CARLSBAD, Calif., Nov. 02, 2017 (GLOBE NEWSWIRE) — SeaSpine Holdings Corporation (NASDAQ:SPNE), a global medical technology company focused on surgical solutions for the treatment of spinal disorders, announced today financial results for the third quarter ended September 30, 2017.

Third Quarter 2017 Financial Highlights and Recent Accomplishments

• Revenue of $31.7 million, unchanged compared to the prior year
  • U.S. revenue of $28.2 million, a decrease of 0.8% year-over-year
    • U.S. Orthobiologics revenue of $14.9 million, an increase of 2.0% year-over-year
    • U.S. Spinal Implants revenue of $13.3 million, a decrease of 3.9% year-over-year
  • International revenue of $3.5 million, an increase of 7.4% year-over-year
• Full commercial launch of the Shoreline Anterior Cervical Standalone (ACS) System, featuring TruProfile™ technology, providing surgeons the ability to intraoperatively address a wide range of anatomy, surgical situations or bone
• Limited commercial launch of OsteoStrand™ Demineralized Bone Fibers and initial surgeries successfully completed
• Improved liquidity position, with total cash balance $4.4 million higher than at June 30, 2017, and all outstanding debt and interest paid down during the third quarter

“We are pleased with our results this quarter and confident that our strategy to reposition SeaSpine for growth is on track,” said Keith Valentine, President and Chief Executive Officer of SeaSpine. “We are confident that our recent and upcoming product launches, combined with an even stronger distribution network, will generate growth as we head into 2018.”

Third Quarter 2017 Financial Results
Revenue for the third quarter of 2017 totaled $31.7 million, unchanged compared to the same period of the prior year. U.S. revenue was $28.2 million, a decrease of 0.8% compared to the same period of the prior year.  The decrease in U.S. revenue was primarily due to low-single digit price declines and decreased usage of SeaSpine’s legacy spinal implant systems, which outpaced the revenue growth contributed by recently launched products.

U.S. Orthobiologics revenue totaled $14.9 million, increasing 2.0% compared to the third quarter of 2016. U.S. Spinal Implants revenue totaled $13.3 million, decreasing 3.9% compared to the third quarter of 2016.

Gross margin for the third quarter of 2017 was 61.6%, compared to 56.3% for the same period in 2016.  The increase in gross margin was mainly driven by lower manufacturing costs for orthobiologics products manufactured at the Company’s Irvine, California facility.

Operating expenses for the third quarter of 2017 totaled $27.3 million, compared to $27.4 million for the same period of the prior year.  A $0.2 million increase in R&D expense was more than offset by lower selling, general and administrative and intangible amortization expenses.  SG&A expense for the third quarter of 2017 included the benefit of a $1.2 million non-cash gain related to a reduction in the fair market value of contingent consideration liabilities associated with the NLT Spine acquisition, which was mostly offset by higher selling commissions compared to the third quarter of 2016.

Net loss for the third quarter of 2017 was $7.5 million, compared to a net loss of $9.5 million for the third quarter of 2016.

Cash and cash equivalents at September 30, 2017 totaled $16.7 million, and the Company had no amounts outstanding under its $30.0 million credit facility. During the third quarter of 2017, the Company paid off all outstanding borrowings plus accrued interest totaling $4.1 million. The Company realized $11.0 million in net proceeds in the third quarter of 2017 through the sale of approximately 1,023,000 shares of its common stock under its “at the market” equity offering program and used a portion of those proceeds to fully pay down the credit facility.

2017 Financial Outlook
SeaSpine expects full-year 2017 revenue guidance to be in the range of $130 million to $132 million, reflecting growth of 1% to 2.5% over full-year 2016 revenue.

Webcast and Conference Call Information
SeaSpine will report complete financial results for the third quarter of 2017 on November 2, 2017 at 1:30 p.m. PT / 4:30 p.m. ET. Individuals interested in listening to the conference call may do so by dialing (877) 418-4766 for domestic callers or (614) 385-1253 for international callers, using Conference ID: 97240039. To listen to a live webcast, please visit the Investors section of the SeaSpine website at: www.seaspine.com. A replay of the webcast will be available until Wednesday, November 15, 2017.

About SeaSpine
SeaSpine is a global medical technology company focused on the design, development and commercialization of surgical solutions for the treatment of patients suffering from spinal disorders. SeaSpine has a comprehensive portfolio of orthobiologics and spinal implants solutions to meet the varying combinations of products that neurosurgeons and orthopedic spine surgeons need to perform fusion procedures on the lumbar, thoracic and cervical spine. SeaSpine’s orthobiologics products consist of a broad range of advanced and traditional bone graft substitutes that are designed to improve bone fusion rates following a wide range of orthopedic surgeries, including spine, hip, and extremities procedures. SeaSpine’s spinal implants portfolio consists of an extensive line of products to facilitate spinal fusion in minimally invasive surgery (MIS), complex spine, deformity and degenerative procedures. Expertise in both orthobiologic sciences and spinal implants product development allows SeaSpine to offer its surgeon customers a differentiated portfolio and a complete solution to meet their fusion requirements. SeaSpine currently markets its products in the United States and in over 30 countries worldwide.

Forward-Looking Statements
SeaSpine cautions you that statements included in this news release that are not a description of historical facts are forward-looking statements that are based on the Company’s current expectations and assumptions. Such forward-looking statements include, but are not limited to, statements relating to: the ability of the Company’s recent and upcoming product launches, as well as its distribution network, to generate growth as it heads into 2018; and the Company’s expectations for full-year 2017 revenue.  Among the factors that could cause or contribute to material differences between the Company’s actual results and the expectations indicated by the forward-looking statements are risks and uncertainties that include, but are not limited to: surgeons’ willingness to continue to use the Company’s existing products and to adopt its newly launched products, including the risk that the Company’s products do not demonstrate adequate safety or efficacy, independently or relative to competitive products, to support expected levels of demand or pricing; the ability of newly launched products to perform as designed and intended and to meet the clinical needs of surgeons and patients; the Company’s ability to attract new, high-quality distributors, whether as a result of inability to reach agreement on financial or other contractual terms or otherwise, disruption to the Company’s existing distribution network as new distributors are added, and the ability of new distributors to generate growth or offset disruption to existing distributors; continued pricing pressure, whether as a result of consolidation in hospital systems, competitors or others, as well as exclusion from major healthcare systems, whether as a result of unwillingness to provide required pricing or otherwise; the risk of supply shortages, including as a result of the Company’s dependence on a limited number of third-party suppliers for components and raw materials or otherwise; unexpected expense, including as a result of developing and supporting the launch of new products; the Company’s ability to continue to invest in product development and sales and marketing initiatives at levels sufficient to drive future revenue growth; general economic and business conditions in the markets in which the Company does business, both in the U.S. and abroad; and other risks and uncertainties more fully described in the Company’s news releases and periodic filings with the Securities and Exchange Commission. The Company’s public filings with the Securities and Exchange Commission are available at www.sec.gov.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date when made. SeaSpine does not intend to revise or update any forward-looking statement set forth in this news release to reflect events or circumstances arising after the date hereof, except as may be required by law.

Investor Relations Contact
Carrie Mendivil
(415) 937-5405
ir@seaspine.com

November 02, 2017

WARSAW, Ind., Nov. 1, 2017 /PRNewswire/ — Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) today reported financial results for the quarter ended September 30, 2017.  The Company reported third quarter net sales of $1.818 billion, a decrease of 0.8% from the prior year period, and a decrease of 1.2% on a constant currency basis.  Excluding approximately 30 basis points of contribution from the LDR Holding Corporation acquisition, third quarter 2017 revenues decreased 1.1% from the third quarter of 2016, or 1.5% on a constant currency basis.

Diluted earnings per share for the quarter were $0.48, a decrease of 38.5% from the prior year period.  Adjusted diluted earnings per share for the quarter were $1.72, a decrease of 3.9% from the prior year period.

“Our top line results remained challenged during the third quarter, due to the pace of supply recovery of certain key brands, as well as softened domestic market conditions and slower than anticipated sales recapture, particularly in the United States,” said Daniel P. Florin, Interim Chief Executive Officer, Senior Vice President and Chief Financial Officer of Zimmer Biomet.  “While we are not satisfied with our overall performance during the quarter, we remain confident in the Company’s dedicated sales forces, the breadth of our portfolio and our strategic innovation pipeline.  Looking forward, our global teams will continue to make progress towards increasing supply availability and enabling commercial execution, which we expect will translate into accelerated sales growth.”

Net earnings for the third quarter were $98.8 million, a decrease of 37.8% from the prior year period, and $349.9 million on an adjusted basis, a decrease of 3.4% from the prior year period.  Operating cash flow for the third quarter was $455.1 million.

In the quarter, the Company paid $48.5 million in dividends and declared a third quarter dividend of $0.24 per share.  The Company has repaid approximately $950 million of debt year-to-date in 2017.

Guidance

The Company is updating its full-year 2017 constant currency revenue and adjusted earnings per share guidance.  For the full year, the Company now expects revenue in the range of $7.76 billion to $7.80 billion, representing growth of 1.0% to 1.5% compared to the prior year and constant currency revenue growth of 0.9% to 1.4% compared to the prior year, inclusive of approximately 120 basis points of contribution from the LDR transaction.  Previously, the Company had expected full-year, constant currency revenue growth between 1.8% and 2.7%, inclusive of approximately 120 basis points of contribution from the LDR transaction.  Additionally, the Company now expects its full-year 2017 diluted earnings per share to be in a range of $3.80 to $3.93, and in a range of $8.01 to $8.07 on an adjusted basis.  Previously, the Company had expected full-year 2017 diluted earnings per share to be in a range of $4.15 to $4.35, and in a range of $8.20 to $8.30 on an adjusted basis.

For the fourth quarter of 2017, the Company expects revenue in the range of $2.01 billion to $2.05 billion, representing growth of 0% to positive 2.0% compared to the prior year period and constant currency revenue growth of negative 1.8% to positive 0.2% compared to the prior year period.  Additionally, the Company expects its diluted earnings per share for the fourth quarter to be in a range of $0.94 to $1.08, and in a range of $2.08 to $2.14 on an adjusted basis.

Conference Call and Earnings Release Information

The Company will conduct its third quarter 2017 investor conference call today, November 1, 2017 at 8:00 a.m. Eastern Time.  The audio webcast and earnings release information, including the Company’s third quarter investor presentation, can be accessed via Zimmer Biomet’s Investor Relations website at http://investor.zimmerbiomet.com.  The audio webcast will be archived for replay following the conference call.

Individuals in the U.S. and Canada who wish to dial into the conference call may do so by dialing (888) 312-9837 and entering conference ID 7278985.  For a complete listing of international toll-free and local numbers, please visit http://investor.zimmerbiomet.com.  A digital recording will be available 24 hours after the completion of the conference call, from November 2, 2017 to December 1, 2017.  To access the recording, U.S. callers should dial (888) 203-1112 and international callers should dial +1 (719) 457-0820, and enter the Access Code ID 7278985.

Sales Tables

The following sales tables provide results by geography and product category, as well as the percentage change compared to the prior year quarter and nine months, on both a reported and a constant currency basis.

(1)  Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma

(1)  Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma

About the Company

Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products.

We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.

We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet.

Website Information

We routinely post important information for investors on our website, www.zimmerbiomet.com, in the “Investor Relations” section.  We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD.  Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts.  The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Note on Non-GAAP Financial Measures

This press release includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).  These non-GAAP financial measures may not be comparable to similar measures reported by other companies and should be considered in addition to, and not as a substitute for, or superior to, other measures prepared in accordance with GAAP.

Sales change information for the three- and nine-month periods ended September 30, 2017 is presented on a GAAP (reported) basis and on a constant currency basis, as well as on a basis that excludes the contribution from the Company’s acquisition of LDR Holding Corporation in July 2016.  Projected revenue change information is also presented on a GAAP basis and on a constant currency basis.  Constant currency rates exclude the effects of foreign currency exchange rates.  They are calculated by translating current and prior-period sales at the same predetermined exchange rate.  The translated results are then used to determine year-over-year percentage increases or decreases.  Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release.

Net earnings, diluted earnings per share and projected diluted earnings per share are presented on a GAAP (reported) basis and on an adjusted basis.  Adjusted earnings and adjusted diluted earnings per share exclude the effects of inventory step-up; certain inventory and manufacturing-related charges connected to discontinuing certain product lines, quality enhancement and remediation efforts; special items; intangible asset amortization; any related effects on our income tax provision associated with these items; and other certain tax adjustments.  Special items include expenses resulting directly from our business combinations and/or global restructuring, quality and operational excellence initiatives, including employee termination benefits, certain contract terminations, consulting and professional fees, dedicated project personnel, asset impairment or loss on disposal charges, certain litigation matters, costs of complying with our deferred prosecution agreement and other items.  Other certain tax adjustments include a tax restructuring that lowered the tax rate on deferred tax liabilities recorded on intangible assets recognized in acquisition-related accounting, net favorable resolutions of various tax matters, and charges from internal restructuring transactions that provide the Company access to cash in a tax efficient manner.

Management uses these non-GAAP financial measures internally to evaluate the performance of the business and believes they are useful measures that provide meaningful supplemental information to investors to consider when evaluating the performance of the Company.  Management believes these measures offer the ability to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported operating results, to perform trend analysis, to better identify operating trends that may otherwise be masked or distorted by these types of items and to provide additional transparency of certain items.  In addition, certain of these non-GAAP financial measures are used as performance metrics in the Company’s incentive compensation programs.

Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding sales and earnings guidance and any statements about our expectations, plans, strategies or prospects.  We generally use the words “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” “sees,” “seeks,” “should,” “could,” “intends” and similar expressions to identify forward-looking statements.  Such statements are based upon the current beliefs and expectations of management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual outcomes and results to differ materially.  These risks, uncertainties and changes in circumstances include, but are not limited to: our chief executive officer transition, including disruptions and uncertainties related thereto, our ability to appoint a permanent successor with the desired level of experience and expertise in a timely manner, the potential impact on our business and future strategic direction resulting from our transition to a new chief executive officer, and our ability to retain other key members of senior management; the possibility that the anticipated synergies and other benefits from mergers and acquisitions will not be realized, or will not be realized within the expected time periods; the risks and uncertainties related to our ability to successfully integrate the operations, products, employees and distributors of acquired companies; the effect of the potential disruption of management’s attention from ongoing business operations due to integration matters related to mergers and acquisitions; the effect of mergers and acquisitions on our relationships with customers, vendors and lenders and on our operating results and businesses generally; compliance with the Deferred Prosecution Agreement entered into in January 2017; the success of our quality and operational excellence initiatives, including ongoing quality enhancement and remediation efforts at the legacy Biomet Warsaw facility; challenges relating to changes in and compliance with governmental laws and regulations affecting our U.S. and international businesses, including regulations of the U.S. Food and Drug Administration (FDA) and foreign government regulators, such as more stringent requirements for regulatory clearance of products; the ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA, while continuing to satisfy the demand for our products; the outcome of government investigations; competition; pricing pressures; changes in customer demand for our products and services caused by demographic changes or other factors; the impact of healthcare reform measures; reductions in reimbursement levels by third-party payors and cost containment efforts of healthcare purchasing organizations; dependence on new product development, technological advances and innovation; shifts in the product category or regional sales mix of our products and services; supply and prices of raw materials and products; control of costs and expenses; the ability to obtain and maintain adequate intellectual property protection; the ability to form and implement alliances; changes in tax obligations arising from tax reform measures, including European Union rules on state aid, or examinations by tax authorities; product liability and intellectual property litigation losses; the ability to retain the independent agents and distributors who market our products; dependence on a limited number of suppliers for key raw materials and outsourced activities; changes in general industry and market conditions, including domestic and international growth rates; changes in general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations; and the impact of the ongoing financial and political uncertainty on countries in the Euro zone on the ability to collect accounts receivable in affected countries.  For a further list and description of such risks and uncertainties, see our reports filed with the U.S. Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2016 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.  Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, www.zimmerbiomet.com or on request from us.  Forward-looking statements speak only as of the date they are made, and we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  Readers of this release are cautioned not to rely on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate.  This cautionary statement is applicable to all forward-looking statements contained in this release.

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