K2M Group Holdings, Inc. Reports Second Quarter 2017 Financial Results; Reaffirms Fiscal Year 2017 Outlook

LEESBURG, Va., Aug. 01, 2017 (GLOBE NEWSWIRE) — K2M Group Holdings, Inc. (Nasdaq:KTWO) (the “Company” or “K2M”), a global leader of complex spine and minimally invasive solutions focused on achieving three-dimensional Total Body Balance, today reported financial results for its second fiscal quarter ended June 30, 2017.

Second Quarter 2017 Financial Summary:

  • Total Q2 revenue of $65.7 million, up 10.9% year-over-year. Total Q2 revenue increased 11.6% year-over-year on a constant currency basis.
  • Domestic Q2 revenue of $50.8 million, up 12.2% year-over-year, comprised of:
    • U.S. Complex Spine growth of 9.7% year-over-year
    • U.S. Minimally Invasive Surgery (MIS) growth of 25.4% year-over-year
    • U.S. Degenerative growth of 9.9% year-over-year.
  • International Q2 revenue of $14.9 million, up 6.6% year-over-year, or 9.3% on a constant currency basis.
  • Net loss of $9.1 million for the three months ended June 30, 2017, compared to a net loss of $11.1 million in the comparable period last year.
  • Adjusted EBITDA of $0.6 million for the three months ended June 30, 2017, compared to Adjusted EBITDA loss of $0.3 million in the comparable period last year.

 Recent Product Introductions:

  • On May 25, 2017, the Company announced the launch of the MESA 2 Cricket, an enhancement to the Company’s innovative MESA®2 Deformity Spinal System. The MESA 2 Cricket provides surgeons the ability to efficiently complete challenging correction maneuvers in all three anatomical planes, with the goal of achieving three-dimensional balance in patients with complex spinal deformities.
  • On June 20, 2017, the Company announced the introduction of the SAHARA® AL Expandable Stabilization System, the Company’s first expandable offering within its interbody portfolio. SAHARA AL is the only lordotic expandable interbody device with integrated screw fixation on the market to help achieve spinal balance.
  • On June 22, 2017, the Company announced that its MOJAVETM PL 3D Expandable Interbody System received 510(k) clearance from the U.S. Food & Drug Administration (FDA). MOJAVE PL 3D is a first-to-market, 3D-printed, FDA-cleared expandable posterior-lumbar (PL) interbody system that features K2M’s Lamellar 3D Titanium Technology.
  • On July 6, 2017, the Company announced that its NILE® Proximal Fixation Spinal System, a spinal system specifically designed for proximal construct augmentation, received 510(k) clearance from the FDA and a CE Mark. NILE Proximal Fixation addresses complex spinal deformity cases and consists of bands and connectors that may be used in conjunction with spinal rod constructs for attachment to the posterior vertebral structures at the proximal end of the construct.

Recent Strategic Highlights:

  • On April 6, 2017, K2M and LifeHealthcare Group Limited announced a new distribution agreement for K2M’s innovative spinal technologies in Australia and New Zealand (ANZ). The K2M/LifeHealthcare distribution partnership dates back to 2010 and has yielded strong growth and a significant spine market position in ANZ. Looking to build on this success, K2M and LifeHealthcare entered into a new five-year agreement with the shared goal of establishing a number one spine market position in ANZ.
  • On April 21, 2017, K2M received key product registrations in Japan from the Pharmaceuticals and Medical Devices Agency (PMDA), which are now under its control, including the MESA and EVEREST® product lines.
  • On May 1, 2017, the Company announced that they hosted more than 100 international spine surgeons from 22 countries for its annual Meeting of Minds™ in Lisbon, Portugal, from April 28-29, 2017. Meeting of Minds is a premier, world-class curriculum in the latest approaches and techniques for the operative treatment of spinal disorders. The Company also demonstrated its Balance ACS (or BACS) platform, which applies three-dimensional solutions across the entire clinical care continuum to help drive quality outcomes in spine patients.
  • On May 3, 2017, the Company announced participation at the 2017 combined meeting of The European Pediatric Orthopaedic Society and The Pediatric Orthopaedic Society of North America (EPOSNA) from May 3-6 in Barcelona, Spain. The Company showcased the Balance ACS and Three-Dimensional Total Body Balance and hosted a clinical symposium in 3D spinal solutions.
  • On July 10, 2017, the Company announced the signing of a new, long-term, exclusive agreement with Mitsubishi Corporation subsidiary Japan Medicalnext Co., Ltd., a wholly-owned entity of MC Healthcare, Inc. and a prominent supplier of medical devices in Japan, for the distribution of K2M’s innovative spinal technologies. Pursuant to the agreement, Japan Medicalnext is the exclusive distributor of K2M’s spine products in Japan. The terms of the agreement include a long-term partnership of up to seven years. With more than 250 employees—including 50 orthopedic sales professionals—in seven offices located throughout the country, Japan Medicalnext has significant experience in medical device distribution, including the Japanese spinal surgery market.

“Our second quarter product launches and strategic accomplishments reflect continued progress toward our strategic goals of introducing innovative spine surgery technologies, expanding our selling presence and improving our selling productivity which, together, help K2M to increase our share of the global spine market,” said President and Chief Executive Officer, Eric Major. “Revenue growth in the second quarter was driven by double-digit growth in the U.S. and high single-digit constant currency growth outside the U.S.  During the quarter, we also made progress toward achieving profitability, generating $0.6 million in Adjusted EBITDA, compared to an Adjusted EBITDA loss of $0.3 million last year. We have reaffirmed our full year financial outlook—including constant currency revenue growth of 12%-15% year-over-year and Adjusted EBITDA of $6 million to $10 million—and continue to expect improving results over the balance of 2017.”

Second Quarter 2017 Financial Results

Three Months Ended June 30, Increase / Decrease
2017 2016 $ Change % Change % Change
($ in thousands) (as reported) (constant currency)
United States $ 50,775 $ 45,238 $ 5,537 12.2 % 12.2 %
International 14,917 13,989 928 6.6 % 9.3 %
Total Revenue: $ 65,692 $ 59,227 $ 6,465 10.9 % 11.6 %

Total revenue for the second quarter of 2017 increased $6.5 million, or 10.9%, to $65.7 million, compared to $59.2 million for the second quarter of 2016. Total revenue increased 11.6% year-over-year on a constant currency basis. The increase in revenue was primarily driven by greater sales volume from primarily domestic new surgeon users and newer product offerings, offset primarily by customer declines and lower sales in certain international direct markets as compared to last year.

Revenue in the United States increased $5.5 million, or 12.2% year-over-year, to $50.8 million, and international revenue increased $0.9 million, or 6.6% year-over-year, to $14.9 million. Second quarter 2017 international revenue increased 9.3% year-over-year on a constant currency basis. Foreign currency exchange impacted second quarter international revenue by approximately $0.3 million, representing approximately 265 basis points of 2017 international growth year-over-year.

The following table represents domestic revenue by procedure category.

Three Months Ended June 30, Increase / Decrease
2017 2016 $ Change % Change
($ in thousands)
Complex Spine $ 20,342 $ 18,535 $ 1,807 9.7 %
Minimally Invasive 8,785 7,005 1,780 25.4 %
Degenerative 21,648 19,698 1,950 9.9 %
U.S. Revenue: $ 50,775 $ 45,238 $ 5,537 12.2 %

By procedure category, U.S. revenue in the Company’s complex spine, MIS and degenerative categories represented 40.1%, 17.3% and 42.6% of U.S. revenue, respectively, for the three months ended June 30, 2017.

Gross profit for the second quarter of 2017 increased 9.0% to $43.2 million, compared to $39.6 million for the second quarter of 2016.  Gross margin was 65.7% for the second quarter of 2017, compared to 66.9% for the prior year period. Gross profit includes amortization expense on investments in surgical instruments of $3.6 million, or 5.5% of sales, for the three months ended June 30, 2017, compared to $3.4 million, or 5.8% of sales, for the comparable period last year.

Operating expenses for the second quarter of 2017 increased $2.4 million, or 4.9%, to $51.3 million, compared to $48.9 million for the second quarter of 2016. The increase in operating expenses was driven primarily by a $2.2 million increase in sales and marketing expenses, compared to the comparable period last year.

Loss from operations for the second quarter of 2017 improved $1.1 million, to $8.2 million, compared to a loss from operations of $9.3 million for the comparable period last year. Loss from operations included intangible amortization of $2.4 million and $2.6 million for the second quarters of 2017 and 2016, respectively.

Total other expenses for the second quarter of 2017 decreased $0.8 million to $0.9 million, compared to $1.7 million last year. The decrease in other expense, net, was primarily attributable to an increase of $1.8 million in unrealized gains from foreign currency remeasurement on intercompany payable balances, partially offset by an increase in interest expense of $1.0 million from the Convertible Senior Notes issued in August 2016.

Net loss for the second quarter of 2017 was $9.1 million, or $(0.21) per diluted share, compared to a loss of $11.1 million, or $(0.27) per diluted share, for the second quarter of 2016.

Six-Months 2017 Financial Results

Six Months Ended June 30, Increase / Decrease
2017 2016 $ Change % Change % Change
($ in thousands) (as reported) (constant currency)
United States $ 96,982 $ 87,431 $ 9,551 10.9 % 10.9 %
International 30,595 28,102 2,493 8.9 % 11.8 %
Total Revenue: $ 127,577 $ 115,533 $ 12,044 10.4 % 11.1 %

For the six months ended June 30, 2017, total revenue increased $12.1 million, or 10.4%, to $127.6 million, compared to $115.5 million for the six months ended June 30, 2016. Total revenue increased 11.1% year-over-year on a constant currency basis. U.S. revenue increased $9.6 million, or 10.9%, to $97.0 million for the first six months of 2017, compared to $87.4 million last year. International revenue increased $2.5 million, or 8.9%, to $30.6 million for the first six months of 2017, compared to $28.1 million last year. International revenue increased 11.8% year-over-year on a constant currency basis.

Six Months Ended June 30, Increase / Decrease
2017 2016 $ Change % Change
($ in thousands)
Complex Spine $ 37,478 $ 34,465 $ 3,013 8.7 %
Minimally Invasive 16,657 13,886 2,771 20.0 %
Degenerative 42,847 39,080 3,767 9.6 %
U.S. Revenue: $ 96,982 $ 87,431 $ 9,551 10.9 %

Sales in our complex spine, MIS and degenerative categories represented 38.6%, 17.2% and 44.2% of U.S. revenue, respectively, for the first six months of 2017.

As of June 30, 2017, we had cash and cash equivalents of $36.5 million as compared to $45.5 million as of December 31, 2016. We had working capital of $111.3 million as of June 30, 2017 as compared to $115.9 million as of December 31, 2016.

At June 30, 2017, outstanding long-term indebtedness included the carrying value of the Convertible Senior Notes of $38.0 million and the capital lease obligation of $34.4 million. The Company had no borrowings outstanding on the revolving credit facility as of June 30, 2017.

2017 Outlook

The Company is reaffirming its fiscal year 2017 guidance expectations. The Company continues to expect:

  • Total revenue on an as reported basis in the range of $263.0 million to $270.0 million, representing growth of 11% to 14% year-over-year, compared to total revenue of $236.6 million in fiscal year 2016.
  • Total revenue on a constant currency basis is expected to increase 12% to 15% year-over-year in 2017.
  • The Company continues to expect mid-teens growth in its U.S. business in 2017.
  • The Company now expects mid-single-digit growth in its International business in 2017, compared to an expectation of low single-digit growth previously.
  • Total net loss of approximately $34.0 million to $31.0 million, compared to a total net loss of $41.7 million in fiscal year 2016.
  • Adjusted EBITDA in a range of $6.0 million to $10.0 million, compared to Adjusted EBITDA of $0.6 million in fiscal year 2016.

Conference Call

Management will host a conference call at 5:00 p.m. Eastern Time on August 1st to discuss the results of the second quarter, and to host a question and answer session. Those who would like to participate may dial 888-505-4378 (719-457-1513 for international callers) and provide access code 1117408 approximately 10 minutes prior to the start of the call. A live webcast of the call will also be provided on the investor relations section of the Company’s website at http://Investors.K2M.com/.

For those unable to participate, a replay of the call will be available for two weeks at 888-203-1112 (719-457-0820 for international callers); access code 1117408. The webcast will be archived on the investor relations section of the Company’s website.

About K2M Group Holdings, Inc.

K2M Group Holdings, Inc. is a global leader of complex spine and minimally invasive solutions focused on achieving three-dimensional Total Body Balance. Since its inception, K2M has designed, developed, and commercialized innovative complex spine and minimally invasive spine technologies and techniques used by spine surgeons to treat some of the most complicated spinal pathologies. K2M has leveraged these core competencies into Balance ACS, a platform of products, services, and research to help surgeons achieve three-dimensional spinal balance across the axial, coronal, and sagittal planes, with the goal of supporting the full continuum of care to facilitate quality patient outcomes. The Balance ACS platform, in combination with the Company’s technologies, techniques, and leadership in the 3D-printing of spinal devices, enable K2M to compete favorably in the global spinal surgery market. For more information, visit www.K2M.com and connect with us on FacebookTwitterInstagramLinkedIn, and YouTube.

Forward-Looking Statements

This press release contains forward-looking statements that reflect current views with respect to, among other things, operations and financial performance.  Forward-looking statements include all statements that are not historical facts such as our statements about our expected financial results and guidance and our expectations for future business prospects.  In some cases, you can identify these forward-looking statements by the use of words such as, “outlook,” “guidance,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words.  Such forward-looking statements are subject to various risks and uncertainties including, among other things: our ability to achieve or sustain profitability in the future; our ability to demonstrate to spine surgeons the merits of our products; pricing pressures and our ability to compete effectively generally; collaboration and consolidation in hospital purchasing; inadequate coverage and reimbursement for our products from third-party payors; lack of long-term clinical data supporting the safety and efficacy of our products; dependence on a limited number of third-party suppliers; our ability to maintain and expand our network of direct sales employees, independent sales agencies and international distributors and their level of sales or distribution activity with respect to our products; proliferation of physician-owned distributorships in the industry; decline in the sale of certain key products; loss of key personnel; our ability to enhance our product offerings through research and development; our ability to manage expected growth; our ability to successfully acquire or invest in new or complementary businesses, products or technologies; our ability to educate surgeons on the safe and appropriate use of our products; costs associated with high levels of inventory; impairment of our goodwill and intangible assets; disruptions in our main facility or information technology systems;  our ability to ship a sufficient number of our products to meet demand; our ability to strengthen our brand; fluctuations in insurance cost and availability; our ability to comply with extensive governmental regulation within the United States and foreign jurisdictions; our ability  to maintain or obtain regulatory approvals and clearances within the United States and foreign jurisdictions; voluntary corrective actions by us or our distribution or other business partners or agency enforcement actions; recalls or serious safety issues with our products; enforcement actions by regulatory agencies for improper marketing or promotion; misuse or off-label use of our products; delays or failures in clinical trials and results of clinical trials; legal restrictions on our procurement, use, processing, manufacturing or distribution of allograft bone tissue; negative publicity concerning methods of tissue recovery and screening of donor tissue; costs and liabilities relating to environmental laws and regulations;  our failure or the failure of our agents to comply with fraud and abuse laws; U.S. legislative or Food and Drug Administration regulatory reforms; adverse effects of medical device tax provisions; potential tax changes in jurisdictions in which we conduct business; our ability to generate significant sales; potential fluctuations in sales volumes and our results of operations over the course of the year; uncertainty in future capital needs and availability of capital to meet our needs; our level of indebtedness and the availability of borrowings under our credit facility; restrictive covenants and the impact of other provisions in the indenture governing our convertible  senior notes and our credit facility;  continuing worldwide economic instability; our ability to protect our intellectual property rights; patent litigation and product liability lawsuits; damages relating to trade secrets or non-competition or non-solicitation agreements; risks associated with operating internationally; fluctuations in foreign currency exchange rates; our ability to comply with the Foreign Corrupt Practices Act and similar laws; our ability to implement and maintain effective internal control over financial reporting; potential volatility in our stock due; our lack of current plans to pay cash dividends; our ability to take advantage of certain reduced disclosure requirements and exemptions as a result of being an emerging growth company; increased costs and additional regulations and requirements as a result of no longer qualifying as an emerging growth company as of December 31, 2017; potential dilution by the future issuances of additional common stock in connection with our incentive plans, acquisitions or otherwise; anti-takeover provisions in our organizational documents and our ability to issue preferred stock without shareholder approval; potential limits on our ability to use our net operating loss carryforwards; and other risks and uncertainties, including those described under the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K filed with the SEC, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.  Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.  These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and our filings with the SEC.

We operate in a very competitive and challenging environment.  New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this release.  We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this press release relate only to events as of the date on which the statements are made.  We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.  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. Unless specifically stated otherwise, our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or other strategic transactions we may make.

K2M GROUP HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands, Except Share and Per Share Data)
June 30, December 31,
2017 2016
ASSETS    
Current assets:    
Cash and cash equivalents $ 36,546 $ 45,511
Accounts receivable, net 50,092 46,430
Inventory, net 66,751 61,897
Prepaid expenses and other current assets 7,039 6,147
Total current assets 160,428 159,985
Property, plant and equipment, net 50,938 50,714
Goodwill 121,814 121,814
Intangible assets, net 18,076 22,758
Other assets, net 30,725 28,254
Total assets $ 381,981 $ 383,525
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities under capital lease obligation $ 1,046 $ 973
Accounts payable 21,708 15,367
Accrued expenses 16,339 15,673
Accrued payroll liabilities 10,001 12,068
Total current liabilities 49,094 44,081
Convertible senior notes 38,003 36,894
Capital lease obligation, net of current maturities 34,392 34,933
Deferred income taxes, net 5,017 5,017
Other liabilities 1,069 1,032
Total liabilities 127,575 121,957
Stockholders’ equity:
Common stock, $0.001 par value, 750,000,000 shares authorized; 43,277,400 and
42,291,352 shares issued and 43,268,789 and 42,282,741 shares outstanding, respectively
43 42
Additional paid-in capital 485,713 474,512
Accumulated deficit (231,013 ) (211,081 )
Accumulated other comprehensive loss (203 ) (1,771 )
Treasury stock, at cost, 8,611 and 8,611 shares, respectively (134 ) (134 )
Total stockholders’ equity 254,406 261,568
Total liabilities and stockholders’ equity $ 381,981 $ 383,525
K2M GROUP HOLDINGS, INC.
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 $ 65,692 $ 59,227 $ 127,577 $ 115,533
Cost of revenue 22,522 19,631 44,001 39,235
Gross profit 43,170 39,596 83,576 76,298
Operating expenses:
Research and development 5,560 5,762 10,810 10,790
Sales and marketing 31,242 28,993 61,716 56,748
General and administrative 14,524 14,183 28,278 28,031
Total operating expenses 51,326 48,938 100,804 95,569
Loss from operations (8,156 ) (9,342 ) (17,228 ) (19,271 )
Other expense, net:
Foreign currency transaction gain (loss) 874   (972 ) 847 (552 )
Interest expense (1,731 )   (735 ) (3,463 ) (1,386 )
Total other expense, net (857 )   (1,707 ) (2,616 ) (1,938 )
Loss before income taxes (9,013 ) (11,049 ) (19,844 ) (21,209 )
Income tax expense 46 49 88 74
Net loss $ (9,059 ) $ (11,098 ) $ (19,932 ) $ (21,283 )
Basic and diluted $ (0.21 ) $ (0.27 ) $ (0.47 ) $ (0.51 )
Weighted average shares outstanding:
Basic and diluted 42,641,585 41,622,027 42,434,311 41,487,575
K2M GROUP HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 (In Thousands)
Six Months Ended June 30,
2017 2016
Operating activities
Net loss $ (19,932 ) $ (21,283 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 14,614 14,037
Provision for inventory reserves 2,192 1,876
Provision for allowance for doubtful accounts 50 (29 )
Stock-based compensation expense 2,880 3,855
Accretion of discounts and amortization of issuance costs of convertible senior notes 1,109
Other 3
Changes in operating assets and liabilities:
Accounts receivable (2,924 ) (7,733 )
Inventory (3,523 ) (7,254 )
Prepaid expenses and other assets (5,583 ) (5,796 )
Accounts payable, accrued expenses, and accrued payroll liabilities 2,929 6,270
Net cash used in operating activities (8,185 ) (16,057 )
Investing activities
Purchase of surgical instruments (6,442 ) (7,812 )
Purchase of property, plant and equipment (2,571 ) (14,275 )
Changes in cash restricted for leasehold improvements 61 4,449
Purchase of intangible assets (50 ) (1,282 )
Net cash used in investing activities (9,002 ) (18,920 )
Financing activities
Borrowings on bank line of credit 19,500
Principal payments under capital lease (469 )
Issuances and exercise of stock-based compensation benefit plans, net of income tax 8,322 876
Net cash provided by financing activities 7,853 20,376
Effect of exchange rate changes on cash and cash equivalents 369 (209 )
Net decrease in cash and cash equivalents (8,965 ) (14,810 )
Cash and cash equivalents at beginning of period 45,511 34,646
Cash and cash equivalents at end of period $ 36,546 $ 19,836
Significant non-cash investing activities
Leasehold improvements under capital lease $ $ 2,603
Additions to property, plant and equipment $ 500
Cash paid for:
Income taxes $ 131 $ 175
Interest $ 1,124 $ 171

K2M GROUP HOLDINGS, INC.
Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
 (In Thousands)

Use of Non-GAAP Financial Measures

This press release includes the non-GAAP financial measures of revenue in constant currency, Adjusted Gross Profit, and Adjusted EBITDA.

The Company presents these non-GAAP measures because it believes these measures are useful indicators of the Company’s operating performance.  Management uses these non-GAAP measures principally as a measure of the Company’s operating performance and believes that these measures are useful to investors because they are frequently used by analysts, investors and other interested parties to evaluate companies in the Company’s industry.  The Company also believes that these measures are useful to its management and investors as a measure of comparative operating performance from period to period.

Constant currency information compares results between periods as if exchange rates had remained constant period-to-period.  We calculate constant currency by converting the prior-year results using current-year foreign currency exchange rates.

Adjusted Gross Profit represents Gross Profit less amortization expense of surgical instruments.  The Company presented Adjusted Gross Profit because it believes it is a useful measure of the Company’s gross profit and operating performance because the measure is not burdened by the timing impact of instrument purchases and related amortization.

Adjusted EBITDA represents net loss plus interest expense, income tax expense, depreciation and amortization, stock-based compensation expense and foreign currency transaction (gain) loss.

The Company presents Adjusted EBITDA because it believes it is a useful indicator of the Company’s operating performance.  Management uses Adjusted EBITDA principally as a measure of the Company’s operating performance and for planning purposes, including the preparation of the Company’s annual operating budget and financial projections.

Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to net loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP and it should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items.  In addition, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future.  Adjusted EBITDA contains certain other limitations, including the failure to reflect the Company’s cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized.  In evaluating Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation.  The Company’s presentation of Adjusted EBITDA should not be construed to imply that the Company’s future results will be unaffected by any such adjustments.  Management compensates for these limitations by primarily relying on its GAAP results in addition to using Adjusted EBITDA supplementally.  The Company’s definition of Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

The following table presents reconciliations of gross profit to adjusted gross profit and net loss to Adjusted EBITDA for the periods presented.

Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Reconciliation from Gross Profit to Adjusted Gross Profit
Gross profit $ 43,170 $ 39,596 $ 83,576 $ 76,298
Surgical instrument amortization 3,605 3,425 7,069 6,697
Adjusted gross profit (a Non-GAAP Measure) $ 46,775 $ 43,021 $ 90,645 $ 82,995
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Reconciliations from Net Loss to Adjusted EBITDA
Net loss $ (9,059 ) $ (11,098 ) $ (19,932 ) $ (21,283 )
Interest expense 1,731 735 3,463 1,386
Income tax expense 46 49 88 74
Depreciation and amortization 7,419 7,294 14,614 14,037
Stock-based compensation expense 1,339 1,749 2,880 3,855
Foreign currency transaction (gain) loss (874 ) 972 (847 ) 552
Adjusted EBITDA (a Non-GAAP Measure) $ 602 $ (299 ) $ 266 $ (1,379 )

The following table presents a reconciliation of net loss to Adjusted EBITDA for our 2017 guidance:

Year Ended
December 31,
2017
Net loss $ (32,450 )
Interest expense 6,700
Income tax expense 100
Depreciation and amortization 27,500
Stock-based compensation expense 6,150
Foreign currency transaction loss
Adjusted EBITDA $ 8,000

The reconciliation assumes the mid-point of the Adjusted EBITDA range and the mid-point of each component of the reconciliation, corresponding to guidance of $6.0 million to $10.0 million for 2017.

Investor Contact:
Westwicke Partners on behalf of K2M Group Holdings, Inc.
Mike Piccinino, CFA
443-213-0500

Globus Medical Reports Second Quarter 2017 Results

AUDUBON, Pa., Aug. 02, 2017 (GLOBE NEWSWIRE) — Globus Medical, Inc. (NYSE:GMED), a leading musculoskeletal solutions manufacturer, today announced its financial results for the second quarter ended June 30, 2017.

  • Worldwide sales were $152.4 million, an increase of 10.8% as reported, or 11.0% in constant currency
  • Second quarter net income was $28.7 million, or 18.8% of sales
  • Diluted earnings per share (EPS) were $0.29
  • Non-GAAP diluted EPS were $0.32
  • Non-GAAP adjusted EBITDA was 35.1% of sales

David Paul, Chairman and CEO said, “Our worldwide sales for the second quarter were $152.4 million, an increase of 10.8% over the second quarter of 2016.  Our adjusted EBITDA margins remained at an outstanding 35.1% and we also delivered non-GAAP EPS of $0.32.

“We are pleased with our performance during the second quarter.  We made significant progress with competitive rep hiring, further expanded our in-house manufacturing capacity, and continued to run an extremely efficient organization with best in class adjusted EBITDA margins.  During the quarter we completed the acquisition of KB Medical, an innovative robotics company out of Switzerland. This acquisition significantly bolsters our development team, intellectual property, and product portfolio. KB Medical has a tremendous team of innovative developers that share our philosophy, approach, and strategy for robotic solutions in medicine.  We remain confident in our long-term growth prospects and our ability to sustain industry-leading profitability by continuing to execute on our strategy of rapid product introduction, expansion of our U.S. and international sales footprints, and diligent expense control.”

Second quarter sales in the U.S. increased by 1.2% compared to the second quarter of 2016.  International sales increased by 104.5% over the second quarter of 2016 on an as reported basis and 106.6% on a constant currency basis due to the Alphatec acquisition included in the second quarter of 2017.  Sales from the Alphatec acquisition contributed $15.5 million in the quarter.

Second quarter GAAP net income was $28.7 million, an increase of 11.1% over the same period last year.  Diluted EPS for the second quarter was $0.29, as compared to $0.27 for the second quarter 2016.  Non-GAAP diluted EPS for the second quarter was $0.32, compared to $0.29 in the second quarter of 2016.

The company generated net cash provided by operating activities of $26.0 million and non-GAAP free cash flow of $12.4 million in the second quarter.  Cash, cash equivalents and marketable securities ended the quarter at $373.1 million.  The company remains debt free.

2017 Annual Guidance
The company reaffirms guidance for full year 2017 sales of $625 million and non-GAAP fully diluted earnings per share of $1.27.

Conference Call Information
Globus Medical will hold a teleconference to discuss its 2017 second quarter results with the investment community at 5:30 p.m. Eastern Time today.  Globus invites all interested parties to join the call by dialing:

1-855-533-7141 United States Participants
1-720-545-0060 International Participants
There is no pass code for the teleconference.

For interested parties who do not wish to ask questions, the teleconference will be webcast live and may be accessed through a link on the Globus Medical website at investors.globusmedical.com.

The call will be archived until Wednesday, August 9, 2017.  The audio archive can be accessed by calling 1-855-859-2056 in the U.S. or 1-404-537-3406 from outside the U.S. The passcode for the audio replay is 1012-6289.

About Globus Medical, Inc.
Globus Medical, Inc. is a leading musculoskeletal solutions company based in Audubon, PA.  The company was founded in 2003 by an experienced team of professionals with a shared vision to create products that enable surgeons to promote healing in patients with musculoskeletal disorders.

Non-GAAP Financial Measures
To supplement our financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), management uses certain non-GAAP financial measures.  For example, non-GAAP adjusted EBITDA, which represents net income before interest income, net and other non-operating expenses, provision for income taxes, depreciation and amortization, stock-based compensation, provision for litigation, and acquisition related costs, is useful as an additional measure of operating performance, and particularly as a measure of comparative operating performance from period to period, as it is reflective of changes in pricing decisions, cost controls and other factors that affect operating performance, and it removes the effect of our capital structure, asset base, income taxes and interest income and expense.  Our management also uses non-GAAP adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections.  Provision for litigation represents costs incurred for litigation settlements or unfavorable verdicts when the loss is known or considered probable and the amount can be reasonably estimated, or in the case of a favorable settlement, when income is realized.  Acquisition related costs represents the change in fair value of business-acquisition-related contingent consideration; costs related to integrating recently acquired businesses including but not limited to costs to exit or convert contractual obligations, severance, and information system conversion; and specific costs related to the consummation of the acquisition process such as banker fees, legal fees, and other acquisition- related professional fees.

In addition, for the period ended June 30, 2017 and for other comparative periods, we are presenting non-GAAP net income and non-GAAP diluted earnings per share, which represents net income and diluted earnings per share excluding the provision for litigation, amortization of intangibles, acquisition related costs and the tax effects of such adjustments.  The tax impact of these non-GAAP adjustments is calculated based on the consolidated effective tax rate on a GAAP basis, applied to the non-GAAP adjustments, unless the underlying item has a materially different tax treatment, in which case the estimated tax rate applicable to the adjustment is used.  We believe these non-GAAP measures are also useful indicators of our operating performance, and particularly as additional measures of comparative operating performance from period to period as they remove the effects of litigation, amortization of intangibles, acquisition related costs, and the tax effects of such adjustments, which we believe are not reflective of underlying business trends.  Additionally, for the periods ended June 30, 2017 and for other comparative periods, we also define the non-GAAP measure of free cash flow as the net cash provided by operating activities, adjusted for the impact of restricted cash, less the cash impact of purchases of property and equipment.  We believe that this financial measure provides meaningful information for evaluating our overall liquidity for comparative periods as it facilitates an assessment of funds available to satisfy current and future obligations and fund acquisitions.  Furthermore, the non-GAAP measure of constant currency sales growth is calculated by translating current year sales at the same average exchange rates in effect during the applicable prior year period.  We believe constant currency sales growth provides insight to the comparative increase or decrease in period sales, in dollar and percentage terms, excluding the effects of fluctuations in foreign currency exchange rates.

Non-GAAP adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, free cash flow and constant currency sales growth are not calculated in conformity with U.S. GAAP within the meaning of Item 10(e) of Regulation S-K.  Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial measures prepared in accordance with U.S. GAAP.  These measures do not include certain expenses that may be necessary to evaluate our liquidity or operating results.  Our definitions of non-GAAP adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, free cash flow and constant currency sales growth may differ from that of other companies and therefore may not be comparable.  Additionally, we have recast prior periods for non-GAAP net income and non-GAAP diluted earnings per share.

Safe Harbor Statements
All statements included in this press release other than statements of historical fact are forward-looking statements and may be identified by their use of words such as “believe,” “may,” “might,” “could,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and other similar terms.  These forward-looking statements are based on our current assumptions, expectations and estimates of future events and trends.  Forward-looking statements are only predictions and are subject to many risks, uncertainties and other factors that may affect our businesses and operations and could cause actual results to differ materially from those predicted.  These risks and uncertainties include, but are not limited to, factors affecting our quarterly results, our ability to manage our growth, our ability to sustain our profitability, demand for our products, our ability to compete successfully (including without limitation our ability to convince surgeons to use our products and our ability to attract and retain sales and other personnel), our ability to rapidly develop and introduce new products, our ability to develop and execute on successful business strategies, our ability to successfully integrate the international operations acquired from Alphatec, both in general and on our anticipated timeline, our ability to transition Alphatec’s international customers to Globus Medical products, our ability to realize the expected benefits to our results from the Alphatec acquisition, our ability to comply with laws and regulations that are or may become applicable to our businesses, our ability to safeguard our intellectual property, our success in defending legal proceedings brought against us, trends in the medical device industry, general economic conditions, and other risks.  For a discussion of these and other risks, uncertainties and other factors that could affect our results, you should refer to the disclosure contained in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, including the sections labeled “Risk Factors” and “Cautionary Note Concerning Forward-Looking Statements,” and in our Forms 10-Q, Forms 8-K and other filings with the Securities and Exchange Commission.  These documents are available at www.sec.gov.  Moreover, we operate in an evolving environment.  New risk factors and uncertainties emerge from time to time and it is not possible for us to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.  Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements.  Forward-looking statements contained in this press release speak only as of the date of this press release.  We undertake no obligation to update any forward-looking statements as a result of new information, events or circumstances or other factors arising or coming to our attention after the date hereof.

GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Six Months Ended
(In thousands, except per share amounts) June 30,
2017
June 30,
2016
June 30,
2017
June 30,
2016
Sales $ 152,390 $ 137,489 $ 308,199 $ 276,753
Cost of goods sold 37,199 32,731 72,799 64,250
Gross profit 115,191 104,758 235,400 212,503
Operating expenses:
Research and development 10,713 10,594 21,379 20,624
Selling, general and administrative 64,438 53,312 131,497 107,110
Provision for litigation 243 3,056 243 3,056
Amortization of intangibles 1,809 397 3,591 789
Acquisition related costs 617 (519 ) 1,005 155
Total operating expenses 77,820 66,840 157,715 131,734
Operating income 37,371 37,918 77,685 80,769
Other income, net 2,186 418 4,286 1,178
Income before income taxes 39,557 38,336 81,971 81,947
Income tax provision 10,890 12,530 24,590 28,131
Net income $ 28,667 $ 25,806 $ 57,381 $ 53,816
Earnings per share:
Basic $ 0.30 $ 0.27 $ 0.60 $ 0.56
Diluted $ 0.29 $ 0.27 $ 0.59 $ 0.56
Weighted average shares outstanding:
Basic 96,161 95,585 96,079 95,491
Diluted 97,818 96,426 97,483 96,359
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value) June 30,
2017
December 31,
2016
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 149,669 $ 132,639
Restricted cash 478 477
Short-term marketable securities 162,520 157,673
Accounts receivable, net of allowances of $3,645 and $2,771, respectively 95,489 91,983
Inventories 111,108 112,692
Prepaid expenses and other current assets 5,879 14,502
Income taxes receivable 9,986 3,800
Total current assets 535,129 513,766
Property and equipment, net of accumulated depreciation of $181,223 and $166,711, respectively 130,123 124,229
Long-term marketable securities 60,932 60,444
Note receivable 30,000 30,000
Intangible assets, net 90,036 61,706
Goodwill 112,769 105,926
Other assets 1,051 928
Deferred income taxes 34,974 30,638
Total assets $ 995,014 $ 927,637
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 16,291 $ 17,472
Accrued expenses 41,707 46,401
Income taxes payable 1,400 1,911
Business acquisition liabilities, current 9,663 14,108
Total current liabilities 69,061 79,892
Business acquisition liabilities, net of current portion 10,676 5,972
Deferred income taxes 8,175 7,876
Other liabilities 1,802 1,819
Total liabilities 89,714 95,559
Commitments and contingencies
Equity:
Common stock; $0.001 par value.  Authorized 785,000 shares; issued
  and outstanding 96,289 and 95,930 shares at June 30, 2017 and December 31, 2016, respectively 96 96
Additional paid-in capital 224,796 211,725
Accumulated other comprehensive loss (5,872 ) (8,642 )
Retained earnings 686,280 628,899
Total equity 905,300 832,078
Total liabilities and equity $ 995,014 $ 927,637
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
(In thousands) June 30,
2017
June 30,
2016
Cash flows from operating activities:
Net income $ 57,381 $ 53,816
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 22,935 13,698
Amortization of premium on marketable securities 1,855 2,085
Write-down for excess and obsolete inventories 4,962 4,536
Stock-based compensation expense 7,062 5,690
Allowance for doubtful accounts 958 148
Change in fair value of contingent consideration 811
Change in deferred income taxes (4,238 ) 1,625
(Increase)/decrease in:
Restricted cash (1 ) 14,884
Accounts receivable (3,172 ) 2,624
Inventories (4,652 ) (3,812 )
Prepaid expenses and other assets 8,506 1,114
Increase/(decrease) in:
Accounts payable (1,660 ) (1,707 )
Accrued expenses and other liabilities (4,497 ) (10,078 )
Income taxes payable/receivable (6,825 ) (5,796 )
Net cash provided by operating activities 79,425 78,827
Cash flows from investing activities:
Purchases of marketable securities (119,196 ) (172,886 )
Maturities of marketable securities 102,733 129,495
Sales of marketable securities 9,503 16,602
Purchases of property and equipment (25,061 ) (20,142 )
Acquisition of businesses (31,501 )
Net cash used in investing activities (63,522 ) (46,931 )
Cash flows from financing activities:
Payment of business acquisition liabilities (5,234 ) (400 )
Proceeds from exercise of stock options 5,911 3,575
Net cash provided by financing activities 677 3,175
Effect of foreign exchange rate on cash 450 119
Net increase in cash and cash equivalents 17,030 35,190
Cash and cash equivalents, beginning of period 132,639 60,152
Cash and cash equivalents, end of period $ 149,669 $ 95,342
Supplemental disclosures of cash flow information:
Interest paid 21 2
Income taxes paid $ 35,475 $ 32,214
Supplemental Financial Information
Sales by Geographic Area:
(Unaudited)   Three Months Ended Six Months Ended
(In thousands) June 30,
2017
June 30,
2016
June 30,
2017
June 30,
2016
United States $ 126,271 $ 124,716 $ 255,934 $ 252,276
International 26,119 12,773 52,265 24,477
Total sales $ 152,390 $ 137,489 $ 308,199 $ 276,753
Sales by Product Category:
(Unaudited)   Three Months Ended Six Months Ended
(In thousands) June 30,
2017
June 30,
2016
June 30,
2017
June 30,
2016
Innovative Fusion $ 79,866 $ 69,442 $ 161,738 $ 139,488
Disruptive Technology 72,524 68,047 146,461 137,265
Total sales $ 152,390 $ 137,489 $ 308,199 $ 276,753
Liquidity and Capital Resources:
(Unaudited) June 30,
2017
December 31,
2016
(In thousands)
Cash and cash equivalents $ 149,669 $ 132,639
Short-term marketable securities 162,520 157,673
Long-term marketable securities 60,932 60,444
Total cash, cash equivalents and marketable securities $ 373,121 $ 350,756
Available borrowing capacity under revolving credit facility 50,000 50,000
Working capital $ 466,068 $ 433,874

The following tables reconcile GAAP to Non-GAAP financial measures.

Non-GAAP Adjusted EBITDA Reconciliation Table:
(Unaudited) Three Months Ended Six Months Ended
(In thousands, except percentages) June 30,
2017
June 30,
2016
June 30,
2017
June 30,
2016
Net income $ 28,667 $ 25,806 $ 57,381 $ 53,816
Interest income, net (1,590 ) (602 ) (3,008 ) (1,098 )
Provision for income taxes 10,890 12,530 24,590 28,131
Depreciation and amortization 10,695 7,022 22,935 13,698
EBITDA 48,662 44,756 101,898 94,547
Provision for litigation 243 3,056 243 3,056
Stock-based compensation expense 3,571 2,920 7,062 5,690
Acquisition related costs 968 (519 ) 2,054 155
Adjusted EBITDA $ 53,444 $ 50,213 $ 111,257 $ 103,448
Net income as a percentage of sales 18.8 % 18.8 % 18.6 % 19.4 %
Adjusted EBITDA as a percentage of sales 35.1 % 36.5 % 36.1 % 37.4 %
Non-GAAP Net Income Reconciliation Table:
(Unaudited) Three Months Ended Six Months Ended
(In thousands) June 30,
2017
June 30,
2016
June 30,
2017
June 30,
2016
Net income $ 28,667 $ 25,806 $ 57,381 $ 53,816
Provision for litigation 243 3,056 243 3,056
Amortization of intangibles 1,809 397 3,591 789
Acquisition related costs 968 (519 ) 2,054 155
Tax effect of adjusting items (840 ) (990 ) (1,766 ) (1,372 )
Non-GAAP net income $ 30,847 $ 27,750 $ 61,503 $ 56,444
Non-GAAP Diluted Earnings Per Share Reconciliation Table:
(Unaudited) Three Months Ended Six Months Ended
(Per share amounts) June 30,
2017
June 30,
2016
June 30,
2017
June 30,
2016
Diluted earnings per share, as reported $ 0.29 $ 0.27 $ 0.59 $ 0.56
Provision for litigation 0.03 0.03
Amortization of intangibles 0.02 0.04 0.01
Acquisition related costs 0.01 (0.01 ) 0.02
Tax effect of adjusting items (0.01 ) (0.01 ) (0.02 ) (0.01 )
Non-GAAP diluted earnings per share* $ 0.32 $ 0.29 $ 0.63 $ 0.59
* amounts might not add due to rounding
Non-GAAP Free Cash Flow Reconciliation Table:
(Unaudited) Three Months Ended Six Months Ended
(In thousands)   June 30,
2017
June 30,
2016
June 30,
2017
June 30,
2016
Net cash provided by operating activities $ 25,976 $ 23,270 $ 79,425 $ 78,827
Adjustment for impact of restricted cash 1 784 1 (14,884 )
Purchases of property and equipment (13,528 ) (10,776 ) (25,061 ) (20,142 )
Non-GAAP free cash flow $ 12,449 $ 13,278 $ 54,365 $ 43,801
Non-GAAP Constant Currency Sales Growth Comparative Table:
(Unaudited) Three Months Ended Reported
Growth
Currency
Impact on
Current Period
Constant
Currency
Growth
(In thousands, except percentages) June 30,
2017
June 30,
2016
United States $ 126,271 $ 124,716 1.2 % 1.2 %
International 26,119 12,773 104.5 % $ (275 ) 106.6 %
Total sales $ 152,390 $ 137,489 10.8 % $ (275 ) 11.0 %
(Unaudited) Six Months Ended Reported
Growth
Currency
Impact on
Current Period
Constant
Currency
Growth
(In thousands, except percentages) June 30,
2017
June 30,
2016
United States $ 255,934 $ 252,276 1.4 % 1.4 %
International 52,265 24,477 113.5 % $ (639 ) 116.1 %
Total sales $ 308,199 $ 276,753 11.4 % $ (639 ) 11.6 %
Contact:
Daniel Scavilla
Senior Vice President, Chief Financial Officer
Phone: (610) 930-1800
Email: investors@globusmedical.com
www.globusmedical.com

First Surgical Implantation of ZIP ULTRA® MIS Interspinous Device Performed in Argentina

CARLSBAD, Calif., Aug. 02, 2017 (GLOBE NEWSWIRE) — Aurora Spine Corporation (“Aurora Spine” or the “Company”) (TSXV:ASG) announced today the first surgical implantation of the company’s ZIP ULTRA® minimally invasive interspinous device in Latin America in Buenos Aires, Argentina. This surgery is part of Aurora Spine’s efforts to expand the use of its ZIP® MIS Fusion System worldwide. The surgery was performed at the Clinique Hospital San Miguel Arcangel by the surgeon team of Prof. Santiago Cerneaz and Dr. Guillermo Segvic.

“The ZIP ULTRA MIS fusion system is a very intuitive and easy to use system that allows me to perform a short and safe surgery while avoiding the risk of nerve impact,” said Prof. Cerneaz and Dr. Segvic. “The instrumentation is very intuitive and the implantation is fast and simple via a small incision.”

“We are very excited to now offer our ZIP MIS product portfolio in Argentina,” said Laszlo Garamszegi, Chief Technology Officer of Aurora Spine. The ZIP family of products is designed to be simple, safe and secure and we are convinced it will improve patient outcomes in Argentina.”

“Aurora is changing spine surgery,” said Trent Northcutt, President and CEO of Aurora Spine. “The combination of the proven ONE-STEP™ locking mechanism and our minimally invasive design allows patients in Latin America to receive the Screwless Procedure™ as an alternative to pedicle screws.”

Aurora Spine’s ZIP ULTRA MIS interspinous fixation implant for spinal fusion consists of a ONE-STEP™ locking mechanism, which eliminates the use of a set screw, articulating spikes and comes in various sizes to accommodate variations in patient anatomy.

About Aurora Spine

Aurora Spine is an early stage company focused on bringing new solutions to the spinal implant market through a series of screwless, innovative, minimally invasive, regenerative spinal implant technologies. Aurora Spine continues to position itself at the forefront of spinal surgery procedures, focusing on minimally invasive spine surgery technologies. Aurora Spine is changing spine surgery by focusing on disruptive technologies following the Company’s commitment to – Simplifying the Complex.

Forward-Looking Statements

This news release contains forward-looking information that involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Aurora Spine, including, without limitation, those listed under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” in Aurora Spine’s final prospectus (collectively, “forward-looking information”). Forward-looking information in this news release includes information concerning the proposed use and success of the company’s products in surgical procedures. Aurora Spine cautions investors of Aurora Spine’s securities about important factors that could cause Aurora Spine’s actual results to differ materially from those projected in any forward-looking statements included in this news release. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ unilaterally from those expressed in such forward-looking statements. No assurance can be given that the expectations set out herein will prove to be correct and, accordingly, prospective investors should not place undue reliance on these forward looking statements. These statements speak only as of the date of this press release and Aurora Spine does not assume any obligation to update or revise them to reflect new events or circumstances.

CONTACT INFORMATION

Aurora Spine Corporation

Trent Northcutt
President and Chief Executive Officer
(760) 424-2004

Sarina Mason
Chief Financial Officer
(760) 424-2004

www.aurora-spine.com

Globus Medical Announces Acquisition of Robotics Developer KB Medical

AUDUBON, Pa., Aug. 02, 2017 (GLOBE NEWSWIRE) — Globus Medical, Inc. (GMED), a leading musculoskeletal solutions manufacturer, today announced that the acquisition of KB Medical, SA, a robotic developer based in Lausanne, Switzerland, closed during the second quarter of 2017.

“The acquisition of KB Medical demonstrates Globus Medical’s continued commitment and enthusiasm for the potential impact of robotic technology on surgery,” said Dave Demski, President, Emerging Technologies. “The addition of KB Medical will enable Globus Medical to accelerate, enhance and expand our product portfolio in Imaging, Navigation and Robotics. KB Medical’s experienced team of technology development professionals, its strong IP portfolio, and shared philosophy for robotic solutions in medicine strengthen Globus Medical’s position in this strategic area.”

About Globus Medical, Inc.
Globus Medical, Inc. is a leading musculoskeletal solutions company based in Audubon, PA.  The company was founded in 2003 by an experienced team of professionals with a shared vision to create products that enable surgeons to promote healing in patients with musculoskeletal disorders.

Safe Harbor Statements

All statements included in this press release other than statements of historical fact are forward-looking statements and may be identified by their use of words such as “believe,” “may,” “might,” “could,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and other similar terms.  These forward-looking statements are based on our current assumptions, expectations and estimates of future events and trends.  Forward-looking statements are only predictions and are subject to many risks, uncertainties and other factors that may affect our businesses and operations and could cause actual results to differ materially from those predicted.  These risks and uncertainties include, but are not limited to, factors affecting our quarterly results, our ability to manage our growth, our ability to sustain our profitability, demand for our products, our ability to compete successfully (including without limitation our ability to convince surgeons to use our products and our ability to attract and retain sales and other personnel), our ability to rapidly develop and introduce new products, our ability to develop and execute on successful business strategies, our ability to successfully integrate the international operations acquired from Alphatec, both in general and on our anticipated timeline, our ability to transition Alphatec’s international customers to Globus Medical products, our ability to realize the expected benefits to our results from the Alphatec acquisition, our ability to comply with laws and regulations that are or may become applicable to our businesses, our ability to safeguard our intellectual property, our success in defending legal proceedings brought against us, trends in the medical device industry, general economic conditions, and other risks.  For a discussion of these and other risks, uncertainties and other factors that could affect our results, you should refer to the disclosure contained in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, including the sections labeled “Risk Factors” and “Cautionary Note Concerning Forward-Looking Statements,” and in our Forms 10-Q, Forms 8-K and other filings with the Securities and Exchange Commission.  These documents are available at www.sec.gov.  Moreover, we operate in an evolving environment.  New risk factors and uncertainties emerge from time to time and it is not possible for us to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.  Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements.  Forward-looking statements contained in this press release speak only as of the date of this press release.  We undertake no obligation to update any forward-looking statements as a result of new information, events or circumstances or other factors arising or coming to our attention after the date hereof.

SI-BONE, Minimally Invasive SI Joint Fusion using the iFuse Implant System® Maintains Exclusive Coverage with BCBS of IL, MT,NM,OK,TX

SAN JOSE, Calif.Aug. 2, 2017 /PRNewswire/ — SI-BONE, Inc., an innovative medical device company that pioneered the use of the iFuse Implant System® (“iFuse”), a triangular shaped minimally invasive surgical (MIS) device indicated for fusion for certain disorders of the sacroiliac (SI) joint, announced that Health Care Service Corporation (HCSC) and its divisions of Blue Cross and Blue Shield® (BCBS) in IllinoisMontanaNew MexicoOklahoma, and Texas have updated their coverage policy for MIS SI joint fusion and maintained their exclusive positive coverage for the iFuse Implant System.  The updated policy, which took effect July 15th, 2017, includes additional iFuse Implant System clinical publications and can be found at the link below.

 http://www.medicalpolicy.hcsc.net/medicalpolicy/activePolicyPage?lid=j4cm155u&corpEntCd=IL1

The policy specifically states that “use of minimally invasive or percutaneous SIJ fusion products other than titanium triangular implants/devices (e.g., iFuse Implant System) is considered experimental, investigational and/or unproven.”  In other words, only the iFuse Implant System is considered a proven MIS SI joint fusion procedure and is covered by the policy.

Blue Cross and Blue Shield® (BCBS) plans of IllinoisMontanaNew MexicoOklahoma and Texas, under the umbrella of HCSC, is the largest customer-owned health insurer in the United States and the fourth largest commercial health insurer overall, covering approximately 15 million lives. The iFuse exclusive positive coverage policy, which originally became effective January 1, 2017, is based on the large body of published clinical evidence supporting the use of the patented triangular titanium iFuse ImplantsTM for SI joint fusion.  The policy has been further strengthened with additional iFuse Implant publications demonstrating the safety and effectiveness of the iFuse ProcedureTM.  The BCBS plans in IllinoisMontanaNew MexicoOklahoma and Texas join SelectHealth in Utah and Geisinger in Pennsylvania as a growing number of commercial health plans to offer exclusive positive coverage for the iFuse Implant System.

Ralph Rashbaum, MD of the Texas Back Institute in Plano, TX commented: “this exclusive coverage policy update by the five Blue Cross and Blue Shield plans in IllinoisOklahomaNew MexicoMontana and my home state of Texas further validates the strength of the clinical evidence supporting the iFuse Implant System as the only minimally invasive SI joint fusion device with appropriate and sufficient data to support coverage.”

About SI Joint Dysfunction
The SI joint has been attributed as a source of pain in 15-30 percent of patients with chronic low back pain1-4, and in up to 43 percent of patients with new onset or persistent low back pain after lumbar fusion.5  Patients with SI joint dysfunction may feel pain in the lower back, buttocks and/or legs. This can be especially true while transitioning from sitting to standing, stepping up or down, bending and lifting, walking, sleeping or even just sitting on the affected side.

SI joint dysfunction is often misdiagnosed or the pain misattributed to other causes, as not all healthcare providers evaluate the SI joint, and most patients do not ask about it.  While not commonly diagnosed, SI joint disorders can be identified through a series of simple tests that include when a patient identifies their pain by pointing directly to the PSIS (the bony prominence overlying the SI joint), known as the Fortin Finger Test.  The diagnosis is confirmed with physical examination and image-guided diagnostic injections directly in the SI joint.

About the iFuse Implant System
The iFuse Implant System provides a minimally invasive surgical solution to fuse the SI joint using triangular titanium implants that create an interference fit within the ilium and sacrum.  The triangular implant shape and press fit insertion technique are both patented and designed to provide immediate fixation by minimizing the SI joint’s unique motion of nutation.  The implants have a porous surface that provides an environment conducive to ongrowth and ingrowth6, facilitating long-term fusion of the joint.  The iFuse Implant, marketed since 2009, is the only commercially available SI joint fusion device in the United States with published prospective clinical evidence from multiple studies that demonstrate improvement in pain, patient function and quality of life.

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

About SI-BONE, Inc.
SI-BONE, Inc. (San Jose, California) is a leading innovative medical device company dedicated to the development, manufacture and commercialization of minimally invasive surgical devices for the treatment of patients with low back symptoms related to certain sacroiliac joint disorders.  SI-BONE, Inc. first received 510(k) clearance to market its iFuse Implant System from the Food and Drug Administration in November 2008. The CE mark for European commercialization was obtained in November 2010.

SI-BONE and iFuse Implant System are registered trademarks of SI-BONE, Inc. ©2017 SI-BONE, Inc. All Rights Reserved. 9954.080217

1.

Bernard TN, Kirkaldy-Willis WH. Recognizing specific characteristics of nonspecific low back pain. Clin Orthop Relat Res. 1987;217:266–80.

2.

Schwarzer AC, Aprill CN, Bogduk N. The Sacroiliac Joint in Chronic Low Back Pain. Spine. 1995;20:31–7.

3.

Maigne JY, Aivaliklis A, Pfefer F. Results of Sacroiliac Joint Double Block and Value of Sacroiliac Pain Provocation Tests in 54 Patients with Low Back Pain. Spine. 1996;21:1889–92.

4.

Sembrano JN, Polly DW Jr. How Often is Low Back Pain Not Coming From The Back? Spine. 2009;34:E27–32.
DePalma M, Ketchum JM, Saullo TR. Etiology of Chronic Low Back Pain Patients Having Undergone Lumbar Fusion. Pain Med. 2011;12:732–9.

5.

DePalma M, Ketchum JM, Saullo TR. Etiology of Chronic Low Back Pain Patients Having Undergone Lumbar Fusion. Pain Med. 2011;12:732–9.

6.

MacBarb, et al., “Fortifying the Bone-Implant Interface Part II: An In Vivo Evaluation of 3D-Printed and TPS-Coated Triangular Implants,” Int J Spine Surg, 2017; 11.

 

SOURCE SI-BONE, Inc.

Related Links

http://www.si-bone.com

Titan Spine Continues Strong Sales Performance with 49% YOY Growth Rate at Mid-Year 2017

August 02, 2017

MEQUON, Wis.–(BUSINESS WIRE)–Titan Spine, a medical device surface technology company focused on developing innovative spinal interbody fusion implants, today announced that it continues its strong revenue acceleration for the second quarter of 2017, driven by the increasing demand for the Company’s nanoLOCK® surface technology. nanoLOCK® is the company’s next-generation surface technology featuring enhanced micro and nano-scaled architecture, proven to significantly improve the osteogenic response it creates.1

The company reports the following for the second quarter:

  • Surpassed 50,000 implantations of its Endoskeleton® interbody fusion devices since inception
  • nanoLOCK® sales volume has increased by 42% since the close of the first quarter
  • nanoLOCK® has been utilized to date by 150 surgeons in 98 hospitals
  • Achieved 2,500 implantations of nanoLOCK® since launch

Ted Bird, Chief Commercial Officer of Titan Spine, commented, “Following a record first quarter, we continued to exceed expectations during the second quarter for a strong close to the mid-2017 mark. The significant demand for nanoLOCK® is a direct reflection of our expanded sales team’s ability to reach more surgeons and surgeons’ recognition of the advantages our surface technology provides at the nano-cellular level for helping patients heal faster following spine fusion surgery. In fact, we have more than doubled the number of surgeon customers using nanoLOCK in the second quarter compared to the first. We are pleased that our second quarter achievements demonstrate a growing confidence and continued adoption of nanoLOCK®.”

Steve Cichy, Executive Vice President of Sales of Titan Spine, added, “The demand for nanoLOCK® has certainly fueled our significant sales growth over the first half of this year. We have recently invested significant capital to beef up our instrument set and implant inventory to meet this growing demand, which will start to pay dividends over the remainder of the year and beyond.”

Titan Spine offers a full line of Endoskeleton® titanium implants that feature its proprietary nanoLOCK® surface technology, which was launched in the U.S. in October 2016 following FDA clearance in late 2014. The nanoLOCK® surface technology consists of a unique combination of roughened topographies at the macro, micro, and nano levels (MMN™). This unique combination of surface topographies is designed to create an optimal host-bone response and actively participate in the fusion process by promoting the upregulation of osteogenic and angiogenic factors necessary for bone growth, encouraging natural production of bone morphogenetic proteins (BMPs), downregulating inflammatory factors, and creating the potential for a faster and more robust fusion.2,3,4 All Endoskeleton® devices are covered by the company’s risk share warranty.

About Titan Spine

Titan Spine, LLC is a surface technology company focused on the design and manufacture of interbody fusion devices for the spine. The company is committed to advancing the science of surface engineering to enhance the treatment of various pathologies of the spine that require fusion. Titan Spine, located in Mequon, Wisconsin and Laichingen, Germany, markets a full line of Endoskeleton® interbody devices featuring its proprietary textured surface in the U.S. and portions of Europe through its sales force and a network of independent distributors. To learn more, visit www.titanspine.com.

nanoLOCK® named the winner of Back Pain Centers of America’s 2017 Awards of Excellence for the Technology Innovation Award

1 Olivares-Navarrete, R., Hyzy S.L., Gittens, R.A., Berg, M.E., Schneider, J.M., Hotchkiss, K., Schwartz, Z., Boyan, B. D. Osteoblast lineage cells can discriminate microscale topographic features on titanium-aluminum-vanadium surfaces. Ann Biomed Eng. 2014 Dec; 42 (12): 2551-61.

Olivares-Navarrete, R., Hyzy, S.L., Slosar, P.J., Schneider, J.M., Schwartz, Z., and Boyan, B.D. (2015). Implant materials generate different peri-implant inflammatory factors: PEEK promotes fibrosis and micro-textured titanium promotes osteogenic factors. Spine, Volume 40, Issue 6, 399–404.

Olivares-Navarrete, R., Gittens, R.A., Schneider, J.M., Hyzy, S.L., Haithcock, D.A., Ullrich, P.F., Schwartz, Z., Boyan, B.D. (2012). Osteoblasts exhibit a more differentiated phenotype and increased bone morphogenetic production on titanium alloy substrates than poly-ether-ether-ketone. The Spine Journal, 12, 265-272.

4 Olivares-Navarrete, R., Hyzy, S.L., Gittens, R.A., Schneider, J.M., Haithcock, D.A., Ullrich, P.F., Slosar, P. J., Schwartz, Z., Boyan, B.D. (2013). Rough titanium alloys regulate osteoblast production of angiogenic factors. The Spine Journal, 13, 1563-1570.

Contacts

Company:
Titan Spine
Andrew Shepherd, 866-822-7800
ashepherd@titanspine.com
or
Media:
The Ruth Group
Kirsten Thomas, 508-280-6592
kthomas@theruthgroup.com

AlloSource Releases AlloFuse Line Extension

CENTENNIAL, Colo., Aug. 1, 2017 /PRNewswire-USNewswire/ — AlloSource, one of the nation’s largest providers of cartilage, bone, skin, soft-tissue, and cellular allografts to advance patient healing in surgical procedures and wound care, today announced the release of AlloFuse® Select CM, a premium addition to AlloSource’s AlloFuse portfolio.

AlloFuse Select CM combines osteoconductive, osteoinductive, and osteogenic properties to initiate and nurture bone growth, delivering the benefits of autograft bone without the potential drawbacks. The product is clinically proven to activate and support bone formation and can be used in a variety of spinal, neurologic, and orthopedic procedures. This cellular allograft matrix also has good handling characteristics, as it is moldable and compressible for insertion into interbody implants or placement around anatomical structures.

“AlloFuse Select CM underscores our commitment to offering surgeons the advanced solutions they need to support their patients’ healing,” said Kerr Holbrook, AlloSource Chief Commercial Officer. “Our passion for our donors and recipients is reflected in the continued expansion of the regenerative therapies we provide.”

The addition of AlloFuse Select CM enhances the AlloFuse portfolio of demineralized bone fiber, putty, paste, and gel allografts. This line expansion provides surgeons with a premium AlloSource cellular allograft to meet a variety of needs for patients.

About AlloSource

AlloSource is one of the largest nonprofit cellular and tissue networks in the country, offering more than 200 types of precise cartilage, cellular, bone, skin and soft-tissue allografts to advance patient healing. For more than 20 years, AlloSource’s products have bridged the proven science of allografts with the advanced technology of cells, offering life-saving and life-enhancing possibilities in spine, sports medicine, foot and ankle, orthopedic, reconstructive, trauma and wound care procedures. As the world’s largest processor of cellular bone allografts, fresh cartilage tissue for joint repair and skin allografts to help patients heal from severe burns, AlloSource delivers unparalleled expertise and service to its growing network of surgeons, partners, and the country’s most reputable organ procurement organizations. The company is accredited by the American Association of Tissue Banks and is headquartered in Centennial, CO. For more information, please visit allosource.org or our educational website, allograftpossibilities.org.

Media Contact
Megan Duggan
AlloSource
720. 382. 2766
mduggan@allosource.org

 

SOURCE AlloSource

Integra LifeSciences Reports Second Quarter 2017 Financial Results

PLAINSBORO, N.J., July 26, 2017 (GLOBE NEWSWIRE) — Integra LifeSciences Holdings Corporation (NASDAQ:IART), a leading global medical technology company, today reported its financial results for the second quarter ending June 30, 2017.

Highlights:

  • The company is tightening full-year 2017 revenue guidance to a new range of $1.125 billion to $1.140 billion, reflecting changes in foreign currency expectations and overperformance in Derma Sciences.  The company is also revising 2017 full-year organic sales growth to a new range of 6.0% to 7.0% from its previous guidance of 7.0% to 8.5%, which reflects expectations for lower organic sales growth from Dural Repair;
  • The company is maintaining previously issued 2017 full-year GAAP and adjusted earnings per share guidance;
  • Second quarter revenue increased 13.2% over the prior year quarter to $282.2 million, and organic revenue increased 4.6%. Derma Sciences contributed $23.8 million of revenue to second quarter results;
  • Second quarter GAAP gross margin increased 80 basis points over the prior year’s quarter to 64.9% due to lower purchase accounting adjustments from the TEI acquisition. Adjusted gross margin decreased 80 basis points to 68.4%, primarily due to dilution from Derma Sciences;
  • Second quarter GAAP net income decreased by $1.9 million to $10.8 million compared to the prior year’s second quarter, largely because of acquisition and integration expenses. Adjusted net income increased 17.0% to $35.4 million based on higher revenues, G&A expense leverage and a lower tax rate; and
  • Second quarter Operating cash flow was $28.9 million, a decrease from $38.1 million in the prior year’s quarter largely resulting from higher cash outlays for acquisition and integration expenses.  Trailing twelve month free cash flow conversion was 72.4%, compared to 59.8% in the prior-year period.

Total revenues for the second quarter were $282.2 million, reflecting an increase of $32.9 million, or 13.2%, over the second quarter of 2016. Sales in Orthopedics and Tissue Technologies increased by 34.2%, which includes the acquired sales from Derma Sciences and strength in our regenerative product portfolio. Sales in Specialty Surgical Solutions increased 1.1% compared to the prior-year period.

Excluding the revenue contribution from acquisitions and the effect of currency exchange rates and discontinued products, revenues increased 4.6% over the second quarter of 2016.

“Profitability and cash flows were strong in the second quarter, while revenues came in at the low end of our guidance range,” said Peter Arduini, Integra’s president and chief executive officer. “While Dural Repair underperformed, new product introductions and acquisitions performed well, giving us confidence that revenue growth will accelerate in the second half of this year. We also made significant progress on the planned acquisition of Codman Neurosurgery, and look forward to closing the transaction in the fourth quarter.”

The company reported GAAP net income of $10.8 million, or $0.14 per diluted share, for the second quarter of 2017, compared to a GAAP net income of $12.8 million, or $0.16 per diluted share, in the prior year’s quarter. The year-over-year declines largely resulted from acquisition and integration expenses associated with the Derma Sciences and Codman Neurosurgery transactions.

The adjusted measures discussed below are computed with the adjustments to GAAP reporting set forth in the attached reconciliation.

Adjusted EBITDA for the second quarter of 2017 was $62.7 million, or 22.2% of revenue, compared to $54.6 million, or 21.9% of revenue, in the second quarter of 2016. The adjusted EBITDA margin in the second quarter of 2017 includes over 100 basis points of dilution from Derma Sciences.

Adjusted net income for the second quarter of 2017 was $35.4 million, an increase of 17.0% over the prior year, and compares to adjusted net income of $30.3 million in the second quarter of 2016. Adjusted earnings per share for the second quarter of 2017 was $0.45, an increase of 12.5% over the prior year quarter.

2017 Full-Year Outlook

The company is tightening full-year 2017 revenue guidance to a new range of $1.125 billion to $1.140 billion, from $1.120 billion to $1.140 billion, reflecting changes in foreign currency expectations and overperformance in Derma Sciences. The company is maintaining its full-year GAAP and adjusted earnings per share guidance ranges of $0.49 to $0.55 and $1.88 to $1.94, respectively.

Based on second quarter results and the outlook for the remainder of the year, the company is lowering its full-year 2017 organic revenue growth range to 6.0% to 7.0%, down from its previous range of 7.0% to 8.5%, which reflects slower growth in Dural Repair.

“Despite the temporary slowdown in Specialty Surgical organic growth, we were pleased with the strong profitability generated in the quarter, which led to adjusted net income growth of 17.0% versus the prior year’s quarter and a double-digit increase in adjusted earnings per share,” said Glenn Coleman, Integra’s chief financial officer. “New product introductions including several regenerative products, the Cadence (R) Total Ankle System and the CUSA(R) Clarity are expected to drive organic growth acceleration in the second half of the year.”

In the future, the company may record, or expects to record, certain additional revenues, gains, expenses, or charges as described in the Discussion of Adjusted Financial Measures below which will be excluded from the calculation of adjusted EBITDA, adjusted earnings per share for historical periods and in adjusted earnings per share guidance.

Conference Call and Presentation Available Online

Integra has scheduled a conference call for 8:30 AM ET today, Wednesday, July 26, 2017, to discuss financial results for the second quarter and forward-looking financial guidance. The conference call will be hosted by Integra’s senior management team and will be open to all listeners. Additional forward-looking information may be discussed in a question and answer session following the call.

Integra’s management team will reference a presentation during the conference call. The presentation can be found on investor.integralife.com.

Access to the live call is available by dialing (323) 794-2093 and using the passcode 1833148. The call can also be accessed via a webcast link provided on investor.integralife.com.  A replay of the call will be available through July 31, 2017, by dialing (719) 457-0820 and using the passcode 1833148. The webcast will also be archived on the website.

About Integra

Integra LifeSciences is dedicated to limiting uncertainty for clinicians, so they can concentrate on providing the best patient care. Integra offers innovative solutions, including leading plastic and regenerative technologies, in specialty surgical solutions and orthopedics and tissue technologies. For more information, please visit www.integralife.com.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and reflect the Company’s judgment as of the date of this release.  Forward-looking statements include, but are not limited to, statements concerning future financial performance, including projections for revenues, GAAP and adjusted net income, GAAP and adjusted (loss)/earnings per diluted share, non-GAAP adjustments such as global enterprise resource planning (“ERP”) system implementation charges, acquisition-related charges, goodwill impairment charges, non-cash amortization of imputed interest for convertible debt, intangible asset amortization, and income tax expense (benefit) related to non-GAAP adjustments. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from predicted or expected results. Such risks and uncertainties include, but are not limited to the following: the Company’s ability to execute its operating plan effectively; the Company’s ability to manufacture and ship sufficient quantities of its products to meet its customers’ demands; the ability of third-party suppliers to supply us with raw materials and finished products; global macroeconomic and political conditions; the Company’s ability to manage its direct sales channels effectively; the Company’s ability to maintain relationships with customers of acquired entities and businesses; physicians’ willingness to adopt and third-party payors’ willingness to provide or maintain reimbursement for the Company’s recently launched, planned and existing products; initiatives launched by the Company’s competitors; downward pricing pressures for customers; the Company’s ability to secure regulatory approval for products in development; the Company’s ability to remediate quality systems violations; fluctuations in hospitals spending for capital equipment; the Company’s ability to comply with and obtain approvals for products of human origin and comply regulations regarding products containing materials derived from animal sources; difficulties in controlling expenses, including costs to procure and manufacture our products; the impact of changes in management or staff levels; the Company’s ability to integrate acquired businesses; the impact of goodwill and intangible asset impairment charges if future operating results of acquired businesses are significantly less than the results anticipated at the time of the acquisitions, the Company’s ability to leverage its existing selling organizations and administrative infrastructure; the Company’s ability to increase product sales and gross margins, and control non-product costs; the Company’s ability to achieve anticipated growth rates, margins and scale and execute its strategy generally; the amount and timing of acquisition and integration-related costs; the geographic distribution of where the Company generates its taxable income; the effect of legislation effecting healthcare reform in the United States and internationally; fluctuations in foreign currency exchange rates; the amount of our convertible notes and bank borrowings outstanding and other factors influencing liquidity; and the economic, competitive, governmental, technological, and other risk factors and uncertainties identified under the heading “Risk Factors” included in Item 1A of Integra’s Annual Report on Form 10-K for the year ended December 31, 2016 and information contained in subsequent filings with the Securities and Exchange Commission.  In addition, with respect to the Codman Neurosurgery acquisition, forward-looking statements in this document may include without limitation any statements regarding the planned completion of the proposed acquisition, the costs and benefits of the proposed acquisition, including future financial and operating results, Integra’s or the Codman Neurosurgery business’s plans, objectives, expectations and intentions and the expected timing of completion of the proposed acquisition.   It is important to note that Integra’s goals and expectations are not predictions of actual performance.  Actual results may differ materially from Integra’s current expectations depending upon a number of factors affecting the Codman Neurosurgery business and Integra’s business and risks and uncertainties associated with acquisition transactions.  These factors include, among other things, the following: successful closing of the proposed acquisition; the ability to obtain required regulatory approvals for the proposed acquisition (including the approval of antitrust authorities necessary to complete the proposed acquisition), the timing of obtaining such approvals and the risk that such approvals may result in the imposition of conditions, including with respect to divestitures, that could materially adversely affect Integra, the Codman Neurosurgery business and the expected benefits of the proposed acquisition; the risk that a condition to closing of the proposed acquisition may not be satisfied on a timely basis or at all, the failure of the proposed acquisition to close for any other reason and the risk liability to Integra in connection therewith; access to available financing (including financing for the acquisition) on a timely basis and on reasonable terms; the effects of disruption caused by the proposed acquisition making it more difficult for Integra to execute its operating plan effectively or to maintain relationships with employees, vendors and other business partners; stockholder litigation in connection with the proposed acquisition; and  Integra’s ability to successfully integrate the Codman Neurosurgery business and other acquired businesses.

These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise.

Discussion of Adjusted Financial Measures

In addition to our GAAP results, we provide organic revenues, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted net income, adjusted earnings per diluted share, adjusted diluted weighted average shares outstanding, free cash flow and adjusted free cash flow conversion.  Organic revenues consist of total revenues excluding the effects of currency exchange rates, acquired revenues and product discontinuances.  Adjusted EBITDA consists of GAAP net income from continuing operations, excluding: (i) depreciation and amortization; (ii) other income (expense); (iii) interest income and expense; (iv) income taxes; and (v) those operating expenses also excluded from adjusted net income.  The measure of adjusted net income consists of GAAP net income from continuing operations, excluding: (i) global enterprise resource planning (“ERP”) implementation charges; (ii) structural optimization charges; (iii) certain employee severance charges; (iv) acquisition-related charges; (v) convertible debt non-cash interest; (vi) intangible asset amortization expense; and (vii) discontinued product lines charges; and (viii) income tax impact from adjustments and other items.  The measure of adjusted diluted weighted average shares outstanding is calculated by adding the economic benefit of the convertible note hedge transactions relating to Integra’s 2016 convertible notes.  The adjusted earnings per diluted share measure is calculated by dividing adjusted net income attributable to diluted shares by adjusted diluted weighted average shares outstanding.  The measure of free cash flow consists of GAAP net cash provided by continuing operating activities from continuing operations less purchases of property and equipment.  The adjusted free cash flow conversion measure is calculated by dividing free cash flow by adjusted net income.

Reconciliations of GAAP revenues to adjusted revenues and GAAP Adjusted Net Income from continuing operations to adjusted EBITDA, and adjusted net income, and GAAP earnings per diluted share to adjusted earnings per diluted share all for the Three Months Ended June 30, 2017 and 2016, and the free cash flow and free cash flow conversion for the Three Months Ended June 30, 2017 and 2016 and the twelve months ended June 30, 2017 and 2016, appear in the financial tables in this release.

The Company believes that the presentation of organic revenues and the various adjusted EBITDA, adjusted net income, adjusted earnings per diluted share, adjusted diluted weighted average shares outstanding, free cash flow and free cash flow conversion measures provide important supplemental information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations.  For further information regarding why Integra believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the Company’s Current Report on Form 8-K regarding this earnings press release filed today with the Securities and Exchange Commission.  This Current Report on Form 8-K is available on the SEC’s website at www.sec.gov or on our website at www.integralife.com.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
 Three Months Ended
June 30,
2017 2016
Total revenues, net $   282,164 $   249,309
Costs and expenses:
Cost of goods sold 98,998 89,565
Research and development 15,747 14,679
Selling, general and administrative 145,015 119,217
Intangible asset amortization 5,419 3,471
Total costs and expenses 265,179 226,932
Operating income 16,985 22,377
Interest income 64 6
Interest expense (6,181 ) (6,588 )
Other income (expense), net (2,866 ) (852 )
Income from continuing operations before taxes 8,002 14,943
Income tax expense (benefit) (2,833 ) 2,188
Net income $ 10,835 $ 12,755
Net income per share:
Income from continuing operations $ 0.14 $ 0.16
Diluted net income per share $ 0.14 $ 0.16
Weighted average common shares outstanding for diluted net income per share 78,963 78,710

Segment revenues and growth in total revenues excluding the effects of currency exchange rates, acquisitions, and discontinued products are as follows:

(In thousands)

Three Months Ended June 30,
 2017 2016 Change
Specialty Surgical Solutions $   159,857 $   158,163 1.1 %
Orthopedics and Tissue Technologies 122,307 91,146    34.2 %
Total revenues $ 282,164 $ 249,309 13.2 %
Impact of changes in currency exchange rates $ 1,160 $
Less contribution of revenues from acquisitions* (24,028 )
Less contribution of revenues from discontinued products (514 ) (1,805 )
Total organic revenues $ 258,782 $ 247,504 4.6 %

* Acquisitions include Derma Sciences and TGX Medical

Items included in GAAP net income from continuing operations and location where each item is recorded are as follows:

(In thousands)

Three Months Ended June 30, 2017
Item Total Amount COGS(a) SG&A(b) Amort.(c) OI&E(d) Tax(e)
Global ERP implementation charges $ 834 $ $ 834 $ $ $
Structural optimization charges 1,806 974 832
Acquisition-related charges* 23,698 1,887 19,548 2,263
Intangible asset amortization expense 12,497 7,078 5,419
Estimated income tax impact from above adjustments and other items (14,276 ) (14,276 )
Total adjustments $ 24,559 $     9,939 $     21,214 $     5,419 $   2,263 $  (14,276 )
Depreciation expense 9,097

a) COGS – Cost of goods sold
b) SG&A – Selling, general and administrative
c) Amort. – Intangible asset amortization
d) OI&E – Interest (income) expense, net and other (income) expense, net
e) Tax – Income tax expense

* Acquisition related charges are primarily associated with the Derma Sciences and Codman Neurosurgery acquisitions and include banking, legal, consulting and other expenses

Three Months Ended June 30, 2016
(In thousands)
Item Total Amount COGS (a) SG&A (b) Amort. (c) OI&E (d) Tax (e)
Global ERP implementation charges $ 5,696 $ $ 5,696 $ $ $
Structural optimization charges 1,838 1,008 830
Acquisition-related charges 6,020 4,644 1,376
Certain employee severance charges 617 317 300
Intangible asset amortization expense 10,351 6,880 3,471
Convertible debt noncash interest 2,104 2,104
Estimated income tax impact from above adjustments and other items (9,120 ) (9,120 )
Total adjustments $  17,506 $    12,849 $     8,202 $     3,471 $    2,104 $   (9,120 )
Depreciation expense 7,663

a) COGS – Cost of goods sold
b) SG&A – Selling, general and administrative
c) Amort. – Intangible asset amortization
d) OI&E – Interest (income) expense, net and other (income) expense, net
e) Tax – Income tax expense

RECONCILIATION OF NON-GAAP ADJUSTMENTS – GAAP NET INCOME FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended June 30,
2017 2016
GAAP net income from continuing operations $ 10,835 $ 12,755
Non-GAAP adjustments:
Depreciation and intangible asset amortization expense 21,594 18,014
Other (income) expense, net 603 852
Interest expense, net 6,117 6,582
Income tax expense (benefit) (2,833 ) 2,188
Global ERP implementation charges 834 5,696
Structural optimization charges 1,806 1,838
Acquisition-related charges 23,698 6,020
Certain employee severance charges 617
Total of non-GAAP adjustments 51,819 41,807
Adjusted EBITDA $ 62,654 $ 54,562
RECONCILIATION OF NON-GAAP ADJUSTMENTS – GAAP NET INCOME FROM CONTINUING OPERATIONS TO
MEASURES OF ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended June 30,
 2017  2016
GAAP net income from continuing operations $ 10,835 $ 12,755
Non-GAAP adjustments:
Global ERP implementation charges 834 5,696
Structural optimization charges 1,806 1,838
Acquisition-related charges 23,698 6,020
Certain employee severance charges 617
Intangible asset amortization expense 12,497 10,351
Convertible debt noncash interest 2,104
Estimated income tax impact from adjustments and other items (14,276 ) (9,120 )
Total of non-GAAP adjustments 24,559 17,506
Adjusted net income $ 35,394 $ 30,261
Adjusted diluted net income per share $ 0.45 $ 0.40
Weighted average common shares outstanding for diluted net income per share 78,963 78,710
Weighted average common shares outstanding adjustment for economic benefit of convertible bond hedge transactions (2,284 )
Weighted average common shares outstanding for adjusted diluted net income per share 78,963 76,426
CONDENSED BALANCE SHEET DATA
(UNAUDITED)
(In thousands)
June 30,
2017
 December 31,
2016
Cash and cash equivalents $ 154,600 $ 102,055
Accounts receivable, net 171,323 148,186
Inventories, net 234,680 217,263
Bank line of credit 880,000 665,000
Stockholders’ equity $    894,555 $ 839,667
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
Six Months Ended June 30,
 June 30, 2017  June 30, 2016
Net cash provided by operating activities $ 57,753 $ 63,109
Net cash used in investing activities (230,660 ) (14,773 )
Net cash provided by (used in) financing activities 218,363 (9,082 )
Effect of exchange rate changes on cash and cash equivalents 7,089 (583 )
Net increase in cash and cash equivalents $ 52,545 $ 38,671
RECONCILIATION OF NON-GAAP ADJUSTMENTS – GAAP OPERATING CASH FLOW TO
MEASURES OF FREE CASH FLOW AND FREE CASH FLOW CONVERSION
(UNAUDITED)
(In thousands)
Three Months Ended June 30,
2017 2016
GAAP net cash provided by continuing operating activities $ 28,871 $ 38,079
Purchases of property and equipment from continuing operations (12,819 ) (8,267 )
Free cash flow 16,052 29,812
Adjusted net income * $ 35,394 $ 30,261
Adjusted free cash flow conversion 45.4 % 98.5 %
Twelve Months Ended June 30,
2017 2016
GAAP net cash provided by continuing operating activities** $ 111,046 $ 108,362
Accreted interest payment associated with the 2016 convertible note 42,786
Purchases of property and equipment from continuing operations (50,174 ) (37,622 )
Adjusted free cash flow 103,658 70,740
Adjusted net income * $ 143,122 $ 118,243
Adjusted free cash flow conversion 72.4 % 59.8 %

* Adjusted net income for quarters ended June 30, 2017 and 2016 are reconciled above.  Adjusted net income for remaining quarters in the trailing twelve months calculation have been previously reconciled and are publicly available in the Quarterly Earnings Call Presentations and the Historical Financial Results: Continuing Operations presentation on our website at investor.integralife.com under Events & Presentations.
** Operating cash flow excludes $42.8M of accreted interest payment associated with the 2016 Convertible Notes.

The Company calculates adjusted free cash flow conversion by dividing its free cash flow by adjusted net income.  The Company believes this measure is useful in evaluating the significance of the cash special charges in its adjusted earnings measures.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION
RECONCILIATION OF NON-GAAP ADJUSTMENTS – GUIDANCE
 Recorded Year
to Date
Projected Year Ended
(In thousands, except per share amounts) June 30, 2017 December 31, 2017
Low High
GAAP net income $ 17,230 $ 39,250 $ 43,750
Non-GAAP adjustments:
Global ERP implementation charges 3,261 3,261 3,261
Structural optimization charges 3,392 11,392 11,392
Acquisition-related charges 44,015 90,247 90,247
Certain employee severance charges 125 125 125
Discontinued product lines charges 1,025 1,025 1,025
Intangible asset amortization expense 23,464 47,800 47,800
Estimated income tax impact from adjustments and other items (26,226 )   (44,000 )   (44,000 )
Total of non-GAAP adjustments 49,056 109,850 109,850
Adjusted net income $ 66,286 $ 149,100 $ 153,600
GAAP diluted net income per share $ 0.22 $ 0.49 $ 0.55
Non-GAAP adjustments detailed above (per share) $ 0.62 $ 1.39 $ 1.39
Adjusted diluted net income per share $ 0.84 $ 1.88 $ 1.94
Weighted average common shares outstanding for diluted net income per share 78,703 79,500 79,000
GUIDANCE – SPECIAL CHARGES
Item  YTD
Amount
 FY
Guidance
COGS SG&A R&D Amort.  Interest
(Inc)Exp
Tax
Global ERP implementation charges $ 3,261 $ 3,261 $ $ 3,261 $    — $       — $         — $     —
Structural optimization charges 3,392 11,392   10,500 892
Acquisition-related charges    44,015     90,247 9,000    81,247
Certain employee severance charges 125 125 125
Discontinued product lines charges 1,025 1,025 1,025
Intangible asset amortization expense 23,464 47,800 31,000 16,800
Convertible debt non-cash interest
Estimated income tax impact from adjustments and other items (26,226 ) (44,000 )   (44,000 )
Total 49,056 109,850 51,525 85,525   16,800 (44,000 )
Contact:

Investor Relations:
Michael Beaulieu
(609) 750-2827
michael.beaulieu@integralife.com

Media:
Laurene Isip
(609) 750-7984
laurene.isip@integralife.com

Medicrea Announces World’s First Minimally-Invasive Spine Surgery Using Patient-Specific Implants

July 31, 2017

LYON, France & NEW YORK–(BUSINESS WIRE)–The Medicrea Group (Euronext Growth Paris: FR0004178572 – ALMED), pioneering the convergence of healthcare IT and next-generation, outcome-centered device design and manufacturing with UNiD™ ASI technology, announced today that the world’s first minimally-invasive spine surgery using patient-specific implants was performed by Dr. C.J. Kleck at the University of Colorado Hospital using the company’s UNiD™ MIS Rod.

The limited visualization of the spine associated with Minimally-Invasive Spine (MIS) techniques poses unique challenges for surgeons whose goal is segmental sagittal balance, while offering known benefits to patients which include reduced muscle damage during surgery and improved recovery time post-operatively. Such advantages have led MIS solutions to be an area of particular growth in the spine market. Surgeons trained in MIS techniques are able to treat a growing number of spinal conditions due to recent advancements in imaging and device offerings. The UNiD™ MIS Rod is the first and only spinal implant in the world that is manufactured specially for the patient prior to minimally-invasive surgery. The UNiD™ MIS Rod is compatible with percutaneous and mini-open MIS applications, removing the need to modify implants intra-operatively.

“As one of the early adopters of UNiD™ ASI, I have seen firsthand the associated benefits of the technology in open deformity cases. I am pleased to extend it now to my MIS cases where I see the potential for increased utility in degenerative indications.” stated Dr. Kleck following the surgery. “With each patient-specific implant designed utilizing Medicrea’s support services, machine learning and predictive analytics, my colleagues and I have seen an improved efficiency in our pre-surgical as well as our surgical practice. I believe this scientific, data-driven model is the best approach available to optimize long-term patient results and represents the future of value-based spinal care.”

Denys Sournac, President and CEO of Medicrea, stated, “We are now able to respond to the growing demand for personalized UNiD™ ASI technology in minimally-invasive surgery by introducing the UNiD™ MIS Rod to our UNiD™ TEK line of FDA-cleared patient-specific implants. We are the only company in Spine able to generate Adaptive Spine Intelligence powered by proprietary data science and remain committed to driving improved outcomes and efficiencies for patients, surgeons, hospitals and payers with our platform of UNiD™ ASI implants, services and IT.”

Today, more than 1,500 UNiD™ Rod surgeries have been performed worldwide. The range of patient-specific implants available as UNiD™ TEK are fully compatible with Medicrea’s platform of innovative procedurally-integrated solutions.

About Medicrea (www.Medicrea.com)

Through the lens of predictive medicine, Medicrea leads the design, integrated manufacture, and distribution of 30+ FDA approved spinal implant technologies that have been utilized in over 100,000 spinal surgeries to date. By leveraging its proprietary software analysis tools with big data and machine learning technologies and supported by an expansive collection of clinical and scientific data, Medicrea is well-placed to streamline the efficiency of spinal care, reduce procedural complications and limit time spent in the operating room.

Operating in a $10 billion marketplace, Medicrea is a Small and Medium sized Enterprise (SME) with 175 employees worldwide, which includes 50 who are based in the U.S. The Company has an ultra-modern manufacturing facility in Lyon, France housing the development and production of 3D-printed titanium patient-specific implants.

For further information, please visit: Medicrea.com.

Connect with Medicrea:
FACEBOOK | INSTAGRAM | TWITTER | WEBSITE | YOUTUBE

Medicrea is listed on
EURONEXT Growth Paris
ISIN: FR 0004178572
Ticker: ALMED

Contacts

Medicrea
Denys Sournac
Founder, Chairman and CEO
dsournac@Medicrea.com
or
Fabrice Kilfiger,
Chief Financial Officer
fkilfiger@Medicrea.com
Tel: +33 (0)4 72 01 87 87

DJO Global Announces Date for Release of Second Quarter 2017 Results

August 01, 2017

SAN DIEGO–(BUSINESS WIRE)–DJO Global, Inc., a leading global provider of medical technologies designed to get and keep people moving, today announced the following information for the release of its second quarter 2017 financial results and a conference call to discuss those results.

Date: Thursday, August 10, 2017

Time: Financial Results: 4:05 PM Eastern Time | Conference Call: 4:30 PM Eastern Time; 1:30 PM Pacific Time

Dial In: (866) 394-8509 (International callers please use (706) 643-6833) and use reservation code: 22322226. Please dial in 5 to 10 minutes prior to scheduled start time.

Replay: (855) 859-2056 for all callers. Enter reservation code: 22322226. Replay ends 48 hours after call.

Live Internet: www.DJOglobal.com, accessed through the Investor Relations page of the Company’s website. The webcast will be archived after the completion of the call.

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 orthopedic 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 orthopedic 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, CMFTM, Compex®, DonJoy®, ProCare®, DJO® Surgical, Dr. Comfort®, Bell-Horn® and ExosTM. For additional information on the Company, please visit www.DJOglobal.com.

Contacts

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