Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 26, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
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 | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 14,537,751 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 109,009,256 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | |||
Total revenue, net | $ 131,814 | $ 128,860 | $ 133,178 |
Cost of goods sold | 51,826 | 55,544 | 61,119 |
Gross profit | 79,988 | 73,316 | 72,059 |
Operating expenses: | |||
Selling, general and administrative | 97,303 | 101,065 | 110,551 |
Research and development | 12,180 | 11,442 | 8,353 |
Intangible amortization | 3,168 | 4,309 | 5,331 |
Total operating expenses | 112,651 | 116,816 | 124,235 |
Operating loss | (32,663) | (43,500) | (52,176) |
Other (income) expense, net | (430) | 264 | 877 |
Loss before income taxes | (32,233) | (43,764) | (53,053) |
Provision (benefit) for income taxes | (118) | (552) | 2,479 |
Net loss | $ (32,115) | $ (43,212) | $ (55,532) |
Net Loss per share, basic and diluted (in dollars per share) | $ (2.58) | $ (3.85) | $ (4.99) |
Weighted average shares used to compute basic and diluted net loss per share | 12,426 | 11,222 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (32,115) | $ (43,212) | $ (55,532) |
Other comprehensive income (loss) | |||
Change in foreign currency translation adjustments | 678 | (119) | 498 |
Comprehensive loss | $ (31,437) | $ (43,331) | $ (55,034) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 10,788 | $ 14,566 |
Trade accounts receivable, net of allowances of $466 and $483 | 21,872 | 20,982 |
Inventories | 41,721 | 45,299 |
Prepaid expenses and other current assets | 2,037 | 1,813 |
Total current assets | 76,418 | 82,660 |
Property, plant and equipment, net | 22,063 | 21,863 |
Intangible assets, net | 35,207 | 41,785 |
Other assets | 786 | 857 |
Total assets | 134,474 | 147,165 |
Current liabilities: | ||
Short-term debt | 0 | 445 |
Accounts payable, trade | 7,385 | 8,537 |
Accrued compensation | 5,833 | 4,393 |
Accrued commissions | 5,793 | 4,398 |
Contingent consideration liabilities | 207 | 2,855 |
Other accrued expenses and current liabilities | 3,939 | 3,790 |
Total current liabilities | 23,157 | 24,418 |
Long-term borrowings under credit facility | 0 | 3,835 |
Contingent consideration liabilities | 4,228 | 5,125 |
Other liabilities | 1,436 | 2,810 |
Total liabilities | 28,821 | 36,188 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value; 15,000 authorized; no shares issued and outstanding at December 31, 2017 and December 31, 2016 | 0 | 0 |
Common stock, $0.01 par value; 60,000 authorized; 13,508 and 11,258 shares issued and outstanding at December 31, 2017 and 2016, respectively | 135 | 113 |
Additional paid-in capital | 206,844 | 180,753 |
Accumulated other comprehensive income | 1,950 | 1,272 |
Accumulated deficit | (103,276) | (71,161) |
Total stockholders' equity | 105,653 | 110,977 |
Total liabilities and stockholders' equity | $ 134,474 | $ 147,165 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 466 | $ 483 |
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) | 13,508,000 | 11,258,000 |
Common stock outstanding (in shares) | 13,508,000 | 11,258,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
OPERATING ACTIVITIES: | |||
Net loss | $ (32,115) | $ (43,212) | $ (55,532) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 10,871 | 11,758 | 12,445 |
Instrument replacement expense | 1,848 | 1,389 | 1,228 |
Impairment of spinal instruments | 0 | 919 | 175 |
Impairment of construction in progress | 0 | 0 | 419 |
Provision for excess and obsolete inventories | 4,399 | 5,402 | 7,327 |
Amortization of debt issuance costs | 139 | 139 | 0 |
Deferred income tax benefit | (78) | (10) | (282) |
Stock-based compensation | 6,067 | 6,438 | 3,816 |
Gain from change in fair value of contingent consideration liabilities | (975) | (270) | 0 |
Gain from release of foreign tax liability | (1,512) | 0 | 0 |
Allocation of non-cash charges from Integra | 0 | 0 | 563 |
Changes in assets and liabilities | |||
Accounts receivable | (612) | 4,295 | (2,004) |
Inventories | 1,206 | 1,404 | (8,365) |
Prepaid expenses and other current assets | (211) | 1,877 | (2,867) |
Other non-current assets | 72 | 79 | 1,335 |
Accounts payable | (2,080) | (5,006) | 5,818 |
Income taxes payable | 0 | 0 | (320) |
Accrued commissions | 1,394 | 166 | 335 |
Other accrued expenses and current liabilities | 2,630 | 167 | 3,316 |
Other non-current liabilities | 335 | 195 | 27 |
Net cash used in operating activities | (8,622) | (14,270) | (32,566) |
INVESTING ACTIVITIES: | |||
Purchases of property and equipment | (7,446) | (7,569) | (11,555) |
Additions to technology assets | (200) | (1,150) | (150) |
Net cash used in investing activities | (7,646) | (8,719) | (11,705) |
FINANCING ACTIVITIES: | |||
Borrowings under credit facility | 0 | 3,300 | 0 |
Borrowings under short term debt | 0 | 1,202 | 0 |
Repayments of credit facility | (4,020) | 0 | 0 |
Repayments of short term debt | (445) | (757) | 0 |
Proceeds from issuance of common stock- employee stock purchase plan and exercise of stock options | 1,021 | 691 | 0 |
Proceeds from issuance of common stock, net of offering costs- ATM transactions | 15,557 | 0 | 0 |
Repurchases of common stock for income tax withheld upon vesting of restricted stock | (50) | (160) | 0 |
Payment for Contingent Consideration Liability, Financing Activities | (23) | 0 | 0 |
Integra net investment prior to the spin-off | 0 | 0 | 77,173 |
Debt issuance costs | 0 | 0 | (80) |
Excess tax benefits from stock-based compensation arrangements | 0 | 0 | 37 |
Net cash provided by financing activities | 12,040 | 4,276 | 77,130 |
Effect of exchange rate changes on cash and cash equivalents | 450 | (150) | (82) |
Net change in cash and cash equivalents | (3,778) | (18,863) | 32,777 |
Cash and cash equivalents at beginning of period | 14,566 | 33,429 | 652 |
Cash and cash equivalents at end of period | 10,788 | 14,566 | 33,429 |
Non-cash investing activities: | |||
Property and equipment in liabilities | 925 | 802 | 638 |
Fair value of intangible assets acquired through acquisition of business (see Note 6) | 0 | 8,250 | 0 |
Fair value of contingent consideration liabilities in connection with acquisition of business (see Note 7) | 0 | 7,980 | 0 |
Non-cash financing activities: | |||
Settlement of related-party payable to Integra net investment | 0 | 0 | 29,022 |
Debt issuance cost | 0 | 0 | 328 |
Supplemental cash flow information: | |||
Interest paid | 373 | 0 | 0 |
Income taxes refunded | $ (513) | ||
Income taxes paid | $ 89 | $ 2,982 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Integra Net Investment | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Balance at beginning of period (in shares) at Dec. 31, 2014 | 0 | |||||
Balance at beginning 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) | |||
Net transfer from Integra | 107,433 | 107,433 | ||||
Reclassification of parent company investment in connection with spin-off | 0 | 170,241 | (170,241) | |||
Foreign currency translation adjustment | 498 | 498 | ||||
Issuance of common stock in connection with spin-off | 11,048 | |||||
Issuance of common stock in connection with spin-off | 0 | $ 110 | (110) | |||
Restricted stock issued | 66 | |||||
Restricted stock issued | 0 | $ 1 | (1) | |||
Restricted stock forfeited | (12) | |||||
Restricted stock forfeited | 0 | |||||
Stock-based compensation | 3,619 | 3,619 | ||||
Excess tax benefits from stock-based compensation | 37 | 37 | ||||
Balance at end of period (in shares) at Dec. 31, 2015 | 11,102 | |||||
Balance at end of period at Dec. 31, 2015 | 147,339 | $ 111 | 173,786 | 0 | 1,391 | (27,949) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (43,212) | (43,212) | ||||
Foreign currency translation adjustment | (119) | (119) | ||||
Restricted stock issued | 79 | |||||
Restricted stock issued | 0 | $ 1 | (1) | |||
Issuance of common stock under employee stock purchase plan | 90 | |||||
Issuance of common stock under employee stock purchase plan | 691 | $ 1 | 690 | |||
Restricted stock forfeited | (1) | |||||
Restricted stock forfeited | 0 | |||||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards | (12) | |||||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards | (160) | (160) | ||||
Stock-based compensation | $ 6,438 | 6,438 | ||||
Balance at end of period (in shares) at Dec. 31, 2016 | 11,258 | 11,258 | ||||
Balance at end of period at Dec. 31, 2016 | $ 110,977 | $ 113 | 180,753 | 0 | 1,272 | (71,161) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (32,115) | (32,115) | ||||
Foreign currency translation adjustment | 678 | 678 | ||||
Restricted stock issued | 253 | |||||
Restricted stock issued | 970 | $ 2 | 968 | |||
Issuance of common stock under employee stock purchase plan | 150 | |||||
Issuance of common stock under employee stock purchase plan | 986 | $ 2 | 984 | |||
Issuance of common stock- NLT Spine Ltd contingent closing consideration | 350 | |||||
Issuance of common stock- NLT Spine Ltd contingent closing consideration | 2,548 | $ 3 | 2,545 | |||
Issuance of common stock- ATM transactions | 1,500 | |||||
Issuance of common stock- ATM transactions | 15,557 | $ 15 | 15,542 | |||
Issuance of common stock- exercise of stock options | 5 | |||||
Issuance of common stock- exercise of stock options | 35 | 35 | ||||
Restricted stock forfeited | (1) | |||||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards | (7) | |||||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards | (50) | (50) | ||||
Stock-based compensation | $ 6,067 | 6,067 | ||||
Balance at end of period (in shares) at Dec. 31, 2017 | 13,508 | 13,508 | ||||
Balance at end of period at Dec. 31, 2017 | $ 105,653 | $ 135 | $ 206,844 | $ 0 | $ 1,950 | $ (103,276) |
BUSINESS
BUSINESS | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS | BUSINESS AND BASIS OF PRESENTATION Business SeaSpine Holdings Corporation was incorporated in Delaware on February 12, 2015 in connection with the spin-off of the orthobiologics and spinal implant business of Integra LifeSciences Holdings Corporation, a diversified medical technology company. The spin-off occurred on July 1, 2015. Unless the context indicates otherwise, (i) references to "SeaSpine" or the "Company" refer to SeaSpine Holdings Corporation and its wholly-owned subsidiaries, and (ii) references to "Integra" refer to Integra LifeSciences Holdings Corporation and its subsidiaries other than SeaSpine. Basis of Presentation and Principles of Consolidation 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 implant business. 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 implant 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. See Note 3, “Transactions with Integra,” for further information regarding the relationships the Company has with Integra. 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. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of consolidated financial statements in conformity with GAAP 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 other credits, net realizable value of inventories, discount rates and estimated projected cash flows used to value and test impairments of identifiable intangible and long-lived assets, depreciation and amortization periods for identifiable intangible and long-lived assets, assumptions related to the timing and probability of product launch dates, discount rates matched to the estimated timing of payments, probability of success rates, and estimated net sales for contingent considerations in business combinations, 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 money market accounts. Fair Value of Financial Instruments The carrying amounts of cash, cash equivalents, receivables, accounts payable, accrued expenses, and short-term debt at December 31, 2017 and 2016, 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 long-term debt outstanding at December 31, 2016 pursuant to the Company’s credit facility with Wells Fargo Bank, National Association approximated fair value as interest rates on this instrument approximated the borrowing rates currently available for debt with similar terms and maturities. This fair value measurement is categorized within Level 2 of the fair value hierarchy. The carrying amounts of contingent consideration liabilities at December 31, 2017 and 2016 pursuant to the business combinations (see Note 6- Business Combinations ) are measured at fair value on a recurring basis, and are classified within Level 3 of the fair value hierarchy because they use significant unobservable inputs. Trade Accounts Receivable and Allowances Trade accounts receivable in the accompanying consolidated balance sheets are presented net of allowances for doubtful accounts and sales returns and other credits.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 the Company's 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, 2017 or 2016. 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 spinal 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 spinal instruments and 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. Business Combinations The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of the acquisition. Any purchase price in excess of these net assets is recorded as goodwill, and any fair value of these net assets, excluding goodwill, in excess of the purchase price is recorded as a bargain purchase gain. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. Contingent consideration liability is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent consideration liability are recognized in the statement of operations. Contingent consideration liability related to acquisitions consist of commercial milestone payments and contingent royalty payments, and are valued using discounted cash flow techniques. The fair value of commercial milestone payments and contingent royalty payments reflects management’s expectations of probability and amount of payment, and increases or decreases as the probability and amount of payment or expectation of timing of payment changes. 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. Impairment of 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. The Company recognizes tax benefits in its financial statements when its uncertain tax positions are more likely than not to be sustained upon audit. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company recognizes 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 Net sales are derived primarily from the sale of orthobiologics and spinal implant products globally. Sales are reported net of returns, rebates, group purchasing organization fees and other customer allowances. Allowances and estimates of returns and other credits are recorded in the sales returns reserve. 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, the Company generates most of its revenue by consigning its orthobiologics products and by consigning or loaning its spinal implant sets to hospitals and independent sales agents, who in turn either deliver them to hospitals for a single surgical procedure, after which they are returned to the Company, or leave them with hospitals that are high volume users for multiple procedures. The spinal implant sets typically contain the instruments, disposables, and spinal implants required to complete a surgery. The Company ships replacement inventory to independent sales agents to replace the consigned inventory used in surgeries. The Company maintains and replenishes loaned sets at its facility and returns them to a hospital or independent sales agent for the next procedure. The Company recognizes revenue on these consigned or loaned products when they have been used or implanted in a surgical procedure. For all other sales transactions, including sales to international stocking distributors and private label partners, the Company recognizes revenue when the products are shipped to the customer or stocking distributors and the transfer of title and risk of loss occurs. There is generally no customer acceptance or other condition that prevents the Company from recognizing revenue in accordance with the delivery terms for these sales transactions. Product royalties account for less than 1% of total revenue for any of the periods presented, and 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 material. 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 $1.6 million , $1.6 million , and $1.2 million for product shipments for loaning of spinal implants and instrumentation sets and costs incurred for internal movement of inventory were recorded in selling, general and administrative expense during the years ended December 31, 2017, 2016 and 2015, respectively. Research and Development Research and development costs, including salaries, stock-based compensation, 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. 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 was based on the fair value on the grant date using the Black-Scholes-Merton option pricing model. The fair value of restricted stock granted prior to the spin-off was based on the Integra’s stock price at the grant date, and the fair value of restricted stock granted after the spin-off was based on the Company's stock price at the grant date. 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 $6.1 million in 2017, $6.4 million in 2016 and $4.4 million in 2015. 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 stocking 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 net sales or accounts receivable for any of the periods presented. Recent Accounting Standards Not Yet Adopted The Company qualifies as an “emerging growth company” (EGC) pursuant to the provisions of the Jumpstart Our Business Startups (JOBS) Act and elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, which permits EGCs to defer compliance with new or revised accounting standards (the EGC extension) until non-issuers are required to comply with such standards. Accordingly, so long as the Company continues to qualify as an EGC, the Company will not have to adopt or comply with new or revised accounting standards until non-issuers are required to adopt or comply with such standards. In May 2014, the Financial Accounting Standards Board (FASB) issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The new standard provides a five-step approach to be applied to all contracts with customers. The new standard also requires expanded disclosure about revenue recognition. The new standard as amended by ASU 2015-14, ASU 2016-10 and ASU 2016-12, will be effective for the Company beginning on January 1, 2019, and for interim periods within annual periods beginning on January 1, 2020. The Company performed a preliminary assessment of the impact of this new standard on its consolidated financial statements. In assessing the impact, the Company has outlined all revenue streams, and has considered the five steps outlined in the standard for product sales, from which substantially all the Company's revenue is generated. The Company plans to adopt the new standard using the modified retrospective method. The Company will continue to evaluate the future impact of the new standard. In February 2016, the FASB issued Update No. 2016-02, Leases (Topic 842) . The new standard requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than twelve months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new standard must be adopted using the modified retrospective approach. The standard will be effective for the Company beginning on January 1, 2020, and interim periods within annual periods beginning on January 1, 2021, with early adoption permitted. The Company does not plan to early adopt and expects to apply the transition practical expedients allowed by the standard. Note 9 to the Consolidated Financial Statements provides details on the Company’s current lease arrangements. While the Company continues to evaluate the impact of this new standard on its consolidated financial statements, the Company currently expects the primary impact will be to record right-of-use assets and lease liabilities for existing operating leases in the consolidated balance sheets. The Company does not currently expect the adoption of this new standard to have a material impact on its consolidated results of operations or cash flows. In August 2016, the FASB issued Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard addresses eight specific cash flow issues related to cash receipts and cash payments with the objective of reducing the existing diversity of presentation and classification in the statement of cash flows. The new standard will be effective for the Company beginning on January 1, 2019, and interim periods within annual periods beginning on January 1, 2020. Early adoption is permitted and should be applied using a retrospective transition method to each period presented. The Company is in the process of evaluating the impact of this standard on its consolidated financial statements. In May 2017, the FASB issued Update No. 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting. The new standard provides guidance regarding which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The new standard will be effective for the Company beginning on January 1, 2018, and interim periods within annual periods beginning on January 1, 2018. The new standard should be applied prospectively to an award modified on or after the adoption date. The Company is in the process of evaluating the impact of this standard on its consolidated financial statements. Recently Adopted Accounting Standards In July 2015, the FASB issued Update No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) . 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 price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance was effective for the Company beginning on January 1, 2017, and interim periods within annual periods beginning on January 1, 2018. Adoption of this new guidance has had no impact on the Company’s consolidated financial statements. 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. 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, any assumed issuance of common stock under restricted stock awards and units, and any assumed issuances under the Company's 2015 Employee Stock Purchase Plan, as the effect, in each case, would be antidilutive. Common stock equivalents of 3.3 million, 3.1 million and 2.0 million shares for the years ended December 31, 2017, 2016 and 2015, respectively, were excluded from the calculation because of their antidilutive effect. |
TRANSACTIONS WITH INTEGRA
TRANSACTIONS WITH INTEGRA | 12 Months Ended |
Dec. 31, 2017 | |
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 SeaSpine'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, 2017 , 2016 and 2015 totaled $0.6 million , $1.1 million and $6.2 million , respectively. The Company's sale of finished goods to Integra under its contract manufacturing arrangement for the years ended December 31, 2017 and 2016 totaled $0.4 million and $0.2 million , respectively, and was immaterial for the year ended December 31, 2015. Pursuant to a transition services agreement, Integra and SeaSpine provided certain services to one another following the spin-off, and Integra and SeaSpine agreed to indemnify each other against certain liabilities arising from their respective businesses. Under this agreement, Integra provided the Company with certain support functions, including information technology, accounting and other financial functions, regulatory affairs and quality assurance, human resources and other administrative support. The Company incurred no costs under the agreement for the year ended December 31, 2017, and approximately $0.3 million and $2.8 million of costs for the years ended December 31, 2016 and 2015, respectively. 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. There were no allocated costs for each of the years ended December 31, 2017 and 2016. Year Ended December 31, 2015 (In thousands) Cost of goods sold $ 488 Selling, general and administrative 8,633 Research and development 253 Total Allocated Costs $ 9,374 Included in the above amounts are certain non-cash allocated costs, including stock-based compensation. Such amounts were $0.6 million for the year ended December 31, 2015. 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 by SeaSpine from Integra of Mozaik raw materials and finished goods, and fees incurred pursuant to the transition services agreement 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. The following table summarizes the components of the net decrease in Integra net investment for the year ended December 31, 2015. The Integra net investment was reclassified to Additional Paid-in Capital in connection with the spin-off. Year Ended December 31, 2015 (In thousands) Cash pooling and general financing activities (a) $ 68,386 Corporate Allocations (excluding non-cash adjustments) 8,787 Total Integra net investment in financing activities within cash flow statement 77,173 Non-cash adjustments (b) 29,806 Spin-off related adjustment (c) 161 Reclassification of Integra net investment in connection with the spin-off (170,241 ) Foreign exchange impact 293 Net decrease in Integra investment $ (62,808 ) (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) 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 on July 1, 2015, which was the date when SeaSpine became a separate, independent, publicly-traded company. |
DEBT AND INTEREST
DEBT AND INTEREST | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
DEBT AND INTEREST | DEBT AND INTEREST Credit Agreement In December 2015, the Company entered into a three -year credit facility with Wells Fargo Bank, National Association, which was subsequently amended in October 2016 to address the Company's acquisition of certain assets of NLT (as described in Note 6, "Business Combinations," below) (as amended, the Credit Facility). 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 a guarantor and to provide a security interest in substantially all its assets for the benefit of the counterparty. Borrowings under the Credit Facility accrue interest at the rate then applicable to base rate loans (as customarily defined), unless and until converted into LIBOR rate loans (as customarily defined) 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 , (i) base rate plus 1.25 percentage points for base rate loans and (ii) LIBOR rate plus 2.25 percentage points for LIBOR rate 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 rate 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 rate loans. The Company will also pay an unused line fee in an amount equal to 0.375% per annum of the unused Credit Facility amount. The unused line fee is due and payable on the first day of each month. In September 2016, the Company borrowed $3.3 million under the Credit Facility. The Company elected to have the LIBOR rate apply to the amount borrowed with an interest period of six months commencing on September 28, 2016, which was further extended for another interest period of six months commencing on March 28, 2017. During the year ended December 31, 2017, the Company paid off the entire amount borrowed plus accrued interest, totaling $4.1 million . There were no amounts outstanding under the Credit Facility at December 31, 2017, and $3.8 million outstanding at December 31, 2016. At December 31, 2017 , the Company had $20.5 million of current borrowing capacity thereunder. Debt issuance costs and legal fees related to the Credit Facility totaling $0.4 million were recorded as a deferred asset and are being amortized ratably over the term of the arrangement. The Credit Facility contains various customary affirmative and negative covenants, 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 applicable covenants at December 31, 2017 . 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, the lender will have the right to terminate the commitments and accelerate the maturity of any loans outstanding. Insurance Premium Finance Agreements In July 2016, the Company entered into two insurance premium finance agreements (the Finance Agreements) with First Insurance Funding Corporation and AFCO Acceptance Corporation (the Lenders), under which the Lenders agreed to pay premiums, taxes and fees to insurance companies on the Company's behalf for various insurance policies. The Company financed an aggregate of $1.2 million under the Finance Agreements with annual interest rates between 2% and 4% . The Company recorded the total amounts due to the Lenders as short-term debt on the balance sheet. At June 30, 2017, the financed amount plus accrued interest was paid off and no amounts were outstanding under the Finance Agreements, and no additional amounts have been financed under the Finance Agreements since then. There were no amounts outstanding under the Finance Agreements at December 31, 2017, and $0.4 million outstanding at December 31, 2016. |
BALANCE SHEET DETAILS
BALANCE SHEET DETAILS | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
BALANCE SHEET DETAILS | BALANCE SHEET DETAILS Inventories. Inventories consisted of the following: December 31, 2017 December 31, 2016 (In thousands) Finished goods $ 31,008 $ 30,922 Work in process 6,909 10,554 Raw materials 3,804 3,823 $ 41,721 $ 45,299 Property, Plant and Equipment . Property, plant and equipment, net and corresponding useful lives were as follows: December 31, 2017 December 31, 2016 Useful Lives (In thousands) Leasehold improvement $ 5,312 $ 5,003 Lease term Machinery and production equipment 7,030 6,826 3-10 years Spinal instruments and sets 20,340 26,618 5 years Information systems and hardware 7,375 6,918 3-7 years Furniture and fixtures 991 1,058 3-5 years Construction in progress 8,136 7,828 Total 49,184 54,251 Less accumulated depreciation and amortization (27,121 ) (32,388 ) Property, plant and equipment, net $ 22,063 $ 21,863 The balance of construction in progress as of December 31, 2017 and 2016 consists primarily of spinal instruments that are not yet placed into service. Depreciation and amortization expenses totaled $4.1 million , $4.5 million and $4.5 million for the years ended December 31, 2017, 2016, and 2015, respectively, and included $0.8 million , $1.2 million and $0.3 million expenses that were presented within cost of goods sold for 2017, 2016 and 2015, respectively. The cost of purchased instruments used to replace damaged instruments in existing sets and recorded directly to the instrument replacement expense totaled $1.8 million , $1.4 million and $1.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. For the years ended December 31, 2016 and 2015, the Company recorded impairment charges totaling $0.9 million and $0.2 million , respectively, against spinal instruments that are no longer expected to be placed into service. No impairment charges against spinal instruments were recorded for the year ended December 31, 2017. Identifiable Intangible Assets. The components of the Company’s identifiable intangible assets were as follows: December 31, 2017 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Product technology 12 years $ 40,769 $ (25,827 ) $ 14,942 Customer relationships 12 years 56,830 (36,565 ) 20,265 Trademarks/brand names — 300 (300 ) — $ 97,899 $ (62,692 ) $ 35,207 December 31, 2016 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Product technology 12 years $ 40,569 $ (22,218 ) $ 18,351 Customer relationships 12 years 56,830 (33,396 ) 23,434 Trademarks/brand names — 300 (300 ) — $ 97,699 $ (55,914 ) $ 41,785 Annual amortization expense (including amounts reported in cost of goods sold) is expected to be approximately, $6.5 million in 2018 , $5.8 million in 2019 , $4.9 million in 2020 , $4.9 million in 2021 , and $4.8 million in 2022 . Amortization expense totaled $6.8 million , $7.2 million and $8.0 million for the years ended December 31, 2017 , 2016 and 2015, respectively, and included $3.6 million , $2.9 million , and $2.7 million , respectively, of amortization of product technology intangible assets that was presented within cost of goods sold. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS In August 2016, the Company entered into an asset purchase agreement with N.L.T Spine Ltd. (NLT), and NLT Spine, Inc., a wholly owned subsidiary of NLT, pursuant to which the Company agreed to purchase certain of the assets of NLT’s medical device business, including substantially all of NLT’s medical device intellectual property related to the ownership, design, development, manufacture, marketing and commercial exploitation of certain expandable interbody devices. The acquisition was undertaken to increase the Company's product offering in expandable interbody devices. At the initial closing under the asset purchase agreement, the Company entered into (i) an exclusive license agreement with NLT, pursuant to which the Company received an exclusive, worldwide license to make, use, import, offer for sale, sell and otherwise commercially exploit NLT’s expandable interbody device products , (ii) a transition services agreement with NLT, pursuant to which NLT agreed to provide certain services with respect to the continued development of the acquired intellectual property and (iii) a non-competition and non-solicitation agreement with NLT, pursuant to which NLT and its affiliates agreed not to compete with the Company with respect to the acquired intellectual property, subject to certain exceptions. The purchase price consisted of an initial cash payment to NLT of $1.0 million , which was paid in September 2016 upon the initial closing, and the issuance in January 2017 of 350,000 shares of the Company’s common stock with a total fair value of $2.5 million at issuance as contingent closing consideration upon the satisfaction of certain conditions, including FDA 510(K) clearance of one of the acquired product technologies. In accordance with the terms of the asset purchase agreement, the number of shares issued was determined based on the volume weighted average closing price (VWAP) of the Company's common stock during the 20 trading day period ending one trading day prior to the issuance date, subject to a minimum and maximum VWAP of $10.00 and $17.00 , respectively. The VWAP over such 20 -trading day period was $7.58 and therefore $10.00 was used. The Company is also obligated to pay up to a maximum of $5.0 million in milestone payments, payable at the Company's election in cash or in shares of its common stock, which are contingent on the Company's achievement of four independent events related to the commercialization of the acquired product technologies. Additionally, the Company is required to pay royalty payments, in cash, to NLT equal to declining (over time) percentages of the Company’s future net sales of certain of the acquired product technologies not to exceed $43.0 million in the aggregate. The Company has the option to terminate any future obligation to make royalty payments by making a one-time cash payment to NLT of $18.0 million . The Company accounted for this transaction as a business combination in accordance with ASC 805 Business Combinations , and as such, the assets acquired have been recorded at their respective fair values. There were no liabilities assumed. The determination of fair value for the identifiable intangible assets acquired requires extensive use of estimates and judgments. Significant estimates include estimating cash flows and determining the appropriate discount rate, which are considered significant unobservable inputs (Level 3) under the fair value concepts defined in ASC 820. Intangible assets acquired were valued at $9.3 million as of the initial closing date and recorded as product technology intangible assets, which are being amortized ratably over a useful life of 10 years from the initial closing. Acquisition costs of $0.5 million incurred were recorded as selling, marketing and administrative expenses. The following table summarizes the estimated fair value of total consideration to be paid to NLT as of September 26, 2016, the date of the initial closing. The Company estimated the fair value of the contingent consideration, including contingent milestone payments and contingent royalty payments, using a probability weighted approach that considers the possible outcomes based on assumptions related to the timing and probability of the product launch dates, discount rates matched to the timing of payments, and probability of success rates and discount adjustments on the related cash flows. Subsequent to the acquisition date, at each reporting period, the contingent consideration liabilities will be remeasured at current fair value with changes to be recorded in the consolidated statements of operations. The total purchase price was allocated entirely to product technology intangible asset. (In thousands) Cash paid for purchase $ 1,000 Contingent closing consideration 2,930 Contingent milestone payments 2,310 Contingent royalty payments 3,010 Total purchase price $ 9,250 The unaudited pro forma financial information set forth below assumes that the NLT purchased assets had been acquired on January 1, 2015. The unaudited pro forma financial information includes the effect of estimated amortization charges for acquired intangible assets of $0.9 million for each of the years ended December 31, 2016 and 2015, the estimated research and development expenses for the purchased assets of $1.1 million for each of the years ended December 31, 2016 and 2015, and excludes the non-recurring acquisition costs of $0.5 million for the year ended December 31, 2016. There was no adjustment to the total revenues. The unaudited pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented. The actual amortization charges for acquired intangible assets and research and development expenses for the purchased assets are included in the consolidated statement of operations for the year ended December 31, 2017, and therefore no adjustment was made to such statement. Year Ended December 31, 2016 2015 (In thousands, except per share data) Operating loss $ (45,063 ) $ (54,196 ) Net loss (44,775 ) (57,552 ) Net loss per share, basic and diluted $ (3.99 ) $ (5.17 ) Weighted average shares used to compute basic and diluted net loss per share 11,222 11,139 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The fair values of the Company’s assets and liabilities, including contingent consideration liabilities, are measured at fair value on a recurring basis, and are determined under the fair value categories as follows (in thousands): Total Quoted Price in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2017: Contingent consideration liabilities- current $ 207 $ — $ — $ 207 Contingent consideration liabilities- non-current 4,228 — — 4,228 Total contingent consideration $ 4,435 $ — $ — $ 4,435 Total Quoted Price in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2016: Contingent consideration liabilities- current $ 2,855 $ — $ — $ 2,855 Contingent consideration liabilities- non-current 5,125 — — 5,125 Total contingent consideration $ 7,980 $ — $ — $ 7,980 Contingent consideration liabilities are classified within Level 3 of the fair value hierarchy because they use significant unobservable inputs. For those liabilities, fair value is determined using a probability-weighted discounted cash flow model and significant inputs which are not observable in the market. The significant inputs include assumptions related to the timing and probability of the product launch dates, discount rates matched to the timing of payments, and probability of success rates. The following table sets forth the changes in the estimated fair value of the Company’s liabilities measured on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2017 and 2016. The gain from change in fair value of contingent closing consideration is the difference between the fair value of shares expected to be issued to NLT based on assumptions as of December 31, 2016, including the forecasted issuance date and stock price and the fair value of the shares actually issued to NLT on January 31, 2017. The gain from change in fair value of contingent milestone and royalty payments resulted from updated estimated timing of payments, probability of success rates, the passage of time, updated discount rates matched to the estimated timing of payments, actual net sales of certain products for the year ended December 31, 2017 , and lower estimated net sales for future royalty payment periods. A change in estimated timing of payments, probability of success rates, or estimated net sales for future royalty payment periods would be expected to have a material impact on the fair value of contingent milestone and royalty payments. Year Ended December 31, 2017 2016 (in thousands) Beginning Balance as of January 1 $ 7,980 $ — Contingent consideration liabilities assumed (settled) (2,570 ) 8,250 Gain from change in fair value of contingent closing consideration recorded in other income (112 ) (270 ) Gain from change in fair value of contingent milestone and royalty payments recorded in selling, general and administrative expenses (863 ) — Ending Balance as of December 31 $ 4,435 $ 7,980 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | EQUITY AND STOCK-BASED COMPENSATION Common Stock On January 31, 2017, the Company issued 350,000 shares of common stock to NLT as the settlement of contingent closing consideration pursuant to the terms of the asset purchase agreement entered into with NLT in August 2016. The total fair value of such shares was $2.5 million at issuance. See Note 6, "Business Combinations" above. In August 2016, the Company entered into an equity distribution agreement (Distribution Agreement) with Piper Jaffray & Co. (Piper Jaffray), pursuant to which the Company may offer and sell shares of its common stock in “at the market” (ATM) offerings (as defined in Rule 415 of the Securities Act of 1933, as amended) having an aggregate offering price up to $25.0 million in gross proceeds from time to time through Piper Jaffray acting as sales agent. The shares offered and sold under the Distribution Agreement are covered by a registration statement on Form S-3 that was declared effective on August 24, 2016. Under the Distribution Agreement, the Company sold 1,500,000 shares of common stock at an average price per share of $10.78 and received net proceeds of approximately $15.6 million (net of $0.6 million of offering costs) during the year ended December 31, 2017. The Company intends to use the net proceeds for general corporate purposes, including paying down outstanding borrowings under the Credit Facility, sales and marketing expenditures aimed at growing its business, and research and development expenditures focused on product development. Subsequent to December 31, 2017, the Company sold an additional 882,332 shares of common stock at an average price per share of $10.00 and received net proceeds of approximately $8.6 million (net of $0.2 million offering costs), which consumed the remaining capacity under the Distribution Agreement. Equity Award Plans Stock-based compensation expense, all related to employees and non-employee directors, was recognized as follows: December 31 2017 2016 2015 (In Thousands) Selling, general and administrative $ 5,136 $ 5,378 $ 3,993 Research and development 790 783 242 Cost of goods sold 141 277 168 Total stock-based compensation expense 6,067 6,438 4,403 Total estimated tax benefit related to stock-based compensation expense — — 37 Net effect on net income $ 6,067 $ 6,438 $ 4,366 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 SeaSpine were converted to equity awards denominated in SeaSpine common stock. In general, each post-conversion award is subject to the same terms and conditions as were applicable to the pre-conversion award. In May 2015, the Company adopted the 2015 Incentive Award Plan, which was subsequently amended and restated with approval of the Company's stockholders (as amended and restated, the 2015 Plan). Under the 2015 Plan, the Company can grant its employees, non-employee directors and consultants 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 3,786,643 shares of its common stock in respect of awards granted under the 2015 Plan. As of December 31, 2017 , there were 346,604 shares available to grant under the 2015 Plan. In 2016, the Company established the 2016 Employment Inducement Incentive Award Plan (the 2016 Plan). The plan is a broad-based incentive plan which allows for the issuance of stock-based awards, including non-qualified stock options, restricted stock awards, performance awards, restricted stock unit awards and stock appreciation rights, to any prospective officer or other employee who has not previously been an employee or director of SeaSpine or an affiliate or who is commencing employment with SeaSpine or an affiliate following a bona-fide period of non-employment by SeaSpine or an affiliate. An aggregate of 1,000,000 shares are reserved for issuance under the 2016 Plan. The Company has not awarded any shares under the 2016 Plan as of December 31, 2017 . Restricted Stock Awards and Restricted Stock Units The Company expenses the fair value of restricted stock awards and of 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 and to restricted stock units includes an estimate for forfeitures. The expected forfeiture rate of all equity-based compensation is based on historical experience of pre-vesting forfeitures on awards by each homogenous group of shareowners. For awards granted to non-executive employees, the forfeiture rate is estimated to be 15% , 12% and 10% annually for the years ended December 31, 2017 , 2016 and 2015, respectively. There is no forfeiture rate applied to awards granted to non-employee directors or executive employees because their pre-vesting forfeitures are anticipated to be highly unlikely. As individual awards become fully vested, stock-based compensation expense is adjusted to recognize actual forfeitures. The following table summarizes restricted stock awards and restricted stock units granted to SeaSpine employees and non-employee directors during the year ended December 31, 2017 : Restricted Stock Awards and Units Shares (In thousands) Weighted Average Grant Date Fair Value Per Share Unvested, January 1, 2017 65 $9.87 Granted 927 7.89 Cancellations (14) 7.97 Released/Vested (253) 8.57 Unvested, December 31, 2017 725 $7.82 The weighted average grant date fair value of restricted stock awards and units granted during the years ended December 31, 2017, 2016 and 2015 was $7.89 , $9.89 and $12.81 , respectively. The total fair value of shares vested in 2017, 2016 and 2015 was $2.2 million , $0.7 million , and $1.1 million , respectively. The Company recognized $3.8 million , $0.9 million and $0.3 million in expense related to restricted stock awards and restricted stock units for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017 , there was approximately $2.3 million of total unrecognized compensation expense related to the unvested portions of these awards. This cost is expected to be recognized over a weighted-average period of approximately 1.4 years. Stock Options Stock option grants to employees generally have a requisite service period 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 years ended December 31, 2017, 2016 and 2015: December 31 2017 2016 2015 Expected dividend yield 0 % 0 % 0 % Risk-free interest rate 2.0 % 1.3 % 1.6 % Expected volatility 35.7 % 38.2 % 38.2 % Expected term (in years) 5.1 4.9 5.1 The Company considered that it has never paid, 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 "plain vanilla" options is calculated using the simplified method as prescribed by accounting guidance for stock-based compensation. A "plain vanilla" option is an option with the following characteristics: (1) the option is granted at-the-money; (2) exercisability is conditional only on satisfaction of a service condition through the vesting date; (3) employees who terminate their service prior to vesting forfeit the option; (4) employees who terminate their service after vesting are granted limited time to exercise their options; and (5) the option is nontransferable and non-hedgeable. The expected term of any other option is based on disclosures from similar companies with similar grants. In addition, the Company applies an expected forfeiture rate when amortizing stock-based compensation expense. The expected forfeiture rate of options is based on historical experience of pre-vesting forfeitures on awards by each homogenous group of shareowners. The forfeiture rate of options granted to non-executive employees is estimated to be 15% , 12% and 10% annually for the years ended December 31, 2017, 2016 and 2015, respectively. There is no forfeiture rate applied for non-employee directors and executive employees as their pre-vesting forfeitures are anticipated to be highly unlikely. As individual grant awards become fully vested, stock-based compensation expense is adjusted to recognize actual forfeitures. A summary of the options granted during the year ended December 31, 2017 and the total number of options outstanding as of that date and changes since January 1, 2017 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, 2017 2,732 $ 14.43 6.71 $ 37 Granted 22 $ 7.56 — — Exercised (5 ) $ 6.92 — — Forfeited (187 ) $ 12.68 — — Outstanding, December 31, 2017 2,560 $ 14.51 5.96 $ 238 Vested or expected to vest, December 31, 2017 2,525 $ 14.54 5.96 $ 217 Exercisable, December 31, 2017 1,744 $ 14.55 5.98 $ 136 The weighted average grant date fair value of options granted during the years ended December 31, 2017 , 2016 and 2015 was $2.63 , $3.00 and $5.57 , respectively. The total fair value of shares vested in 2017, 2016 and 2015 was $2.2 million , $4.8 million , and $0.7 million , respectively. The Company recognized $1.7 million , $5.0 million and $4.4 million in expense related to stock options for the years ended December 31, 2017 , 2016 and 2015, respectively. As of December 31, 2017 , there was approximately $0.9 million of total unrecognized compensation expense related to unvested stock options. This cost is expected to be recognized over a weighted-average period of approximately 1.0 years. Employee Stock Purchase Plan In May 2015, the Company adopted the SeaSpine Holdings Corporation 2015 Employee Stock Purchase Plan, which was amended in December 2015 (as amended, the ESPP). Under the ESPP, eligible employees may 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 purchase 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 any calendar year. The purchase price for shares to be purchased under the ESPP is 85% of the lesser of the market price of the Company's common stock on the first trading date of an offering period or on any purchase date during an offering period (June 30 or December 31). The ESPP authorizes the issuance of up to 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, as amended (the IRC). The first offering period under the ESPP commenced on January 1, 2016 and will end on December 31, 2017. However, the ESPP contains a restart feature, such that if the market price of the stock at the end of any six-month purchase period is lower than the market price at the original grant date of an offering period, that offering period will terminate after that purchase date, and a new two-year offering period will commence on the January 1 or July 1 immediately following the date the original offering period terminated. This restart feature was first triggered on the purchase date that occurred on June 30, 2016, such that the offering period that commenced on January 1, 2016 was terminated, and a new two-year offering period commenced on July 1, 2016. This restart feature was triggered again on the purchase date that occurred on December 31, 2016, such that the offering period that commenced on July 1, 2016 was terminated, and a new two-year offering period commenced on January 1, 2017 and will end on December 31, 2018. The Company applied share-based payment modification accounting to the awards that were initially valued at the grant date to determine the amount of any incremental fair value associated with the modified awards. The impact to stock-based compensation expense for modifications during the year ended December 31, 2017 , was immaterial. During the years ended December 31, 2017 and 2016, there were 150,020 and 89,857 shares of common stock, respectively, purchased under the ESPP. The Company recognized $0.6 million and $0.5 million in expense related to the ESPP for the years ended December 31, 2017 and 2016, respectively. The Company estimates the fair value of shares issued to employees under the ESPP using the Black-Scholes-Merton option-pricing model. The following weighted average assumptions were used in the calculation of fair value of shares under the ESPP at the grant date for the years ended December 31, 2017 and 2016, respectively: December 31 2017 2016 Expected dividend yield 0 % 0 % Risk-free interest rate 1.0 % 0.6 % Expected volatility 28.1 % 30.5 % Expected term (in years) 1.2 1.2 |
LEASE
LEASE | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
LEASE | LEASE The Company leases administrative, manufacturing, research, and distribution facilities and various manufacturing, office and transportation equipment through operating lease agreements. During the year ended December 31, 2017 , the Company entered into two lease agreements: one for an office located in Wayne, Pennsylvania, where the Company designs spinal implants and which facilitates the Company's interactions with customers in the Eastern United States, and another for an office located in Lyon, France, which serves as the Company's international sales and marketing office. The terms of these two lease agreements are through June 2022 and February 2026, respectively, and both have an average annual cost of less than $0.1 million . Future minimum lease payments under the Company's operating leases at December 31, 2017 are as follows: Payments Due by Calendar Year (In thousands) 2018 $ 2,083 2019 2,130 2020 2,187 2021 2,221 2022 2,242 Thereafter 6,236 Total minimum lease payments $ 17,099 Total lease expense for the years ended December 31, 2017, 2016, and 2015 was $2.2 million , $3.1 million and $2.5 million , respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company is subject to income taxes in the U.S., Switzerland and France. 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. 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) Income (loss) before income taxes consisted of the following: Year Ended December 31, 2017 2016 2015 (In thousands) United States operations $ (34,886 ) $ (44,072 ) $ (51,305 ) Foreign operations 2,653 308 (1,748 ) $ (32,233 ) $ (43,764 ) $ (53,053 ) A reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate is as follows: Year Ended December 31, 2017 2016 2015 Federal statutory rate 35.0% 35.0% 35.0% Increase (decrease) in income taxes resulting from: State income taxes, net of federal tax benefit 4.1% 2.1% 0.1% Foreign operations (0.2)% (3.2)% (0.7)% Changes in valuation allowances 43.2% (33.1)% (16.7)% Pre-Spin losses with no tax benefit —% —% (22.7)% Uncertain tax positions 0.3% 0.2% —% Research and development credit 0.2% 0.2% —% Return to provision —% 0.9% —% Domestic manufacturing deduction —% —% 0.5% Other 0.8% (0.8)% (0.2)% Change in rate resulting from the 2017 Tax Act (83.0)% —% —% Effective tax rate 0.4% 1.3% (4.7)% The provision/(benefit) for income taxes consisted of the following: Year Ended December 31, 2017 2016 2015 (In thousands) Current: Federal $ (102 ) $ (532 ) $ 2,655 State 20 (51 ) 106 Foreign 42 41 — Total current $ (40 ) $ (542 ) $ 2,761 Deferred: Federal — — — State — — — Foreign (78 ) (10 ) (282 ) Total deferred $ (78 ) $ (10 ) $ (282 ) Provision (benefit) for income taxes $ (118 ) $ (552 ) $ 2,479 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, 2017 2016 (In thousands) Deferred tax assets: Doubtful accounts $ 116 $ 184 Inventory related items 8,976 13,163 Tax credits 158 83 Accrued vacation 348 498 Accrued bonus 815 812 Stock compensation 3,129 3,329 Net operating loss carryforwards 22,175 19,955 Intangible and fixed assets 12,054 22,910 Other 686 923 Total deferred tax assets 48,457 61,857 Less valuation allowance (47,433 ) (61,118 ) Deferred tax assets after valuation allowance $ 1,024 $ 739 Deferred tax liabilities: Other 469 246 Total deferred tax liabilities $ 469 $ 246 Net deferred tax assets $ 555 $ 493 The Tax Cuts and Jobs Act (the 2017 Tax Act) was enacted on December 22, 2017. The 2017 Tax Act reduces the U.S federal corporate tax rate from 35% to 21% . Accordingly, the Company has modified the value of the deferred tax assets and liabilities including the net operating loss carryover at December 31, 2017. Prior to enactment of the new tax reform, the Company had total net deferred tax assets of $74.1 million before valuation allowance at December 31, 2017. Taking the new tax reform into consideration, the Company's total net deferred tax assets were $48.0 million before valuation allowance at December 31, 2017. The Company is not subject to the new transition tax on accumulated foreign earnings enacted by the 2017 Tax Act since the foreign operations have been included in US tax filings pursuant to an election to disregard these entities for federal income tax purposes. At December 31, 2017, the Company had net operating loss carryforwards of $88.3 million for federal and state income tax purposes. The Company also had foreign net operating loss carryforwards of $2.7 million . These tax loss carryforwards begin to expire in 2018 and 2027 for foreign and federal and state income tax, respectively, and will expire through 2037. The tax benefit recorded for net operating losses, net of valuation allowance, was less than $0.1 million which relates only to foreign net operating losses. At December 31, 2016, the Company had net operating loss carryforwards of $51.4 million for federal and state income tax purposes. The Company also had foreign net operating loss carryforwards of $3.0 million . These tax loss carryforwards began to expire in 2016 and 2027 for foreign and federal and state income tax, respectively, and will expire through 2035. The tax benefit recorded for net operating losses, net of valuation allowance, was less than $0.1 million which relates only to foreign net operating losses. 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, 2017 2016 2015 (In thousands) Balance, beginning of year $ 305 $ 298 $ 113 Gross increases: Prior years’ tax positions 5 7 90 Additions to tax positions in prior years due to spin-off — — 185 Current year tax positions 74 107 — Gross decreases: Settlements — — — Statute of limitations lapses (107 ) (107 ) (90 ) Balance, end of year $ 277 $ 305 $ 298 Approximately $0.3 million of the balance at December 31, 2017 relates to uncertain tax positions that, if recognized, would affect the annual effective tax rate. 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, 2017, 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 2017, 2016 and 2015 were not significant. The Company files income tax returns as prescribed by tax laws of the jurisdictions in which it operates. 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, 2017. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
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 are included in the consolidated statements of operations as a component of cost of goods sold. The Company is subject to various legal proceedings in the ordinary course of its business with respect to its products, its current or former employees, and its commercial relationships, some of which have been settled by the Company. In the opinion of management, such proceedings 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 the Company's 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. While uncertainty exists, the Company does not believe there are any pending legal proceedings that would have a material impact on the Company’s financial position, cash flows or results of operations. |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION Management assessed its segment reporting based on how it internally manages and reports the results of its business to its chief operating decision maker. 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 of spinal implants. The Company reports revenue in two product categories: orthobiologics and spinal implants. 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 implants 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, 2017 2016 2015 (In thousands) Orthobiologics $ 69,128 $ 66,240 $ 67,258 Spinal implants 62,686 62,620 65,920 Total Revenue, net $ 131,814 $ 128,860 $ 133,178 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, 2017 2016 2015 (In thousands) United States $ 118,405 $ 116,800 $ 120,259 International 13,409 12,060 12,919 Total Revenue, net $ 131,814 $ 128,860 $ 133,178 |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [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 $0.6 million , $0.6 million and $0.5 million for the years ended 2017, 2016 and 2015, respectively. |
SELECTED QUARTERLY INFORMATION
SELECTED QUARTERLY INFORMATION - UNAUDITED | 12 Months Ended |
Dec. 31, 2017 | |
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: 2017 $ 31,894 $ 34,196 $ 31,742 $ 33,982 2016 31,399 33,201 31,741 32,519 Gross profit: 2017 $ 18,722 $ 20,202 $ 19,566 $ 21,498 2016 17,116 19,271 17,860 19,069 Net loss: 2017 $ (9,103 ) $ (8,043 ) $ (7,462 ) $ (7,507 ) 2016 (12,007 ) (11,983 ) (9,454 ) (9,768 ) Basic/diluted net loss per common share (1) : 2017 $ (0.79 ) $ (0.68 ) $ (0.58 ) $ (0.56 ) 2016 (1.08 ) (1.07 ) (0.84 ) (0.87 ) (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 canceled shares of its common stock during the year. |
SUBSEQUENT EVENT (Notes)
SUBSEQUENT EVENT (Notes) | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENT In February 2018, the Company's board of directors approved a second amendment to the 2015 Plan, pursuant to which the share reserve was increased by 350,000 shares over the current share reserve under the 2015 Plan. Such amendment is subject to the Company obtaining the requisite stockholder approval. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II - 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, 2017: Allowance for doubtful accounts and sales returns and other credits $ 483 $ 47 $ — $ (64 ) $ 466 Deferred tax asset valuation allowance 61,118 (13,685 ) — — 47,433 Year ended December 31, 2016: Allowance for doubtful accounts and sales returns and other credits $ 764 $ (207 ) $ — $ (74 ) $ 483 Deferred tax asset valuation allowance 46,638 14,480 — — 61,118 Year ended December 31, 2015: Allowance for doubtful accounts and sales returns and other credits $ 558 $ 55 $ — $ 151 $ 764 Deferred tax asset valuation allowance 83,457 (36,819 ) — — 46,638 |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP 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 other credits, net realizable value of inventories, discount rates and estimated projected cash flows used to value and test impairments of identifiable intangible and long-lived assets, depreciation and amortization periods for identifiable intangible and long-lived assets, assumptions related to the timing and probability of product launch dates, discount rates matched to the estimated timing of payments, probability of success rates, and estimated net sales for contingent considerations in business combinations, 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 money market accounts. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash, cash equivalents, receivables, accounts payable, accrued expenses, and short-term debt at December 31, 2017 and 2016, 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 long-term debt outstanding at December 31, 2016 pursuant to the Company’s credit facility with Wells Fargo Bank, National Association approximated fair value as interest rates on this instrument approximated the borrowing rates currently available for debt with similar terms and maturities. This fair value measurement is categorized within Level 2 of the fair value hierarchy. The carrying amounts of contingent consideration liabilities at December 31, 2017 and 2016 pursuant to the business combinations (see Note 6- Business Combinations ) are measured at fair value on a recurring basis, and are classified within Level 3 of the fair value hierarchy because they use significant unobservable inputs. |
Trade Accounts Receivable and Allowances | Trade Accounts Receivable and Allowances Trade accounts receivable in the accompanying consolidated balance sheets are presented net of allowances for doubtful accounts and sales returns and other credits.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 the Company's 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, 2017 or 2016. |
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 spinal 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 spinal instruments and 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. |
Business Combinations | Business Combinations The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of the acquisition. Any purchase price in excess of these net assets is recorded as goodwill, and any fair value of these net assets, excluding goodwill, in excess of the purchase price is recorded as a bargain purchase gain. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. Contingent consideration liability is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent consideration liability are recognized in the statement of operations. Contingent consideration liability related to acquisitions consist of commercial milestone payments and contingent royalty payments, and are valued using discounted cash flow techniques. The fair value of commercial milestone payments and contingent royalty payments reflects management’s expectations of probability and amount of payment, and increases or decreases as the probability and amount of payment or expectation of timing of payment changes. |
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. |
Impairment of Long-Lived Assets | Impairment of 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. The Company recognizes tax benefits in its financial statements when its uncertain tax positions are more likely than not to be sustained upon audit. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company recognizes 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 Net sales are derived primarily from the sale of orthobiologics and spinal implant products globally. Sales are reported net of returns, rebates, group purchasing organization fees and other customer allowances. Allowances and estimates of returns and other credits are recorded in the sales returns reserve. 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, the Company generates most of its revenue by consigning its orthobiologics products and by consigning or loaning its spinal implant sets to hospitals and independent sales agents, who in turn either deliver them to hospitals for a single surgical procedure, after which they are returned to the Company, or leave them with hospitals that are high volume users for multiple procedures. The spinal implant sets typically contain the instruments, disposables, and spinal implants required to complete a surgery. The Company ships replacement inventory to independent sales agents to replace the consigned inventory used in surgeries. The Company maintains and replenishes loaned sets at its facility and returns them to a hospital or independent sales agent for the next procedure. The Company recognizes revenue on these consigned or loaned products when they have been used or implanted in a surgical procedure. For all other sales transactions, including sales to international stocking distributors and private label partners, the Company recognizes revenue when the products are shipped to the customer or stocking distributors and the transfer of title and risk of loss occurs. There is generally no customer acceptance or other condition that prevents the Company from recognizing revenue in accordance with the delivery terms for these sales transactions. Product royalties account for less than 1% of total revenue for any of the periods presented, and 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 material. |
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. Shipping and handling costs of $1.6 million , $1.6 million , and $1.2 million for product shipments for loaning of spinal implants and instrumentation sets and costs incurred for internal movement of inventory were recorded in selling, general and administrative expense during the years ended December 31, 2017, 2016 and 2015, respectively. |
Research and Development | Research and Development Research and development costs, including salaries, stock-based compensation, 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 | 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. 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 was based on the fair value on the grant date using the Black-Scholes-Merton option pricing model. The fair value of restricted stock granted prior to the spin-off was based on the Integra’s stock price at the grant date, and the fair value of restricted stock granted after the spin-off was based on the Company's stock price at the grant date. 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 $6.1 million in 2017, $6.4 million in 2016 and $4.4 million in 2015. |
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 stocking 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 net sales or accounts receivable for any of the periods presented. |
Recently Issued and Adopted Accounting Standards | Recent Accounting Standards Not Yet Adopted The Company qualifies as an “emerging growth company” (EGC) pursuant to the provisions of the Jumpstart Our Business Startups (JOBS) Act and elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, which permits EGCs to defer compliance with new or revised accounting standards (the EGC extension) until non-issuers are required to comply with such standards. Accordingly, so long as the Company continues to qualify as an EGC, the Company will not have to adopt or comply with new or revised accounting standards until non-issuers are required to adopt or comply with such standards. In May 2014, the Financial Accounting Standards Board (FASB) issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The new standard provides a five-step approach to be applied to all contracts with customers. The new standard also requires expanded disclosure about revenue recognition. The new standard as amended by ASU 2015-14, ASU 2016-10 and ASU 2016-12, will be effective for the Company beginning on January 1, 2019, and for interim periods within annual periods beginning on January 1, 2020. The Company performed a preliminary assessment of the impact of this new standard on its consolidated financial statements. In assessing the impact, the Company has outlined all revenue streams, and has considered the five steps outlined in the standard for product sales, from which substantially all the Company's revenue is generated. The Company plans to adopt the new standard using the modified retrospective method. The Company will continue to evaluate the future impact of the new standard. In February 2016, the FASB issued Update No. 2016-02, Leases (Topic 842) . The new standard requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than twelve months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new standard must be adopted using the modified retrospective approach. The standard will be effective for the Company beginning on January 1, 2020, and interim periods within annual periods beginning on January 1, 2021, with early adoption permitted. The Company does not plan to early adopt and expects to apply the transition practical expedients allowed by the standard. Note 9 to the Consolidated Financial Statements provides details on the Company’s current lease arrangements. While the Company continues to evaluate the impact of this new standard on its consolidated financial statements, the Company currently expects the primary impact will be to record right-of-use assets and lease liabilities for existing operating leases in the consolidated balance sheets. The Company does not currently expect the adoption of this new standard to have a material impact on its consolidated results of operations or cash flows. In August 2016, the FASB issued Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard addresses eight specific cash flow issues related to cash receipts and cash payments with the objective of reducing the existing diversity of presentation and classification in the statement of cash flows. The new standard will be effective for the Company beginning on January 1, 2019, and interim periods within annual periods beginning on January 1, 2020. Early adoption is permitted and should be applied using a retrospective transition method to each period presented. The Company is in the process of evaluating the impact of this standard on its consolidated financial statements. In May 2017, the FASB issued Update No. 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting. The new standard provides guidance regarding which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The new standard will be effective for the Company beginning on January 1, 2018, and interim periods within annual periods beginning on January 1, 2018. The new standard should be applied prospectively to an award modified on or after the adoption date. The Company is in the process of evaluating the impact of this standard on its consolidated financial statements. Recently Adopted Accounting Standards In July 2015, the FASB issued Update No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) . 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 price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance was effective for the Company beginning on January 1, 2017, and interim periods within annual periods beginning on January 1, 2018. Adoption of this new guidance has had no impact on the Company’s consolidated financial statements. |
Net Loss Per Share | 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. 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, any assumed issuance of common stock under restricted stock awards and units, and any assumed issuances under the Company's 2015 Employee Stock Purchase Plan, as the effect, in each case, would be antidilutive. Common stock equivalents of 3.3 million, 3.1 million and 2.0 million shares for the years ended December 31, 2017, 2016 and 2015, respectively, were excluded from the calculation because of their antidilutive effect. |
TRANSACTIONS WITH INTEGRA (Tabl
TRANSACTIONS WITH INTEGRA (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | 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. There were no allocated costs for each of the years ended December 31, 2017 and 2016. Year Ended December 31, 2015 (In thousands) Cost of goods sold $ 488 Selling, general and administrative 8,633 Research and development 253 Total Allocated Costs $ 9,374 The following table summarizes the components of the net decrease in Integra net investment for the year ended December 31, 2015. The Integra net investment was reclassified to Additional Paid-in Capital in connection with the spin-off. Year Ended December 31, 2015 (In thousands) Cash pooling and general financing activities (a) $ 68,386 Corporate Allocations (excluding non-cash adjustments) 8,787 Total Integra net investment in financing activities within cash flow statement 77,173 Non-cash adjustments (b) 29,806 Spin-off related adjustment (c) 161 Reclassification of Integra net investment in connection with the spin-off (170,241 ) Foreign exchange impact 293 Net decrease in Integra investment $ (62,808 ) (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) 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 on July 1, 2015, which was the date when SeaSpine became a separate, independent, publicly-traded company. |
BALANCE SHEET DETAILS (Tables)
BALANCE SHEET DETAILS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Inventory, Net | Inventories consisted of the following: December 31, 2017 December 31, 2016 (In thousands) Finished goods $ 31,008 $ 30,922 Work in process 6,909 10,554 Raw materials 3,804 3,823 $ 41,721 $ 45,299 |
Schedule of Property, Plant and Equipment | Property, plant and equipment, net and corresponding useful lives were as follows: December 31, 2017 December 31, 2016 Useful Lives (In thousands) Leasehold improvement $ 5,312 $ 5,003 Lease term Machinery and production equipment 7,030 6,826 3-10 years Spinal instruments and sets 20,340 26,618 5 years Information systems and hardware 7,375 6,918 3-7 years Furniture and fixtures 991 1,058 3-5 years Construction in progress 8,136 7,828 Total 49,184 54,251 Less accumulated depreciation and amortization (27,121 ) (32,388 ) Property, plant and equipment, net $ 22,063 $ 21,863 |
Schedule of Components of Identifiable Intangible Assets | The components of the Company’s identifiable intangible assets were as follows: December 31, 2017 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Product technology 12 years $ 40,769 $ (25,827 ) $ 14,942 Customer relationships 12 years 56,830 (36,565 ) 20,265 Trademarks/brand names — 300 (300 ) — $ 97,899 $ (62,692 ) $ 35,207 December 31, 2016 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Product technology 12 years $ 40,569 $ (22,218 ) $ 18,351 Customer relationships 12 years 56,830 (33,396 ) 23,434 Trademarks/brand names — 300 (300 ) — $ 97,699 $ (55,914 ) $ 41,785 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following table summarizes the estimated fair value of total consideration to be paid to NLT as of September 26, 2016, the date of the initial closing. The Company estimated the fair value of the contingent consideration, including contingent milestone payments and contingent royalty payments, using a probability weighted approach that considers the possible outcomes based on assumptions related to the timing and probability of the product launch dates, discount rates matched to the timing of payments, and probability of success rates and discount adjustments on the related cash flows. Subsequent to the acquisition date, at each reporting period, the contingent consideration liabilities will be remeasured at current fair value with changes to be recorded in the consolidated statements of operations. The total purchase price was allocated entirely to product technology intangible asset. (In thousands) Cash paid for purchase $ 1,000 Contingent closing consideration 2,930 Contingent milestone payments 2,310 Contingent royalty payments 3,010 Total purchase price $ 9,250 |
Business Acquisition, Pro Forma Information | The actual amortization charges for acquired intangible assets and research and development expenses for the purchased assets are included in the consolidated statement of operations for the year ended December 31, 2017, and therefore no adjustment was made to such statement. Year Ended December 31, 2016 2015 (In thousands, except per share data) Operating loss $ (45,063 ) $ (54,196 ) Net loss (44,775 ) (57,552 ) Net loss per share, basic and diluted $ (3.99 ) $ (5.17 ) Weighted average shares used to compute basic and diluted net loss per share 11,222 11,139 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | ||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The fair values of the Company’s assets and liabilities, including contingent consideration liabilities, are measured at fair value on a recurring basis, and are determined under the fair value categories as follows (in thousands): Total Quoted Price in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2017: Contingent consideration liabilities- current $ 207 $ — $ — $ 207 Contingent consideration liabilities- non-current 4,228 — — 4,228 Total contingent consideration $ 4,435 $ — $ — $ 4,435 | Total Quoted Price in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2016: Contingent consideration liabilities- current $ 2,855 $ — $ — $ 2,855 Contingent consideration liabilities- non-current 5,125 — — 5,125 Total contingent consideration $ 7,980 $ — $ — $ 7,980 |
Schedule of Liabilities Measured on Recurring Basis, Unobservable Inputs | A change in estimated timing of payments, probability of success rates, or estimated net sales for future royalty payment periods would be expected to have a material impact on the fair value of contingent milestone and royalty payments. Year Ended December 31, 2017 2016 (in thousands) Beginning Balance as of January 1 $ 7,980 $ — Contingent consideration liabilities assumed (settled) (2,570 ) 8,250 Gain from change in fair value of contingent closing consideration recorded in other income (112 ) (270 ) Gain from change in fair value of contingent milestone and royalty payments recorded in selling, general and administrative expenses (863 ) — Ending Balance as of December 31 $ 4,435 $ 7,980 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock-Based Compensation Expense | Stock-based compensation expense, all related to employees and non-employee directors, was recognized as follows: December 31 2017 2016 2015 (In Thousands) Selling, general and administrative $ 5,136 $ 5,378 $ 3,993 Research and development 790 783 242 Cost of goods sold 141 277 168 Total stock-based compensation expense 6,067 6,438 4,403 Total estimated tax benefit related to stock-based compensation expense — — 37 Net effect on net income $ 6,067 $ 6,438 $ 4,366 |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The following table summarizes restricted stock awards and restricted stock units granted to SeaSpine employees and non-employee directors during the year ended December 31, 2017 : Restricted Stock Awards and Units Shares (In thousands) Weighted Average Grant Date Fair Value Per Share Unvested, January 1, 2017 65 $9.87 Granted 927 7.89 Cancellations (14) 7.97 Released/Vested (253) 8.57 Unvested, December 31, 2017 725 $7.82 |
Schedule of Valuation Assumptions for Stock Options | The following weighted-average assumptions were used in the calculation of fair value for options grants for the years ended December 31, 2017, 2016 and 2015: December 31 2017 2016 2015 Expected dividend yield 0 % 0 % 0 % Risk-free interest rate 2.0 % 1.3 % 1.6 % Expected volatility 35.7 % 38.2 % 38.2 % Expected term (in years) 5.1 4.9 5.1 |
Schedule of Stock Option Activity | A summary of the options granted during the year ended December 31, 2017 and the total number of options outstanding as of that date and changes since January 1, 2017 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, 2017 2,732 $ 14.43 6.71 $ 37 Granted 22 $ 7.56 — — Exercised (5 ) $ 6.92 — — Forfeited (187 ) $ 12.68 — — Outstanding, December 31, 2017 2,560 $ 14.51 5.96 $ 238 Vested or expected to vest, December 31, 2017 2,525 $ 14.54 5.96 $ 217 Exercisable, December 31, 2017 1,744 $ 14.55 5.98 $ 136 |
Schedule of Valuation Assumptions for ESPP | The following weighted average assumptions were used in the calculation of fair value of shares under the ESPP at the grant date for the years ended December 31, 2017 and 2016, respectively: December 31 2017 2016 Expected dividend yield 0 % 0 % Risk-free interest rate 1.0 % 0.6 % Expected volatility 28.1 % 30.5 % Expected term (in years) 1.2 1.2 |
LEASE (Tables)
LEASE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments under the Company's operating leases at December 31, 2017 are as follows: Payments Due by Calendar Year (In thousands) 2018 $ 2,083 2019 2,130 2020 2,187 2021 2,221 2022 2,242 Thereafter 6,236 Total minimum lease payments $ 17,099 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | before income taxes consisted of the following: Year Ended December 31, 2017 2016 2015 (In thousands) United States operations $ (34,886 ) $ (44,072 ) $ (51,305 ) Foreign operations 2,653 308 (1,748 ) $ (32,233 ) $ (43,764 ) $ (53,053 ) |
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, 2017 2016 2015 Federal statutory rate 35.0% 35.0% 35.0% Increase (decrease) in income taxes resulting from: State income taxes, net of federal tax benefit 4.1% 2.1% 0.1% Foreign operations (0.2)% (3.2)% (0.7)% Changes in valuation allowances 43.2% (33.1)% (16.7)% Pre-Spin losses with no tax benefit —% —% (22.7)% Uncertain tax positions 0.3% 0.2% —% Research and development credit 0.2% 0.2% —% Return to provision —% 0.9% —% Domestic manufacturing deduction —% —% 0.5% Other 0.8% (0.8)% (0.2)% Change in rate resulting from the 2017 Tax Act (83.0)% —% —% Effective tax rate 0.4% 1.3% (4.7)% |
Schedule of Components of Income Tax Expense (Benefit) | The provision/(benefit) for income taxes consisted of the following: Year Ended December 31, 2017 2016 2015 (In thousands) Current: Federal $ (102 ) $ (532 ) $ 2,655 State 20 (51 ) 106 Foreign 42 41 — Total current $ (40 ) $ (542 ) $ 2,761 Deferred: Federal — — — State — — — Foreign (78 ) (10 ) (282 ) Total deferred $ (78 ) $ (10 ) $ (282 ) Provision (benefit) for income taxes $ (118 ) $ (552 ) $ 2,479 |
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, 2017 2016 (In thousands) Deferred tax assets: Doubtful accounts $ 116 $ 184 Inventory related items 8,976 13,163 Tax credits 158 83 Accrued vacation 348 498 Accrued bonus 815 812 Stock compensation 3,129 3,329 Net operating loss carryforwards 22,175 19,955 Intangible and fixed assets 12,054 22,910 Other 686 923 Total deferred tax assets 48,457 61,857 Less valuation allowance (47,433 ) (61,118 ) Deferred tax assets after valuation allowance $ 1,024 $ 739 Deferred tax liabilities: Other 469 246 Total deferred tax liabilities $ 469 $ 246 Net deferred tax assets $ 555 $ 493 |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the Company’s uncertain tax benefits is as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Balance, beginning of year $ 305 $ 298 $ 113 Gross increases: Prior years’ tax positions 5 7 90 Additions to tax positions in prior years due to spin-off — — 185 Current year tax positions 74 107 — Gross decreases: Settlements — — — Statute of limitations lapses (107 ) (107 ) (90 ) Balance, end of year $ 277 $ 305 $ 298 |
SEGMENT AND GEOGRAPHIC INFORM32
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Segment | Revenue, net consisted of the following: Year Ended December 31, 2017 2016 2015 (In thousands) Orthobiologics $ 69,128 $ 66,240 $ 67,258 Spinal implants 62,686 62,620 65,920 Total Revenue, net $ 131,814 $ 128,860 $ 133,178 |
Total Revenue By Major Geographic Area | 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, 2017 2016 2015 (In thousands) United States $ 118,405 $ 116,800 $ 120,259 International 13,409 12,060 12,919 Total Revenue, net $ 131,814 $ 128,860 $ 133,178 |
SELECTED QUARTERLY INFORMATIO33
SELECTED QUARTERLY INFORMATION - UNAUDITED (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share data) Total revenue, net: 2017 $ 31,894 $ 34,196 $ 31,742 $ 33,982 2016 31,399 33,201 31,741 32,519 Gross profit: 2017 $ 18,722 $ 20,202 $ 19,566 $ 21,498 2016 17,116 19,271 17,860 19,069 Net loss: 2017 $ (9,103 ) $ (8,043 ) $ (7,462 ) $ (7,507 ) 2016 (12,007 ) (11,983 ) (9,454 ) (9,768 ) Basic/diluted net loss per common share (1) : 2017 $ (0.79 ) $ (0.68 ) $ (0.58 ) $ (0.56 ) 2016 (1.08 ) (1.07 ) (0.84 ) (0.87 ) (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 canceled shares of its common stock during the year. |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Narrative (Details) - USD ($) shares in Thousands, $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | |||||
Product royalties as a percent of total revenue, less than (as a percent) | 1.00% | 1.00% | 1.00% | ||
Shipping and handling costs | $ 1,600 | $ 1,600 | $ 1,200 | ||
Stock-based compensation expense | $ 6,067 | $ 6,438 | $ 4,403 | ||
Weighted average shares used to compute basic and diluted net loss per share | 11,000 | 12,426 | 11,222 | ||
Antidilutive dilutive securities (in shares) | 3,300 | 3,100 | 2,000 |
TRANSACTIONS WITH INTEGRA Narra
TRANSACTIONS WITH INTEGRA Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Purchases | $ (1,206) | $ (1,404) | $ 8,365 |
Related party costs incurred during the period | 300 | 2,800 | |
Stock-based compensation | 6,067 | 6,438 | 3,816 |
Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Purchases | 600 | 1,100 | 6,200 |
Sale of finished goods | $ 400 | $ 200 | |
Stock-based compensation | $ 600 |
TRANSACTIONS WITH INTEGRA Alloc
TRANSACTIONS WITH INTEGRA Allocated Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Cost of goods sold | $ 51,826 | $ 55,544 | $ 61,119 |
Selling, general and administrative | 97,303 | 101,065 | 110,551 |
Research and development | $ 12,180 | $ 11,442 | 8,353 |
Integra | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Cost of goods sold | 488 | ||
Selling, general and administrative | 8,633 | ||
Research and development | 253 | ||
Total Allocated Costs | $ 9,374 |
TRANSACTIONS WITH INTEGRA Integ
TRANSACTIONS WITH INTEGRA Integra Net Investment (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Related Party Transaction [Line Items] | |
Net decrease in Integra investment | $ 0 |
Integra | Affiliated Entity | |
Related Party Transaction [Line Items] | |
Net decrease in Integra investment | (62,808) |
Cash pooling and general financing activities | Integra | Affiliated Entity | |
Related Party Transaction [Line Items] | |
Net decrease in Integra investment | 68,386 |
Corporate Allocations (excluding non-cash adjustments) | Integra | Affiliated Entity | |
Related Party Transaction [Line Items] | |
Net decrease in Integra investment | 8,787 |
Total Integra net investment in financing activities within cash flow statement | Integra | Affiliated Entity | |
Related Party Transaction [Line Items] | |
Net decrease in Integra investment | 77,173 |
Non-cash adjustments | Integra | Affiliated Entity | |
Related Party Transaction [Line Items] | |
Net decrease in Integra investment | 29,806 |
Spin-off related adjustment | Integra | Affiliated Entity | |
Related Party Transaction [Line Items] | |
Net decrease in Integra investment | 161 |
Reclassification of Integra net investment in connection with the spin-off | Integra | Affiliated Entity | |
Related Party Transaction [Line Items] | |
Net decrease in Integra investment | (170,241) |
Foreign exchange impact | Integra | Affiliated Entity | |
Related Party Transaction [Line Items] | |
Net decrease in Integra investment | $ 293 |
DEBT AND INTEREST Credit Agreem
DEBT AND INTEREST Credit Agreement (Details) | Dec. 24, 2015USD ($)extension | Sep. 30, 2016USD ($) | Jul. 31, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Line of Credit Facility [Line Items] | ||||||
Line of credit borrowings | $ 0 | $ 3,300,000 | $ 0 | |||
Repayment of Long-Term Debt and Accrued Interest | 4,100,000 | |||||
Remaining borrowing capacity | 20,500,000 | |||||
Short-term debt, amount outstanding during period | $ 1,200,000 | |||||
Short-term debt | $ 0 | 445,000 | ||||
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 | Minimum | ||||||
Line of Credit Facility [Line Items] | ||||||
Average excess availability | 10,000,000 | |||||
Credit Agreement | Maximum | ||||||
Line of Credit Facility [Line Items] | ||||||
Average excess availability | $ 20,000,000 | |||||
Credit Agreement | Revolving Credit Facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Borrowing capacity | $ 30,000,000 | |||||
Line of credit borrowings | $ 3,300,000 | |||||
Long-term Line of Credit | $ 3,800,000 | |||||
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% | |||||
Short-term Debt | Minimum | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, interest rate, stated percentage | 2.00% | |||||
Short-term Debt | Maximum | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, interest rate, stated percentage | 4.00% |
BALANCE SHEET DETAILS Schedule
BALANCE SHEET DETAILS Schedule of Inventories, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Balance Sheet Related Disclosures [Abstract] | ||
Finished goods | $ 31,008 | $ 30,922 |
Work in process | 6,909 | 10,554 |
Raw materials | 3,804 | 3,823 |
Inventories, net | $ 41,721 | $ 45,299 |
BALANCE SHEET DETAILS Property,
BALANCE SHEET DETAILS Property, Plant and Equipment Balances (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Total | $ 49,184 | $ 54,251 |
Less accumulated depreciation and amortization | (27,121) | (32,388) |
Property, plant and equipment, net | 22,063 | 21,863 |
Leasehold improvement | ||
Property, Plant and Equipment [Line Items] | ||
Total | 5,312 | 5,003 |
Machinery and production equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 7,030 | 6,826 |
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) | 10 years | |
Spinal instruments and sets | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 20,340 | 26,618 |
Useful Lives (in years) | 5 years | |
Information systems and hardware | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 7,375 | 6,918 |
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 | $ 991 | 1,058 |
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) | 5 years | |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 8,136 | $ 7,828 |
BALANCE SHEET DETAILS Propert41
BALANCE SHEET DETAILS Property, Plant and Equipment Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 4,100 | $ 4,500 | $ 4,500 |
Instrument replacement expense | 1,848 | 1,389 | 1,228 |
Impairment of spinal instruments | 0 | 919 | 175 |
Cost of goods sold | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 800 | $ 1,200 | $ 300 |
BALANCE SHEET DETAILS Component
BALANCE SHEET DETAILS Components of Company's Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 97,899 | $ 97,699 |
Accumulated Amortization | (62,692) | (55,914) |
Net | $ 35,207 | $ 41,785 |
Product technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Life (in years) | 12 years | 12 years |
Cost | $ 40,769 | $ 40,569 |
Accumulated Amortization | (25,827) | (22,218) |
Net | $ 14,942 | $ 18,351 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Life (in years) | 12 years | 12 years |
Cost | $ 56,830 | $ 56,830 |
Accumulated Amortization | (36,565) | (33,396) |
Net | 20,265 | 23,434 |
Trademarks/brand names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 300 | 300 |
Accumulated Amortization | (300) | (300) |
Net | $ 0 | $ 0 |
BALANCE SHEET DETAILS Identifia
BALANCE SHEET DETAILS Identifiable Intangible Assets Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||
Annual amortization expense expected to approximate in 2017 | $ 6.5 | ||
Annual amortization expense expected to approximate in 2018 | 5.8 | ||
Annual amortization expense expected to approximate in 2019 | 4.9 | ||
Annual amortization expense expected to approximate in 2020 | 4.9 | ||
Annual amortization expense expected to approximate in 2021 | 4.8 | ||
Intangible asset amortization | 6.8 | $ 7.2 | $ 8 |
Product technology | Cost of goods sold | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible asset amortization | $ 3.6 | $ 2.9 | $ 2.7 |
BUSINESS COMBINATIONS Narrative
BUSINESS COMBINATIONS Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 26, 2016 | Jan. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Business Acquisition, Contingent Consideration [Line Items] | |||||
Business combination, consideration transferred | $ 1,000 | ||||
Business combination, equity interest issued or issuable (in shares) | 350,000 | ||||
Business combination, equity interest issued or issuable, value assigned | $ 2,500 | ||||
Business combination, trading period for determination of volume weighted average closing price | 20 days | ||||
Volume Weighted Average Closing Price (in dollars per share) | $ 7.58 | ||||
Business combination, intangibles assets acquired | $ 9,300 | ||||
Acquired intangible assets useful life | 10 years | ||||
Intangible asset amortization | $ 6,800 | $ 7,200 | $ 8,000 | ||
Research and development | $ 12,180 | 11,442 | $ 8,353 | ||
Business acquisition, transaction costs | $ 500 | ||||
Minimum | |||||
Business Acquisition, Contingent Consideration [Line Items] | |||||
Volume Weighted Average Closing Price (in dollars per share) | 10 | ||||
Maximum | |||||
Business Acquisition, Contingent Consideration [Line Items] | |||||
Volume Weighted Average Closing Price (in dollars per share) | $ 17 | ||||
Pro Forma | |||||
Business Acquisition, Contingent Consideration [Line Items] | |||||
Intangible asset amortization | 900 | ||||
Research and development | 1,100 | ||||
Business acquisition, transaction costs | $ 500 | ||||
Contingent milestone payments | |||||
Business Acquisition, Contingent Consideration [Line Items] | |||||
Business combination, contingent consideration arrangements, range of outcomes, value, high | 5,000 | ||||
Contingent asset purchase payments | |||||
Business Acquisition, Contingent Consideration [Line Items] | |||||
Business combination, contingent consideration arrangements, range of outcomes, value, high | 43,000 | ||||
Business combination, contingent consideration arrangements, range of outcomes, value, low | $ 18,000 |
BUSINESS COMBINATIONS Prelimina
BUSINESS COMBINATIONS Preliminary Estimated Fair Values of NLTs Assets Acquired and Liabilities Assumed (Details) $ in Thousands | Sep. 26, 2016USD ($) |
Business Acquisition [Line Items] | |
Business combination, consideration transferred | $ 1,000 |
Total purchase price | 9,250 |
Common stock | |
Business Acquisition [Line Items] | |
Contingent consideration liability | 2,930 |
Contingent milestone payments | |
Business Acquisition [Line Items] | |
Contingent consideration liability | 2,310 |
Contingent asset purchase payments | |
Business Acquisition [Line Items] | |
Contingent consideration liability | $ 3,010 |
BUSINESS COMBINATIONS Results o
BUSINESS COMBINATIONS Results of Operations and Financial Position of the NLT Purchased Assets (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating loss | $ (32,663) | $ (43,500) | $ (52,176) | |||||||||
Net loss | $ (7,507) | $ (7,462) | $ (8,043) | $ (9,103) | $ (9,768) | $ (9,454) | $ (11,983) | $ (12,007) | $ (32,115) | $ (43,212) | $ (55,532) | |
Net Loss per share, basic and diluted (in dollars per share) | $ (0.56) | $ (0.58) | $ (0.68) | $ (0.79) | $ (0.87) | $ (0.84) | $ (1.07) | $ (1.08) | $ (2.58) | $ (3.85) | $ (4.99) | |
Weighted average shares used to compute basic and diluted net loss per share | 11,000 | 12,426 | 11,222 | |||||||||
Pro Forma | ||||||||||||
Operating loss | $ (45,063) | $ (54,196) | ||||||||||
Net loss | $ (44,775) | $ (57,552) | ||||||||||
Net Loss per share, basic and diluted (in dollars per share) | $ (3.99) | $ (5.17) | ||||||||||
Weighted average shares used to compute basic and diluted net loss per share | 11,222 | 11,139 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value on Recurring Basis (Details) - Recurring - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liabilities- current | $ 207 | $ 2,855 | |
Contingent consideration liabilities- non-current | 4,228 | 5,125 | |
Total contingent consideration | 4,435 | 7,980 | |
Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liabilities- current | 0 | 0 | |
Contingent consideration liabilities- non-current | 0 | 0 | |
Total contingent consideration | 0 | 0 | |
Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liabilities- current | 0 | 0 | |
Contingent consideration liabilities- non-current | 0 | 0 | |
Total contingent consideration | 0 | 0 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liabilities- current | 207 | 2,855 | |
Contingent consideration liabilities- non-current | 4,228 | 5,125 | |
Total contingent consideration | $ 4,435 | $ 7,980 | $ 0 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in Contingent Consideration Liabilities (Details) - Recurring - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent Consideration Liability, Fair Value Disclosure | $ 4,435 | $ 7,980 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent Consideration Liability, Fair Value Disclosure | 4,435 | 7,980 | $ 0 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Settlements | (2,570) | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases | 8,250 | ||
Other Income [Member] | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings | (112) | (270) | |
Selling, General and Administrative Expenses [Member] | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings | $ (863) | $ 0 |
STOCK-BASED COMPENSATION Common
STOCK-BASED COMPENSATION Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 2 Months Ended | 12 Months Ended | ||
Jan. 31, 2017 | Feb. 14, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 350,000 | ||||
Business combination, equity interest issued or issuable, value assigned | $ 2,500 | ||||
Proceeds from the issuance of common stock- employee stock purchase plan and exercise of options | $ 15,557 | $ 0 | $ 0 | ||
ATM offering [Member] | |||||
Stock Issued During Period, Shares, New Issues | 1,500,000 | ||||
Shares Issued, Price Per Share | $ 10.78 | ||||
Proceeds from the issuance of common stock- employee stock purchase plan and exercise of options | $ 15,600 | ||||
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | 600 | ||||
Maximum [Member] | ATM offering [Member] | |||||
CommonStockSharesToBeIssuedValue | $ 25,000 | ||||
Subsequent Event | ATM offering [Member] | |||||
Stock Issued During Period, Shares, New Issues | 882,332 | ||||
Shares Issued, Price Per Share | $ 10 | ||||
Proceeds from the issuance of common stock- employee stock purchase plan and exercise of options | $ 8,600 | ||||
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | $ 200 |
STOCK-BASED COMPENSATION Stock-
STOCK-BASED COMPENSATION Stock-Based Compensation Expense Breakout (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | $ 6,067 | $ 6,438 | $ 4,403 |
Total estimated tax benefit related to stock-based compensation expense | 0 | 0 | 37 |
Net effect on net income | 6,067 | 6,438 | 4,366 |
Selling, general and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 5,136 | 5,378 | 3,993 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 790 | 783 | 242 |
Cost of goods sold | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | $ 141 | $ 277 | $ 168 |
STOCK-BASED COMPENSATION Equity
STOCK-BASED COMPENSATION Equity Award Plans (Details) | Dec. 31, 2017shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares available for grant (in shares) | 346,604 |
Number of shares authorized (in share) | 3,786,643 |
2016 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares authorized (in share) | 1,000,000 |
STOCK-BASED COMPENSATION Restri
STOCK-BASED COMPENSATION Restricted Stock Awards and Restricted Stock Units Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Forfeiture rate (as a percent) | 15.00% | 12.00% | 10.00% |
Stock-based compensation | $ 6,067 | $ 6,438 | $ 3,816 |
Restricted Stock and Restricted Stock Unit | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 7.89 | $ 9.89 | $ 12.81 |
Fair market value of shares vested | $ 2,200 | $ 700 | $ 1,100 |
Stock-based compensation | 3,800 | $ 900 | $ 300 |
Unrecognized compensation expense | $ 2,300 | ||
Recognition period (in years) | 1 year 5 months |
STOCK-BASED COMPENSATION Rest53
STOCK-BASED COMPENSATION Restricted Stock Awards and Restricted Stock Units Activity (Details) - Restricted Stock and Restricted Stock Unit - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Shares (In thousands) | |||
Unvested at beginning of period (in shares) | 65 | ||
Granted (in shares) | 927 | ||
Cancellations (in shares) | (14) | ||
Released/Vested (in shares) | (253) | ||
Unvested at end of period (in shares) | 725 | 65 | |
Weighted Average Grant Date Fair Value Per Share | |||
Unvested at beginning of period (in dollars per share) | $ 9.87 | ||
Granted (in dollars per share) | 7.89 | $ 9.89 | $ 12.81 |
Cancellations (in dollars per share) | 7.97 | ||
Released/Vested (in dollars per share) | 8.57 | ||
Unvested at end of period (in dollars per share) | $ 7.82 | $ 9.87 |
STOCK-BASED COMPENSATION Stock
STOCK-BASED COMPENSATION Stock Options Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Forfeiture rate (as a percent) | 15.00% | 12.00% | 10.00% |
Stock-based compensation | $ 6,067 | $ 6,438 | $ 3,816 |
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average grant date fair value (in dollars per share) | $ 2.63 | $ 3 | $ 5.57 |
Fair value of options vested | $ 2,200 | $ 4,800 | $ 700 |
Stock-based compensation | 1,700 | $ 5,000 | $ 4,400 |
Unrecognized compensation cost | $ 900 | ||
Recognition period (in years) | 1 year | ||
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 Stoc55
STOCK-BASED COMPENSATION Stock Options Weighted-Average Assumptions (Details) - Employee Stock Option | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Risk-free interest rate (as a percent) | 2.00% | 1.27% | 1.55% |
Expected volatility (as a percent) | 35.70% | 38.20% | 38.17% |
Expected term (in years) | 5 years 1 month | 4 years 11 months | 5 years 1 month |
STOCK-BASED COMPENSATION Stoc56
STOCK-BASED COMPENSATION Stock Options Activity (Details) - Employee Stock Option - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Shares Outstanding (In thousands) | ||
Outstanding at beginning of period (in shares) | 2,732 | |
Granted (in shares) | 22 | |
Exercised (in shares) | (5) | |
Forfeited (in shares) | (187) | |
Outstanding at end of period (in shares) | 2,560 | 2,732 |
Weighted Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 14.43 | |
Granted (in dollars per share) | 7.56 | |
Exercised (in dollars per share) | 6.92 | |
Forfeited (in dollars per share) | 12.68 | |
Outstanding at end of period (in dollars per share) | $ 14.51 | $ 14.43 |
Vested or expected to vest | ||
Number of Shares Outstanding (In thousands) (in shares) | 2,525 | |
Weighted Average Exercise Price (in dollars per share) | $ 14.54 | |
Weighted Average Remaining Contractual Life (In years) | 5 years 11 months 16 days | |
Aggregate Intrinsic Value (In thousands) | $ 217 | |
Additional Information | ||
Outstanding, Weighted Average Remaining Contractual Life (In years) | 5 years 11 months 16 days | 6 years 8 months 16 days |
Outstanding, Aggregate Intrinsic Value (In thousands) | $ 238 | $ 37 |
Exercisable, Number of Shares Outstanding (In thousands) (in shares) | 1,744 | |
Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 14.55 | |
Exercisable, Weighted Average Remaining Contractual Life (In years) | 5 years 11 months 22 days | |
Exercisable, Aggregate Intrinsic Value (In thousands) | $ 136 |
STOCK-BASED COMPENSATION Employ
STOCK-BASED COMPENSATION Employee Stock Purchase Plan Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized (in share) | 3,786,643 | ||
Compensation expense | $ 6,067,000 | $ 6,438,000 | $ 3,816,000 |
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | $ 600,000 | $ 500,000 | |
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 (in share) | 400,000 | ||
Number of shares purchased | 150,020 | 89,857 |
STOCK-BASED COMPENSATION Empl58
STOCK-BASED COMPENSATION Employee Stock Purchase Plan Weighted-Average Assumptions (Details) - Employee Stock Purchase Plan | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend yield (as a percent) | 0.00% | 0.00% |
Risk-free interest rate (as a percent) | 1.00% | 0.60% |
Expected volatility (as a percent) | 28.10% | 30.50% |
Expected term (in years) | 1 year 2 months | 1 year 2 months |
LEASE Operating lease annual pa
LEASE Operating lease annual payment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Leased Assets [Line Items] | |||
Operating Leases, Rent Expense | $ 2,200 | $ 3,100 | $ 2,500 |
2,018 | 2,083 | ||
2,019 | 2,130 | ||
2,020 | 2,187 | ||
2,021 | 2,221 | ||
2,022 | 2,242 | ||
Thereafter | 6,236 | ||
Total minimum lease payments | 17,099 | ||
Property Subject to Operating Lease [Member] | |||
Operating Leased Assets [Line Items] | |||
Payments for Rent | $ 100 |
INCOME TAXES Narrative (Details
INCOME TAXES Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Operating Loss Carryforwards [Line Items] | ||
Deferred Tax Assets, Prior to Tax Cuts and Jobs Act, Net | $ 74,100 | |
Deferred Tax Assets, Net | 47,988 | |
Tax benefit | $ 100 | |
Unrecognized tax benefits that would impact effective tax rate | 300 | |
Amounts expected to be reduced | 100 | |
Internal Revenue Service (IRS) And State and Local Jurisdiction | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 88,300 | 51,400 |
Foreign Tax Authority | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 2,700 | $ 3,000 |
INCOME TAXES Loss before income
INCOME TAXES Loss before income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
United States operations | $ (34,886) | $ (44,072) | $ (51,305) |
Foreign operations | 2,653 | 308 | (1,748) |
Loss before income taxes | $ (32,233) | $ (43,764) | $ (53,053) |
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, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory rate | 35.00% | 35.00% | 35.00% |
Increase (decrease) in income taxes resulting from: | |||
State income taxes, net of federal tax benefit | 4.10% | 2.10% | 0.10% |
Foreign operations | (0.20%) | (3.20%) | (0.70%) |
Changes in valuation allowances | 43.20% | (33.10%) | (16.70%) |
Pre-Spin losses with no tax benefit | 0.00% | 0.00% | (22.70%) |
Uncertain tax positions | 0.30% | 0.20% | 0.00% |
Research and development credit | 0.20% | 0.20% | (0.00%) |
Return to provision | 0.00% | 0.90% | 0.00% |
Domestic manufacturing deduction | 0.00% | 0.00% | 0.50% |
Other | 0.80% | (0.80%) | (0.20%) |
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent | (83.00%) | 0.00% | 0.00% |
Effective tax rate | 0.40% | 1.30% | (4.70%) |
INCOME TAXES Provision for inco
INCOME TAXES Provision for income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Federal | $ (102) | $ (532) | $ 2,655 |
State | 20 | (51) | 106 |
Foreign | 42 | 41 | 0 |
Total current | (40) | (542) | 2,761 |
Deferred: | |||
Federal | 0 | 0 | 0 |
State | 0 | 0 | 0 |
Foreign | (78) | (10) | (282) |
Total deferred | (78) | (10) | (282) |
Provision (benefit) for income taxes | $ (118) | $ (552) | $ 2,479 |
INCOME TAXES Deferred tax asset
INCOME TAXES Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Doubtful accounts | $ 116 | $ 184 |
Inventory related items | 8,976 | 13,163 |
Tax credits | 158 | 83 |
Accrued vacation | 348 | 498 |
Accrued bonus | 815 | 812 |
Stock compensation | 3,129 | 3,329 |
Net operating loss carryforwards | 22,175 | 19,955 |
Intangible & fixed assets | 12,054 | 22,910 |
Other | 686 | 923 |
Total deferred tax assets | 48,457 | 61,857 |
Less valuation allowance | (47,433) | (61,118) |
Deferred tax assets after valuation allowance | 1,024 | 739 |
Deferred tax liabilities: | ||
Other | 469 | 246 |
Total deferred tax liabilities | 469 | 246 |
Deferred Tax Assets, Net of Valuation Allowance | $ 555 | $ 493 |
INCOME TAXES Uncertain tax bene
INCOME TAXES Uncertain tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance, beginning of year | $ 305 | $ 298 | $ 113 |
Prior years’ tax positions | 5 | 7 | 90 |
Additions to tax positions in prior years due to spin-off | 0 | 0 | 185 |
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions | 74 | 107 | 0 |
Settlements | 0 | 0 | 0 |
Statute of limitations lapses | (107) | (107) | (90) |
Balance, end of year | $ 277 | $ 305 | $ 298 |
SEGMENT AND GEOGRAPHIC INFORM66
SEGMENT AND GEOGRAPHIC INFORMATION Narrative (Details) | 12 Months Ended |
Dec. 31, 2017product | |
Segment Reporting [Abstract] | |
Number of product categories | 2 |
SEGMENT AND GEOGRAPHIC INFORM67
SEGMENT AND GEOGRAPHIC INFORMATION Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 131,814 | $ 128,860 | $ 133,178 |
United States | |||
Segment Reporting Information [Line Items] | |||
Revenues | 118,405 | 116,800 | 120,259 |
International | |||
Segment Reporting Information [Line Items] | |||
Revenues | 13,409 | 12,060 | 12,919 |
Orthobiologics | |||
Segment Reporting Information [Line Items] | |||
Revenues | 69,128 | 66,240 | 67,258 |
Spinal implants | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ 62,686 | $ 62,620 | $ 65,920 |
EMPLOYEE BENEFIT PLAN Narrative
EMPLOYEE BENEFIT PLAN Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Retirement Benefits [Abstract] | |||
Contributions | $ 0.6 | $ 0.6 | $ 0.5 |
SELECTED QUARTERLY INFORMATIO69
SELECTED QUARTERLY INFORMATION - UNAUDITED Financials (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenue, net | $ 33,982 | $ 31,742 | $ 34,196 | $ 31,894 | $ 32,519 | $ 31,741 | $ 33,201 | $ 31,399 | $ 131,814 | $ 128,860 | $ 133,178 |
Gross profit | 21,498 | 19,566 | 20,202 | 18,722 | 19,069 | 17,860 | 19,271 | 17,116 | 79,988 | 73,316 | 72,059 |
Net loss | $ (7,507) | $ (7,462) | $ (8,043) | $ (9,103) | $ (9,768) | $ (9,454) | $ (11,983) | $ (12,007) | $ (32,115) | $ (43,212) | $ (55,532) |
Net Loss per share, basic and diluted (in dollars per share) | $ (0.56) | $ (0.58) | $ (0.68) | $ (0.79) | $ (0.87) | $ (0.84) | $ (1.07) | $ (1.08) | $ (2.58) | $ (3.85) | $ (4.99) |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - shares | Feb. 01, 2018 | Dec. 31, 2017 |
Subsequent Event [Line Items] | ||
Number of shares authorized (in share) | 3,786,643 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Number of shares authorized (in share) | 350,000 | |
2016 Plan [Member] | ||
Subsequent Event [Line Items] | ||
Number of shares authorized (in share) | 1,000,000 |
SCHEDULE II - VALUATION AND Q71
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for doubtful accounts and sales returns and other credits | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ 483 | $ 764 | $ 558 |
Charged to Costs and Expenses | 47 | (207) | 55 |
Charged to Other Accounts | 0 | 0 | 0 |
Additions/Deductions | (64) | (74) | 151 |
Balance at End of Period | 466 | 483 | 764 |
Deferred tax asset valuation allowance | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 61,118 | 46,638 | 83,457 |
Charged to Costs and Expenses | (13,685) | 14,480 | (36,819) |
Charged to Other Accounts | 0 | 0 | 0 |
Additions/Deductions | 0 | 0 | 0 |
Balance at End of Period | $ 47,433 | $ 61,118 | $ 46,638 |