SPNE - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by and welcome to the Quarter Four, 2020 SeaSpine Holdings Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Relations. Investor [Indiscernible] Hunter you. Thank ahead, sir. go Please

Unidentified Company Representative

participating Thank call. today’s you for in

fourth Valentine; is John full Joining ended the SeaSpine Keith XX, financial and and XXXX. December for released me from SeaSpine CEO, CFO, year today, Bostjancic. results quarter Earlier

Such will conference regard within in the forward-looking this for our business our strategy, the During plans, make securities future our and of objectives federal statements historical we and call, laws plan, to meaning results other All expectations may fact, and operations as are such condition. statements. expressions. intend will, of financial future than believe, forward-looking statements, statements similar would, words include statements could, and

You are as March X, reflect statements, and our forward-looking cautioned beliefs XXXX. based of on today, information not only place reliance on are speak predictions undue which only current to and

and a news now Commission, that stated those corporate and please the our and periodic will Valentine. implied of www.sec.gov. For call to Keith? material website actual www.seaspine.com Securities our Keith differences results see could risks and statements, over uncertainties on forward-looking and are turn description available between with I our by the or filings the releases which cause Exchange

Keith Valentine

the effective, a year, increasingly their XXXX foundational impacted than year-over-year growth Good of per to again product the by fourth Difficulty] I The and [Technical the That we revenue an all than you second prior executing day, due translated And to continued growing joining pandemic U.S. improve a in implants distributors. hospitals XXXX commitment until both spinal to per been implants X% into the from XX% more disruptions Difficulty] expanded orthobiologics, to lives. in trend once factors the U.S. COVID-XX are orthobiologics when percentage surge spinal by for the second and our XX single restrict never XXXX, cost taking in to double in successfully team’s core in the Those the This have an elective afternoon. year of year pillars and challenging COVID-XX our [Technical network our over the the of surgeries adversely upon market of by continue began October, increasing worldwide launches our U.S. focus nearly more digit due increased [Technical significant revenue half be us. cases. the Difficulty] half quality performance was hospitals the day revenue business the patient thank quarter of exclusive with and strategy. market executed volatile procedural or surgeons most pandemic. quarter, and cancel solutions was caused COVID-XX of deliver to proud XX%, during revenue share and to portfolios which generated more growth. mid-November to U.S. spine mission

revenue at and year-over-year continue grow restrictions to did in and rate. spine to both While November early it U.S. into those saw a continued slower on volumes January We February. surgery December, so

again, and once through. in to of they have to that spine surgeries many communicated improving of accumulated backlog us again However, surgery work once volumes with surgeon decline recent our cases, a are spine COVID customers have

year in cases COVID-XX our ability yet to XXXX in grow revenue confident market year trends, assuming have XXXX, provide and guidance on revenue to continue hospitalizations full fiscal don’t we over sufficient by While these feel XX%, visibility for based we to decline. XXXX, total

first in growth we and will the early of surgery volumes impact of that February, in quarter will the COVID-XX in later on XXXX year, January for However, given had and be be this revenue most anticipate growth spine the the adverse high-single-digits. total

we reported was results. period. our quarter $XX.X prior the since January, This revenue the in spin-offs. the growth announcement In total product than by more compared X.X% to quarterly was our X.X% higher distributors total posted comprises year with and revenue recently increase, our our to growth year-over-year of early again core a in U.S., reflects of sales the In highest line XX% In by line once launched which led fourth revenue, million, Turning extensions. the the fourth U.S., quarter.

from Specifically, from new more per of growth higher spinal of contribute allow as increased recently launched case, launched volumes and complex revenue products products spinal our us XX% orthobiologics to recent more implant and Encouragingly, surgeries. in came implant U.S. XX% U.S. revenue. surgery than than and participate more revenue

implant the and more market which per from the our and complete believe benefited utilization of systems We procedure, complementary is orthobiologics today. we products increased product we spinal of also result offerings

U.S. was XXXX, there and to have For of SeaSpine add in continued of compared per used the quarter the distributors the fourth a systems in average products and increasingly quarter From X.X an of exclusive committed X.X to fourth distribution we XXXX. perspective, more procedure

of quarter core total U.S. XX% collectively these distributors our fourth of the XXXX, generated For revenue.

opportunities reps, accelerating has have on-boarding from driving existing more growth the distributors markets. well We in our which to been currently further sales growth from as new core core underserved drive in tenured to as continuing higher U.S., in both distributors territories,

have system products and by this driving We are particularly of important in launches recent these in Mariner our excited system Admiral alpha A-list been Plating catalyst the progress. Cervical interbody

important revenue meaningful the We from growth sources. U.S. generating all these be are to pleased in

are to our and market surgery U.S. provided confident will than We be overall market, return more faster ability important levels the to grow market levels. to meaningfully conditions spine and they share in pre-COVID take drivers

completed and history exciting The more our XXXX. full complex Revision schedule for Cervical the in Company. featuring our revenue year the to innovation execution. were and RT was growth two topography to surgery commercial launch line launches of major an Turning for of for product implant reef launches. MIS ambitious incredibly We the most in Mariner of Shoreline proprietary XXXX our platform our and extensions system, Interbody catalysts for

launch XD-printed with the impact XXXX, TA OCT co-developed franchise, to highlight adoption the system anterior high Interbody reef and systems await plating commercial launch a compromising interbody to XD-Printed reef for our our four launch next many market manufacturing Plating system C of requirements, XX and with next eagerly Admiral plus Among leading in insertion planned The the Implant the architectural reef novel reef A-list XD-printed A particularly offers in between accommodates designed which I rotate in the alpha insert restorXd. cervical both System antibody interbody, cervical the technology in in requirements. TO Cervical our cervical systems plate WaveForm facilitate alpha launch with interbody up market franchise profile system in and NorthStar C have optimal be stretch interbody in the we in performance the launches degrees occipital the screw to cranial new trajectory System ACDF, and And holes hinge Key first consistently many occipital which want without the articulating techniques. featuring features full device generation into use innovation implant, The this represents keel. NorthStar and launched geometric WaveForm a the to and also direct strength, rigidity. of of The reef exceeded mid-XXXX. alpha to the launches of balance including TH, balancing franchise. the We of new topography, expectations. angulation Mariner construct additional with included angled rapid system aforementioned clinical represents level implants, in that of of our caudal

of reef In commercial fact, TO system. full we launch just announced the earlier today the

options, And and launched Regatta maximum Plate the Expandable represents December, TO minimum and with the four-hole and system, and the lordotic options, Interbody plate TruProfile launch including $XXX expansion a for pathologies. market. anatomy expandable plating interbody Explorer million range watched our lateral one, XXXX both, new late system, featuring Lateral plates the We offering offers allows bring since also to first wide innovative an profile of standalone multiple we is first product interbody fixation solution in for address This which our that SeaSpine technology. in parallel and estimated posterior two

indication an XX line next Looking ahead, alpha platform our next launch, deformity expect of mid-XXXX. foundational we the adult months, in for Mariner with an the extension

systems We articulating recently system, alpha lumbar printed the TA interbody interbody announced to of launch also WaveForm interbody by system. highlighted in XD-printed XXXX, first have four the our more scheduled launch XD

we and field. In differentiating to beyond. in franchise, on orthobiologics efforts to to We XXXX timely will launches of resources alpha devote a launched through the successful aimed compelling full significant commercial be otherwise full data marketing at conducting enabling significant amount in of focus in the product in and Those continue development strong an science to studies our launches our systems many and we are expected our XXXX XXXX. products revenue crowded contributors and the growth

fibers Surgery are the of matrix substantiates publication of cellular fusion and demineralized formation not We product, of Bone OsteoStrand and of products particularly results or bone the improve This leading combined DBMs, matrix robust support the see and payer have scientific six DBM we products. the provider DBM we our products bone study increasing study of The cellular concluded a cellular graft the study tested. proud preclinical our outperformed that to previously competitive comparing that with matrix OsteoStrand Plus, for bone set were preclinical in offerings. the do around differentiated cells the When recent pushback bone that Journal and published Joint a

alliance strategic image XD to work SeaSpine Finally, to instrumentation our machine-vision with to flagship optimized surgery co-market enthusiasm their our specific Surgical and platform. for guided I highlight platform their to develop want continued with

our we In hospital addition assisted systems, to in the to XXXX. XD selling in accounts directly

of technology. helping type we lead the grow place will leads these to for close types We the interest continue optimistic of time relatively over long the opportunities awareness and XD’s many coming placement enabling are this in to equipment, months. on of system are progress this and we Recognizing that to

restricting COVID-XX. current impacts Our as for technology of a financial be likely are due continue to in in budgets hospitals purchasing efficient capitally units will valuable to enabling the hospitals this their ability capital of the to environment, place manner

combined efforts investment our portfolio very in recap delivered And COVID-XX larger and the portfolio can emerge share. business that John gives now, implant to class our of more market we deployment their to the our product turn to from landscape to utilized DBM throughout to for proud continue in financial our are the call our pandemic. changes a Continued have network on increasingly as best we market innovation confidence highly spinal expanding and the exclusive capture and and foundational of growth of XXXX, in QX I’ll distribution plans product John? over systems, aggressive Despite results. with challenges we the support

John Bostjancic

everyone. Thanks, good Keith afternoon, and

growth revenue international the the of to X.X% increased by revenue by more revenue U.S. interbody quarter million, and increase more an X%, $XX.X products, NorthStar recently for line declined and in to topography. $XX.X portfolio. year-over-year the Spinal led revenue surgery Keith million. MIS we from quarter volumes X.X% of $XX.X to able Mariner procedure earlier, As reef featuring by systems, launched our revenue expanded increased noted the U.S. the X.X% with compared particularly Implant Revision our was XXXX year. to new capture million, and to fourth case was total of implant prior X.X% million fourth NanoMetalene OCT increased were Spinal expanded and system than and per $X.X devices

XX.X% inventory quarter The We the fourth the excess Gross due to Plus of growth margin by year-over-year decrease fourth orthobiologics to was XXXX. declines. was in margin was X.X% to in for the spinal million continue $XX.X price OsteoStrand gross period to increased and higher same XXXX product. low-single-digit implant revenue XX.X% the for experience in in the call, driven in compared systems U.S. quarter can required these as quarter, from outsized expected is inventory XXXX which, higher substantial to future a with full provisions from our investment quarter-to-quarter. launches set shift be the more prior in to and we spinal excess obsolete indicated implant obsolete commercial generate The and builds. volatile of inventory anticipated in in on implant charges

quarter three to for commissions primarily margins million, believe to points spinal marketing instrument that gross by $X.X over by XXXX million to Operating driven loss R&D in the December deployment of relates $XX.X compared was $X.X to for loss expenses and in was cash selling period to of net next million, G&A quarter Cash the year Net fourth $XXX,XXX at million can million XXXX, fourth that continue and of notwithstanding, costs, for the set million we and $XX.X higher XXX XXXX. for same of expand expenses. $XX.X a totaled the under equivalents under of However, we to basis years. the $XXX,XXX in of million the XXX and higher for XX, our in that Protection quarter selling totaled no requirements of which per forgiveness fourth and loans the amounts for higher We increase was quarter of year. million the XXXX. compared a Program, program depreciation accordance $XX.X expense had used $X.X of two Paycheck we had prior outstanding the $X.X majority which expenses, and implant with The credit facility. in outstanding increase we and filed which impact, third the XXXX

capital to fourth higher for Our expenditures XXXX. inventory majority of flow operating to investments quarter million spinal in XXXX, of of set fourth equipment, instrument and XXXX. quarter $X.X the free in build burn, $XX.X purchases million which implant fourth of includes for the A the substantial and a that and was cash flows million quarter and cash increase of increase attributable property $X.X was compared

full burn as loan the expenses to for slight margin benefit free million, flow year our percentage $X.X on reduce compared expanding continuing remain and a $XX.X revenue. cash-based PPP G&A Our a of increase XXXX. account of XXXX gross We million focused adjusted to forgivable a cash was for the to

and revenue any we expenditures sustained leverage initiatives growth. capital are R&D However, accelerated sales, driving inventory towards and to fill critical marketing operating to continue implant to redeploy that set and plan spinal

instrument We our commercial many than growth inventory critical set revenue that Keith even to free for flow XXXX that support slated generate we in launches be XXXX more reported CapEx the we for build burn as be slightly and for to expect outlined higher XXXX earlier. XXXX, the full spinal and invest implant cash will to and expectations

to and on That we aggressively the are that positive is nearly additional With based plus we the that sufficiently elect facility, can continue access on we to credit through equivalents to back for founded levels have cash can million, for seen $XX $XX liquidity premise it. in made like not deferrable and and cash is investments $XX growth. at that XXXX to on million over confidently to we which million the from of and the we’ve this point, patients volumes who our At call capitalized the hand, expand XXXX believe surgery we invest results will those elective need is It’s to comments. to surgery best, before return I Keith? pre-COVID and would the as spine temporarily closing surgery underlying progresses. Keith to confidence turn

Keith Valentine

you, Thank John.

adult timely for than very and believe revenue priorities launches core migration four our additional which to the distributors impactful many with above-market exclusivity more sets, XD end, systems of of an implant the the products, our very we similar full and XXXX Our increase products expand the and printed number utilization Mariner the margins. of are indication those, deformity relevant commercial to Namely, launch in launch to a line efficient to generate most well I we extension effectively further spinal interbody develop the have to to their launch. in through SeaSpine, on gross clinically past. growth and delivered to alpha in to and XXXX XXXX, To that alpha we being more launches of plan the of dozen and executed

this that, by U.S. operating it and remain distributors our XXX Irvine of again solutions as of gaining and generate efficiencies sustained With that we Operator? facility. of once efficient impacts by margin our revenue to return than and from systems and new points we driven cost-effective exit expect XX% XXX that expect surgeons Spinal launched from passionate double-digit deliver Implant is we from to motivated sets XXX to we who and our our clinically long-term new COVID-XX. of market. to will and more utilization of our And emerge manufacturing existing The open are growth recently past and optimistic both spinal revenue up yet and employees successes optimism disruptive implant XX% than can between generating than with in from distributors. We are more gross We and more fueled expansion now core more questions. superior, basis us the revenue differentiate the to U.S. to procedural SeaSpine XXXX, dedicated by competitive from inventory additional

Operator

the of [Operator question Instructions] O’brien Sandler. first Piper Your comes line Matt from from

Unidentified Analyst

Drew been But, Hi know And considering from then, the questions. on smaller U.S. forward moving a Matt. a spinal wondering kind the those we into two early you what is some I be ‘XX of obviously, you just the for color perspective. here. talk parts wildcard be degree. factoring think a guys. business I our And about previously has of course This a over if key visibility taking here you improved thank of year that [Technical we of a on the models? has could appreciate the the perspective your the had maybe especially all bit to should for I chunks parts from discussed of mix thinking through But the be international driver. your growth businesses? should Difficulty] between there business. But, in should outlook,

Keith Valentine

Yes.

all because area least I the we is distributors. the still think, where of visibility is through that done international only stocking of most -- business have

on better COVID can’t the we don’t marketing But, have do But, grow. spinal sales I implant investing it a the obviously we and I moving given this it implants got -- fact We given and that We think implants continuing both launch. moving we’re launching right? you the you expect a support. the XXXX. products on will uncertainties. of right those So, we at driving point, of sets, think -- we’ll be than visibility any the U.S. lot I ground in, growth, and full we’re the dial it that grow more of don’t spinal up lack lot picked that to to really spinal think the on in in in But, we have, ortho, portfolios, commercial think,

deploying full deploying So, investing also leading will U.S. be do portfolio. the we the come growth commercial aggressively in implants spinal but that with are those existing and our more sets of in sets we launches anticipate

Unidentified Analyst

just COVID, That’s Obviously product despite year, wanted on that a up helpful. top-line. the for comment I driver side. Okay. new follow XX last the launches big been on obviously to

in back as here to far as launches launches you new going top-line? stage many most roll expect XX are you And Thank limited broadly more you. mentioned what contributing are those you XXXX? think, ‘XX. those launches, then, of guess, I XX, that to I the currently to in in how out

Keith Valentine

Yes.

that Revision most and revenue allows the system surgeries. and to launches year more meaningful us complex in forward should deformity impactful were Mariner the going participate So, MIS full last to was be that

were those topography alpha contributors launch, two is So, another big big with from Shoreline addition. reef an

it expectations in expected many terms of products driving But, alpha the full in launch into a refresh of launch go growth. is was And cervical Shoreline in that NorthStar alpha XXXX. particularly we’ve been an one else launch to And an alpha in amount XXXX, posterior successful even launch. product as the called terms -- of much a with system everything outperformed everything was topography commercial OCT that’s contributions. the of And I most our that was else enhancement. think, then, launch the for in be nice pretty portfolio revenue to alpha to reef an an

uptake our expectations we surgeons, had. features a of one alpha that own exceeding particularly some -- with out We I by sets good that of given limited as launch for intake of our clinical the device. an are internal number even But, the called expecting was by

to launches to really launches, around a what about what as alpha there do the Shoreline all year XD-printed we’re lot a that year, interbody Revision Mariner of able in moved including full launch, pointed all generated, growth think this all that of about you growth. launch, a full can we’re you just Mariner Shoreline our is what by and terms to alpha last we bringing more led XXXX excited technology come and do portfolio But, launches and good and MIS commercial that about in commercial that out, -- think commercial year. So in full

Operator

Your Canaccord. of line next Rose from from question Kyle the comes

Kyle Rose

to So, commentary you those drive prepared just state core wanted about obviously, end team. the talked the at Keith, I remarks, talk higher outlined distributors. the just to from the you’ve revenues your of about of plans And coming commercial XX%. then,

year heard where QX. that at right, I that group, up you from that’s coming ‘XX think, into the I revenues from XX% ended

So, higher team happening what’s we mix maybe to the XXXX? help of been us confidence about you gives when seeing towards behind scenes see you’re that revenues that driving that commercial the from the understand channel think

Keith Valentine

Yes.

I think really there’s things. two

to systems, more into legacy course, continue of of is, that to some, the be that cervical and rounding the was big we’re is the very distributors. Perfect getting one out very posterior portfolio two our of go opportunity think, old first example The systems full one now as launch with exclusive items I last legacy will obsolete we are opportunity. important that

course of other brought have that will a territory, new aboard be X become to representing up we good will speed, along just to distributor fully training over the functional takes they number functional. partners feel it, too we about XX -- the that fully months have they us that them the be is the to be from last there’ll in often of The that with more to ability really goes year, the

ago that into so, or we we off will nine about good the paying get feel XXXX. And months that year made investments start we the a ago fact as

Kyle Rose

the presumably second QX, in in quarter growing half did record the the have When the almost but with half. and Great. the the year. number performance ‘XX, a look not I And weighted at did you you half this north about to I about talking in in the a put revenue you’re of growth guidance, talk second about then, when year, quarter commentary record QX, formal I XX% second of to providing know of you XX% upside the about that you’re think

COVID sort geographic us half second incremental in you well? and to rest that really focus about the of as first be some term, year through the there help maybe as it half. Is near just think takes the should about or puts thinking of is move uncertainty So, we

John Bostjancic

by talked presented to be we’re near-term particularly since the what we of that launch about I we it’s the the throughout the launch -- January year, we February. XXXX even end No, part us it’s half Things just good thing how the saw continued uncertainties the of it’s direction in there do disruptions exactly as are and of trending number. in more And are early able we and COVID hopefully, on saw the It’s right that we just are be we time. but half That saw to right? of wrapped experienced more well -- And to with that prudent terms we year, that. about case feel first cautious until vaccine in about first vaccines back-end I products cautious, distributed the bit the trending and lower in to growth. and first the But, things widely counts. we’re But the a in of on the we that rollouts year, little and think annual but call. still fact we’re COVID, has the QX continuing why more weighted systems, as being stability want given half up like is said, feel the cautious

Operator

comes Your from from Ryan the of line BTIG. next question Zimmerman

Ryan Zimmerman

major back on year. of guidance the just coming market? solid a the contemplate the questions. bit, of we in large the Thanks from have mean, and weighting. And Does end one fairly half congrats, Maybe I a for players. the spinout little your guidance disruption the any taking

sense how of a so about provide thought guidance maybe additional to context in And that just you some get of that dynamics upside? actually the could of market kind trying of the

Keith Valentine

our launch. full we’ve managing disruption We had distributors we’ve ones out, brought launched we’ve more the terms we’re what focused spin in be And on that of in the and and that would from that transition addressed also specifically will done the we haven’t we’re what to but board. pipeline on products commercial the

it that if the product take market good comes we just more our disruption guidance think, based managing in out I to new today distribution opportunistically, that. bring control opportunity the for share think terms of is been addition launches. on us and us more pipeline I even is what But, we’ve some would of and things there

Ryan Zimmerman

then, Okay. of good know. appreciate X.X to products And ago. today, number Fair year around enough. the I you’re this Keith, metric to that a relative That’s using X.X

even where see Just paint north you could but broadly maybe time, you the go that of usage kind guidance where of think speaking, if indication necessarily, your and to incremental an products not can picture whether of could over as a of of two, than you maybe higher opportunity that there. get trend

Keith Valentine

Yes.

around in doing X. to getting as strong pedicle look But, strongly -- to have. ultimately, X.Xish where we close we that means getting start capturing start can as XXXX, I feel having to were start ability over that is really was off unique the closer offering to getting year think XXXX, want X.X. the rod that we We moving interbody the you’re I it, announced, And it’s you then And back a into we kicked all if go case. that Ryan, cases. influence case. good multispecialty, into the you’re to conversation if to plus, were think, in have And carry what longer X where just year biologics you could beyond you X goes with X.X, we the a can right, interbody we in at or that of we entire we you as we orthobiologic it you screw a pedicle the go construct. now And the is and X also, with So, way because as right? if as the up well look we -- case have, continue screw start want the really case, entire both and the into fusion the phenomenal, capture on, doing now

Operator

Truist. [Operator the of Instructions] Your Kaila from next question Krum line from comes

Kaila Krum

So, just that the to speak guys into just seeing have plan starting months What two year-to-date, you to you is, outlook? Can you high I what single-digit they understand said be get quarter. to first things mean or I’m first I you’re trying growth better you’re we’re out, confident in do to need or from in the still here, and can stable, simply do to need do they that get mean, worse really? quarter.

Keith Valentine

that elective Yes. it. good to hospitals manageable things for fact feel about think we surgeries A that now, force. the have numbers in couple kicked back of about are Right something more at

so to to create way mean, but may predictive. concern that I holidays a -- certain always no a time concern there’s There’s ebbs have be to And that flows. and to there’s spreading if strands no that new better is be events. going always way continued there’s there’s a understand there or addressed. There’s be

the though, forward and that figure to coming have still at back of we and rescheduled a So, the looks elective business a going on we and number fact being because look delays there there’s with whether I way crystal the getting the don’t to But, out slowdowns as love getting we it’s that strong we’re that -- more will is we the ball be quarter, half love done feel surgery don’t we at book are books. now move be of the forward. tail like progress of made it it, that’s this we whether

Kaila Krum

how doing. sense, in kind a and more you, are sort I be relationship talking Keith. What seeing it of robotics well on could you’re enabling of an XD makes get But And have expecting Thank there. this would about mentioned are That briefly great XXXX? in with just companies lot know that you guys fair. completely update other I contribute that’s how guys. it of of just then, call. you’re No, Yes. know technologies to

Keith Valentine

Yes.

help I think close to COVID, with hit, started that to and great now with as participate had of now it a in close but think deeper to XXXX. interestingly, how early we’re relationship that opportunities then, we a we better understand opportunities collaborations that we we And obviously, get number seeing And training can I them. and great that trained of need gave we lot better us them. and exited different opportunity COVID a

stronger, can a obviously, certain hospitals need that’s the it work things in excitement get of to in to earn great So, channels sales out, the great We to And we others placed a our by year. unit then direction. of we’re last outright, see see a through to to and if both hospitals. and do And purchase lot relationship than as do it that. collaborate it if was well place right way even a better try a

as right like of capital budgets about year, year, going half open now us as great to that or continue capital feel being to see see sales is give far additional year being by placements. really first tail robustness -- the for talking to companies we’re made robotic half the of that’s so, seen that That do think because greater half opportunity. start a I this we’ve up of not And other a hospitals. next of funds equipment so on where we’ll we certainly available next their And will momentum going XXXX, and made deal from a there

Operator

question Mathew of line open. Stifel. Mathew Your Blackman, Blackman now is your from next Mr. comes the from line

Mathew Blackman

Sorry. Apologies. I’ve just mix turn analyst. got analyst, questions. Maybe for tech to tech -- a the start, not the fourth to Thanks learn a off med mute several about in quarter. got button. I’ve procedure taking to the curious how I’m

while been your lower more the about done, peers complex were complexity of gotten disproportionately Some have procedures talking having procedures deferred.

and So, quarter more And now similar being one see in surgeries the volume I’ve so, you a books in on the are And almost a put complex back got there Did that if nature? on are phenomenon? the follow-up. double headwind was like mix. essence, in

Keith Valentine

Yes.

significant a less than is of our not in So, the XX%. deformity component business today surgeries. it’s believe I still complex more

the scoli the in So, the and We doesn’t late typically bump do and little of have bit the impact in same us. on QX it year. season get height a

But per of growth has but Keith impact because little from did mix we complex the as procedure. was of growth. of but the about decline, price used the same earlier, industry. tilt surgery. been then, on little see talked consistent bit the systems us, it more procedure mix, That volume we per the towards was X%, about of benefit did have which we came pretty ASP And number surgeries, not a shift most bit. the deformity a talking And the throughout it’s a from So, wouldn’t

we’re rescheduled. think probably So, we’re getting meaningful becomes us do adult rescheduled, and fruition a procedure of companies allow down of more we’ll those does some see quarter, road dynamic in as products benefit, fourth in talking reasons deformity business. our making complex extending those I that I a advantage the Mariner that to the if seeing getting take higher in the And of of our used one per the of cases that get other because increase platform that like are indication revenue start a when per more mostly because into investments cases that an the to procedure. think an will about number in complex XXXX, part come more And we’re

Mathew Blackman

sense. follow-up, thinking the That new I -- I’m products guess, and/or any more interest less And the you under-indexed of but new characterize it’s either there you asking deeper, also go these to existing to are with Thanks. broader. or portfolio right. all product makes you then, customers, cohorts? the really All these or it’s clearly, Is new is versus resonating early allowing flow. go what my allowing just traction accounts allowing to way or in about

Keith Valentine

what’s deeper going interested and a systems coming with only question what new weren’t of nice Actually, that they relationship that’s already that in have. legacy no some features it’s lot forward, new right? observation, in is. also don’t alpha us necessarily it was incorporated in they’re we��re -- the they that certainly we’ve customers ability new of And interested a but other very not our to product we’re good a to those opportunities Yes, in hospitals the is there’s also because surgeons. the But, seeing continue giving because in products, our

the will And year opportunity is for this drive going fact will, especially you working continue that that come year we seeing aboard, both continue be in the customers so, to as we but participate. through those feel are accounts new if deeper next an finally and and we’re goal segments, to our new products, we’ve good about got that

Operator

from line comes Cohen next Your of Thalmann. the from question Ladenburg Jeffrey

Jeffrey Cohen

issues I drill wanted to in Two a little bit.

extra Firstly, like the XXX sets calling on R&D, comments on X.X of some items X.X quarter, XXX for G&A. OpEx

for one as far and shouldn’t that’s think we time, the forward? that OpEx So, modeling as out of about X.X the QX,

John Bostjancic

the all don’t product expense, of it as the higher it any for the to But, I want instrument and depreciation fourth gearing in The upcoming the quarter deployment characterize up was particularly onetime. as spend were launches. we

the business. and deployment are the depreciation But, more infrastructure expense as the G&A that So, But that elevated an growth noncash capital nature, also instruments the in the in were that. of of the just more and to reflect or R&D expenditures say, launch business recurring historical nature, more But, will deploying biggest in the of and OpEx. increase, depreciating I’d the increase marketing was to expense in support rate part the because and continue at the instrument we of permanent and the increases sales products. the instruments continue it’s it’s

Jeffrey Cohen

inventory that expect to if the I you’d about And over million what, the $XX of, correlate $X million try year? up to in inventory, Okay. for order to

John Bostjancic

Sorry, Are XXXX off-the-cuff inventory or or for mean XXXX is I up you talking sets, about year? the going XXXX? XXXX? to go

Jeffrey Cohen

‘XX versus ‘XX.

John Bostjancic

of in because versus the Xx XXXX go launches, we’re in an a should launch. deployed full launches, X again commercial and ‘XX typically bunch Yes, alpha doing with alpha up versus it inventory right, number of went or ‘XX the with sets XXXX in up

those to CapEx all as inventory both would So, we full and deploy be expected up go commercial launches.

Jeffrey Cohen

the to basis-point we XXX Keith had a basis XXX talking two And between increase about XXX it. you as the then, comment ranges? Got Okay, clarify -- differential XXX about to to XXX aspirational and about think you annually, Could points. margins, perfect. then was the

John Bostjancic

Yes.

the The opportunity a That’s grow been grow But, we’ve more still XXX for intact. second the saying to XXX long-term basis got it to in estimation is I to XXXX. think, points. for XXXX. while, We’ve an just expectation one even

that out. gave was So, Keith genesis the the percentages of

Operator

from the from line question next comes Your of Folkes Cantor Brandon Instructions] Fitzgerald. [Operator

Brandon Folkes

on Congratulations from Maybe good a quarter. me. just two

would And just another pace bolus a getting started in new can you terms give we So, color a you fantastic think and of should beyond of then, greedy, additional great. and one, any near phasing the going be XXXX obviously, launches, of on this as of drive gross launches about on the XXXX which is to of you product being launches too kind of how in maybe well. had growth. sort year Without sort us throughout midterm XXXX, out versus to margin,

Keith Valentine

Yes.

So, are past on that numerous I will putting year. the that in think going it forward, we healthy pipeline to planning similar we’ve we’re continuation very launches, we’re in in we’re move momentum a And XXXX. what of still have or of The as will product XXXX see years. be projects to as this launches that place the also, couple seen as as

in to existing continuing think product us naturally what improve I addition, to though, you’ll on you’ll see lines. see is, start

it’s ability be important to for now a goals kind features the size, important into also have with driving before start opportunities would are we feel thoughtful of approach messaged will address us, development trauma, very launch start well, which we to to and one critical those direction. able but that to we tumor and updating be taken process different We right like at the as are and that network effectively of additional distribution So, and very and time when we pathologies. is that our moving the

John Bostjancic

orthobiologics need having the again, there’s margin couple the a you’ve compared gross big that’s have tough the every XXXX. of But for cost of the ultimately to we the inventory, a I costs those end of that savings full bit XXXX. to ended alpha in implants number to puts that the to sell anticipate year, deployed. because I again expect having manufacturing deployed a the savings function one facility, quantify, And the more And us, launch set to absorbing XXXX. you’re of more little think, in and slower charge doing of, go which very versus growth the Overall because X of facility that little compared odd a in in in you a higher the don’t of so-called of was up through of you inventory, sold up launch production XXXX of XXXX is but comment, would or to for and bit on down E&O takes. number but sets sets then, sized Irvine Xx got the we overall but many commercial for And then, the the it’s

higher as nice building the overhead. the that outpaced But facility, inventory pace. produce absorption just a overhead for absorbing at sake in cost the at increase really to not volumes produced of we’re we our So,

just to last and efficiently lean X, we’ve cost X.X lot projects that more more effectively from efficiently. that facility of So, the the that’s well, given just as things, that where is on more that’s of is manufacturing function pretty using we years the the production get cost things unit fixed the meaningful, X cost plant, which a but produce. over a you’re at of the variable benefit right, tissue higher implemented volumes, And able basis a then lower also to produce

fixed So, fixed it of came the cost many could the it’s it’s a least. lot mostly more it’s that costs, without more a because but at coming Irvine and from where facility fact scalable facility quantify costs, to we add that with because adding room from, very hard volume to component more grow

Operator

There no Instructions] Mr. [Operator are questions continue. Keith the phone. please over Valentine,

Keith Valentine

joining with Thank QX. connecting you, for look And Cheers. we everyone, to after forward us. you

Operator

Ladies you for today’s concludes conference this call. participation. your and gentlemen, Thank

disconnect. now may You

SeaSpine (SPNE) 2 Mar 212020 Q4 Earnings call transcript