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Current Issues in Spine

February 2-4, 2017

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February 27, 2017 OrthoSpineNews

24th February 2017

Philips’ new augmented reality system has been used in clinical practice for the first time at the Karolinska University Hospital, Solna, Sweden.

“This new technology allows us to use augmented reality in combination with 3D imaging for intraoperative surgical planning and navigation of our devices. We have now treated four patients using the system and placed 44 pedicle screws with satisfactory results. We have been able to check the overall result in 3D in the operating room without the need to move the patient to a CT scanner. The radiation dose to the staff is zero and minimal to the patient.” said Adrian Elmi-Terander, principal investigator at Karolinska University Hospital, Solna, Sweden. “We tested this workflow pre-clinically for complex thoracic and cervical spine surgeries with very convincing results and look forward to extending it to complex cerebral neurosurgical procedures.”

A pre-clinical study published in Spine has demonstrated superior accuracy for thoracic pedicle screws placement using an augmented-reality navigation system (Philips) in comparison to those placed freehand.

The system consists of four high resolution optical video cameras mounted to in the frame of a motorised ceiling-mounted C-arm flat detector (Allura Clarity FD20, Philips Healthcare). Between eight and 10 markers were placed on the skin around the surgical site on each of four human cadavers for tracking by the system.

 

READ THE REST HERE


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February 27, 2017 OrthoSpineNews

DUBLIN–(BUSINESS WIRE)–Research and Markets has announced the addition of the “Orthobiologics Market 2014 – 2025” report to their offering.

The global orthobiologics market is expected to reach USD 10.2 billion by 2025.

The orthobiologics market is predominantly driven by the increasing orthopedic disease and musculoskeletal disease burden globally. Moreover, emerging technological innovations in biomaterials, used in the production of orthobiologics are presumed to accelerate the market demand over the forecast period. These predominantly include modifications in graft designs, advent of recombinant biologic agents, stem cell therapy and cultured tissue scaffolds.

These advancements are accompanied with the benefits such as enhanced biocompatibility, reduced surgical time and smaller incisions. Furthermore, these novel solutions are presumed to efficiently reduce the recurrence of post-operative complications, which in turn is expected to boost the orthobiologics market during the forecast period.

In 2015, North America accounted for the dominant share owing to consistent efforts of industry players in promoting awareness pertinent to the orthobiological products resulting in significant rise in adoption rate. Asia Pacific is anticipated to exhibit an exponential CAGR as a consequence of significant surge in healthcare spending and awareness levels with respect to the availability of orthobiologics

Companies Mentioned:

  • Bone Biologics, Corp.
  • Medtronic
  • Bioventus LLC
  • Pioneer Surgical Technology
  • Smith & Nephew plc
  • Stryker Corporation
  • DePuy Synthes, Inc.
  • Genzyme
  • Osiris Therapeutics, Inc.
  • Globus Medical
  • Wright Medical Technology
  • Orthofix, Inc.
  • NuVasive, Inc.
  • Zimmer Biomet
  • Anthrex

Key Topics Covered:

1 Research Methodology & Scope

2 Executive Summary

3 Orthobiologics Market Variables, Trends & Scope

4 Orthobiologics Market: Product Estimates & Trend Analysis

5 Orthobiologics Market: Application Estimates & Trend Analysis

6 Orthobiologics Market: End-use Estimates & Trend Analysis

7 Orthobiologics: Regional Estimates & Trend Analysis, by Product, Application & End-use

8 Competitive Landscape

For more information about this report visit http://www.researchandmarkets.com/research/3k7vqg/orthobiologics

Contacts

Research and Markets
Laura Wood, Senior Manager
press@researchandmarkets.com
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900
U.S. Fax: 646-607-1907
Fax (outside U.S.): +353-1-481-1716
Related Topics: Orthopedic Devices


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February 25, 2017 OrthoSpineNews

The major challenge dominating the healthcare industry has always been to lower the cost of patient care while not sacrificing quality. As technology continues to advance in surgery, more procedures can be done outside a traditional hospital setting (such as in surgery centers and physician offices). Ambulatory Surgery Centers (ASCs) have stood as the “high-quality low-cost patient care” model despite many regulatory changes in the healthcare scene.

With ASCs, Medicare and its beneficiaries share in more than $2.6 billion in savings annually because Medicare pays significantly less for procedures performed in ASCs compared to hospital outpatient departments (HOPDs). This trend encompasses more than just Medicare; ASCs are highly sought after by payers who are looking for lower facility fees. Commercial insurance providers and their beneficiaries save $38 billion each year with ASCs.

In its 2017 ASC Payment System rates and policies, CMS projects a 1.9 percent increase. On the other hand, as part of the Bipartisan Budget Act of 2015 (Budget Deal), Congress mandated that, beginning in 2017, all off-campus physician practices and ASCs acquired by a hospital, following enactment of the law in November 2015, would no longer be reimbursed using the HOPD payment rates. CMS calls them “off-campus provider-based departments (PBDs).” Off-campus PBDs will be paid under MPFS (Medicare Physician Fee Schedule) in most cases instead of the higher-paying OPPS.

On the patient’s side, co-pays are significantly lower when care is received in an ASC. For instance, a (Medicare beneficiary) patient could be paying $496 for co-insurance in a cataract extraction procedure if performed in the HOPD; whereas in an ASC setting, the patient could pay as little as a $195 co-pay.

Here’s an infographic of how ASCs have evolved over the years and helped bring healthcare costs down while increasing patient satisfaction.

Hospitals who want to avoid the cost of running non-acute outpatient departments are also beginning to establish ASCs of their own or entering into joint partnerships. Hence the rise of ASCs in recent years. In 2014 alone, there were more than 5000 ASCs performing 23 million surgeries a year.

 

READ THE REST HERE


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February 25, 2017 OrthoSpineNews

February 24, 2017

ATLANTA–(BUSINESS WIRE)–

IPG, the industry-leading provider of Device Benefit Management solutions, today announced a partnership with Lima Corporate, a global medical device company providing reconstructive and fixation orthopaedic solutions. With a national footprint and focus on the commercial health care market, IPG enables high quality, cost effective surgical care and supports the delivery of value based care for high cost surgical procedures for their health plan clients. This partnership creates significant opportunities to improve surgical outcomes, while reducing overall healthcare costs.

“Lima Corporate is enthusiastic to initiate this collaboration with IPG as it represents a paradigm shift in the medical device market in the U.S. while maintaining access to state-of-the-art devices. Through this agreement, Lima is able to provide key technology, such as our Trabecular Titanium technology used in our hip and shoulder portfolio, which are the only 3D printed devices with 10-years of clinical follow-up,” said Luigi Ferrari, CEO of Lima Corporate.

By bringing transparency, contracting strategy, analytics and surgical expertise related to the delivery of device-intensive surgical procedures, IPG enables surgeons and facilities to successfully make value-based care delivery decisions that drive quality and affordability around surgical procedures through device selection and site of care optimization. As IPG continues to execute on its manufacturer partnership strategy with firms who strategically align with this objective, Lima was identified as an excellent fit.

“IPG is excited about the opportunity to work closely with Lima to bring their high-value technology to IPG’s health plan clients and patients,” said Vince Coppola, President & CEO of IPG. “This relationship will further expand our mission to bring high quality, cost effective surgical solutions to the U.S. healthcare market.”

As a participating manufacturer in IPG’s Device Benefit Management program, Lima will gain access to IPG’s expansive network of direct partnering facilities and surgeons. This agreement will provide greater access for IPG’s customers for high quality shoulder, hip and knee arthroplasty products. Lima has a strong international presence, and the partnership with IPG will enable Lima to significantly drive expansion of their products in the United States.

About Lima Corporate
Lima Corporate is a global medical device company providing reconstructive orthopaedic solutions to surgeons who face the challenges of improving the quality of life of their patients. Based in Italy, Lima Corporate is committed to the development of innovative products and procedures to enable surgeons to select ideal solution for every individual patient. Lima Corporate’s product range includes large joint revision and primary implants and complete extremities solutions including fixation. For additional information on the Company, please visit www.limacorporate.com.

About IPG
IPG is the leading provider of Device Benefit Management solutions, working with health plans, providers, surgical facilities and patients across the country to improve quality and reduce costs for surgical procedures through optimization of the most effective site of care and device selection, resulting in more affordable high-quality care to consumers. For more information about IPG, call us at 866.753.0046, or visit us on the web at www.ipg.com.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170224005056/en/


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February 24, 2017 OrthoSpineNews

PLAINSBORO, N.J., Feb. 23, 2017 (GLOBE NEWSWIRE) — Integra LifeSciences Holdings Corporation (“Integra”) (NASDAQ:IART), a global leader in medical technology, announced today that its tender offer by its wholly-owned subsidiary, Integra Derma, Inc. (“Offeror”), to purchase all outstanding common and preferred shares of Derma Sciences, Inc. (“Derma Sciences”) (NASDAQ:DSCI) at an offer price of $7.00 per share for Derma Sciences’ common stock, $32.00 per share for Derma Sciences’ Series A Convertible Preferred Stock and $48.00 per share for Derma Sciences’ Series B Convertible Preferred Stock, expired as scheduled at 12:00 midnight, New York City time, on Wednesday, February 22, 2017.  The tender offer was made pursuant to an Offer to Purchase, dated January 25, 2017, and in connection with the Agreement and Plan of Merger, dated January 10, 2017, among Integra, Offeror and Derma Sciences (the “Merger Agreement”), which Integra and Derma Sciences previously announced on January 10, 2017.

Broadridge Corporate Issuer Solutions, Inc., the depositary for the tender offer, has advised Integra that, as of the expiration of the tender offer, a total of 24,271,885 shares of Derma Sciences’ common stock, 17,440 shares of Derma Sciences’ Series A Convertible Preferred Stock and 53,059 of Derma Sciences’ Series B Convertible Preferred Stock were validly tendered in the tender offer representing approximately 85.7% of the outstanding voting power of the shares, 93.8% of the Series A Convertible Preferred Stock, and 96.9% of the Series B Convertible Preferred Stock. The Offeror has accepted for payment all shares that were validly tendered prior to expiration of the tender offer, and payment for such shares will be made promptly, in accordance with the terms of the tender offer.

Integra intends to effect the merger of the Offeror with and into Derma Sciences, with Derma Sciences surviving as an indirect wholly owned subsidiary of Integra, promptly, in accordance with the Merger Agreement.  Pursuant to the  Merger Agreement, each share of capital stock of Derma Sciences issued and outstanding immediately prior to the effective time of the merger (other than shares (a) irrevocably accepted for payment in the tender offer, (b) shares held in the treasury of Derma Sciences, (c) shares owned by Integra or any direct or indirect subsidiary of Integra (including Offeror) or Derma Sciences immediately prior to the effective time of the merger, or (d) shares with respect to which appraisal rights were properly exercised under the DGCL) not validly tendered and purchased in the tender offer will be converted into the right to receive the same per-share price paid in the tender offer, without interest, subject to any withholding of taxes required by applicable law.  Following the merger, Derma Sciences’ common stock will cease to be traded on the NASDAQ.

About Integra

Integra LifeSciences Holdings Corporation, a world leader in medical technology, is dedicated to limiting uncertainty for clinicians, so they can concentrate on providing the best patient care. Integra offers innovative solutions, including leading plastic and regenerative technologies, in specialty surgical solutions, orthopedics and tissue technologies. For more information, please visit www.integralife.com.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains forward-looking statements that include, among other things, statements about Integra’s beliefs and expectations, statements about Integra’s proposed acquisition of Derma Sciences, including expectations regarding the growth and success of the combined entity. These statements may be identified by words such as “expect,” “anticipate,” “estimate,” “intend,” “plan,” “believe,” “promises”, “projects,” and other words and terms of similar meaning. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including important factors that could delay, divert, or change any of these expectations, and could cause actual outcomes and results to differ materially from current expectations. Factors that may materially affect such forward-looking statements include: Integra’s ability to realize the anticipated benefits of the tender offer and the merger. For further details and a discussion of these and other risks and uncertainties, please see Integra’s public filings with the Securities and Exchange Commission, including the company’s latest periodic reports on Form 10-K and 10-Q. Integra does not undertake, and specifically disclaims, any obligation to publicly update or amend any forward-looking statement, whether as a result of new information, future events, or otherwise.

CONTACT: Integra LifeSciences Holdings Corporation

Investors

Angela Steinway
609-936-2268
angela.steinway@integralife.com

Michael Beaulieu
609-750-2827
michael.beaulieu@integralife.com

Media

Laurene Isip
609-750-7984
laurene.isip@integralife.com

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February 24, 2017 OrthoSpineNews

PLAINSBORO, N.J., Feb. 23, 2017 (GLOBE NEWSWIRE) — Integra LifeSciences Holdings Corporation (NASDAQ:IART) today reported its financial results for the fourth quarter and full year ending December 31, 2016.

Highlights:

  • Full-year 2016 revenue increased 12.4% to $992.1 million, while organic revenue increased 9.0% over the prior year;
  • Fourth quarter revenue increased 6.0% over the prior-year quarter to $255.7 million, with organic revenues up 7.0%;
  • Fourth quarter GAAP gross margin increased to 66.6% or 390 basis over the prior-year period; adjusted gross margin in the fourth quarter reached a record high of 70.2%, a 190 basis point increase over the prior year period;
  • Fourth quarter GAAP earnings per diluted share (EPS) amounted to $0.35, a 75% increase over the prior year period; adjusted EPS amounted to $0.52, or an increase of 18%;
  • Full-year 2016 cash flow from operations was $116.4 million, a decrease from $117.1 million over the prior year.  Excluding $42.8 million for the accreted interest payment associated with the convertible notes, cash flow from operations was $159.2 million, above the high end of our guidance range.

Total revenues for the full year 2016 were $992.1 million, an increase of $109.3 million, or 12.4%, over the full year 2015.  Total revenues for the fourth quarter were $255.7 million, representing an increase of $14.5 million, or 6.0%, over the fourth quarter of 2015.

Organic revenues, computed by adjusting GAAP revenues as set forth in the attached reconciliation, increased over 2015 by 9.0% in the full year, and 7.0% in the fourth quarter.

“We were pleased with our performance in 2016, which resulted in full-year organic revenue growth of 9% and full-year adjusted gross margin of 69.5%,” said Peter Arduini, Integra’s President and Chief Executive Officer.  “We look forward to a transformative 2017 as we integrate two of the largest acquisitions in the Company’s history.”

The Company reported GAAP net income of $74.6 million, or $0.94 per diluted share, for the full year 2016, compared to GAAP net income of $6.9 million, or $0.10 per diluted share in 2015.  Results in 2015 included a $35.6 million non-cash tax charge to establish a valuation allowance for certain deferred tax assets associated with the SeaSpine separation.  The Company reported GAAP net income of $28.2 million, or $0.35 per diluted share, in the fourth quarter of 2016 compared to GAAP net income of $15.0 million, or $0.20 per diluted share, in the fourth quarter of 2015.

Adjusted measures discussed below are computed with the adjustments to GAAP reporting set forth in the attached reconciliation.

Adjusted EBITDA for the full year 2016 was $231.7 million, or 23.4% of revenue, an increase from $195.6 million, or 22.2% of revenue, in the prior year.  Adjusted EBITDA for the fourth quarter of 2016 was $66.5 million, or 26.0% of revenue, an increase from $56.7 million, or 23.5% of revenue, in the fourth quarter of the prior year.

Adjusted net income for the full year 2016 was $135.3 million, or $1.76 per diluted share, compared to $108.6 million, or $1.54 per diluted share in 2015.  Adjusted net income for the fourth quarter of 2016 was $40.7 million, or $0.52 per diluted share, compared to adjusted net income of $32.8 million, or $0.44 per diluted share, in the fourth quarter of 2015.

For the year ended December 31, 2016, cash flows from operations totaled $159.2 million, excluding a $42.8 million accreted interest payment.  Cash invested in capital expenditures was $47.3 million.   Adjusted free cash flow conversion for the trailing twelve months ended December 31, 2016 was 82.7% versus 77.0% for the twelve months ended December 31, 2015.  Integra generated $49.3 million of cash flows from operations, excluding a $42.8 million accreted interest payment, and invested $21.2 million in capital expenditures in the fourth quarter of 2016.

Outlook for 2017

The Company expects full year 2017 revenues to be between $1.12 billion and $1.14 billion, including the Derma Sciences acquisition, and organic sales growth to be between 7% and 8.5%. The Company expects its GAAP EPS for the full year to be between $0.49 and $0.55, and adjusted EPS to be between $1.88 and $1.94.

“In 2016, faster growth in higher margin products resulted in meeting or exceeding the high-end of our earnings and operating cash flow targets,” said Glenn Coleman, Chief Financial Officer. “The Derma Sciences tender offer has been completed and we expect the transaction to close shortly.  We are now including Derma Sciences into our 2017 guidance, while the assumptions underlying our base business remain unchanged.”

Full-year 2017 revenue and EPS guidance includes the expected financial impact of Derma Sciences. Our GAAP EPS and cash flow guidance also reflect the estimated expense and cash impact of estimates for pre-close costs associated with the Codman Neurosurgery acquisition. The post-closing financial impact of the Codman Neurosurgery acquisition is excluded from guidance and will be updated later in the year.

In the future, the Company may record, or expect to record, certain additional revenues, gains, expenses or charges as described in the Discussion of Adjusted Financial Measures below that it will exclude in the calculation of organic revenue growth, adjusted EBITDA and adjusted EPS for historical periods and in providing adjusted EPS guidance.

Conference Call and Presentation Available Online

Integra has scheduled a conference call for 8:30 AM ET today, Thursday, February 23, 2017 to discuss fourth quarter and full-year 2016 financial results, and forward-looking financial guidance.  The conference call will be hosted by Integra’s senior management team and will be open to all listeners.  Additional forward-looking information may be discussed in a question and answer session following the call.

Integra’s management team will reference a presentation during the conference call, which can be found on the Investor section of the website at investor.integralife.com.

Access to the live call is available by dialing 785-830-1923 and using the passcode 3819268. The call can also be accessed through a webcast via a link provided on the Investor Relations homepage of Integra’s website at investor.integralife.com.  Access to the replay is available through February 28, 2017 by dialing 719-457-0820 and using the passcode 3819268. The webcast will also be archived on the website.

Integra LifeSciences, a world leader in medical technology, is dedicated to limiting uncertainty for clinicians, so they can concentrate on providing the best patient care.  Integra offers innovative solutions, including leading plastic and regenerative technologies, in specialty surgical solutions, orthopedics and tissue technologies.  For more information, please visit www.integralife.com.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and reflect the Company’s judgment as of the date of this release.  Forward-looking statements include, but are not limited to, statements concerning future financial performance, including projections for revenues, GAAP and adjusted net (loss)/income, GAAP and adjusted (loss)/earnings per diluted share, non-GAAP adjustments such as global enterprise resource planning (“ERP”) system implementation charges, acquisition-related charges, goodwill impairment charges, non-cash amortization of imputed interest for convertible debt, intangible asset amortization, and income tax expense (benefit) related to non-GAAP adjustments. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from predicted or expected results. Such risks and uncertainties include, but are not limited to the following: the Company’s ability to execute its operating plan effectively; the Company’s ability to manufacture and ship sufficient quantities of its products to meet its customers’ demand; the ability of third-party suppliers to supply us with raw materials and finished products; global macroeconomic and political conditions; the Company’s ability to manage its direct sales channels effectively; the Company’s ability to maintain relationships with customers of acquired entities; physicians’ willingness to adopt and third-party payors’ willingness to provide or maintain reimbursement for the Company’s recently launched, planned and existing products; initiatives launched by the Company’s competitors; downward pricing pressures for customers; the Company’s ability to secure regulatory approval for products in development; the Company’s ability to remediate quality systems violations; fluctuations in hospitals spending for capital equipment; the Company’s ability to comply with and obtain approvals for products of human origin and comply with recently enacted regulations regarding products containing materials derived from animal sources; difficulties in controlling expenses, including costs to procure and manufacture our products; the impact of changes in management or staff levels; the Company’s ability to integrate acquired businesses; the impact of goodwill and intangible asset impairment charges if future operating results of acquired businesses are significantly less than the results anticipated at the time of the acquisitions, the Company’s ability to leverage its existing selling organizations and administrative infrastructure; the Company’s ability to increase product sales and gross margins, and control non-product costs; the Company’s ability to achieve anticipated growth rates, margins and scale and execute its strategy generally; the amount and timing of acquisition, and integration-related costs; the geographic distribution of where the Company generates its taxable income; the effect of legislation effecting healthcare reform in the United States and internationally; fluctuations in foreign currency exchange rates; the amount of our convertible notes and bank borrowings outstanding and other factors influencing liquidity; and the economic, competitive, governmental, technological and other risk factors and uncertainties identified under the heading “Risk Factors” included in Item 1A of Integra’s Annual Report on Form 10-K for the year ended December 31, 2016 and information contained in subsequent filings with the Securities and Exchange Commission. In addition, with respect to the Codman Neurosurgery acquisition, forward-looking statements in this document may include without limitation any statements regarding the planned completion of the proposed acquisition, the costs and benefits of the proposed acquisition, including future financial and operating results, Integra’s or the Codman Neurosurgery business’s plans, objectives, expectations and intentions and the expected timing of completion of the proposed acquisition.   It is important to note that Integra’s goals and expectations are not predictions of actual performance.  Actual results may differ materially from Integra’s current expectations depending upon a number of factors affecting the Codman Neurosurgery business and Integra’s business and risks and uncertainties associated with acquisition transactions.  These factors include, among other things: successful closing of the proposed acquisition; the risk that competing offers will be made for the Codman Neurosurgery business before the binding offer is accepted; the risk that the binding offer may not accepted on a timely basis or at all; the ability to obtain required regulatory approvals for the proposed acquisition (including the approval of antitrust authorities necessary to complete the proposed acquisition), the timing of obtaining such approvals and the risk that such approvals may result in the imposition of conditions, including with respect to divestitures, that could materially adversely affect Integra, the Codman Neurosurgery business and the expected benefits of the proposed acquisition; the risk that a condition to closing of the proposed acquisition may not be satisfied on a timely basis or at all, the failure of the proposed acquisition to close for any other reason and the risk liability to Integra in connection therewith; access to available financing (including financing for the acquisition) on a timely basis and on reasonable terms; the effects of disruption caused by the proposed acquisition making it more difficult for Integra to execute its operating plan effectively or to maintain relationships with employees, vendors and other business partners; stockholder litigation in connection with the proposed acquisition; and  Integra’s ability to successfully integrate the Codman Neurosurgery business and other acquired businesses. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Discussion of Adjusted Financial Measures

In addition to our GAAP results, we provide organic revenues, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted net income and adjusted earnings per diluted share, adjusted diluted weighted average shares outstanding, free cash flow and adjusted free cash flow conversion.

Organic revenues consist of growth in total revenues excluding the contribution of acquired products, and effects of currency exchange rates on the current period’s revenues, and the contribution of revenues from discontinued products in both the current and prior periods’ revenues.  Adjusted EBITDA consist of GAAP net (loss)/income from continuing operations, excluding: (i) depreciation and amortization, (ii) other income (expense), net, (iii) interest income and expense, (iv) income taxes, and (v) those operating expenses also excluded from adjusted net income.  The measure of adjusted net income consists of GAAP net (loss)/income from continuing operations, excluding: (i) global ERP implementation charges; (ii) structural optimization charges; (iii) post-spin SeaSpine separation-related charges (iv) certain employee severance charges; (v) acquisition-related charges; (vi) intangible asset amortization expense; (vii) convertible debt non-cash interest; and (viii) income tax impact from adjustments and other items.  The measure of adjusted diluted weighted average shares outstanding is calculated by adding the economic benefit of the convertible note hedge and warrant transactions relating to Integra’s 2016 convertible notes.  The adjusted earnings per diluted share measure is calculated by dividing adjusted net income attributable to diluted shares by diluted weighted average shares outstanding.  The measure of free cash flow consists of GAAP net cash provided by operating activities less purchases of property and equipment.  The adjusted free cash flow conversion measure is calculated by dividing free cash flow by adjusted net income.

Reconciliations of GAAP revenues to organic revenues for the quarter and year ended December 31, 2016 and GAAP net (loss)/income to adjusted EBITDA and adjusted net income, GAAP (losses)/earnings per diluted share to adjusted earnings per diluted share, and GAAP cash provided by operating activities to free cash flow and adjusted free cash flow conversion for the quarters and years ended December 31, 2016 and 2015 appear in the financial tables in this release.

The Company believes that the presentation of organic revenues and the various adjusted EBITDA, adjusted net income, adjusted earnings per diluted share, adjusted diluted weighted average shares outstanding, free cash flow and adjusted free cash flow conversion measures provides important supplemental information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations.  For further information regarding why Integra believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the Company’s Current Report on Form 8-K regarding this earnings press release filed today with the Securities and Exchange Commission.  This Current Report on Form 8-K is available on the SEC’s website at www.sec.gov or on our website at www.integralife.com.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended
December 31,
Twelve  Months Ended
December 31,
2016 2015 2016 2015
Total revenues $ 255,663 $ 241,160 $ 992,075 $ 882,734
Costs and expenses:
Cost of goods sold 85,422 90,001 349,089 326,542
Research and development 13,901 13,866 58,155 50,895
Selling, general and administrative 112,119 109,750 455,629 415,757
Intangible asset amortization 3,452 3,535 13,862 9,953
Goodwill impairment charge
Total costs and expenses 214,894 217,152 876,735 803,147
Operating income 40,769 24,008 115,340 79,587
Interest income 10 12 24 30
Interest expense (6,548 ) (6,113 ) (25,803 ) (23,534 )
Other income (expense), net 1,243 1,604 845 4,588
Income from continuing operations before income taxes 35,474 19,511 90,406 60,671
Income tax expense 7,228 4,531 15,842 53,820
Income from continuing operations 28,246 14,980 74,564 6,851
Income (loss) from discontinued operations, net of tax expense (benefit) (10,370 )
Net income (loss) $ 28,246 $ 14,980 $ 74,564 $ (3,519 )
Net income (loss) per share:
Income from continuing operations $ 0.35 $ 0.20 $ 0.94 $ 0.10
Income (loss) from discontinued operations $ $ $ $ (0.15 )
Net income (loss) per share $ 0.35 $ 0.20 $ 0.94 $ (0.05 )
Weighted average common shares outstanding for diluted net income per share 80,286 76,370 79,194 71,354

Segment revenues* and growth in total revenues excluding the effects of currency exchange rates, acquisitions and discontinued products are as follows:

(In thousands)

Three Months Ended

December 31,

Twelve Months Ended

December 31,

2016 2015 Change 2016 2015 Change
Specialty Surgical Solutions $ 163,777 $ 153,082 7.0 % $ 632,524 $ 586,918 7.8 %
Orthopedics and Tissue Technologies 91,886 88,079 4.3 % 359,551 295,816 21.5 %
Total Revenues $ 255,663 $ 241,160 6.0 % $ 992,075 $ 882,734 12.4 %
Impact of changes in currency exchange rates $ 1,226 $ $ 2,659 $
Less contribution of revenues from acquisitions ** $ (449 ) $ $ (41,203 ) $
Less contribution of revenues from discontinued products $ (770 ) $ (2,199 ) $ (6,282 ) $ (13,338 )
Total organic revenues $ 255,670 $ 238,961 7.0 % $ 947,249 $ 869,396 9.0 %

** Acquisitions include TEI, Salto Talaris(R) / Futura(TM) and Tekmed.

Items included in GAAP net income and location where each item is recorded are as follows:

(In thousands)
Three Months Ended December 31, 2016
Item   Total Amount   COGS(a)   SG&A(b)   R&D(c)   Amort.(d) Other,
Interest
Exp(Inc)(e)
Tax(f)
Global ERP implementation charges $ 3,199 $ $ 3,199 $ $ $ $
Structural optimization charges 2,254 1,354 900
Certain employee severance charges 26 12 14
Acquisition-related charges 1,902 1,025 877
Intangible asset amortization expense 10,298 6,846 3,452
Convertible debt non-cash interest 1,775 1,775
Estimated income tax impact from adjustments and other items (6,961 ) (6,961 )
Depreciation expense 8,014

a) COGS – Cost of goods sold
b) SG&A – Selling, general and administrative
c) R&D – Research and development
d) Amort. – Intangible asset amortization
e) Other, Interest Inc (Exp) – Other, interest income (expense), net
f) Tax – Income tax expense

Three Months Ended December 31, 2015
(In thousands)
Item  Total Amount   COGS (a)   SG&A (b)   R&D (c)   Amort. (d) Interest
Exp/(Inc) (e)
Tax (f)
Global ERP implementation charges 4,484 4,484
Structural optimization charges 3,283 1,426 1,277 580
Certain employee severance charges 534 158 376
Acquisition-related charges 4,535 4,761 885 (1,111 )
Post-spin SeaSpine separation-related charges 445 445
Intangible asset amortization expense 10,704 7,169 3,535
Convertible debt non-cash interest 2,043 2,043
Estimated income tax impact from adjustments and other items* (8,249 ) (8,249 )
Depreciation expense 7,564

* Includes a valuation allowance of $1.6 million for certain deferred tax assets associated with the SeaSpine separation.

a) COGS – Cost of goods sold
b) SG&A – Selling, general and administrative
c) R&D – Research and development
d) Amort. – Intangible asset amortization
e) Interest Inc(Exp) – Interest income (expense), net
f) Tax – Income tax expense

Items included in GAAP net income and location where each item is recorded are as follows:

(In thousands)
Twelve Months Ended December 31, 2016
Item Total
Amount
  COGS(a)   SG&A(b)   R&D (c)   Amort.(d) Other,
Interest
Exp(Inc)(e)
Tax(f)
Global ERP implementation charges $ 15,585 $ $ 15,585 $ $ $ $
Structural optimization charges 7,794 4,480 3,314
Certain employee severance charges 1,446 499 947
Acquisition-related charges 18,898 13,890 4,808 200
Intangible asset amortization expense 41,502 27,640 13,862
Convertible debt non-cash interest 8,075 8,075
Estimated income tax impact from adjustments and other items (32,520 ) (32,520 )
Depreciation expense 31,163

a) COGS – Cost of goods sold
b) SG&A – Selling, general and administrative
c) R&D – Research and development
d) Amort. – Intangible asset amortization
e) Other, Interest Inc (Exp) – Other, Interest income (expense), net
f) Tax – Income tax expense

Twelve Months Ended December 31, 2015
(In thousands)
Item Total
Amount
  COGS (a)   SG&A (b)   R&D (c)   Amort. (d) Interest
Exp(Inc) (e)
  Tax (f)
Global ERP implementation charges 16,375 16,375
Structural optimization charges 16,752 6,799 9,751 580 (378 )
Certain employee severance charges 2,642 654 1,988
Acquisition-related charges 15,703 9,968 6,846 (1,111 )
Post-Spin SeaSpine separation related charges 3,801 3,801
Intangible asset amortization expense 32,235 22,282 9,953
Convertible debt non-cash interest 7,871 7,871
Estimated income tax impact from adjustments and other items* 6,393 6,393
Depreciation expense 27,018

*  Includes a valuation allowance of $37.2 million for certain deferred tax assets associated with the SeaSpine separation.

a) COGS – Cost of goods sold
b) SG&A – Selling, general and administrative
c) R&D – Research and development
d) Amort. – Intangible asset amortization
e) Interest Inc(Exp) – Interest income (expense), net
f) Tax – Income tax expense

INTEGRA LIFESCIENCES HOLDINGS CORPORATION
RECONCILIATION OF NON-GAAP ADJUSTMENTS – GAAP NET INCOME FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA
(UNAUDITED)
(In thousands)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2016 2015 2016 2015
GAAP net income from continuing operations $ 28,246 $ 14,980 $ 74,564 $ 6,851
Non-GAAP adjustments:
Depreciation and intangible asset amortization expense 18,312 18,268 72,665 59,253
Other (income) expense, net (1,243 ) (1,604 ) (845 ) (4,588 )
Interest (income) expense, net 6,538 6,101 25,779 23,504
Income tax expense (benefit) 7,228 4,531 15,842 53,820
Global ERP implementation charges 3,199 4,484 15,585 16,375
Structural optimization charges * 2,254 3,283 7,794 17,130
Certain employee severance charges 26 534 1,446 2,642
Acquisition-related charges ** 1,902 5,646 18,898 16,814
Post-spin SeaSpine separation-related charges 445 3,801
  Total of non-GAAP adjustments 38,216 41,688 157,164 188,751
Adjusted EBITDA $ 66,462 $ 56,668 $ 231,728 $ 195,602

* For the twelve months ended December 31, 2015, Structural optimization charges excludes ($378) already added back in the “Other (income) expense, net” line above.

** For the three and twelve months ended December 31, 2015, Acquisition-related charges excludes ($1,111) already added back in the “Other (income) expense, net” line above.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION
RECONCILIATION OF NON-GAAP ADJUSTMENTS – GAAP NET INCOME FROM CONTINUING OPERATIONS TO MEASURES OF ADJUSTED NET INCOME AND
ADJUSTED EARNINGS PER SHARE
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2016 2015 2016 2015
GAAP net income from continuing operations $ 28,246 $ 14,980 $ 74,564 $ 6,851
Non-GAAP adjustments:
Global ERP implementation charges 3,199 4,484 15,585 16,375
Structural optimization charges 2,254 3,283 7,794 16,752
Certain employee severance charges 26 534 1,446 2,642
Acquisition-related charges 1,902 4,535 18,898 15,703
Post-spin SeaSpine separation-related charges 445 3,801
Intangible asset amortization expense 10,298 10,704 41,502 32,235
Convertible debt non-cash interest 1,775 2,043 8,075 7,871
Estimated income tax impact from adjustments and other items (6,961 ) (8,249 ) (32,520 ) 6,393
  Total of non-GAAP adjustments 12,493 17,779 60,780 101,772
Adjusted net income $ 40,739 $ 32,759 $ 135,344 $ 108,623
Adjusted diluted net income per share $ 0.52 $ 0.44 $ 1.76 $ 1.54
Weighted average common shares outstanding for diluted net income from continuing operations per share 80,286 76,370 79,194 71,354
Weighted average common shares outstanding adjustment for convertible dilution (2,412 ) (1,332 ) (2,296 ) (922 )
Weighted average common shares outstanding for adjusted diluted net income per share 77,874 75,038 76,898 70,432
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
CONDENSED BALANCE SHEET DATA
(UNAUDITED)
(In thousands)
December 31, December 31,
2016 2015
Cash and cash equivalents $ 102,055 $ 48,132
Accounts receivable, net 148,186 132,241
Inventory, net 217,263 211,429
Bank line of credit 665,000 481,875
Convertible securities 218,240
Stockholders’ equity 839,667 751,443
RECONCILIATION OF NON-GAAP ADJUSTMENTS – GAAP OPERATING CASH FLOW TO
MEASURES OF ADJUSTED FREE CASH FLOW AND ADJUSTED FREE CASH FLOW CONVERSION
(UNAUDITED)
(In thousands)
Three Months Ended December 31,
2016 2015
GAAP Net cash provided by operating activities $ 6,529 $ 25,640
Accreted interest payment associated with the 2016 Convertible Notes *** 42,786
Purchases of property and equipment (21,192 ) (13,099 )
Adj. Free Cash Flow 28,123 12,541
Adjusted net income * 40,739 32,759
Adjusted Free Cash Flow Conversion 69.0 % 38.3 %
Twelve Months Ending December 31,
2016 2015
GAAP Net cash provided by operating activities $ 116,405 $ 117,063
Accreted interest payment associated with the 2016 Convertible Notes*** 42,786
Purchases of property and equipment (47,328 ) (33,413 )
Adj. Free Cash Flow 111,863 83,650
Adjusted net income * 135,344 108,623
Adjusted Free Cash Flow Conversion 82.7 % 77.0 %
***Operating Cash Flow for the fourth quarter and full year 2016 excludes $42.8M of accreted interest payment associated with the 2016 Convertible Notes.

* Adjusted net income for quarters and twelve months ended December 31, 2015 and 2016 are reconciled above.

The Company calculates adjusted free cash flow conversion by dividing its free cash flow by adjusted net income.  The Company believes this measure is a useful metric in evaluating the significance of the cash special charges in its adjusted earnings measures.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION
RECONCILIATION OF NON-GAAP ADJUSTMENTS – GUIDANCE
(In millions, except per share amounts)
Projected Year Ended
December 31, 2017
Low High
GAAP net income $ 39.3 $ 43.8
Non-GAAP adjustments:
Global ERP implementation charges 8.0 8.0
Structural optimization charges 19.5 19.5
Acquisition-related charges 78.5 78.5
Intangible asset amortization expense 47.8 47.8
Convertible debt non-cash interest
Estimated income tax impact from adjustments and other items (44.0 ) (44.0 )
Total of non-GAAP adjustments 109.8 109.8
Adjusted net income $ 149.1 $ 153.6
GAAP diluted net income per share $ 0.49 $ 0.55
Non-GAAP adjustments detailed above (per share) $ 1.39 $ 1.39
Adjusted diluted net income per share $ 1.88 $ 1.94
Weighted average common shares outstanding for diluted net income per share 79.5 79.0

Items included in GAAP net income guidance and location where each item is expected to be recorded is as follows:

(In millions)

Projected Year Ended December 31, 2017
Item   Total Amount   COGS   SG&A   Amort. Interest
Exp(Inc)
Tax
Global ERP implementation charges 8.0 8.0
Structural optimization charges 19.5 10.5 9.0
Acquisition-related charges 78.5 9.0 69.5
Intangible asset amortization expense 47.8 31.0 16.8
Convertible debt non-cash interest
Estimated income tax impact from adjustments and other items (44.0 ) (44.0 )
Contact:

Investor Relations:
Angela Steinway
(609) 936-2268
angela.steinway@integralife.com

Michael Beaulieu
(609) 750-2827
michael.beaulieu@integralife.com

rti-surgical-corporate-photos-45-1200x801.jpg

February 24, 2017 OrthoSpineNews

February 23, 2017

ALACHUA, Fla.–(BUSINESS WIRE)–RTI Surgical Inc. (RTI) (Nasdaq: RTIX), a global surgical implant company, reported operating results for the fourth quarter and full year of 2016. The company also outlined new actions focused on improving execution and returning the company to profitable growth.

RTI’s board and management team have pivoted the company toward growth areas, such as opportunities in the direct business that are beginning to yield early results. The company also initiated a restructuring program that is expected to achieve cost savings and position RTI’s operating platform to capitalize on future growth opportunities. As announced in January, the Board appointed Camille Farhat, an experienced executive and growth-focused leader with proven expertise in revitalizing and growing global health care businesses, to Chief Executive Officer. Mr. Farhat will assume the position on March 15, 2017.

“In a few short weeks, we will welcome Camille Farhat as our new Chief Executive Officer,” said Curtis M. Selquist, Chairman of RTI’s Board of Directors. “Camille’s initial focus will be to lead a 90-day effort focused on assessing and developing a plan to return RTI to profitable and sustainable growth. This will include identifying additional opportunities to reduce the company’s cost structure and improve cash flow, refocusing the company’s culture around accountability and execution, and redirecting its resources to attractive markets that we believe offer the greatest opportunities for growth. Over the course of 2017, the company is committed to driving cost efficiencies, focused innovation and profitable growth, and we will measure and report progress in all areas accordingly.”

RTI Interim Chief Executive Officer Robert Jordheim said, “We are focused on execution and, in parallel with the pending arrival of Camille, we are executing an initial restructuring plan to reduce operating costs and streamline and improve our platform for growth. As a result of this initial cost rationalization, we expect to incur a pre-tax charge of approximately $4 million for severance-related expenses, a majority of which will be recorded in the first quarter of 2017. This initial plan is expected to save the company approximately $8 million of annualized expenses beginning in the first quarter of 2017 and is a first step toward optimizing our expense structure to establish an efficient and more flexible platform upon which to grow profitably.”

RTI’s fourth quarter and full year 2016 financial results, as outlined in greater detail below, reflect that the company has initiated steps in the quarter to improve the operational performance and financial results of its overall business going forward. RTI has delivered strong performance in its direct business, with double-digit growth reported in its spine, surgical specialties, cardiothoracic and international businesses. While RTI’s commercial/other business declined during 2016, primarily due to extraordinarily high commercial orders in 2015, the business did show signs of stabilization during the year.

Fourth Quarter 2016

RTI reported a net loss of $12.0 million in 2016’s fourth quarter, or $0.21 per fully diluted common share, mainly due to pre-tax charges totaling $16.0 million related to excess hernia and sports medicine inventory and asset impairment of the company’s German subsidiary. As outlined in the reconciliation tables that follow, excluding these charges, adjusted net income per fully diluted common share was $0.01 and adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) was $6.1 million for the fourth quarter of 2016.

Worldwide revenues were $71.3 million for the fourth quarter of 2016, a decrease of 6 percent, domestic revenues were $64.6 million, a decrease of 9 percent, and international revenues were $6.8 million, an increase of 24 percent from 2015’s fourth quarter. The decrease in domestic revenue was primarily due to lower orders in the commercial/other business in 2016 coming off a very strong 2015; partially offset by strong growth in the domestic direct businesses. The increase in international revenues was mainly driven by growth in Asia, primarily in Spine.

Direct revenues were $44.5 million for the fourth quarter of 2016, an increase of 22 percent compared to the fourth quarter of 2015, with particular strength in Spine. RTI’s spine business continues to be one of the fastest-growing spine businesses in the U.S., primarily due to increases in surgeon users and distributor relationships. Commercial/other revenues were $26.8 million for the fourth quarter of 2016.

The company has begun implementing restructuring actions targeted at rightsizing investments toward those businesses and market areas with the greatest potential for long-term growth. This effort is ongoing and is expected to result in both cost savings and additional revenue opportunities over the near- and long-term.

Full Year 2016

Worldwide revenues were $272.9 million for the full year 2016, a decrease of 3 percent compared to revenues for the full year 2015, mainly due to the same factors impacting fourth quarter 2016 worldwide revenues. Domestic revenues were $247.8 million for the full year 2016, a decrease of 5 percent compared to domestic revenues for the full year 2015. International revenues were $25.1 million for the full year 2016, an increase of 15 percent compared to international revenues for the full year 2015. On a constant currency basis, international revenues for the full year 2016 increased 15 percent compared to international revenue for the full year 2015.

Direct revenues were $160.8 million for the full year 2016, an increase of 16 percent compared to direct revenues for the full year 2015. The company experienced double digit growth in the spine, surgical specialties, cardiothoracic, and international businesses. Commercial/other revenues were $112 million for the full year 2016, a decrease of 22 percent compared to commercial/other revenues for the full year 2015. The decline in commercial/other business is primarily related to significantly high orders in 2015 with lower orders in 2016, however the commercial business showed signs of stabilization during the year. In addition, RTI is taking actions to reinvigorate this business by strengthening relationships and investing in innovation.

During the year, the company recorded pre-tax charges totaling $25.6 million as follows: $9.6 million related to hernia and sports medicine inventory, $5.6 million related to asset impairment of the company’s German subsidiary, $1.2 million related to strategic review costs, $4.4 million related to CEO transition and retirement costs, $2.7 million related to contested proxy costs, $1.1 million related to restructuring, and $1 million related to severance. In addition, the company also recorded a foreign net operating loss valuation reserve of $1.2 million.

Net loss applicable to common shares was $18.1 million for the full year 2016, compared to net income applicable to common shares of $11.6 million for the full year 2015. Net loss per common share was $0.31 for the full year 2016, based on 58.2 million common shares outstanding, compared to net income per fully diluted common share of $0.20 for the full year 2015, based on 58.6 million fully diluted common shares outstanding.

As detailed in the reconciliation provided later in this release, adjusted net income applicable to common shares was $2.1 million for the full year 2016, compared to adjusted net income applicable to common shares of $13.4 million for the full year 2015. Adjusted net income per fully diluted common share was $0.04 for the full year 2016, based on 58.5 million fully diluted common shares outstanding, compared to adjusted net income per fully diluted common share of $0.23 for the full year 2015, based on 58.6 million fully diluted common shares outstanding.

Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), as detailed in the reconciliation provided later in this release, was $29.8 million for the full year 2016 (11 percent of 2016 revenues) compared to $46.3 million for the full year 2015 (16 percent of 2015 revenues).

Fiscal 2017 Outlook

RTI will remain focused in 2017 on execution, continued innovation and profitable growth across each of its business lines and geographies. The company has developed its guidance based on a conservative view of its current restructuring and operational improvement program, its current business profile and existing market conditions.

Within this context, RTI expects full year revenues for 2017 to be between $274 million and $285 million. Compared to the full year 2016, direct revenue is expected to grow mid-to-high single digits on a percentage basis, while commercial/other revenue is expected to account for a relatively flat to low single-digit decline on a percentage basis.

As detailed in the reconciliation provided later in this release, excluding the approximately $4 million pre-tax charge for severance-related expenses in 2017 as noted above, adjusted full year net income per fully diluted common share is expected to be in the range of $0.05 to $0.10, based on 59.5 million fully diluted common shares outstanding.

RTI will continue to evaluate its operating platform throughout the year and will update its 2017 top- and bottom-line guidance as its actions might warrant.

Conference Call

RTI will host a conference call and simultaneous audio webcast to discuss its fourth quarter and full year results at 8:30 a.m. ET today. The conference call can be accessed by dialing (877) 383-7419. The webcast can be accessed through the investor section of RTI’s website at www.rtix.com. A replay of the conference call will be available on the RTI website following the call.

About RTI Surgical Inc.

RTI Surgical is a leading global surgical implant company providing surgeons with safe biologic, metal and synthetic implants. Committed to delivering a higher standard, RTI’s implants are used in sports medicine, general surgery, spine, orthopedic, trauma and cardiothoracic procedures and are distributed in nearly 50 countries. RTI is headquartered in Alachua, Fla., and has four manufacturing facilities throughout the U.S. and Europe. RTI is accredited in the U.S. by the American Association of Tissue Banks and is a member of AdvaMed. For more information, please visit www.rtix.com.

Forward Looking Statement

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations, estimates and projections about our industry, our management’s beliefs and certain assumptions made by our management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, except for historical information, any statements made in this communication about anticipated financial results, growth rates, new product introductions, future operational improvements and results or regulatory actions or approvals or changes to agreements with distributors also are forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties, including the risks described in public filings with the U.S. Securities and Exchange Commission (SEC). Our actual results may differ materially from the anticipated results reflected in these forward-looking statements. Copies of the company’s SEC filings may be obtained by contacting the company or the SEC or by visiting RTI’s website at www.rtix.com or the SEC’s website at www.sec.gov.

RTI SURGICAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except share and per share data)
Three months ended Twelve months ended
December 31, December 31,
2016 2015 2016 2015
Revenues $ 71,347 $ 76,121 $ 272,865 $ 282,293
Costs of processing and distribution 43,246 35,814 140,516 132,551
Gross profit 28,101 40,307 132,349 149,742
Expenses:
Marketing, general and administrative 31,447 27,351 116,125 107,439
Research and development 4,056 3,573 16,090 15,065
Strategic review costs 500 1,150
CEO Retirement and transition costs 297 4,404
Contested proxy expenses 2,680
Asset impairment and abandonments 5,635 814 5,635 814
Litigation settlement and settlement charges 804 804
Restructuring charges 1,107
Severance costs 995 1,039 995
Total operating expenses 41,935 33,537 148,230 125,117
Operating (loss) income (13,834 ) 6,770 (15,881 ) 24,625
Total other expense – net (667 ) (425 ) (1,779 ) (1,411 )
(Loss) income before income tax benefit (provision) (14,501 ) 6,345 (17,660 ) 23,214
Income tax benefit (provision) 3,399 (2,179 ) 3,061 (8,299 )
Net (loss) income (11,102 ) 4,166 (14,599 ) 14,915
Convertible preferred dividend (897 ) (845 ) (3,508 ) (3,305 )
Net (loss) income applicable to common shares $ (11,999 ) $ 3,321 $ (18,107 ) $ 11,610
Net (loss) income per common share – basic $ (0.21 ) $ 0.06 $ (0.31 ) $ 0.20
Net (loss) income per common share – diluted $ (0.21 ) $ 0.06 $ (0.31 ) $ 0.20
Weighted average shares outstanding – basic 58,426,241 57,793,509 58,236,745 57,611,231
Weighted average shares outstanding – diluted 58,426,241 58,450,690 58,236,745 58,590,494
RTI SURGICAL, INC. AND SUBSIDIARIES
Reconciliation of Net (Loss) Income Applicable to Commons Shares to Adjusted EBITDA
(Unaudited, in thousands)
Three Months Twelve Months
Ended December 31, Ended December 31,
2016 2015 2016 2015
Net (loss) income applicable to common shares $ (11,999 ) $ 3,321 $ (18,107 ) $ 11,610
Interest expense, net 594 511 1,647 1,489
(Benefit) provision for income taxes (3,399 ) 2,179 (3,061 ) 8,299
Depreciation 2,540 3,028 12,835 12,240
Amortization of intangible assets 883 1,037 3,675 4,282
EBITDA (11,381 ) 10,076 (3,011 ) 37,920
Reconciling items impacting EBITDA
Preferred dividend 897 845 3,508 3,305
Non-cash stock based compensation 515 633 3,590 2,548
Foreign exchange loss (gain) 73 (86 ) 132 (78 )
Other reconciling items *
Excess inventory charge 9,556 9,556
Strategic review costs 500 1,150
CEO Retirement and transition costs 297 4,404
Contested proxy expenses 2,680
Asset impairment and abandonments 5,635 814 5,635 814
Litigation settlement and settlement charges 804 804
Restructuring charges 1,107
Severance costs 995 1,039 995
Adjusted EBITDA $ 6,092 $ 14,081 $ 29,790 $ 46,308
Adjusted EBITDA as a percent of revenues 9 % 18 % 11 % 16 %
*See explanations in Use of Non-GAAP Financial Measures section later in this release.
RTI SURGICAL, INC. AND SUBSIDIARIES
Reconciliation of Net (Loss) Income Applicable to Common Shares and Net (Loss) Income Per Diluted Share to
Adjusted Net Income Applicable to Common Shares and Adjusted Net Income Per Diluted Share
(Unaudited, in thousands except per share data)
Three Months Ended
December 31, 2016 December 31, 2015
Net Net
(Loss) Income Amount (Loss) Income Amount
Applicable to Per Diluted Applicable to Per Diluted
Common Shares Share Common Shares Share
As reported $ (11,999 ) $ (0.21 ) $ 3,321 $ 0.06
Excess inventory charge (1) 9,556 0.16
Strategic review costs (2) 500 0.01
CEO Retirement and transition costs (3) 297 0.01
Asset impairment and abandonments (5) 5,635 0.10 814 0.01
Litigation and settlement charges (6) 804 0.01
Severance charges (8) 995 0.02
Tax effect on adjustments (3,474 ) (0.06 ) (871 ) (0.01 )
Adjusted * $ 515 $ 0.01 $ 5,063 $ 0.09
* See explanations in Use of Non-GAAP Financial Measures section later in this release.
Amount Per Diluted Share may not foot due to rounding.
Twelve Months Ended
December 31, 2016 December 31, 2015
Net Net
(Loss) Income Amount (Loss) Income Amount
Applicable to Per Diluted Applicable to Per Diluted
Common Shares Share Common Shares Share
As reported $ (18,107 ) $ (0.31 ) $ 11,610 $ 0.20
Excess inventory charge (1) 9,556 0.16
Strategic review costs (2) 1,150 0.02
CEO Retirement and transition costs (3) 4,404 0.08
Contested proxy expenses (4) 2,680 0.05
Asset impairment and abandonments (5) 5,635 0.10 814 0.01
Litigation and settlement charges (6) 804 0.01
Restructuring charges (7) 1,107 0.02
Severance charges (8) 1,039 0.02 995 0.02
European net operating loss valuation reserve (9) 1,224 0.02
Tax effect on adjustments (6,602 ) (0.11 ) (871 ) (0.01 )
Adjusted * $ 2,086 $ 0.04 $ 13,352 $ 0.23
* See explanations in Use of Non-GAAP Financial Measures section later in this release.
Amount Per Diluted Share may not foot due to rounding.

Fiscal 2017 Outlook

Full year net income per fully diluted common share is expected to be in the range of $0.01 to $0.06, based on 59.5 million fully diluted shares outstanding. Excluding severance charges taken in 2017, full year net income per fully diluted common share is expected to be in the range of $0.05 to $0.10.

RTI SURGICAL, INC. AND SUBSIDIARIES
Reconciliation of GAAP Guidance Net Income Per Common Share – Diluted to
Adjusted Non-GAAP Guidance Net Income Per Common Share – Diluted
(Unaudited)
Twelve Months Ended
December 31, 2017
$ Amount
Per Common
Share – Diluted
GAAP Guidance Net Income Per Common Share – Diluted $ 0.01 – 0.06
Severance charges, net of tax effect 0.04
Adjusted Non-GAAP Guidance Net Income Per Common Share – Diluted $ 0.05 – 0.10

Use of Non-GAAP Financial Measures

To supplement the Company’s unaudited condensed consolidated financial statements presented on a GAAP basis, the Company discloses certain non-GAAP financial measures that exclude certain amounts, including Adjusted EBITDA, Adjusted Net Income Applicable to Common Shares and Adjusted Net Income per Common Share – Diluted. The calculation of the tax effect on the adjustments between GAAP net (loss) income applicable to common shares and non-GAAP net income applicable to common shares is based upon our estimated annual GAAP tax rate, adjusted to account for items excluded from GAAP net (loss) income applicable to common shares in calculating Adjusted Net Income Applicable to Common Shares-Diluted. A reconciliation of the non-GAAP financial measures to the corresponding GAAP measures is included in the tables listed above.

The following is an explanation of the adjustments that management excluded as part of adjusted measures for the three and twelve month period ended December 31, 2016 and 2015 as well as the reason for excluding the individual items:

(1) 2016 Excess inventory charge – This adjustment represents an inventory charge as a result of writing-off certain excess product quantities primarily for excess hernia and sports medicine inventory. Management removes the amount of these expenses from our operating results to supplement a comparison to our past operating performance.

(2) 2016 Strategic review costs – This adjustment represents charges relating to a comprehensive strategic review of the Company’s business lines and operations to leverage the Company’s expertise, technology and products and identify opportunities to increase stockholder value. Management removes the amount of these expenses from our operating results to supplement a comparison to our past operating performance.

(3) 2016 CEO Retirement and transition costs – This adjustment represents charges relating to the retirement of our Chief Executive Officer, Brian K. Hutchison, pursuant to the Executive Transition Agreement dated August 29, 2012 and Executive Separation Agreement dated August 15, 2016. Management removes the amount of these expenses from our operating results to supplement a comparison to our past operating performance.

(4) 2016 Contested proxy expenses – This adjustment represent charges relating to contested proxy expenses. Management removes the amount of these costs from our operating results to supplement a comparison to our past operating performance.

(5) 2016 and 2015 Asset impairment and abandonments – This adjustment represents an asset impairment in 2016 and abandonment of certain long-term assets at our German facility in 2015. Management removes the amount of these costs from our operating results to supplement a comparison to our past operating performance. Due to the significant effort that is required to determine the fair value of German facility’s long-lived assets, the Company was unable to finalize the 2016 long-lived asset impairment analysis as of the date of this release. The Company will finalize the impairment analyses and reflect the finalized fair value in its December 31, 2016 Form 10-K. The long-lived asset impairment reported in this release is the Company’s current best estimate of the impairment amount.

(6) 2015 Litigation and settlement charges – This adjustment represents charges relating to settlements of domestic and international distributor disputes. Management removes the amount of these costs from our operating results to supplement a comparison to our past operating performance.

(7) 2016 Restructuring charges – This adjustment represents the closure of our French distribution and tissue procurement office. Management removes the amount of these costs from our operating results to supplement a comparison to our past operating performance.

(8) 2016 and 2015 Severance charges – This adjustment represents charges relating to the termination of former employees. Management removes the amount of these costs from our operating results to supplement a comparison to our past operating performance.

(9) 2016 Foreign net operating loss valuation reserve – This adjustment represents charges relating to a foreign net operating loss valuation reserve. Management removes the amount of these costs from our operating results to supplement a comparison to our past operating performance.

Material Limitations Associated with the Use of Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted Net Income Applicable to Common Shares and Adjusted Net Income per Common Share – Diluted should not be considered in isolation, or as a replacement for GAAP measures.

Usefulness of Non-GAAP Financial Measures to Investors

The Company believes that presenting Adjusted EBITDA, Adjusted Net Income Applicable to Common Shares and Adjusted Net Income per Common Share – Diluted in addition to the related GAAP measures provide investors greater transparency to the information used by management in its financial decision-making. The Company further believes that providing this information better enables the Company’s investors to understand the Company’s overall core performance and to evaluate the methodology used by management to assess and measure such performance.

RTI SURGICAL, INC. AND SUBSIDIARIES
Condensed Consolidated Revenues
(Unaudited, in thousands)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2016 2015 2016 2015
Revenues:
Spine $ 21,393 $ 15,608 $ 73,907 $ 57,983
Sports medicine and orthopedics 13,187 13,058 50,143 50,712
Surgical specialties 1,481 1,025 4,466 3,029
Cardiothoracic 2,815 2,296 11,147 8,699
International 5,653 4,400 21,185 18,338
Subtotal direct 44,529 36,387 160,848 138,761
Global commercial 23,731 36,869 99,127 129,930
Other revenues 3,087 2,865 12,890 13,602
Total revenues $ 71,347 $ 76,121 $ 272,865 $ 282,293
Domestic revenues 64,564 70,636 247,756 260,387
International revenues 6,783 5,485 25,109 21,906
Total revenues $ 71,347 $ 76,121 $ 272,865 $ 282,293
RTI SURGICAL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
December 31, December 31,
2016 2015
Assets
Cash $ 13,849 $ 12,614
Accounts receivable – net 41,488 47,243
Inventories – net 119,743 118,673
Prepaid and other assets 5,213 13,184
Total current assets 180,293 191,714
Property, plant and equipment – net 83,098 84,992
Goodwill 54,887 54,887
Other assets – net 49,553 49,069
Total assets $ 367,831 $ 380,662
Liabilities and Stockholders’ Equity
Accounts payable $ 26,112 $ 20,446
Accrued expenses and other current liabilities 26,772 33,474
Current portion of long-term obligations 6,080 5,853
Total current liabilities 58,964 59,773
Deferred revenue 6,612 9,354
Long-term liabilities 77,523 73,856
Total liabilities 143,099 142,983
Preferred stock 60,016 56,323
Stockholders’ equity:
Common stock and additional paid-in capital 416,570 417,337
Accumulated other comprehensive loss (8,316) (7,042)
Accumulated deficit (243,538) (228,939)
Total stockholders’ equity 164,716 181,356
Total liabilities and stockholders’ equity $ 367,831 $ 380,662
RTI SURGICAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Three Months Twelve Months
Ended December 31, Ended December 31,
2016 2015 2016 2015
Cash flows from operating activities:
Net (loss) income $ (11,102 ) $ 4,166 $ (14,599 ) $ 14,915

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization expense 3,423 4,065 16,510 16,522
Stock-based compensation 515 633 3,590 2,548
Amortization of deferred revenue (1,217 ) (1,160 ) (4,867 ) (6,225 )

Other items to reconcile to net cash provided by operating activities

13,670 (1,131 ) 14,689 (18,764 )
Net cash provided by operating activities 5,289 6,573 15,323 8,996
Cash flows from investing activities:
Purchases of property, plant and equipment (2,563 ) (4,771 ) (15,337 ) (17,740 )
Patent and acquired intangible asset costs (420 ) (249 ) (2,615 ) (498 )
Net cash used in investing activities (2,983 ) (5,020 ) (17,952 ) (18,238 )
Cash flows from financing activities:
Proceeds from long-term obligations 2,000 2,000 17,000 8,750
Net (payments) proceeds from short-term obligations (86 ) (1,511 ) 422
Payments on long-term obligations (2,000 ) (1,133 ) (11,424 ) (5,294 )
Other financing activities (307 ) 88 (401 ) 2,396
Net cash (used in) provided by financing activities (307 ) 869 3,664 6,274
Effect of exchange rate changes on cash and cash equivalents 226 (116 ) 200 (121 )
Net increase (decrease) in cash and cash equivalents 2,225 2,306 1,235 (3,089 )
Cash and cash equivalents, beginning of period 11,624 10,308 12,614 15,703
Cash and cash equivalents, end of period $ 13,849 $ 12,614 $ 13,849 $ 12,614

Contacts

RTI Surgical
Robert Jordheim
Interim Chief Executive Officer
rjordheim@rtix.com
or
Roxane Wergin, 386-418-8888
Director, Corporate Communications
rwergin@rtix.com


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February 24, 2017 OrthoSpineNews

MARIETTA, Ga., Feb. 23, 2017 /PRNewswire/ — MiMedx Group, Inc. (NASDAQ: MDXG), the leading regenerative medicine company utilizing human amniotic tissue and patent-protected processes to develop and market advanced products and therapies for the Wound Care, Surgical, Orthopedic, Spine, Sports Medicine, Ophthalmic, and Dental sectors of healthcare, today announced its record results for the fourth quarter and full year ended December 31, 2016.

Full Year 2016 Highlights are:

  • Revenue is a 31% increase over full year 2015 revenue
  • Revenue of $245.0 million within range of MiMedx guidance
  • Wound Care revenue of $184 million is a 30% increase over 2015
  • Surgical, Sports Medicine and Orthopedics (SSO) revenue of $61.0 million grew 32% over 2015
  • Gross margin of 87%
  • Net income of $12.0 million beats consensus by $1.0 million
  • GAAP EPS (diluted) of $0.11 beats consensus by $0.01
  • Adjusted Net Income* of $24.4 million and EPS (diluted) of $0.22 meets consensus
  • Adjusted EBITDA* of $44.4 million
  • Net cash flows from operations of $25.8 million is a 37% increase over prior year
  • Stock repurchase under the repurchase plan of $10.4 million

Fourth Quarter 2016 Highlights are:

  • Revenue grew 35% over Q4 2015 revenue
  • Revenue of $69.9 Million within range of MiMedx Q4 2016 guidance
  • Wound Care revenue grew 32% over Q4 2015
  • SSO revenue for Q4 2016 grew 44% over Q4 2015
  • 20th of last 21 quarters of meeting or exceeding revenue guidance
  • Gross margin of 87%
  • Net income of $5.5 million
  • 20th consecutive quarter of positive Adjusted EBITDA*
  • Adjusted EBITDA* of $13.9 million
  • Adjusted Net Income* of $8.1 million is a 14% increase over 2015
    * See the accompanying tables for definitions of each Non-GAAP metric. Reconciliations of GAAP EBITDA to Adjusted EBITDA, GAAP Gross Margin to Adjusted Gross Margin, and GAAP Net Income to Adjusted Net Income and Adjusted Diluted Net Income Per Share appear in the tables below. These non-GAAP measures include, but are not limited to, adjustments for non-cash charges associated with purchase accounting related to the Stability Biologics acquisition, normalization of tax expense, one-time non-recurring cash charges and share based compensation expense.

Parker H. “Pete” Petit, Chairman and CEO stated, “The final revenue is $1.8 million lower than we pre-released on January 9, 2017. This lower revenue is the result of the decision that we made to take what we believe is a very conservative approach related to the transition of certain government accounts from a distributor’s Federal Supply Schedule (FSS) contract to our own FSS contract. As previously reported, the Company has been transitioning since 2015 from sales to government accounts through our relationship with AvKare to sales directly to government accounts on our own FSS. In connection with that transition, we have an obligation to repurchase AvKare’s remaining inventory, if any, within 90 days following the expiration of the agreement on June 30, 2017.  At that time, the Company expects AvKare’s inventory to be minimal based on AvKare’s obligation to use commercially reasonable efforts to achieve target sales levels over the remaining term of the agreement.”

Results for Full Year and Fourth Quarter Ended December 31, 2016
The Company recorded record revenue for the year ended December 31, 2016 of $245.0 million, a $57.8 million or 31% increase over 2015 revenue of $187.3 million.  The Company’s gross margin for the year ended December 31, 2016, was 87%, compared to an 89% gross margin in the same period of 2015.   The decline in gross profit was driven by the impact of purchase accounting related to the acquisition as well as product mix in certain Stability Biologics products. The Company expects overall product gross margins to improve in 2017. Net Income for the year ended December 31, 2016, was $12.0 million, or $.11 per diluted common share, as compared to Net Income of $29.4 million, or $0.26 per diluted common share, in the same period of 2015.  Adjusted EBITDA* for the year ended December 31, 2016, was $44.4 million, as compared to Adjusted EBITDA* of $44.0 million for the year ended December 31, 2015.

The Company recorded record revenue for the 2016 fourth quarter of $69.9 million, a $18.0 million or 35% increase over 2015 fourth quarter revenue of $51.8 million. The Company’s gross margin for the quarter ended December 31, 2016, was 87%, as compared to the 90% gross margin in the fourth quarter of 2015. Net Income for the fourth quarter of 2016, was $5.5 million, or $.05 per diluted common share, a $7.9 million or 59% reduction, as compared to Net Income of $13.4 million, or $0.12 per diluted common share, which included an income tax benefit of $5.7 million due to the release of our net operating loss valuation allowance, in the fourth quarter of 2015.  Adjusted EBITDA* for the quarter ended December 31, 2016, was $13.9 million, a $1.0 million or 8% improvement, as compared to Adjusted EBITDA* of $12.9 million for the fourth quarter of 2015.

Management Commentary on Results
Petit said, “We are very pleased with the performance of both of our sales verticals during 2016 and especially during the fourth quarter. Our fourth quarter revenue performance was within our guidance, and it marked 21 consecutive quarters of sequential revenue growth and 20 of 21 quarters of meeting or exceeding our revenue guidance.  Our core advanced wound care revenue, led by our commercial accounts, was the primary contributor to our record fourth quarter performance. Our new products performed very well with EpiCord®, our new dehydrated human umbilical cord allograft, receiving substantial interest among physicians, and AmnioFill™ and OrthoFlo Lyophilized, our other recently launched new products, met the Company’s performance expectations.”

Bill Taylor, President and COO, noted, “Our 2016 Wound Care revenue of $184.0 million grew by 30% and Surgical, Sports Medicine and Orthopedics (“SSO”) revenue of $61.0 million increased by 32% over 2015.  In the fourth quarter, Wound Care performed extremely well, growing 32% over the fourth quarter of 2015. Our SSO revenue grew significantly and increased by 44% over the 2016 fourth quarter, despite lower than expected fourth quarter revenue from Stability Biologics. EpiFix®, the Company’s flagship product, continues to drive our leadership position in the advanced wound care market. EpiFix is very strong with both our commercial wound care accounts, as well as government accounts.”

Petit commented, “With respect to cash flow and profitability, we were pleased that our cash position at the end of the fourth quarter increased so significantly and the Days Sales Outstanding (DSO) in our Accounts Receivable show a favorable decline. Our profit performance during 2016 was challenging early in the year because of our new product investments, but our profitability was up in the fourth quarter. The fourth quarter was our 20th consecutive quarter of recording positive Adjusted EBITDA*, and our 10th consecutive quarter of operating profit.”

Taylor said, “2016 was another year of accelerated investments in clinical trials. At the end of the year, we had 27 clinical studies ongoing with more than 100 clinical sites under management. As of now, our Compendium of peer-reviewed published studies including completed Randomized Control Trials (RCTs), scientific studies and significant case studies totals 46. Our ongoing investment in this strategy is continuing to propel our successes in gaining reimbursement coverage and furthering our regulatory approvals. During 2016, we added 32.5 million new covered lives and added 21 new plans providing coverage. By year end, we had over 298 million covered lives, which represents more than a 12% increase over year end 2015.”

Petit stated, “With the publication of our 2016 audited financial results, much of the innuendo associated with the recent allegations that two former employees have made against the Company should be resolved. Furthermore, we expect the Audit Committee of our Board will soon be releasing its findings from its in-depth investigation into these allegations. When the results from that investigation are reported, management believes any remaining innuendo that might possibly still remain should be completely resolved.”

“Our sales organization now totals approximately 325 individuals.  We have implemented certain territory realignments and management changes to focus on our growth. We have a large sales force with great expertise and effectiveness, and we look forward to continuing to show exceptional growth,” commented Taylor.

Full Year 2017 and First Quarter 2017 Guidance Highlights
MiMedx reiterated its first quarter and full year 2017 guidance that was previously communicated by the Company on January 9, 2017, which included:

  • First quarter of 2017 revenue forecasted to be in the range of $69.5 to $72.5 million
  • 2017 revenue guidance in the range of $302 to $307 million
  • Gross profit margins for 2017 expected to be in the range of 86% to 88%
  • 2017 Operating Earnings forecasted to grow by 90% or greater
  • GAAP EPS for 2017 projected to be in the range of $0.18 to $0.20
  • 2017 GAAP Net Earnings expected to grow in excess of 95%
  • 2017 Adjusted EBITDA* expected to be in the range of 21% to 23% of revenue
  • Adjusted EPS* for 2017 projected to be in the range of $0.31 to $0.33

“Our first quarter of 2017 expectations are tempered by the normal seasonality effects experienced in the first quarter of every year. Even with that offset for seasonality, our first quarter of 2017 guidance provides for 30% to 36% revenue growth over first quarter of 2016 of $53.4 million. With the traditional seasonality experienced in our market, the first quarter of the year is typically the lightest quarter, followed by strong growth in the second, slightly lower growth in the third quarter due to some vacation effects, and then another quarter of strong growth with the fourth quarter,” said Petit.

Liquidity and Cash Flow
Cash on hand as of December 31, 2016, was $34.4 million, as compared to $28.5 million as of December 31, 2015. Net working capital as of December 31, 2016 increased $6.3 million to $75.8 million, as compared to $69.5 million as of December 31, 2015.  The Company recorded positive net cash flow from operating activities of $25.8 million for the year ended December 31, 2016 due primarily to increased Adjusted EBITDA*.

Share Repurchase Program
The Company continued to acquire its shares through the Company’s Share Repurchase Program during 2016. Since the May 2014 inception of the program through December 31, 2016, the Company acquired $56.1 million in repurchased shares.

In its press release of February 6, 2017, the Company announced that the MiMedx Board of Directors had authorized an increase of $10 million to the Company’s Share Repurchase Program, and the Board would consider a substantial additional commitment to this program at its next meeting. The Board’s action earlier in February brought the total authorized to $76 million since the Share Repurchase Program commenced. The Company reported that at yesterday’s meeting, the MiMedx Board of Directors authorized an additional increase of $10 million to the Share Repurchase Program, bringing the total authorized to date to $86 million. “With the on-going undervaluation, market conditions, our available resources and other related factors, I believe this increase is a very wise investment for the Company and one that will continue to be anti-dilutive,” commented Petit.

GAAP Earnings
The Company recorded Net Income of $12.0 million for the year ended December 31, 2016, or $0.11 per diluted common share, as compared to a Net Income of $29.4 million, or $0.26 per diluted common share, for the year ended December 31, 2015. The Company recorded Net Income of $5.5 million for the quarter ended December 31, 2016, or $0.05 per diluted common share, as compared to a Net Income of $13.4 million, or $.12 per diluted common share, for the quarter ended December 31, 2015.

Full year 2016 Research & Development (“R&D”) expenses were $12.0 million or 5% of Net Sales, an increase of $3.6 million over full year 2015 R&D expenses of $8.4 million. Fourth quarter 2016 R&D expenses were $3.5 million or 5% of Net Sales, an increase of $1.1 over fourth quarter 2014 R&D expenses of $2.3 million.

Selling, general and administrative (“SG&A”) expenses for full year 2016 were $180.0 million, a $46.6 million increase over full year 2015 SG&A expenses of $133.4 million.  SG&A expenses for the fourth quarter of 2016 were $48.4 million, an $11.9 million increase over fourth quarter of 2015 SG&A expenses of $36.5 million.  Increases in SG&A were due to the continuation of the buildup of the Company’s National Accounts function, direct sales force in Wound Care and SSO sales channels, as well as patent litigation costs.

“As I have previously stated, our 2016 earnings were reduced due to the Company’s increased expenses related to our accelerated introductions of the three new products we launched during the year. We believe this strategic decision to accelerate their respective launches and allocation of sales and marketing resources and expenses will prove to be very beneficial as we see the 2017 and beyond revenue results from these products, each of which address critical needs of the market,” concluded Petit.

Revenue Breakdown
The Company distinguishes revenue in two categories: (1) Wound Care and (2) SSO, which includes Original Equipment Manufacturer (“OEM”) applications. For fourth quarter of 2016, Wound Care revenue was $52.8 million, representing 75.5% of total revenue, and SSO (including OEM) revenue was $17.1 million, representing 24.5% of total revenue.

Earnings Call
MiMedx management will host a live broadcast of its fourth quarter and full year 2016 results conference call on Thursday, February 23, 2017, beginning at 10:30 a.m. eastern time.  A listen-only simulcast of the MiMedx Group conference call will be available on-line at the Company’s website at www.mimedx.com.  A 30-day on-line replay will be available approximately one hour following the conclusion of the live broadcast.  The replay can also be found on the Company’s website at www.mimedx.com.

Use of Non-GAAP Financial Measures
Management has disclosed adjusted financial measurements in this press announcement that present financial information that is not in accordance with generally accepted accounting principles (“GAAP”).  These measurements are not a substitute for GAAP measurements, although Company management uses these measurements as aids in monitoring the Company’s on-going financial performance from quarter-to-quarter and year-to-year on a regular basis and for benchmarking against other medical technology companies.  Adjusted EBITDA* is earnings before financing expense, interest, taxes, depreciation, amortization, and share-based compensation.  For a reconciliation of this non-GAAP financial measure to the most directly comparable financial measure, see the accompanying table to this release.  Adjusted financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.  Investors should consider adjusted measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.

About MiMedx
MiMedx® is an integrated developer, processor and marketer of patent protected and proprietary regenerative biomaterial products and bioimplants processed from human amniotic membrane and other human birth tissues, such as amniotic fluid, umbilical cord and placental collagen, and human skin and bone.  “Innovations in Regenerative Biomaterials” is the framework behind our mission to give physicians products and tissues to help the body heal itself.  We process the human amniotic membrane utilizing our proprietary PURION® Process, to produce a safe and effective implant. MiMedx proprietary processing methodology employs aseptic processing techniques in addition to terminal sterilization.  MiMedx is the leading supplier of amniotic tissue, having supplied over 700,000 allografts to date for application in the Wound Care, Burn, Surgical, Orthopedic, Spine, Sports Medicine, Ophthalmic and Dental sectors of healthcare.

Safe Harbor Statement
This press release includes statements that look forward in time or that express management’s beliefs, expectations or hopes.  Such statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, the Company’s financial projections for the first quarter and full year 2017, that the lowering of the fourth quarter 2016 revenue related to government account transitioning was a conservative approach, that the Company’s expectations that remaining inventory of AvKare that is subject to repurchase obligations will be minimal, that the Company’s ongoing investment in clinical trials continues to propel its success in gaining reimbursement coverage and regulatory approvals, that the publication of the Company’s 2016 audited financial results will resolve much of the innuendo associated with recent allegations made by former employees, that territory realignments and management changes in the sales force will help continue the Company’s growth, that the repurchase of shares continues to be a wise investment for the Company, that the decision to accelerate the launches of three new products in 2016 will prove to be beneficial in 2017 and beyond.  Among the risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking statements include that the Company’s 2017 financial performance may not meet expectations, revenue and earnings may not grow or may decline, the Company’s new products may not gain acceptance in the medical community or have the expected market impact, the lowering of fourth quarter 2016 revenue to account for government account transitioning may be insufficient, the AvKare inventory subject to repurchase by the Company after termination of the agreement may be more than minimal, the Company’s investment in clinical trials may not lead to further reimbursement coverage or regulatory approvals, the publication of the Company’s 2016 audited financial results may not resolve the innuendo associated with allegations made against the Company, territory realignments and management changes in the sales force may not help with the Company’s growth or may hurt the Company’s growth, the repurchase of the Company’s shares may prove not to be a wise investment, market demand for the Company’s products may not grow or could decline, and the risk factors detailed from time to time in the Company’s periodic Securities and Exchange Commission filings, including, without limitation, its 10-K filing for the fiscal year ended December 31, 2015, and its most recent Form 10Q filing.  By making these forward-looking statements, the Company does not undertake to update them in any manner except as may be required by the Company’s disclosure obligations in filings it makes with the Securities and Exchange Commission under the federal securities laws.

MIMEDX GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

December 31,

2016

2015

ASSETS

Current assets:

Cash and cash equivalents

$     34,391

$        28,486

Short term investments

3,000

Accounts receivable, net

67,151

53,755

Inventory, net

17,814

7,460

Prepaid expenses and other current assets

7,182

3,609

Total current assets

126,538

96,310

Property and equipment, net of accumulated depreciation

13,786

9,475

Goodwill

20,203

4,040

Intangible assets, net of accumulated amortization

23,268

10,763

Deferred tax asset, net

9,114

14,838

Deferred financing costs and other assets

354

487

    Total assets

$      193,263

$      135,913

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$        11,436

$          6,633

Accrued compensation

12,365

15,034

Accrued expenses

10,941

4,644

Current portion of earn out liability

8,740

Income taxes

5,768

(67)

Other current liabilities

1,482

533

    Total current liabilities

50,732

26,777

Earn out liability

8,711

Other liabilities

820

1,148

    Total liabilities

60,263

27,925

Commitments and contingencies 

Stockholders’ equity:

  Preferred stock; $.001 par value; 5,000,000 shares authorized
and 0 shares issued and outstanding

  Common stock; $.001 par value; 150,000,000 shares authorized; 110,212,547
issued and 109,862,787  outstanding at December 31, 2016 and 109,467,416 issued
and 107,361,471 outstanding at December 31, 2015

110

109

  Additional paid-in capital

161,261

163,133

  Treasury stock at cost:
349,760 shares at December 31, 2016
and 2,105,945 shares at December 31, 2015

(2,216)

(17,124)

  Accumulated deficit

(26,155)

(38,130)

     Total stockholders’ equity

133,000

107,988

        Total liabilities and stockholders’ equity

$       193,263

$      135,913

MIMEDX GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except share and per share data) 

Years Ended December 31,

2016

2015

2014

Net sales

$          245,015

$        187,296

$          118,223

Cost of sales

32,407

20,202

12,665

Gross margin

212,608

167,094

105,558

Operating expenses:

Research and development expenses

12,038

8,413

7,050

Selling, general and administrative expenses

179,997

133,384

90,480

Amortization of intangible assets

2,127

933

928

Operating income 

18,446

24,364

7,100

Other expense, net

Interest expense, net

(339)

(86)

(48)

Income before income tax provision

18,107

24,278

7,052

Income tax provision

(6,133)

5,168

(832)

Net Income

$            11,974

$          29,446

$              6,220

Net income per common share – basic

$                0.11

$              0.28

$                0.06

Net income per common share –  diluted

$                0.11

$              0.26

$                0.05

Weighted average shares outstanding – basic

105,928,348

105,929,205

105,793,008

Weighted average shares outstanding –  diluted

112,441,709

113,628,482

113,295,504

MIMEDX GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Years Ended December 31,

2016

2015

2014

Cash flows from operating activities:

Net income

$        11,974

$    29,446

$        6,220

   Adjustments to reconcile net income to net cash from operating activities:

Depreciation

3,333

1,799

1,197

   Amortization of intangible assets

2,127

933

928

Amortization of inventory fair value step-up

1,485

Amortization of deferred financing costs

181

42

Share-based compensation

17,818

16,896

11,453

Change in deferred income taxes

(594)

(7,081)

Increase (decrease) in cash, net of effects of acquisition, resulting from changes in:

    Accounts receivable

(11,395)

(27,083)

(10,579)

    Inventory

(2,837)

(2,327)

(1,252)

    Prepaid expenses and other current assets

(2,784)

(2,094)

(203)

    Accounts payable

(3,666)

3,136

1,287

    Accrued compensation

(2,669)

3,511

5,935

    Accrued expenses

6,297

2,140

1,098

    Income taxes

5,835

(519)

452

    Other liabilities

723

8

266

Net cash flows from operating activities

25,828

18,807

16,802

Cash flows from investing activities:

  Purchases of equipment

(6,269)

(5,827)

(2,558)

  Purchase of Stability Inc., net of cash acquired

(7,631)

  Fixed maturity securities redemption

3,000

6,000

(9,000)

  Patent application costs

(842)

(851)

(594)

Net cash flows from investing activities

(11,742)

(678)

(12,152)

Cash flows from financing activities:

  Proceeds from exercise of stock options

3,494

4,629

2,470

  Proceeds from exercise of warrants

46

1,113

  Stock repurchase under repurchase plan

(10,378)

(40,279)

(5,612)

  Stock repurchase for tax withholdings on vesting of restricted stock

(1,165)

  Deferred financing costs

(30)

(504)

  Payments under capital lease obligations

(102)

(117)

(117)

Net cash flows from financing activities

(8,181)

(36,225)

(2,146)

Net change in cash

5,905

(18,096)

2,504

Cash and cash equivalents, beginning of period

28,486

46,582

44,078

Cash and cash equivalents, end of period

$         34,391

$     28,486

$      46,582

MIMEDX GROUP, INC. AND SUBSIDIARIES

Non-GAAP Financial Measures and Reconciliation

In addition to our GAAP results, we provide certain Non-GAAP metrics including Adjusted EBITDA, Adjusted Gross Margin, Adjusted Net Income and Adjusted Diluted Net Income per share. We believe that the presentation of these measures provides important supplemental information to management and investors regarding our performance.   These measurements are not a substitute for GAAP measurements, although Company management uses these measurements as aids in monitoring the Company’s on-going financial performance from quarter-to-quarter and year-to-year on a regular basis and for benchmarking against other medical technology companies. Adjusted EBITDA consists of GAAP Net Income excluding: (i) depreciation and amortization, (ii) other income (expense), (iii) interest income and expense, (iv) income taxes,  (v) one time acquisition related costs, (vi) the effect of purchase accounting due to acquisitions and (vii) share-based compensation expense.   Due to the impact of the acquisition of Stability in January 2016 and the release of the valuation allowance on the deferred tax asset on reported tax expense in 2015 on results, we have decided to provide additional adjusted non-GAAP measures to provide comparability of normal ongoing operating results. Beginning in 2016, we have reported Adjusted Gross Margin, Adjusted Net Income and Adjusted Diluted Net Income per Share to normalize results for comparison purposes.  Adjusted Gross Margin consists of GAAP gross margin excluding amortization of inventory fair value step-up. Adjusted Net Income and Adjusted Diluted Net Income per share consists of GAAP net income excluding: (i) one time acquisition related costs, (ii) amortization of inventory fair value step-up, (iii) amortization of intangible assets and (iv) share-based compensation. Reconciliations of GAAP net income to Adjusted EBITDA, GAAP Gross Margin to Adjusted Gross Margin and GAAP Net Income to Adjusted Net Income and Adjusted Diluted Net Income per share for the years ended December 31, 2016, 2015 and 2014 appear in the tables below (in thousands):

Years Ended December 31,

2016

2015

2014

Net  Income (Per GAAP)

$       11,974

$      29,446

$        6,220

Add back (deduct):

  Income taxes

6,133

(5,168)

832

  One time costs incurred in connection with acquisition

1,088

  One time inventory costs incurred in connection with acquisition

1,593

  Other interest expense, net

339

86

48

  Depreciation expense

3,333

1,799

1,197

  Amortization of intangible assets

2,127

933

928

  Share-based compensation

17,818

16,896

11,453

Adjusted EBITDA

$      44,405

$    43,992

$     20,678

     Reconciliation of “Adjusted Gross Margin” defined as Gross Margin before Amortization of inventory fair value
step-up (in thousands):

Years Ended December 31, 

2016

2015

2014

Gross Margin (Per GAAP)

$       212,608

$   167,094

$      105,558

Non-GAAP Adjustments:

  One time inventory costs incurred in connection with acquisition

1,593

Gross Margin before Amortization of inventory fair value
step-up

$        214,201

$    167,094

$       105,558

Adjusted Gross Margin

87.4%

89.2%

89.3%

     Reconciliation of “Adjusted Net Income” and “Adjusted Diluted Net Income” per share defined as Net Income less Amortization, One Time Costs and Share-Based Compensation (in thousands, except share and per share data):

Years Ended December 31,

2016

2015

2014

Net income (Per GAAP)

$        11,974

$          29,446

$         6,220

Non-GAAP Adjustments:

  Tax rate normalization*

$           (898)

$        (15,374)

$       (4,069)

  One time costs incurred in connection with acquisition

1,088

  One time inventory costs incurred in connection with
acquisition

1,593

  Amortization of intangible assets

2,127

933

928

  Share-based compensation

17,818

16,896

11,453

  Estimated income tax impact from adjustments

(9,335)

(7,495)

(8,605)

Adjusted Net Income

$        24,367

$           24,406

$          5,927

Adjusted Diluted Net Income per share

$            0.22

$               0.21

$            0.05

Denominator for diluted earnings per share – weighted average
shares adjusted for dilutive securities

112,441,709

113,628,482

113,295,504

* Assumes a normalized tax rate of 40% for 2016, 42% for 2015 and 70% for 2014.

 

SOURCE MiMedx Group, Inc.


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February 24, 2017 OrthoSpineNews

25.01.2017 / BY HAYLEY PARONISH

Expressing his eagerness to expand into the growing area of stem cell research and regenerative medicine, Steve Czop gives us a look into his current position as Medical Affairs Officer at Burst Biologics. Having studied pharmacy for ten years, Steve believes that our culture of excellence at Burst Biologics is what ultimately drew him here.

Steve spoke of current projects, the foundation Burst Biologics is laying, and what has been the most impactful for him thus far. It was apparent by the end of the interview that Steve will play an essential role in the success of our company.

Where are you from?

Steve – I grew up in New Jersey but just recently moved to Tampa, Florida to get away from the cold weather.

What is your educational background?

Steve – I have a B.S in Pharmacy from Rutgers College of Pharmacy. I was a practicing registered pharmacist for about 10 years and then decided to go in a different direction.

What is your past work experience before starting your role at Burst Biologics?

Steve —  I learned most of everything I do now through my work at several different companies. I started out with a company called EBI, which was part of Biomet at the time. My career at Biomet lasted 13 years, and during that time I started out at the bottom as a clinical research assistant and worked my way up to senior clinical research associate. I took on regulatory responsibilities while learning about medical writing. I obtained my regulatory submissions experience during the down times in clinical research functions.

I, then, moved to Redmond, Washington, where I joined a start-up company. The excitement it brought me to bring new technology onto the market was something I couldn’t pass up. At this company we developed a facet joint replacement, obtained IDE approval fairly quickly, and initiated a multicenter clinical trial. Unfortunately, the economy downturned, the field of motion preservation shifted a bit, and the company failed, despite the work of a lot of dedicated and talented people. However, it was a great experience for me and a good opportunity to learn and grow.

Immediately after Redmond I moved back to New Jersey to work for my second startup ApaTech. ApaTech was a fabricator of a synthetic bone graft, Actifuse, that had some uncommon properties that were very unique. My job at ApaTech was to establish a clinical portfolio as well as fulfill a range of regulatory functions. We had 5 peer review papers in the time I was there. When the company was sold to Baxter, I continued there from 2010 to 2016. I worked with the ApaTech product in addition to supporting other products in their portfolio as a Senior Manager in Medical Affairs.

 

READ THE REST HERE


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February 24, 2017 OrthoSpineNews

WALTHAM, Mass., Feb. 23, 2017 (GLOBE NEWSWIRE) — Histogenics Corporation (Histogenics) (HSGX), a regenerative medicine company focused on developing and commercializing products in the musculoskeletal space, today announced that Company Management will be presenting at two upcoming healthcare investor conferences.

  • Cowen and Company 37th Annual Health Care Conference – Boston, MA (March 6-8, 2017)

    Adam Gridley, Histogenics’ CEO, will be presenting a corporate overview on Monday, March 6, 2017, at 4:00 pm EST.
  • Canaccord Genuity 2017 Musculoskeletal Conference – San Diego (March 14, 2017)

    Adam Gridley, Histogenics’ CEO, will be presenting a corporate overview on Tuesday, March 14, 2017 at 3:30 pm PST.  The conference immediately precedes the American Academy of Orthopaedic Surgeons (AAOS) Annual Meeting and explores the current state of orthopedics, biologics, imaging, robotic surgery, tissue sculpting, and regenerative tissue companies.

The live webcasts for the presentations listed above may be accessed by visiting the Investor Relations section of Histogenics’ website at www.histogenics.com.  The webcasts will be available on Histogenics’ website for approximately 45 days following the respective conferences.

About Histogenics Corporation

Histogenics is a leading regenerative medicine company developing and commercializing products in the musculoskeletal segment of the marketplace.  Histogenics’ regenerative medicine platform combines expertise in cell processing, scaffolding, tissue engineering, bioadhesives and growth factors to provide solutions to treat musculoskeletal-related conditions.  Histogenics’ first investigational product candidate, NeoCart, is currently in Phase 3 clinical development.  NeoCart is an autologous cell therapy designed to treat cartilage defects in the knee using the patient’s own cells.  Knee cartilage defects represent a significant opportunity in the United States, with an estimated 500,000 or more applicable procedures each year.  NeoCart is designed to exhibit characteristics of articular, hyaline cartilage prior to and upon implantation into the knee and therefore does not rely on the body to make new cartilage, characteristics not exhibited in other current treatment options.  For more information, please visit www.histogenics.com.