Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | May 03, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2024 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | OFIX | |
Entity Registrant Name | ORTHOFIX MEDICAL INC. | |
Entity Central Index Key | 0000884624 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 37,529,256 | |
Entity File Number | 0-19961 | |
Entity Tax Identification Number | 98-1340767 | |
Entity Address, Address Line One | 3451 Plano Parkway | |
Entity Address, City or Town | Lewisville | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75056 | |
City Area Code | 214 | |
Local Phone Number | 937-2000 | |
Entity Incorporation, State or Country Code | DE | |
Title of 12(b) Security | Common stock, $0.10 par value per share | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets | ||
Cash and cash equivalents | $ 26,964 | $ 33,107 |
Restricted cash | 2,500 | 4,650 |
Accounts receivable, net of allowances of $8,398 and $7,130, respectively | 125,617 | 128,098 |
Inventories | 219,076 | 222,166 |
Prepaid expenses and other current assets | 24,821 | 32,422 |
Total current assets | 398,978 | 420,443 |
Property, plant, and equipment, net | 158,132 | 159,060 |
Intangible assets, net | 112,761 | 117,490 |
Goodwill | 194,934 | 194,934 |
Other long-term assets | 41,245 | 33,388 |
Total assets | 906,050 | 925,315 |
Current liabilities | ||
Accounts payable | 57,147 | 58,357 |
Current portion of long-term debt | 3,125 | 1,250 |
Current portion of finance lease liability | 724 | 708 |
Other current liabilities | 89,625 | 104,908 |
Total current liabilities | 150,621 | 165,223 |
Long-term debt | 115,071 | 93,107 |
Long-term portion of finance lease liability | 18,345 | 18,532 |
Other long-term liabilities | 51,698 | 49,723 |
Total liabilities | 335,735 | 326,585 |
Contingencies (Note 8) | ||
Shareholders’ equity | ||
Common shares $0.10 par value; 100,000 shares authorized; 37,410 and 37,165 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | 3,741 | 3,717 |
Additional paid-in capital | 753,398 | 746,450 |
Accumulated deficit | (186,164) | (150,144) |
Accumulated other comprehensive loss | (660) | (1,293) |
Total shareholders’ equity | 570,315 | 598,730 |
Total liabilities and shareholders’ equity | $ 906,050 | $ 925,315 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowance for doubtful accounts | $ 8,398 | $ 7,130 |
Common shares, par value | $ 0.1 | $ 0.1 |
Common shares, authorized | 100,000,000 | 100,000,000 |
Common shares, issued | 37,410,000 | 37,165,000 |
Common shares, outstanding | 37,410,000 | 37,165,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Net sales | $ 188,608 | $ 175,204 |
Cost of sales | 61,366 | 64,875 |
Gross profit | 127,242 | 110,329 |
Sales and marketing | 100,043 | 93,791 |
General and administrative | 31,648 | 48,811 |
Research and development | 19,492 | 23,307 |
Acquisition-related amortization and remeasurement (Note 12) | 5,396 | 4,134 |
Operating loss | (29,337) | (59,714) |
Interest expense, net | (4,558) | (1,289) |
Other income (expense), net | (1,274) | 676 |
Loss before income taxes | (35,169) | (60,327) |
Income tax expense | (851) | (611) |
Net loss | $ (36,020) | $ (60,938) |
Net loss per common share: | ||
Basic | $ (0.95) | $ (1.71) |
Diluted | $ (0.95) | $ (1.71) |
Weighted average number of common shares: | ||
Basic | 37,741 | 35,734 |
Diluted | 37,741 | 35,734 |
Other comprehensive loss, before tax | ||
Unrealized [gain (loss)] on debt securities | $ 1,671 | $ (63) |
Currency translation adjustment | (1,038) | 493 |
Other comprehensive income, before tax | 633 | 430 |
Other comprehensive income, net of tax | 633 | 430 |
Comprehensive loss | $ (35,387) | $ (60,508) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Total | Common Shares [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Beginning Balance at Dec. 31, 2022 | $ 336,860 | $ 2,016 | $ 334,969 | $ 1,251 | $ (1,376) |
Balance, Shares at Dec. 31, 2022 | 20,162,000 | ||||
Net loss | (60,938) | (60,938) | |||
Other comprehensive income, net of tax | 430 | 430 | |||
Share-based compensation expense | 13,020 | 13,020 | |||
Common shares issued in connection with SeaSpine merger, Shares | 16,047,000 | ||||
Common shares issued in connection with SeaSpine merger | 376,745 | $ 1,605 | 375,140 | ||
Common shares issued, net | (1,958) | $ 26 | (1,984) | ||
Common shares issued, net, Shares | 254,000 | ||||
Ending Balance at Mar. 31, 2023 | 664,159 | $ 3,647 | 721,145 | (59,687) | (946) |
Balance, Shares at Mar. 31, 2023 | 36,463,000 | ||||
Beginning Balance at Dec. 31, 2023 | $ 598,730 | $ 3,717 | 746,450 | (150,144) | (1,293) |
Balance, Shares at Dec. 31, 2023 | 37,165,000 | 37,165,000 | |||
Net loss | $ (36,020) | (36,020) | |||
Other comprehensive income, net of tax | 633 | 633 | |||
Share-based compensation expense | 8,800 | 8,800 | |||
Common shares issued, net | (1,828) | $ 24 | (1,852) | ||
Common shares issued, net, Shares | 245 | ||||
Ending Balance at Mar. 31, 2024 | $ 570,315 | $ 3,741 | $ 753,398 | $ (186,164) | $ (660) |
Balance, Shares at Mar. 31, 2024 | 37,410,000 | 37,410,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities | ||
Net loss | $ (36,020) | $ (60,938) |
Adjustments to reconcile net loss to net cash from operating activities | ||
Depreciation and amortization | 14,862 | 12,670 |
Inventory reserve expenses | 6,350 | 7,412 |
Amortization of inventory fair value step up | 3,047 | 11,636 |
Amortization of operating lease assets, debt costs, and other assets | 1,478 | 1,696 |
Provision for expected credit losses | 1,376 | 208 |
Deferred income taxes | 408 | 379 |
Share-based compensation expense | 8,800 | 13,020 |
Change in valuation of investment securities | 314 | (207) |
Change in fair value of contingent consideration | 1,170 | |
Other | 944 | (383) |
Changes in operating assets and liabilities, net of effects of acquisitions | ||
Accounts receivable | 813 | 4,792 |
Inventories | (6,936) | (16,781) |
Prepaid expenses and other current assets | 2,749 | 2,225 |
Accounts payable | (820) | (3,560) |
Other current liabilities | (14,856) | (5,842) |
Other long-term assets and liabilities | (2,274) | (347) |
Net cash used in operating activities | (18,595) | (34,020) |
Cash flows from investing activities | ||
Capital expenditures for property, plant, and equipment | (10,543) | (11,472) |
Capital expenditures for intangible assets | (274) | (363) |
Cash acquired in the SeaSpine merger | 29,419 | |
Other investing activities | (50) | (500) |
Net cash provided by (used in) investing activities | (10,867) | 17,084 |
Cash flows from financing activities | ||
Payments related to tax withholdings for share-based compensation | (1,828) | (1,958) |
Payments related to finance lease obligation | (172) | (160) |
Borrowings under credit facility | 40,000 | 45,000 |
Repayment of borrowings from credit facility | (15,000) | |
Payment of debt acquired from SeaSpine merger | (26,899) | |
Payment of debt issuance costs and other financing activities | (1,547) | |
Net cash provided by financing activities | 21,453 | 15,983 |
Effect of exchange rate changes on cash | (284) | 221 |
Net change in cash and cash equivalents | (8,293) | (732) |
Cash and cash equivalents at the beginning of period | 37,757 | 50,700 |
Cash and cash equivalents at the end of period | 29,464 | 49,968 |
Components of cash and cash equivalents at the end of period | ||
Cash and cash equivalents | 26,964 | 49,968 |
Restricted cash | 2,500 | |
Cash and cash equivalents at the end of period | 29,464 | $ 49,968 |
Noncash investing activities - Purchase of intangible assets | $ 50 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (36,020) | $ (60,938) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Title | directors or officers |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Rule 10b5-1 Arrangement Modified | false |
Non-Rule 10b5-1 Arrangement Modified | false |
Business and basis of presentat
Business and basis of presentation | 3 Months Ended |
Mar. 31, 2024 | |
Organization Consolidation And Presentation Of Financial Statements And Unusual Or Infrequent Items Disclosure [Abstract] | |
Business and basis of presentation | 1. Business and basis of presentation Description of the Business Orthofix Medical Inc. (the “Company” or "Orthofix") is a leading global spine and orthopedics company with a comprehensive portfolio of biologics, innovative spinal hardware, bone growth therapies, specialized orthopedic solutions, and a leading surgical navigation system. Its products are distributed in more than 60 countries worldwide. The Company is headquartered in Lewisville, Texas, where it conducts general business, product development, medical education and manufacturing, and has primary offices in Carlsbad, CA, with a focus on spine and biologics product innovation and surgeon education, and Verona, Italy, with an emphasis on product innovation, production, and medical education for orthopedics. The combined company’s global research and development, commercial, and manufacturing footprint also includes facilities and offices in Irvine, CA, Toronto, Canada, Sunnyvale, CA, Maidenhead, UK, Munich, Germany, Paris, France, and São Paulo, Brazil. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair statement have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Form 10-K for the year ended December 31, 2023. Operating results for the three months ended March 31, 2024, are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, 2024. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition; contractual allowances; allowances for expected credit losses; inventories; valuation of intangible assets; goodwill; fair value measurements, including contingent consideration; litigation and contingent liabilities; tax matters; and share-based compensation. Actual results could differ from these estimates. |
Recently adopted accounting sta
Recently adopted accounting standards, recently issued accounting pronouncements | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently adopted accounting standards, recently issued accounting pronouncements | 2. Recently adopted accounting standards, recently issued accounting pronouncements Adoption of Accounting Standards Update ("ASU") 2022-03 - Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions In June 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-03, which clarifies the guidance in Topic 820, Fair Value Measurement , when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale and to introduce new disclosure requirements. The Company adopted this standard effective January 1, 2024, on a prospective basis. Adoption of this standard did not have a material impact to the Company's consolidated balance sheet, statements of operations, or cash flows, but did modify the Company's disclosures related to certain investments. Refer to Note 7 for the Company's updated disclosures on investments in equity securities subject to capital sale restrictions. Adoption of ASU 2023-07 - Improvements to Reportable Segment Disclosures In November 2023, the FASB issued ASU 2023-07, which enhances and improves disclosures about operating segment's revenues, measures of profit/loss, and expenses to enable investors to better understand an entity's overall performance and assess potential future cash flows. The amendment requires that an entity disclose (i) significant expenses that are regularly provided to the Chief Operating Decision Maker ("CODM"), (ii) other segment items by reportable segment including a description of its composition, (iii) all annual disclosures required by Topic 280 in interim periods, (iv) additional measures of a segment's profit or loss used by the CODM in assessing segment performance and allocation of resources, and (v) title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. The Company adopted this standard effective January 1, 2024, on a prospective basis. Refer to Note 11 for the Company's updated business segment disclosures. Recently Issued Accounting Pronouncements Topic Description of Guidance Effective Date Status of Company's Evaluation Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative (ASU 2023-06) Adds interim and annual disclosure requirements to a variety of subtopics in the Accounting Standards Codification, including those focusing on accounting changes, earnings per share, debt and repurchase agreements. The guidance will be applied prospectively. The effective date will be the date when the SEC's removal of the related disclosure requirement becomes effective, with early adoption prohibited. Various The Company is currently evaluating the impact this ASU may have on its consolidated financial statements. Improvements to Income Tax Disclosures (ASU 2023-09) Enhance the transparency and decision usefulness of income tax disclosures to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and January 1, 2025 The Company is currently evaluating the impact this ASU may have on its consolidated financial statements. Other recently issued ASUs, excluding those ASUs which have already been disclosed as adopted or described above, were assessed and determined not applicable, or are expected to have minimal impact on the Company's condensed consolidated financial statements. |
Merger and Acquisitions
Merger and Acquisitions | 3 Months Ended |
Mar. 31, 2024 | |
Business Combinations [Abstract] | |
Merger and Acquisitions | 3. Mergers and acquisitions Merger with SeaSpine On January 5, 2023, the Company and SeaSpine completed an all-stock merger of equals (the "Merger") to create a leading global spine and orthopedics company with highly complementary portfolios of biologics, innovative spinal hardware, bone growth therapies, specialized orthopedic solutions, and a leading surgical navigation system. As a result of the Merger, each share of SeaSpine common stock issued and outstanding immediately prior to the closing of the Merger was converted into the right to receive 0.4163 shares of Orthofix common stock. During the fourth quarter of 2023, the Company finalized its valuation of assets acquired and liabilities assumed. The following table summarizes the fair value of assets acquired and liabilities assumed at the acquisition date: (U.S. Dollars, in thousands) Final Acquisition Date Fair Value Assigned Useful Life Assets acquired: Current assets Cash and cash equivalents $ 29,419 Accounts receivable, net 35,313 Inventories 132,636 Prepaid expenses and other current assets 4,590 Total current assets 201,958 Property, plant, and equipment, net 68,863 Customer relationships 33,100 13 years Developed technology 47,200 6 - 8 years In-process research and development ("IPR&D") 5,750 Indefinite Other long-term assets 20,501 Total identifiable assets acquired $ 377,372 Liabilities assumed : Current liabilities Accounts payable $ 21,602 Other current liabilities 43,521 Total current liabilities 65,123 Long-term borrowings under SeaSpine credit facility 26,298 Other long-term liabilities 32,823 Total liabilities assumed 124,244 Net identifiable assets acquired $ 253,128 Total fair value of consideration transferred 376,745 Residual goodwill $ 123,617 The Company recognized $ 0.1 million and $ 6.5 million in direct acquisition-related costs, which exclude integration-related activities, that were expensed during the three months ended March 31, 2024, and 2023 , respectively. These costs are included in the condensed consolidated statements of operations and comprehensive loss, primarily within general and administrative expenses. The Company's results of operations included $ 70.5 million of net sales and a net loss of $ 14.3 million from SeaSpine for the three months ended March 31, 2024 compared to $ 60.9 million of net sales and a net loss of $ 27.9 million for the three months ended March 31, 2023 in the condensed consolidated statements of operations and comprehensive loss. Due to the completion of the Merger on January 5, 2023, all SeaSpine financial results for fiscal year 2023, except for the first four days of January, were included in the Company's condensed consolidated statement of operations and comprehensive loss. Therefore, the Company did not prepare unaudited pro forma financial information for the three months ended March 31, 2024, and 2023 , on the basis that the Merger was completed on January 1, 2023. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2024 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories Inventories were as follows: (U.S. Dollars, in thousands) March 31, December 31, (Unaudited) Raw materials $ 30,903 $ 28,390 Work-in-process 56,193 53,510 Finished products 131,980 140,266 Inventories $ 219,076 $ 222,166 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases | 5. Leases A summary of the Company's lease portfolio as of March 31, 2024, and December 31, 2023, is presented in the table below: (U.S. Dollars, in thousands) Classification March 31, December 31, (Unaudited) Right-of-use assets ("ROU assets") Operating leases Other long-term assets $ 19,116 $ 19,869 Finance leases Property, plant and equipment, net 16,092 16,345 Total ROU assets $ 35,208 $ 36,214 Lease Liabilities Current Operating leases Other current liabilities $ 3,534 $ 3,477 Finance leases Current portion of finance lease liability 724 708 Long-term Operating leases Other long-term liabilities 16,372 17,125 Finance leases Long-term portion of finance lease liability 18,345 18,532 Total lease liabilities $ 38,975 $ 39,842 Supplemental cash flow information related to leases was as follows: (Unaudited, U.S. Dollars, in thousands) Three Months Ended Three Months Ended Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 2,162 $ 1,674 Operating cash flows from finance leases 210 214 Financing cash flows from finance leases 172 160 ROU assets obtained in exchange for lease obligations Operating leases 462 15,316 Finance leases — — |
Long-term debt
Long-term debt | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Long-term debt | 6. Long-term debt The carrying values of the Company's outstanding debt obligations as of March 31, 2024, and December 31, 2023, were as follows: (U.S. Dollars, in thousands) March 31, December 31, (Unaudited) Initial Term Loan and Delayed Draw Term Loan Principal amount $ 125,000 $ 100,000 Unamortized original debt discount ( 4,050 ) ( 4,331 ) Unamortized debt issuance costs and lenders fees ( 2,754 ) ( 1,312 ) Total indebtedness from initial term loan and delayed draw term loan 118,196 94,357 Revolving Credit Facilities Principal amount outstanding — — Total indebtedness outstanding $ 118,196 $ 94,357 Current portion of long-term debt $ 3,125 $ 1,250 Long-term debt 115,071 93,107 Total indebtedness outstanding $ 118,196 $ 94,357 On January 10, 2024, the Company borrowed $ 15.0 million under its senior secured revolving credit facility (the "Revolving Credit Facility") as part of its Financing Agreement with Blue Torch Finance LLC. On March 22, 2024, the secured delayed draw term loan facility (the "Delayed Draw Term Loan") of $ 25.0 million was fully funded and the proceeds were used to repay the $ 15.0 million outstanding under the Revolving Credit Facility. The Financing Agreement contains financial covenants requiring the Company to maintain a minimum level of liquidity at all times, a maximum consolidated leverage ratio (measured on a quarterly basis), and a minimum asset coverage ratio (measured on a monthly basis). As of March 31, 2024, the Company was in compliance with all required financial covenants. On March 15, 2024, the Company entered into Amendment No.1 to the Financing Agreement with Blue Torch Finance LLC (the "First Amendment"). Under the terms of the First Amendment, the parties agreed to reduce the number of business days to submit a notice of borrowing for the Delayed Draw Term Loan, and redefine certain terms within the asset coverage financial covenant. The maturity date remains November 6, 2027, for each of the Initial Term Loan, Delayed Draw Term Loan, and Revolving Credit Facility. As of March 31, 2024 , the Company had no borrowings on its available lines of credit in Italy, which provide up to an aggregate amount of € 5.5 million ($ 5.9 million). |
Fair value measurements and inv
Fair value measurements and investments | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Measurements And Investment Disclosure [Abstract] | |
Fair value measurements and investments | 7. Fair value measurements and investments The fair value measurements of the Company’s financial assets and liabilities measured on a recurring basis were as follows: March 31, December 31, (Unaudited, U.S. Dollars, in thousands) Level 1 Level 2 Level 3 Total Total Assets Neo Medical convertible loan agreements $ — $ 8,355 $ — $ 8,355 $ 6,760 Neo Medical preferred equity securities — 4,951 — 4,951 4,951 Other investments — — 1,331 1,331 1,309 Total $ — $ 13,306 $ 1,331 $ 14,637 $ 13,020 Liabilities Lattus contingent consideration $ — $ — ( 9,670 ) $ ( 9,670 ) $ ( 8,500 ) Deferred compensation plan — ( 1,604 ) — ( 1,604 ) ( 1,674 ) Total $ — $ ( 1,604 ) $ ( 9,670 ) $ ( 11,274 ) $ ( 10,174 ) Neo Medical Convertible Loan Agreements and Equity Investment Since October 2020, the Company has held preferred equity securities of Neo Medical SA, a privately held Swiss-based company developing a new generation of products for spinal surgery ("Neo Medical") and a Convertible Loan Agreement, pursuant to which the Company loaned Neo Medical CHF 4.6 million, or $ 5.0 million, at the date of issuance (the “Convertible Loan”). The preferred equity securities are recorded in other long-term assets and are considered an investment that does not have a readily determinable fair value. As such, the Company measures this investment at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company's equity investment with Neo Medical is subject to certain sales restrictions, such as right of first refusal, tag-along provisions, and drag-along provisions. Permitted transfers include (i) sales of shares to an affiliate of such shareholder, (ii) transfer of shares as part of a compensation package offered to employees, or (iii) Neo Medical may repurchase shares at a price no greater than that originally paid by the shareholder. The table below presents a reconciliation of the beginning and ending balances of the Company’s investment in Neo Medical preferred equity securities: (Unaudited, U.S. Dollars, in thousands) 2024 2023 Fair value of Neo Medical preferred equity securities at January 1 $ 4,951 $ 6,084 Conversion of loan into preferred equity securities — — Foreign currency remeasurement recognized in other income (expense), net — — Unrealized loss recognized in other income (expense), net — — Fair value of Neo Medical preferred equity securities at March 31 $ 4,951 $ 6,084 Cumulative unrealized gain (loss) on Neo Medical preferred equity securities $ ( 720 ) $ 413 The Convertible Loan is recorded in other long-term assets as an available for sale debt security as of March 31, 2024. In April 2024, the Company and Neo Medical agreed to convert the Convertible Loan into shares of Neo Medical preferred equity securities, with such conversion occurring on April 19, 2024. As such, the Company estimated the fair value of the Convertible Loan based upon the estimated fair value of equivalent preferred shares as of March 31, 2024. Therefore, as this fair value estimate is based upon a valuation method using observable market inputs, the Company has now classified this investment as a Level 2 financial asset. The following table provides a reconciliation of the beginning and ending balances of the Convertible Loans, which was measured at fair value using significant unobservable inputs in 2023: (Unaudited, U.S. Dollars, in thousands) 2024 2023 Fair value of Neo Medical Convertible Loans at January 1 $ 6,760 $ 7,140 Interest recognized in interest income, net 135 116 Foreign currency remeasurement recognized in other income (expense), net ( 471 ) 61 Unrealized gain (loss) recognized in other comprehensive loss 1,671 ( 137 ) Reversal of expected credit loss recognized in other income (expense), net 260 — Fair value of Neo Medical Convertible Loans at March 31 $ 8,355 $ 7,180 Contractual value of Neo Medical Convertible Loans at January 1 $ 6,683 $ 6,084 Allowance for credit loss recognized in other income (expense), net — — Amortized cost basis of Neo Medical Convertible Loans at March 31 $ 6,683 $ 6,084 Other Investments Other investments represent assets and investments recorded at fair value that are not deemed to be material for disclosure on an individual basis. The fair value of these assets is based upon significant unobservable inputs, such as probability-weighted discounted cash flow models, requiring the Company to develop its own assumptions. Therefore, the Company has categorized these assets as Level 3 financial assets. As of March 31, 2024, this balance was classified within other current assets. Lattus Contingent Consideration In connection with the Merger, the Company assumed a contingent consideration obligation under a purchase agreement between SeaSpine and Lattus Spine LLC ("Lattus") executed in December 2022. Under the terms of the agreement, the Company may be required to make installment payments at certain dates based on future net sales of certain products (the "Lateral Products"). The estimated fair value of the Lattus contingent consideration is determined using a Monte Carlo simulation and a discounted cash flow model requiring significant inputs which are not observable in the market. The significant inputs include assumptions related to the timing and probability of certain product launch dates, estimated future sales of the products, revenue risk-adjusted discount rate, revenue volatility, and discount rates matched to the timing of payments. The following table provides a reconciliation of the beginning and ending balances for the Lattus contingent consideration measured at estimated fair value using significant unobservable inputs (Level 3): (Unaudited, U.S. Dollars, in thousands) 2024 2023 Lattus contingent consideration estimated fair value at January 1 $ 8,500 $ — Contingent consideration assumed in Merger — 11,500 Increase (decrease) in fair value recognized in acquisition-related amortization and remeasurement 1,170 — Lattus contingent consideration estimated fair value at March 31 $ 9,670 $ 11,500 The following table provides quantitative information related to certain key assumptions utilized within the valuation as of March 31, 2024: (Unaudited, U.S. Dollars, in thousands) Fair Value as of Unobservable inputs Estimate Lattus Contingent Consideration $ 9,670 Counterparty discount rate 15.0 % - 15.6 % Revenue risk-adjusted discount rate 7.10 % - 7.86 % |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Contingencies policies The Company records accruals for certain outstanding legal proceedings, investigations, or claims when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company evaluates developments in legal proceedings, investigations, and claims that could affect the amount of any accrual, as well as any developments that would make a loss contingency both probable and reasonably estimable on a quarterly basis. When a loss contingency is not both probable and reasonably estimable, the Company does not accrue the loss. However, if the loss (or an additional loss in excess of the accrual) is at least a reasonable possibility and material, then the Company discloses a reasonable estimate of the possible loss or range of loss, if such reasonable estimate can be made. If the Company cannot make a reasonable estimate of the possible loss, or range of loss, then that is disclosed. In addition, legal fees and other directly related costs are expensed as incurred. In addition to the matters described in the paragraphs below, in the normal course of its business, the Company is involved in various lawsuits from time to time and may be subject to certain other contingencies. The Company believes any losses related to these matters are individually and collectively immaterial as to a possible loss and range of loss. Arbitration claims with former executives In September 2023, the Company’s Board of Directors terminated the employment of Keith Valentine, John Bostjancic, and Patrick Keran, who had served respectively as the Company’s President and Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer. The Board’s decision followed an investigation conducted by independent outside legal counsel and directed and overseen by the Company’s independent directors. As a result of the investigation, the Board determined that each of these executives engaged in repeated inappropriate and offensive conduct that violated multiple code of conduct requirements and was inconsistent with the Company’s values and culture. The Company notified each of Messrs. Valentine, Bostjancic, and Keran that their respective terminations were being made for “Cause,” as defined in applicable employment-related agreements (including each executive’s respective Change in Control and Severance Agreement, dated June 19, 2023). The Company also notified each of Messrs. Valentine, Bostjancic, and Keran that it did not believe it was required to make any further payments to them, other than payment of salary through September 12, 2023. The Board also requested that Mr. Valentine resign as a director, which he did in October 2023. In January 2024, the Company received written notices of arbitration claims from counsel to Messrs. Valentine, Bostjancic, and Keran. Each of the arbitration claims asserts that the respective former executive was wrongfully terminated for “Cause” because the former executive’s conduct did not meet the contractually applicable definition of “Cause.” The claims seek relief for, among other things, alleged breach of contract, defamation, false light invasion of privacy, deceit, as well as indemnification and advancement for attorneys’ fees. The three former executives seek severance payments, as well as the value of forfeited equity grants, under applicable change in control and severance agreements and further damages as a result of purported defamatory statements. The Company disagrees with many of the assertions contained in the written notices of arbitration claims and intends to vigorously defend the asserted claims. Due in part to the preliminary nature of this matter, the Company currently cannot reasonably estimate a possible loss, or range of loss, that may arise from the arbitration claims. Commitments As a result of the Merger, the Company became party to agreements with certain distributor partners that provide the Company with an option to purchase, and an option for those partners to require the Company to purchase, the distribution business of those partners at specified future dates. At such time, the Company or distributor may (in certain cases, subject to satisfying certain conditions) submit written notice to the other of its intention to exercise its rights and initiate or require the purchase. Upon receipt of the written notice, the Company and the distributor will work in good faith to consummate the purchase. Under these agreements, the purchase price would be paid in shares of the Company's common stock. Based on the closing price of the Company's common stock as of March 31, 2024 , assuming the options under all the relevant agreements were exercised, the estimated total number of shares the Company would issue under these agreements was approximately 1.5 million shares for agreements that must be settled in shares of the Company's stock. The Company has received notification from one such distributor, who has notified the Company of its decision to exercise its buyout option. The Company is currently in negotiations with this distributor in regard to the consummation of the potential acquisition. Italian Medical Device Payback (“IMDP”) In 2015, the Italian Parliament introduced rules for entities that supply goods and services to the Italian National Healthcare System. A key provision of the law is a ‘payback’ measure, requiring medical device companies in Italy to make payments to the Italian government if medical device expenditures exceed regional maximum ceilings. Companies are required to make payments equal to a percentage of expenditures exceeding maximum regional caps. In the third quarter of 2022, the Italian Ministry of Health provided guidelines to the Italian regions and provinces on seeking payback of expenditure overruns relating to the years ended December 31, 2015, through December 31, 2018. Since receiving the guidelines, several regions and provinces have requested payment from affected medical device companies, including the Company. The Company has taken legal action to dispute the legality of such measures. The Company accounts for the estimated cost of the IMDP as sales and marketing expense and periodically reassesses the liability based upon current facts and circumstances. As a result, the Company recorded an expense of $ 0.3 million and $ 0.3 million for the three months ended March 31, 2024, and 2023, respectively. As of March 31, 2024 , the Company has accrued $ 7.7 million related to the IMDP, which it has classified within other long-term liabilities; however, the actual liability could be higher or lower than the amount accrued once all legal proceedings are resolved and upon further clarification of the IMDP by the Italian authorities for more recent fiscal years. |
Accumulated other comprehensive
Accumulated other comprehensive loss | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Accumulated other comprehensive loss | 9. Accumulated other comprehensive loss The components of and changes in accumulated other comprehensive loss were as follows: (Unaudited, U.S. Dollars, in thousands) Currency Neo Medical Convertible Loans Other Investments Accumulated Other Balance at December 31, 2023 $ ( 1,065 ) $ ( 228 ) $ — $ ( 1,293 ) Other comprehensive income (loss) ( 1,038 ) 1,671 — 633 Income taxes — — — — Balance at March 31, 2024 $ ( 2,103 ) $ 1,443 $ — $ ( 660 ) |
Revenue recognition and account
Revenue recognition and accounts receivable | 3 Months Ended |
Mar. 31, 2024 | |
Revenue Recognition And Accounts Receivable [Abstract] | |
Revenue recognition and accounts receivable | 10. Revenue recognition and accounts receivable Revenue Recognition The Company has two reporting segments: Global Spine and Global Orthopedics. Within the Global Spine reporting segment, there are two product categories: (i) Bone Growth Therapies, and (ii) Spinal Implants, Biologics, and Enabling Technologies. The table below presents net sales by major product category by reporting segment: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Change Bone Growth Therapies $ 52,477 $ 47,714 10.0 % Spinal Implants, Biologics, and Enabling Technologies 108,816 101,492 7.2 % Global Spine 161,293 149,206 8.1 % Global Orthopedics 27,315 25,998 5.1 % Net sales $ 188,608 $ 175,204 7.7 % Product Sales and Marketing Service Fees The table below presents product sales and marketing service fees, which are both components of net sales: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Product sales $ 175,831 $ 162,248 Marketing service fees 12,777 12,956 Net sales $ 188,608 $ 175,204 Product sales primarily consist of the sale of bone growth therapies devices, spinal implants, certain biologics, enabling technologies, and orthopedics products. Marketing service fees are received from MTF Biologics based on total sales of biologics tissues sourced from MTF Biologics and relate solely to the Global Spine reporting segment. The Company partners with MTF Biologics to provide certain allograft solutions (HCT/Ps) for various spine, orthopedic and other bone repair needs, with this partnership allowing us to exclusively market certain biologic offerings. Accounts receivable and related allowances The following table provides a detail of changes in the Company’s allowance for expected credit losses for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Allowance for expected credit losses beginning balance $ 7,130 $ 6,419 Addition resulting from the Merger with SeaSpine — 137 Current period provision for expected credit losses 1,376 208 Write-offs charged against the allowance and other ( 19 ) ( 126 ) Effect of changes in foreign exchange rates ( 89 ) 53 Allowance for expected credit losses ending balance $ 8,398 $ 6,691 |
Business segment information
Business segment information | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Business segment information | 11. Business segment information The Company's operations are managed through two reporting segments: Global Spine and Global Orthopedics. These reporting segments represent the operating segments for which the Chief Executive Officer, who is also the CODM, reviews financial information and makes resource allocation decisions among businesses. The primary metric used by the CODM in managing the Company is adjusted earnings before interest, tax, depreciation, and amortization (“adjusted EBITDA”, a non-GAAP financial measure). Adjusted EBITDA represents earnings before interest income (expense), income taxes, depreciation, and amortization, and excludes the impact of share-based compensation, gains and losses related to changes in foreign exchange rates, charges related to the SeaSpine merger and other strategic investments, acquisition-related fair value adjustments, gains and/or losses on investments, litigation and investigation charges, charges related to initial compliance with regulations set forth by the European Union Medical Device Regulation, and succession charges. Corporate activities are comprised of operating expenses not directly identifiable within the two reporting segments, such as human resources, finance, legal, and information technology functions. The Company neither discretely allocates assets, other than goodwill, to its operating segments nor evaluates the operating segments using discrete asset information. Global Spine The Global Spine reporting segment offers two primary product categories: (i) Bone Growth Therapies and (ii) Spinal Implants, Biologics, and Enabling Technologies. The Bone Growth Therapies product category manufactures, distributes, sells, and provides support services for market leading devices used adjunctively in high-risk spinal fusion procedures and to treat both nonunion and acute fractures in the orthopedic space. These Class III medical devices are indicated as an adjunctive, noninvasive treatment to improve fusion success rates in the cervical and lumbar spine as well as a therapeutic treatment for non-spine acute and nonunion fractures. This product category uses distributors and a direct sales channel to sell its devices to hospitals, healthcare providers, and patients, in the U.S. Spinal Implants, Biologics, and Enabling Technologies is comprised of (i) a broad portfolio of spine fixation and motion preservation implant products used in surgical procedures of the spine, (ii) one of the most comprehensive biologics portfolios in both the demineralized bone matrix and cellular allograft market segments, and (iii) image-guided surgical solutions to facilitate degenerative, minimally invasive, and complex surgical procedures. Spinal Implants, Biologics, and Enabling Technologies products are sold through a network of distributors and sales representatives to hospitals and healthcare providers on a global basis for Spinal Implants and Enabling Technologies, and primarily within the U.S. for Biologics. Global Orthopedics The Global Orthopedics reporting segment offers products and solutions for limb deformity correction and complex limb reconstruction with a focus on use in trauma, adult and pediatric limb reconstruction, and foot and ankle procedures. This reporting segment specializes in the design, development, and marketing of external and internal fixation orthopedic products that are coupled with enabling digital technologies to serve the complete patient treatment pathway. We sell these products through a global network of distributors and sales representatives to hospitals, healthcare organizations, and healthcare providers. Corporate Corporate activities are comprised of the operating expenses and activities of the Company not necessarily identifiable within the two reporting segments. The table below presents net sales by major product category by reporting segment: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Change Bone Growth Therapies $ 52,477 $ 47,714 10.0 % Spinal Implants, Biologics, and Enabling Technologies 108,816 101,492 7.2 % Global Spine 161,293 149,206 8.1 % Global Orthopedics 27,315 25,998 5.1 % Net sales $ 188,608 $ 175,204 7.7 % The following table presents adjusted EBITDA, the primary metric used in managing the Company, by reporting segment: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Adjusted EBITDA by reporting segment Global Spine $ 19,890 $ 14,981 Global Orthopedics ( 1,492 ) 44 Corporate ( 10,733 ) ( 11,821 ) Consolidated adjusted EBITDA $ 7,665 $ 3,204 Reconciling items: Interest expense, net $ 4,558 $ 1,289 Depreciation and amortization 14,862 12,670 Share-based compensation expense 8,800 13,020 Foreign exchange impact 1,588 ( 583 ) SeaSpine merger-related costs 4,520 20,740 Strategic investments 120 661 Acquisition-related fair value adjustments 4,217 11,636 Interest and loss on investments ( 260 ) — Litigation and investigation costs 2,260 469 Succession charges 2,210 — Medical device regulation — 3,629 All other ( 41 ) — Loss before income taxes $ ( 35,169 ) $ ( 60,327 ) The following table presents depreciation and amortization by reporting segment: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Global Spine $ 11,929 $ 9,599 Global Orthopedics 2,207 1,629 Corporate 726 1,442 Total $ 14,862 $ 12,670 Geographical information The table below presents net sales by geographic destination for each reporting segment and for the consolidated Company: Three Months Ended (Unaudited, U.S. Dollars, in thousands) 2024 2023 Global Spine U.S. $ 151,865 $ 139,457 International 9,428 9,749 Total Global Spine 161,293 149,206 Global Orthopedics U.S. 8,154 6,636 International 19,161 19,362 Total Global Orthopedics 27,315 25,998 Consolidated U.S. 160,019 146,093 International 28,589 29,111 Net sales $ 188,608 $ 175,204 The following data includes property, plant, and equipment by geographic area: (U.S. Dollars, in thousands) March 31, December 31, (Unaudited) U.S. $ 142,355 $ 142,727 Italy 10,033 10,187 Germany 2,620 3,030 Others 3,124 3,116 Total $ 158,132 $ 159,060 |
Acquisition-Related Amortizatio
Acquisition-Related Amortization and Remeasurement | 3 Months Ended |
Mar. 31, 2024 | |
Acquisition Related Amortization And Remeasurement [Abstract] | |
Acquisition-Related Amortization and Remeasurement | 12. Acquisition-related amortization and remeasurement Acquisition-related amortization and remeasurement consists of (i) amortization related to intangible assets acquired through business combinations or asset acquisitions and (ii) remeasurement of any related contingent consideration arrangements, which are recognized immediately upon acquisition. Components of acquisition-related amortization and remeasurement are as follows: Three Months Ended (Unaudited, U.S. Dollars, in thousands) 2024 2023 Amortization of acquired intangibles $ 4,226 $ 4,134 Changes in fair value of contingent consideration 1,170 — Total $ 5,396 $ 4,134 |
Share-based compensation
Share-based compensation | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based compensation | 13. Share-based compensation Components of share-based compensation expense are as follows: Three Months Ended (Unaudited, U.S. Dollars, in thousands) 2024 2023 Cost of sales $ 576 $ 471 Sales and marketing 1,667 2,249 General and administrative 5,548 9,104 Research and development 1,009 1,196 Total $ 8,800 $ 13,020 Three Months Ended (Unaudited, U.S. Dollars, in thousands) 2024 2023 Stock options $ 1,118 $ 2,756 Market-based stock options 327 — Time-based restricted stock awards and units 5,873 9,846 Market-based / performance-based restricted stock units 838 — Stock purchase plan 644 418 Total $ 8,800 $ 13,020 Pursuant to the Merger Agreement, the equity awards of SeaSpine (including stock options and restricted stock units) outstanding as of immediately prior to the closing of the Merger were converted into equity awards denominated in shares of Orthofix common stock. The Company issued options to purchase 1.9 million shares of Orthofix common stock and 0.5 million shares of time-based vesting restricted stock in connection with the conversion of such awards. The estimated fair value of the portion of the SeaSpine equity awards for which the required service period had been completed at the time of the closing of the Merger was treated as purchase consideration. The remaining estimated fair value is recorded as compensation expense over the remainder of the service period associated with the awards. During the three months ended March 31, 2024, and 2023 , the Company issued 0.2 million and 0.3 million shares, respectively, of common stock related to stock purchase plan issuances, stock option exercises, and the vesting of restricted stock awards and units. Inducement plans During 2024, the Company appointed a new President and Chief Executive Officer, Chief Financial Officer, Chief People & Business Operations Officer, and Chief Legal Officer. As an inducement to accept employment with the Company, the individuals were awarded grants of (i) stock options, (ii) time-based restricted stock units, (iii) time-based cliff vesting restricted stock units, and (iv) performance stock units, valued in the aggregate across all award types at approximately $ 14.9 million. |
Income taxes
Income taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income taxes | 14. Income taxes Generally, income tax provisions for interim periods are based on an estimated annual income tax rate, adjusted for discrete tax items, with any changes affecting the estimated annual effective tax rate recorded in the interim period in which the change occurs. Due to the impact of losses not benefited by the Company’s U.S. and Italian operations, the Company determined the estimated annual effective tax rate method would not provide a reliable estimate of the Company’s overall annual effective tax rate. As such, the Company has calculated the tax provision using the actual effective rate for the three months ended March 31, 2024. Due to the impact of temporary differences on the U.S. current tax liability without any deferred tax benefit, the actual effective rate may vary in future quarters. For the three months ended March 31, 2024, and 2023, the effective tax rate was ( 2.4 %) and ( 1.0 %) , respectively. The primary factors affecting the Company’s effective tax rate for the three months ended March 31, 2024 , were certain losses not benefited and tax amortization on certain acquired intangibles. |
Earnings per share ("EPS")
Earnings per share ("EPS") | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Earnings per share ("EPS") | 15. Earnings per share (“EPS”) For the three months ended March 31, 2024, and 2023 , no adjustments were made to net income for purposes of calculating basic and diluted EPS. The following is a reconciliation of the weighted average shares used in diluted EPS computations. Three Months Ended (Unaudited, In thousands) 2024 2023 Weighted average common shares-basic 37,741 35,734 Effect of dilutive securities Unexercised stock options and stock purchase plan — — Unvested restricted stock units — — Weighted average common shares-diluted 37,741 35,734 There were 6.7 million and 7 .2 million weighted average outstanding stock options and restricted stock units not included in the diluted EPS computation for the three months ended March 31, 2024, and 2023 , respectively, because inclusion of these awards was anti-dilutive. |
Recently adopted accounting s_2
Recently adopted accounting standards, recently issued accounting pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently adopted accounting standards and recently issued accounting pronouncements | Recently Issued Accounting Pronouncements Topic Description of Guidance Effective Date Status of Company's Evaluation Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative (ASU 2023-06) Adds interim and annual disclosure requirements to a variety of subtopics in the Accounting Standards Codification, including those focusing on accounting changes, earnings per share, debt and repurchase agreements. The guidance will be applied prospectively. The effective date will be the date when the SEC's removal of the related disclosure requirement becomes effective, with early adoption prohibited. Various The Company is currently evaluating the impact this ASU may have on its consolidated financial statements. Improvements to Income Tax Disclosures (ASU 2023-09) Enhance the transparency and decision usefulness of income tax disclosures to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and January 1, 2025 The Company is currently evaluating the impact this ASU may have on its consolidated financial statements. Other recently issued ASUs, excluding those ASUs which have already been disclosed as adopted or described above, were assessed and determined not applicable, or are expected to have minimal impact on the Company's condensed consolidated financial statements. |
Merger and Acquisitions (Tables
Merger and Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Business Combinations [Abstract] | |
Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair value of assets acquired and liabilities assumed at the acquisition date: (U.S. Dollars, in thousands) Final Acquisition Date Fair Value Assigned Useful Life Assets acquired: Current assets Cash and cash equivalents $ 29,419 Accounts receivable, net 35,313 Inventories 132,636 Prepaid expenses and other current assets 4,590 Total current assets 201,958 Property, plant, and equipment, net 68,863 Customer relationships 33,100 13 years Developed technology 47,200 6 - 8 years In-process research and development ("IPR&D") 5,750 Indefinite Other long-term assets 20,501 Total identifiable assets acquired $ 377,372 Liabilities assumed : Current liabilities Accounts payable $ 21,602 Other current liabilities 43,521 Total current liabilities 65,123 Long-term borrowings under SeaSpine credit facility 26,298 Other long-term liabilities 32,823 Total liabilities assumed 124,244 Net identifiable assets acquired $ 253,128 Total fair value of consideration transferred 376,745 Residual goodwill $ 123,617 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories were as follows: (U.S. Dollars, in thousands) March 31, December 31, (Unaudited) Raw materials $ 30,903 $ 28,390 Work-in-process 56,193 53,510 Finished products 131,980 140,266 Inventories $ 219,076 $ 222,166 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Summary of Lease Portfolio | A summary of the Company's lease portfolio as of March 31, 2024, and December 31, 2023, is presented in the table below: (U.S. Dollars, in thousands) Classification March 31, December 31, (Unaudited) Right-of-use assets ("ROU assets") Operating leases Other long-term assets $ 19,116 $ 19,869 Finance leases Property, plant and equipment, net 16,092 16,345 Total ROU assets $ 35,208 $ 36,214 Lease Liabilities Current Operating leases Other current liabilities $ 3,534 $ 3,477 Finance leases Current portion of finance lease liability 724 708 Long-term Operating leases Other long-term liabilities 16,372 17,125 Finance leases Long-term portion of finance lease liability 18,345 18,532 Total lease liabilities $ 38,975 $ 39,842 |
Summary of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases was as follows: (Unaudited, U.S. Dollars, in thousands) Three Months Ended Three Months Ended Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 2,162 $ 1,674 Operating cash flows from finance leases 210 214 Financing cash flows from finance leases 172 160 ROU assets obtained in exchange for lease obligations Operating leases 462 15,316 Finance leases — — |
Long-term debt (Tables)
Long-term debt (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Summary of Carrying Values of Outstanding Debt Obligations | The carrying values of the Company's outstanding debt obligations as of March 31, 2024, and December 31, 2023, were as follows: (U.S. Dollars, in thousands) March 31, December 31, (Unaudited) Initial Term Loan and Delayed Draw Term Loan Principal amount $ 125,000 $ 100,000 Unamortized original debt discount ( 4,050 ) ( 4,331 ) Unamortized debt issuance costs and lenders fees ( 2,754 ) ( 1,312 ) Total indebtedness from initial term loan and delayed draw term loan 118,196 94,357 Revolving Credit Facilities Principal amount outstanding — — Total indebtedness outstanding $ 118,196 $ 94,357 Current portion of long-term debt $ 3,125 $ 1,250 Long-term debt 115,071 93,107 Total indebtedness outstanding $ 118,196 $ 94,357 |
Fair value measurements and i_2
Fair value measurements and investments (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Schedule of Financial Assets and Liabilities Recorded at Fair Value on Recurring Basis | The fair value measurements of the Company’s financial assets and liabilities measured on a recurring basis were as follows: March 31, December 31, (Unaudited, U.S. Dollars, in thousands) Level 1 Level 2 Level 3 Total Total Assets Neo Medical convertible loan agreements $ — $ 8,355 $ — $ 8,355 $ 6,760 Neo Medical preferred equity securities — 4,951 — 4,951 4,951 Other investments — — 1,331 1,331 1,309 Total $ — $ 13,306 $ 1,331 $ 14,637 $ 13,020 Liabilities Lattus contingent consideration $ — $ — ( 9,670 ) $ ( 9,670 ) $ ( 8,500 ) Deferred compensation plan — ( 1,604 ) — ( 1,604 ) ( 1,674 ) Total $ — $ ( 1,604 ) $ ( 9,670 ) $ ( 11,274 ) $ ( 10,174 ) |
Schedule of Reconciliation of Investments in Equity Securities | The table below presents a reconciliation of the beginning and ending balances of the Company’s investment in Neo Medical preferred equity securities: (Unaudited, U.S. Dollars, in thousands) 2024 2023 Fair value of Neo Medical preferred equity securities at January 1 $ 4,951 $ 6,084 Conversion of loan into preferred equity securities — — Foreign currency remeasurement recognized in other income (expense), net — — Unrealized loss recognized in other income (expense), net — — Fair value of Neo Medical preferred equity securities at March 31 $ 4,951 $ 6,084 Cumulative unrealized gain (loss) on Neo Medical preferred equity securities $ ( 720 ) $ 413 |
Schedule of Reconciliation For Contingent Consideration Measured At Fair Value Using Significant Unobservable Inputs | The following table provides a reconciliation of the beginning and ending balances for the Lattus contingent consideration measured at estimated fair value using significant unobservable inputs (Level 3): (Unaudited, U.S. Dollars, in thousands) 2024 2023 Lattus contingent consideration estimated fair value at January 1 $ 8,500 $ — Contingent consideration assumed in Merger — 11,500 Increase (decrease) in fair value recognized in acquisition-related amortization and remeasurement 1,170 — Lattus contingent consideration estimated fair value at March 31 $ 9,670 $ 11,500 |
Fair Value, Inputs, Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Schedule of Reconciliation For Convertible Loans Measured At Fair Value Using Significant Unobservable Inputs | (Unaudited, U.S. Dollars, in thousands) 2024 2023 Fair value of Neo Medical Convertible Loans at January 1 $ 6,760 $ 7,140 Interest recognized in interest income, net 135 116 Foreign currency remeasurement recognized in other income (expense), net ( 471 ) 61 Unrealized gain (loss) recognized in other comprehensive loss 1,671 ( 137 ) Reversal of expected credit loss recognized in other income (expense), net 260 — Fair value of Neo Medical Convertible Loans at March 31 $ 8,355 $ 7,180 Contractual value of Neo Medical Convertible Loans at January 1 $ 6,683 $ 6,084 Allowance for credit loss recognized in other income (expense), net — — Amortized cost basis of Neo Medical Convertible Loans at March 31 $ 6,683 $ 6,084 |
Schedule of Changes in Valuation of Securities | The following table provides quantitative information related to certain key assumptions utilized within the valuation as of March 31, 2024: (Unaudited, U.S. Dollars, in thousands) Fair Value as of Unobservable inputs Estimate Lattus Contingent Consideration $ 9,670 Counterparty discount rate 15.0 % - 15.6 % Revenue risk-adjusted discount rate 7.10 % - 7.86 % |
Accumulated other comprehensi_2
Accumulated other comprehensive loss (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Components of Changes in Accumulated Other Comprehensive Loss | The components of and changes in accumulated other comprehensive loss were as follows: (Unaudited, U.S. Dollars, in thousands) Currency Neo Medical Convertible Loans Other Investments Accumulated Other Balance at December 31, 2023 $ ( 1,065 ) $ ( 228 ) $ — $ ( 1,293 ) Other comprehensive income (loss) ( 1,038 ) 1,671 — 633 Income taxes — — — — Balance at March 31, 2024 $ ( 2,103 ) $ 1,443 $ — $ ( 660 ) |
Revenue recognition and accou_2
Revenue recognition and accounts receivable (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Revenue Recognition And Accounts Receivable [Abstract] | |
Schedule of Net Sales by Major Product Category by Reporting Segment | The table below presents net sales by major product category by reporting segment: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Change Bone Growth Therapies $ 52,477 $ 47,714 10.0 % Spinal Implants, Biologics, and Enabling Technologies 108,816 101,492 7.2 % Global Spine 161,293 149,206 8.1 % Global Orthopedics 27,315 25,998 5.1 % Net sales $ 188,608 $ 175,204 7.7 % The table below presents net sales by major product category by reporting segment: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Change Bone Growth Therapies $ 52,477 $ 47,714 10.0 % Spinal Implants, Biologics, and Enabling Technologies 108,816 101,492 7.2 % Global Spine 161,293 149,206 8.1 % Global Orthopedics 27,315 25,998 5.1 % Net sales $ 188,608 $ 175,204 7.7 % |
Schedule of Components Net Sales | The table below presents product sales and marketing service fees, which are both components of net sales: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Product sales $ 175,831 $ 162,248 Marketing service fees 12,777 12,956 Net sales $ 188,608 $ 175,204 |
Allowances for Expected Credit Losses | The following table provides a detail of changes in the Company’s allowance for expected credit losses for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Allowance for expected credit losses beginning balance $ 7,130 $ 6,419 Addition resulting from the Merger with SeaSpine — 137 Current period provision for expected credit losses 1,376 208 Write-offs charged against the allowance and other ( 19 ) ( 126 ) Effect of changes in foreign exchange rates ( 89 ) 53 Allowance for expected credit losses ending balance $ 8,398 $ 6,691 |
Business segment information (T
Business segment information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Schedule of Net Sales by Major Product Category by Reporting Segment | The table below presents net sales by major product category by reporting segment: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Change Bone Growth Therapies $ 52,477 $ 47,714 10.0 % Spinal Implants, Biologics, and Enabling Technologies 108,816 101,492 7.2 % Global Spine 161,293 149,206 8.1 % Global Orthopedics 27,315 25,998 5.1 % Net sales $ 188,608 $ 175,204 7.7 % The table below presents net sales by major product category by reporting segment: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Change Bone Growth Therapies $ 52,477 $ 47,714 10.0 % Spinal Implants, Biologics, and Enabling Technologies 108,816 101,492 7.2 % Global Spine 161,293 149,206 8.1 % Global Orthopedics 27,315 25,998 5.1 % Net sales $ 188,608 $ 175,204 7.7 % |
Summary of EBITDA by Reporting Segment | The following table presents adjusted EBITDA, the primary metric used in managing the Company, by reporting segment: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Adjusted EBITDA by reporting segment Global Spine $ 19,890 $ 14,981 Global Orthopedics ( 1,492 ) 44 Corporate ( 10,733 ) ( 11,821 ) Consolidated adjusted EBITDA $ 7,665 $ 3,204 Reconciling items: Interest expense, net $ 4,558 $ 1,289 Depreciation and amortization 14,862 12,670 Share-based compensation expense 8,800 13,020 Foreign exchange impact 1,588 ( 583 ) SeaSpine merger-related costs 4,520 20,740 Strategic investments 120 661 Acquisition-related fair value adjustments 4,217 11,636 Interest and loss on investments ( 260 ) — Litigation and investigation costs 2,260 469 Succession charges 2,210 — Medical device regulation — 3,629 All other ( 41 ) — Loss before income taxes $ ( 35,169 ) $ ( 60,327 ) |
Schedule of Depreciation and Amortization by Reporting Segment | The following table presents depreciation and amortization by reporting segment: Three Months Ended March 31, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Global Spine $ 11,929 $ 9,599 Global Orthopedics 2,207 1,629 Corporate 726 1,442 Total $ 14,862 $ 12,670 |
Summary of Net Sales by Geographic Destination | The table below presents net sales by geographic destination for each reporting segment and for the consolidated Company: Three Months Ended (Unaudited, U.S. Dollars, in thousands) 2024 2023 Global Spine U.S. $ 151,865 $ 139,457 International 9,428 9,749 Total Global Spine 161,293 149,206 Global Orthopedics U.S. 8,154 6,636 International 19,161 19,362 Total Global Orthopedics 27,315 25,998 Consolidated U.S. 160,019 146,093 International 28,589 29,111 Net sales $ 188,608 $ 175,204 |
Summary of Property, Plant and Equipment of Reporting Segments by Geographic Area | The following data includes property, plant, and equipment by geographic area: (U.S. Dollars, in thousands) March 31, December 31, (Unaudited) U.S. $ 142,355 $ 142,727 Italy 10,033 10,187 Germany 2,620 3,030 Others 3,124 3,116 Total $ 158,132 $ 159,060 |
Acquisition-Related Amortizat_2
Acquisition-Related Amortization and Remeasurement (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Acquisition Related Amortization And Remeasurement [Abstract] | |
Components of Acquisition-Related Amortization and Remeasurement | Components of acquisition-related amortization and remeasurement are as follows: Three Months Ended (Unaudited, U.S. Dollars, in thousands) 2024 2023 Amortization of acquired intangibles $ 4,226 $ 4,134 Changes in fair value of contingent consideration 1,170 — Total $ 5,396 $ 4,134 |
Share-based compensation (Table
Share-based compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Components of Share-Based Compensation Expense | Components of share-based compensation expense are as follows: Three Months Ended (Unaudited, U.S. Dollars, in thousands) 2024 2023 Cost of sales $ 576 $ 471 Sales and marketing 1,667 2,249 General and administrative 5,548 9,104 Research and development 1,009 1,196 Total $ 8,800 $ 13,020 Three Months Ended (Unaudited, U.S. Dollars, in thousands) 2024 2023 Stock options $ 1,118 $ 2,756 Market-based stock options 327 — Time-based restricted stock awards and units 5,873 9,846 Market-based / performance-based restricted stock units 838 — Stock purchase plan 644 418 Total $ 8,800 $ 13,020 |
Earnings per share ("EPS") (Tab
Earnings per share ("EPS") (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Weighted Average Shares Used in Diluted EPS | The following is a reconciliation of the weighted average shares used in diluted EPS computations. Three Months Ended (Unaudited, In thousands) 2024 2023 Weighted average common shares-basic 37,741 35,734 Effect of dilutive securities Unexercised stock options and stock purchase plan — — Unvested restricted stock units — — Weighted average common shares-diluted 37,741 35,734 |
Merger and acquisitions - Addit
Merger and acquisitions - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 05, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Business Acquisition [Line Items] | |||
Conversion of stock, shares converted | 0.4163 | ||
Net sales | $ 188,608 | $ 175,204 | |
Net loss | (36,020) | (60,938) | |
SeaSpine Holdings Corporation [Member] | |||
Business Acquisition [Line Items] | |||
Direct acquisition-related costs | 100 | 6,500 | |
Net sales | 70,500 | 60,900 | |
Net loss | 14,300 | 27,900 | |
Global Spine [Member] | |||
Business Acquisition [Line Items] | |||
Net sales | $ 161,293 | $ 149,206 |
Merger and acquisitions - Summa
Merger and acquisitions - Summary of Fair Values of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands | Jan. 05, 2023 | Mar. 31, 2024 | Dec. 31, 2023 |
Current liabilities | |||
Residual goodwill | $ 194,934 | $ 194,934 | |
SeaSpine Holdings Corporation [Member] | |||
Current assets | |||
Cash and cash equivalents | $ 29,419 | ||
Accounts receivable, net | 35,313 | ||
Inventories | 132,636 | ||
Prepaid expenses and other current assets | 4,590 | ||
Total current assets | 201,958 | ||
Property, plant, and equipment, net | 68,863 | ||
Other long-term assets | 20,501 | ||
Total identifiable assets acquired | 377,372 | ||
Current liabilities | |||
Accounts payable | 21,602 | ||
Other current liabilities | 43,521 | ||
Total current liabilities | 65,123 | ||
Long-term borrowings under SeaSpine credit facility | 26,298 | ||
Other long-term liabilities | 32,823 | ||
Total liabilities assumed | 124,244 | ||
Net identifiable assets acquired | 253,128 | ||
Total fair value of consideration transferred | 376,745 | ||
Residual goodwill | 123,617 | ||
SeaSpine Holdings Corporation [Member] | Customer Relationships [Member] | |||
Current assets | |||
Finite lived intangible assets, net acquired | $ 33,100 | ||
Current liabilities | |||
Assigned Useful Life | 13 years | ||
SeaSpine Holdings Corporation [Member] | Developed Technology [Member] | |||
Current assets | |||
Finite lived intangible assets, net acquired | $ 47,200 | ||
SeaSpine Holdings Corporation [Member] | Developed Technology [Member] | Minimum [Member] | |||
Current liabilities | |||
Assigned Useful Life | 6 years | ||
SeaSpine Holdings Corporation [Member] | Developed Technology [Member] | Maximum [Member] | |||
Current liabilities | |||
Assigned Useful Life | 8 years | ||
SeaSpine Holdings Corporation [Member] | In Process Research and Development [Member] | |||
Current assets | |||
Finite lived intangible assets, net acquired | $ 5,750 | ||
Current liabilities | |||
Assigned Useful Life | Indefinite |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 30,903 | $ 28,390 |
Work-in-process | 56,193 | 53,510 |
Finished products | 131,980 | 140,266 |
Inventories | $ 219,076 | $ 222,166 |
Leases - Summary of Lease Portf
Leases - Summary of Lease Portfolio (Detail) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Right-of-use assets ("ROU assets") | ||
Operating leases | $ 19,116 | $ 19,869 |
Operating lease, right-of-use asset, statement of financial position [Extensible List] | Other long-term assets | Other long-term assets |
Finance leases | $ 16,092 | $ 16,345 |
Finance lease, right-of-use asset, statement of financial position [Extensible List] | Property, plant, and equipment, net | Property, plant, and equipment, net |
Total ROU assets | $ 35,208 | $ 36,214 |
Current | ||
Operating leases | $ 3,534 | $ 3,477 |
Operating lease, liability, current, statement of financial position [Extensible List] | Other current liabilities | Other current liabilities |
Finance leases | $ 724 | $ 708 |
Long-term | ||
Operating leases | $ 16,372 | $ 17,125 |
Operating lease, liability, noncurrent, statement of financial position [Extensible List] | Other long-term liabilities | Other long-term liabilities |
Finance leases | $ 18,345 | $ 18,532 |
Total lease liabilities | $ 38,975 | $ 39,842 |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Cash Flow Information Related to Leases (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ 2,162 | $ 1,674 |
Operating cash flows from finance leases | 210 | 214 |
Financing cash flows from finance leases | 172 | 160 |
ROU assets obtained in exchange for lease obligations | ||
Operating leases | $ 462 | $ 15,316 |
Long-Term Debt - Summary of Car
Long-Term Debt - Summary of Carrying Values of Outstanding Debt Obligations (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Debt Instrument [Line Items] | ||
Current portion of long-term debt | $ 3,125 | $ 1,250 |
Long-term debt | 115,071 | 93,107 |
Total initial indebtedness outstanding | 118,196 | 94,357 |
Initial Term Loan and Delayed Draw Term Loan | ||
Debt Instrument [Line Items] | ||
Principal amount outstanding | 125,000 | 100,000 |
Unamortized original debt discount | (4,050) | (4,331) |
Unamortized debt issuance costs and lenders fees | (2,754) | (1,312) |
Total initial indebtedness outstanding | 118,196 | 94,357 |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Total initial indebtedness outstanding | $ 118,196 | $ 94,357 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) | 3 Months Ended | |||
Mar. 22, 2024 USD ($) | Mar. 31, 2024 USD ($) | Mar. 31, 2024 EUR (€) | Jan. 10, 2024 USD ($) | |
Debt Instrument [Line Items] | ||||
Repayments of lines of credit | $ 15,000,000 | |||
Revolving Credit Facility [Member] | Financing Agreement [Member] | Blue Torch Finance L L C [Member] | ||||
Debt Instrument [Line Items] | ||||
Borrowings | $ 15,000,000 | |||
Repayments of lines of credit | $ 15,000,000 | |||
Delayed Draw Term Loan [Member] | Financing Agreement [Member] | Blue Torch Finance L L C [Member] | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 25,000,000 | |||
Italy [Member] | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 5,900,000 | € 5,500,000 | ||
Borrowings | $ 0 |
Fair Value Measurements and I_3
Fair Value Measurements and Investments - Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets fair value | $ 14,637 | $ 13,020 |
Deferred compensation plan, Liabilities | (1,604) | (1,674) |
Liabilities fair value, Total | (11,274) | (10,174) |
Lattus [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Contingent consideration | (9,670) | |
Liabilities fair value, Total | (8,500) | |
Convertible Loan Agreements [Member] | Neo Medical [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets fair value | 8,355 | 6,760 |
Preferred Equity Securities [Member] | Neo Medical [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets fair value | 4,951 | 4,951 |
Other Investments [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets fair value | 1,331 | $ 1,309 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets fair value | 13,306 | |
Deferred compensation plan, Liabilities | (1,604) | |
Liabilities fair value, Total | (1,604) | |
Fair Value, Inputs, Level 2 [Member] | Convertible Loan Agreements [Member] | Neo Medical [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets fair value | 8,355 | |
Fair Value, Inputs, Level 2 [Member] | Preferred Equity Securities [Member] | Neo Medical [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets fair value | 4,951 | |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets fair value | 1,331 | |
Liabilities fair value, Total | (9,670) | |
Fair Value, Inputs, Level 3 [Member] | Lattus [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Contingent consideration | (9,670) | |
Fair Value, Inputs, Level 3 [Member] | Other Investments [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets fair value | $ 1,331 |
Fair Value Measurements and I_4
Fair Value Measurements and Investments - Additional Information (Detail) - Oct. 31, 2020 SFr in Millions, $ in Millions | USD ($) | CHF (SFr) |
Neo Medical [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Convertible loans | $ 5 | SFr 4.6 |
Fair Value Measurements and I_5
Fair Value Measurements and Investments - Schedule of Reconciliation of Investments in Equity Securities (Detail) - Preferred Stock [Member] - Neo Medical [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Fair value of equity securities beginning balance | $ 4,951 | $ 6,084 |
Fair value of equity securities Ending balance | 4,951 | 6,084 |
Cumulative unrealized gain (loss) on Neo Medical preferred equity securities | $ (720) | $ 413 |
Fair Value Measurements and I_6
Fair Value Measurements and Investments - Schedule of Reconciliation For Contingent Consideration Measured At Fair Value Using Significant Unobservable Inputs (Level 3) (Detail) - Neo Medical [Member] - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||
Fair value of convertible loans beginning balance | $ 6,760 | $ 7,140 | ||
Interest recognized in interest income, net | 135 | 116 | ||
Foreign currency remeasurement recognized in other income (expense), net | (471) | 61 | ||
Unrealized gain (loss) recognized in other comprehensive loss | 1,671 | (137) | ||
Reversal of expected credit loss recognized in other income (expense), net | 260 | |||
Fair value of convertible loans ending balance | 8,355 | 7,180 | ||
Contractual value of Neo Medical Convertible Loans at January 1 | $ 6,683 | $ 6,084 | ||
Amortized cost basis of Neo Medical Convertible Loans at March 31 | $ 6,683 | $ 6,084 |
Fair Value Measurements and I_7
Fair Value Measurements and Investments - Schedule of Valuation Methodology and Unobservable Inputs for Level 3 Assets and Liabilities Measured at Fair Value (Detail) - Lattus Spine [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Contingent consideration | $ 9,670 | |
Minimum [Member] | ||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Counterparty discount rate | 15% | |
Revenue risk-adjusted discount rate | 7.10% | |
Maximum [Member] | ||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Counterparty discount rate | 15.60% | |
Revenue risk-adjusted discount rate | 7.86% | |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Contingent consideration estimated fair value | $ 8,500 | |
Contingent consideration | $ 11,500 | |
Increase (decrease) in fair value recognized in acquisition-related amortization and remeasurement | 1,170 | 0 |
Contingent consideration estimated fair value at March 31 | $ 9,670 | $ 11,500 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2024 USD ($) Executive shares | Mar. 31, 2023 USD ($) | |
Other Commitments [Line Items] | ||
Number of former executives seeking severance payments | Executive | 3 | |
Estimated sales and marketing expense (benefit) | $ 0.3 | $ 0.3 |
Accrued other long-term liabilities | $ 7.7 | |
SeaSpine [Member] | ||
Other Commitments [Line Items] | ||
Number of shares issued under acquisition | shares | 1.5 |
Accumulated other comprehensi_3
Accumulated other comprehensive loss - Components of Changes in Accumulated Other Comprehensive Loss (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Beginning Balance | $ 598,730 |
Ending Balance | 570,315 |
Currency Translation Adjustments [Member] | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Beginning Balance | (1,065) |
Other comprehensive income (loss) | (1,038) |
Ending Balance | (2,103) |
Neo Medical [Member] | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Beginning Balance | (228) |
Other comprehensive income (loss) | 1,671 |
Ending Balance | 1,443 |
Accumulated Other Comprehensive Loss [Member] | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Beginning Balance | (1,293) |
Other comprehensive income (loss) | 633 |
Ending Balance | (660) |
Other Investments [Member] | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Beginning Balance | $ 0 |
Revenue Recognition and Accou_3
Revenue Recognition and Accounts Receivable - Schedule of Net Sales by Major Product Category by Reporting Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenue Recognition And Accounts Receivable [Line Items] | ||
Net sales | $ 188,608 | $ 175,204 |
Change | 7.70% | |
Bone Growth Therapies [Member] | ||
Revenue Recognition And Accounts Receivable [Line Items] | ||
Net sales | $ 52,477 | 47,714 |
Change | 10% | |
Spinal Implants, Biologics, and Enabling Technologies [Member] | ||
Revenue Recognition And Accounts Receivable [Line Items] | ||
Net sales | $ 108,816 | 101,492 |
Change | 7.20% | |
Global Spine [Member] | ||
Revenue Recognition And Accounts Receivable [Line Items] | ||
Net sales | $ 161,293 | 149,206 |
Change | 8.10% | |
Global Orthopedics [Member] | ||
Revenue Recognition And Accounts Receivable [Line Items] | ||
Net sales | $ 27,315 | $ 25,998 |
Change | 5.10% |
Revenue Recognition and Accou_4
Revenue Recognition and Accounts Receivable - Schedule of Components of Net Sales (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenue Recognition [Abstract] | ||
Product sales | $ 175,831 | $ 162,248 |
Marketing service fees | 12,777 | 12,956 |
Net sales | $ 188,608 | $ 175,204 |
Revenue Recognition and Accou_5
Revenue Recognition and Accounts Receivable - Schedule of Allowance for Expected Credit Losses (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for expected credit losses beginning balance | $ 7,130 | $ 6,419 |
Addition resulting from the Merger with SeaSpine | 137 | |
Current period provision for expected credit losses | 1,376 | 208 |
Write-offs charged against the allowance and other | (19) | (126) |
Effect of changes in foreign exchange rates | (89) | 53 |
Allowance for expected credit losses ending balance | $ 8,398 | $ 6,691 |
Business Segment Information -
Business Segment Information - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2024 Segment | |
Segment Reporting [Abstract] | |
Number of reporting segments | 2 |
Business Segment Information _2
Business Segment Information - Schedule of Net Sales by Major Product Category by Reporting Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 188,608 | $ 175,204 |
Change | 7.70% | |
Bone Growth Therapies [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 52,477 | 47,714 |
Change | 10% | |
Spinal Implants, Biologics, and Enabling Technologies [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 108,816 | 101,492 |
Change | 7.20% | |
Global Spine [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 161,293 | 149,206 |
Change | 8.10% | |
Global Orthopedics [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 27,315 | $ 25,998 |
Change | 5.10% |
Business Segment Information _3
Business Segment Information - Summary of EBIDTA by Reporting Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Segment Reporting Information [Line Items] | ||
Consolidated adjusted EBITDA | $ 7,665 | $ 3,204 |
Interest expense, net | 4,558 | 1,289 |
Depreciation and amortization | 14,862 | 12,670 |
Share-based compensation expense | 8,800 | 13,020 |
Foreign exchange impact | 1,588 | (583) |
SeaSpine merger-related costs | 4,520 | 20,740 |
Strategic investments | 120 | 661 |
Acquisition-related fair value adjustments | 4,217 | 11,636 |
Interest and loss on investments | (260) | |
Litigation and investigation costs | 2,260 | 469 |
Succession charges | 2,210 | |
Medical device regulation | 3,629 | |
All other | (41) | |
Loss before income taxes | (35,169) | (60,327) |
Operating Segments [Member] | Global Spine [Member] | ||
Segment Reporting Information [Line Items] | ||
Consolidated adjusted EBITDA | 19,890 | 14,981 |
Operating Segments [Member] | Global Orthopedics [Member] | ||
Segment Reporting Information [Line Items] | ||
Consolidated adjusted EBITDA | (1,492) | 44 |
Corporate, Non-Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Consolidated adjusted EBITDA | $ (10,733) | $ (11,821) |
Business Segment Information _4
Business Segment Information - Schedule of Depreciation and Amortization by Reporting Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Segment Reporting Information [Line Items] | ||
Depreciation and amortization | $ 14,862 | $ 12,670 |
Operating Segments [Member] | Global Spine [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization | 11,929 | 9,599 |
Operating Segments [Member] | Global Orthopedics [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization | 2,207 | 1,629 |
Corporate, Non-Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization | $ 726 | $ 1,442 |
Business Segment Information _5
Business Segment Information - Summary of Net Sales by Geographic Destination for Each Reporting Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net sales | $ 188,608 | $ 175,204 |
Global Spine [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net sales | 161,293 | 149,206 |
Global Orthopedics [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net sales | 27,315 | 25,998 |
U.S. [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net sales | 160,019 | 146,093 |
U.S. [Member] | Global Spine [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net sales | 151,865 | 139,457 |
U.S. [Member] | Global Orthopedics [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net sales | 8,154 | 6,636 |
International [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net sales | 28,589 | 29,111 |
International [Member] | Global Spine [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net sales | 9,428 | 9,749 |
International [Member] | Global Orthopedics [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net sales | $ 19,161 | $ 19,362 |
Business Segment Information _6
Business Segment Information - Summary of Property, Plant and Equipment of Reporting Segments by Geographic Area (Detail) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment net | $ 158,132 | $ 159,060 |
U.S. [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment net | 142,355 | 142,727 |
Italy [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment net | 10,033 | 10,187 |
Germany [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment net | 2,620 | 3,030 |
Others [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment net | $ 3,124 | $ 3,116 |
Acquisition-Related Amortizat_3
Acquisition-Related Amortization and Remeasurement - Components of Acquisition-Related Amortization and Remeasurement (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Acquisition Related Amortization And Remeasurement [Abstract] | ||
Amortization of acquired intangibles | $ 4,226 | $ 4,134 |
Changes in fair value of contingent consideration | 1,170 | |
Total | $ 5,396 | $ 4,134 |
Share-based Compensation - Sche
Share-based Compensation - Schedule of Components of Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share based compensation expense | $ 8,800 | $ 13,020 |
Employee Stock Option | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share based compensation expense | 1,118 | 2,756 |
Market-based Stock Options [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share based compensation expense | 327 | |
Time-based Restricted Stock Awards and Units [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share based compensation expense | 5,873 | 9,846 |
Market-based / Performance-based Restricted Stock Units [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share based compensation expense | 838 | |
Stock purchase plan [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share based compensation expense | 644 | 418 |
Cost of sales [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share based compensation expense | 576 | 471 |
Sales and marketing [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share based compensation expense | 1,667 | 2,249 |
General and administrative [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share based compensation expense | 5,548 | 9,104 |
Research and development [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share based compensation expense | $ 1,009 | $ 1,196 |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Detail) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares issued under stock purchase plan, stock option exercises and restricted stock awards and units | 0.2 | 0.3 |
Shares granted, value | $ 14.9 | |
SeaSpine [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of options issued in connection with conversion of awards | 1.9 | |
Number of time based RSU issued in exchange for equity awards | 0.5 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Components Of Income Tax Expense Benefit [Line Items] | ||
Income tax effective rate | (2.40%) | (1.00%) |
Earnings Per Share ("EPS") - Sc
Earnings Per Share ("EPS") - Schedule of Reconciliation of Weighted Average Shares Used in Diluted EPS (Detail) - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Earnings Per Share [Line Items] | ||
Weighted average common shares-basic | 37,741 | 35,734 |
Effect of dilutive securities | ||
Weighted average common shares-diluted | 37,741 | 35,734 |
Earnings Per Share ("EPS") - Ad
Earnings Per Share ("EPS") - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Restricted Stock Units [Member] | Outstanding Stock Options [Member] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Weighted average outstanding options, awards and units not included in diluted earnings per share | 6.7 | 0.2 |
Goodwill - Schedule of Net Carr
Goodwill - Schedule of Net Carrying Value of Goodwill and Activity Recognized (Detail) $ in Thousands | Mar. 31, 2024 USD ($) |
Goodwill [Line Items] | |
Goodwill, net Beginning Balance | $ 194,934 |
Goodwill, net Ending Balance | $ 194,934 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - Blue Torch Finance LLC [Member] - Financing Agreement [Member] - USD ($) $ in Millions | Mar. 22, 2024 | Jan. 10, 2024 |
Delayed Draw Term Loan [Member] | ||
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | $ 25 | |
Revolving Credit Facility [Member] | ||
Subsequent Event [Line Items] | ||
Borrowings | $ 15 |