Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | SRGA | |
Entity Registrant Name | SURGALIGN HOLDINGS, INC. | |
Entity Central Index Key | 0001760173 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 81,396,449 | |
Entity File Number | 001-38832 | |
Entity Tax Identification Number | 83-2540607 | |
Entity Address, Address Line One | 520 Lake Cook Road | |
Entity Address, Address Line Two | Suite 315 | |
Entity Address, City or Town | Deerfield | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60015 | |
City Area Code | 224 | |
Local Phone Number | 303-4651 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Interactive Data Current | Yes | |
Security Exchange Name | NASDAQ | |
Title of 12(b) Security | common stock, $0.001 par value |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 95,790 | $ 5,608 |
Accounts receivable - less allowances of $6,638 at September 30, 2020 and $4,795 at December 31, 2019 | 24,485 | 23,216 |
Inventories - net | 28,195 | 24,574 |
Prepaid and other current assets | 4,278 | 4,034 |
Current assets of discontinued operations | 138,382 | |
Total current assets | 152,748 | 195,814 |
Non-current inventories - net | 4,872 | 6,637 |
Property, plant and equipment - net | 617 | 789 |
Other assets - net | 10,107 | 5,418 |
Noncurrent assets of discontinued operations | 135,851 | |
Total assets | 168,344 | 344,509 |
Current Liabilities: | ||
Accounts payable | 10,760 | 11,116 |
Accrued expenses | 13,720 | 15,099 |
Accrued income taxes | 29,106 | 424 |
Current liabilities of discontinued operations | 213,749 | |
Total current liabilities | 53,586 | 240,388 |
Deferred tax liability | 2,559 | |
Other long-term liabilities | 1,323 | 2,862 |
Noncurrent liabilities of discontinued operations | 285 | |
Total liabilities | 57,468 | 243,535 |
Commitments and contingencies (Note 19) | ||
Preferred stock Series A, $.001 par value: 5,000,000 shares authorized; 50,000 shares issued and outstanding | 66,410 | |
Stockholders' equity: | ||
Common stock, $.001 par value: 150,000,000 shares authorized; 75,146,449 and 75,213,515 shares issued and outstanding, respectively | 75 | 75 |
Additional paid-in capital | 503,901 | 498,438 |
Accumulated other comprehensive loss | (2,619) | (7,629) |
Accumulated deficit | (384,922) | (451,179) |
Less treasury stock, 1,429,141 and 1,285,224 shares, respectively, at cost | (5,559) | (5,141) |
Total stockholders' equity | 110,876 | 34,564 |
Total liabilities and stockholders' equity | $ 168,344 | $ 344,509 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 6,638 | $ 4,795 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 50,000 | 50,000 |
Preferred stock, shares outstanding | 50,000 | 50,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 75,146,449 | 75,213,515 |
Common stock, shares outstanding | 75,146,449 | 75,213,515 |
Treasury stock, shares | 1,429,141 | 1,285,224 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income / (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenues | $ 27,926 | $ 28,702 | $ 75,562 | $ 85,849 |
Cost of goods sold | 11,892 | 7,607 | 30,336 | 24,711 |
Gross profit | 16,034 | 21,095 | 45,226 | 61,138 |
Expenses: | ||||
Marketing, general and administrative | 27,754 | 34,247 | 97,095 | 95,454 |
Research and development | 2,208 | 4,271 | 9,764 | 12,475 |
Gain on acquisition contingency | (130) | (1,590) | ||
Asset impairment and abandonments | 9,356 | 4 | 12,117 | 15 |
Transaction and integration expenses | 3,411 | 3,089 | 5,826 | 13,999 |
Total operating expenses | 42,729 | 41,611 | 124,672 | 120,353 |
Operating loss | (26,695) | (20,516) | (79,446) | (59,215) |
Other (expense) income: | ||||
Interest income | 21 | 4 | 92 | 161 |
Foreign exchange gain (loss) | 21 | (51) | (28) | (88) |
Total other expense - net | 42 | (47) | 64 | 73 |
Loss before income tax benefit | (26,653) | (20,563) | (79,382) | (59,142) |
Income tax benefit | 3,591 | 3,492 | 9,955 | |
Net loss from continuing operations | (26,653) | (16,972) | (75,890) | (49,187) |
Discontinued operations (Note 4) | ||||
Income from operations of discontinued operations (including gain on disposition of $210,866 for the three and nine months ended 9/30/2020) | 191,871 | 13,292 | 181,337 | 39,987 |
Income tax provision | (42,534) | (1,458) | (39,189) | (5,101) |
Net income on discontinued operations | 149,337 | 11,834 | 142,148 | 34,886 |
Net income (loss) applicable to common shares | 122,684 | (5,138) | 66,258 | (14,301) |
Other comprehensive gain (loss): | ||||
Unrealized foreign currency translation gain (loss) | (108) | (1,122) | (180) | (1,120) |
Comprehensive income (loss) | $ 122,576 | $ (6,260) | $ 66,078 | $ (15,421) |
Net loss from continuing operations per common share - basic | $ (0.36) | $ (0.23) | $ (1.04) | $ (0.71) |
Net loss from continuing operations per common share - diluted | (0.36) | (0.23) | (1.04) | (0.71) |
Net income from discontinued operations per common share - basic | 2.04 | 0.16 | 1.95 | 0.50 |
Net income from discontinued operations per common share - diluted | $ 2.04 | $ 0.16 | $ 1.95 | $ 0.50 |
Weighted average shares outstanding - basic | 73,212,662 | 72,472,591 | 72,933,038 | 69,340,006 |
Weighted average shares outstanding - diluted | 73,212,662 | 72,472,591 | 72,933,038 | 69,340,006 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income / (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||
Gain on disposition of assets | $ 210,866 | $ 210,866 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Treasury Stock [Member] |
Beginning Balance at Dec. 31, 2018 | $ 181,531 | $ 64 | $ 433,143 | $ (7,270) | $ (239,537) | $ (4,869) |
Net (loss) income | (9,351) | (9,351) | ||||
Foreign currency translation adjustment | (393) | (393) | ||||
Exercise of common stock options | 284 | 284 | ||||
Equity instruments issued in connection with Paradigm Spine acquisition - net of fees | 60,730 | 11 | 60,719 | |||
Stock-based compensation | 1,163 | 1,163 | ||||
Purchase of treasury stock | (130) | (130) | ||||
Amortization of preferred stock series A issuance costs | (46) | (46) | ||||
Ending Balance at Mar. 31, 2019 | 233,788 | 75 | 495,263 | (7,663) | (248,888) | (4,999) |
Beginning Balance at Dec. 31, 2018 | 181,531 | 64 | 433,143 | (7,270) | (239,537) | (4,869) |
Foreign currency translation adjustment | (1,120) | |||||
Ending Balance at Sep. 30, 2019 | 230,292 | 75 | 497,518 | (8,390) | (253,838) | (5,073) |
Beginning Balance at Mar. 31, 2019 | 233,788 | 75 | 495,263 | (7,663) | (248,888) | (4,999) |
Net (loss) income | 188 | 188 | ||||
Foreign currency translation adjustment | 395 | 395 | ||||
Exercise of common stock options | 111 | 111 | ||||
Stock-based compensation | 1,267 | 1,267 | ||||
Purchase of treasury stock | (42) | (42) | ||||
Amortization of preferred stock series A issuance costs | (45) | (45) | ||||
Ending Balance at Jun. 30, 2019 | 235,662 | 75 | 496,596 | (7,268) | (248,700) | (5,041) |
Net (loss) income | (5,138) | (5,138) | ||||
Foreign currency translation adjustment | (1,122) | (1,122) | ||||
Stock-based compensation | 969 | 969 | ||||
Purchase of treasury stock | (32) | (32) | ||||
Amortization of preferred stock series A issuance costs | (47) | (47) | ||||
Ending Balance at Sep. 30, 2019 | 230,292 | 75 | 497,518 | (8,390) | (253,838) | (5,073) |
Beginning Balance at Dec. 31, 2019 | 34,564 | 75 | 498,438 | (7,629) | (451,179) | (5,141) |
Net (loss) income | (17,863) | (17,863) | ||||
Foreign currency translation adjustment | (370) | (370) | ||||
Exercise of common stock options | 20 | 20 | ||||
Stock-based compensation | 1,310 | 1,310 | ||||
Purchase of treasury stock | (193) | (193) | ||||
Amortization of preferred stock series A issuance costs | (44) | (44) | ||||
Ending Balance at Mar. 31, 2020 | 17,424 | 75 | 499,724 | (7,999) | (469,042) | (5,334) |
Beginning Balance at Dec. 31, 2019 | 34,564 | 75 | 498,438 | (7,629) | (451,179) | (5,141) |
Foreign currency translation adjustment | (180) | |||||
Ending Balance at Sep. 30, 2020 | 110,876 | 75 | 503,901 | (2,619) | (384,922) | (5,559) |
Beginning Balance at Mar. 31, 2020 | 17,424 | 75 | 499,724 | (7,999) | (469,042) | (5,334) |
Net (loss) income | (38,564) | (38,564) | ||||
Foreign currency translation adjustment | 298 | 298 | ||||
Stock-based compensation | 1,023 | 1,023 | ||||
Purchase of treasury stock | (19) | (19) | ||||
Amortization of preferred stock series A issuance costs | (46) | (46) | ||||
Ending Balance at Jun. 30, 2020 | (19,884) | 75 | 500,701 | (7,701) | (507,606) | (5,353) |
Net (loss) income | 122,684 | 122,684 | ||||
Foreign currency translation adjustment | (108) | (108) | ||||
Foreign currency translation adjustment related to the impact of discontinued operations | 5,190 | 5,190 | ||||
Stock-based compensation | 3,217 | 3,217 | ||||
Purchase of treasury stock | (206) | (206) | ||||
Amortization of preferred stock series A issuance costs | (17) | (17) | ||||
Ending Balance at Sep. 30, 2020 | $ 110,876 | $ 75 | $ 503,901 | $ (2,619) | $ (384,922) | $ (5,559) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 66,258 | $ (14,301) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization expense | 6,003 | 16,342 |
Provision for bad debts and product returns | 2,015 | 1,050 |
Provision for inventory write-downs | 9,597 | 5,482 |
Revenue recognized due to change in deferred revenue | (2,618) | (3,772) |
Deferred income tax benefit | (932) | (4,588) |
Stock-based compensation | 5,550 | 3,399 |
Asset impairment and abandonments | 12,117 | 15 |
Gain on acquisition contingency | (130) | (1,590) |
Paid in kind interest expense | 2,948 | |
Loss on extinguishment of debt | 2,686 | |
Amortization of debt issuance costs | 283 | 361 |
Amortization of debt discount | 2,479 | |
Derivative loss | 12,641 | |
Gain on sale of OEM business | (210,866) | |
Other | 214 | 708 |
Change in assets and liabilities: | ||
Accounts receivable | 9,221 | (4,522) |
Inventories | (7,236) | (7,609) |
Accounts payable | 1,695 | (12,684) |
Accrued expenses | 20,694 | 3,998 |
Deferred revenue | 2,955 | 2,000 |
Other operating assets and liabilities | (5,295) | 274 |
Net cash used in operating activities | (72,669) | (12,504) |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (9,738) | (10,882) |
Patent and acquired intangible asset costs | (419) | (1,786) |
Net cash provided by (used in) investing activities | 426,940 | (112,360) |
Cash flows from financing activities: | ||
Proceeds from exercise of common stock options | 20 | 395 |
Repayment of short-term obligations | (76,912) | |
Proceeds from long-term obligations | 89,892 | 118,000 |
Payments of debt issuance costs | (1,740) | (729) |
Payments on long-term obligations | (207,266) | (500) |
Payments for treasury stock | (418) | (204) |
Redemption of preferred stock | (66,519) | |
Other | 38 | |
Net cash (used in) provided by financing activities | (262,905) | 116,962 |
Effect of exchange rate changes on cash and cash equivalents | (1,184) | (96) |
Net decrease in cash and cash equivalents | 90,182 | (7,998) |
Cash and cash equivalents, beginning of period | 5,608 | 10,949 |
Cash and cash equivalents, end of period | 95,790 | 2,951 |
Supplemental cash flow disclosure: | ||
Cash paid for interest | 4,488 | 4,941 |
Net income tax payments (refunds) | 4,986 | (1,982) |
Non-cash acquisition of property, plant and equipment | 817 | |
Non-cash common stock issuance | 60,730 | |
OEM Business [Member] | ||
Cash flows from investing activities: | ||
Proceeds from sale of OEM business | $ 437,097 | |
Paradigm Spine [Member] | ||
Cash flows from investing activities: | ||
Payments to acquire businesses | (99,692) | |
Supplemental cash flow disclosure: | ||
Non-cash acquisition of Paradigm Spine | $ 60,730 |
Operations and Organization
Operations and Organization | 9 Months Ended |
Sep. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Operations and Organization | 1. Operations and Organization Surgalign Holdings Inc. and Subsidiaries (“Surgalign” or the “Company”), (formerly known as RTI Surgical Holdings, Inc. and Subsidiaries (“RTI”), is a global medical technology company advancing the science of spine care, focused on delivering innovative solutions that drive superior clinical and economic outcomes. The Company is building off a legacy of high quality and differentiated products and continues to invest in clinically validated innovation to deliver better surgical outcomes and improve patient’s lives. Surgalign markets products throughout the United States and in more than 50 countries worldwide through an expanding network of top independent distributors. Surgalign, a member of AdvaMed (“Advanced Medical Technology Association”), is headquartered in Deerfield, IL, with commercial, innovation and design centers in San Diego, CA, Marquette MI and Wurmlingen, Germany. On July 20, 2020, pursuant to the Equity Purchase Agreement and subsequent amendments entered into in 2020 (the “Purchase Agreement”), RTI sold its original equipment manufacturing business and business related to processing donated human musculoskeletal and other tissue and bovine and porcine animal tissue (collectively, the “OEM Businesses”) to Ardi Bidco Ltd. (the “Buyer”) and its affiliates for a purchase price of $440 million of cash, subject to certain adjustments (the “Transactions”). More specifically, pursuant to the terms of the Purchase Agreement, RTI sold to the Buyer and its affiliates all of the issued and outstanding shares of RTI OEM, LLC (which, prior to the Transactions, was converted to a corporation and changed its name to “RTI Surgical, Inc.”), RTI Surgical, LLC (which, prior to the Transactions, was converted to a corporation and changed its name to “Pioneer Surgical Technology, Inc.”), Tutogen Medical (United States), Inc. and Tutogen Medical GmbH. The Transactions were previously described in the Proxy Statement filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on June 18, 2020. Subsequent to the Transactions, RTI was renamed to Surgalign Holdings, Inc, operating as Surgalign Spine Technologies. References in this Form 10-Q to Surgalign or the Company refer to the Company including, where obvious from the context, the disposed OEM Businesses. “Legacy RTI” refers to the Company prior to the acquisition of Paradigm Spine on March 8, 2019. Prior to the sale of the OEM Businesses, the Company operated two reportable segments: Spine and OEM. Subsequent to the sale of the OEM Businesses, the Company operates reportable one segment On Sept 29, 2020, the Company entered into a Stock Purchase Agreement to acquire Holo Surgical Inc., a privately-held technology company that is developing an Augmented Reality and Artificial Intelligence digital surgery platform (‘ARAI ™ six-year COVID-19 The coronavirus (COVID-19) pandemic, as well as the corresponding governmental response and the Company’s management of the crisis has had a significant impact on the Company’s business. The consequences of the outbreak and impact on the economy continues to evolve and the full extent of the impact is uncertain as of the date of this filing. The outbreak has already brought a significant disruption to the operations of the Company. At times throughout 2020, many hospitals and other medical facilities canceled elective surgeries, reduced and diverted staffing and diverted other resources to patients suffering from the infectious disease and limited hospital access for non-patients, including our direct and indirect sales representatives. Because of the COVID-19 pandemic, surgeons and their patients are required, or are choosing, to defer procedures in which our products would be used, and many facilities that specialize in the procedures in which our products would be used have closed or reduced operating hours. These circumstances have negatively impacted the ability of our employees and distributors to effectively market and sell our products. In addition, even after the pandemic has subsided and/or governmental orders no longer prohibit or recommend against performing such procedures, patients may continue to defer such procedures out of concern of being exposed to coronavirus or for other reasons. The COVID-19 pandemic has also caused adverse effects on general commercial activity and the global economy, which has led to an economic slowdown or recession, and which has adversely affected our business, operating results or financial condition. The adverse effect of the pandemic on the broader economy has also negatively affected demand for procedures using our products, and could cause one or more of our distributors, customers, and suppliers to experience financial distress, cancel, postpone or delay orders, be unable to perform under a contract, file for bankruptcy protection, go out of business, or suffer disruptions in their business. This could impact our ability to provide products and otherwise operate our business, as well as increase our costs and expenses. The COVID-19 pandemic has also led to and could continue to lead to severe disruption and volatility in the global capital markets, which could increase our cost of future capital and adversely affect our ability to access the capital markets in the future. The above and other continued disruptions to our business as a result of COVID-19 has resulted in a material adverse effect on our business, operating results and financial condition. The full extent to which the COVID-19 pandemic will impact our business will depend on future developments that are highly uncertain and cannot be accurately predicted, including the possibility that new adverse information may emerge concerning COVID-19 and additional actions to contain it or treat its impact may be required. In response to the COVID-19 novel coronavirus pandemic and the resulting federal and local guidelines, the Company furloughed or reduced the hours of a majority of its U.S.-based employees in Q2 2020, but they have since returned to work. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, which the Company considers necessary for a fair presentation of the results of operations for the periods shown. The condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a fair presentation of condensed consolidated financial position, results of operations, comprehensive loss and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Surgalign, Inc., Paradigm Spine, LLC (“Paradigm”), Pioneer Surgical Technology, Inc. (“Pioneer Surgical”), and Zyga Technology, Inc. (“Zyga”). T he financial positions and operating results of the disposed OEM Businesses have been reported as Discontinued Operations in the condensed consolidated financial statements in the current as well as prior comparative periods. Immaterial restatement of earnings per share (EPS) The Company identified errors in the calculation of its historical basic and diluted EPS. In the historical periods presented in the filing, the weighted average basic and diluted shares incorrectly included treasury stock, restricted stock awards, and restricted stock units. The weighted average shares used in the restated basic and diluted EPS from continuing operations and discontinued operation has been corrected. Significant New Accounting Policies Derivative Instruments – The Company reviews debt agreements for embedded features. If these features are not clearly and closely related to the debt host, they meet the definition of a derivative and require bifurcation from the host contract. All derivative instruments, including embedded derivatives are recorded on the balance sheet at their respective fair values. The Company will adjust the carrying value of the derivative liability to fair value at each subsequent reporting date. The changes in the fair value of the derivatives are recorded in the period they occur. Retirement of Series A Convertible Preferred Stock and Related Events On July 17, 2020, the Company received a notification from WSHP Biologics Holdings, LLC (“WSHP”) seeking redemption on or before September 14, 2020 of all of the outstanding shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”), all of which are held by WSHP. On July 24, 2020 the Company redeemed the Series A Preferred Stock for approximately $67 million, a Certificate of Retirement was filed with the Delaware Secretary of State retiring the Series A Preferred Stock, and the WSHP representatives on the Company’s Board of Directors, Curtis M. Selquist and Chris Sweeney resigned from the Board of Directors. Liquidity As the global outbreak of COVID-19 continues to rapidly evolve, it could continue to materially and adversely affect our revenues, financial condition, profitability, and cash flows for an indeterminate period of time. In connection with the Transactions on July 20, 2020, the Company (i) paid in full its $80.0 million revolving credit facility under that certain Credit Agreement dated as of June 5, 2018, by and among Surgalign Spine Technologies, Inc. (formerly known as RTI Surgical, Inc.), as a borrower, Pioneer Surgical Technology, Inc., our wholly-owned subsidiary, as a borrower, the other loan parties thereto as guarantors, JPMorgan Chase Bank, N.A., as lender and as administrative agent for the JPM Lenders, as amended (the “2018 Credit Agreement”), (ii) terminated the 2018 Credit Agreement, (iii) paid in full its $ 100.0 million term loan and $ 30.0 million incremental term loan commitment under that certain Second Lien Credit Agreement, dated as of March 8, 2019, by and among Surgalign Spine Technologies, Inc., as borrower, the lenders party thereto from time to time and Ares Capital Corporation, as administrative agent for the other lenders party thereto, as amended (the “2019 Credit Agreement”) and (iv) terminated the 2019 Credit Agreement. Additionally, the Company redeemed all of the outstanding shares of Series A Convertible Preferred Stock. As discussed in Note 21, the Securities and Exchange Commission (“SEC”) has an active investigation that remains ongoing. The Company continues to cooperate with the SEC in relation to the investigation. Based on current information available to the Company, the impact associated with SEC investigation and shareholder litigation may have on the Company cannot be reasonably estimated. Going Concern The accompanying consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with generally accepted accounting principles in the United States of America. The going concern basis of presentation assumes that we will continue in operation one year after the date these financial statements are issued, and we will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. The coronavirus (COVID-19) pandemic, as well as the corresponding governmental response and the Company’s management of the crisis has had a significant impact on the Company’s business. The consequences of the outbreak and impact on the economy continues to evolve and the full extent of the impact is uncertain as of the date of this filing. The outbreak has already brought a significant disruption to the operations of the Company. The continued disruptions to our business as a result of COVID-19 has resulted in a material adverse effect on our business, operating results and financial condition. The full extent to which the COVID-19 pandemic will impact our business will depend on future developments that are highly uncertain and cannot be accurately predicted, including the possibility that new adverse information may emerge concerning COVID-19 and additional actions to contain it or treat its impact may be required. As of September 30, 2020, we had cash of $95,790 and an accumulated deficit of $384,922. For the nine-months ended September 30, 2020, we had a loss from continuing operations of $75,890. We have incurred losses from operations in the previous two fiscal years and did not generate positive cash flows from operations in fiscal year 2019 or for the nine-months ended September 30, 2020. The Company closed on the sale of the OEM business to Ardi Bidco, Ltd., on July 20, 2020 and upon the close of the sale, the Company repaid all of its debt obligations in full. Additionally, all preferred stock was also redeemed by Water Street Healthcare Partners, resulting in cash payment of $66,519 during the third quarter of 2020. During the third quarter of 2020, the Company had announced that it had acquired Holosurgical, Inc. (“Holosurgical”). The acquisition closed on October 23, 2020 (see Note 22, Subsequent Events). Under the terms of the acquisition agreement, Surgalign paid $30 million in cash and issued 6.25 million shares of Surgalign common stock valued at approximately $12 million. In addition, further contingent consideration valued at up to $83 million may be payable in common stock and cash upon achievement of certain regulatory, developmental, and commercial milestones. The first milestone achievement to Holosurgical relating to regulatory approval could occur as early as the second half of 2021. The Company is projecting it will continue to generate significant negative operating cash flows over the next 12-months and beyond. In consideration of i) COVID-19 uncertainties, ii) negative cash flows that are projected over the next 12-month period, iii) the income taxes to be paid related to the gain on sale associated with the OEM business, and iv) approx. $10 million in contingent consideration amounts which are expected to become due to the former owners of Holosurgical if regulatory approval in the US is obtained in 2021, which would paid through combination of common stock and cash; the Company has forecasted the need to raise additional capital in order to continue as a going concern. The Company’s operating plan for the next 12-month period also includes continued investments in its product pipeline which will necessitate additional debt and/or equity financing in addition to the funding of future operations through 2021 and beyond. The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. If cash resources are insufficient to satisfy the Company’s on-going cash requirements through 2021, the Company will be required to scale back operations, reduce research and development expenses, and postpone, as well as suspend capital expenditures, in order to preserve liquidity. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing. In consideration of the inherent risks and uncertainties that exist in relation to both elective surgeries, as well as in relation to worsening of global economic conditions resulting from ongoing COVID-19 pandemic, along with the cash paid to acquire Holosurgical and potential contingent consideration milestone payments, a portion of which are expected to be paid in common stock and/or cash which may become due in 2021; management has concluded that substantial doubt exists with respect to the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Management is planning to raise additional debt and/or equity financing and will attempt to curtail discretionary expenditures in the future, if necessary, however, in consideration of the risks and uncertainties mentioned, such plans cannot be considered probable of occurring at this time. The recoverability of a major portion of the recorded asset amounts shown in the Company’s accompanying consolidated balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its funding requirements on a continuous basis, to maintain existing financing and to succeed in its future operations. The Company’s financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. |
Recently Adopted and Issued Acc
Recently Adopted and Issued Accounting Standards | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Changes And Error Corrections [Abstract] | |
Recently Adopted and Issued Accounting Standards | 3. In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) and other interbank offered rates. This guidance is effective beginning on March 12, 2020 through December 31, 2022. The Company adopted ASU 2020-04 and it did not have an impact on its condensed consolidated financial statements. In May 2019, the FASB ASU Financial Instruments — Credit Losses (Topic 326) In April 2019, the FASB issued ASU No. 2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities; Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments Credit losses for trade receivables is determined based on historical information, current information and reasonable and supportable forecasts. The Company has concluded that the adoption of the standard was not material as the composition of the trade receivables at the reporting date is consistent with that used in developing the historical credit-loss percentages. Further, the risk characteristics of the Company’s customer and composition of the portfolio have not changed significantly over time. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Discontinued Operations | 4. Discontinued Operations In connection with the Transactions, on July 20, 2020, RTI completed the disposition of its OEM Businesses The following tables shows the assets and liabilities of the discontinued operations: As of December 31, 2019 Carrying amounts of the major classes of assets included in discontinued operations: Accounts receivable - net $ 36,072 Inventories - net 99,575 Prepaid and other current assets 2,735 Total current assets 138,382 Property, plant and equipment - net 69,102 Deferred tax assets - net - Goodwill 55,384 Other intangible assets - net 10,492 Other assets - net 873 Total noncurrent assets 135,851 Total assets of discontinued operations $ 274,233 Carrying amounts of the major classes of liabilities included in discontinued operations: Current Liabilities: Accounts payable $ 19,010 Accrued expenses 17,814 Current portion of deferred revenue 2,748 Current portion of long-term obligations 174,177 Total current liabilities 213,749 Other long-term liabilities 285 Total liabilities of discontinued operations $ 214,034 The current portion of the long-term obligations relates to the 2018 Credit Agreement and 2019 Credit Agreement. In accordance with the terms and conditions in the Purchase Agreement and approved by respective lenders, on July 20, 2020, the Company (i) paid in full its $80.0 million revolving credit facility under the 2018 Credit Agreement, (ii) terminated the 2018 Credit Agreement, (iii) paid in full its $100.0 million term loan and $30.0 million incremental term loan commitment under the 2019 Credit Agreement, and (iv) terminated the 2019 Credit Agreement. The following tables shows the financial results of the discontinued operations: Three Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Major classes of line items constituting net income from discontinued operations Revenues $ 6,877 $ 48,039 $ 87,192 $ 142,467 Costs of processing and distribution 4,006 25,910 49,928 76,370 Gross profit 2,871 22,129 37,264 66,097 Expenses: Marketing, general and administrative 2,259 4,972 12,636 16,993 Severance and restructuring costs - - 604 - Transaction and integration expenses 11,811 120 23,598 120 Total expenses 14,070 5,092 36,838 17,113 Operating (loss) income (11,199 ) 17,037 426 48,984 Other expense (income): Interest expense 5,094 3,718 14,632 8,957 Loss on extinguishment of debt 2,686 - 2,686 - Derivative loss - - 12,641 - Foreign exchange (gain) loss 17 27 (3 ) 40 Total other expense - net 7,797 3,745 29,956 8,997 (Loss) income from discontinued operations (18,996 ) 13,292 (29,530 ) 39,987 Gain on sale of net assets of discontinued operations 210,866 - 210,866 - Income from discontinued operations before income tax provision 191,871 13,292 181,337 39,987 Income tax provision (42,534 ) (1,458 ) (39,189 ) (5,101 ) Net Income from discontinued operations $ 149,337 $ 11,834 $ 142,148 $ 34,886 In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations. As such, the marketing and general and administrative expenses in discontinued operations include corporate costs incurred directly in support of the Company’s OEM business. Pursuant to the Purchase Agreement, RTI and the Buyer have also entered into a Transition Services Agreement, through which the disposed OEM Businesses will provide to the Company transitional services related to IT support, customer and vendor management, and procurement etc. for periods ranging from 3 to 12 months after the disposal. Since the transitional services are related to the Company’s continuing operations, the related expenses are reported as the operating expenses of the continuing operations. The Company applied the “Intraperiod Tax Allocation” rules under ASC 740, which requires the allocation of an entity’s total annual income tax provision among continuing operations and, in the Company’s case, discontinued operations. Included in the $1.6 million income tax expense for fiscal year 2019 is $0.6 million tax expense related to the gain on the Divestiture. The taxes on the gain were calculated using various state statutory tax rates and are partially offset by the utilization of historical state and federal net operating losses. Proceeds from the sale of the Company’s OEM Business have been presented in the Consolidated Statements of Cash Flows under investing activities for the nine months ended September 30, 2020. Total operating and investing cash flows of discontinued operations for the nine months ended September 30, 2020 and 2019 are comprised of the following, which exclude the effect of income taxes: Nine Months Ended September 30 September 30 2020 2019 Significant operating non-cash reconciliation items: Depreciations and amortization $ 4,633 $ 6,445 Provision for bad debt and products returns $ 650 $ 56 Provision on inventory write-downs $ - $ 1,455 Revenue recognized due to change in deferred revenue $ (2,618 ) $ (3,772 ) Deferred income tax provision $ (3,644 ) $ (184 ) Stock-based compensation $ 792 $ 401 Gain on sale of discontinued assets, net $ (210,866 ) $ - Paid in kind interest expense $ - $ 2,948 Loss on extinguishment of debt $ 2,686 - Amortizations of debt issuance costs $ 283 361 Amortizations of debt discount $ 2,479 - Significant investing items: Purchase of property, plant and equipment $ (1,867 ) $ (5,171 ) Patent and acquired intangible asset costs $ (419 ) $ (1,786 ) Proceeds from sale of OEM business $ 437,097 $ - |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenue from Contracts with Customers | 5 . The Company recognizes revenue upon transfer of control of promised products in an amount that reflects the consideration it expects to receive in exchange for those products. The Company typically transfers control at a point in time upon shipment or delivery of the implants for direct sales, or upon implantation for sales of consigned inventory. The customer is able to direct the use of, and obtain substantially all of the benefits from, the implant at the time the implant is shipped, delivered, or implanted, respectively based on the terms of the contract. Disaggregation of Revenue The Company’s entire revenue for the three and nine months ended September 30, 2020 and 2019 were recognized at a point in time. The following table represents total revenue by region: For the Three Month Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenues: Domestic $ 23,690 $ 24,292 $ 62,917 $ 70,496 International 4,236 4,409 12,645 15,353 Total revenues from contracts with customers $ 27,926 $ 28,702 $ 75,562 $ 85,849 The Company’s performance obligations consist mainly of transferring control of implants identified in the contracts. The Company’s transaction price is generally fixed. Any discounts or rebates are estimated at the inception of the contract and recognized as a reduction of the revenue. Some of the Company’s contracts offer assurance-type warranties in connection with the sale of a product to a customer. Assurance-type warranties provide a customer with assurance that the related product will function as the parties intended because it complies with agreed-upon specifications. Such warranties do not represent a separate performance obligation and are not material to the condensed consolidated financial statements. |
Acquisition of Paradigm Spine,
Acquisition of Paradigm Spine, LLC | 9 Months Ended |
Sep. 30, 2020 | |
Paradigm Spine [Member] | |
Acquisition | 6 . Acquisition of Paradigm Spine, LLC On March 8, 2019, pursuant to the Master Transaction Agreement (the “Master Transaction Agreement”), dated as of November 1, 2018, by and among Legacy RTI, PS Spine Holdco, LLC, a Delaware limited liability company (“PS Spine”), the Company, and Bears Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of the Company (“Merger Sub”), the Company acquired all of the outstanding equity interests of Paradigm, through a transaction in which: (i) PS Spine contributed all of the issued and outstanding equity interests in Paradigm to the Company (the “Contribution”); (ii) Merger Sub merged with and into Legacy RTI (the “Merger”), with Legacy RTI surviving as a wholly owned direct subsidiary of the Company; and (iii) the Company was renamed “RTI Surgical Holdings, Inc.” (collectively, the “Paradigm Transaction”). Legacy RTI retained its existing name “RTI Surgical, Inc.” Pursuant to the Master Transaction Agreement: (i) each share of common stock, par value $0.001 per share, of Legacy RTI issued and outstanding immediately prior to the Paradigm Transaction (other than shares held by Legacy RTI as treasury shares or by the Company or Merger Sub immediately prior to the Paradigm Transaction, which were automatically cancelled and ceased to exist) was converted automatically into one fully paid and non-assessable share of Company common stock , par value $0.001 per share; (ii) each share of Series A convertible preferred stock, par value $0.001 per share, of Legacy RTI issued and outstanding immediately prior to the Paradigm Transaction (other than shares held by Legacy RTI as treasury shares or by the Company or Merger Sub immediately prior to the Paradigm Transaction, which were automatically cancelled and ceased to exist) was converted automatically into one fully paid and non-assessable share of Series A convertible preferred stock, par value $0.001 per share, of the Company; and (iii) each stock option and restricted stock award granted by Legacy RTI was converted into a stock option or restricted stock award, as applicable, of the Company with respect to an equivalent number of shares of the Company common stock on the same terms and conditions as were applicable prior to the closing. The consideration for the Contribution was $100,000 (the “Cash Consideration Amount”) in cash and 10,729,614 shares of Company common stock (the “Stock Consideration Amount”). The Cash Consideration Amount was adjusted lower by Paradigm’s working capital of $7,000. In addition to the Cash Consideration Amount and the Stock Consideration Amount, the Company may be required to make further cash payments or issue additional shares of Company common stock to PS Spine in an amount up to $50,000 of shares of Company common stock to be valued based upon the Legacy RTI Price and an additional $100,000 of cash and/or Company common stock to be valued at the time of issuance, in each case, if certain revenue targets are achieved between closing, March 8, 2019, and December 31, 2022. The Company originally estimated the fair value of the contingent liability related to the revenue-based earnout of $72,177 utilizing a Monte-Carlo simulation model as of March 8, 2019. A Monte-Carlo simulation is an analytical method used to estimate fair value by performing a large number of simulations or trial runs and thereby determining a value based on the possible outcomes. Accounted for as a liability to be revalued at each reporting period, the f The Company has accounted for the acquisition of Paradigm under FASB ASC 805, Business Combinations The purchase price was financed as follows: (In thousands) Cash proceeds from second lien credit agreement $ 100,000 Fair market value of securities issued 60,730 Fair market value of contingent earnout 72,177 Total purchase price $ 232,907 In the first quarter of 2019 , the Company completed its valuations and purchase price allocations . The table below represents the final allocation of the total purchase price to Paradigm ’s tangible and intangible assets and liabilities fair values as of March 8, 2019 . Balance at March 8, 2019 (In thousands) Cash $ 307 Accounts receivable 5,220 Inventories 17,647 Other current assets 934 Property, plant and equipment 379 Other non-current assets 1,079 Current liabilities (6,169 ) Lease liabilities (1,079 ) Net tangible assets acquired 18,318 Other intangible assets 79,000 Goodwill 135,589 Total net assets acquired $ 232,907 As of March 8, 2019, the inventory fair value was composed of current inventory of $7,122 and non-current inventory of $10,525. Total net assets acquired as of March 8, 2019, were all part of the Company’s only operating segment at that time. Fair values are based on management’s estimates and assumptions including variations of the income approach, the cost approach and the market approach. The Company believes that the acquisition of Paradigm, a spine focused business, offers the potential for substantial strategic and financial benefits. The transaction further advances the Company’s strategic transformation focused on reducing complexity, driving operational excellence and accelerating growth. The Company believes the acquisition will enhance stockholder value through, among other things, enabling the Company to capitalize on the following strategic advantages and opportunities: • Paradigm will strengthen the Company’s spine portfolio with the addition of the coflex® Interlaminar Stabilization® device. Coflex is a differentiated and minimally invasive motion preserving stabilization implant that is FDA PMA-approved for the treatment of moderate to severe lumbar spinal stenosis (“LSS”) in conjunction with decompression. • Coflex allows the Company to provide surgeons who treat patients with moderate to severe LSS with a PMA-approved device supported by more than 12 years of clinical data. These potential benefits resulted in the Company paying a premium for Paradigm resulting in the recognition of $135,589 of goodwill assigned to the Company’s only operating segment and reporting unit at the time of the Paradigm acquisition. The acquired goodwill was subsequently impaired. See Note 12 – Goodwill for details. Additionally, the acquired inventories were partially written down. See Note 9 – Inventories for details. The following unaudited pro forma information shows the results of the Paradigm’s operations as though the acquisition had occurred as of the beginning of the prior comparable period, January 1, 2019, (in thousands): For the Nine Months Ended September 30, 2019 Revenues $ 27,251 Net loss applicable to common shares (12,705 ) The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisition taken place as of the beginning of the periods presented, or the results that may occur in the future. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 7 . Stock-Based Compensation In the first nine months of 2020, the Company granted 1,561,069 stock options, and 1,690,597 under its 2018 Incentive Compensation Plan. For the three and nine months ended September 30, 2020 and 2019, the Company recognized stock-based compensation as follows: For the Three Month Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Stock-based compensation: Costs of processing and distribution $ 33 $ 36 $ 105 $ 108 Marketing, general and administrative $ 1,112 $ 774 $ 3,103 $ 2,845 Research and development $ 5 $ 15 $ 35 $ 45 Transaction and integration expenses $ 1,515 — $ 1,515 — Total $ 2,665 $ 825 $ 4,758 $ 2,998 For the nine months ended September 30, 2020 and 2019, the Company incurred $792 and $401 of stock-based compensation expense related to the disposed OEM Businesses. For the three months ended September 30, 2020 and 2019, the Company incurred $552 and $144 of stock-based compensation expense related to the disposed OEM Businesses. These expenses have been presented in the results from discontinued operations. |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | 8 . Net Loss Per Common Share A reconciliation of the number of shares of common stock used in the calculation of basic and diluted net income per common share is presented below: For the Three Month Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Basic shares 73,212,662 72,472,591 72,933,038 69,340,006 Effect of dilutive securities: Stock options — — — — RSA and RSU — Preferred stock Series A — — — — Diluted shares 73,212,662 72,472,591 72,933,038 69,340,006 For the three and nine months ended September 30, 2020 and 2019, the Company has suffered a net loss from its continuing operations. As a result, the Company has excluded all potential dilutive shares from the computation of the diluted EPS to avoid the anti-dilutive effect. The following table includes the number of potential dilutive shares that were excluded due to the anti-dilutive effect: For the Three Month Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Stock Option - 327,085 3,748 667,015 RSU and RSA 1,515,137 852,131 1,191,573 526,981 Convertible Series A Preferred Stock 3,308,854 15,152,761 11,221,121 15,152,761 Total 4,823,991 16,331,977 12,416,442 16,346,757 For the three months ended September 30, 2020 and 2019, 5,305,329 and 2,315,856 of issued stock options were not included in the computation of diluted EPS because their exercise price exceeded the average market price during the period. For the nine months ended September 30, 2020 and 2019, 4,963,654 and 1,653,991, respectively, of issued stock options were not included in the computation of diluted EPS because their exercise price exceeded the average market price during the period. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | 9 . Inventories The inventory balance as of September 30, 2020 and December 31, 2019 contains entirely finished goods. For the three months ended September 30, 2020 and 2019, the Company had inventory write-downs of $5,624 and $1,361 , respectively, and for the nine months ended September 30, 2020 and 2019 the Company had inventory write-downs of $9,597 and $4,027, respectively, primarily due to excess product. |
Prepaid and Other Current Asset
Prepaid and Other Current Assets | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Prepaid and Other Current Assets | 10 . Prepaid and Other Current Assets Prepaid and Other Current Assets are as follows: September 30, December 31, 2020 2019 Income tax receivable $ 5 $ 2,785 Prepaid expenses 2,356 996 Other 1,917 253 $ 4,278 $ 4,034 |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property Plant And Equipment [Abstract] | |
Property, Plant and Equipment | 11 . Property, Plant and Equipment The net book value of p roperty, plant and equipment is as follows September 30, December 31, 2020 2019 Processing equipment 39 110 Surgical instruments 517 541 Building and Office equipment, furniture and fixtures 50 122 Computer equipment and software 11 16 $ 617 $ 789 For the three months ended September 30, 2020 and 2019, the Company had depreciation expense in connection with property, plant and equipment of $758 and $1,378, respectively, and for the nine months ended months ended September 30, 2020 and 2019, the Company had depreciation expense of $1,074 and $3,201 , respectively. For the three and nine months ended September 30, 2020, the Company recorded asset impairment and abandonment charges of $9,210 and $11,971, respectively related to property, plant and equipment in the Spine asset group. The Spine asset group could not support the newly capitalized carrying amount of the property, plant and equipment, because the Spine asset group has projected negative cash flows over the useful life of the long-lived assets in the asset group. The fair value of property and equipment was measured utilizing an orderly liquidation value of each of the underlying assets. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill | 1 2 . Goodwill The change in the carrying amount of goodwill for the nine months ended September 30 September 30, December 31, 2020 2019 Balance at January 1 $ - $ 4,414 Goodwill acquired related to Paradigm acquisition — 135,589 Goodwill impairment from continuing operations — (140,003 ) Balance at end of period $ - $ - On March 8, 2019, we acquired Paradigm for a purchase price of approximately $232,907 and recorded goodwill of approximately $135,589. The goodwill arising from the Paradigm acquisition was specifically allocated to the Spine reporting unit. For the impairment test performed in 2019, it was concluded the fair value of goodwill is substantially in excess of our carrying value. For the Spine reporting unit test for the year ended December 31, 2019, it was concluded the carrying value was in excess of the fair value of goodwill and we recorded an impairment charge of all the goodwill in the Spine reporting unit totaling $140,003. |
Fair Value Information
Fair Value Information | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Information | 1 3 . Fair Value Information Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-level valuation hierarchy for classification and disclosure of fair value measurements as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Embedded derivatives identified within the Ares incremental term loan entered into, assessed and adjusted to their estimated fair value during the second quarter of 2020. Fair value is measured as of the debt issuance date using Level 3 inputs. For the issuance, the derivative level 3 fair value was measured based on a probability-weighted discounted cash flow approach. Unobservable inputs included the probability of a shareholder approval (unobservable), a recovery scenario should shareholder approval not occur (unobservable), and an estimated discount rate based on market data of comparable debt (observable). Long-lived assets, including property and equipment subject to amortization were impaired and written down to their estimated fair values during the first quarter of 2020. Fair value is measured as of the impairment date using Level 3 inputs. For the 2020 impairments, the long-lived asset level 3 fair value was measured base on orderly liquidation value for the Property, plant and equipment. Unobservable inputs for the orderly liquidation value included replacement costs (unobservable), physical deterioration estimates (unobservable) and market sales data for comparable assets and unobservable inputs for the income approach included forecasted cash flows generated from use of the intangible assets (unobservable). The following table summarizes impairments of long-lived assets and the related post impairment fair values of the corresponding assets for the three and nine months ended September 30, 2020. For the Three Months Ended For the Nine Months Ended September 30, 2020 September 30, 2020 Impairment Fair Value Impairment Fair Value Property, plant and equipment - net 9,210 617 11,971 617 Intangibles 146 — 146 — $ 9,356 $ 617 $ 12,117 $ 617 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Accrued Expenses | 1 4 . Accrued Expenses Accrued expenses are as follows: September 30, December 31, 2020 2019 Accrued compensation $ 3,084 $ 2,911 Accrued distributor commissions 3,765 4,325 Accrued business development expenses - 2,555 Accrued leases 607 967 Accrued acquisition contingency 1,000 - Other 5,264 4,341 $ 13,720 $ 15,099 |
Other long-term liabilities
Other long-term liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities Noncurrent [Abstract] | |
Other long-term liabilities | 1 5 . Other long-term liabilities Other long-term liabilities are as follows: September 30, December 31, 2020 2019 Lease obligations 1,121 1,487 Acquisition contingencies — 1,130 Other 202 245 $ 1,323 $ 2,862 Acquisition contingencies represent the Company’s fair value estimate of the Zyga acquisition clinical and revenue |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 1 6 . Income Taxes The Company evaluates the need for deferred tax asset valuation allowances based on a more likely than not standard. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The Company has evaluated all evidence, both positive and negative, and determined that its domestic deferred tax assets are not more likely than not to be realized. In making this determination, numerous factors were considered including the cumulative recent loss position in the US. During the second quarter. the Company considered the removal of the going concern evaluation and the Company’s foreign operations three-year On July 20, 2020, RTI completed the disposition of its OEM Businesses and has recognized tax expense of $42.4 million within discontinued operations as of the third quarter. Discontinued operations tax expense primarily relates to the tax gain on sale of the OEM business, partially offset by the Company’s ability to utilize tax attributes and recognition of the benefit for year-to-date U.S. losses from continuing operations pursuant to the Company’s adoption of ASU 2019-12. (See Note 4 “Discontinued Operations” for additional information). On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted by the United States Congress. As a result of the enactment of the CARES Act, net operating losses (“NOL’s”) can now be carried back for five years, which resulted in the Company recognizing a benefit during the first quarter of approximately $3.5 million. The effective tax rate from continuing operations is primarily impacted by the CARES Act tax benefit referenced above. The September 30, 2019 continuing operations effective tax rate was primarily a result of pretax losses at statutory rates. |
Preferred Stock
Preferred Stock | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Preferred Stock | 17 . Preferred Stock On June 12, 2013, the Company and WSHP Biologics Holdings, LLC (“WSHP”), an affiliate of Water Street Healthcare Partners, healthcare-focused private equity firm (“Water Street”), entered into an investment agreement. Pursuant to the terms of the investment agreement, the Company issued $50,000 of convertible preferred equity to Water Street in a private placement which closed on July 16, 2013, with preferred stock issuance costs of $1,290. The preferred stock accrued dividends at a rate of 6% per annum. To the extent dividends were not paid in cash in any quarter, the dividends which have accrued on each outstanding share of preferred stock during such three-month period accumulated until paid in cash or converted to common stock. On August 1, 2018, the Company and Water Street, a related party, entered into an Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock of RTI Surgical, Inc. (the “Amended and Restated Certificate of Designation”). Pursuant to the Amended and Restated Certificate of Designation: (1) dividends on the Series A Preferred Stock did not accrue after July 16, 2018; (2) the Company could not force a redemption of the Series A Preferred Stock prior to July 16, 2020; and (3) the holders of the Series A Preferred Stock could not convert the Series A Preferred Stock into common stock prior to July 16, 2021 (with certain exceptions). On July 17, 2020, the Company received a notification from WSHP seeking redemption on or before September 14, 2020 of all of the outstanding shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”), all of which are held by WSHP. On July 24, 2020, the Company redeemed the Series A Preferred Stock for approximately $67 million and Certificate of Retirement was filed with the Delaware Secretary of State retiring the Series A Preferred Stock. Preferred stock is as follows: Preferred Stock Liquidation Preferred Stock Issuance Net Value Costs Total Balance at January 1, 2020 $ 66,519 $ (109 ) $ 66,410 Amortization of preferred stock issuance costs — 46 46 Balance at March 31, 2020 66,519 (63 ) 66,456 Amortization of preferred stock issuance costs — 46 46 Balance at June 30, 2020 $ 66,519 $ (17 ) $ 66,502 Amortization of preferred stock issuance costs — 17 17 Redemption of preferred stock (66,519 ) (66,519 ) Balance at September 30, 2020 $ - $ - $ - Preferred Stock Liquidation Preferred Stock Issuance Net Value Costs Total Balance at January 1, 2019 $ 66,519 $ (293 ) $ 66,226 Amortization of preferred stock issuance costs — 46 46 Balance at March 31, 2019 66,519 (247 ) 66,272 Amortization of preferred stock issuance costs — 46 46 Balance at June 30, 2019 $ 66,519 $ (201 ) $ 66,318 Amortization of preferred stock issuance costs — 46 46 Balance at September 30, 2019 $ 66,519 $ (155 ) $ 66,364 |
Severance and Restructuring Cos
Severance and Restructuring Costs | 9 Months Ended |
Sep. 30, 2020 | |
Employee Severance [Member] | |
Severance and Restructuring Costs | 18 . Severance and Restructuring Costs As part of the acquisition of Paradigm in 2019, management implemented a plan for which remaining outstanding balances at December 31, 2019 were fully paid out during the first quarter of 2020 The following table includes a roll-forward of severance and restructuring costs included in accrued expenses, see Note 17. Accrued severance and restructuring costs at January 1, 2020 $ 136 Severance and restructuring costs accrued in 2020 604 Subtotal severance and restructuring costs 740 Severance and restructuring related cash payments (740 ) Accrued severance and restructuring charges at September 30, 2020 $ - |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 19 . Commitments and Contingencies Agreement to Acquire Paradigm – On March 8, 2019, pursuant to the Master Transaction Agreement, the Company acquired Paradigm in a cash and stock transaction valued at up to $300,000, consisting of $150,000 on March 8, 2019, plus potential future milestone payments. Established in 2005, Paradigm’s primary product is the coflex® Interlaminar Stabilization® device, a differentiated and minimally invasive motion preserving stabilization implant that is FDA premarket approved for the treatment of moderate to severe lumbar spinal stenosis in conjunction with decompression. Under the terms of the agreement, the Company paid $100,000 in cash and issued 10,729,614 shares of the Company’s common stock. The shares of Company common stock issued on March 8, 2019, were valued based on the volume weighted average closing trading price for the five trading days prior to the date of execution of the definitive agreement, representing $50,000 of value. In addition, the Company may be required to pay up to an additional $150,000 in a combination of cash and Company common stock based on a revenue earnout consideration. Based on a probability weighted model, the Company estimates a contingent liability related to the revenue based earnout of zero utilizing a Monte-Carlo simulation model. A Monte-Carlo simulation is an analytical method used to estimate fair value by performing a large number of simulations or trial runs and thereby determining a value based on the possible outcomes. Accounted for as a liability to be revalued at each reporting period, the fair value of the contingent liability was measured using Level 3 inputs, which includes weighted average cost of capital and projected revenues and costs Acquisition of Zyga – O n January 4, 2018, the Company acquired Zyga, a leading spine-focused medical device company that develops and produces innovative minimally invasive devices to treat underserved conditions of the lumbar spine. Zyga’s primary product is the SImmetry® Sacroiliac Joint Fusion System. Under the terms of the merger agreement dated January 4, 2018, the Company acquired Zyga for $21,000 in consideration paid at closing (consisting of borrowings of $18,000 on its revolving credit facility and $3,000 cash on hand), $1,000 contingent upon the successful achievement of a clinical milestone, and a revenue based earnout consideration of up to an additional $35,000. Based on a probability weighted model, the Company estimates a contingent liability related to the clinical milestone of $1,000, which is within the Accrued expenses line of the Condensed Consolidated Balance Sheets. Distribution Agreement with Medtronic – On October 12, 2013, the Company entered into a replacement distribution agreement with Medtronic, plc. (“Medtronic”), pursuant to which Medtronic will distribute certain allograft implants for use in spinal, general orthopedic and trauma surgery. Under the terms of this distribution agreement, Medtronic will be a non-exclusive distributor except for certain specified implants for which Medtronic will be the exclusive distributor. Medtronic will maintain its exclusivity with respect to these specified implants unless the cumulative fees received by us from Medtronic for these specified implants decline by a certain amount during any trailing 12-month period. The initial term of this distribution agreement was to have been through December 31, 2017. The term automatically renews for successive five-year Distribution Agreement with Zimmer Dental Inc. - On September 3, 2010, the Company entered into an exclusive distribution agreement with Zimmer Dental, Inc. (“Zimmer Dental”), a subsidiary of Zimmer, with an effective date of September 30, 2010, as amended from time to time. The Agreement was assigned to Biomet 3i, LLC (“Biomet”), an affiliate of Zimmer Dental, on January 1, 2016. The Agreement has an initial term of ten years. Under the terms of this distribution agreement, the Company agreed to supply sterilized allograft and xenograft implants at an agreed upon transfer price, and Biomet agreed to be the exclusive distributor of the implants for dental and oral applications worldwide (except Ukraine), subject to certain Company obligations under an existing distribution agreement with a third party with respect to certain implants for the dental market. In consideration for Biomet’s exclusive distribution rights, Biomet agreed to the following: 1) payment to the Company of $13,000 within ten days of the effective date (the “Upfront Payment”); 2) annual exclusivity fees (“Annual Exclusivity Fees”) paid annually as long as Biomet maintains exclusivity for the term of the contract to be paid at the beginning of each calendar year; and 3) annual purchase minimums to maintain exclusivity. Upon occurrence of an event that materially and adversely affects Biomet’s ability to distribute the implants, Biomet may be entitled to certain refund rights with respect to the then current Annual Exclusivity Fee, where such refund would be in an amount limited by a formula specified in this agreement that is based substantially on the occurrence’s effect on Biomet’s revenues. The Upfront Payment, the Annual Exclusivity Fees and the fees associated with distributions of processed tissue are considered to be a single performance obligation. Accordingly, the Upfront Payment and the Annual Exclusivity Fees are deferred as received and are being recognized as other revenues over the term of this distribution agreement based on the expected contractual annual purchase minimums relative to the total contractual minimum purchase requirements in this distribution agreement. Additionally, the Company considered the potential impact of this distribution agreement’s contractual refund provisions and does not expect these provisions to impact future expected revenue related to this distribution agreement. This agreement was transferred in connection with the sale of the OEM Businesses and is now reported in discontinued operations.. The Company’s aforementioned revenue recognition methods related to the Zimmer distribution agreements do not result in the deferral of revenue less than amounts that would be refundable in the event the agreements were to be terminated in future periods. Additionally, the Company evaluates the appropriateness of the aforementioned revenue recognition methods on an ongoing basis. |
Legal Actions
Legal Actions | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Legal Actions | 2 0 . Legal Actions The Company is, from time to time, involved in litigation relating to claims arising out of its operations in the ordinary course of business. Based on the information currently available to the Company, including the availability of coverage under its insurance policies, the Company does not believe that any of these claims that were outstanding as of September 30, 2020 will have a material adverse impact on its financial position or results of operations. The Company’s accounting policy is to accrue for legal costs as they are incurred. Coloplast — The Company is presently named as co-defendant along with other companies in a small percentage of the transvaginal surgical mesh (“TSM”) mass tort claims being brought in various state and federal courts. The TSM litigation has as its catalyst various Public Health Notifications issued by the FDA with respect to the placement of certain TSM implants that were the subject of 510k regulatory clearance prior to their distribution. The Company does not process or otherwise manufacture for distribution in the U.S. any implants that were the subject of these FDA Public Health Notifications. The Company denies any allegations against it and intends to continue to vigorously defend itself. In addition to claims made directly against the Company, Coloplast, a distributor of TSM’s and certain allografts processed and private labeled for them under a contract with the Company, has also been named as a defendant in individual TSM cases in various federal and state courts. Coloplast requested that the Company indemnify or defend Coloplast in those claims which allege injuries caused by the Company’s allograft implants, and on April 24, 2014, Coloplast sued RTI Surgical, Inc. in the Fourth Judicial District of Minnesota for declaratory relief and breach of contract. On December 11, 2014, Coloplast entered into a settlement agreement with RTI Surgical, Inc. and Tutogen Medical, Inc. (the “Company Parties”) resulting in dismissal of the case. Under the terms of the settlement agreement, the Company Parties are responsible for the defense and indemnification of two categories of present and future claims: (1) tissue only (where Coloplast is solely the distributor of Company processed allograft tissue and no Coloplast-manufactured or distributed synthetic mesh is identified) (“Tissue Only Claims”), and (2) tissue plus non-Coloplast synthetic mesh (“Tissue-Non-Coloplast Claims”) (the Tissue Only Claims and the Tissue-Non-Coloplast Claims being collectively referred to as “Indemnified Claims”). As of September 30, 2020, there are a cumulative total of 1,157 Indemnified Claims for which the Company Parties are providing defense and indemnification. The defense and indemnification of these cases are covered under the Company’s insurance policy subject to a reservation of rights by the insurer. Based on the current information available to the Company, the impact that current or any future TSM litigation may have on the Company cannot be reasonably estimated. LifeNet — On June 27, 2018, LifeNet Health, Inc. (“LifeNet”) filed a patent infringement lawsuit in the United States District Court for the Middle District of Florida (since moved to the Northern District of Florida) claiming infringement of five of its patents by the Company’s predecessor RTI Surgical, Inc. The suit requests damages, enhanced damages, reimbursement of costs and expenses, reasonable attorney fees, and an injunction. The asserted patents are expired. On April 7, 2019, the Court granted the Company’s request to stay the lawsuit pending the U.S. Patent Trial and Appeal Board’s (PTAB) decision whether to institute review of the patentability of LifeNet’s patents. On August 12, 2019 the PTAB instituted review of three LifeNet patents, and on September 3, 2019 the PTAB instituted review of the remaining two. On August 4,2020 and August 26, 2020 the PTAB issued final written decisions finding that certain claims were shown to be unpatentable and others not. Neither party appealed the PTAB’s decisions with respect to the three LifeNet patents on which the PTAB instituted review on August 12, 2019. With respect to the remaining two LifeNet patents, Surgalign filed Notices of Appeal with the Federal Circuit on October 27, 2020 and LifeNet filed a Notice of Cross-appeal on November 9, 2020. The Company continues to believe the suit is without merit and will vigorously defend its position. Based on the current information available to the Company, the impact that current or any future litigation may have on the Company cannot be reasonably estimated. Securities Class Action— There is currently ongoing stockholder litigation related to the Company’s Investigation (as defined below). A class action complaint was filed by Patricia Lowry, a purported shareholder of the Company, against the Company, and certain current and former officers of the Company, in the United States District Court for the Northern District of Illinois on March 23, 2020 asserting claims under Sections 10(b) and 20(a) the Securities Exchange Act of 1934 (the “Exchange Act”) and demanding a jury trial (“Lowry Action”). The court appointed a different shareholder as Lead Plaintiff and she filed an amended complaint on August 31, 2020. On October 15, 2020, the Company and the other-named defendants moved to dismiss the amended complaint. Derivative Lawsuits — Three derivative lawsuits have also been filed on behalf of the Company, naming it as a nominal defendant, and demanding a jury trial. On June 5, 2020, David Summers filed a shareholder derivative lawsuit (“ Summers Action”) against certain current and former directors and officers of the Company (as well as the Company as a nominal defendant), in the United States District Court for the Northern District of Illinois asserting statutory claims under Sections 10(b), 14(a) and 20(a) of the Exchange Act, as well as common law claims for breach of fiduciary duty, unjust enrichment and corporate waste. Thereafter, two similar shareholder derivative lawsuits asserting many of the same claims were filed in the same court against the same current and former directors and officers of the Company (as well as the Company as a nominal defendant). The three derivative lawsuits have been consolidated into the first-filed Summers Action. On September 6, 2020 the Court entered an order staying the Summers Action pending resolution of the motions to dismiss in the Lowry Action. In the future, we may become subject to additional litigation or governmental proceedings or investigations that could result in additional unanticipated legal costs regardless of the outcome of the litigation. If we are not successful in any such litigation, we may be required to pay substantial damages or settlement costs. Based on the current information available to the Company, the impact that current or any future stockholder litigation may have on the Company cannot be reasonably estimated. |
Regulatory Actions
Regulatory Actions | 9 Months Ended |
Sep. 30, 2020 | |
Text Block [Abstract] | |
Regulatory Actions | 2 1 . Regulatory Actions SEC Investigation — As previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on March 16, 2020, and the Form 10-K filed with the SEC on June 8,2020, the Audit Committee of the Board of Directors, with the assistance of independent legal and forensic accounting advisors, conducted an internal investigation of matters relating to the Company’s revenue recognition practices for certain contractual arrangements, primarily with OEM customers, including the accounting treatment, financial reporting and internal controls related to such arrangements (the “Investigation”). The Investigation also examined transactions to understand the practices related to manual journal entries for accrual and reserve accounts. As a result of the Investigation, the Audit Committee concluded that the Company would restate its previously issued audited financial statements for fiscal years 2018, 2017 and 2016, selected financial data for fiscal years 2015 and 2014, the unaudited financial statements for the quarterly periods within these years commencing with the first quarter of 2016, as well as the unaudited financial statements for the quarterly periods within the 2019 fiscal year. The Investigation was precipitated by an investigation by the U.S. Securities and Exchange Commission initially related to the periods 2014 through 2016. The SEC investigation is ongoing and the Company is cooperating with the SEC in its investigation. Based on the current information available to the Company the financial or other impact of the Investigation cannot be reasonably determined. Environmental Protection Agency— On January 28, 2020, RTI received an Opportunity to Show Cause letter from the United States Environmental Protection Agency (“EPA”). The letter alleged potential violations of hazardous waste regulations at the Company’s Alachua, Florida facilities based on a November 20, 2019 inspection conducted by EPA, and offered the Company the opportunity to meet with EPA to explain why EPA should not take any formal enforcement action. The Company held a virtual meeting with EPA on May 19, 2020 to discuss the corrective actions it had taken in response to EPA’s letter. During subsequent discussions, EPA has indicated that it intends to impose a penalty on the Company related to the allegations in the letter. The Company has recorded a liability for the amount the EPA has communicated they intend to impose on the Company related to the allegations in the letter which is included in accrued expenses in the condensed consolidated balance sheet. The Company is in negotiations with EPA. |
Related Party
Related Party | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party | 22. Related Party On July 15, 2020, the Board appointed Stuart F. Simpson to serve as the Chairman of the Board, effective immediately upon consummation of the Transactions. On July 20, 2020, Mr. Simpson entered into a consulting agreement (“Consulting Agreement”) with the Company, pursuant to which he will provide consulting services to the Company. The Consulting Agreement has an initial term of three years, but may be extended with the mutual agreement of the parties. Mr. Simpson will be entitled to an annual consulting fee of $275,000 per year during the term of the Consulting Agreement, payable in 12 equal monthly installments, and the Company agreed to enter into a restricted stock award agreement, pursuant to which the Company will grant to Mr. Simpson a restricted stock award equal to $825,000. The restricted stock grant shall vest in three equal amounts on the first, second and third anniversaries of the grant date. These amounts are in lieu of any amounts Mr. Simpson would otherwise receive as a director. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 2 3 . Subsequent Events The Company evaluated subsequent events as of the issuance date of the consolidated financial statements as defined by FASB ASC 855, Subsequent Events On Sept 29, 2020, the Company entered into a Stock Purchase Agreement As consideration for the Acquisition, the Company paid to the Seller $30,000,000 in cash and issue to the Seller 6,250,000 shares of common stock, par value $0.001 of the Company (“ Common Stock ”). In addition, following the closing, the Seller will be entitled to receive contingent consideration from the Company valued in an aggregate amount of up to $83,000,000, to be paid through the issuance of Common Stock or the payment of cash, contingent upon and following the achievement of certain regulatory, commercial and utilization milestones by specified time periods occurring up to the sixth (6th) anniversary of the closing. The Purchase Agreement provides that the Company will issue Common Stock to satisfy any contingent consideration payable to the Seller, until the total number of shares of Common Stock issued to the Seller pursuant to the Purchase Agreement (including the 6,250,000 shares of Common Stock issued at closing) is equal to 14,900,000 shares of Common Stock (or otherwise, to the extent a lower number, the maximum number of shares of Common Stock that would not require obtaining stockholder approval under the applicable rules of the Nasdaq Stock Market). Following the attainment of that limitation, the post-closing contingent payments would be payable in cash. The number of shares of Common Stock issued as contingent consideration with respect to the achievement of a post-closing milestone, if any, will be calculated based on the volume weighted average price of the Common Stock for the five (5) day trading period commencing on the opening of trading on the third trading day following the achievement of the applicable milestone. The Purchase Agreement also includes certain covenants and obligations of the Company with respect to the operation of the business of Holo Surgical that apply during the period in which the milestones may be achieved. The Acquisition was closed on October 23, 2020. The preliminary valuation of the acquired assets and liabilities is not yet complete, and as such, the Company has not yet completed its allocation of the purchase price allocation for the acquisition. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Changes And Error Corrections [Abstract] | |
Immaterial restatement of earnings per share (EPS) | Immaterial restatement of earnings per share (EPS) The Company identified errors in the calculation of its historical basic and diluted EPS. In the historical periods presented in the filing, the weighted average basic and diluted shares incorrectly included treasury stock, restricted stock awards, and restricted stock units. The weighted average shares used in the restated basic and diluted EPS from continuing operations and discontinued operation has been corrected. |
Significant New Accounting Policies | Significant New Accounting Policies Derivative Instruments – The Company reviews debt agreements for embedded features. If these features are not clearly and closely related to the debt host, they meet the definition of a derivative and require bifurcation from the host contract. All derivative instruments, including embedded derivatives are recorded on the balance sheet at their respective fair values. The Company will adjust the carrying value of the derivative liability to fair value at each subsequent reporting date. The changes in the fair value of the derivatives are recorded in the period they occur. |
Liquidity | Liquidity As the global outbreak of COVID-19 continues to rapidly evolve, it could continue to materially and adversely affect our revenues, financial condition, profitability, and cash flows for an indeterminate period of time. In connection with the Transactions on July 20, 2020, the Company (i) paid in full its $80.0 million revolving credit facility under that certain Credit Agreement dated as of June 5, 2018, by and among Surgalign Spine Technologies, Inc. (formerly known as RTI Surgical, Inc.), as a borrower, Pioneer Surgical Technology, Inc., our wholly-owned subsidiary, as a borrower, the other loan parties thereto as guarantors, JPMorgan Chase Bank, N.A., as lender and as administrative agent for the JPM Lenders, as amended (the “2018 Credit Agreement”), (ii) terminated the 2018 Credit Agreement, (iii) paid in full its $ 100.0 million term loan and $ 30.0 million incremental term loan commitment under that certain Second Lien Credit Agreement, dated as of March 8, 2019, by and among Surgalign Spine Technologies, Inc., as borrower, the lenders party thereto from time to time and Ares Capital Corporation, as administrative agent for the other lenders party thereto, as amended (the “2019 Credit Agreement”) and (iv) terminated the 2019 Credit Agreement. Additionally, the Company redeemed all of the outstanding shares of Series A Convertible Preferred Stock. As discussed in Note 21, the Securities and Exchange Commission (“SEC”) has an active investigation that remains ongoing. The Company continues to cooperate with the SEC in relation to the investigation. Based on current information available to the Company, the impact associated with SEC investigation and shareholder litigation may have on the Company cannot be reasonably estimated. Going Concern The accompanying consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with generally accepted accounting principles in the United States of America. The going concern basis of presentation assumes that we will continue in operation one year after the date these financial statements are issued, and we will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. The coronavirus (COVID-19) pandemic, as well as the corresponding governmental response and the Company’s management of the crisis has had a significant impact on the Company’s business. The consequences of the outbreak and impact on the economy continues to evolve and the full extent of the impact is uncertain as of the date of this filing. The outbreak has already brought a significant disruption to the operations of the Company. The continued disruptions to our business as a result of COVID-19 has resulted in a material adverse effect on our business, operating results and financial condition. The full extent to which the COVID-19 pandemic will impact our business will depend on future developments that are highly uncertain and cannot be accurately predicted, including the possibility that new adverse information may emerge concerning COVID-19 and additional actions to contain it or treat its impact may be required. As of September 30, 2020, we had cash of $95,790 and an accumulated deficit of $384,922. For the nine-months ended September 30, 2020, we had a loss from continuing operations of $75,890. We have incurred losses from operations in the previous two fiscal years and did not generate positive cash flows from operations in fiscal year 2019 or for the nine-months ended September 30, 2020. The Company closed on the sale of the OEM business to Ardi Bidco, Ltd., on July 20, 2020 and upon the close of the sale, the Company repaid all of its debt obligations in full. Additionally, all preferred stock was also redeemed by Water Street Healthcare Partners, resulting in cash payment of $66,519 during the third quarter of 2020. During the third quarter of 2020, the Company had announced that it had acquired Holosurgical, Inc. (“Holosurgical”). The acquisition closed on October 23, 2020 (see Note 22, Subsequent Events). Under the terms of the acquisition agreement, Surgalign paid $30 million in cash and issued 6.25 million shares of Surgalign common stock valued at approximately $12 million. In addition, further contingent consideration valued at up to $83 million may be payable in common stock and cash upon achievement of certain regulatory, developmental, and commercial milestones. The first milestone achievement to Holosurgical relating to regulatory approval could occur as early as the second half of 2021. The Company is projecting it will continue to generate significant negative operating cash flows over the next 12-months and beyond. In consideration of i) COVID-19 uncertainties, ii) negative cash flows that are projected over the next 12-month period, iii) the income taxes to be paid related to the gain on sale associated with the OEM business, and iv) approx. $10 million in contingent consideration amounts which are expected to become due to the former owners of Holosurgical if regulatory approval in the US is obtained in 2021, which would paid through combination of common stock and cash; the Company has forecasted the need to raise additional capital in order to continue as a going concern. The Company’s operating plan for the next 12-month period also includes continued investments in its product pipeline which will necessitate additional debt and/or equity financing in addition to the funding of future operations through 2021 and beyond. The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. If cash resources are insufficient to satisfy the Company’s on-going cash requirements through 2021, the Company will be required to scale back operations, reduce research and development expenses, and postpone, as well as suspend capital expenditures, in order to preserve liquidity. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing. In consideration of the inherent risks and uncertainties that exist in relation to both elective surgeries, as well as in relation to worsening of global economic conditions resulting from ongoing COVID-19 pandemic, along with the cash paid to acquire Holosurgical and potential contingent consideration milestone payments, a portion of which are expected to be paid in common stock and/or cash which may become due in 2021; management has concluded that substantial doubt exists with respect to the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Management is planning to raise additional debt and/or equity financing and will attempt to curtail discretionary expenditures in the future, if necessary, however, in consideration of the risks and uncertainties mentioned, such plans cannot be considered probable of occurring at this time. The recoverability of a major portion of the recorded asset amounts shown in the Company’s accompanying consolidated balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its funding requirements on a continuous basis, to maintain existing financing and to succeed in its future operations. The Company’s financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. |
Recently Adopted and Issued Accounting Standards | In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) and other interbank offered rates. This guidance is effective beginning on March 12, 2020 through December 31, 2022. The Company adopted ASU 2020-04 and it did not have an impact on its condensed consolidated financial statements. In May 2019, the FASB ASU Financial Instruments — Credit Losses (Topic 326) In April 2019, the FASB issued ASU No. 2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities; Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments Credit losses for trade receivables is determined based on historical information, current information and reasonable and supportable forecasts. The Company has concluded that the adoption of the standard was not material as the composition of the trade receivables at the reporting date is consistent with that used in developing the historical credit-loss percentages. Further, the risk characteristics of the Company’s customer and composition of the portfolio have not changed significantly over time. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Schedule of Assets and Liabilities, Financial Results and Operating and Investing Cash Flows of Discontinued Operations | The following tables shows the assets and liabilities of the discontinued operations: As of December 31, 2019 Carrying amounts of the major classes of assets included in discontinued operations: Accounts receivable - net $ 36,072 Inventories - net 99,575 Prepaid and other current assets 2,735 Total current assets 138,382 Property, plant and equipment - net 69,102 Deferred tax assets - net - Goodwill 55,384 Other intangible assets - net 10,492 Other assets - net 873 Total noncurrent assets 135,851 Total assets of discontinued operations $ 274,233 Carrying amounts of the major classes of liabilities included in discontinued operations: Current Liabilities: Accounts payable $ 19,010 Accrued expenses 17,814 Current portion of deferred revenue 2,748 Current portion of long-term obligations 174,177 Total current liabilities 213,749 Other long-term liabilities 285 Total liabilities of discontinued operations $ 214,034 The following tables shows the financial results of the discontinued operations: Three Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Major classes of line items constituting net income from discontinued operations Revenues $ 6,877 $ 48,039 $ 87,192 $ 142,467 Costs of processing and distribution 4,006 25,910 49,928 76,370 Gross profit 2,871 22,129 37,264 66,097 Expenses: Marketing, general and administrative 2,259 4,972 12,636 16,993 Severance and restructuring costs - - 604 - Transaction and integration expenses 11,811 120 23,598 120 Total expenses 14,070 5,092 36,838 17,113 Operating (loss) income (11,199 ) 17,037 426 48,984 Other expense (income): Interest expense 5,094 3,718 14,632 8,957 Loss on extinguishment of debt 2,686 - 2,686 - Derivative loss - - 12,641 - Foreign exchange (gain) loss 17 27 (3 ) 40 Total other expense - net 7,797 3,745 29,956 8,997 (Loss) income from discontinued operations (18,996 ) 13,292 (29,530 ) 39,987 Gain on sale of net assets of discontinued operations 210,866 - 210,866 - Income from discontinued operations before income tax provision 191,871 13,292 181,337 39,987 Income tax provision (42,534 ) (1,458 ) (39,189 ) (5,101 ) Net Income from discontinued operations $ 149,337 $ 11,834 $ 142,148 $ 34,886 Total operating and investing cash flows of discontinued operations for the nine months ended September 30, 2020 and 2019 are comprised of the following, which exclude the effect of income taxes: Nine Months Ended September 30 September 30 2020 2019 Significant operating non-cash reconciliation items: Depreciations and amortization $ 4,633 $ 6,445 Provision for bad debt and products returns $ 650 $ 56 Provision on inventory write-downs $ - $ 1,455 Revenue recognized due to change in deferred revenue $ (2,618 ) $ (3,772 ) Deferred income tax provision $ (3,644 ) $ (184 ) Stock-based compensation $ 792 $ 401 Gain on sale of discontinued assets, net $ (210,866 ) $ - Paid in kind interest expense $ - $ 2,948 Loss on extinguishment of debt $ 2,686 - Amortizations of debt issuance costs $ 283 361 Amortizations of debt discount $ 2,479 - Significant investing items: Purchase of property, plant and equipment $ (1,867 ) $ (5,171 ) Patent and acquired intangible asset costs $ (419 ) $ (1,786 ) Proceeds from sale of OEM business $ 437,097 $ - |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Total Revenue by Region | The Company’s entire revenue for the three and nine months ended September 30, 2020 and 2019 were recognized at a point in time. The following table represents total revenue by region: For the Three Month Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenues: Domestic $ 23,690 $ 24,292 $ 62,917 $ 70,496 International 4,236 4,409 12,645 15,353 Total revenues from contracts with customers $ 27,926 $ 28,702 $ 75,562 $ 85,849 |
Acquisition of Paradigm Spine_2
Acquisition of Paradigm Spine, LLC (Tables) - Paradigm Spine [Member] | 9 Months Ended |
Sep. 30, 2020 | |
Acquisition Purchase Price | The purchase price was financed as follows: (In thousands) Cash proceeds from second lien credit agreement $ 100,000 Fair market value of securities issued 60,730 Fair market value of contingent earnout 72,177 Total purchase price $ 232,907 |
Summary of Changes to Fair Value of Acquired Assets and Liabilities | The table below represents the final allocation of the total purchase price to Paradigm ’s tangible and intangible assets and liabilities fair values as of March 8, 2019 . Balance at March 8, 2019 (In thousands) Cash $ 307 Accounts receivable 5,220 Inventories 17,647 Other current assets 934 Property, plant and equipment 379 Other non-current assets 1,079 Current liabilities (6,169 ) Lease liabilities (1,079 ) Net tangible assets acquired 18,318 Other intangible assets 79,000 Goodwill 135,589 Total net assets acquired $ 232,907 |
Pro Forma Information of Operations | The following unaudited pro forma information shows the results of the Paradigm’s operations as though the acquisition had occurred as of the beginning of the prior comparable period, January 1, 2019, (in thousands): |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation Recognized | For the three and nine months ended September 30, 2020 and 2019, the Company recognized stock-based compensation as follows: For the Three Month Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Stock-based compensation: Costs of processing and distribution $ 33 $ 36 $ 105 $ 108 Marketing, general and administrative $ 1,112 $ 774 $ 3,103 $ 2,845 Research and development $ 5 $ 15 $ 35 $ 45 Transaction and integration expenses $ 1,515 — $ 1,515 — Total $ 2,665 $ 825 $ 4,758 $ 2,998 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation of Common Stock used in Calculation of Basic and Diluted Earnings Per Share | A reconciliation of the number of shares of common stock used in the calculation of basic and diluted net income per common share is presented below: For the Three Month Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Basic shares 73,212,662 72,472,591 72,933,038 69,340,006 Effect of dilutive securities: Stock options — — — — RSA and RSU — Preferred stock Series A — — — — Diluted shares 73,212,662 72,472,591 72,933,038 69,340,006 |
Schedule of Number of Potential Dilutive Shares that Excluded Due to Anti-dilutive Effect | The following table includes the number of potential dilutive shares that were excluded due to the anti-dilutive effect: For the Three Month Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Stock Option - 327,085 3,748 667,015 RSU and RSA 1,515,137 852,131 1,191,573 526,981 Convertible Series A Preferred Stock 3,308,854 15,152,761 11,221,121 15,152,761 Total 4,823,991 16,331,977 12,416,442 16,346,757 |
Prepaid and Other Current Ass_2
Prepaid and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Schedule of Prepaid and Other Current Assets | Prepaid and Other Current Assets are as follows: September 30, December 31, 2020 2019 Income tax receivable $ 5 $ 2,785 Prepaid expenses 2,356 996 Other 1,917 253 $ 4,278 $ 4,034 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property Plant And Equipment [Abstract] | |
Schedule of Net Book Value of Property, Plant and Equipment | The net book value of p roperty, plant and equipment is as follows September 30, December 31, 2020 2019 Processing equipment 39 110 Surgical instruments 517 541 Building and Office equipment, furniture and fixtures 50 122 Computer equipment and software 11 16 $ 617 $ 789 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The change in the carrying amount of goodwill for the nine months ended September 30 September 30, December 31, 2020 2019 Balance at January 1 $ - $ 4,414 Goodwill acquired related to Paradigm acquisition — 135,589 Goodwill impairment from continuing operations — (140,003 ) Balance at end of period $ - $ - |
Fair Value Information (Tables)
Fair Value Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of Impairments of Long-Lived Assets and Related Post Impairment Fair Values | The following table summarizes impairments of long-lived assets and the related post impairment fair values of the corresponding assets for the three and nine months ended September 30, 2020. For the Three Months Ended For the Nine Months Ended September 30, 2020 September 30, 2020 Impairment Fair Value Impairment Fair Value Property, plant and equipment - net 9,210 617 11,971 617 Intangibles 146 — 146 — $ 9,356 $ 617 $ 12,117 $ 617 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Accrued Expenses | Accrued expenses are as follows: September 30, December 31, 2020 2019 Accrued compensation $ 3,084 $ 2,911 Accrued distributor commissions 3,765 4,325 Accrued business development expenses - 2,555 Accrued leases 607 967 Accrued acquisition contingency 1,000 - Other 5,264 4,341 $ 13,720 $ 15,099 |
Other long-term liabilities (Ta
Other long-term liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities Noncurrent [Abstract] | |
Summary of Other long-term liabilities | Other long-term liabilities are as follows: September 30, December 31, 2020 2019 Lease obligations 1,121 1,487 Acquisition contingencies — 1,130 Other 202 245 $ 1,323 $ 2,862 |
Preferred Stock (Tables)
Preferred Stock (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of Preferred Stock | Preferred stock is as follows: Preferred Stock Liquidation Preferred Stock Issuance Net Value Costs Total Balance at January 1, 2020 $ 66,519 $ (109 ) $ 66,410 Amortization of preferred stock issuance costs — 46 46 Balance at March 31, 2020 66,519 (63 ) 66,456 Amortization of preferred stock issuance costs — 46 46 Balance at June 30, 2020 $ 66,519 $ (17 ) $ 66,502 Amortization of preferred stock issuance costs — 17 17 Redemption of preferred stock (66,519 ) (66,519 ) Balance at September 30, 2020 $ - $ - $ - Preferred Stock Liquidation Preferred Stock Issuance Net Value Costs Total Balance at January 1, 2019 $ 66,519 $ (293 ) $ 66,226 Amortization of preferred stock issuance costs — 46 46 Balance at March 31, 2019 66,519 (247 ) 66,272 Amortization of preferred stock issuance costs — 46 46 Balance at June 30, 2019 $ 66,519 $ (201 ) $ 66,318 Amortization of preferred stock issuance costs — 46 46 Balance at September 30, 2019 $ 66,519 $ (155 ) $ 66,364 |
Severance and Restructuring C_2
Severance and Restructuring Costs (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Employee Severance [Member] | |
Schedule of Restructuring Charges | Accrued severance and restructuring costs at January 1, 2020 $ 136 Severance and restructuring costs accrued in 2020 604 Subtotal severance and restructuring costs 740 Severance and restructuring related cash payments (740 ) Accrued severance and restructuring charges at September 30, 2020 $ - |
Operations and Organization - A
Operations and Organization - Additional Information (Detail) $ in Millions | Sep. 29, 2020USD ($) | Jul. 21, 2020Segment | Jul. 20, 2020USD ($)Segment | Sep. 30, 2020USD ($) | Sep. 30, 2020Country |
Operations And Organization [Line Items] | |||||
Number of reportable segments | Segment | 1 | 2 | |||
Holo Surgical Inc. [Member] | Stock Purchase Agreement [Member] | |||||
Operations And Organization [Line Items] | |||||
Cash to be paid at closing | $ 42 | $ 30 | |||
Future milestone payment period | 6 years | ||||
Ardi Bidco Ltd. [Member] | Discontinued Operations, Held-for-sale [Member] | |||||
Operations And Organization [Line Items] | |||||
Consideration received or receivable for disposal of assets | $ 440 | ||||
Minimum [Member] | |||||
Operations And Organization [Line Items] | |||||
Number of countries that receive distribution | Country | 50 | ||||
Maximum [Member] | Holo Surgical Inc. [Member] | Stock Purchase Agreement [Member] | |||||
Operations And Organization [Line Items] | |||||
Payments to acquire businesses | $ 125 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) - USD ($) shares in Thousands, $ in Thousands | Sep. 29, 2020 | Jul. 24, 2020 | Jul. 20, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Basis Of Presentation [Line Items] | ||||||||
Payment on redemption of preferred stock | $ 67,000 | $ 66,519 | ||||||
Cash and cash equivalents | 95,790 | $ 95,790 | $ 5,608 | |||||
Accumulated deficit | 384,922 | 384,922 | $ 451,179 | |||||
Net loss from continuing operations | 26,653 | $ 16,972 | 75,890 | $ 49,187 | ||||
COVID-19 [Member] | ||||||||
Basis Of Presentation [Line Items] | ||||||||
Contingent consideration amounts | 10,000 | 10,000 | ||||||
Holo Surgical Inc. [Member] | Stock Purchase Agreement [Member] | ||||||||
Basis Of Presentation [Line Items] | ||||||||
Cash to be paid at closing | $ 42,000 | 30,000 | ||||||
Number of common stock to be issued at closing, value | $ 12,000 | |||||||
Holo Surgical Inc. [Member] | Stock Purchase Agreement [Member] | Common Stock [Member] | ||||||||
Basis Of Presentation [Line Items] | ||||||||
Business acquisition, common shares issuable at closing | 6,250 | |||||||
Holo Surgical Inc. [Member] | Stock Purchase Agreement [Member] | Common Stock [Member] | Maximum [Member] | ||||||||
Basis Of Presentation [Line Items] | ||||||||
Business acquisition, contingent consideration payable upon achievement of post-closing milestones | $ 83,000 | $ 83,000 | ||||||
Revolving Credit Facility [Member] | 2018 Loan Agreement [Member] | ||||||||
Basis Of Presentation [Line Items] | ||||||||
Debt retirement | $ 80,000 | |||||||
Ares Term Loans [Member] | 2019 Loan Agreement [Member] | Second Amendment To Second Lien Credit Agreement [Member] | ||||||||
Basis Of Presentation [Line Items] | ||||||||
Debt retirement | 100,000 | |||||||
Incremental Term Loan [Member] | 2019 Loan Agreement [Member] | Second Amendment To Second Lien Credit Agreement [Member] | ||||||||
Basis Of Presentation [Line Items] | ||||||||
Debt retirement | $ 30,000 |
Recently Adopted and Issued A_2
Recently Adopted and Issued Accounting Standards - Additional Information (Detail) | Sep. 30, 2020 |
Accounting Standards Update 2020-04 [Member] | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Change in accounting principle, accounting standards update, adopted [true false] | true |
Change in accounting principle, accounting standards update, adoption date | Mar. 12, 2020 |
Change in accounting principle, accounting standards update, immaterial effect [true false] | true |
Accounting Standards Update 2019-12 [Member] | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Change in accounting principle, accounting standards update, adopted [true false] | true |
Change in accounting principle, accounting standards update, adoption date | Jan. 1, 2020 |
Change in accounting principle, accounting standards update, immaterial effect [true false] | true |
Accounting Standards Update 2019-05 [Member] | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Change in accounting principle, accounting standards update, adopted [true false] | true |
Change in accounting principle, accounting standards update, adoption date | Dec. 15, 2019 |
Change in accounting principle, accounting standards update, immaterial effect [true false] | true |
Accounting Standards Update 2017-12 [Member] | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Change in accounting principle, accounting standards update, adopted [true false] | true |
Change in accounting principle, accounting standards update, adoption date | Jan. 1, 2020 |
Change in accounting principle, accounting standards update, immaterial effect [true false] | true |
Accounting Standards Update 2016-13 [Member] | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Change in accounting principle, accounting standards update, adopted [true false] | true |
Change in accounting principle, accounting standards update, adoption date | Jan. 1, 2020 |
Change in accounting principle, accounting standards update, immaterial effect [true false] | true |
Accounting Standards Update 2018-13 [Member] | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Change in accounting principle, accounting standards update, adopted [true false] | true |
Change in accounting principle, accounting standards update, adoption date | Dec. 31, 2019 |
Change in accounting principle, accounting standards update, immaterial effect [true false] | true |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Assets and Liabilities of Discontinued Operations (Detail) $ in Thousands | Dec. 31, 2019USD ($) |
Carrying amounts of the major classes of assets included in discontinued operations: | |
Accounts receivable - net | $ 36,072 |
Inventories - net | 99,575 |
Prepaid and other current assets | 2,735 |
Total current assets | 138,382 |
Property, plant and equipment - net | 69,102 |
Goodwill | 55,384 |
Other intangible assets - net | 10,492 |
Other assets - net | 873 |
Total noncurrent assets | 135,851 |
Total assets of discontinued operations | 274,233 |
Current Liabilities: | |
Accounts payable | 19,010 |
Accrued expenses | 17,814 |
Current portion of deferred revenue | 2,748 |
Current portion of long-term obligations | 174,177 |
Total current liabilities | 213,749 |
Other long-term liabilities | 285 |
Total liabilities of discontinued operations | $ 214,034 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Detail) - USD ($) $ in Thousands | Jul. 20, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||
Income tax expense benefit | $ (3,591) | $ (3,492) | $ (9,955) | $ 1,600 | |
Tax expense related to gain on divestiture | $ 600 | ||||
Minimum [Member] | |||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||
Transitional services period related to it support, customer and vendor management, and procurement | 3 months | ||||
Maximum [Member] | |||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||
Transitional services period related to it support, customer and vendor management, and procurement | 12 months | ||||
Revolving Credit Facility [Member] | 2018 Loan Agreement [Member] | |||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||
Debt retirement | $ 80,000 | ||||
Ares Term Loans [Member] | 2019 Loan Agreement [Member] | Second Amendment To Second Lien Credit Agreement [Member] | |||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||
Debt retirement | 100,000 | ||||
Incremental Term Loan [Member] | 2019 Loan Agreement [Member] | Second Amendment To Second Lien Credit Agreement [Member] | |||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||
Debt retirement | $ 30,000 |
Discontinued Operations - Sch_2
Discontinued Operations - Schedule of Financial Results of Discontinued Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Discontinued Operations And Disposal Groups [Abstract] | ||||
Revenues | $ 6,877 | $ 48,039 | $ 87,192 | $ 142,467 |
Costs of processing and distribution | 4,006 | 25,910 | 49,928 | 76,370 |
Gross profit | 2,871 | 22,129 | 37,264 | 66,097 |
Expenses: | ||||
Marketing, general and administrative | 2,259 | 4,972 | 12,636 | 16,993 |
Severance and restructuring costs | 604 | |||
Transaction and integration expenses | 11,811 | 120 | 23,598 | 120 |
Total expenses | 14,070 | 5,092 | 36,838 | 17,113 |
Operating (loss) income | (11,199) | 17,037 | 426 | 48,984 |
Interest expense | 5,094 | 3,718 | 14,632 | 8,957 |
Loss on extinguishment of debt | 2,686 | 2,686 | ||
Derivative loss | 12,641 | |||
Foreign exchange (gain) loss | 17 | 27 | (3) | 40 |
Total other expense - net | 7,797 | 3,745 | 29,956 | 8,997 |
(Loss) income from discontinued operations | (18,996) | 13,292 | (29,530) | 39,987 |
Gain on sale of net assets of discontinued operations | 210,866 | 210,866 | ||
Income from discontinued operations before income tax provision | 191,871 | 13,292 | 181,337 | 39,987 |
Income tax provision | (42,534) | (1,458) | (39,189) | (5,101) |
Net Income from discontinued operations | $ 149,337 | $ 11,834 | $ 142,148 | $ 34,886 |
Discontinued Operations - Summa
Discontinued Operations - Summary of Operating and Investing Cash Flows of Discontinued Operations (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Significant operating non-cash reconciliation items: | ||
Stock-based compensation | $ 5,550 | $ 3,399 |
Gain on sale of discontinued assets, net | 210,866 | |
Paid in kind interest expense | 2,948 | |
Loss on extinguishment of debt | (2,686) | |
Amortization of debt issuance costs | 283 | 361 |
Amortization of debt discount | 2,479 | |
Significant investing items: | ||
Purchase of property, plant and equipment | (817) | |
Discontinued Operations [Member] | ||
Significant operating non-cash reconciliation items: | ||
Depreciations and amortization | 4,633 | 6,445 |
Provision for bad debt and products returns | 650 | 56 |
Provision on inventory write-downs | 1,455 | |
Revenue recognized due to change in deferred revenue | (2,618) | (3,772) |
Deferred income tax provision | (3,644) | (184) |
Stock-based compensation | 792 | 401 |
Gain on sale of discontinued assets, net | (210,866) | |
Paid in kind interest expense | 2,948 | |
Loss on extinguishment of debt | 2,686 | |
Amortization of debt issuance costs | 283 | 361 |
Amortization of debt discount | 2,479 | |
Significant investing items: | ||
Purchase of property, plant and equipment | (1,867) | (5,171) |
Patent and acquired intangible asset costs | (419) | $ (1,786) |
Proceeds from sale of OEM business | $ 437,097 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Schedule of Total Revenue by Region (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 27,926 | $ 28,702 | $ 75,562 | $ 85,849 |
Transferred At Point In Time [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 27,926 | 28,702 | 75,562 | 85,849 |
Transferred At Point In Time [Member] | Domestic [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 23,690 | 24,292 | 62,917 | 70,496 |
Transferred At Point In Time [Member] | International [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 4,236 | $ 4,409 | $ 12,645 | $ 15,353 |
Acquisition of Paradigm Spine_3
Acquisition of Paradigm Spine, LLC - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | Mar. 08, 2019 | Dec. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||||
Common stock par value | $ 0.001 | $ 0.001 | ||
Goodwill | $ 4,414 | |||
Paradigm Spine [Member] | ||||
Business Acquisition [Line Items] | ||||
Potential debt to finance business combination | $ 100,000 | |||
Number of common stock to be issued at closing, shares | 10,729,614 | |||
Cash consideration threshold working capital amount | $ 7,000 | |||
Potential debt to finance business combination | 100,000 | |||
Contingent liability | 72,177 | |||
Acquisition and integration expenses | $ 15,537 | |||
Business development expenses | 462 | |||
Severance expenses | $ 896 | |||
Inventory fair value, current | 7,122 | |||
Inventory fair value, noncurrent | 10,525 | |||
Goodwill | 135,589 | |||
Paradigm Spine [Member] | Maximum [Member] | ||||
Business Acquisition [Line Items] | ||||
Number of common stock to be issued at closing, value | $ 50,000 | |||
Master Transaction Agreement [Member] | ||||
Business Acquisition [Line Items] | ||||
Common stock par value | $ 0.001 | |||
Master Transaction Agreement [Member] | One Fully Paid And Nonassessable [Member] | ||||
Business Acquisition [Line Items] | ||||
Common stock par value | $ 0.001 |
Acquisition of Paradigm Spine_4
Acquisition of Paradigm Spine, LLC - Acquisition Purchase Price (Detail) - USD ($) $ in Thousands | Mar. 08, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Business Acquisition [Line Items] | |||
Cash proceeds from second lien credit agreement | $ 89,892 | $ 118,000 | |
Paradigm Spine [Member] | |||
Business Acquisition [Line Items] | |||
Cash proceeds from second lien credit agreement | $ 100,000 | ||
Fair market value of securities issued | 60,730 | ||
Fair market value of contingent earnout | 72,177 | ||
Total purchase price | $ 232,907 | $ 99,692 |
Acquisition of Paradigm Spine_5
Acquisition of Paradigm Spine, LLC - Summary of Changes to Fair Value of Acquired Assets and Liabilities (Detail) - USD ($) $ in Thousands | Mar. 08, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||
Goodwill | $ 4,414 | |
Paradigm Spine [Member] | ||
Business Acquisition [Line Items] | ||
Cash | $ 307 | |
Accounts receivable | 5,220 | |
Inventories | 17,647 | |
Other current assets | 934 | |
Property, plant and equipment | 379 | |
Other non-current assets | 1,079 | |
Current liabilities | (6,169) | |
Lease liabilities | (1,079) | |
Net tangible assets acquired | 18,318 | |
Other intangible assets | 79,000 | |
Goodwill | 135,589 | |
Total net assets acquired | $ 232,907 |
Acquisition of Paradigm Spine_6
Acquisition of Paradigm Spine, LLC. - Pro Forma Information of Operations (Detail) - Paradigm Spine [Member] $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Business Acquisition, Pro Forma Information [Line Items] | |
Revenues | $ 27,251 |
Net loss applicable to common shares | $ (12,705) |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 2,665 | $ 825 | $ 4,758 | $ 2,998 |
Discontinued Operations [Member] | OEM Business [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 552 | $ 144 | $ 792 | $ 401 |
2018 Equity Incentive Plan [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock options, granted | 1,561,069 | |||
Restricted Stock Awards [Member] | 2018 Equity Incentive Plan [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Granted | 1,690,597 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-Based Compensation Recognized (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | $ 2,665 | $ 825 | $ 4,758 | $ 2,998 |
Costs of Processing and Distribution [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | 33 | 36 | 105 | 108 |
Marketing General and Administrative [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | 1,112 | 774 | 3,103 | 2,845 |
Research and Development Expense [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | 5 | $ 15 | 35 | $ 45 |
Transaction and Integration Expenses [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation | $ 1,515 | $ 1,515 |
Net Loss Per Common Share - Rec
Net Loss Per Common Share - Reconciliation of Common Stock Used in Calculation of Basic and Diluted Earnings Per Share (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Weighted Average Number Of Shares Outstanding Reconciliation [Line Items] | ||||
Basic shares | 73,212,662 | 72,472,591 | 72,933,038 | 69,340,006 |
Effect of dilutive securities: | ||||
Preferred stock Series A | 0 | 0 | 0 | 0 |
Diluted shares | 73,212,662 | 72,472,591 | 72,933,038 | 69,340,006 |
Stock Option [Member] | ||||
Effect of dilutive securities: | ||||
Dilutive securities | 0 | 0 | 0 | 0 |
RSU and RSA [Member] | ||||
Effect of dilutive securities: | ||||
Dilutive securities | 0 | 0 | 0 | 0 |
Net Loss Per Common Share - Sch
Net Loss Per Common Share - Schedule of Number of Potential Dilutive Shares that Excluded Due to Anti-dilutive Effect (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Number of potential dilutive shares excluded due to anti-dilutive effect | 4,823,991 | 16,331,977 | 12,416,442 | 16,346,757 |
Stock Option [Member] | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Number of potential dilutive shares excluded due to anti-dilutive effect | 327,085 | 3,748 | 667,015 | |
RSU and RSA [Member] | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Number of potential dilutive shares excluded due to anti-dilutive effect | 1,515,137 | 852,131 | 1,191,573 | 526,981 |
Convertible Series A Preferred Stock [Member] | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Number of potential dilutive shares excluded due to anti-dilutive effect | 3,308,854 | 15,152,761 | 11,221,121 | 15,152,761 |
Net Loss Per Common Share - Add
Net Loss Per Common Share - Additional Information (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive stock excluded from the computation of diluted EPS | 4,823,991 | 16,331,977 | 12,416,442 | 16,346,757 |
Stock Option [Member] | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive stock excluded from the computation of diluted EPS | 5,305,329 | 2,315,856 | 4,963,654 | 1,653,991 |
Inventories - Additional Inform
Inventories - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | ||||
Provision for inventory write-downs | $ 5,624 | $ 1,361 | $ 9,597 | $ 4,027 |
Prepaid and Other Current Ass_3
Prepaid and Other Current Assets - Schedule of Prepaid and Other Current Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | ||
Income tax receivable | $ 5 | $ 2,785 |
Prepaid expenses | 2,356 | 996 |
Other | 1,917 | 253 |
Prepaid and other current assets | $ 4,278 | $ 4,034 |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Net Book Value of Property, Plant and Equipment (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Net book value of property, plant and equipment | $ 617 | $ 789 |
Processing Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Net book value of property, plant and equipment | 39 | 110 |
Building and Office equipment, furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Net book value of property, plant and equipment | 50 | 122 |
Surgical Instruments [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Net book value of property, plant and equipment | 517 | 541 |
Computer Equipment and Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Net book value of property, plant and equipment | $ 11 | $ 16 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation expense in connection with property, plant and equipment | $ 758 | $ 1,378 | $ 1,074 | $ 3,201 |
Property, Plant and Equipment [Member] | Spine [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Asset impairment and abandonments | $ 9,210 | $ 11,971 |
Goodwill - Schedule of Goodwill
Goodwill - Schedule of Goodwill (Detail) - USD ($) $ in Thousands | Mar. 08, 2019 | Dec. 31, 2019 |
Goodwill [Line Items] | ||
Beginning Balance | $ 4,414 | |
Goodwill impairment from continuing operations | (140,003) | |
Paradigm Spine [Member] | ||
Goodwill [Line Items] | ||
Goodwill acquired | $ 135,589 | $ 135,589 |
Ending Balance | $ 135,589 |
Goodwill - Additional Informati
Goodwill - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 08, 2019 | Dec. 31, 2019 |
Goodwill [Line Items] | ||
Goodwill impairment | $ 140,003 | |
Paradigm Spine [Member] | ||
Goodwill [Line Items] | ||
Total purchase price | $ 232,907 | |
Goodwill acquired | $ 135,589 | $ 135,589 |
Fair Value Information - Summar
Fair Value Information - Summary of Impairments of Long-Lived Assets and Related Post Impairment Fair Values (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | |
Fair Value Disclosures [Abstract] | ||
Property, plant and equipment - net, Impairment | $ 9,210 | $ 11,971 |
Property, plant and equipment - net, Impairment, Fair Value | 617 | 617 |
Intangibles, Impairment | 146 | 146 |
Impairment | 9,356 | 12,117 |
Fair Value | $ 617 | $ 617 |
Accrued Expenses - Accrued Expe
Accrued Expenses - Accrued Expenses (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Payables And Accruals [Abstract] | ||
Accrued compensation | $ 3,084 | $ 2,911 |
Accrued distributor commissions | 3,765 | 4,325 |
Accrued business development expenses | 2,555 | |
Accrued leases | 607 | 967 |
Accrued acquisition contingency | 1,000 | |
Other | 5,264 | 4,341 |
Total accrued expenses | $ 13,720 | $ 15,099 |
Other Long-Term Liabilities - S
Other Long-Term Liabilities - Summary of Other Long-term Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Other Long Term Liabilities [Line Items] | ||
Other | $ 202 | $ 245 |
Total other long-term liabilities | 1,323 | 2,862 |
Other Long Term Liabilities [Member] | ||
Other Long Term Liabilities [Line Items] | ||
Lease obligations | $ 1,121 | 1,487 |
Zyga Technology Inc [Member] | ||
Other Long Term Liabilities [Line Items] | ||
Acquisition contingencies | $ 1,130 |
Other Long Term Liabilities - A
Other Long Term Liabilities - Additional Information (Detail) - Zyga Technology Inc [Member] - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | Jan. 04, 2018 | |
Clinical and Revenue Milestones Payment [Member] | |||
Other Long Term Liabilities [Line Items] | |||
Revenue contingencies | $ 1,130 | ||
Earn Out Payment [Member] | |||
Other Long Term Liabilities [Line Items] | |||
Reduction in contingent liability | $ 130 | ||
Clinical Milestones [Member] | |||
Other Long Term Liabilities [Line Items] | |||
Revenue contingencies | $ 1,000 | ||
Clinical Milestones [Member] | Accrued Expenses [Member] | |||
Other Long Term Liabilities [Line Items] | |||
Revenue contingencies | $ 1,000 | $ 1,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | Mar. 27, 2020 | Jun. 30, 2020 | Sep. 30, 2020 | Mar. 31, 2020 |
Income Tax Disclosure [Abstract] | ||||
Primary measure of cumulative income, number of years | 3 years | |||
Deferred foreign income tax expense (benefit) included in discontinued operations | $ 3.4 | |||
Tax expense discontinued operations | $ 42.4 | |||
Net operating losses carried back period | 5 years | |||
Income tax receivable | $ 3.5 |
Preferred Stock - Additional In
Preferred Stock - Additional Information (Detail) - USD ($) $ in Thousands | Jul. 24, 2020 | Jul. 16, 2013 | Jun. 12, 2013 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Temporary Equity [Line Items] | |||||||||||
Preferred stock issuance cost | $ (17) | $ (63) | $ (109) | $ (155) | $ (201) | $ (247) | $ (293) | ||||
Payment on redemption of preferred stock | $ 67,000 | $ 66,519 | |||||||||
Private Placement [Member] | |||||||||||
Temporary Equity [Line Items] | |||||||||||
Preferred stock dividend rate | 6.00% | ||||||||||
Private Placement [Member] | Convertible Preferred Stock [Member] | |||||||||||
Temporary Equity [Line Items] | |||||||||||
Convertible preferred stock issued | $ 50,000 | ||||||||||
Preferred stock issuance cost | $ 1,290 |
Preferred Stock - Schedule of P
Preferred Stock - Schedule of Preferred Stock (Detail) - USD ($) $ in Thousands | Jul. 24, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Temporary Equity [Line Items] | |||||||||
Preferred Stock Liquidation Value | $ 66,519 | $ 66,519 | $ 66,519 | $ 66,519 | $ 66,519 | $ 66,519 | $ 66,519 | ||
Amortization of preferred stock issuance costs | $ 17 | 46 | 46 | 46 | 46 | 46 | |||
Redemption of preferred stock | $ (67,000) | $ (66,519) | |||||||
Preferred Stock Issuance Costs | (17) | (63) | (155) | (201) | (247) | (109) | (293) | ||
Net Total | $ 66,502 | $ 66,456 | $ 66,364 | $ 66,318 | $ 66,272 | $ 66,410 | $ 66,226 |
Severance and Restructuring C_3
Severance and Restructuring Costs - Additional Information (Detail) - Employee Severance [Member] $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Severance and restructuring expense | $ 604 |
OEM [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Severance and restructuring expense | $ 604 |
Severance and Restructuring C_4
Severance and Restructuring Costs - Schedule of Restructuring Charges (Detail) - Employee Severance [Member] $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Accrued severance and restructuring charges, beginning balance | $ 136 |
Severance and restructuring expense | 604 |
Subtotal severance and restructuring costs | 740 |
Severance and restructuring related cash payments | (740) |
Accrued severance and restructuring charges, ending balance | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 08, 2019 | Jan. 04, 2018 | Oct. 12, 2013 | Sep. 30, 2010 | Sep. 30, 2020 | Sep. 30, 2019 |
Medtronic [Member] | ||||||
Commitment And Contingencies [Line Items] | ||||||
Decline in cumulative fees received, trailing period | 12 months | |||||
Distribution agreement automatic renewal term | 5 years | |||||
Period prior to expiration of initial term for notice | 1 year | |||||
Renew distribution agreement | The term automatically renews for successive five-year periods, unless either party provides written notice of its intent not to renew at least one year prior to the expiration of the initial term or the applicable renewal period. Neither party provided notice of non-renewal on or before December 31, 2016, thereby triggering the five-year automatic renewal period upon the expiration of the initial term. The distribution agreement will therefore continue at least through December 31, 2022. | |||||
Zimmer [Member] | Biomet [Member] | ||||||
Commitment And Contingencies [Line Items] | ||||||
Initial agreement term | 10 years | |||||
Upfront payment | $ 13,000 | |||||
Upfront payment period | 10 days | |||||
Paradigm Spine [Member] | ||||||
Commitment And Contingencies [Line Items] | ||||||
Agreement to acquire business | $ 300,000 | |||||
Cash to be paid at closing | 150,000 | |||||
Potential debt to finance business combination | $ 100,000 | |||||
Number of common stock to be issued at closing, shares | 10,729,614 | |||||
Number of common stock to be issued at closing, value | $ 50,000 | |||||
Revenue based earnout considerations | 0 | |||||
Payments to acquire businesses | 232,907 | |||||
Cash from RTI Surgical | 232,907 | $ 99,692 | ||||
Earnout consideration | 72,177 | |||||
Paradigm Spine [Member] | Maximum [Member] | ||||||
Commitment And Contingencies [Line Items] | ||||||
Revenue based earnout considerations | $ 150,000 | |||||
Zyga Technology Inc [Member] | ||||||
Commitment And Contingencies [Line Items] | ||||||
Date of merger agreement | Jan. 4, 2018 | |||||
Payments to acquire businesses | $ 21,000 | |||||
Cash from RTI Surgical | 3,000 | |||||
Zyga Technology Inc [Member] | Clinical Milestones [Member] | ||||||
Commitment And Contingencies [Line Items] | ||||||
Earnout consideration | 1,000 | |||||
Zyga Technology Inc [Member] | Clinical Milestones [Member] | Accrued Expenses [Member] | ||||||
Commitment And Contingencies [Line Items] | ||||||
Earnout consideration | 1,000 | $ 1,000 | ||||
Zyga Technology Inc [Member] | Earn Out Payment [Member] | ||||||
Commitment And Contingencies [Line Items] | ||||||
Revenue based earnout consideration | 35,000 | |||||
Zyga Technology Inc [Member] | Revolving Credit Facility [Member] | ||||||
Commitment And Contingencies [Line Items] | ||||||
Cash proceeds from credit facility | $ 18,000 |
Legal Actions - Additional Info
Legal Actions - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2020ClaimLawsuit | |
Commitments And Contingencies Disclosure [Abstract] | |
Claims for which the Company Parties are providing defense and indemnification | Claim | 1,157 |
Number of lawsuits filed on behalf of company | Lawsuit | 3 |
Related Party - Additional Info
Related Party - Additional Information (Detail) - Mr. Simpson [Member] $ in Thousands | Jul. 20, 2020USD ($)Installmentshares |
Restricted Stock Awards [Member] | |
Related Party Transaction [Line Items] | |
Number of shares to be grants | shares | 825,000 |
Consulting Agreement [Member] | |
Related Party Transaction [Line Items] | |
Initial agreement term | 3 years |
Annual consulting fee | $ | $ 275,000 |
Number of monthly installments | Installment | 12 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - USD ($) | Sep. 29, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | ||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |
Stock Purchase Agreement [Member] | Holo Surgical Inc. [Member] | ||||
Subsequent Event [Line Items] | ||||
Business acquisition, cash to be paid at closing | $ 42,000,000 | $ 30,000,000 | ||
Stock Purchase Agreement [Member] | Holo Surgical Inc. [Member] | Common Stock [Member] | ||||
Subsequent Event [Line Items] | ||||
Business acquisition, common shares issuable at closing | 6,250,000 | |||
Stock Purchase Agreement [Member] | Holo Surgical Inc. [Member] | Common Stock [Member] | Maximum [Member] | ||||
Subsequent Event [Line Items] | ||||
Business acquisition, contingent consideration payable upon achievement of post-closing milestones | $ 83,000,000 | $ 83,000,000 | ||
Stock Purchase Agreement [Member] | Holo Surgical Inc. [Member] | Roboticine, Inc. [Member] | ||||
Subsequent Event [Line Items] | ||||
Business acquisition, cash to be paid at closing | $ 30,000,000 | |||
Common stock, par value | $ 0.001 | |||
Business acquisition, contingent consideration arrangements, description | In addition, following the closing, the Seller will be entitled to receive contingent consideration from the Company valued in an aggregate amount of up to $83,000,000, to be paid through the issuance of Common Stock or the payment of cash, contingent upon and following the achievement of certain regulatory, commercial and utilization milestones by specified time periods occurring up to the sixth (6th) anniversary of the closing. The Purchase Agreement provides that the Company will issue Common Stock to satisfy any contingent consideration payable to the Seller, until the total number of shares of Common Stock issued to the Seller pursuant to the Purchase Agreement (including the 6,250,000 shares of Common Stock issued at closing) is equal to 14,900,000 shares of Common Stock (or otherwise, to the extent a lower number, the maximum number of shares of Common Stock that would not require obtaining stockholder approval under the applicable rules of the Nasdaq Stock Market). | |||
Business acquisition, contingent consideration arrangements, basis for amount | The number of shares of Common Stock issued as contingent consideration with respect to the achievement of a post-closing milestone, if any, will be calculated based on the volume weighted average price of the Common Stock for the five (5) day trading period commencing on the opening of trading on the third trading day following the achievement of the applicable milestone. | |||
Stock Purchase Agreement [Member] | Holo Surgical Inc. [Member] | Roboticine, Inc. [Member] | Maximum [Member] | ||||
Subsequent Event [Line Items] | ||||
Business acquisition, contingent consideration payable upon achievement of post-closing milestones | $ 83,000,000 | |||
Stock Purchase Agreement [Member] | Holo Surgical Inc. [Member] | Roboticine, Inc. [Member] | Common Stock [Member] | ||||
Subsequent Event [Line Items] | ||||
Business acquisition, common shares issuable at closing | 6,250,000 | |||
Business acquisition, equity interests issued or issuable for contingent consideration upon achievement of post-closing milestones | 14,900,000 |