RTI Surgical® Announces 2017 Second Quarter Results

Posted On August 8, 2017 By OrthoSpineNews In Financial /

August 08, 2017

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

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

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

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

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

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

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

Second Quarter 2017

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

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

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

Fiscal 2017 Outlook

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

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

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

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

Conference Call

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

About RTI Surgical Inc.

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

Forward Looking Statement

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


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


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

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

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


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


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


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


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

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



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

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



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


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

Fiscal 2017 Outlook

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


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


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

Use of Non-GAAP Financial Measures

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

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

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

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

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

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

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

Usefulness of Non-GAAP Financial Measures to Investors

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


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


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

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


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

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

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

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

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

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

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


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

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

Contacts

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

FH Orthopedics, Inc. announces successful initial implantations of the Arrow® Prime Dual-Platform Total Shoulder System in the U.S.

Posted On August 8, 2017 By OrthoSpineNews In Recon, Top Stories /

(PR NewsChannel) / August 8, 2017 / CHICAGO

FH Orthopedics, Inc. (FH Inc.), a designer and manufacturer of sports medicine, trauma and joint reconstruction products, announced today the successful first total shoulder arthroplasty using the novel Arrow®Prime cementless glenoid baseplate. Supported by 14 years of successful clinical history, Arrow®Prime offers surgeons unparalleled intraoperative flexibility, dual-platform interchangeability, and addresses the continuum of indications for shoulder arthroplasty in an efficient, 4-tray instrument system.

The Arrow®Prime was cleared by the FDA in April 2017 and has been implanted successfully in multiple centers across the U.S.

Patrick Noud, MD (Lansing, MI) implanted the first Arrow®Prime cementless glenoid baseplate in the U.S. “My initial experience was very satisfying. Relative to traditional cemented polyethylene glenoid implants, the Arrow®Prime anatomic metal-backed glenoid and instrumentation were seamless and efficient, the press-fit of the porous implant impressive, and the procedure was quicker, as no bone cement was required.”

READ THE REST HERE

The ApiFix Spinal Implant Receives TGA Certification

Posted On August 8, 2017 By OrthoSpineNews In Spine, Top Stories /

MISGAV, Israel, Aug. 8, 2017 /PRNewswire/ — ApiFix, a portfolio company of The Trendlines Group, received TGA certification through its distributor Orthotech Pty. Ltd. to begin marketing the ApiFix system in Australia for the treatment and correction of Adolescent Idiopathic Scoliosis (AIS) using an innovative, minimally invasive surgical approach.

The ApiFix system represents a breakthrough treatment for Adolescent Idiopathic Scoliosis (AIS) as it is a minimally invasive, non-fusion spinal implant system which dramatically improves the quality of life of patients who undergo scoliosis surgery. Additionally, it saves hospitalization and OR time, and is considerably more cost-effective than current scoliosis surgery.

“Incorporating the ApiFix system into our portfolio of products fits our mission to bring exceptional, unique, state-of the-art orthopedic products into the Australian market. The ApiFix system provides game-changing technology for AIS patients and surgeons alike and we’re proud to include them in our suite of products,” commented Sam Scott-Young, Managing Director of Orthotech.

Standard scoliosis surgical correction is a highly invasive, lengthy procedure involving a long recovery period, and resulting in a rigid spine due to fusion of the vertebrae. The ApiFix approach brings an ingenious solution with its minimally invasive, non-fusion spinal implant system, inserted in a short procedure, followed by a brief recovery period, and maintains spine flexibility.

ApiFix CEO Eran Feldhay, M.D. remarked: “The certification for the ApiFix product by the TGA through our distribution partnership with Orthotech allows us to expand our reach and provide treatment for AIS patients in Australia too. We look forward to working with a company like Orthotech who are committed to innovative orthopaedic solutions for their customers.”

About ApiFix

ApiFix is an innovation-driven medical device company focused on providing less invasive solutions for scoliosis patients. ApiFix’s leading product for non-fusion treatment of adolescent idiopathic scoliosis (AIS) is used today in Europe. ApiFix is led by a team of highly-regarded spine surgeons and veteran spine specialists. The company has CE clearance and is marketed in Germany, Italy, Greece, The Netherlands, Spain and Israel.

ApiFix principals will attend the annual meeting of the Scoliosis Research Society, (SRS) in Philadelphia, USA on September 5-8 to present the ApiFix system, clinical cases and their follow-up to potential users from all over the world.

Contact: Saar Wollach, ApiFix Sales & Marketing Manager, +972-54-4511512, Philadelphia saar@apifix.com

MiMedx Updates The Status Of Its More Than 5,400 U.S. Hospitals Under Contract

Posted On August 8, 2017 By OrthoSpineNews In Recon /

MARIETTA, Ga., Dec. 7, 2015 /PRNewswire/ — MiMedx Group, Inc., the leading regenerative medicine company utilizing human amniotic tissue and patent-protected processes to develop and market advanced products and therapies for the Wound Care, Surgical, Orthopedic, Spine, Sports Medicine, Ophthalmic, and Dental sectors of healthcare, announced today an update of its total portfolio of National Account contracts.

The Company’s National Account contracts are primarily with Group Purchasing Organizations (“GPOs”) and Integrated Delivery Networks (“IDNs”) which provide valuable financial and efficiency-related services for healthcare providers, including the major hospital networks in the U.S. Through these National Account relationships, MiMedx currently has over 5,400 U.S hospitals under contract for the Company’s allografts.

Parker H. “Pete” Petit, Chairman and CEO, said, “We are pleased to partner with the many GPOs and IDNs in our National Account portfolio. These organizations bring both clinical and cost effectiveness resources to the hospitals, ambulatory surgery centers, physician practices and other facilities and entities they serve. Our allografts are recognized for improving patient outcomes, reducing costs and eliminating waste. We share a common goal with these organizations to improve patient outcomes while controlling costs. Our mutual focus to this cause has contributed to our rapid success in establishing our robust National Account network.”

Bill Taylor, President and COO, commented, “We currently have the nation’s four largest GPOs under contract for our allografts. Our contracts cover approximately 95% of the hospitals in the U.S. today, and include our full line of dehydrated human amnion/chorion membrane (dHACM) allografts. In addition, we now have more than 50 IDN systems under contract with MiMedx. Some of our IDNs under contract are also affiliated with the GPOs we have under contract. Many of the IDN Systems have entered into a committed level with MiMedx for our allografts.”

“We continue to have on-going negotiations with additional IDNs to be included in our National Account network. We want to be certain our clinically effective and cost effective allografts can be accessed by the greatest number of patients that can benefit from them. Our vast relationships with GPOs and IDNs are a critical element in achieving that goal,” added Petit.

About MiMedx
MiMedx® is an integrated developer, processor and marketer of patent protected and proprietary regenerative biomaterial products and bioimplants processed from human amniotic membrane and other birth tissues. “Innovations in Regenerative Biomaterials” is the framework behind our mission to give physicians products and tissues to help the body heal itself. Our biomaterial platform technologies are AmnioFix®, EpiFix®, CollaFix™ and OrthoFlo. AmnioFix and EpiFix are our tissue technologies processed from human amniotic membrane derived from donated placentas. Through our donor program, a mother delivering via scheduled full-term Caesarean section birth can elect in advance of delivery to donate the placenta in lieu of having it discarded as medical waste. We process the human amniotic membrane utilizing our proprietary PURION® Process, to produce a safe and effective implant. MiMedx is the leading supplier of amniotic tissue, having supplied over 500,000 allografts to date for application in the Wound Care, Surgical, Orthopedic, Spine, Sports Medicine, Ophthalmic and Dental sectors of healthcare. The Company has recently introduced OrthoFlo, an amniotic fluid derived allograft for homologous use. Amniotic fluid is donated by consenting mothers delivering healthy babies by scheduled full-term Caesarean section births. CollaFix™, our next technology platform we plan to commercialize, is our collagen fiber technology, developed with our patented cross-linking polymers, designed to mimic the natural composition, structure and mechanical properties of musculoskeletal tissues in order to augment their repair. CollaFix™ is the only biological, biodegradable, biomimetic technology that matches human tendon in strength and stiffness.

Life Spine Announces First Clinical Use of TiBOW™ MIS TLIF Expandable Spacer System

Posted On August 8, 2017 By OrthoSpineNews In Spine, Top Stories /

August 08, 2017

HUNTLEY, Ill.–(BUSINESS WIRE)–Life Spine, a medical device company that designs, develops, manufactures and markets products for the surgical treatment of spinal disorders announced today the first clinical uses of TiBOW MIS TLIF Expandable Spacer System featuring Osseo-Loc™ Surface Technology with Dr. James Lynch of Reno, Nevada, and Dr. John Anson of Las Vegas, Nevada.

TiBOW joins Life Spine’s extensive portfolio of micro invasive and expandable products cleared by the FDA. The system allows for in-situ expansion for increased endplate coverage and stability, for minimally invasive TLIF and oblique approaches. With multiple Lordotic options, TiBOW provides the surgeon the ability to restore normal sagittal alignment while building upon Life Spine’s commitment of offering ground-breaking procedural solutions.

TiBOW MIS TLIF Expandable Spacer System features the innovative surface technology, Osseo-Loc, which creates a geometric surface architecture that provides an osteophylic environment, documented for the recruitment of bone building cells (osteoblasts) on titanium implants¹.

“Life Spine has set out to build an expandable product platform that reflects many of the unmet needs of its surgeon customers, as well as challenges associated with micro invasive TLIF procedures,” John Anson M.D. of the Spine and Brain Institute noted. “The design of this system addresses common challenges associated with narrow TLIF devices by providing an expandable footprint and unimpeded graft aperture. I believe TiBOW is a safe and effective option for my patients, while potentially offering less pain and the ability to return to work faster.”

About Life Spine

Life Spine is dedicated to improving the quality of life for spinal patients by increasing procedural efficiency and efficacy through innovative design, uncompromising quality standards, and the most technologically advanced manufacturing platforms. Life Spine, which is privately held, is based in Huntley, Illinois. For more information, please visit: http://www.lifespine.com.

Life Spine is a registered trademark.

¹K.Kieswetter, Z. Schwartz, T. W. Hummert, D. L. Cochran, J. Simpson and B. D. Boyan
“Surface roughness modulates the local production of growth factors by osteoblast-like MG-62 cells” The Journal of Biomedical Materials Research (1996): Web.

Contacts

Life Spine
Mr. Omar Faruqi
Chief Financial Officer
ofaruqi@lifespine.com
847-884-6117

ConforMIS Reports Second Quarter 2017 Financial Results and Updates Fiscal Year 2017 Guidance

Posted On August 8, 2017 By OrthoSpineNews In Financial /

BILLERICA, Mass., Aug. 03, 2017 (GLOBE NEWSWIRE) — ConforMIS, Inc. (NASDAQ:CFMS), a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell joint replacement implants that are customized to fit each patient’s unique anatomy, announced today financial results for the second quarter ended June 30, 2017.

Q2 Summary:

Total revenue of $18.5 million, down 4.4% year-over-year on a reported basis and down 3.6% on a constant currency basis
Product revenue of $18.0 million, down 5.5% year-over-year on a reported basis and down 4.8% on a constant currency basis
– U.S. product revenue increased 1.5% year-over-year
– Rest of World product revenue decreased 31.1% year-over-year on a reported basis and decreased 27.5% year-over-year on a constant currency basis

“As ConforMIS continues into this transition year, we experienced mixed results in the second quarter,” said Mark Augusti, President and Chief Executive Officer of ConforMIS, Inc. “The impact from changes in the field sales organization and in reimbursement adversely affected our overall revenue growth, while on a positive note, we were able to achieve a 300 basis point improvement in gross margin and a $2 million reduction in net loss over the prior year.”

Mr. Augusti continued, “We believe the changes that we are making will have a positive impact on our results moving forward. That said, we have adjusted our 2017 guidance to reflect our revenue expectations for the remainder of the year.”

Second Quarter 2017 Financial Results

Revenue	Three months ended June 30,				Increase/decrease
*($, in thousands)*		2017		2016	$ Change			% Change		% Change
								*(as reported)*		*(constant* *currency)*
United States	$	15,219	$	15,002	$	218		1.5	%	1.5	%
Rest of world		2,827		4,102		(1,276	)	-31.1	%	-27.5	%
Product revenue		18,046		19,104		(1,058	)	-5.5	%	-4.8	%
Royalty revenue		438		229		209		91.1	%	91.1	%
Total revenue	$	18,484	$	19,333	$	(849	)	-4.4	%	-3.6	%

Total revenue decreased $0.8 million to $18.5 million, or 4.4% year-over-year on a reported basis and decreased 3.6% on a constant currency basis. Total revenue in the second quarter of 2017 included royalty revenue related to patent license agreements of $0.4 million, as compared to $0.2 million in the second quarter of 2016.

Product revenue decreased $1.1 million to $18.0 million, or 5.5% year-over-year on a reported basis and decreased 4.8% on a constant currency basis. U.S. product revenue increased $0.2 million to $15.2 million, or 1.5% year-over-year, and Rest of World product revenue decreased $1.3 million to $2.8 million, or 31% year-over-year on a reported basis and decreased 27.5% on a constant currency basis. Product revenue from sales of iTotal CR, iDuo and iUni was $13.3 million for the three months ended June 30, 2017 compared to $15.7 million for the three months ended June 30, 2016, a decrease of $2.4 million, or 15.3% year-over-year, on a reported basis and 14.8% on a constant currency basis. Product revenue from sales of iTotal PS was $4.8 million for the three months ended June 30, 2017 compared to $3.4 million for the three months ended June 30, 2016, an increase of $1.4 million, or 41.2% year-over-year, on a reported and constant currency basis.

Gross profit increased $0.2 million to $6.2 million, or 34% of revenue, in the second quarter of 2017, compared to $6.0 million, or 31% of revenue, in the second quarter of 2016. The increase in gross margin year-over-year was driven primarily by manufacturing efficiencies and cost reductions as a result of vertical integration and the timing of royalty payments received.

Total operating expenses increased $0.1 million to $20.2 million, or 0.2% year-over-year.

Net loss was $12.1 million, or $0.28 per basic share, in the second quarter of 2017, compared to a net loss of $14.1 million, or $0.34 per basic share, for the same period last year. The decrease in second quarter net loss was driven primarily by higher foreign currency exchange transaction income related to international intercompany receivables and higher royalty revenue.

As of June 30, 2017, the Company’s cash and cash equivalents and investments totaled $71.2 million, compared to $65.5 million as of December 31, 2016. As previously announced, in January 2017 the Company secured up to $50 million in term debt financing, of which $15 million was borrowed in January and $15 million was borrowed in June.

2017 Financial Guidance

For the full year 2017, the Company expects total revenue in a range of $75 million to $78 million, representing year-over-year decline of 6% to 3% on a reported basis and 6% to 2% on a constant currency basis. This is updated from previous guidance in a range of $80 million to $84 million, representing year-over-year growth of 0% to 5% on a reported basis and 1% to 6% on a constant currency basis. The Company’s 2017 revenue guidance assumes the following:

Product revenue in a range of $74 million to $77 million, representing year-over-year decline of 6% to 2% on a reported basis and 5% to 2% on a constant currency basis. This is updated from previous guidance in a range of $79 million to $83 million, representing year-over-year growth of 0% to 5% on a reported basis and 1% to 6% on a constant currency basis.
Royalty revenue of approximately $0.8 million related to ongoing patent license royalty payments has not changed.

For the full year 2017, the Company expects gross margin in a range of 34% to 36%, from previous guidance of 36% to 38%.

Note on Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides certain information regarding the Company’s financial results or projected financial results on a non-GAAP “constant currency basis.” This information estimates the impact of changes in foreign currency rates on the translation of the Company’s current or projected future period financial results as compared to the applicable comparable period. This impact is derived by taking the adjusted current or projected local currency results and translating them into U.S. Dollars based upon the foreign currency exchange rates for the applicable comparable period. It does not include any other effect of changes in foreign currency rates on the Company’s results or business. Non-GAAP information is not a substitute for, and is not superior to, information presented on a GAAP basis.

Conference Call

As previously announced, ConforMIS will conduct a conference call and webcast today at 4:30 PM Eastern Time. Management will discuss financial results and strategic matters. To participate in the conference call, please call 877-809-6331 (or 615-247-0224 for international) and use conference ID number 57887575 or listen to the webcast in the investor relations section of the company’s website at ir.conformis.com. The online archive of the webcast will be available on the company’s website for 30 days.

About ConforMIS, Inc.

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

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

Cautionary Statement Regarding Forward-Looking Statements

Any statements in this press release about our future expectations, plans and prospects, including statements about our strategy, future operations, future financial position and results, market growth, total revenue and revenue mix by product and geography, gross margin, operating trends, the potential impact and advantages of using customized implants, and potential transition at the Company as well as other statements containing the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” and similar expressions, constitute forward-looking statements within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make as a result of a variety of risks and uncertainties, including risks related to our estimates regarding the potential market opportunity for our current and future products, our expectations regarding our revenue, gross margin, expenses, revenue growth, transition and other results of operations, and the other risks and uncertainties described in the “Risk Factors” sections of our public filings with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent our views as of the date hereof. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date hereof.

CONFORMIS, INC. AND SUBSIDIARIES
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
Product	$	18,046		$	19,104		$	38,425		$	39,086
Royalty		438			229			514			497
Total revenue		18,484			19,333			38,939			39,583
Cost of revenue		12,236			13,332			26,196			26,919
Gross profit		6,248			6,001			12,743			12,664

Operating expenses
Sales and marketing		9,375			10,648			20,191			21,762
Research and development		4,335			3,977			8,895			8,375
General and administrative		6,444			5,487			14,902			11,782
Total operating expenses		20,154			20,112			43,988			41,919
Loss from operations		(13,906	)		(14,111	)		(31,245	)		(29,255	)

Other income and expenses
Interest income		127			143			230			282
Interest expense		(372	)		(75	)		(679	)		(100	)
Foreign currency exchange transaction income		2,117			—			2,507			—
Total other income (expenses), net		1,872			68			2,058			182
Loss before income taxes		(12,034	)		(14,043	)		(29,187	)		(29,073	)
Income tax provision		56			9			63			13

Net loss	$	(12,090	)	$	(14,052	)	$	(29,250	)	$	(29,086	)

Net loss per share – basic and diluted	$	(0.28	)	$	(0.34	)	$	(0.68	)	$	(0.71	)
Weighted average common shares outstanding – basic and diluted		43,193,065			41,314,942			43,035,672			41,155,421

CONFORMIS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share data)

	June 30, 2017			December 31, 2016
Assets	(unaudited)
Current Assets
Cash and cash equivalents	$	39,207		$	37,257
Investments		29,218			28,242
Accounts receivable, net		11,868			14,675
Inventories		11,784			11,720
Prepaid expenses and other current assets		2,592			3,954
Total current assets		94,669			95,848
Property and equipment, net		16,493			15,084
Other Assets
Restricted cash		762			300
Investments		2,750			—
Intangible assets, net		622			746
Goodwill		753			753
Other long-term assets		35			79
Total assets	$	116,084		$	112,810

Liabilities and stockholder’s equity
Current liabilities
Accounts payable	$	5,076		$	5,474
Accrued expenses		8,187			8,492
Deferred revenue		305			305
Total current liabilities		13,568			14,271
Other long-term liabilities		451			164
Deferred revenue		4,167			4,320
Long-term debt,less debt issuance costs		29,612			—
Total liabilities		47,798			18,755
Commitments and contingencies		—			—
Stockholders’ equity
Preferred stock, $0.00001 par value:
Authorized: 5,000,000 shares authorized at June 30, 2017 and December 31, 2016, respectively, no shares outstanding as of June 30,2017 and December 31, 2016.		—			—
Common stock, $0.00001 par value:
Authorized: 200,000,000 shares at June 30, 2017 and December 31, 2016; 44,866,228 and 43,399,547 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively		—			—
Additional paid-in capital		482,576			476,486
Accumulated deficit		(412,491	)		(382,930	)
Accumulated other comprehensive (loss) income		(1,799	)		499
Total stockholders’ equity		68,286			94,055
Total liabilities and stockholders’ equity	$	116,084		$	112,810

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

DePuy Synthes Announces Exclusive Co-Marketing Agreement With Medical Enterprises Distribution, LLC To Further Transform Hip Replacement

Posted On August 8, 2017 By OrthoSpineNews In Recon, Top Stories /

WARSAW, Ind., Aug. 7, 2017 /PRNewswire/ — DePuy Synthes* has announced an exclusive agreement with Medical Enterprises Distribution, LLC to co-market the ME1000™ Surgical Impactor for use in Total Hip Arthroplasty (THA). The ME1000 is designed to replace the handheld mallet used in THA. The ME1000 delivers constant, stable energy that is designed to automate bone preparation, implant assembly and positioning. This in turn may lead to more consistent clinical outcomes and favorably impact patient satisfaction.

Because the battery-powered ME1000 automates THA, there is also likely to be less surgeon fatigue and potentially less work-related injuries that can arise from mallet use. A 2016 study published in The Journal of Arthroplasty showed that 66.1% of 183 orthopaedic surgeons who responded to a survey experienced a work-related injury and that 31% of responding surgeons required surgery for their injury.¹ The paper cited the use of repetitive movements with operating instruments and tools as a potential cause for upper limb tendinitis and discussed the need for measures to improve the surgical environment and work ergonomics for orthopaedic surgeons.¹

“In addition to its potential benefits for both patients and orthopaedic surgeons, the ME1000 can be easily integrated into a surgeon’s operational technique and into the hospital’s processes,” said Aaron Villaruz, Global Hip Platform Leader, DePuy Synthes Joint Reconstruction. “We at DePuy Synthes view this technology as a significant advancement as we strive to help our customers meet their goals of improving clinical outcomes, increasing patient satisfaction and managing costs.”

The ME1000 is compatible only with DePuy Synthes hip systems. Adapters are available for anterior and posterior approaches to THA. One of the early users of the technology is Dr. Joel Matta**, a pioneer in the Anterior Approach to Hip Replacement who is affiliated with the Steadman Clinic in Vail, CO.

“I’ve used the ME1000 on more than 100 primary DePuy Synthes hip implants, and my observation is that, compared to a mallet, the ME1000 reduces peak forces while increasing energy per second,” said Dr. Matta. “I have found that the rotational stability of the implants is more easily and consistently achieved, and the risk of fracture potentially reduced. It is also easier for me to make adjustments, and achieve a precise position of the acetabular cup. I also appreciate that the physical effort and resultant fatigue from performing a hip replacement surgery is markedly reduced which benefits my capabilities during a full surgical schedule.”

DePuy Synthes is expected to begin co-marketing the ME1000 with Medical Enterprises Distribution, LLC within the current quarter.

About DePuy Synthes Companies

DePuy Synthes Companies, part of the Johnson & Johnson Medical Devices Companies***, provides one of the most comprehensive orthopaedics portfolios in the world. DePuy Synthes Companies solutions, in specialties including joint reconstruction, trauma, craniomaxillofacial, spinal surgery and sports medicine, are designed to advance patient care while delivering clinical and economic value to health care systems worldwide. For more information, visit www.depuysynthes.com.

About Medical Enterprises Distribution, LLC

Based in Norcross, GA, Medical Enterprises Distribution, LLC, is a pioneering healthcare technology firm focused on surgical procedure innovation. For more information, visit http://www.medistribution.com.

ME1000 Photo Courtesy of Medical Enterprises Distribution, LLC

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding the effectiveness and value of the ME1000. The reader is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of DePuy Synthes and/or Johnson & Johnson. Risks and uncertainties include, but are not limited to: uncertainty of commercial success; challenges to patents; competition, including technological advances, new products and patents attained by competitors; product efficacy or safety concerns resulting in product recalls or regulatory action; manufacturing difficulties and delays; changes to applicable laws and regulations, including global health care reforms; changes in behavior and spending patterns for health care products and services; and trends toward health care cost containment. A further list and description of these risks, uncertainties and other factors can be found in Johnson & Johnson’s Annual Report on Form 10-K for the fiscal year ended January 1, 2017, including under “Item 1A. Risk Factors”, its most recently filed Quarterly Report on Form 10-Q, including in the section captioned “Cautionary Note Regarding Forward-Looking Statements”, and the company’s subsequent filings with the Securities and Exchange Commission. Copies of these filings are available online at www.sec.gov, www.jnj.com or on request from Johnson & Johnson. Neither DePuy Synthes nor Johnson & Johnson undertakes to update any forward-looking statement because of new information or future events or developments.

¹Alqahtani S, Alzahrani M, Tanzer M. Adult Reconstructive Surgery: A High-Risk Profession for Work-Related Injuries. The Journal of Arthroplasty 2016; 31(6): 1194-8.

*DePuy Synthes represents the products and services of DePuy Synthes, Inc. and its affiliates.
**Consultant to DePuy Synthes Joint Reconstruction with an ownership interest in Medical Enterprises Distribution, LLC.
***The Johnson & Johnson Medical Devices Companies comprise the surgery, orthopaedics, and cardiovascular businesses within Johnson & Johnson’s Medical Devices segment.

The third-party trademarks used herein are the trademarks of their respective owners.

SOURCE DePuy Synthes

Wright Medical Group N.V. Reports 2017 Second Quarter Financial Results

Posted On August 8, 2017 By OrthoSpineNews In Financial /

AMSTERDAM, The Netherlands, Aug. 02, 2017 (GLOBE NEWSWIRE) — Wright Medical Group N.V. (NASDAQ:WMGI) today reported financial results for its second quarter ended June 25, 2017 and reaffirmed 2017 annual guidance.

Net sales from continuing operations totaled $179.7 million during the second quarter ended June 25, 2017, representing 5% as reported growth, and 6% growth on a constant currency basis. Gross margins from continuing operations were 78.8% during the quarter ended June 25, 2017. Reconciliations of all historical non-GAAP financial measures used in this release to the most comparable GAAP measures can be found in the attached financial tables.

Robert Palmisano, president and chief executive officer, commented, “All of our most important financial results are right on track with our plan for the year. We also continued to make significant progress in the second quarter on the initiatives that will enable us to achieve our longer term goals. Global net sales growth of 5%, including expected dis-synergies, adjusted EBITDA of $19.8 million and gross margins of 78.8% reflect the strength of our markets and our unique position in them. We believe we are well positioned as we head into the back half of the year to accelerate our business momentum.”

Palmisano continued, “Highlights in the quarter included 16% sales growth in U.S. shoulders, driven by strong contributions from the ongoing rollout of our SIMPLICITI shoulder system, as well as the launch of our PERFORM Reversed glenoid, which is off to a terrific start. We anticipate that our PERFORM Reversed launch will drive accelerating revenue in the second half of the year as we deliver additional instrument sets to the U.S. field. In our U.S. lower extremities and biologics business, we saw outstanding growth of 32% in the most technologically advanced portions of our portfolio, which include AUGMENT Bone Graft, SALVATION Limb Salvage and Total Ankle Replacement. We also launched our INVISION Total Ankle Revision System in July and believe the combination of INVISION, our continuum of care total ankle replacement portfolio and significantly improved reimbursement could create a tipping point in the adoption of total ankle replacement.”

Palmisano further commented, “Growth in the core U.S. lower extremities and biologics portfolio was significantly lower than our more technologically advanced products, partially due to the revenue dis-synergies in the quarter, which we anticipated. As previously announced, we completed the hiring and training of approximately 100 sales representatives in our U.S. lower extremities business in the quarter. We expect to see some benefit from these rep adds beginning in the third quarter and meaningful benefit in the fourth quarter and beyond as the expanded footprint, greater focus on the core product portfolio and greater incentives to drive growth begin to take effect.”

Net loss from continuing operations for the second quarter of 2017 totaled $21.0 million, or $(0.20) per diluted share.

The company’s net loss from continuing operations for the second quarter of 2017 included the after-tax effects of $3.2 million of transition costs, an unrealized gain of $4.3 million related to mark-to-market adjustments on derivatives, $11.2 million of non-cash interest expense related to its convertible notes, and a $3.9 million unrealized gain related to mark-to-market adjustments on contingent value rights (CVRs) issued in connection with the BioMimetic acquisition.

The company’s second quarter 2017 non-GAAP net loss from continuing operations, as adjusted for the above items, was $14.6 million. The company’s second quarter 2017 non-GAAP adjusted EBITDA from continuing operations, as defined in the non-GAAP to GAAP reconciliation provided later in this release, was $19.8 million. The attached financial tables include reconciliations of all historical non-GAAP measures to the most comparable GAAP measures.

Cash, cash equivalents and restricted cash totaled $378.9 million as of the end of the second quarter of 2017. This amount includes $150 million classified as restricted cash on the company’s balance sheet that is held in escrow to fund a portion of the metal-on-metal hip litigation Master Settlement Agreement (MSA).

Palmisano concluded, “We are right on track with the key revenue growth drivers for 2017, and remain confident in our full-year revenue guidance of $755 million to $765 million and full-year adjusted EBITDA guidance of $78.5 million to $85.5 million. We continue to expect there will be strong acceleration in the second half of the year as we annualize the impact of the merger revenue dis-synergies and begin to realize the benefits from an expanded U.S. sales force and new product launches. In addition, I believe we are positioned well for future success and achieving our key financial goals of mid-teens constant currency net sales growth, gross margins in the high 70% range and non-GAAP adjusted EBITDA margins of approximately 20% in the next one to two years.”

Outlook

The company continues to anticipate net sales for full-year 2017 of approximately $755 million to $765 million, representing an as reported growth rate of 9% to 11% over 2016. This guidance range assumes an approximate 1% headwind from currency for the full year, which is approximately 1% of cushion as compared to current rates. In addition, this range implies second half of 2017 constant currency revenue growth of 12% to 15%, excluding the estimated impact of the four extra selling days in Q4 of 2017.

The company continues to anticipate full-year 2017 non-GAAP adjusted EBITDA from continuing operations, as described in the non-GAAP reconciliation provided later in this release, of $78.5 million to $85.5 million.

The company continues to anticipate non-GAAP adjusted earnings per share from continuing operations, including share-based compensation, as described in the non-GAAP to GAAP reconciliation provided later in this release, for full-year 2017 of $(0.33) to $(0.26) per diluted share.

The company estimates approximately 105.1 million diluted weighted average ordinary shares outstanding for fiscal year 2017.

The company’s non-GAAP adjusted EBITDA from continuing operations target is measured by adding back to net loss from continuing operations charges for interest, income taxes, depreciation and amortization expenses, non-cash share-based compensation expense and non-operating income and expense. Additionally, the company’s adjusted EBITDA from continuing operations target excludes possible future acquisitions; other material future business developments; and due diligence, transaction and transition costs associated with acquisitions and divestitures. Further, this adjusted EBITDA from continuing operations target excludes any expenses, earnings or losses related to the divested large joints business, legacy Wright’s divested OrthoRecon business and legacy Tornier’s divested ankle replacement and silastic toe products.

The company’s non-GAAP adjusted earnings per share from continuing operations target is measured by adding back to net loss from continuing operations non-cash interest expense associated with the 2017, 2020 and 2021 convertible notes; due diligence, transaction and transition costs associated with acquisitions and divestitures; mark-to-market adjustments to CVRs; non-cash mark-to-market derivative adjustments; and charges for non-cash amortization expenses, net of taxes. Note that as a result of the company’s relatively low effective tax rate due to the valuation allowance impacting a substantial portion of the company’s income/loss, the company is currently estimating the tax effect on amortization expense at 0%. Further, this adjusted earnings per share from continuing operations target excludes possible future acquisitions; other material future business developments; and any expenses, earnings or losses related to the divested large joints business.

All of the historical non-GAAP financial measures used in this release are reconciled to the most directly comparable GAAP measures. With respect to the company’s 2017 financial guidance regarding non-GAAP adjusted EBITDA from continuing operations and non-GAAP adjusted earnings per share from continuing operations, however, the company cannot provide a quantitative reconciliation to the most directly comparable GAAP measures without unreasonable effort due to its inability to make accurate projections and estimates related to certain information needed to calculate some of the adjustments as described above, including the market driven fair value adjustments to CVRs and derivatives. The anticipated differences between these non-GAAP financial measures and the most directly comparable GAAP measure are described above qualitatively.

The company’s anticipated ranges for net sales from continuing operations, non-GAAP adjusted EBITDA from continuing operations, and non-GAAP adjusted earnings per share from continuing operations are forward-looking statements, as are any other statements that anticipate or aspire to future events or performance. They are subject to various risks and uncertainties that could cause the company’s actual results to differ materially from the anticipated targets. The anticipated targets are not predictions of the company’s actual performance. See the cautionary information about forward-looking statements in the “Cautionary Note Regarding Forward-Looking Statements” section of this release.

Supplemental Financial Information

To view the second quarter of 2017 supplemental financial information, visit ir.wright.com. For historical information on Wright Medical Group N.V. segment reporting changes and non-GAAP combined pro forma financial information, please refer to the presentation posted on Wright’s website at ir.wright.com in the “Financial Information” section.

Internet Posting of Information

Wright routinely posts information that may be important to investors in the “Investor Relations” section of its website at www.wright.com. The company encourages investors and potential investors to consult the Wright website regularly for important information about Wright.

Conference Call and Webcast

As previously announced, Wright will host a conference call starting at 3:30 p.m. Central Time today. The live dial-in number for the call is (844) 295-9436 (U.S.) / (574) 990-1040 (Outside U.S.). The participant passcode for the call is “Wright.” A simultaneous webcast of the call will be available via Wright’s corporate website at www.wright.com.

A replay of the call will be available beginning at 5:30 p.m. Central Time on August 2, 2017 through August 9, 2017. To hear this replay, dial (855) 859-2056 (U.S.) / (404) 537-3406 (Outside U.S.) and enter code 13575026. A replay of the conference call will also be available via the internet starting today and continuing for at least 12 months. To access a replay of the conference call via the internet, go to the “Investor Relations – Presentations/Calendar” section of the company’s corporate website located at www.wright.com.

The conference call may include a discussion of non-GAAP financial measures. Reference is made to the most directly comparable GAAP financial measures, the reconciliation of the differences between the two financial measures, and the other information included in this release, the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (SEC) today, or otherwise available in the “Investor Relations – Supplemental Financial Information” section of the company’s corporate website located at www.wright.com.

The conference call may include forward-looking statements. See the cautionary information about forward-looking statements in the “Cautionary Note Regarding Forward-Looking Statements” section of this release.

About Wright Medical Group N.V.

Wright Medical Group N.V. is a global medical device company focused on extremities and biologics products. The company is committed to delivering innovative, value-added solutions improving the quality of life for patients worldwide. Wright is a recognized leader of surgical solutions for the upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets, three of the fastest growing segments in orthopaedics. For more information about Wright, visit www.wright.com.

™ and ® denote trademarks and registered trademarks of Wright Medical Group N.V. or its affiliates, registered as indicated in the United States, and in other countries. All other trademarks and trade names referred to in this release are the property of their respective owners.

Non-GAAP Financial Measures

To supplement the company’s consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles, the company uses certain non-GAAP financial measures in this release. Reconciliations of the historical non-GAAP financial measures used in this release to the most comparable GAAP measures for the respective periods can be found in tables later in this release. Wright’s non-GAAP financial measures include net sales, excluding the impact of foreign currency; net income, as adjusted; EBITDA, as adjusted; gross margin, as adjusted; earnings, as adjusted; and earnings, as adjusted, per diluted share, in each case, from continuing operations. The company’s management believes that the presentation of these measures provides useful information to investors. These measures may assist investors in evaluating the company’s operations, period over period. Wright’s non-GAAP financial measures exclude such items as non-cash interest expense related to the company’s 2017 convertible notes, 2020 convertible notes and 2021 convertible notes, net gains and losses on mark-to-market adjustments on and settlements of derivative assets and liabilities, write-off of unamortized debt discount and deferred financing charges following the partial settlement of 2017 convertible notes and 2020 convertible notes, mark-to-market adjustments on CVRs, and transaction and transition costs, all of which may be highly variable, difficult to predict and of a size that could have substantial impact on the company’s reported results of operations for a period. It is for this reason that the company cannot provide without unreasonable effort a quantitative reconciliation to the most directly comparable GAAP measures for its 2017 financial guidance regarding non-GAAP adjusted EBITDA from continuing operations and non-GAAP adjusted earnings per share from continuing operations. Management uses the non-GAAP measures in this release internally for evaluation of the performance of the business, including the allocation of resources and the evaluation of results relative to employee performance compensation targets. Investors should consider non-GAAP financial measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This release includes forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “expect,” “intend,” “could,” “may,” “will,” “believe,” “estimate,” “look forward,” “forecast,” “goal,” “target,” “project,” “continue,” “outlook,” “guidance,” “future,” other words of similar meaning and the use of future dates. Forward-looking statements in this release include, but are not limited to, statements about the company’s anticipated financial results for 2017, including net sales from continuing operations, adjusted EBITDA from continuing operations and adjusted earnings per share from continuing operations; anticipated sales acceleration in the second half of the year and benefits from expanded U.S. sales force and new product launches, anticipated sales and cost synergies and dis-synergies and the timing thereof; and the company’s ability to achieve its key financial goals. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Each forward-looking statement contained in this release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Applicable risks and uncertainties include, among others, the failure to integrate the legacy Wright and Tornier businesses and realize net sales synergies and cost savings from the merger with Tornier or delay in realization thereof; operating costs and business disruption as a result of the merger, including adverse effects on employee retention and sales force productivity and on business relationships with third parties; integration costs; actual or contingent liabilities; adverse effects of diverting resources and attention to providing transition services to the purchaser of the large joints business; the adequacy of the company’s capital resources and need for additional financing; the timing of regulatory approvals and introduction of new products; physician acceptance, endorsement, and use of new products; failure to achieve the anticipated benefits from approval of AUGMENT^® Bone Graft; the effect of regulatory actions, changes in and adoption of reimbursement rates; product liability claims and product recalls; pending and threatened litigation; risks associated with the metal-on-metal master settlement agreement and the settlement agreement with the three settling insurers; risks associated with international operations and expansion; fluctuations in foreign currency exchange rates; other business effects, including the effects of industry, economic or political conditions outside of the company’s control; reliance on independent distributors and sales agencies; competitor activities; changes in tax and other legislation; and the risks identified under the heading “Risk Factors” in Wright’s Annual Report on Form 10-K for the year ended December 25, 2016 filed by Wright with the SEC on February 23, 2017 and in other subsequent SEC filings by Wright. Investors should not place considerable reliance on the forward-looking statements contained in this release. Investors are encouraged to read Wright’s filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The forward-looking statements in this release speak only as of the date of this release, and Wright undertakes no obligation to update or revise any of these statements. Wright’s business is subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.

–Tables Follow–


Wright Medical Group N.V.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data–unaudited)

	Three months ended						Six months ended
	June 25, 2017			June 26, 2016			June 25, 2017			June 26, 2016
Net sales	$	179,693		$	170,716		$	356,884		$	340,007
Cost of sales ¹	38,122			49,009			75,248			95,675
Gross profit	141,571			121,707			281,636			244,332
Operating expenses:
Selling, general and administrative	130,818			136,483			260,652			271,229
Research and development	12,547			12,108			24,979			24,224
Amortization of intangible assets	6,999			7,484			14,396			13,941
Total operating expenses	150,364			156,075			300,027			309,394
Operating loss	(8,793		)	(34,368		)	(18,391		)	(65,062		)
Interest expense, net	18,339			13,024			36,534			24,878
Other (income) expense, net	(6,557		)	(2,061		)	1,418			(3,129		)
Loss from continuing operations before income taxes	(20,575		)	(45,331		)	(56,343		)	(86,811		)
Provision (benefit) for income taxes	385			(3,300		)	1,324			(4,588		)
Net loss from continuing operations	$	(20,960	)	$	(42,031	)	$	(57,667	)	$	(82,223	)
Loss from discontinued operations, net of tax	(20,202		)	$	(187,329	)	$	(42,194	)	$	(195,135	)
Net loss	$	(41,162	)	$	(229,360	)	$	(99,861	)	$	(277,358	)

Net loss from continuing operations per share, basic and diluted	$	(0.20	)	$	(0.41	)	$	(0.55	)	$	(0.80	)
Net loss from discontinued operations per share, basic and diluted	$	(0.19	)	$	(1.82	)	$	(0.41	)	$	(1.90	)

Net loss per share, basic and diluted	$	(0.39	)	$	(2.23	)	$	(0.96	)	$	(2.70	)

Weighted-average number of shares outstanding-basic and diluted	104,377			102,785			104,020			102,745

¹Cost of sales includes amortization of inventory step-up adjustment of $10.4 million and $20.6 million for the three and six months ended June 26, 2016, respectively.

Wright Medical Group N.V.
Consolidated Net Sales Analysis
(dollars in thousands–unaudited)

	Three months ended						Six months ended
	June 25, 2017		June 26, 2016		% change		June 25, 2017		June 26, 2016		% change
U.S.
Lower extremities	54,348		52,008		4.5	%	109,809		107,286		2.4	%
Upper extremities	57,535		49,909		15.3	%	113,493		99,910		13.6	%
Biologics	19,273		17,792		8.3	%	37,907		34,920		8.6	%
Sports med & other	1,780		2,164		(17.7	)%	3,881		4,301		(9.8	)%
Total U.S.	$	132,936	$	121,873	9.1	%	$	265,090	$	246,417	7.6	%

International
Lower extremities	14,767		16,241		(9.1	)%	28,409		31,783		(10.6	)%
Upper extremities	22,987		23,940		(4.0	)%	45,409		44,915		1.1	%
Biologics	5,129		4,867		5.4	%	10,300		9,065		13.6	%
Sports med & other	3,874		3,795		2.1	%	7,676		7,827		(1.9	)%
Total International	$	46,757	$	48,843	(4.3	)%	$	91,794	$	93,590	(1.9	)%

Global
Lower extremities	69,115		68,249		1.3	%	138,218		139,069		(0.6	)%
Upper extremities	80,522		73,849		9.0	%	158,902		144,825		9.7	%
Biologics	24,402		22,659		7.7	%	48,207		43,985		9.6	%
Sports med & other	5,654		5,959		(5.1	)%	11,557		12,128		(4.7	)%
Total net sales	$	179,693	$	170,716	5.3	%	$	356,884	$	340,007	5.0	%

Wright Medical Group N.V.
Supplemental Net Sales Information
(unaudited)

	Three months ended June 25, 2017 net sales growth/(decline)
	U.S. as reported		Int’l constant currency		Int’l as reported		Global constant currency		Global as reported
Product line
Lower extremities	4	%	(5	%)	(9	%)	2	%	1	%
Upper extremities	15	%	(1	%)	(4	%)	10	%	9	%
Biologics	8	%	8	%	5	%	8	%	8	%
Sports med & other	(18	%)	7	%	2	%	(2	%)	(5	%)
Total net sales	9	%	(1	%)	(4	%)	6	%	5	%

	Six months ended June 25, 2017 net sales growth/(decline)
	U.S. as reported		Int’l constant currency		Int’l as reported		Global constant currency		Global as reported
Product line
Lower extremities	2	%	(7	%)	(11	%)	0	%	(1	%)
Upper extremities	14	%	4	%	1	%	11	%	10	%
Biologics	9	%	15	%	14	%	10	%	10	%
Sports med & other	(10	%)	4	%	(2	%)	(1	%)	(5	%)
Total net sales	8	%	2	%	(2	%)	6	%	5	%

Wright Medical Group N.V.
Reconciliation of Adjusted Non-GAAP Earnings Per Share to Net Loss from Continuing Operations Per Share
(dollars in thousands, except per share data–unaudited)

	Three months ended						Six months ended
	June 25, 2017			June 26, 2016			June 25, 2017			June 26, 2016
Net loss from continuing operations, as reported	$	(20,960	)	$	(42,031	)	$	(57,667	)	$	(82,223	)
Net loss from continuing operations per share, as reported	$	(0.20	)	$	(0.41	)	$	(0.55	)	$	(0.80	)
Reconciling items:
Inventory step-up amortization	—			10,387			—			20,616
Non-cash interest expense on convertible notes ¹	11,249			8,240			22,248			15,296
Non-cash loss on extinguishment of debt	—			12,343			—			12,343
Derivatives mark-to-market adjustments ²	(4,329		)	(16,632		)	(3,964		)	(23,273		)
Transaction and transition costs	3,201			9,014			6,173			19,847
Management changes	—			1,348			—			1,348
CVR mark-to-market adjustments ²	(3,924		)	1,401			2,236			6,725
Contingent consideration fair value adjustment ²	176			306			176			306
Legal settlement	—			1,800			—			1,800
Costs associated with 2021 Notes issuance	—			234			—			234
IRS settlement ³	—			(3,073		)	—			(3,073		)
Tax effect of reconciling items ⁴	(52		)	(2,132		)	(70		)	(3,321		)
Non-GAAP net loss from continuing operations, as adjusted	$	(14,639	)	$	(18,795	)	$	(30,868	)	$	(33,375	)
Add back amortization of intangible assets	6,999			7,484			14,396			13,941
Adjusted non-GAAP earnings	$	(7,640	)	$	(11,311	)	$	(16,472	)	$	(19,434	)
Weighted-average basic shares outstanding	104,377			102,785			104,020			102,745
Adjusted non-GAAP earnings per share	$	(0.07	)	$	(0.11	)	$	(0.16	)	$	(0.19	)

¹Impacting interest expense, net
²Impacting other (income) expense, net
³IRS Settlement includes $0.8 million of interest income and $2.3 million tax benefit.
⁴Determined based upon the effective tax rate in the jurisdiction in which the expense was incurred.

Wright Medical Group N.V.
Reconciliation of Non-GAAP Adjusted EBITDA to Net Loss from Continuing Operations
(dollars in thousands–unaudited)

	Three months ended						Six months ended
	June 25, 2017			June 26, 2016			June 25, 2017			June 26, 2016
Net loss from continuing operations	$	(20,960	)	$	(42,031	)	$	(57,667	)	$	(82,223	)
Interest expense, net	18,339			13,024			36,534			24,878
Provision (benefit) from income taxes	385			(3,300		)	1,324			(4,588		)
Depreciation	13,678			13,270			27,124			26,120
Amortization	6,999			7,484			14,396			13,941
Non-GAAP EBITDA	$	18,441		$	(11,553	)	$	21,711		$	(21,872	)
Reconciling items impacting EBITDA:
Non-cash share-based compensation expense	4,732			3,056			8,686			6,373
Other (income) expense, net	(6,557		)	(2,061		)	1,418			(3,129		)
Inventory step-up amortization	—			10,387			—			20,616
Transaction and transition costs	3,201			9,014			6,173			19,847
Management changes	—			1,348			—			1,348
Legal settlement	—			1,800			—			1,800
Costs associated with 2021 Notes issuance	—			234			—			234
Non-GAAP adjusted EBITDA	$	19,817		$	12,225		$	37,988		$	25,217
Net sales from continuing operations	179,693			170,716			356,884			340,007
Non-GAAP adjusted EBITDA margin	11.0		%	7.2		%	10.6		%	7.4		%

Wright Medical Group N.V.
Reconciliation of Non-GAAP Adjusted Gross Margins to Gross Margins from Continuing Operations
(dollars in thousands–unaudited)

	Three months ended						Six months ended
	June 25, 2017			June 26, 2016			June 25, 2017			June 26, 2016
Gross profit from continuing operations, as reported	$	141,571		$	121,707		$	281,636		$	244,332
Gross margins from continuing operations, as reported	78.8		%	71.3		%	78.9		%	71.9		%
Reconciling items impacting gross profit:
Inventory step-up amortization	—			10,387			—			20,616
Transaction and transition costs	—			1,954			685			2,078
Non-GAAP gross profit from continuing operations, as adjusted	$	141,571		$	134,048		$	282,321		$	267,026
Net sales from continuing operations	179,693			170,716			356,884			340,007
Non-GAAP adjusted gross margins from continuing operations	78.8		%	78.5		%	79.1		%	78.5		%

Wright Medical Group N.V.
Reconciliation of Other Non-GAAP Financial Measures to Other As Reported Results
(dollars in thousands–unaudited)

	Three months ended						Six months ended
	June 25, 2017			June 26, 2016			June 25, 2017			June 26, 2016
Net sales	$	179,693		$	170,716		$	356,884		$	340,007

Selling, general and administrative expense, as reported	$	130,818		$	136,483		$	260,652		$	271,229
Selling, general and administrative expense as a percentages of net sales, as reported	72.8		%	79.9		%	73.0		%	79.8		%
Reconciling items impacting selling, general and administrative expense:
Transaction and transition costs – selling, general and administrative	3,101			6,970			5,388			17,530
Management changes	—			1,348			—			1,348
Legal settlement	—			1,800			—			1,800
Costs associated with 2021 Notes issuance	—			234			—			234
Selling, general and administrative expense, as adjusted	$	127,717		$	126,131		$	255,264		$	250,317
Selling, general and administrative expense as a percentage of net sales, as adjusted	71.1		%	73.9		%	71.5		%	73.6		%

Research & development expense, as reported	$	12,547		$	12,108		$	24,979		$	24,224
Research & development expense as a percentages of net sales, as reported	7.0		%	7.1		%	7.0		%	7.1		%
Reconciling items impacting research & development expense:
Transaction and transition costs – research & development	100			90			100			239
Research & development expense, as adjusted	$	12,447		$	12,018		$	24,879		$	23,985
Research & development expense as a percentage of net sales, as adjusted	6.9		%	7.0		%	7.0		%	7.1		%

Wright Medical Group N.V.
Condensed Consolidated Balance Sheets
(dollars in thousands–unaudited)

	June 25, 2017		December 25, 2016
Assets
Current assets:
Cash and cash equivalents	$	228,877	$	262,265
Restricted cash	150,018		150,000
Accounts receivable, net	116,884		130,602
Inventories	161,769		150,849
Prepaid expenses and other current assets	66,565		65,909
Total current assets	724,113		759,625

Property, plant and equipment, net	206,614		201,732
Goodwill and intangible assets, net	1,080,807		1,082,839
Other assets	279,937		246,390
Total assets	$	2,291,471	$	2,290,586

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	42,762	$	32,866
Accrued expenses and other current liabilities	432,430		407,704
Current portion of long-term obligations	25,639		33,948
Total current liabilities	500,831		474,518
Long-term obligations	805,770		780,407
Other liabilities	350,245		348,797
Total liabilities	1,656,846		1,603,722

Shareholders’ equity	634,625		686,864
Total liabilities and shareholders’ equity	$	2,291,471	$	2,290,586

Investors & Media:
Julie D. Tracy
Sr. Vice President, Chief Communications Officer
Wright Medical Group N.V.
(901) 290-5817
julie.tracy@wright.com

Orthofix International Reports Second Quarter 2017 Financial Results

Posted On August 8, 2017 By OrthoSpineNews In Financial /

August 07, 2017

LEWISVILLE, Texas–(BUSINESS WIRE)–Orthofix International N.V. (NASDAQ:OFIX) today reported its financial results for the second quarter ended June 30, 2017. Net sales were $108.9 million, diluted earnings per share from continuing operations was $0.26 and adjusted earnings per share from continuing operations was $0.42.

“The key take-away from the second quarter is the strong sales performance of our Biologics and Spine Fixation businesses. Both have averaged mid-single digit year-over-year growth over the last three quarters,” said Brad Mason, President and Chief Executive Officer. “We believe these growth rates are sustainable in both businesses due to the renewed engagement of our sales partners, the addition of new distributors in underserved markets and our flow of new products to the field.

“The BioStim and Extremity Fixation businesses also performed better than we expected in the second quarter with BioStim delivering another solid top line performance and, when excluding planned subsidiary restructuring and the loss of sales due to the discontinuation of a non-core business last year, Extremity Fixation delivered good constant currency growth.

“Our bottom line performance was in line with our expectations for the period. Our primary focus this year is investing in the areas necessary to support a sustainable increase to our top line growth rate, rather than margin expansion. As we move into next year, without sacrificing our top line growth, we expect to return to adjusted EBITDA margin expansion as a result of a number of opportunities we see across the P&L.”

Financial Results Overview

The following table provides net sales by strategic business unit (“SBU”):


	Three Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)	2017		2016		Change		Constant Currency Change
BioStim	$	47,174	$	44,758	5.4	%	5.4	%
Biologics		15,661		14,256	9.9	%	9.9	%
Extremity Fixation		24,747		26,817	(7.7	%)	(6.0	%)
Spine Fixation		21,360		18,244	17.1	%	17.1	%
Net sales	$	108,942	$	104,075	4.7	%	5.1	%

Gross profit increased $4.2 million to $85.8 million. Gross margin improved slightly to 78.7% compared to 78.4% in the prior year period, which was slightly below our expectations due primarily to larger than usual inventory reserve expenses. Non-GAAP net margin, an internal metric that we define as gross profit less sales and marketing expenses, was $35.3 million compared to $35.5 million in the prior year period. The decrease in non-GAAP net margin was primarily due to higher sales and marketing expenses in Biologics and Extremity Fixation.

Net income from continuing operations was $4.7 million, or $0.26 per share, compared to net loss of ($6.3) million, or ($0.35) per share in the prior year period. Adjusted net income from continuing operations was $7.8 million, or $0.42 per share, compared to adjusted net income of $7.5 million, or $0.40 per share in the prior year period.

EBITDA was $14.0 million, compared to $2.6 million in the prior year period. Adjusted EBITDA was $20.5 million, or 18.8% of net sales, for the second quarter, compared to $19.2 million, or 18.5% of net sales, in the prior year period.

Liquidity

As of June 30, 2017, cash and cash equivalents were $44.3 million compared to $39.6 million as of December 31, 2016. As of June 30, 2017, we had no outstanding indebtedness and borrowing capacity of $125 million. Cash flow from operations decreased $11.6 million to $9.7 million and free cash flow decreased $9.9 million to $1.1 million.

2017 Outlook

For the year ending December 31, 2017, the Company expects the following results, assuming exchange rates are the same as those currently prevailing.


	Previous 2017 Outlook				Current 2017 Outlook
(Unaudited, U.S. Dollars, in millions, except per share data)	Low		High		Low			High
Net sales	$	411.0	$	415.0	$	422.0	⁽¹⁾	$	425.0	⁽¹⁾
Net income from continuing operations	$	20.6	$	23.7	$	17.7	⁽²⁾	$	21.4	⁽²⁾
Adjusted EBITDA	$	76.0	$	79.0	$	79.0	⁽³⁾	$	81.0	⁽³⁾
EPS from continuing operations	$	1.12	$	1.29	$	0.96	⁽⁴⁾	$	1.16	⁽⁴⁾
Adjusted EPS from continuing operations	$	1.48	$	1.58	$	1.54	⁽⁵⁾	$	1.60	⁽⁵⁾

¹Represents a year-over-year increase of 3.0% to 3.7% on a reported basis
²Represents a year-over-year increase of 406.1% to 512.0%
³Represents a year-over-year decrease of 0.4% to an increase of 2.1%
⁴Represents a year-over-year increase of 405.3% to 510.5%
⁵Represents a year-over-year increase of 5.5% to 9.6%

Conference Call

Orthofix will host a conference call today at 4:30 PM Eastern time to discuss the Company’s financial results for the second quarter of 2017. Interested parties may access the conference call by dialing (800) 406-5345 in the U.S. and (719) 325-4807 outside the U.S., and referencing the conference ID 7718902. A replay of the call will be available for two weeks by dialing (888) 203-1112 in the U.S. and (719) 457-0820 outside the U.S., and entering the conference ID 7718902. A webcast of the conference call may be accessed by going to the Company’s website at www.orthofix.com, by clicking on the Investors link and then the Events and Presentations page.

About Orthofix

Orthofix International N.V. is a diversified, global medical device company focused on improving patients’ lives by providing superior reconstructive and regenerative orthopedic and spine solutions to physicians worldwide. Headquartered in Lewisville, Texas, the Company has four strategic business units: BioStim, Biologics, Extremity Fixation and Spine Fixation. Orthofix products are widely distributed via the Company’s sales representatives and distributors. In addition, Orthofix is collaborating on research and development activities with leading clinical organizations such as Brown University, Sinai Hospital of Baltimore, Cleveland Clinic, Texas Scottish Rite Hospital for Children, and the Musculoskeletal Transplant Foundation. For more information, please visit www.orthofix.com.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “intends,” “predicts,” “potential,” or “continue” or other comparable terminology. These forward-looking statements are not guarantees of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. Therefore, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to further update any such statement, or the risk factors described in Part I, Item 1A under the heading Risk Factors in our Form 10-K for the year ended December 31, 2016, to reflect new information, the occurrence of future events or circumstances or otherwise.


ORTHOFIX INTERNATIONAL N.V.
Condensed Consolidated Statements of Operations

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Unaudited, U.S. Dollars, in thousands, except share and per share data)	2017			2016			2017			2016
Net sales	$	108,942		$	104,075		$	211,680		$	202,754
Cost of sales		23,177			22,516			45,758			44,653
Gross profit		85,765			81,559			165,922			158,101
Sales and marketing		50,471			46,043			99,003			90,865
General and administrative		20,409			18,545			38,691			35,550
Research and development		6,887			6,796			14,311			14,436
Charges related to U.S. Government resolutions		—			12,870			—			12,870
Operating income (loss)		7,998			(2,695	)		13,917			4,380
Interest income (expense), net		76			(113	)		121			(151	)
Other income (expense), net		585			147			(3,763	)		1,980
Income (loss) before income taxes		8,659			(2,661	)		10,275			6,209
Income tax expense		(3,924	)		(3,685	)		(7,848	)		(7,979	)
Net income (loss) from continuing operations		4,735			(6,346	)		2,427			(1,770	)
Discontinued operations
Loss from discontinued operations		(1,300	)		(1,572	)		(1,827	)		(2,562	)
Income tax benefit		418			474			599			728
Net loss from discontinued operations		(882	)		(1,098	)		(1,228	)		(1,834	)
Net income (loss)	$	3,853		$	(7,444	)	$	1,199		$	(3,604	)
Net income (loss) per common share—basic
Net income (loss) from continuing operations	$	0.26		$	(0.35	)	$	0.13		$	(0.10	)
Net loss from discontinued operations		(0.05	)		(0.06	)		(0.06	)		(0.10	)
Net income (loss) per common share—basic	$	0.21		$	(0.41	)	$	0.07		$	(0.20	)
Net income (loss) per common share—diluted
Net income (loss) from continuing operations	$	0.26		$	(0.35	)	$	0.13		$	(0.10	)
Net loss from discontinued operations		(0.05	)		(0.06	)		(0.06	)		(0.10	)
Net income (loss) per common share—diluted	$	0.21		$	(0.41	)	$	0.07		$	(0.20	)
Weighted average number of common shares:
Basic		18,050,551			18,147,681			18,015,308			18,312,781
Diluted		18,343,038			18,147,681			18,288,050			18,312,781


ORTHOFIX INTERNATIONAL N.V.
Condensed Consolidated Balance Sheets

(U.S. Dollars, in thousands except share data)	June 30, 2017			December 31, 2016
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	44,330		$	39,572
Restricted cash		—			14,369
Accounts receivable, net of allowances of $8,480 and $8,396, respectively		61,213			57,848
Inventories		75,869			63,346
Prepaid expenses and other current assets		17,192			19,238
Total current assets		198,604			194,373
Property, plant and equipment, net		46,651			48,916
Patents and other intangible assets, net		9,508			7,461
Goodwill		53,565			53,565
Deferred income taxes		42,685			47,325
Other long-term assets		16,664			20,463
Total assets	$	367,677		$	372,103
Liabilities and shareholders’ equity
Current liabilities
Accounts payable	$	14,245		$	14,353
Other current liabilities		50,858			69,088
Total current liabilities		65,103			83,441
Other long-term liabilities		25,627			25,185
Total liabilities		90,730			108,626
Contingencies
Shareholders’ equity
Common shares $0.10 par value; 50,000,000 shares authorized; 18,119,430 and 17,828,155 issued and outstanding as of June 30, 2017 and December 31, 2016, respectively		1,812			1,783
Additional paid-in capital		211,990			204,095
Retained earnings		65,378			64,179
Accumulated other comprehensive loss		(2,233	)		(6,580	)
Total shareholders’ equity		276,947			263,477
Total liabilities and shareholders’ equity	$	367,677		$	372,103

ORTHOFIX INTERNATIONAL N.V.
Non-GAAP Financial Measures

The following tables present reconciliations of net income (loss) from continuing operations, earnings per share (“EPS”) from continuing operations, gross profit, and net cash from operating activities, in each case calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), to, as applicable, non-GAAP financial measures, referred to as “EBITDA,” “Adjusted EBITDA,” “Adjusted net income from continuing operations,” “Adjusted earnings per share from continuing operations,” “Non-GAAP net margin” and “Free cash flow” that exclude items specified in the tables. A more detailed explanation of the items excluded from these non-GAAP financial measures, as well as why management believes the non-GAAP financial measures are useful to them, is included following the reconciliations.


EBITDA and Adjusted EBITDA

	Three Months Ended June 30,						Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)	2017			2016			2017			2016
Net income (loss) from continuing operations	$	4,735		$	(6,346	)	$	2,427		$	(1,770	)
Interest expense (income), net		(76	)		113			(121	)		151
Income tax expense		3,924			3,685			7,848			7,979
Depreciation and amortization		5,372			5,130			10,447			10,003
EBITDA	$	13,955		$	2,582		$	20,601		$	16,363
Share-based compensation		2,676			1,913			5,492			4,012
Foreign exchange impact		(618	)		(185	)		(1,631	)		(2,000	)
Strategic investments		2,226			206			9,326			404
SEC / FCPA matters and related costs		560			545			701			790
Infrastructure investments		—			1,284			—			2,246
Legal judgments/settlements		1,392			—			1,619			—
International restructuring		321			—			82			—
Charges related to U.S. Government resolutions		—			12,870			—			12,870
Adjusted EBITDA	$	20,512		$	19,215		$	36,190		$	34,685
As a % of net sales		18.8	%		18.5	%		17.1	%		17.1	%


Adjusted Net Income from Continuing Operations

	Three Months Ended June 30,						Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)	2017			2016			2017			2016
Net income (loss) from continuing operations	$	4,735		$	(6,346	)	$	2,427		$	(1,770	)
Foreign exchange impact		(618	)		(185	)		(1,631	)		(2,000	)
Strategic investments		2,226			206			9,326			404
SEC / FCPA matters and related costs		560			545			701			790
Infrastructure investments		—			1,284			—			2,246
Legal judgments/settlements		1,392			—			1,619			—
International restructuring		321			—			82			—
Charges related to U.S. Government resolutions		—			12,870			—			12,870
Long-term income tax rate adjustment		(841	)		(897	)		107			182
Adjusted net income from continuing operations	$	7,775		$	7,477		$	12,631		$	12,722


Adjusted Earnings per Share from Continuing Operations

	Three Months Ended June 30,						Six Months Ended June 30,
(Unaudited, per diluted share)	2017			2016			2017			2016
EPS from continuing operations	$	0.26		$	(0.35	)	$	0.13		$	(0.10	)
Foreign exchange impact		(0.03	)		(0.01	)		(0.09	)		(0.11	)
Strategic investments		0.12			0.01			0.51			0.02
SEC / FCPA matters and related costs		0.03			0.03			0.04			0.04
Infrastructure investments		—			0.07			—			0.12
Legal judgments/settlements		0.08			—			0.09			—
International restructuring		0.02			—			—			—
Charges related to U.S. Government resolutions		—			0.70			—			0.69
Long-term income tax rate adjustment		(0.06	)		(0.05	)		0.01			0.02
Adjusted EPS from continuing operations	$	0.42		$	0.40		$	0.69		$	0.68

Weighted average number of diluted common shares		18,343,038			18,511,978			18,288,050			18,645,280


Non-GAAP Net Margin

	Three Months Ended June 30,						Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)	2017			2016			2017			2016
Gross profit	$	85,765		$	81,559		$	165,922		$	158,101
Sales and marketing		(50,471	)		(46,043	)		(99,003	)		(90,865	)
Non-GAAP net margin	$	35,294		$	35,516		$	66,919		$	67,236

BioStim	$	19,469		$	18,575		$	36,602		$	34,983
Biologics		6,470			6,718			12,641			12,822
Extremity Fixation		6,766			8,161			13,178			15,336
Spine Fixation		2,696			2,201			4,703			4,536
Corporate		(107	)		(139	)		(205	)		(441	)
Non-GAAP net margin	$	35,294		$	35,516		$	66,919		$	67,236


Free Cash Flow

	Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)	2017			2016
Net cash from operating activities	$	9,727		$	21,373
Capital expenditures		(8,593	)		(10,356	)
Free cash flow	$	1,134		$	11,017


2017 Outlook

	Previous 2017 Outlook						Current 2017 Outlook
(Unaudited, U.S. Dollars, in millions)	Low			High			Low			High
Net income from continuing operations	$	20.6		$	23.7		$	17.7		$	21.4
Interest expense, net		0.1			0.2			0.2			0.1
Income tax expense		13.6			14.3			15.7			15.5
Depreciation and amortization		20.0			20.0			20.0			20.0
EBITDA	$	54.3		$	58.2		$	53.6		$	57.0
Share-based compensation		11.8			11.8			13.0			13.0
Foreign exchange impact		(1.0	)		(1.0	)		(1.6	)		(1.6	)
Strategic investments		8.6			8.1			10.3			9.3
SEC / FCPA matters and related costs		1.3			1.0			1.2			1.0
International restructuring		0.8			0.7			0.9			0.7
Legal judgments/settlements		0.2			0.2			1.6			1.6
Adjusted EBITDA	$	76.0		$	79.0		$	79.0		$	81.0


	Previous 2017 Outlook						Current 2017 Outlook
(Unaudited, per diluted share)	Low			High			Low			High
EPS from continuing operations	$	1.12		$	1.29		$	0.96		$	1.16
Foreign exchange impact		(0.05	)		(0.05	)		(0.09	)		(0.09	)
Strategic investments		0.46			0.44			0.56			0.51
SEC / FCPA matters and related costs		0.07			0.05			0.07			0.05
International restructuring		0.04			0.04			0.05			0.04
Legal judgments/settlements		0.01			0.01			0.09			0.09
Long-term income tax rate adjustment		(0.17	)		(0.20	)		(0.10	)		(0.16	)
Adjusted EPS from continuing operations	$	1.48		$	1.58		$	1.54		$	1.60

Weighted average number of diluted common shares		18,400,000			18,400,000			18,400,000			18,400,000

Non-GAAP Measures:

Constant Currency

Constant currency is a non-GAAP measure, which is calculated by using foreign currency rates from the comparable, prior-year period, to present net sales at comparable rates. Constant currency can be presented for numerous GAAP measures, but is most commonly used by management to analyze net sales without the impact of changes in foreign currency rates.

EBITDA

EBITDA is a non-GAAP financial measure, which is calculated by adding interest income (expense), net; income tax expense; and depreciation and amortization to net income (loss) from continuing operations. EBITDA provides management with additional insight to its results of operations.

Adjusted EBITDA, Adjusted Net Income from Continuing Operations and Adjusted Earnings per Share from Continuing Operations

These non-GAAP financial measures provide management with additional insight to its results of operations and are calculated using the following adjustments:

Share-based compensation – costs related to our share-based compensation plans, which include stock options, restricted stock awards, performance-based restricted stock awards, market-based restricted stock awards and our stock purchase plan
Foreign exchange impact – gains and losses related to foreign currency transactions; guidance presented does not include the impact of any future foreign exchange fluctuations
Strategic investments – costs related to our strategic investments, including our investment in eNeura, Inc.
SEC / FCPA matters and related costs – legal and other professional fees associated with the SEC Investigation, Securities Class Action Complaint and Brazil subsidiary compliance review
Infrastructure investments – costs associated with our multi-year process and systems improvement effort, “Bluecore,” which was completed in 2016
Legal judgments/settlements – adverse or favorable legal judgments or negotiated legal settlements
International restructuring – costs related to a planned restructuring, primarily consisting of severance charges and the write-down of certain assets
Charges related to U.S. Government resolutions – charges related to the settlement with the SEC as further discussed in our Form 10-K for the year ended December 31, 2016
Long-term income tax rate adjustment – reflects management’s expectation of a long-term normalized effective tax rate of 38%, which is based on current tax law and current expected income; actual tax expense will ultimately be based on GAAP performance and may differ from the 38% effective tax rate due to a variety of factors, including the jurisdictions in which profits are determined to be earned and taxed, the resolutions of issues arising from tax audits with various tax authorities, and the ability to realize deferred tax assets

Non-GAAP Net Margin

Non-GAAP net margin is an internal non-GAAP metric, which we define as gross profit less sales and marketing expense. Non-GAAP net margin is the primary metric used by our Chief Operating Decision Maker in managing our business.

Free Cash Flow

Free cash flow is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operating activities. Free cash flow is an important indicator of how much cash is generated or used by our normal business operations, including capital expenditures. Management uses free cash flow as a measure of progress on its capital efficiency and cash flow initiatives.

Usefulness and Limitations of Non-GAAP Financial Measures

Management uses non-GAAP measures to evaluate performance period-over-period, to analyze the underlying trends in our business, to assess performance relative to competitors and to establish operational goals and forecasts that are used in allocating resources. Management uses these non-GAAP measures as the basis for assessing the ability of the underlying operations to generate cash. In addition, management uses these non-GAAP measures to further its understanding of the performance of our business units.

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

The non-GAAP measures used in this press release may have limitations as analytical tools, and should not be considered in isolation or as a replacement for GAAP financial measures. Some of the limitations associated with the use of these non-GAAP financial measures are that they exclude items that reflect an economic cost and can have a material effect on cash flows. Similarly, certain non-cash expenses, such as share-based compensation, do not directly impact cash flows, but are part of total compensation costs accounted for under GAAP.

Compensation for Limitations Associated with Use of Non-GAAP Financial Measures

We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance. The GAAP results provide the ability to understand our performance based on a defined set of criteria. The non-GAAP measures reflect the underlying operating results of our businesses, which we believe is an important measure of our overall performance. We provide a detailed reconciliation of the non-GAAP financial measures to our most directly comparable GAAP measures, and encourage investors to review this reconciliation.

Usefulness of Non-GAAP Financial Measures to Investors

We believe that providing non-GAAP financial measures that exclude certain items provides investors with greater transparency to the information used by senior management in its financial and operational decision-making. Management believes it is important to provide investors with the same non-GAAP metrics it uses to supplement information regarding the performance and underlying trends of our business operations in order to facilitate comparisons to its historical operating results and internally evaluate the effectiveness of our operating strategies. Disclosure of these non-GAAP financial measures also facilitates comparisons of our underlying operating performance with other companies in the industry that also supplement their GAAP results with non-GAAP financial measures.

Contacts

Orthofix International N.V.
Mark Quick, 214-937-2924
markquick@orthofix.com

Zimmer Biomet Announces Quarterly Dividend for Third Quarter of 2017

Posted On August 8, 2017 By OrthoSpineNews In Financial /

WARSAW, Ind., Aug. 7, 2017 /PRNewswire/ — Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH), a global leader in musculoskeletal healthcare, today announced that its Board of Directors has approved the payment of a quarterly cash dividend to stockholders for the third quarter of 2017.

The cash dividend of $0.24 per share will be paid on or about October 27, 2017 to stockholders of record as of the close of business on September 22, 2017. Future declarations of dividends are subject to approval of the Board of Directors and may be adjusted as business needs or market conditions change.

About Zimmer Biomet

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.

ZBH-Fin

SOURCE Zimmer Biomet Holdings, Inc.

Author: OrthoSpineNews

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