		0.52		1.09

Basic shares		27,832		27,707		27,804		27,653
Diluted shares		27,987		27,875		27,964		27,858


Consolidated Condensed Balance Sheets (in thousands, unaudited)

	December		December
	2016		2015
Assets:
Cash and cash equivalents	$	27,428	$	72,504
Accounts receivable, net		148,244		133,863
Inventories		135,869		133,361
Other current assets		18,971		20,076
Total Current Assets		330,512		359,804
Property, plant and equipment, net		122,029		125,452
Goodwill		397,664		260,651
Other intangible assets, net		419,549		308,171
Other assets		59,229		47,622
Total Assets	$	1,328,983	$	1,101,700

Liabilities and Shareholders’ Equity:
Current liabilities	$	113,952	$	119,718
Long-term debt, excluding current maturities		488,288		269,471
Other liabilities		146,167		127,438
Shareholders’ equity		580,576		585,073
Total Liabilities and Shareholders’ Equity	$	1,328,983	$	1,101,700


Consolidated Condensed Statements of Cash Flows Twelve Months Ended December 31, 2016 and 2015 (in thousands, unaudited)

	2016		2015
Operating Activities
Net income	$	14,664	$	30,498
Depreciation and amortization		55,309		43,879
Stock-based compensation expense		8,375		7,499
Deferred income taxes		(2,871)		2,251
Changes in operating assets and liabilities and other, net		(37,255)		(36,059)
Net cash provided by operating activities		38,222		48,068

Investing Activities
Payments related to business acquisitions		(256,450)		(9,353)
Proceeds from sale of a facility		5,178		–
Purchases of property, plant and equipment		(14,753)		(15,009)
Net cash used in investing activities		(266,025)		(24,362)

Financing Activities
Payments on term loan		(8,750)		–
Proceeds of term loan		175,000		–
Proceeds of revolver		225,000		142,680
Payments on revolver		(162,347)		(112,000)
Payments related to debt issue costs		(5,556)		(1,485)
Payment related to distribution agreement		(16,667)		(16,667)
Dividend payments on common stock		(22,213)		(22,105)
Other, net		(265)		(196)
Net cash provided by (used in) financing activities		184,202		(9,773)

Effect of exchange rate changes on cash and cash equivalents		(1,475)		(7,761)
Net increase (decrease) in cash and cash equivalents		(45,076)		6,172
Cash and cash equivalents at beginning of period		72,504		66,332
Cash and cash equivalents at end of period	$	27,428	$	72,504


Sales Summary (in millions, unaudited)

	Three Months Ended December 31,
					% Change
							Domestic	International
	2016		2015		As Reported	Constant Currency	As Reported	As Reported	Constant Currency
Orthopedic Surgery	$	98.0	$	104.2	-5.9%	-3.2%	-12.6%	-1.1%	3.7%
General Surgery		92.5		70.9	30.5%	32.0%	33.4%	25.2%	29.5%
Surgical Visualization		13.6		15.9	-15.0%	-13.9%	-27.7%	0.2%	3.3%
	$	204.1	$	191.0	6.8%	9.1%	7.6%	6.0%	10.7%

Single-use Products	$	160.0	$	146.8	9.0%	11.3%	10.9%	6.8%	11.8%
Capital Products		44.1		44.2	-0.2%	1.6%	-4.7%	3.7%	7.3%
	$	204.1	$	191.0	6.8%	9.1%	7.6%	6.0%	10.7%

Domestic	$	105.1	$	97.7	7.6%	7.6%
International		99.0		93.3	6.0%	10.7%
	$	204.1	$	191.0	6.8%	9.1%

	Twelve Months Ended December 31,
					% Change
							Domestic	International
	2016		2015		As Reported	Constant Currency	As Reported	As Reported	Constant Currency
Orthopedic Surgery	$	370.5	$	389.0	-4.7%	-1.7%	-5.4%	-4.3%	0.7%
General Surgery		341.4		274.2	24.5%	26.0%	27.9%	18.2%	22.5%
Surgical Visualization		51.6		56.0	-7.8%	-5.9%	-13.0%	-2.2%	2.2%
	$	763.5	$	719.2	6.2%	8.6%	10.4%	1.9%	6.7%

Single-use Products	$	605.8	$	567.3	6.8%	9.3%	10.0%	3.3%	8.5%
Capital Products		157.7		151.9	3.8%	6.1%	12.2%	-2.8%	1.2%
	$	763.5	$	719.2	6.2%	8.6%	10.4%	1.9%	6.7%

Domestic	$	399.1	$	361.5	10.4%	10.4%
International		364.4		357.7	1.9%	6.7%
	$	763.5	$	719.2	6.2%	8.6%


Reconciliation of Reported Net Earnings to Adjusted Net Earnings (in thousands, except per share amounts, unaudited)

	Three Months Ended December 31, 2016
	Gross Profit		Selling & Administrative Expense		Operating Income		Other Expense		Tax Expense		Effective Tax Rate	Net Income		Diluted EPS
As reported	$	106,959	$	86,719	$	12,606	$	–	$	1,987	22.9%	$	6,708	$	0.24
% of sales		52.4%		42.5%		6.2%
Restructuring costs ⁽¹⁾		2,075		(2,768)		4,843		–		1,701			3,142		0.11
Business acquisition costs⁽²⁾		–		(3,244)		3,244		–		1,139			2,105		0.08
	$	109,034	$	80,707	$	20,693	$	–	$	4,827	28.8%	$	11,955	$	0.43
% of sales		53.4%		39.5%		10.1%
Amortization of intangible assets	$	1,500	$	(3,500)	$	5,000	$	–	$	1,857			3,143		0.11
Adjusted earnings												$	15,098	$	0.54

	Three Months Ended December 31, 2015
	Gross Profit		Selling & Administrative Expense		Operating Income		Other Expense		Tax Expense		Effective Tax Rate	Net Income		Diluted EPS
As reported	$	102,376	$	82,668	$	12,967	$	–	$	3,537	31.1%	$	7,852	$	0.28
% of sales		53.6%		43.3%		6.8%
Restructuring costs ⁽¹⁾		2,837		(4,334)		7,171		–		2,461			4,710		0.17
Business acquisition costs ⁽²⁾		–		(2,069)		2,069		–		172			1,897		0.07
	$	105,213	$	76,265	$	22,207	$	–	$	6,170	29.9%	$	14,459	$	0.52
% of sales		55.1%		39.9%		11.6%
Amortization of intangible assets	$	1,500	$	(1,590)	$	3,090	$	–	$	963			2,127		0.08
Adjusted earnings												$	16,586	$	0.60

(1)		In 2016 and 2015, the Company restructured certain operating, sales, marketing and administrative functions and incurred severance and other related costs.

(2)		In 2016 and 2015, the Company incurred consulting fees, legal fees, and integration related costs associated with the acquisition of SurgiQuest, Inc.


Reconciliation of Reported Net Earnings to Adjusted Net Earnings (in thousands, except per share amounts, unaudited)

	Twelve Months Ended December 31, 2016
	Gross Profit		Selling & Administrative Expense		Operating Income		Other Expense		Tax Expense		Effective Tax Rate	Net Income		Diluted EPS
As reported	$	408,330	$	338,400	$	37,676	$	2,942	$	4,711	24.3%	$	14,664	$	0.52
% of sales		53.5%		44.3%		4.9%
Restructuring costs⁽¹⁾		7,612		(6,873)		14,485		–		4,919			9,566		0.35
Business acquisition costs⁽²⁾		–		(20,599)		20,599		–		7,173			13,426		0.48
Gain on sale of facility⁽³⁾		–		1,890		(1,890)		–		(853)			(1,037)		(0.04)
Debt refinancing costs⁽⁴⁾		–		–		–		(2,942)		930			2,012		0.07
	$	415,942	$	312,818	$	70,870	$	–	$	16,880	30.4%	$	38,631	$	1.38
% of sales		54.5%		41.0%		9.3%
Amortization of intangible assets	$	6,000	$	(13,989)	$	19,989	$	–	$	7,197			12,792		0.46
Adjusted earnings												$	51,423	$	1.84

	Twelve Months Ended December 31, 2015
	Gross Profit		Selling & Administrative Expense		Operating Income		Other Expense		Tax Expense		Effective Tax Rate	Net Income		Diluted EPS
As reported	$	381,702	$	303,091	$	51,175	$	–	$	14,646	32.4%	$	30,498	$	1.09
% of sales		53.1%		42.1%		7.1%
Restructuring costs ⁽¹⁾		8,016		(13,655)		21,671		–		7,713			13,958		0.51
Business acquisition costs ⁽²⁾		–		(2,543)		2,543		–		311			2,232		0.08
	$	389,718	$	286,893	$	75,389	$	–	$	22,670	32.7%	$	46,688	$	1.68
% of sales		54.2%		39.9%		10.5%
Amortization of intangible assets	$	6,000	$	(6,486)	$	12,486	$	–	$	4,145			8,341		0.30
Adjusted earnings												$	55,029	$	1.98

(1)		In 2016 and 2015, the Company restructured certain operating, sales, marketing and administrative functions and incurred severance and other related costs. Additionally, in the second quarter of 2016, the Company terminated a product offering and incurred charges mainly related to inventory and fixed assets.

(2)		In 2016 and 2015, the Company incurred investment banking fees, consulting fees, legal fees, and integration related costs associated with the acquisition of SurgiQuest, Inc.

(3)		In 2016, the Company recorded a gain on the sale of its facility in Centennial, Colorado.

(4)		In 2016, in conjunction with the acquisition of SurgiQuest, Inc., the Company refinanced its existing credit facility and incurred one-time fees associated with an agreement between the Company and JP Morgan Chase Bank, N.A., as well as costs associated with the early extinguishment of debt.


Reconciliation of Reported Net Income to EBITDA & Adjusted EBITDA (in thousands, unaudited)

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2016		2015		2016		2015

Net income	$	6,708	$	7,852	$	14,664	$	30,498
Provision for income taxes		1,987		3,537		4,711		14,646
Interest expense		3,911		1,578		15,359		6,031
Depreciation		5,237		4,785		20,479		18,704
Amortization		8,601		6,638		33,788		24,581
EBITDA	$	26,444	$	24,390	$	89,001	$	94,460

Stock based compensation		1,869		1,656		7,653		6,478
Restructuring costs		4,843		7,171		14,485		21,671
Business acquisition costs		3,244		2,069		20,599		2,543
Gain on sale of facility		–		–		(1,890)		–
Debt refinancing costs		–		–		2,942		–
Adjusted EBITDA	$	36,400	$	35,286	$	132,790	$	125,152


EBITDA Margin
EBITDA		13.0%		12.8%		11.7%		13.1%
Adjusted EBITDA		17.8%		18.5%		17.4%		17.4%

Contacts

CONMED Corporation
Luke A. Pomilio, 315-624-3202
Chief Financial Officer
LukePomilio@conmed.com

Over $2 million in funding announced for biomedical innovations across the State of Michigan

Posted On February 3, 2017 By OrthoSpineNews In Financial /

Media Contact: Kara Gavin – February 1, 2017

ANN ARBOR, Mich. — From an innovative coating for joint replacements, to a promising drug for the painful inflammatory disease scleroderma, 11 new biomedical ideas that emerged from research across Michigan have just gotten funding that could help them make the leap from lab to patient care.

Over $2 million in funding has just flowed to the teams developing these concepts from the Michigan Translational Research and Commercialization for Life Sciences Innovation Hub. MTRAC, as it’s known, is co-managed by the University of Michigan Medical School and Office of Research with funding from U-M and the Michigan Economic Development Corporation.

Projects from across the state were selected for funding by MTRAC’s Innovation Hub team, to accelerate their paths to market, bringing them one step closer to ultimately helping patients and their families.

Finalists for the funding, including teams from U-M, Michigan State University, Michigan Technological University, Beaumont Health System, and Henry Ford Health System, presented project proposals to the MTRAC Oversight Committee at their annual meeting in downtown Ann Arbor in early January.

Those selected for funding range from an antibacterial coating for orthopedic implants to a novel nano-vaccine technology to a potential next-generation cancer therapeutic. Award amounts range from $130,000 to $260,000 per project, supporting mid-stage product development activities that are critical steps on the path to market.

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