SPNE - Earnings call transcript Q1 2021

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Operator

Welcome to SeaSpine's 2021 First Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, May 3, 2021. I would now like to turn the conference over to Leigh Salvo, Investor Relations. Please go ahead.

Leigh Salvo

Thank you, and thank you for participating in today's call.

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

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

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

and between website, our material risks with periodic stated could For the please forward-looking those and and which a our on at results implied our are uncertainties difference corporate by or the filings www.seaspine.com SEC, see and statements, of cause www.sec.gov. that releases actual news description available

Our over earlier financial Valentine. measures, will supplemental non-GAAP and directly GAAP GAAP loss considered release business in turn be comparable such Keith? issued presentation accepted regarding believes today. should operations. provided tables these comparable discussion the principles, together Reconciliations most not Keith in provides calculated the measures call relating financial or trends now replacements the for the as and certain management These the with accounting most accordance should that I financial press include are are of the measures not to non-GAAP EBITDA be GAAP. read that to we of to measures with accompanying directly measures. adjusted information Management and will and results financial important also today investors generally financial company's the

Keith Valentine

couldn't surge, with rising once revenue positive of Good continued for in of our declines the in the of confidence from our individuals the late from XXXX the visibility spine coupled pending year start quarter. for in anticipated We ever-increasing believe winter XD for prior to of XX% to to and six COVID are more enough revenue surgery continue the more market have to a happier million and U.S., approximately us. meet of an a that acquisition, launch spinal Surgical, XD growth to add guidance you, the currently the dozen a over to contribution we commercial implant COVID partners full we closed our cases support more quarter XX% and fund for financing distributors Thank joining reps including to growth. systems orthobiologics momentum first March the spinal population penetrate their the strengthened with balance that how market we those in demand The on of of surgeries anticipated cash throughout be from the providing growth all for April. and thank provide Surgical for and of to saw in revenue equity closed resulting a systems while pipeline With I sales exciting point XXXX significantly vaccinated, and to closes. robust in will acquisition Those to territories. remain and XXXX, spinal outlook With for important Despite $XX for organic volumes now and products you over remainder for share attract Surgical afternoon, inflection limited XX% mid-April our full and deploy factors our poised us due we contribution portion to recent further Leigh. in XD exclusive our growth capital further acquisition catalysts to also months deeper getting XX% year, we in distribution and to implant to SeaSpine sets existing XXXX. take strongly February favorable slow sheet additional accelerate and the restrictions help over

recently first of our our XX% was to quarter Orthobiologics U.S., by implant U.S. our and the Turning launched revenue In per and was compared results. came products sales extensions, the of growth. once and and again, a volumes higher In core XX% In case. revenue, growth we surgery XX% implant led the products from again period. revenue line announcement recently April, total specifically by U.S. we generate where revenue. in XX% year increase spinal with launched million, Once new approximately spinal from our $XX comprised line of distributors revenue total year-over-year of posted to prior growth U.S., increased XX% our higher

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

quarter X.X there first an average SeaSpine of the quarter XXXX. in to products XXXX, of procedure the of per used systems first For and X.X was compared

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

territories this important now drive image the guidance to recently onboarded U.S. in value reps as distributors progress. well in previously the SeaSpine's reputation from with our expect sales the coupled proposition additional growth markets. tenured catalyst penetrate innovation, be driving into to constant distributors deeper XD hiring further core of as for their will platform, in We core underserved existing from Surgical

team. of for even from in a with current lot capital capital-efficient units budget Turning capital also of with before that technology new flexibility of The force and manner not outright family of system have ASCs close hospitals surgeons. the SeaSpine to to unit. enabling partners purchase and The to experienced an in the already expected remain sparked interest and new has more of second potentially we've Surgical's We XD conversations the end to and sales on-track the the integration SeaSpine quarter, us is and distributor to XD XD the Surgical. addition XD acquisition give may sufficient started planning and acquisition place a

the accelerate programs being we platform, to to respect WaveForm XXXX, With XD's top Interbody development further Finally, alpha product XD-Printed planning TO quarter we the TA a priority. software engineers preoperative to software launches, look extend launches capabilities with our the initiated Systems. forward and first articulating during of the collaborating of to Implant XD the with Oblique TLIF of WaveForm

Interbody and in more We for expect approach one for lateral launch to a two Lumbar Systems approach. another anterior XD-Printed XXXX,

two deliver We to on also launch Interbody XXXX. more XD-Printed commitment Interbody surface on-track NanoMetalene additions planned launched System Including we extensions TO XX remain our Reef and than to line our technology fully Topography. Reef featuring the more to products the and in portfolio,

of include WaveForm significant fixation, the notable OCT device, system for our posterior expected of the the growth XD-Printed System Some the launches adult Explorer the foundational to more alpha contributors Mariner an indication Interbody in TO Implant next Expandable with in the and platform particular, full XXXX Plating to four Anterior commercial our and are C line cervical Admiral and Interbody revenue be launch extension Those deformity of launches, launches NorthStar System. the of beyond.

foundational now we innovation product emerge on plans Maintaining spinal our And of portfolio, support important flexibility a balance invest is pandemic. larger rather, and now we growth. the we can capture the I'll call and opportunistically to and for in we utilized financial John market financials the further have of more then our investment stronger our exclusive deployment, John? highly will share. gives more their efforts DBM our more network Continued details recent their with I wrap best-in-class outlook, the with aggressive as up. over development to from confidence to increasingly our growth to our sheet, for distribution implant And COVID-XX - systems, confidence financing, have even combined that in turn so

John Bostjancic

and Keith, everyone. good Thanks, afternoon,

again in XXXX increased The the posted in of inventory the total in and of portfolio. years The reported OsteoStrand more year-over-year higher capture is fully first As XX.X% than the first sales XXXX. or the by and rapid expanded and excess products this commercial XX%, the for the $XX.X for is sales was revenue in basis was products our was sales inventory clinical basis with in excess in launches day That XXXX which Orthobiologics per X% investment Keith U.S. one U.S. per a same growth. quarter U.S., compared adoption from margin increase XX% XXXX growth million. implant anticipated by relative million sales revenue they higher to day required million. XX% The were in day per a to quarter earlier, in revenue. first $X.X growth lower to generate XXXX products. by increase XXXX volumes the first more implant most on gross recently prior XX% and selling of launched substantial noted $XX inventory set in increased the an quarter to systems launched International Plus revenue for new products, increase due in were in and per procedure relation by In revenue Gross was we shift our recently with in the launched the and in alpha in and increased driven as implant for Implant to sign obsolete period a compared margin that XX% for obsolete case first of increased very surgery expected Spinal drive outsized once implant encouraging more to margin the on beyond. predominantly of to led $XX.X spinal quarter growth to and provisions the reported. revenue Spinal products can per full was primarily year XX% increased day those to and a increase accounts million, able builds. these U.S. day, XX.X% additional to sales of gross we to charges XX% a quarter our XXXX. spinal

valuable asset intangible net per quarter continue of operating $X.X quarter margins quarter financial notwithstanding, for next the three technology non-GAAP results administrative quarter in charge for for development acquisition; million Surgical noncash equivalents XD financial Protection general we credit and XXXX, $X.X million, incurred under nor compared and of $XX loss increases Surgical from depreciation expenses a our years provides to against shares primarily million our relates expenses, press by million the presented $XX of Program. $XX in basis $X.X expenses two credit operating million first to $XX.X earnings which issued before impact, expand companies compared million and XXX million in XX, we performance compared improved and for Adjusted million from the recorded million facility impact we and XXXX. substantial research cash a of million professional underwritten by afternoon. totaled of which Operating adjusted in of the the the we XXX in expenses, had Net was $X.X million, $X.X of A first that to that $XX information was this the Cash of million other over associated tables The XXXX points outstanding of core XXXX. was taxes, by loss a totaled with million amortization loss XXXX. million the quarter offering measure selling of the to we received marketing first our proceeds $XXX,XXX legal higher the was of impairment pending These to These common reconciliation of $X.X of of year to before the in stock in in subsequent first X.X fees believe XXXX of XXX However, increase driven by and first and for and over do the driven acquired XXXX EBITDA of Paycheck the $XX.X period-to-period facilitates loss selling with XXXX. million that and of were $X.X in Adjusted majority commissions; connection March a that XXXX. increase XXX million and other the to our expenses. quarter release on GAAP we by XD borrowings believe this gross $XX.X can repayment quarter under loss a basis loss of the to by million outstanding at our first net EBITDA in for to of comparability the of include points million public first April of higher to partially $X of offset a $X.X and amounts facility not is April. that $XX.X operating net loss industry. the higher year the interest, loans

operating million to increase instrument million Our set for for purchases free property was higher cash increase the implant XXXX. and flow quarter of quarter burn, and first cash a which investments $X.X equipment, in includes $X.X of spinal compared attributable first flows the builds inventory XXXX, was and $X.X of to expenditures. in million capital That

Turning to our continuing of remain as We outlook a expenses for to focused gross G&A percentage our and revenue. expanding reduce XXXX. financial cash-based on margin

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

of compared prior prior to giving the of million to the XXXX range growth the to full million, the XX% expect Including reflecting of earlier, growth be noted of range reflecting year. to to $XXX the XX% Surgical, before $XXX be effect million, to Surgical Keith $XXX As year. XD revenue year to to in to expect XX% acquisition revenue we the year acquisition XXXX million $XXX XX% pending of of full compared in we XD

of expect EBITDA P&L We to year, dilutive including last anticipated on loss reduce XXXX XD in this to impact further our year. our the adjusted Surgical compared

dilution XXXX. XXXX respect slated implant of full shareholders Surgical anticipated to to support our cash shares the than which investments due from and they from SeaSpine acquisition, XX% XD reflected be the burden launches certain closing, We than shares is million With will XD EBITDA Surgical planned this expectations allows flow more expect more we to to shares part reported stock. them we certain that revenue XD many accelerated for be will guidance. set spinal exchangeable our until growth taxable modestly year, significantly events the commercial to XXXX in the common critical $XX.X receive that higher instrument the free exchangeable and those increase adjusted in but in for to expect a to defer at elect for This build CapEx inventory tender for generate

any will makes nor XD likely tax tender not tender for the shareholder result, effect. calculations a timing RSUs will XD each elections, the common as that Those share per of be per the shareholder X.X million denominator can't five loss that shares shares of any a will the planning. their reflected exchangeable each personal issuance. shareholders such be issued and within stock At which based exchangeable long-term in we tendered shares As will XD issued shares will shares, ultimately roughly shares time, exchangeable XD the in a total because be stock in loss common until of be based anti-dilutive will that SeaSpine years of this to be shareholders, of must on the denominator consistent their predict number exchangeable issued XD share decision those treated shareholders' that with like on stock be options their equivalents exchangeable issued

acquisition which point, over of details aggressively the never we to our million will to the closing have the free capitalized on hand to Keith can I'd equivalents With the can growth. and expected At confidently of on our of Surgical on the to to like turn in We Surgical XXXX after portion through expand P&L payment flow burn consideration impact transaction to million XD cash we comments. been expect elect $XXX cash better provide continue for and additional closes. credit XD the invest for roughly additional to cash after cash call $XX this back have that million, and liquidity we $XX access facility, plus we

Keith Valentine

Thank you, John.

timely beyond our very execute additive excited team Surgical to be all to their SeaSpine priorities and room. the technologies outstanding are growth We foundational to level be to high spread on to family a commitment to are and generate enabling influence that to XD SeaSpine, organization revenue implant our of and operating sets at growth That above-market efficient expand number our the namely gross we add and our able further will clinically-relevant to the into SeaSpine the that core our effectively utilization more to of leverage to transformed just the through develop products today, have distributors increase launch to exclusivity to and spinal their margins.

we XXX be of revenue expect more than first sustain the emerge employees growth SeaSpine in is the driven it past in than further questions. we who procedural XXX that, successes from clinically more fueled quarter this We deliver increase to Surgical motivated dedicated and to and by market. we disruptive competitive That distributors surgeons passionate differentiate our the Operator? that of as solutions will double-digit and us and cost-effective impacts are both by soon to yet to COVID-XX. continue optimism XD to open with and delivered With and are superior, now up

Operator

Instructions] of [Operator of first from O'Brien Sandler. the comes question Our you. Matthew Thank line Piper

Your line is open. now

Matthew O'Brien

guidance is the guidance, you restating acceleration have a marked obviously, versus last what see great to it Keith, in done three - quarters the the historically.

about just little you that's coming talk from? can bit So a where

Keith Valentine

Yes.

is that a kind of in think from. continuing I sets and a marketing but market. job with you They helping our working and not that of trays, sounds of demand take pent-up to even shift momentum a year where newer what their And telegraphed to CapEx saw for And see very those combination that end think invest great to full products. in distributors a even launch. it, really deal to on done marketplace get down of are from trays alpha, with that and we certainly the just last that good new I but great coupled that, what kind be the products in an getting it would in share with that come in some is investment to coordination alphas our even acceleration surgeries instrument came for bit coming as investments we teams out in moved we distributors has of need, in some of really like we that there's the implant Matt, growth us. have by required you opportunity from our on it we asking the in little you're It have came board that a of how So only investment think I on perspective distribution did to

Matthew O'Brien

sorry, had a frog bit I'm Okay. a in of I throat my there.

is specifically, So distributors the folks maybe a but that it more we again, really is some pent-up adding quarters more the areas? saw in where specifically three little were of it's in greenfield these of just you - expecting bit more of step that deployment is last and from? acceleration that year? it Or last the demand, really coming more Is

John Bostjancic

the create It's acceleration. Matt, And full that to upcoming both. actually, are help some of launches, going

of But what launches be I will we've to able Those products going Cervical been Admiral So last systems that the to an think the those the access The Plate, bring to work portfolio competitive for gives board, new we hiring full in on successful the us right, are to launched now the those Fixation the SeaSpine launch the Interbody we they're alpha launch, Those System, year. Interbody, they've one that thinking that sales are brand-new key commercial that right? want just market. of Explorer, expandable. and and Interbody, also really those about the Posterior new the can Expandable XD the attracting but distributors are to NorthStar going in year, later reps distributorship. a catalyst big Meridian ALIF a into and been midyear, address entire with reps are some sales Cervical happen distributors to as their

that into if out at of rest look So acceleration commercial lot that one It's you the the systems, not launch. But full with the really just systems the meaningful year. it's good for of going system. you're the pointing of a those coincides timing news,

Matthew O'Brien

it. Got

Okay.

numbers or you John talk given this keep know for And So launch it it launch you the seems set year, lot you people year, reasons. set competitive of if instrument about this raised, can extra if mind? to like close on just latch for set don't to broad Keith, based. a wouldn't And then, all you vest capital numbers to I with to want next deployment. that the

John Bostjancic

for Well, I us right? launch XX mean, to talked XX The of typical full a is launch about in the it Xx sets. past, sets; number and the we've typical alpha is

we're commercial for based launch. set XX on XX probably systems demand deploy for will in there range the average systems. probably right, But the expectations So more, a are to on some full that those

but launch just is when we're exceed So set XX I'd we're the that we products, to full these some likely say them. to XX demand do average the that given of launch, fully expecting on

Matthew O'Brien

I'm of on sorry, going And an XXXX worth guidance I Any $X million John. Okay, we're wasn't deploy $XX Like, very absolute million year. just next clear. and that? sets to number, in

John Bostjancic

I the flow to our Yes. sure the flow, and the You sets numbers last was increase do be over both set got that's said the you CapEx statement. CapEx side investments, I that look in if set on embedded year stock. in that's historical little And on million than make the call, right, cash more inventory a the mean to $XX as going build cash to we're have XX% side, the right? in looking inventory at

last the $XX implant investment inventory million. total little in all-in, over year - it's was and spinal sets a So

stronger you to So that's confidence is brought confident be a a a number. a little willing to in have calculated healthy we And going the also But the a they're revenue of but demand it got so with bit financing. the sets because that to balance risk to sheet, going take - we've more there. we're XX% speaks increase create, again, on more the we're as top right, pretty up, deploying of

Operator

of comes Ryan next the Our line Zimmerman with BTIG. question from

now open. is line Your

Ryan Zimmerman

little for to hire. quarter just finer mentioned a you to guys, and distributor your their a first that. expectation congratulations. start, wondering eventful put about bit And Keith, just quite you Maybe base on if I'm you been could it's And point

or Just maybe of standpoint? head of that from a grow distributor what capacity force big core kind can kind how sales

John Bostjancic

Yes.

because XX% remain percentage in first of exclusive specific, focused of or sorry, our - revenue on what the the We be one the fourth we from haven't expectations, distributors from was the headcount That's it right? we like, as by the really just of on X/X XXXX. varies feet out distributor. is our U.S. we this on given these core why distributors, It calls And short year, about street set coming more quarter. had earlier of exit revenue., U.S. revenues, should core coming

the get don't on we exclusive the So street percentage obviously, distributors, it sets. priority those to want feet continues numbers, increase ensure folks the but to and to the them we because, with give work just focused that given on and into to first revenue within stay of want the more

Ryan Zimmerman

to say them capacity to hire. there's for fair it's that But

set this expect with investment, hiring? the Given the should we plan that year be cadence product the and will distributors those

John Bostjancic

And reps were the core our year, of diversification right? the our we that's as presence helped geographic why surge, think in the because them that get start the we out geographies of where existing no in footprint we year had before. us second revenue through COVID of hired hire. distributors got half we COVID, really some last got first I Yes. they of to And saw

half more year. the and this So keep helped there's that year, come to in last growth the going of second really

we yes, hire. hire to as we've business track So And for have got that review plans today, well. meetings them as we a know distributors got with those continue to record seeing they've

Ryan Zimmerman

Okay. And me. second for just then

margin. around going color. give maybe be more little gross you margins impact think, us a I comment, impact give - when you on bit a made year? to You give XD's you're the to just gross so XD's this contribution potentially I color But may just closes, can for know this to reluctant the some

John Bostjancic

Yes.

with on that have private gross we don't through financial side, I overall margins profile we par change work company capital the on GAAP, financials the they Canadian margin have, because historical are their and gross use still once but anticipate in ours. statements based overall We So the the those. finalize conversion to GAAP

So think a similar of in we'll that margin apples-to-apples, range. profile margin gross gross our to I overall mid-XXs sort see

As we earn-out spinal we're revenue. generate to margins what that arrangements, under earn-out that gross see be likely then generates going implants from will more higher revenue the most

little tailwind that So that for I suspect could once a think technology purchase get flows lot well. create accounting, the of gross the of we in going and allocated margin the COGS. I assets a to as amortization bit the the to of layer are intangible But a technology through

on So we'll it amortization be dilutive gross will a margin margins, of likely sure it's GAAP to intangible expense. without view like of gross be what looks give sort but that because noncash

of the historical So up to shaped rid that amortization. we'll noise be sure our gross to of how give color in a get with more consistent margin messaging

Ryan Zimmerman

in there. it And forward. going from leave hopefully acquisition and the Canadian loonies I'll Okay. XD no toonies dollars

Operator

line Our with next Kyle question comes of Canaccord. from Rose the

Kyle Rose

back back U.S. little a a last Matt's Great. could material side quarters. market Obviously, just step little you I going acceleration course seen bit if you've a wanted the the kind and of in overall about growth to take the to question. of dynamics on bit the of talk see the market, several hardware just over in the

but XX% in I is your the have of understanding we the contribution, new good volume impressive. think growth product some a QX of

is of right experiencing to now. understand magnitude How XXs much that do about to just help perspective the much Just just you're really that guidance of and come us Maybe going you volume? high how basis? XX% the the a of trying case pricing year. the incremental You're is from range share mix understand from full on talking per think a for taking into

John Bostjancic

scoli there's Yes. increases volume, as that the the get component, of year. to it's seasonality right, season, going the but I'd just every volume come expect surgery from because most happens price you

anticipate don't a price compared I years. So significant in increase to prior

Now wasn't COVID all typical last shutdowns. year just because scoli of quarter season second the the

increasing suspect procedure that more a it's be meaningful QX, basis. maybe I in you'll per But see bit to that ASP year-over-year than going mostly So usual volume. the it's little a more total

the are a surgery, more participating revenue do launch per in able of Now alpha right? and should with support or to case. expected we We're us revision. those The Mariner surgery Mariner more complex higher deformity indication give adult

two that we're products used SeaSpine almost fact, procedure. for In seeing

to that case procedure. continues But going from should still translate think that probably counts. per is tick into right, coming that higher higher be I up, growth to As revenue

Kyle Rose

maybe I Great. after color Okay. but XD know get And on will you just close, that the then help additional out. frame us

with some to incremental for did year. this color guidance respect us You give

out to be about in line So million top into the implant earn-out on that? think also think not us $X to modeling gas majority down about second that majority in for basis? Or be is your moving on side? the of about discrete looking the and that on Help forward? we builds should pressing coming talking go-forward Are million pedal really as that. this growth fair that going we revenue because the on growth item a model. How you represents Should you're expect of realizing really the but what you've people annualizes a about $X talked half,

Keith Valentine

that and in what million. think capital been of We vague like terms revenue to mix look mix going going be probably of of revenue. the a to We've is Yes. it's intentionally $X earn-out in

what get a the units capital commitment. three-year the going we're as hit So to will just be The into be earn-out, earn-out sold. starting should all to are

But outright combination, terms sale. suspect define a irons as lot versus a a percentage in fire as of mix I still more of on, of I sales. but those few the there's the the placements capital year goes $X million see because want the the we'll in don't is total So to earn-outs a capital

So of turns out be the hit in it's to is that incremental million $X to acquisition. I that, it to getting wouldn't set but contribution. We want of did XD but going don't exceeded still the right, we're the only disappointed. don't people million number a from absence say, we are capital, a because our $X earn-out of number or to $X I million capital, we get capital million want and commit that because of $X $X earn-out is revenue the million

I'm better the be sales kind mix earn-out to any capital. with leadership acquisition should chance to to for reluctant done give have the until yet versus what of XD team and the a define revenue collaborate and So expectation we've

Kyle Rose

I to Understood. more Okay. get want color.

Keith Valentine

obviously is to XD Everything additional mean, modeling, one their in hopper is I modeling. run about Kyle, their thinking continuing right business. traditional now there, traditional sales their how Yes, that's right, just their item from

- that's a kind goes to process managed I the said, through. Bos usually in of hospital often as process. that already around plenty capital equipment And process think of nine- and there's certain as XX-month stages the we've processing to So

then So again, be see more the we it of time earn-out. for end, ability on as think weighted I do that towards acceleration but will an goes

Operator

Mathew line the Our comes Stifel. from next with Blackman of question

open. now is line Your

Mathew Blackman

presence underindexed I've color other distribution little a got a enter, give can or or geographies just partners bit couple. on at Maybe, they either mentioned no us more onboarded Keith, the to what you had curious, - perhaps were that were new you all? you allowed you and where regions

Keith Valentine

Yes.

time. We're we were aboard still Coast, the Pacific train that with during really advancing West around COVID, us we've distribution in around have our feel nicely grown advanced during the pandemic specifically, that good helping So new nicely, or just that We partners after Northwest. aggressively coming about time. in distribution teams going and on with was and Colorado,

markets Florida We our in Texas our markets. continue to investments and have further

even hires the on like same clearly we're lot So for to their to distributor exclusive deeper or conversations always to Midwest area that over us view our our in there's Midwest going have been a on to have and and We're The thing XX seeing good good that going us. we're markets for months. distribution has with in in Northeast. next expanding have traditional that the representation opportunity lines. driving is we that be forward the current additional seeing. of We a And continue continues us conversations in as continue product for growth XX still opportunity moving that the we feel

Mathew Blackman

procedure sort And touched question. but could last the ahead John, it a hoping was you And for right. you. frame I on opportunity bit, little of my All complex still then you

in of launched for will into said something that launch this you disease as think full complex transition I mentioned, XX% in But past, of some you've you've mix. XXXX your year. the it's systems like

launched Mariner the You the deformity and adult platform. revision

getting the opportunities help to mix revenue some you arena. and most Just I ahead complex closer current opportunity you're inroads. understand complex us portfolio at of that What whether might important, case represent about you ASP? 'XX talk Whether of how where in procedures of And to need? now, opportunity for average beyond? in the you're guess, cases just that the your still go maybe the of So else having make versus an could sort the or much meaningful incremental could of it's complex

John Bostjancic

going the complex be of allows this Yes. specifically that going but for adult system deformity the entry it'll deformity dramatically an Mariner and that participate because changed new year, we indication. us whole to and probably in mix. Mariner in revision increased anticipate getting It's us specific the indication midyear more from It XX% a deformity, adult market be for give a hasn't the that's little launch. to It's bit into sort deformity alpha to historical

not to contribute it's full percentage have revenue, sets. out will from the shift only we're our for the by revenue alpha expect launch limited I XXXX comes of So it deformity that and because don't launch It there. the to an meaningfully you're but going

the the of something an with terms commercial it's can the launch. road. we from us new have move commercial procedures. of helping still that's to As work work XXXX, during this deformity year us, that because understand again, full it's one to but alpha they to They with alpha But attract in start knowing that's distributors I the coming phase. to needle launches systems complex a want full unfettered sometime system, those and to more the launch, where see you that's a bit of revenue likely in growth contribution anticipate coming move early don't I a our think and significant of into percentage start the may down not But access them to appealing to

Operator

from Our Truist next Krum the with Kaila line comes question Securities. of

open. is now line Your

Samuel Brodovsky

for It's Kaila. Sam on

think take first will exclusive adding to high-value Or your system? to to you hear of your Just just before then distributors off, distributors? it or curious that able to the distributors can you're I'm And be all XD. the have time And be with augment to access additional distributors will with force your distributor having to how conversations about to all going selling start expand initial production is the regards system?

Keith Valentine

Yes.

So a layers there. couple of

The ability feel we our about expand is supply. do to first good one

a about to very done we the to more how investing supplier we has working scale, think products have a a down of us that how our for but lead that down has supplier something and going being we're distribution out be is right slow job scale. we There is it's that to that team. Instead, or the good the can available. so think in shorten for XD or think I that with - it's have consideration at could products more times ability built with time I least those it some sure just-in-time be that make that not

of or dollars, may exciting of more arrangement to, be XD that goods have on on it accounts, of previous a place the whether because, make discount at yes, was conversations unit the makes we Obviously, a distributors the price. we it make sense had do decision accounts different with the with certainly course, now, more cost right really a certain to said, obviously, can decisions baseline, that of making outright. budgetary would this are other Now that off list to and sense our more an quite earn-out we

I excitement and excited to especially engaged all technology, different big distribution, and be so their going that this more bigger well. our of, think would enabling may new for patients with comfortable can to yes, distributor more are a technology much competitive selling it's they market. be certainly, is to hospitals, as radiation-free we kind it's which say, provide of obviously, patients conversations I with to is surgeons, a able feature that as distribution then issue have lastly, I experience and be more becoming aware become think a to in And equation, I we're economic bigger because think the and And having even,

Samuel Brodovsky

quarter what we've growth Great. on last cadence also how year? growth there how should think improvement you That's really the to we over and accelerate And helpful. the in market the seen of impact think or then there? international would love time XD in what given the of in international, can seeing those about since potentially uptake markets hear And you're then improving year, first

John Bostjancic

Yes.

CE I recently. XD work EU just Mark think backwards, I just to got approval think

together new distributor Europe good So in and us opportunity there's place relationships infrastructure have in We an a right? them and there. for Europe, in

there. units we'll be large Australia think have Australian Europe healthy and number a in of sold internationally of bring really they that getting to pretty able decent because the to a more I that in they're XX-some So terms sold to with distributor, distributor. table relationship a started just They already they've

But get XXX(k) third also think demand sometime in quarter, right, bought to probably with we FDA get opportunity systems average I So increases. launched the grow and once there clearance, slated as try there's an of opportunity but all there's the also without more the to and the customers place unit get to the MIS to MIS with module. included, back increase MIS ASPs, to go the MIS purchase module who module them to to

think a but there's where terms I more started of in obviously, I the in upside good and growth EU clarity in they a Australia in because just So getting that's in think locations, both XXXX. got healthy upside, ourselves. relationship seen more are And probably we've we've presence there,

I from again, could to this the now. place only of international for our quickly, in probably But we if increased XX% surgery and COVID where volumes. revenue. we'll think and XX% exceed starting marker that a growth expectation year of I'd uncertainty my they it's this given is off, Maybe start able emerge better XX% well. international And but finally things get there's be amount sustained as from I then it, pretty year. But we in decent is think COVID, Europe realistic of in place emerge I a think they uncertainty still increases to exceed when for terms see

Operator

question next the from of Brandon line comes Cantor Fitzgerald. with Our Folkes

Your line open. is now

Brandon Folkes

sort of the in of last you even case, well? the per in anything bit revenue a little directionally post year? to color maybe quarter just just Can And you're if compared terms elaborate quarter the then in seeing it's as

John Bostjancic

of…? Sorry, sort looking for just you're

Brandon Folkes

Revenue case. Yes. per

just even color, if it's some qualitative color. Just

John Bostjancic

three see Yes. something which procedure, The It we're revenue that's as right? per continues and the to participating two at we things - we're in complex also translates being more used tracking. well, things per into more looking the surgery were deformity, tracking volume systems also number systems But is increases as cases increase, of we're used. higher

was is mid-single about in over as the growth - it's increase Revenue volume case per talked case the script, was right, sort the digits, per typically low the to revenue over in Keith XX%. - in So of growth. it's been

rest mostly of upside. nominally presence driving this think the beyond But from of a markets. before, question rest line from growth - new the a is having be the to it's year for bit of I little got in in with expectations the So volume coming year we've just going and

Operator

Cohen comes Ladenburg. Jeffrey Our line with next the from of question

is line now Your open.

Jeffrey Cohen

how Bos, you? are Well, hi, Keith and

John Bostjancic

are you, Jeff? How Good.

Jeffrey Cohen

the you up XD $XXX You tidy cash. intimating? by million, of QX? XD holders. of from time, what Is plus selected as X.XX which million will Can help million the Shares over were us million, the the raise fine. appear you're XX.X%. then XX.X is that talked Just about And X.XX

John Bostjancic

SeaSpine they elect tender it it shares situation exchangeable - they convert they own then when for for Yes, personal depends or on on their shares, SeaSpine based And they to whether Correct. when shares. shares. into elect exchangeable do those tax if

Jeffrey Cohen

should that years? five And be within Okay.

John Bostjancic

years five issuance. be within mandatory years. to has There's after date five a Yes. tendering It

Jeffrey Cohen

onetime along QX? charges pop any Bos, for lines, up on do the may where statements? they same expect expected Got you closing And it. financial associated the And the with

John Bostjancic

about of professional other and legal We $X.X talked costs the of the QX, bulk million incurred The were fees. in right?

integration to getting activity But in in the and Just that because of quarter. from residual be quarter anticipate clarity the first X/X diligence the professional But to prep that incurred guide of the the in approval through legal and But more to due I first we'll second of come what because Canadian it's shareholder us give we follow-up investing also we'll meeting to. well. anticipate as and more be saw dollars I the fees there'll the would be and X/X work QX in that courts, half the some with we all court than the was few effort a don't numbers. what that drafting going those in documents quarter

Jeffrey Cohen

as specifically lastly Okay. from anything And of strength out April, up pick Keith, here? of any as you then far me. for commentary at Got it. trends, geographically Texas last quarter? and hospitals? on procedures And backlog Did areas any

Keith Valentine

Yes.

tried as to give and think through. I view some March very similar worked color, being April sense we in we as that's So being there too, backlog the that is

more scheduled. - continue, see get see feel the are more they're patients. that for entire through that We're you they're other really out thing to load, and the patients visiting that to so scheduled backlog. good feel kind from of still able they're care, hearing if more their will office think getting more the surgeons doctors this to going feedback they that are They're quarter. continuing and the is good I some their still being And like will, especially throughout with they same

new getting stream. still an up a patients it's So time robust far everything as the that caught seems be as getting as indication to as well into

Jeffrey Cohen

out more Okay. in platforms in. more as then as lastly the one you me, if Got any price commentary I pricing? offerings it. anything seen And far nature or And throw have competitive biologic could or there? increases? have recent you taken And on Any for

Keith Valentine

I from onto or would - vendors. I say would anything do larger on not compete getting really to view continue I pricing. the we're put opportunities hospitals market buying seeing more and number more to Yes. minimal we changing group as into ability be being of

for that our a seeing store, new DBM that's But as does approach side we're erosion if It's we're pricing to to accounts. than opportunity I more so the something so we sometimes say new think that to there's not at a going with aggressive so speak. ways wouldn't marketplace giant that, anything specifically. on how different a about those And have in the come

higher more I we features ones can DBMs in feel we be that but technology get know larger unique we need on, competitive think the we have and those there's premium the still groups. still be a very are to able like where to also we buying

Jeffrey Cohen

nice Got I and it. appreciate Okay. quarter, Nice readout outlook. it.

Operator

question with Matthew Piper have O'Brien the follow-up of do We a from line Sandler.

open. now is line Your

Matthew O'Brien

the this that QX and little guess and to to - just spend year know just on I cash loss, I you outlook. and talk in - the some versus quarter may thing stepping I only just spend folks wondering guess, bit and burn so flow gas about about is at I'm last a from year. I you're wanted the I look EBIT free the wanted you're a I'm everything. talking more - lot the But

going That going "Look, to a So more getting to really see you'll leverage EBIT 'XX, fair heavily the to and in 'XX lot lot profitability. see I'm them elevated I how we're get spend of changes line just 'XX. thinking about to and we thinking investors it of about, think, "Okay, a may to multiyear we're good an a level was over Is period." in think then things 'XX, invest here really kind

that bunch which still years leverage of that get then as 'XX?" all is could we spend with you're because money and opportunity. time bear this frame for 'XX of for, you hoping just in two And kind hoping the So we for, us a see you're

John Bostjancic

free last No projecting longer the to talked cash over But scale we this year the EBITDA driven of reinvesting then But our assumptions dilution also to from second terms higher XD, investments But efficiencies is in earlier. growth is adjusted gross that overall, sort to EBITDA revenue to pretty EBITDA marketing are come and business, burn being inventory to for doing right? haven't increase But to we why at more of cash flow we've we're the got that's rates, getting about the half that year of this for of need good the sales million get burn their this we in million our flow from but to because mark. I of a forecasting bit CapEx, scale year, investments the year. term revenue free a little flow growth think managing invest in this breakeven, confidence some like year is need the while today on And grow supply it's But overall, way flow flow to still we to cash cash still last and line. $XXX spinal and And we're adjusted orthobiologics at the expectations not That achieve because half going build decline year versus kind going free and with that more we're right, leverage. to we it's free by the from higher and those job in all be cash get less little anticipating of increase reduced you adjusted the in seeing cash G&A expected inventory going Most sets the breakeven to in breakeven positive investing because free loss the last sets already financing, chain, flow invest inventory continue want commission the and we the year cash to have Yes. be that underlies losses. line, in this year accelerated increase and changed one, that. revenue the implants CapEx. back change free the full the breakeven mark. flow said, opportunistically in margin of lower contribution the burn R&D, those complex to a growth that in we are $XXX the But to is of around longer-term that fundamentally, right, of expectations. getting entirely free a

Operator

questions. Thank you. further There are no

Keith Valentine

second quarter. very in much the at of us, touch the be you Thanks. Thank joining with end for we'll and you

Operator

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

disconnect. now may You

SeaSpine (SPNE) 4 May 212021 Q1 Earnings call transcript