Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 29, 2016 | Jul. 02, 2015 | |
Document Documentand Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | SPNE | ||
Entity Registrant Name | SeaSpine Holdings Corporation | ||
Entity Central Index Key | 1,637,761 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 11,101,777 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 9,069,768 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | |||
Total revenue, net | $ 133,178 | $ 138,695 | $ 146,586 |
Cost of goods sold | 61,119 | 56,714 | 55,532 |
Gross profit | 72,059 | 81,981 | 91,054 |
Operating expenses: | |||
Selling, general and administrative | 110,551 | 88,213 | 93,009 |
Research and development | 8,353 | 8,527 | 9,893 |
Intangible amortization | 5,331 | 5,590 | 5,598 |
Total operating expenses | 124,235 | 102,330 | 108,500 |
Operating loss | (52,176) | (20,349) | (17,446) |
Other expense, net | (877) | (269) | (4,556) |
Loss before income taxes | (53,053) | (20,618) | (22,002) |
Provision for income taxes | 2,479 | 3,927 | 3,744 |
Net loss | $ (55,532) | $ (24,545) | $ (25,746) |
Net Loss per share, basic and diluted (in dollars per share) | $ (4.99) | $ (2.22) | $ (2.33) |
Weighted average shares used to compute basic and diluted net loss per share | 11,139 | 11,048 | 11,048 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (55,532) | $ (24,545) | $ (25,746) |
Other comprehensive income (loss) | |||
Change in foreign currency translation adjustments | 498 | (961) | 256 |
Comprehensive loss | $ (55,034) | $ (25,506) | $ (25,490) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 33,429 | $ 652 |
Trade accounts receivable, net of allowances of $764 and $558 | 25,326 | 22,538 |
Inventories | 51,271 | 49,862 |
Prepaid expenses and other current assets | 3,696 | 1,564 |
Total current assets | 113,722 | 74,616 |
Property, plant and equipment, net | 21,958 | 16,360 |
Intangible assets, net | 39,632 | 46,891 |
Other assets | 1,077 | 1,775 |
Total assets | 176,389 | 139,642 |
Current liabilities: | ||
Accounts payable, trade | 13,689 | 36,637 |
Income taxes payable | 0 | 608 |
Accrued compensation | 4,177 | 2,408 |
Accrued commissions | 4,227 | 3,892 |
Accrued expenses and other current liabilities | 3,942 | 2,407 |
Total current liabilities | 26,035 | 45,952 |
Long-term borrowings under credit facility | 328 | 0 |
Other liabilities | 2,687 | 2,406 |
Total liabilities | $ 29,050 | $ 48,358 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value; 15,000 authorized at December 31, 2015; no shares issued and outstanding at December 31, 2015 | $ 0 | $ 0 |
Common stock, $0.01 par value; 60,000 authorized; 11,102 shares issued and outstanding at December 31, 2015, and no shares issued and outstanding at December 31, 2014 | 111 | 0 |
Additional paid-in capital | 173,786 | 0 |
Integra net investment prior to the spin-off | 0 | 90,391 |
Accumulated other comprehensive income | 1,391 | 893 |
Accumulated deficit | (27,949) | 0 |
Total stockholders' equity | 147,339 | 91,284 |
Total liabilities and stockholders' equity | $ 176,389 | $ 139,642 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 764 | $ 558 |
Preferred stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock issued (in shares) | 0 | 0 |
Preferred stock outstanding (in shares) | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 60,000,000 | 60,000,000 |
Common stock issued (in shares) | 11,102,000 | 0 |
Common stock outstanding (in shares) | 11,102,000 | 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
OPERATING ACTIVITIES: | |||
Net loss | $ (55,532) | $ (24,545) | $ (25,746) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 12,445 | 12,961 | 13,579 |
Instrument replacement expense | 1,228 | 1,732 | 2,417 |
Impairment of construction in progress | 594 | 0 | 0 |
Provision for excess and obsolete inventories | 7,327 | 2,500 | 2,431 |
Loss on disposal of property and equipment | 0 | 292 | 0 |
Deferred income tax benefit | (282) | (673) | (697) |
Stock-based compensation | 3,816 | 551 | 706 |
Amortization of inventory step-up | 0 | 258 | 795 |
Allocation of non-cash charges from Integra | 563 | 1,934 | 1,415 |
Changes in assets and liabilities | |||
Accounts receivable | (2,004) | 2,997 | 2,314 |
Inventories | (8,365) | (5,185) | (12,633) |
Prepaid expenses and other current assets | (2,867) | 256 | 754 |
Other non-current assets | 1,335 | 499 | 149 |
Accounts payable | 5,818 | 5,797 | 7,944 |
Income taxes payable | (320) | 507 | 101 |
Accrued commissions | 335 | 344 | 1,282 |
Accrued compensation, accrued expenses and other current liabilities | 3,316 | 875 | (2,826) |
Other non-current liabilities | 27 | (294) | 535 |
Net cash (used in) provided by operating activities | (32,566) | 806 | (7,480) |
INVESTING ACTIVITIES: | |||
Purchases of property and equipment | (11,555) | (3,804) | (5,550) |
Technology license milestone payment | (150) | 0 | 0 |
Net cash used in investing activities | (11,705) | (3,804) | (5,550) |
FINANCING ACTIVITIES: | |||
Debt issuance costs | (80) | 0 | 0 |
Integra net investment prior to the spin-off | 77,173 | 3,012 | 13,581 |
Excess tax benefits from stock-based compensation arrangements | 37 | 0 | 0 |
Net cash provided by financing activities | 77,130 | 3,012 | 13,581 |
Effect of exchange rate changes on cash and cash equivalents | (82) | (8) | 4 |
Net change in cash and cash equivalents | 32,777 | 6 | 555 |
Cash and cash equivalents at beginning of period | 652 | 646 | 91 |
Cash and cash equivalents at end of period | 33,429 | 652 | 646 |
Non-cash financing activities: | |||
Settlement of related-party payable to Integra net investment | 29,022 | 0 | 0 |
Long-term borrowings under credit facility | 328 | 0 | 0 |
Non-cash investing activities: | |||
Property and equipment in liabilities | 638 | 300 | 500 |
Supplemental cash flow information: | |||
Income taxes paid | $ 2,982 | $ 4,200 | $ 3,900 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Integra Net Investment | Accumulated Other Comprehensive Income | Accumulated Deficit |
Balance at beginning of period (in shares) at Dec. 31, 2012 | 0 | |||||
Balance at beginning of period at Dec. 31, 2012 | $ (5,624) | $ 0 | $ 0 | $ (7,222) | $ 1,598 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (25,746) | (25,746) | ||||
Other comprehensive income | 256 | 256 | ||||
Net transfers to Integra | 142,609 | 142,609 | ||||
Reclassification of Integra net investment in connection with spin-off | 13,581 | |||||
Balance at end of period (in shares) at Dec. 31, 2013 | 0 | |||||
Balance at end of period at Dec. 31, 2013 | 111,495 | $ 0 | 0 | 109,641 | 1,854 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (24,545) | (24,545) | 0 | |||
Other comprehensive income | (961) | (961) | ||||
Net transfers to Integra | 5,295 | 5,295 | ||||
Reclassification of Integra net investment in connection with spin-off | $ 3,012 | |||||
Balance at end of period (in shares) at Dec. 31, 2014 | 0 | 0 | ||||
Balance at end of period at Dec. 31, 2014 | $ 91,284 | $ 0 | 0 | 90,391 | 893 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (55,532) | (27,583) | (27,949) | |||
Other comprehensive income | 498 | 498 | ||||
Net transfers to Integra | 107,433 | 107,433 | ||||
Reclassification of Integra net investment in connection with spin-off | $ 77,173 | 170,241 | (170,241) | |||
Issuance of common stock in connection with spin-off (in shares) | 11,048,000 | |||||
Issuance of common stock in connection with spin-off | $ 110 | (110) | ||||
Restricted stock awards issued (in shares) | 66,000 | |||||
Restricted stock awards issued | $ 1 | (1) | ||||
Restricted stock awards forfeited (in shares) | (12,000) | |||||
Stock-based compensation | $ 3,619 | 3,619 | ||||
Excess tax benefits from stock-based compensation arrangements | $ 37 | 37 | ||||
Balance at end of period (in shares) at Dec. 31, 2015 | 11,102,000 | 11,102,000 | ||||
Balance at end of period at Dec. 31, 2015 | $ 147,339 | $ 111 | $ 173,786 | $ 0 | $ 1,391 | $ (27,949) |
BUSINESS
BUSINESS | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS | BUSINESS Spin-off from Integra As of June 30, 2015, SeaSpine Holdings Corporation ("SeaSpine," or the "Company") was a subsidiary of Integra LifeSciences Holdings Corporation (“Integra”). On July 1, 2015, Integra completed the spin-off of its orthobiologics and spinal fusion hardware business into SeaSpine, which was created to be a separate, independent, publicly-traded medical technology company focused on the design, development and commercialization of surgical solutions for the treatment of patients suffering from spinal disorders. Unless the context indicates otherwise, (i) references to "SeaSpine," the "Company," and the "Business," refer to SeaSpine Holdings Corporation and its orthobiologics and spinal fusion hardware business and (ii) references to "Integra" refer to Integra LifeSciences Holdings Corporation and its subsidiaries other than SeaSpine. On July 1, 2015 (the "Distribution Date"), SeaSpine common stock was distributed, on a pro rata basis, to Integra’s stockholders of record as of 5:00 p.m. Eastern Time on June 19, 2015 (the "Record Date"). On the Distribution Date, each holder of Integra common stock received one share of SeaSpine common stock for every three shares of Integra common stock held by such holder as of the Record Date. The spin-off was completed pursuant to a Separation and Distribution Agreement and several other agreements with Integra or its subsidiaries related to the spin-off, including an Employee Matters Agreement, a Tax Matters Agreement, a Transition Services Agreement and several Supply Agreements, each of which is filed as an Exhibit to the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission ("SEC") on July 1, 2015 and incorporated by reference herein. These agreements govern the relationship between SeaSpine and Integra following the spin-off and provide for the allocation of various assets, liabilities, rights and obligations. These agreements also include arrangements for transition services, products and raw materials to be provided by Integra to SeaSpine and transition services and products to be provided by SeaSpine to Integra. For a discussion of each agreement, see the section entitled “Certain Relationships and Related Party Transactions" in the SeaSpine Information Statement included as Exhibit 99.1 to the Registration Statement on Form 10, as amended, filed with the SEC on June 9, 2015 (the “Information Statement”). The SeaSpine Registration Statement on Form 10 became effective on June 9, 2015, and SeaSpine common stock began “regular-way” trading on the NASDAQ Global Market on July 2, 2015 under the symbol “SPNE.” |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company prepared the consolidated financial statements included in this report in accordance with accounting principles generally accepted in the U.S. (“GAAP”). For periods prior to the spin-off, the Company’s consolidated financial statements were prepared on a stand-alone basis and derived from Integra's consolidated financial statements and accounting records related to its orthobiologics and spinal fusion hardware business. The Company relied on Integra for a significant portion of its operational and administrative support. The consolidated financial statements included allocations of certain Integra corporate expenses, including information technology resources and support; finance, accounting, auditing services; real estate and facility management services; human resources activities; certain procurement activities; treasury services, legal advisory services and costs for research and development. These costs were allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on a pro-rata basis of revenue, standard costs of sales, or other measures. Integra used a centralized approach to cash management and financing of its operations and substantially all cash generated by the Company through May 4, 2015, the date the Company implemented a separate enterprise resource planning ("ERP") system for SeaSpine, was assumed to be remitted to Integra. Prior to the spin-off, cash management and financing transactions relating to the Company were accounted for through the Integra invested equity account. Accordingly, none of the Integra cash and cash equivalents at the corporate level were assigned to SeaSpine in the consolidated financial statements. Integra’s debt and related interest expense were not allocated to SeaSpine for any of the periods presented since the Company was not the legal obligor of the debt and Integra’s borrowings were not directly attributable to SeaSpine. Subsequent to the spin-off, the Company’s financial statements are presented on a consolidated basis, as the Company became a separate publicly-traded company on July 1, 2015. The Company performs its operational and administrative support using internal resources and purchased services, some of which have been provided by Integra for a fee pursuant to a transition services agreement. See Note 3, “Transactions with Integra,” for further information regarding the relationships the Company has with Integra. Principles of Consolidation For periods prior to the spin-off, the consolidated financial statements include certain assets and liabilities that have historically been held at the Integra level but were specifically identifiable or otherwise attributable to the Company. All significant intra-company transactions within Integra's pre-spin off orthobiologics and spinal fusion hardware business have been eliminated. All significant transactions between the Company and other businesses of Integra before the spin-off are included in these consolidated financial statements. For periods subsequent to the spin-off, the consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and allowances, net realizable value of inventories, amortization periods for acquired intangible assets, discount rates and estimated projected cash flows used to value and test impairments of long-lived assets, estimates of projected cash flows, depreciation and amortization periods for long-lived assets, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation and loss contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances. Actual results could differ from these estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents include cash readily available in checking and bank deposit sweep accounts. Fair Value of Financial Instruments The carrying amounts of cash, cash equivalents, receivables, accounts payable and accrued expenses at December 31, 2015 and December 31, 2014, are considered to approximate fair value because of the short term nature of those items. The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following three categories: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The carrying amount of debt outstanding pursuant to the Credit Facility approximates fair value as interest rates on this instrument approximate current market rates. This fair value measurement is categorized within Level 2 of the fair value hierarchy. Trade Accounts Receivable and Allowances for Doubtful Accounts Receivable Trade accounts receivable in the accompanying consolidated balance sheets are presented net of allowances for doubtful accounts. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowances for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowances for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowances for doubtful accounts are recorded to selling, general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. Inventories Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost, the value determined by the first-in, first-out method, or market. At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of our current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions, a review of the shelf life expiration dates for products, as well as the feasibility of reworking or using excess or obsolete products or components in the production or assembly of other products that are not obsolete or for which there are not excess quantities in inventory. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. The Company capitalizes inventory costs associated with certain products prior to regulatory approval, based on management’s judgment of probable economic benefit. The Company could be required to expense previously capitalized costs related to pre-approval inventory upon a change in such judgment, due to, among other potential factors, a denial or delay of approval by necessary regulatory bodies or a decision by management to discontinue the related development program. No such amounts were capitalized at December 31, 2015 or 2014. Property, Plant, and Equipment Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment charges. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life. The cost of major additions and improvements is capitalized, while maintenance and repair costs that do not improve or extend the lives of the respective assets are charged to operations as incurred. The cost of computer software obtained for internal use is accounted for in accordance with the Accounting Standards Codification 350-40, Internal-Use Software. The cost of purchased instruments which the Company consigns to hospitals and independent sales agents to support surgeries is initially capitalized as construction in progress. The amount is then reclassified to instrument sets and depreciation is initiated when instruments are put together in a newly built set with spinal implants, or directly expensed for the instruments that are used to replace damaged instruments in an existing set. The depreciation expense and direct expense for replacement instruments are recorded in selling, general and administrative expense. Identifiable Intangible Assets Identifiable intangible assets are initially recorded at fair value at the time of acquisition generally using an income or cost approach. The Company capitalizes costs incurred to renew or extend the term of recognized intangible assets and amortizes those costs over their expected useful lives. Long-Lived Assets Long-lived assets held and used by the Company, including property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets to be held and used, a recoverability test is performed using projected undiscounted net cash flows applicable to the long-lived assets. If an impairment exists, the amount of such impairment is calculated based on the estimated fair value of the asset. Impairments to long-lived assets to be disposed of are recorded based upon the difference between the carrying value and the fair value of the applicable assets. There was no impairment of intangible or tangible long-lived assets in any of the periods presented. Foreign Currency The Company generates revenues outside the United States in multiple foreign currencies including euros, British pounds, Swiss francs and New Zealand dollars, and in U.S. dollar-denominated transactions conducted with customers who generate revenue in currencies other than the U.S. dollar. The Company also incurs operating expenses in euros. All assets and liabilities of foreign subsidiaries which have a functional currency other than the U.S. dollar are translated at the rate of exchange at year-end, while elements of the income statement are translated at the average exchange rates in effect during the year. The net effect of these translation adjustments is shown as a component of accumulated other comprehensive income (loss). These currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in non-U.S. subsidiaries. Foreign currency transaction gains and losses are reported in other income (expense), net. Income Taxes In the Company’s consolidated financial statements prior to the spin-off, income tax expense and deferred tax balances were calculated on a separate return basis although the Company’s operations had historically been included in the tax returns filed by the respective Integra entities of which the Company’s business was a part. Prior to the spin-off, the Company maintained an income taxes payable to/from account with Integra. The Company was deemed to settle current tax balances with the Integra tax paying entities in the respective jurisdictions. The Company’s current income tax balances were reflected as income taxes payable and settlements, which are deemed to occur in the year following incurrence, were reflected as changes in net Integra investment in the consolidated balance sheets. We recognize tax benefits in our financial statements when our uncertain tax positions are more likely than not to be sustained upon audit. The amount we recognize is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We recognize deferred tax assets for deductible temporary differences, operating loss carryforwards and tax credit carryforwards. Deferred tax assets are reduced by valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Revenue Recognition Our net sales are derived primarily from the sale of orthobiologics and spinal fusion hardware products globally. Sales are reported net of returns, group purchasing organization fees and other customer allowances. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred title and risk of loss have passed to the customer, there is a fixed or determinable sales price and collectability of that sales price is reasonably assured. In the United States, we generate most of our revenue by consigning our orthobiologics products and consigning or loaning our spinal fusion hardware sets to hospitals and independent sales agents, who in turn deliver them to the hospital for a single surgical procedure or leave them with hospitals that are high volume users for use in multiple procedures. The spinal fusion hardware sets typically contain the instruments, including disposables, and spinal implants required to complete a surgery. We ship replacement inventory to independent sales agents to replace the consigned inventory used in surgeries and maintain and replenish the loaned sets and return them to a hospital or independent sales agent for the next procedure. We recognize revenue on these consigned or loaned products when they have been used or implanted in a surgical procedure. For all other transactions, including sales to international stocking distributors, we recognize revenue when the products are shipped to the customer or stocking distributor and the transfer of title and risk of loss occurs. There are generally no customer acceptance or other conditions that prevent us from recognizing revenue in accordance with the delivery terms. Product royalties are estimated and recognized in the same period that the royalty-based products are sold by licensees. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information and expected sales trends. Differences between actual revenues and estimated royalty revenues are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been significant. Shipping and Handling Fees and Costs Amounts billed to customers for shipping and handling are included in revenues. The related shipping and freight charges incurred by the Company are included in cost of goods sold. Shipping and handling costs of $1.2 million , $1.0 million , and $1.1 million were recorded in selling, general and administrative expense during the years ended December 31, 2015, 2014 and 2013, respectively. Research and Development Research and development costs, including salaries, depreciation, consultant and other external fees, and facility costs directly attributable to research and development activities, are expensed in the period in which they are incurred. Stock-Based Compensation For periods prior to the spin-off, the Company’s stock-based compensation was derived from the equity awards granted by Integra to individuals who would become the Company’s employees. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to its employees. As those stock-based compensation plans were Integra’s plans, the amounts have been recognized in the consolidated statements of operations and the Integra net investment account on the consolidated balance sheet. For periods after the spin-off, the Company's stock-based compensation has been recognized through the consolidated statement of operations and the Company's additional paid-in capital account on the consolidated balance sheet. The Company applies the authoritative guidance for stock-based compensation. This guidance requires companies to recognize the expense related to the fair value of their stock-based compensation awards. Stock-based compensation expense for stock option awards granted after January 1, 2006 was based on the fair value on the grant date using the Black-Scholes-Merton option pricing model. The fair value of performance awards of restricted stock granted prior to the spin-off was based on the Integra’s stock price at the grant date and the assessed probability of meeting future performance targets. The long form method was used in the determination of the windfall tax benefit in accordance with the guidance. The stock-based compensation is initially measured at the fair value of the awards on the grant date and is then recognized on a ratable basis in the financial statements over the requisite service period of the award. Stock-based compensation expense was $4.4 million in 2015, $0.6 million in 2014, and $0.7 million in 2013. Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, which is held at major financial institutions, and trade receivables. The Company’s products are sold on an uncollateralized basis and on credit terms based upon a credit risk assessment of each customer. A portion of the Company’s trade receivables to customers outside the United States includes sales to foreign distributors, who then sell to government owned or supported healthcare systems. The ongoing economic conditions in certain European countries, especially Greece, Ireland, Italy, Portugal and Spain remain uncertain. Accounts receivable from customers in these countries are not a material amount of the Company’s overall receivables. None of the Company’s customers accounted for 10% or more of the combined net sales during the years ended December 31, 2015, 2014 or 2013. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board ("FASB") issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should: 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB deferred for one year the effective date of the new revenue standard, but early adoption is permitted. The new standard will be effective for the Company on January 1, 2018. The Company is in the process of evaluating the impact of this standard on its financial statements. In August 2014, the FASB issued Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendment requires management to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around management’s plan to alleviate these doubts are required. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2016. The implementation of the amended guidance is not expected to have an impact on current disclosures in our financial statements. In April 2015, the FASB issued Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs . The new standard will require debt issuance costs to be presented on the balance sheet as a direct reduction of the carrying value of the associated debt liability, consistent with the presentation of debt discounts. The recognition and measurement requirements will not change as a result of this guidance. The standard is effective for the annual reporting periods beginning after December 15, 2015 and requires a retrospective application. The guidance in Accounting Standards Update (ASU) 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. Under the new standard, the SEC staff will not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The implementation of the amended guidance is not expected to have an impact on current disclosures in our financial statements. In July 2015, the FASB issued Update No. 2015-11, Simplifying the Measurement of Inventory. The new guidance requires an entity to measure inventory within the scope of the amendment at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The implementation of the amended guidance is not expected to have an impact on our financial statements. In November 2015, the FASB issued Update No. 2015-17, Income Taxes - Balance Sheet Reclassification of Deferred Taxes (Topic 740) . This ASU requires that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted and the amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company early adopted this ASU in the fourth quarter of 2015 on a prospective basis and included the current portion of deferred tax assets within the non-current portion of deferred tax assets within the consolidated balance sheet. The Company did not adjust our prior period consolidated balance sheet as a result of the adoption of this ASU. In February 2016, the FASB issued Update No. 2016-02, Leases (ASC 842) , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. ASC 842 supersedes the previous leases standard, ASC 840 Leases. The standard is effective on January 1, 2019, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance. Net Loss Per Share For periods prior to the spin-off, basic and diluted net loss per share was calculated based on the approximately 11.0 million shares of SeaSpine common stock that were distributed to Integra shareholders on July 1, 2015. For periods subsequent to the spin-off, basic and diluted net loss per share was calculated using the weighted-average number of shares of common stock outstanding during the period. The weighted average number of shares used to compute diluted net loss per share excludes any assumed exercise of stock options, and any assumed issuance of common stock under restricted stock units as the effect would be antidilutive. Common stock equivalents of 2.0 million shares for the year ended December 31, 2015 were excluded from the calculation because of their antidilutive effect. Year Ended December 31, 2015 2014 2013 (In thousands, except per share data) Net loss $ (55,532 ) $ (24,545 ) $ (25,746 ) Loss Per Share Data Loss per share Basic and diluted $ (4.99 ) $ (2.22 ) $ (2.33 ) Weighted average number of shares outstanding Basic and diluted 11,139 11,048 11,048 |
TRANSACTIONS WITH INTEGRA
TRANSACTIONS WITH INTEGRA | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
TRANSACTIONS WITH INTEGRA | TRANSACTIONS WITH INTEGRA Related-party Transactions Prior to the spin-off, and pursuant to certain supply agreements subsequent to the spin-off, SeaSpine purchased a portion of raw materials and finished goods from Integra for the Company's Mozaik family of products, and SeaSpine contract manufactured certain finished goods for Integra. The Company's purchases of raw materials and Mozaik product finished goods from Integra for the years ended December 31, 2015 , 2014 and 2013 totaled $6.2 million , $6.2 million and $7.9 million , respectively. The amount of finished goods sold by SeaSpine to Integra under its contract manufacturing arrangement was immaterial for all periods presented. Pursuant to a transition services agreement, Integra and SeaSpine will provide certain services following the spin-off, and Integra and SeaSpine will indemnify each other against certain liabilities arising from their respective businesses. Under this agreement, Integra provides us with certain support functions, including information technology, accounting and other financial functions, regulatory affairs and quality assurance, human resources and other administrative support. In addition, SeaSpine provides limited information technology and systems support services to Integra. The Company incurred approximately $2.8 million of costs under the agreement for the year ended December 31, 2015, of which $1.5 million was outstanding at December 31, 2015. The amount of services provided by SeaSpine to Integra was immaterial for the year ended December 31, 2015. Subsequent to the spin-off, Integra also collected trade receivables from customers on behalf of the Company, of which $1.3 million was outstanding as of December 31, 2015 and recorded in Other Current Assets. Allocated Costs For periods prior to the spin-off, the consolidated statements of operations included direct expenses for cost of goods sold, research and development, sales and marketing, customer service, and administration as well as allocations of expenses arising from shared services and infrastructure provided by Integra to the Company, such as costs of information technology, including the costs of a multi-year global enterprise resource planning implementation, accounting and legal services, real estate and facilities management, corporate advertising, insurance and treasury services, and other corporate and infrastructure services. These allocations are included in the table below. These expenses were allocated to the Company using estimates that the Company considers to be a reasonable reflection of the utilization of services provided to or benefits received from the Company. The allocation methods include pro-rata basis of revenue, standard cost of sales or other measures. Year Ended December 31, 2015 2014 2013 Cost of goods sold $ 488 $ 1,304 $ 1,166 Selling, general and administrative 8,633 17,602 17,408 Research and development 253 490 427 Total Allocated Costs $ 9,374 $ 19,396 $ 19,001 Included in the above amounts are certain non-cash allocated costs, including stock-based compensation. Such amounts were $0.6 million , $1.9 million and $1.4 million for the years ended December 31, 2015 , 2014 and 2013, respectively. All significant related party transactions between SeaSpine and Integra were included in the consolidated financial statements and, prior to the spin-off, were considered to be effectively settled for cash at the time the transaction was recorded, with the exception of the purchases from Integra of Mozaik raw materials and finished goods for all periods presented. The total net effect of the transactions considered to be effectively settled for cash was reflected in the consolidated statement of cash flows as a financing activity and in the consolidated balance sheet as Integra net investment. The following table summarizes the components of the net increase (decrease) in Integra net investment for the years ended December 31, 2015 , 2014 and 2013: Year Ended December 31, 2015 2014 2013 Cash pooling and general financing activities (a) $ 68,386 $ (14,451 ) $ (4,005 ) Corporate Allocations (excluding non-cash adjustments) 8,787 17,463 17,586 Total Integra net investment in financing activities within cash flow statement 77,173 3,012 13,581 Non-cash adjustments (b) 29,806 2,485 2,122 Interest on long term loan (c) — — (4,617 ) Net capitalization of related-party loan — — 131,580 Spin-off related adjustment (d) 161 — — Reclassification of Integra net investment in connection with the spin-off (170,241 ) — — Foreign exchange impact 293 (202 ) (57 ) Net (decrease) increase in Integra investment $ (62,808 ) $ 5,295 $ 142,609 (a) Includes financing activities for capital transfers, cash sweeps and other treasury services. (b) Reflects allocation of non-cash charges from Integra, stock-based compensation and settlement of related-party payable to Integra net investment. (c) Interest on long-term loan capitalized in 2013. (d) During the year ended December 31, 2015, certain spin-off related adjustments were recorded in stockholders' equity, to reflect the appropriate opening balances related to SeaSpine’s legal entities at the Distribution Date. |
DEBT AND INTEREST
DEBT AND INTEREST | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
DEBT AND INTEREST | DEBT AND INTEREST Related -Party Loans The Company had $132.0 million in related-party loans from Integra arising from a prior acquisition. During 2013, those loans and the associated accrued interest were forgiven and capitalized as part of Integra's net investment. The company recorded $4.6 million of interest expense for the year ended December 31, 2013, which was reflected as interest expense in the Company’s consolidated financials. Credit Agreement On December 24, 2015, the Company entered into a three -year credit facility (the "Credit Facility") with Wells Fargo Capital Finance, as Administrative Agent and as a Lender. The Credit Facility provides an asset-backed revolving line of credit of up to $30.0 million in borrowing capacity with a maturity date of December 24, 2018, which maturity date is subject to a one -time one -year extension at the Company's election. In connection with the Credit Facility, the Company was required to become guarantors and to provide a security interest in substantially all its assets for the benefit of Agent and the Lender. Borrowings under the Credit Facility shall accrue interest at the rate then applicable to the Base Rate (as customarily defined) Loans, unless and until converted into LIBOR Rate Loans in accordance with the terms of the Credit Facility. Borrowings bear interest at a floating annual rate equal to (a) during any month for which the Company's average excess availability (as customarily defined) is greater than $20.0 million , base rate plus (i) 1.25 percentage points for base rate loans and (ii) LIBOR rate plus 2.25 percentage points for LIBOR loans, (b) during any month for which the Company's average excess availability is greater than $10.0 million but less than or equal to $20.0 million , (i) base rate plus 1.50 percentage points for base rate loans and (ii) LIBOR rate plus 2.50 percentage points for LIBOR loans and (c) during any month for which the Company's average excess availability is less than or equal to $10.0 million , (i) base rate plus 1.75 percentage points for base rate loans and (ii) LIBOR rate plus 2.75 percentage points for LIBOR loans. The Company will also pay an annual unused line fee in an amount equal to 0.375% times the unused Credit Facility amount. The unused line fee is due and payable on the first day of each month. At December 31, 2015, there was $0.3 million outstanding under the Credit Facility. Debt issuance costs and legal fees related to the financing totaling $0.4 million were recorded as a deferred asset and are subsequently being amortized ratably over the term of the Credit Facility. The Credit Facility contains various customary affirmative and negative covenants agreed to by the Company, including prohibiting the Company from incurring indebtedness without the lender’s consent. The Credit Facility also includes a financial covenant, that requires the Company to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 for the applicable measurement period, if the Company's Total Liquidity (as defined in the Credit Facility) is less than $5.0 million . The Company was in compliance with all such covenants at December 31, 2015. The Credit Facility also includes customary events of default, including events of default relating to non-payment of amounts due under the Credit Facility, material inaccuracy of representations and warranties, violation of covenants, bankruptcy and insolvency, failure to comply with health care laws, violation of certain of the Company’s existing agreements, and the occurrence of a change of control. Under the Credit Facility, if an event of default occurs, lenders holding a majority of the revolving commitments will have the right to terminate the commitments and accelerate the maturity of any loans outstanding. |
BALANCE SHEET DETAILS
BALANCE SHEET DETAILS | 12 Months Ended |
Dec. 31, 2015 | |
Balance Sheet Related Disclosures [Abstract] | |
BALANCE SHEET DETAILS | BALANCE SHEET DETAILS Inventories. Inventories consisted of the following: December 31, 2015 December 31, 2014 (In thousands) Finished goods $ 29,845 $ 32,364 Work in process 15,574 11,675 Raw materials 5,852 5,823 $ 51,271 $ 49,862 Property, Plant and Equipment . Property, plant and equipment, net and corresponding useful lives were as follows: December 31, 2015 December 31, 2014 Useful Lives (In thousands) Leasehold improvement $ 4,830 $ 4,262 Lease term Machinery and production equipment 6,404 5,810 3-20 years Spinal fusion hardware instrument sets 25,080 22,122 5 years Information systems and hardware 6,872 1,720 3-7 years Furniture and fixtures 944 657 3-15 years Construction in progress 8,375 8,789 Total 52,505 43,360 Less accumulated depreciation and amortization (30,547 ) (27,000 ) Property, plant and equipment, net $ 21,958 $ 16,360 Depreciation expenses totaled $4.5 million , $4.8 million and $5.4 million for the years ended December 31, 2015, 2014, and 2013, respectively. The cost of purchased instruments used to replace damaged instruments in existing sets and recorded directly to expense totaled $1.2 million , $1.7 million and $2.4 million for the years ended December 31, 2015, 2014 and 2013, respectively. Identifiable Intangible Assets. The components of the Company’s identifiable intangible assets were as follows: December 31, 2015 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Completed technology 12 years $ 31,169 $ (19,280 ) $ 11,889 Customer relationships 12 years 56,830 (29,087 ) 27,743 Trademarks/brand names — 300 (300 ) — $ 88,299 $ (48,667 ) $ 39,632 December 31, 2014 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Completed technology 12 years $ 30,419 $ (16,582 ) $ 13,837 Customer relationships 12 years 56,830 (23,963 ) 32,867 Trademarks/brand names — 300 (300 ) — Non-Compete agreements 4 years 1,900 (1,713 ) 187 $ 89,449 $ (42,558 ) $ 46,891 Annual amortization expense (including amounts reported in cost of goods sold) is expected to be approximately, $7.0 million in 2016 , $5.8 million in 2017 , $5.5 million in 2018 , $4.8 million in 2019 , and $4.0 million in 2020 . Amortization of product technology-based intangible assets totaled $ 2.7 million , $2.6 million and $2.6 million for the years ended December 31, 2015 , 2014 and 2013, respectively, and is presented by the Company within cost of goods sold. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation expense, all related to employees and non-employee directors, was recognized as follows: Year Ended December 31, 2015 2014 2013 (In thousands) Selling, general and administrative $ 3,993 $ 519 $ 619 Research and development 242 18 78 Cost of goods sold 168 14 9 Total stock-based compensation expense 4,403 551 706 Total estimated tax benefit related to stock-based compensation expense 37 203 271 Net effect on net income $ 4,366 $ 348 $ 435 Equity Award Plans As of June 30, 2015, Integra had stock options, restricted stock awards, performance stock awards, contract stock awards and restricted stock units outstanding under three plans, the 2000 Equity Incentive Plan, the 2001 Equity Incentive Plan, and the 2003 Equity Incentive Plan. In connection with the spin-off, Integra equity awards granted to individuals who became employees of the Company were converted to SeaSpine equity awards. In general, each award is subject to the same terms and conditions as were in effect prior to the spin-off. In May 2015, the Company adopted a 2015 Incentive Award Plan (the "2015 Plan"), under which the Company can grant its employees and non-employee directors incentive stock options and non-qualified stock options, restricted stock, performance stock, dividend equivalent rights, stock appreciation rights, stock payment awards and other incentive awards. The Company may issue up to 2,000,000 shares of its common stock under the 2015 Plan. Restricted Stock Awards, Restricted Stock Units and Performance Stock Awards Performance stock awards, restricted stock awards and restricted stock units generally have requisite service periods of three years . Performance stock awards are subject to graded vesting and the Company expenses their fair value over the requisite service period. The Company expenses the fair value of restricted stock awards and restricted stock units on an accelerated basis over the vesting period or requisite service period, whichever is shorter. Stock-based compensation expense related to restricted stock awards, restricted stock units and performance stock awards includes an estimate for forfeitures. The expected forfeiture rate of all equity based compensation is based on historical patterns of the Company’s employees and is estimated to be 10% annually for the twelve months ended December 31, 2015 . The following table summarizes awards of restricted stock awards, restricted stock units and performance stock awards to SeaSpine employees for the year ended December 31, 2015 : Restricted Stock and Performance Stock Awards Shares (In thousands) Weighted Average Grant Date Fair Value Per Share Unvested, January 1, 2015 — $— Granted 138 12.81 Cancellations (13) 4.40 Released/Vested (62) 17.88 Unvested, December 31, 2015 63 $9.58 The total fair value of shares vested in 2015, 2014 and 2013 was $1.1 million , $0.7 million , and $0.6 million , respectively. The Company recognized $0.3 million , $0.6 million and $0.7 million in expense related to such awards during the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015 , there was approximately $0.3 million of total unrecognized compensation expense related to unvested awards. This cost is expected to be recognized over a weighted-average period of approximately one year . Stock Options Stock option grants to employees generally have requisite service periods of four years , and stock option grants to non-employee directors generally have a requisite service period of one year . Both are subject to graded vesting. The Company records stock-based compensation expense associated with stock options on an accelerated basis over the various vesting periods within each grant and based on their fair value at the date of grant using the Black-Scholes-Merton option pricing model. The following weighted-average assumptions were used in the calculation of fair value for options grants for the year ended December 31, 2015: December 31, 2015 Expected dividend yield 0 % Risk-free interest rate 1.55 % Expected volatility 38.17 % Expected term (in years) 5.1 The Company considered that it has never paid cash dividends and does not currently intend to pay cash dividends. The risk-free interest rates are derived from the U.S. Treasury yield curve in effect on the date of grant for instruments with a remaining term similar to the expected term of the options. Due to the Company’s limited historical data, the expected volatility is calculated based upon the historical volatility of comparable companies in the medical device industry whose share prices are publicly available for a sufficient period of time. The expected term of options is calculated using the simplified method as prescribed by accounting guidance for stock-based compensation. In addition, the Company applies an expected forfeiture rate when amortizing stock-based compensation expense. The expected forfeiture rate of stock options is based on historical patterns of the employee turnover rate and is estimated to be 10% annually for stock-based compensation expense recorded for the year ended December 31, 2015 . As individual grant awards become fully vested, stock-based compensation expense is adjusted to recognize actual forfeitures. A summary of the options issued during the year ended December 31, 2015 and the total number of options outstanding as of that date and changes since January 1, 2015 are set forth below: Number of Shares Outstanding (In thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Life (In years) Aggregate Intrinsic Value (In thousands) Outstanding, January 1, 2015 — $ — — $ — Granted 2,009 14.87 — — Exercised — — — — Forfeited (36 ) 15.61 — — Outstanding, December 31, 2015 1,973 $ 14.86 7.20 $ 4,585 Vested or expected to vest, December 31, 2015 1,800 $ 14.78 7.17 $ 4,314 Exercisable, December 31, 2015 472 $ 12.46 4.53 $ 2,230 The weighted average grant date fair value of options granted during the year ended December 31, 2015 was $5.57 . The total fair value of shares vested during the year ended December 31, 2015 was $0.7 million . The Company recognized $4.4 million in expense related to stock options for the year ended December 31, 2015. As of December 31, 2015 , there was approximately $4.7 million of total unrecognized compensation expense related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately 1.3 years. As of December 31, 2015, the Company had 388,000 shares remaining in the 2015 Plan available for grant. Employee Stock Purchase Plan In May 2015, the Company adopted a 2015 Employee Stock Purchase Plan (the “ESPP”), which was amended in December 2015. The ESPP enables eligible employees to purchase shares of the Company’s common stock through payroll deductions of up to 15% of eligible compensation during an offering period. Generally, each offering will be for a period of twenty-four months as determined by the Company's Board of Directors. There are four six-month purchase periods in each offering period for contributions to be made and to be converted into shares at the end of the purchase period. In no event may an employee invest more than 2,500 shares per purchase period based on the closing price on the first trading date of an offering period or more than $25,000 worth of stock during each calendar year. The purchase price is 85% of the market price of the stock at the first trading date of an offering period or any purchase date during an offering period (June 30 or December 31), whichever is less. The ESPP authorizes the issuance of 400,000 shares of common stock pursuant to purchase rights granted to employees. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986. The first offering period commenced on January 1, 2016 and will end on December 31, 2017. As of December 31, 2015 , no shares of common stock have been purchased under the ESPP. |
LEASE
LEASE | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
LEASE | LEASE The Company entered into a sublease agreement for an office located in Carlsbad, California, which became effective September 8, 2015 upon the Company's receipt of the consent to sublease of the landlord. The term of the lease agreement is from October 1, 2015 through April 28, 2027 at an average annual cost of approximately $1.4 million . The Company leases administrative, manufacturing, research, and distribution facilities and various manufacturing, office and transportation equipment through operating lease agreements. Future minimum lease payments under these operating leases at December 31, 2015 are as follows: Payments Due by Calendar Year (In thousands) 2016 $ 2,287 2017 2,152 2018 2,207 2019 2,262 2020 2,317 Thereafter 12,107 Total minimum lease payments $ 23,332 Total rental expense for the years ended December 31, 2015, 2014, and 2013 was $2.5 million , $2.1 million and $2.1 million , respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company is subject to income taxes in the U.S. and Switzerland. Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are calculated based on the difference between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using the enacted income tax rates expected to be in effect during the years in which the temporary differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Significant judgment is required in determining whether a valuation allowance should be recorded against deferred tax assets. In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. In the event that the Company changes its determination as to the amount of deferred tax assets that can be realized, the Company will adjust its valuation allowance with a corresponding impact to income tax expense in the period in which such determination is made. Prior to the Spin-off Prior to the spin-off, the income tax provision in the consolidated statements of operations has been calculated using the separate return method, as if the Company filed a separate tax return and operated as a stand-alone business. Therefore, cash tax payments and items of current and deferred taxes may not be reflective of actual tax balances included in Integra’s historical consolidated income tax return. More specifically, the presentation of substantial net operating losses, and any related valuation allowances, presented herein do not represent actual net operating losses that have been incurred by the Company or that are available for carryforward to a future tax year. After the Spin-off Subsequent to the spin-off on July 1, 2015, the deferred tax balances were adjusted to reflect only those tax attributes that carryforward with the Company. The adjustment to deferred taxes was recorded through stockholders' equity. The Company also made an election to change the tax classification for its foreign entity. This election resulted in both the foreign entity and its U.S. subsidiary to be included in the consolidated federal tax group on September 1, 2015. Income Tax Provision (Benefit) The Company reported income tax expense despite the reported losses before income taxes, because the legal entity structure did not permit the Company to offset taxable losses generated by certain U.S. subsidiaries against the taxable income generated by its other U.S. subsidiaries. Income/(loss) before income taxes consisted of the following: Year Ended December 31, 2015 2014 2013 (In thousands) United States operations $ (51,305 ) $ (22,097 ) $ (22,157 ) Foreign operations (1,748 ) 1,479 155 $ (53,053 ) $ (20,618 ) $ (22,002 ) A reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate is as follows: Year Ended December 31, 2015 2014 2013 Federal statutory rate 35.0% 35.0% 35.0% Increase (decrease) in income taxes resulting from: State income taxes, net of federal tax benefit 0.1% 2.3% 2.0% Foreign operations (0.7)% (1.1)% 0.5% Changes in valuation allowances (16.7)% (57.9)% (56.1)% Pre-Spin losses with no tax benefit (22.7)% —% —% Uncertain tax positions —% 0.4% 0.4% Research and development credit —% 0.2% 0.3% Return to provision —% 0.6% (0.4)% Domestic manufacturing deduction 0.5% 2.0% 1.6% Other (0.2)% (0.5)% (0.3)% Effective tax rate (4.7)% (19.0)% (17.0)% The effective tax rate for 2015 includes pre-spin net operating losses for which the Company will receive no tax benefit as such losses were utilized by Integra prior to the spin-off. The provision/(benefit) for income taxes consisted of the following: Year Ended December 31, 2015 2014 2013 (In thousands) Current: Federal $ 2,655 $ 3,944 $ 3,994 State 106 252 294 Foreign — 404 153 Total current $ 2,761 $ 4,600 $ 4,441 Deferred: Federal — (741 ) (744 ) State — (60 ) (54 ) Foreign (282 ) 128 101 Total deferred $ (282 ) $ (673 ) $ (697 ) Provision for income taxes $ 2,479 $ 3,927 $ 3,744 The income tax effects of significant temporary differences that give rise to deferred tax assets and liabilities, shown before jurisdictional netting, are presented below: Year Ended December 31, 2015 2014 (In thousands) Deferred tax assets: Doubtful accounts $ 272 $ 88 Inventory related items 11,170 8,435 Tax credits — 579 Accrued vacation 425 374 Accrued bonus 740 335 Stock compensation 1,466 627 Net operating loss carryforwards 7,045 44,966 Intangible & fixed assets 25,354 28,609 Other 649 419 Total deferred tax assets 47,121 84,432 Less valuation allowance (46,638 ) (83,457 ) Deferred tax assets after valuation allowance $ 483 $ 975 Deferred tax liabilities: Other — (60 ) Total deferred tax liabilities $ — $ (60 ) Net deferred tax assets $ 483 $ 915 At December 31, 2015 we had net operating loss carryforwards of $13.3 million for federal and state income tax purposes. We also had foreign net operating loss carryforwards of $8.9 million . These tax loss carryforwards expire in various periods through 2035. The tax benefit recorded for net operating losses, net of valuation allowance, is $0.3 million which relates only to foreign net operating losses. At December 31, 2014 we had net operating loss carryforwards of $113.1 million for federal income tax purposes, and $57.6 million for state income tax purposes. These losses have been recognized in the Integra tax returns and are not available to offset future taxable income. A valuation allowance of $46.6 million , and $83.5 million is recorded against the Company’s gross deferred tax assets of $47.1 million , and $84.4 million recorded at December 31, 2015 and 2014, respectively. The valuation allowance relates to deferred tax assets for certain items that will be deductible for income tax purposes under very limited circumstances and for which the Company believes it is not more likely than not that it will realize the associated tax benefit. However, in the event that the Company determines that it would be able to realize more or less than the recorded amount of net deferred tax assets, an adjustment to the deferred tax asset valuation allowance would be recorded in the period such a determination is made. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax planning strategies in making this assessment. Based upon the levels of historical taxable income, projections of future taxable income and the reversal of deferred tax liabilities over the periods in which the deferred tax assets are deductible, management believes it is more-likely-than-not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowance. The amount of deferred tax asset considered realizable, however, could change in the near term if estimates which require significant judgment of future taxable income during the carryforward period are increased or decreased. A reconciliation of the Company’s uncertain tax benefits is as follows: Year Ended December 31, 2015 2014 2013 (In thousands) Balance, beginning of year $ 113 $ 187 $ 262 Gross increases: Prior years’ tax positions 90 13 100 Additions to tax positions in prior years due to spin-off 185 — — Gross decreases: Settlements — — — Statute of limitations lapses (90 ) (87 ) (175 ) Balance, end of year $ 298 $ 113 $ 187 Approximately $0.3 million of the balance at December 31, 2015 relates to uncertain tax positions that, if recognized, would affect the annual effective tax rate. Included in the balance of uncertain tax positions at December 31, 2015 is $0.2 million of prior year items that were spun off from Integra, but not originally reported in their respective years. There is $0.1 million related to tax positions for which it is reasonably possible that the total amounts could be reduced during the twelve months following December 31, 2015, as a result of expiring statutes of limitations. The Company recognizes interest and penalties relating to uncertain tax positions in income tax expense. The amounts recorded in 2015, 2014 and 2013 were not significant. The Company files income tax returns as prescribed by tax laws of the jurisdictions in which they operate. In the normal course of business, the Company is subject to examination by federal, state, local and foreign jurisdictions where applicable based on the statute of limitations that apply in each jurisdiction. The Company has no open tax audits with any taxing authority as of December 31, 2015. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES In consideration for certain technology, manufacturing, distribution, and selling rights and licenses granted to the Company, the Company has agreed to pay royalties on sales of certain products sold by the Company. The royalty payments that the Company made under these agreements were included on the consolidated statements of operations as a component of cost of goods sold. The Company is subject to various claims, lawsuits and proceedings in the ordinary course of its business with respect to its products, its current or former employees, and involving commercial disputes, some of which have been settled by the Company. In the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material adverse effect on the Company's financial condition. However, it is possible that our results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies. The Company accrues for loss contingencies when it is deemed probable that a loss has been incurred and that loss is estimable. The amounts accrued are based on the full amount of the estimated loss before considering insurance proceeds, and do not include an estimate for legal fees expected to be incurred in connection with the loss contingency. The Company accrues legal fees expected to be incurred in connection with loss contingencies as those fees are incurred by outside counsel as a period cost. The Company does not believe there are any pending legal proceedings that would have a material impact on the Company’s financial position, liquidity or results of operations. |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION Subsequent to the spin-off from Integra, management assessed its segment reporting based on how it internally manages and reports the results of its business to its chief operating decision maker. The Company’s management reviews financial results, manages the business and allocates resources on an aggregate basis. Therefore, financial results are reported in a single operating segment: the development, manufacture and marketing of orthobiologics and spinal fusion hardware. The Company reports revenue in two product categories: orthobiologics and spinal fusion hardware. Orthobiologics products consist of a broad range of advanced and traditional bone graft substitutes that are designed to improve bone fusion rates following surgery. The spinal fusion hardware portfolio consists of an extensive line of products for minimally invasive surgery, complex spine, deformity and degenerative procedures. Revenue, net consisted of the following: Year Ended December 31, 2015 2014 2013 (In thousands) Orthobiologics $ 67,258 $ 67,594 $ 66,669 Spinal fusion hardware 65,920 71,101 79,917 Total Revenue, net $ 133,178 $ 138,695 $ 146,586 The Company attributes revenues to geographic areas based on the location of the customer. Total revenue by major geographic area consisted of the following: Year Ended December 31, 2015 2014 2013 (In thousands) United States $ 120,259 $ 124,365 $ 128,653 International 12,919 14,330 17,933 Total Revenue, net $ 133,178 $ 138,695 $ 146,586 |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLAN | EMPLOYEE BENEFIT PLAN The Company has a defined contribution savings plan under section 401(k) of the IRC. The plan covers substantially all employees. The Company matches employee contributions made to the plan according to a specified formula. The Company’s matching contributions totaled approximately $0.5 million , $0.3 million and $0.1 million for the years ended 2015, 2014 and 2013, respectively. |
SELECTED QUARTERLY INFORMATION
SELECTED QUARTERLY INFORMATION - UNAUDITED | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
SELECTED QUARTERLY INFORMATION - UNAUDITED | SELECTED QUARTERLY INFORMATION - UNAUDITED First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share data) Total revenue, net: 2015 $ 32,314 $ 33,461 $ 32,679 $ 34,724 2014 34,175 35,766 33,606 35,148 Gross profit: 2015 $ 19,713 $ 18,955 $ 15,338 $ 18,053 2014 21,580 20,566 19,324 20,511 Net loss: 2015 $ (9,898 ) $ (17,685 ) $ (14,199 ) $ (13,750 ) 2014 (5,560 ) (5,429 ) (5,316 ) (8,241 ) Basic/diluted net loss per common share(1): 2015 $ (0.90 ) $ (1.60 ) $ (1.27 ) $ (1.23 ) 2014 (0.50 ) (0.49 ) (0.48 ) (0.75 ) (1) Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts do not necessarily add to the annual amount because of differences in the weighted average common shares outstanding during each period principally due to the effect of the Company’s issuing or retiring shares of its common stock during the year. |
VALUATION AND QUALIFYING ACCOUN
VALUATION AND QUALIFYING ACCOUNTS [Schedule] | 12 Months Ended |
Dec. 31, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS Balance at Beginning of Period Charged to Costs and Expenses Charged to Other Accounts Additions/Deductions Balance at End of Period Description (In thousands) Year ended December 31, 2015: Allowance for doubtful accounts and sales returns and allowances $ 558 $ 55 $ — $ 151 $ 764 Deferred tax asset valuation allowance 83,457 (36,819 ) — — 46,638 Year ended December 31, 2014: Allowance for doubtful accounts and sales returns and allowances $ 1,068 $ (267 ) $ — $ (238 ) $ 563 Deferred tax asset valuation allowance 73,461 10,483 (487 ) — 83,457 Year ended December 31, 2013: Allowance for doubtful accounts and sales returns and allowances $ 2,384 $ (691 ) $ — $ (625 ) $ 1,068 Deferred tax asset valuation allowance 66,497 6,569 395 — 73,461 |
SUMMARY OF SIGNIFICANT ACCOUN21
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company prepared the consolidated financial statements included in this report in accordance with accounting principles generally accepted in the U.S. (“GAAP”). For periods prior to the spin-off, the Company’s consolidated financial statements were prepared on a stand-alone basis and derived from Integra's consolidated financial statements and accounting records related to its orthobiologics and spinal fusion hardware business. The Company relied on Integra for a significant portion of its operational and administrative support. The consolidated financial statements included allocations of certain Integra corporate expenses, including information technology resources and support; finance, accounting, auditing services; real estate and facility management services; human resources activities; certain procurement activities; treasury services, legal advisory services and costs for research and development. These costs were allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on a pro-rata basis of revenue, standard costs of sales, or other measures. Integra used a centralized approach to cash management and financing of its operations and substantially all cash generated by the Company through May 4, 2015, the date the Company implemented a separate enterprise resource planning ("ERP") system for SeaSpine, was assumed to be remitted to Integra. Prior to the spin-off, cash management and financing transactions relating to the Company were accounted for through the Integra invested equity account. Accordingly, none of the Integra cash and cash equivalents at the corporate level were assigned to SeaSpine in the consolidated financial statements. Integra’s debt and related interest expense were not allocated to SeaSpine for any of the periods presented since the Company was not the legal obligor of the debt and Integra’s borrowings were not directly attributable to SeaSpine. Subsequent to the spin-off, the Company’s financial statements are presented on a consolidated basis, as the Company became a separate publicly-traded company on July 1, 2015. The Company performs its operational and administrative support using internal resources and purchased services, some of which have been provided by Integra for a fee pursuant to a transition services agreement. See Note 3, “Transactions with Integra,” for further information regarding the relationships the Company has with Integra. |
Principles of Consolidation | Principles of Consolidation For periods prior to the spin-off, the consolidated financial statements include certain assets and liabilities that have historically been held at the Integra level but were specifically identifiable or otherwise attributable to the Company. All significant intra-company transactions within Integra's pre-spin off orthobiologics and spinal fusion hardware business have been eliminated. All significant transactions between the Company and other businesses of Integra before the spin-off are included in these consolidated financial statements. For periods subsequent to the spin-off, the consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and allowances, net realizable value of inventories, amortization periods for acquired intangible assets, discount rates and estimated projected cash flows used to value and test impairments of long-lived assets, estimates of projected cash flows, depreciation and amortization periods for long-lived assets, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation and loss contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances. Actual results could differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents include cash readily available in checking and bank deposit sweep accounts. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash, cash equivalents, receivables, accounts payable and accrued expenses at December 31, 2015 and December 31, 2014, are considered to approximate fair value because of the short term nature of those items. The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following three categories: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The carrying amount of debt outstanding pursuant to the Credit Facility approximates fair value as interest rates on this instrument approximate current market rates. This fair value measurement is categorized within Level 2 of the fair value hierarchy. |
Trade Accounts Receivable and Allowances for Doubtful Accounts Receivable | Trade Accounts Receivable and Allowances for Doubtful Accounts Receivable Trade accounts receivable in the accompanying consolidated balance sheets are presented net of allowances for doubtful accounts. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowances for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowances for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowances for doubtful accounts are recorded to selling, general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. |
Inventories | Inventories Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost, the value determined by the first-in, first-out method, or market. At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of our current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions, a review of the shelf life expiration dates for products, as well as the feasibility of reworking or using excess or obsolete products or components in the production or assembly of other products that are not obsolete or for which there are not excess quantities in inventory. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. The Company capitalizes inventory costs associated with certain products prior to regulatory approval, based on management’s judgment of probable economic benefit. The Company could be required to expense previously capitalized costs related to pre-approval inventory upon a change in such judgment, due to, among other potential factors, a denial or delay of approval by necessary regulatory bodies or a decision by management to discontinue the related development program. No such amounts were capitalized at December 31, 2015 or 2014. |
Property, Plant and Equipment | Property, Plant, and Equipment Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment charges. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life. The cost of major additions and improvements is capitalized, while maintenance and repair costs that do not improve or extend the lives of the respective assets are charged to operations as incurred. The cost of computer software obtained for internal use is accounted for in accordance with the Accounting Standards Codification 350-40, Internal-Use Software. The cost of purchased instruments which the Company consigns to hospitals and independent sales agents to support surgeries is initially capitalized as construction in progress. The amount is then reclassified to instrument sets and depreciation is initiated when instruments are put together in a newly built set with spinal implants, or directly expensed for the instruments that are used to replace damaged instruments in an existing set. The depreciation expense and direct expense for replacement instruments are recorded in selling, general and administrative expense. |
Identifiable Intangible Assets | Identifiable Intangible Assets Identifiable intangible assets are initially recorded at fair value at the time of acquisition generally using an income or cost approach. The Company capitalizes costs incurred to renew or extend the term of recognized intangible assets and amortizes those costs over their expected useful lives. |
Long-Lived Assets | Long-Lived Assets Long-lived assets held and used by the Company, including property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets to be held and used, a recoverability test is performed using projected undiscounted net cash flows applicable to the long-lived assets. If an impairment exists, the amount of such impairment is calculated based on the estimated fair value of the asset. Impairments to long-lived assets to be disposed of are recorded based upon the difference between the carrying value and the fair value of the applicable assets. There was no impairment of intangible or tangible long-lived assets in any of the periods presented. |
Foreign Currency | Foreign Currency The Company generates revenues outside the United States in multiple foreign currencies including euros, British pounds, Swiss francs and New Zealand dollars, and in U.S. dollar-denominated transactions conducted with customers who generate revenue in currencies other than the U.S. dollar. The Company also incurs operating expenses in euros. All assets and liabilities of foreign subsidiaries which have a functional currency other than the U.S. dollar are translated at the rate of exchange at year-end, while elements of the income statement are translated at the average exchange rates in effect during the year. The net effect of these translation adjustments is shown as a component of accumulated other comprehensive income (loss). These currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in non-U.S. subsidiaries. Foreign currency transaction gains and losses are reported in other income (expense), net. |
Income Taxes | Income Taxes In the Company’s consolidated financial statements prior to the spin-off, income tax expense and deferred tax balances were calculated on a separate return basis although the Company’s operations had historically been included in the tax returns filed by the respective Integra entities of which the Company’s business was a part. Prior to the spin-off, the Company maintained an income taxes payable to/from account with Integra. The Company was deemed to settle current tax balances with the Integra tax paying entities in the respective jurisdictions. The Company’s current income tax balances were reflected as income taxes payable and settlements, which are deemed to occur in the year following incurrence, were reflected as changes in net Integra investment in the consolidated balance sheets. We recognize tax benefits in our financial statements when our uncertain tax positions are more likely than not to be sustained upon audit. The amount we recognize is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We recognize deferred tax assets for deductible temporary differences, operating loss carryforwards and tax credit carryforwards. Deferred tax assets are reduced by valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. |
Revenue Recognition | Revenue Recognition Our net sales are derived primarily from the sale of orthobiologics and spinal fusion hardware products globally. Sales are reported net of returns, group purchasing organization fees and other customer allowances. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred title and risk of loss have passed to the customer, there is a fixed or determinable sales price and collectability of that sales price is reasonably assured. In the United States, we generate most of our revenue by consigning our orthobiologics products and consigning or loaning our spinal fusion hardware sets to hospitals and independent sales agents, who in turn deliver them to the hospital for a single surgical procedure or leave them with hospitals that are high volume users for use in multiple procedures. The spinal fusion hardware sets typically contain the instruments, including disposables, and spinal implants required to complete a surgery. We ship replacement inventory to independent sales agents to replace the consigned inventory used in surgeries and maintain and replenish the loaned sets and return them to a hospital or independent sales agent for the next procedure. We recognize revenue on these consigned or loaned products when they have been used or implanted in a surgical procedure. For all other transactions, including sales to international stocking distributors, we recognize revenue when the products are shipped to the customer or stocking distributor and the transfer of title and risk of loss occurs. There are generally no customer acceptance or other conditions that prevent us from recognizing revenue in accordance with the delivery terms. Product royalties are estimated and recognized in the same period that the royalty-based products are sold by licensees. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information and expected sales trends. Differences between actual revenues and estimated royalty revenues are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been significant. |
Shipping and Handling Fees and Costs | Shipping and Handling Fees and Costs Amounts billed to customers for shipping and handling are included in revenues. The related shipping and freight charges incurred by the Company are included in cost of goods sold. |
Research and Development | Research and Development Research and development costs, including salaries, depreciation, consultant and other external fees, and facility costs directly attributable to research and development activities, are expensed in the period in which they are incurred. |
Share-Based Compensation | Stock-Based Compensation For periods prior to the spin-off, the Company’s stock-based compensation was derived from the equity awards granted by Integra to individuals who would become the Company’s employees. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to its employees. As those stock-based compensation plans were Integra’s plans, the amounts have been recognized in the consolidated statements of operations and the Integra net investment account on the consolidated balance sheet. For periods after the spin-off, the Company's stock-based compensation has been recognized through the consolidated statement of operations and the Company's additional paid-in capital account on the consolidated balance sheet. The Company applies the authoritative guidance for stock-based compensation. This guidance requires companies to recognize the expense related to the fair value of their stock-based compensation awards. Stock-based compensation expense for stock option awards granted after January 1, 2006 was based on the fair value on the grant date using the Black-Scholes-Merton option pricing model. The fair value of performance awards of restricted stock granted prior to the spin-off was based on the Integra’s stock price at the grant date and the assessed probability of meeting future performance targets. The long form method was used in the determination of the windfall tax benefit in accordance with the guidance. The stock-based compensation is initially measured at the fair value of the awards on the grant date and is then recognized on a ratable basis in the financial statements over the requisite service period of the award. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, which is held at major financial institutions, and trade receivables. The Company’s products are sold on an uncollateralized basis and on credit terms based upon a credit risk assessment of each customer. A portion of the Company’s trade receivables to customers outside the United States includes sales to foreign distributors, who then sell to government owned or supported healthcare systems. The ongoing economic conditions in certain European countries, especially Greece, Ireland, Italy, Portugal and Spain remain uncertain. Accounts receivable from customers in these countries are not a material amount of the Company’s overall receivables. None of the Company’s customers accounted for 10% or more of the combined net sales during the years ended December 31, 2015, 2014 or 2013. |
Recently Issued and Adopted Accounting Standards | Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board ("FASB") issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should: 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB deferred for one year the effective date of the new revenue standard, but early adoption is permitted. The new standard will be effective for the Company on January 1, 2018. The Company is in the process of evaluating the impact of this standard on its financial statements. In August 2014, the FASB issued Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendment requires management to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around management’s plan to alleviate these doubts are required. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2016. The implementation of the amended guidance is not expected to have an impact on current disclosures in our financial statements. In April 2015, the FASB issued Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs . The new standard will require debt issuance costs to be presented on the balance sheet as a direct reduction of the carrying value of the associated debt liability, consistent with the presentation of debt discounts. The recognition and measurement requirements will not change as a result of this guidance. The standard is effective for the annual reporting periods beginning after December 15, 2015 and requires a retrospective application. The guidance in Accounting Standards Update (ASU) 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. Under the new standard, the SEC staff will not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The implementation of the amended guidance is not expected to have an impact on current disclosures in our financial statements. In July 2015, the FASB issued Update No. 2015-11, Simplifying the Measurement of Inventory. The new guidance requires an entity to measure inventory within the scope of the amendment at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The implementation of the amended guidance is not expected to have an impact on our financial statements. In November 2015, the FASB issued Update No. 2015-17, Income Taxes - Balance Sheet Reclassification of Deferred Taxes (Topic 740) . This ASU requires that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted and the amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company early adopted this ASU in the fourth quarter of 2015 on a prospective basis and included the current portion of deferred tax assets within the non-current portion of deferred tax assets within the consolidated balance sheet. The Company did not adjust our prior period consolidated balance sheet as a result of the adoption of this ASU. In February 2016, the FASB issued Update No. 2016-02, Leases (ASC 842) , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. ASC 842 supersedes the previous leases standard, ASC 840 Leases. The standard is effective on January 1, 2019, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance. |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | For periods prior to the spin-off, basic and diluted net loss per share was calculated based on the approximately 11.0 million shares of SeaSpine common stock that were distributed to Integra shareholders on July 1, 2015. For periods subsequent to the spin-off, basic and diluted net loss per share was calculated using the weighted-average number of shares of common stock outstanding during the period. The weighted average number of shares used to compute diluted net loss per share excludes any assumed exercise of stock options, and any assumed issuance of common stock under restricted stock units as the effect would be antidilutive. Common stock equivalents of 2.0 million shares for the year ended December 31, 2015 were excluded from the calculation because of their antidilutive effect. Year Ended December 31, 2015 2014 2013 (In thousands, except per share data) Net loss $ (55,532 ) $ (24,545 ) $ (25,746 ) Loss Per Share Data Loss per share Basic and diluted $ (4.99 ) $ (2.22 ) $ (2.33 ) Weighted average number of shares outstanding Basic and diluted 11,139 11,048 11,048 |
TRANSACTIONS WITH INTEGRA (Tabl
TRANSACTIONS WITH INTEGRA (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The following table summarizes the components of the net increase (decrease) in Integra net investment for the years ended December 31, 2015 , 2014 and 2013: Year Ended December 31, 2015 2014 2013 Cash pooling and general financing activities (a) $ 68,386 $ (14,451 ) $ (4,005 ) Corporate Allocations (excluding non-cash adjustments) 8,787 17,463 17,586 Total Integra net investment in financing activities within cash flow statement 77,173 3,012 13,581 Non-cash adjustments (b) 29,806 2,485 2,122 Interest on long term loan (c) — — (4,617 ) Net capitalization of related-party loan — — 131,580 Spin-off related adjustment (d) 161 — — Reclassification of Integra net investment in connection with the spin-off (170,241 ) — — Foreign exchange impact 293 (202 ) (57 ) Net (decrease) increase in Integra investment $ (62,808 ) $ 5,295 $ 142,609 (a) Includes financing activities for capital transfers, cash sweeps and other treasury services. (b) Reflects allocation of non-cash charges from Integra, stock-based compensation and settlement of related-party payable to Integra net investment. (c) Interest on long-term loan capitalized in 2013. (d) During the year ended December 31, 2015, certain spin-off related adjustments were recorded in stockholders' equity, to reflect the appropriate opening balances related to SeaSpine’s legal entities at the Distribution Date. The allocation methods include pro-rata basis of revenue, standard cost of sales or other measures. Year Ended December 31, 2015 2014 2013 Cost of goods sold $ 488 $ 1,304 $ 1,166 Selling, general and administrative 8,633 17,602 17,408 Research and development 253 490 427 Total Allocated Costs $ 9,374 $ 19,396 $ 19,001 |
BALANCE SHEET DETAILS (Tables)
BALANCE SHEET DETAILS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Inventory, Net | Inventories consisted of the following: December 31, 2015 December 31, 2014 (In thousands) Finished goods $ 29,845 $ 32,364 Work in process 15,574 11,675 Raw materials 5,852 5,823 $ 51,271 $ 49,862 |
Property, Plant and Equipment | Property, plant and equipment, net and corresponding useful lives were as follows: December 31, 2015 December 31, 2014 Useful Lives (In thousands) Leasehold improvement $ 4,830 $ 4,262 Lease term Machinery and production equipment 6,404 5,810 3-20 years Spinal fusion hardware instrument sets 25,080 22,122 5 years Information systems and hardware 6,872 1,720 3-7 years Furniture and fixtures 944 657 3-15 years Construction in progress 8,375 8,789 Total 52,505 43,360 Less accumulated depreciation and amortization (30,547 ) (27,000 ) Property, plant and equipment, net $ 21,958 $ 16,360 |
Components of Company's Identifiable Intangible Assets | The components of the Company’s identifiable intangible assets were as follows: December 31, 2015 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Completed technology 12 years $ 31,169 $ (19,280 ) $ 11,889 Customer relationships 12 years 56,830 (29,087 ) 27,743 Trademarks/brand names — 300 (300 ) — $ 88,299 $ (48,667 ) $ 39,632 December 31, 2014 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Completed technology 12 years $ 30,419 $ (16,582 ) $ 13,837 Customer relationships 12 years 56,830 (23,963 ) 32,867 Trademarks/brand names — 300 (300 ) — Non-Compete agreements 4 years 1,900 (1,713 ) 187 $ 89,449 $ (42,558 ) $ 46,891 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block] | The following table summarizes awards of restricted stock awards, restricted stock units and performance stock awards to SeaSpine employees for the year ended December 31, 2015 : Restricted Stock and Performance Stock Awards Shares (In thousands) Weighted Average Grant Date Fair Value Per Share Unvested, January 1, 2015 — $— Granted 138 12.81 Cancellations (13) 4.40 Released/Vested (62) 17.88 Unvested, December 31, 2015 63 $9.58 |
Stock-based Compensation Expense | Stock-based compensation expense, all related to employees and non-employee directors, was recognized as follows: Year Ended December 31, 2015 2014 2013 (In thousands) Selling, general and administrative $ 3,993 $ 519 $ 619 Research and development 242 18 78 Cost of goods sold 168 14 9 Total stock-based compensation expense 4,403 551 706 Total estimated tax benefit related to stock-based compensation expense 37 203 271 Net effect on net income $ 4,366 $ 348 $ 435 |
Valuation Assumptions | The following weighted-average assumptions were used in the calculation of fair value for options grants for the year ended December 31, 2015: December 31, 2015 Expected dividend yield 0 % Risk-free interest rate 1.55 % Expected volatility 38.17 % Expected term (in years) 5.1 |
Stock Options, Activity | A summary of the options issued during the year ended December 31, 2015 and the total number of options outstanding as of that date and changes since January 1, 2015 are set forth below: Number of Shares Outstanding (In thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Life (In years) Aggregate Intrinsic Value (In thousands) Outstanding, January 1, 2015 — $ — — $ — Granted 2,009 14.87 — — Exercised — — — — Forfeited (36 ) 15.61 — — Outstanding, December 31, 2015 1,973 $ 14.86 7.20 $ 4,585 Vested or expected to vest, December 31, 2015 1,800 $ 14.78 7.17 $ 4,314 Exercisable, December 31, 2015 472 $ 12.46 4.53 $ 2,230 |
LEASE (Tables)
LEASE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments for Capital Leases | Future minimum lease payments under these operating leases at December 31, 2015 are as follows: Payments Due by Calendar Year (In thousands) 2016 $ 2,287 2017 2,152 2018 2,207 2019 2,262 2020 2,317 Thereafter 12,107 Total minimum lease payments $ 23,332 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective income tax rate reconciliation | A reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate is as follows: Year Ended December 31, 2015 2014 2013 Federal statutory rate 35.0% 35.0% 35.0% Increase (decrease) in income taxes resulting from: State income taxes, net of federal tax benefit 0.1% 2.3% 2.0% Foreign operations (0.7)% (1.1)% 0.5% Changes in valuation allowances (16.7)% (57.9)% (56.1)% Pre-Spin losses with no tax benefit (22.7)% —% —% Uncertain tax positions —% 0.4% 0.4% Research and development credit —% 0.2% 0.3% Return to provision —% 0.6% (0.4)% Domestic manufacturing deduction 0.5% 2.0% 1.6% Other (0.2)% (0.5)% (0.3)% Effective tax rate (4.7)% (19.0)% (17.0)% |
Schedule of Income before Income Tax, Domestic and Foreign | Income/(loss) before income taxes consisted of the following: Year Ended December 31, 2015 2014 2013 (In thousands) United States operations $ (51,305 ) $ (22,097 ) $ (22,157 ) Foreign operations (1,748 ) 1,479 155 $ (53,053 ) $ (20,618 ) $ (22,002 ) |
Schedule of Components of Income Tax Expense (Benefit) | The provision/(benefit) for income taxes consisted of the following: Year Ended December 31, 2015 2014 2013 (In thousands) Current: Federal $ 2,655 $ 3,944 $ 3,994 State 106 252 294 Foreign — 404 153 Total current $ 2,761 $ 4,600 $ 4,441 Deferred: Federal — (741 ) (744 ) State — (60 ) (54 ) Foreign (282 ) 128 101 Total deferred $ (282 ) $ (673 ) $ (697 ) Provision for income taxes $ 2,479 $ 3,927 $ 3,744 |
Schedule of Deferred Tax Assets and Liabilities | The income tax effects of significant temporary differences that give rise to deferred tax assets and liabilities, shown before jurisdictional netting, are presented below: Year Ended December 31, 2015 2014 (In thousands) Deferred tax assets: Doubtful accounts $ 272 $ 88 Inventory related items 11,170 8,435 Tax credits — 579 Accrued vacation 425 374 Accrued bonus 740 335 Stock compensation 1,466 627 Net operating loss carryforwards 7,045 44,966 Intangible & fixed assets 25,354 28,609 Other 649 419 Total deferred tax assets 47,121 84,432 Less valuation allowance (46,638 ) (83,457 ) Deferred tax assets after valuation allowance $ 483 $ 975 Deferred tax liabilities: Other — (60 ) Total deferred tax liabilities $ — $ (60 ) Net deferred tax assets $ 483 $ 915 |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the Company’s uncertain tax benefits is as follows: Year Ended December 31, 2015 2014 2013 (In thousands) Balance, beginning of year $ 113 $ 187 $ 262 Gross increases: Prior years’ tax positions 90 13 100 Additions to tax positions in prior years due to spin-off 185 — — Gross decreases: Settlements — — — Statute of limitations lapses (90 ) (87 ) (175 ) Balance, end of year $ 298 $ 113 $ 187 |
SEGMENT AND GEOGRAPHIC INFORM28
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Total Revenue By Major Geographic Area | Revenue, net consisted of the following: Year Ended December 31, 2015 2014 2013 (In thousands) Orthobiologics $ 67,258 $ 67,594 $ 66,669 Spinal fusion hardware 65,920 71,101 79,917 Total Revenue, net $ 133,178 $ 138,695 $ 146,586 The Company attributes revenues to geographic areas based on the location of the customer. Total revenue by major geographic area consisted of the following: Year Ended December 31, 2015 2014 2013 (In thousands) United States $ 120,259 $ 124,365 $ 128,653 International 12,919 14,330 17,933 Total Revenue, net $ 133,178 $ 138,695 $ 146,586 |
SELECTED QUARTERLY INFORMATIO29
SELECTED QUARTERLY INFORMATION - UNAUDITED (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | SELECTED QUARTERLY INFORMATION - UNAUDITED First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share data) Total revenue, net: 2015 $ 32,314 $ 33,461 $ 32,679 $ 34,724 2014 34,175 35,766 33,606 35,148 Gross profit: 2015 $ 19,713 $ 18,955 $ 15,338 $ 18,053 2014 21,580 20,566 19,324 20,511 Net loss: 2015 $ (9,898 ) $ (17,685 ) $ (14,199 ) $ (13,750 ) 2014 (5,560 ) (5,429 ) (5,316 ) (8,241 ) Basic/diluted net loss per common share(1): 2015 $ (0.90 ) $ (1.60 ) $ (1.27 ) $ (1.23 ) 2014 (0.50 ) (0.49 ) (0.48 ) (0.75 ) (1) Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts do not necessarily add to the annual amount because of differences in the weighted average common shares outstanding during each period principally due to the effect of the Company’s issuing or retiring shares of its common stock during the year. |
BUSINESS Narrative (Details)
BUSINESS Narrative (Details) | Jul. 01, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Shares issued ratio | 0.3333 |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Narrative (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shipping and handling costs | $ 1,200 | $ 1,000 | $ 1,100 |
Stock-based compensation | $ 3,816 | $ 551 | $ 706 |
Weighted average shares used to compute basic and diluted net loss per share | 11,139 | 11,048 | 11,048 |
Antidilutive dilutive securities (in shares) | 2,000 | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation | $ 4,400 | $ 600 | $ 700 |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||
Net loss | $ (13,750) | $ (14,199) | $ (17,685) | $ (9,898) | $ (8,241) | $ (5,316) | $ (5,429) | $ (5,560) | $ (55,532) | $ (24,545) | $ (25,746) |
Net Loss per share, basic and diluted (in dollars per share) | $ (1.23) | $ (1.27) | $ (1.60) | $ (0.90) | $ (0.75) | $ (0.48) | $ (0.49) | $ (0.50) | $ (4.99) | $ (2.22) | $ (2.33) |
Weighted average shares used to compute basic and diluted net loss per share | 11,139 | 11,048 | 11,048 | ||||||||
Pro Forma | |||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||
Net loss | $ (55,532) | $ (24,545) | $ (25,746) | ||||||||
Net Loss per share, basic and diluted (in dollars per share) | $ (4.99) | $ (2.22) | $ (2.33) | ||||||||
Weighted average shares used to compute basic and diluted net loss per share | 11,139 |
TRANSACTIONS WITH INTEGRA Narra
TRANSACTIONS WITH INTEGRA Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transaction [Line Items] | |||
Purchases | $ 8,365 | $ 5,185 | $ 12,633 |
Related party costs incurred during the period | 2,800 | ||
Costs outstanding from related party | 1,500 | ||
Other amounts due from Integra | 1,300 | ||
Stock-based compensation | 3,816 | 551 | 706 |
Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Purchases | 6,200 | 6,200 | 7,900 |
Stock-based compensation | $ 600 | $ 1,900 | $ 1,400 |
TRANSACTIONS WITH INTEGRA Alloc
TRANSACTIONS WITH INTEGRA Allocated Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transaction [Line Items] | |||
Cost of goods sold | $ 61,119 | $ 56,714 | $ 55,532 |
Selling, general and administrative | 110,551 | 88,213 | 93,009 |
Research and development | 8,353 | 8,527 | 9,893 |
Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Cost of goods sold | 488 | 1,304 | 1,166 |
Selling, general and administrative | 8,633 | 17,602 | 17,408 |
Research and development | 253 | 490 | 427 |
Total Allocated Costs | $ 9,374 | $ 19,396 | $ 19,001 |
TRANSACTIONS WITH INTEGRA Integ
TRANSACTIONS WITH INTEGRA Integra Net Investment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | $ 77,173 | $ 3,012 | $ 13,581 |
Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | (62,808) | 5,295 | 142,609 |
Cash pooling and general financing activities | Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | 68,386 | (14,451) | (4,005) |
Corporate Allocations (excluding non-cash adjustments) | Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | 8,787 | 17,463 | 17,586 |
Total Integra net investment in financing activities within cash flow statement | Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | 77,173 | 3,012 | 13,581 |
Non-cash adjustments | Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | 29,806 | 2,485 | 2,122 |
Interest on long term loan | Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | 0 | 0 | (4,617) |
Net capitalization of related-party loan | Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | 0 | 0 | 131,580 |
Spin-off related adjustment | Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | 161 | 0 | 0 |
Reclassification of Integra net investment in connection with the spin-off | Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | (170,241) | 0 | 0 |
Foreign exchange impact | Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Net (decrease) increase in Integra investment | $ 293 | $ (202) | $ (57) |
DEBT AND INTEREST Credit Agreem
DEBT AND INTEREST Credit Agreement (Details) | Dec. 24, 2015USD ($)extension | Dec. 31, 2015USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) |
Affiliated Entity | Integra | ||||
Line of Credit Facility [Line Items] | ||||
Related party loans | $ 132,000,000 | |||
Related party interest expense | $ 4,600,000 | |||
Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Expiration period (in years) | 3 years | |||
Number of extensions | extension | 1 | |||
Extension period (in years) | 1 year | |||
Unused line fee (as a percent) | 0.375% | |||
Deferred asset | $ 400,000 | |||
Minimum fixed charge ratio | 1.1 | |||
Minimum liquidity | $ 5,000,000 | |||
Credit Agreement | Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Borrowing capacity | $ 30,000,000 | |||
Amount outstanding | 300,000 | |||
Credit Agreement | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Line of Credit Facility, Current Borrowing Capacity | 10,000,000 | |||
Credit Agreement | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Line of Credit Facility, Current Borrowing Capacity | $ 20,000,000 | |||
Credit Agreement, Contingent Interest Rate One | Base Rate | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate (as a percent) | 1.25% | |||
Credit Agreement, Contingent Interest Rate One | LIBOR | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate (as a percent) | 2.25% | |||
Credit Agreement. Contingent Interest Rate Two | Base Rate | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate (as a percent) | 1.50% | |||
Credit Agreement. Contingent Interest Rate Two | LIBOR | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate (as a percent) | 2.50% | |||
Credit Agreement, Contingent Interest Rate Three | Base Rate | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate (as a percent) | 1.75% | |||
Credit Agreement, Contingent Interest Rate Three | LIBOR | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate (as a percent) | 2.75% |
BALANCE SHEET DETAILS Schedule
BALANCE SHEET DETAILS Schedule of Inventories, net (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Balance Sheet Related Disclosures [Abstract] | ||
Finished goods | $ 29,845 | $ 32,364 |
Work in process | 15,574 | 11,675 |
Raw materials | 5,852 | 5,823 |
Inventories, net | $ 51,271 | $ 49,862 |
BALANCE SHEET DETAILS Property,
BALANCE SHEET DETAILS Property, plant and equipment balances (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | ||
Total | $ 52,505 | $ 43,360 |
Less accumulated depreciation and amortization | (30,547) | (27,000) |
Property, plant and equipment, net | 21,958 | 16,360 |
Leasehold improvement | ||
Property, Plant and Equipment [Line Items] | ||
Total | 4,830 | 4,262 |
Machinery and production equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 6,404 | 5,810 |
Machinery and production equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 3 years | |
Machinery and production equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 20 years | |
Spinal fusion hardware instrument sets | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 25,080 | 22,122 |
Useful Lives (in years) | 5 years | |
Information systems and hardware | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 6,872 | 1,720 |
Information systems and hardware | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 3 years | |
Information systems and hardware | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 7 years | |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 944 | 657 |
Furniture and fixtures | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 3 years | |
Furniture and fixtures | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 15 years | |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 8,375 | $ 8,789 |
BALANCE SHEET DETAILS Propert39
BALANCE SHEET DETAILS Property, Plant and Equipment Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Balance Sheet Related Disclosures [Abstract] | |||
Depreciation | $ 4,500 | $ 4,800 | $ 5,400 |
Instrument replacement expense | $ 1,228 | $ 1,732 | $ 2,417 |
BALANCE SHEET DETAILS Component
BALANCE SHEET DETAILS Components of Company's Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 88,299 | $ 89,449 |
Accumulated Amortization | (48,667) | (42,558) |
Net | $ 39,632 | $ 46,891 |
Completed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Life (in years) | 12 years | 12 years |
Cost | $ 31,169 | $ 30,419 |
Accumulated Amortization | (19,280) | (16,582) |
Net | $ 11,889 | $ 13,837 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Life (in years) | 12 years | 12 years |
Cost | $ 56,830 | $ 56,830 |
Accumulated Amortization | (29,087) | (23,963) |
Net | 27,743 | 32,867 |
Trademarks/brand names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 300 | 300 |
Accumulated Amortization | (300) | (300) |
Net | $ 0 | $ 0 |
Non-Compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Life (in years) | 4 years | |
Cost | $ 1,900 | |
Accumulated Amortization | (1,713) | |
Net | $ 187 |
BALANCE SHEET DETAILS Identifia
BALANCE SHEET DETAILS Identifiable Intangible Assets Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Finite-Lived Intangible Assets [Line Items] | |||
Annual amortization expense expected to approximate in 2016 | $ 7,000 | ||
Annual amortization expense expected to approximate in 2017 | 5,800 | ||
Annual amortization expense expected to approximate in 2018 | 5,500 | ||
Annual amortization expense expected to approximate in 2019 | 4,800 | ||
Annual amortization expense expected to approximate in 2020 | 4,000 | ||
Intangible asset amortization | 5,331 | $ 5,590 | $ 5,598 |
Completed technology | Cost of goods sold | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible asset amortization | $ 2,700 | $ 2,600 | $ 2,600 |
STOCK-BASED COMPENSATION Stock-
STOCK-BASED COMPENSATION Stock-based Compensation Expense Breakout (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | $ 4,403 | $ 551 | $ 706 |
Total estimated tax benefit related to stock-based compensation expense | 37 | 203 | 271 |
Net effect on net income | 4,366 | 348 | 435 |
Selling, general and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 3,993 | 519 | 619 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 242 | 18 | 78 |
Cost of goods sold | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | $ 168 | $ 14 | $ 9 |
STOCK-BASED COMPENSATION Equity
STOCK-BASED COMPENSATION Equity Award Plans (Details) | 12 Months Ended |
Dec. 31, 2015planshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Number of plans | plan | 3 |
Shares authorized for issuance (up to) | shares | 2,000,000 |
STOCK-BASED COMPENSATION RSA, R
STOCK-BASED COMPENSATION RSA, RSU and PSA Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair market value of shares vested | $ 1,100 | $ 700 | $ 600 |
Stock-based compensation | $ 3,816 | 551 | 706 |
RSA, RSU and PSA | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Requisite service period (in years) | 3 years | ||
Forfeiture rate (as a percent) | 10.00% | ||
Stock-based compensation | $ 300 | $ 600 | $ 700 |
Unrecognized compensation expense | $ 300 | ||
Recognition period (in years) | 1 year |
STOCK-BASED COMPENSATION RSA,45
STOCK-BASED COMPENSATION RSA, RSU and PSA Activity (Details) - RSA, RSU and PSA shares in Thousands | 12 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Shares (In thousands) | |
Unvested at beginning of period (in shares) | shares | 0 |
Granted (in shares) | shares | 138 |
Cancellations (in shares) | shares | (13) |
Released/Vested (in shares) | shares | (62) |
Unvested at end of period (in shares) | shares | 63 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested at beginning of period (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 12.81 |
Cancellations (in dollars per share) | $ / shares | 4.40 |
Released/Vested (in dollars per share) | $ / shares | 17.88 |
Unvested at end of period (in dollars per share) | $ / shares | $ 9.58 |
STOCK-BASED COMPENSATION Stock
STOCK-BASED COMPENSATION Stock Options Weighted-average assumptions (Details) - Employee Stock Option | 12 Months Ended |
Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected Dividend yield (as a percent) | 0.00% |
Risk-free interest rate (as a percent) | 1.55% |
Expected volatility (as a percent) | 38.17% |
Expected term (in years) | 5 years 1 month |
STOCK-BASED COMPENSATION Stoc47
STOCK-BASED COMPENSATION Stock Options Narrative (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation | $ 3,816 | $ 551 | $ 706 |
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Forfeiture rate (as a percent) | 10.00% | ||
Weighted average grant date fair value (in dollars per share) | 5.57 | ||
Fair value of options vested | $ 700 | ||
Stock-based compensation | 4,400 | $ 600 | $ 700 |
Unrecognized compensation cost | $ 4,700 | ||
Recognition period (in years) | 1 year 3 months 10 days | ||
Number of shares available for grant | 388 | ||
Employee | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Requisite service period (in years) | 4 years | ||
Director | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Requisite service period (in years) | 1 year |
STOCK-BASED COMPENSATION Stoc48
STOCK-BASED COMPENSATION Stock Options Activity (Details) - Employee Stock Option $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Number of Shares Outstanding (In thousands) | |
Balance at beginning of period (in shares) | shares | 0 |
Granted (in shares) | shares | 2,009 |
Exercised (in shares) | shares | 0 |
Forfeited (in shares) | shares | (36) |
Balance at end of period (in shares) | shares | 1,973 |
Weighted Average Exercise Price | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 14.87 |
Exercised (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 15.61 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 14.86 |
Vested or expected to vest | |
Number of Shares Outstanding (In thousands) (in shares) | shares | 1,800 |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 14.78 |
Weighted Average Remaining Contractual Life (In years) | 7 years 2 months 2 days |
Aggregate Intrinsic Value (In thousands) | $ | $ 4,314 |
Additional Information | |
Outstanding, Weighted Average Remaining Contractual Life (In years) | 7 years 2 months 12 days |
Outstanding, Aggregate Intrinsic Value (In thousands) | $ | $ 4,585 |
Exercisable, Number of Shares Outstanding (In thousands) (in shares) | shares | 472 |
Exercisable, Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 12.46 |
Exercisable, Weighted Average Remaining Contractual Life (In years) | 4 years 6 months 10 days |
Exercisable, Aggregate Intrinsic Value (In thousands) | $ | $ 2,230 |
STOCK-BASED COMPENSATION Employ
STOCK-BASED COMPENSATION Employee Stock Purchase Plan (Details) | 12 Months Ended |
Dec. 31, 2015USD ($)purchase_periodshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of purchase periods | purchase_period | 4 |
Offering period term | 24 months |
Purchase period term | 6 months |
Employee Stock Purchase Plan | Employee Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Maximum contributions (as a percent) | 15.00% |
Maximum shares investment allowed | 2,500 |
Maximum annual contributions | $ | $ 25,000 |
Purchase price (as a percent) | 85.00% |
Number of shares authorized | 400,000 |
LEASE Operating lease annual pa
LEASE Operating lease annual payment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating Leased Assets [Line Items] | |||
2,016 | $ 2,287 | ||
2,017 | 2,152 | ||
2,018 | 2,207 | ||
2,019 | 2,262 | ||
2,020 | 2,317 | ||
Thereafter | 12,107 | ||
Total minimum lease payments | 23,332 | ||
Rental expense | 2,500 | $ 2,100 | $ 2,100 |
Property Subject to Operating Lease [Member] | |||
Operating Leased Assets [Line Items] | |||
Payments for rent | $ 1,400 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Operating Loss Carryforwards [Line Items] | ||
Tax benefit | $ 0.3 | |
Valuation allowance | 46.6 | $ 83.5 |
Deferred tax assets | 47.1 | 84.4 |
Unrecognized tax benefits that would impact effective tax rate | 0.3 | |
Amount of unrecorded benefit | 0.2 | |
Amounts expected to be reduced | 0.1 | |
Internal Revenue Service (IRS) And State and Local Jurisdiction | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 13.3 | |
Foreign Tax Authority | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 8.9 | |
Internal Revenue Service (IRS) | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 113.1 | |
State and Local Jurisdiction | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 57.6 |
INCOME TAXES (Loss before incom
INCOME TAXES (Loss before income taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
United States operations | $ (51,305) | $ (22,097) | $ (22,157) |
Foreign operations | (1,748) | 1,479 | 155 |
Loss before income taxes | $ (53,053) | $ (20,618) | $ (22,002) |
INCOME TAXES (Reconciliation of
INCOME TAXES (Reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate) (Details) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory rate | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal tax benefit | 0.10% | 2.30% | 2.00% |
Foreign operations | (0.70%) | (1.10%) | 0.50% |
Changes in valuation allowances | (16.70%) | (57.90%) | (56.10%) |
Pre-Spin losses with no tax benefit | (22.70%) | 0.00% | 0.00% |
Uncertain tax positions | 0.00% | 0.40% | 0.40% |
Research and development credit | (0.00%) | 0.20% | 0.30% |
Return to provision | 0.00% | 0.60% | (0.40%) |
Domestic manufacturing deduction | 0.50% | 2.00% | 1.60% |
Other | (0.20%) | (0.50%) | (0.30%) |
Effective tax rate | (4.70%) | (19.00%) | (17.00%) |
INCOME TAXES (Provision for inc
INCOME TAXES (Provision for income taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current: | |||
Federal | $ 2,655 | $ 3,944 | $ 3,994 |
State | 106 | 252 | 294 |
Foreign | 0 | 404 | 153 |
Total current | 2,761 | 4,600 | 4,441 |
Deferred: | |||
Federal | 0 | (741) | (744) |
State | 0 | (60) | (54) |
Foreign | (282) | 128 | 101 |
Total deferred | (282) | (673) | (697) |
Provision for income taxes | $ 2,479 | $ 3,927 | $ 3,744 |
INCOME TAXES (Deferred tax asse
INCOME TAXES (Deferred tax assets and liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | ||
Doubtful accounts | $ 272 | $ 88 |
Inventory related items | 11,170 | 8,435 |
Tax credits | 0 | 579 |
Accrued vacation | 425 | 374 |
Accrued bonus | 740 | 335 |
Stock compensation | 1,466 | 627 |
Net operating loss carryforwards | 7,045 | 44,966 |
Intangible & fixed assets | 25,354 | 28,609 |
Other | 649 | 419 |
Total deferred tax assets | 47,121 | 84,432 |
Less valuation allowance | (46,638) | (83,457) |
Deferred tax assets after valuation allowance | 483 | 975 |
Deferred tax liabilities: | ||
Other | 0 | (60) |
Total deferred tax liabilities | 0 | (60) |
Net deferred tax assets | $ 483 | $ 915 |
INCOME TAXES (Uncertain tax ben
INCOME TAXES (Uncertain tax benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance, beginning of year | $ 113 | $ 187 | $ 262 |
Prior years’ tax positions | 90 | 13 | 100 |
Additions to tax positions in prior years due to spin-off | 185 | 0 | 0 |
Settlements | 0 | 0 | 0 |
Statute of limitations lapses | (90) | (87) | (175) |
Balance, end of year | $ 298 | $ 113 | $ 187 |
SEGMENT AND GEOGRAPHIC INFORM57
SEGMENT AND GEOGRAPHIC INFORMATION Narrative (Detail) | 12 Months Ended |
Dec. 31, 2015product | |
Segment Reporting [Abstract] | |
Number of product categories | 2 |
SEGMENT AND GEOGRAPHIC INFORM58
SEGMENT AND GEOGRAPHIC INFORMATION Revenue (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 133,178 | $ 138,695 | $ 146,586 |
United States | |||
Segment Reporting Information [Line Items] | |||
Revenues | 120,259 | 124,365 | 128,653 |
International | |||
Segment Reporting Information [Line Items] | |||
Revenues | 12,919 | 14,330 | 17,933 |
Orthobiologics | |||
Segment Reporting Information [Line Items] | |||
Revenues | 67,258 | 67,594 | 66,669 |
Spinal fusion hardware | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ 65,920 | $ 71,101 | $ 79,917 |
EMPLOYEE BENEFIT PLAN Narrative
EMPLOYEE BENEFIT PLAN Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Compensation and Retirement Disclosure [Abstract] | |||
Contributions | $ 0.5 | $ 0.3 | $ 0.1 |
SELECTED QUARTERLY INFORMATIO60
SELECTED QUARTERLY INFORMATION - UNAUDITED (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenue, net | $ 34,724 | $ 32,679 | $ 33,461 | $ 32,314 | $ 35,148 | $ 33,606 | $ 35,766 | $ 34,175 | $ 133,178 | $ 138,695 | $ 146,586 |
Gross profit: | 18,053 | 15,338 | 18,955 | 19,713 | 20,511 | 19,324 | 20,566 | 21,580 | 72,059 | 81,981 | 91,054 |
Net loss | $ (13,750) | $ (14,199) | $ (17,685) | $ (9,898) | $ (8,241) | $ (5,316) | $ (5,429) | $ (5,560) | $ (55,532) | $ (24,545) | $ (25,746) |
Net Loss per share, basic and diluted (in dollars per share) | $ (1.23) | $ (1.27) | $ (1.60) | $ (0.90) | $ (0.75) | $ (0.48) | $ (0.49) | $ (0.50) | $ (4.99) | $ (2.22) | $ (2.33) |
VALUATION AND QUALIFYING ACCO61
VALUATION AND QUALIFYING ACCOUNTS [Schedule] (Details) - Allowance for doubtful accounts and sales returns and allowances - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Balance at Beginning of Period | $ 764 | $ 558 | $ 1,068 | $ 2,384 |
Charged to Costs and Expenses | 55 | (267) | (691) | |
Charged to Other Accounts | 0 | 0 | 0 | |
Deductions | 151 | (238) | (625) | |
Balance at End of Period | 764 | 558 | 1,068 | |
Balance at Beginning of Period | 46,638 | 83,457 | 73,461 | $ 66,497 |
Charged to Costs and Expenses | (36,819) | 10,483 | 6,569 | |
Charged to Other Accounts | 0 | (487) | 395 | |
Deductions | 0 | 0 | 0 | |
Balance at End of Period | $ 46,638 | $ 83,457 | $ 73,461 |