Park City, UT

3 days / 6 sessions
Current Issues in Spine

February 2-4, 2017

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April 28, 2017 OrthoSpineNews

WALNUT CREEK, Calif., April 27, 2017 /PRNewswire/ — Providence Medical Technology, Inc., an innovator in tissue-sparing cervical spine technology, today announced the U.S. Patent Office’s issuance of four additional patents, Nos. 9,622,873; 9,622,791; 9,622,874; and 9,629,665, covering various aspects of its proprietary DTRAX® and CAVUX® posterior cervical spinal fixation technologies.

These patents cover, among other things, posterior placement of an implant in a facet joint using a chisel and guide tube; placement of an implant in a facet joint using a forked guide tube; placement of implants of various configurations in a cervical facet joint; and distraction of a facet joint after posterior placement of an implant in the facet joint.

These four recent issuances bring the number of issued patents in Providence’s growing patent portfolio to 35 total. Providence has already filed approximately 40 other applications in various stages of prosecution in the U.S. and overseas covering various aspects of its proprietary technologies.

“We have invested tremendous resources over the years in filing both broad and detailed disclosures covering the important aspects of our technology for tissue-sparing posterior cervical and spinal intervention,” commented Jeff Smith, Chief Executive Officer. “We are extremely pleased with the continued and accelerating growth of our patent portfolio as it provides the means to protect our innovations and rapidly expanding business.”

About Providence Medical Technology, Inc.
Providence Medical Technology, Inc. is a privately-held medical device company focused on innovative solutions for cervical spinal conditions. The company has pioneered a proprietary, tissue-sparing approach to posterior cervical fusion. Providence has developed surgical instrumentation and implants that offer unique benefits in the $2 billion worldwide cervical spine market. The Providence family of products includes the DTRAX® Spinal Instrumentation System, CAVUX® intervertebral implants, and the ALLY™ line of bone and facet screws. All products are shipped-sterile and single-use to maximize efficiency and ensure consistent quality and performance. For more information, visit www.providencemt.com.

Related Links: www.providencemt.com; www.providencemt.com/intellectualproperty/

 

SOURCE Providence Medical Technology, Inc.

Related Links

http://www.providencemt.com


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April 28, 2017 OrthoSpineNews

April 27, 2017

DENVER–(BUSINESS WIRE)–Advanced Orthopedics & Sports Medicine Specialists, a regional leader in comprehensive orthopedic services, and Active Implants, a company that develops orthopedic implant solutions, today announced that the first meniscus replacement procedures in Colorado have been successfully performed by Dr. Wayne Gersoff. Advanced Orthopedics & Sports Medicine Specialists is the only center in Denver – and one of just 10 sites nationwide – enrolling patients with persistent knee pain caused by injured or deteriorating meniscus cartilage in the SUN trial, which is designed to assess the safety and effectiveness of the NUsurface® Meniscus Implant (pronounced “new surface”) in restoring function similar to that of a natural, healthy meniscus.

The recipient of the implant was 58-year-old Golden resident Kathleen Cohan, who tore her meniscus on both knees during a head-on collision over 35 years ago. Although she underwent two partial meniscectomies to treat the tears, she continued to experience knee pain. The pain became so severe that over the last six years, Cohan has dealt with constant burning and stiffness in her knees. As an avid backcountry skier, she was forced to cut down her skiing from 60 days to only two days a year. She was unable to go hiking, rock climbing or even walk for more than three miles. Cohan’s pain had persisted to the point where she had to take painkillers on an almost daily basis.

The meniscus is a tissue pad between the thigh and shin bones. Once damaged, the meniscus has a very limited ability to heal. Over 1 million partial meniscectomies to remove or repair a torn meniscus are performed in the U.S. every year, about the same as the total number of hip and knee replacement surgeries combined. However, many patients still experience persistent knee pain following meniscus surgery.

“There are limited options for patients who experience persistent knee pain following meniscus surgery,” Dr. Gersoff said. “Our hope with the NUsurface implant is that it will alleviate pain in these patients, helping them to delay or avoid knee replacement surgery, and allowing them to return to the activities they enjoy.”

Cohan received the NUsurface Meniscus Implant on May 21, 2016, through a small incision in her right knee and completed a six-week rehabilitation program. It has been almost one year since her surgery and the constant burning pain in her right knee has fully subsided. In addition to her daily leisure activities, she has even returned to backcountry skiing and hiking on a regular basis. Most recently, Cohan went on an adventure trip in Costa Rica with a stable knee, which included rough and steep walking surfaces, class IV river rafting, zip lines and hanging bridges.

“Receiving the NUsurface Meniscus Implant has really helped me return to my active sports lifestyle,” Cohan said. “Avoiding joint replacement is very important to me, and I am hopeful that this implant will help me delay knee replacement for another 10 years.”

The NUsurface Meniscus Implant has been used in Europe under CE Mark since 2008 and Israel since 2011.

About the Clinical Trial

The SUN study (Safety Using NUsurface®) will enroll approximately 120 patients as part of regulatory process to gain approval from FDA to sell the device in the U.S. All patients who meet study requirements and agree to enter the trial are offered the NUsurface Meniscus Implant as treatment. Treatment with NUsurface in the SUN trial is eligible for coverage by Medicare and some private insurance companies. To be eligible for the study, participants must be between the ages of 30 and 75 and have pain after medial meniscus surgery that was performed at least six months ago. To learn more about the SUN study, please visit http://sun-trial.com or call (844) 680-8951.

About the NUsurface® Meniscus Implant

The NUsurface® Meniscus Implant is an investigational treatment for patients with persistent knee pain following medial meniscus surgery. It is made from medical grade plastic and, as a result of its unique materials, composite structure and design, does not require fixation to bone or soft tissues. The NUsurface Meniscus Implant mimics the function of the natural meniscus and redistributes loads transmitted across the knee joint. Clinical trials are underway in the U.S., Europe and Israel to verify the safety and effectiveness of the NUsurface Meniscus Implant.

About Advanced Orthopedic and Sports Medicine Specialists

Advanced Orthopedic and Sports Medicine Specialists is widely recognized as the regional leader in comprehensive orthopedic services. The physicians of Advanced Orthopedic and Sports Medicine Specialists have received specialized training in orthopedic surgery and in subspecialty areas within the field of orthopedic medicine. Advanced Orthopedic and Sports Medicine Specialists specializes in providing comprehensive sports medicine services including the diagnosis and treatment of athletic injuries. We now have 9 Orthopedic Surgeons, 2 Podiatric Surgeons and 1 Board Certified Interventional Physiatrist. Our practice is comprised of surgeons who specialize in sports injuries, upper extremity, spine disorders, total joint replacements, carticel implantation, podiatry abnormalities, musculoskeletal disorders, and surgical and non operative treatment of the neck and spine. Advanced Orthopedic and Sports Medicine Specialists has two locations which offer state of the art digital imaging: our Lowry Office in Central Denver and our Lincoln office located in South Denver. For more information, visit http://www.advancedortho.org/ or call our main office at (303) 344-9090.

About Active Implants

Active Implants, LLC develops orthopedic implant solutions that complement the natural biomechanics of the musculoskeletal system, allowing patients to maintain or return to an active lifestyle. Active Implants is privately held with headquarters in Memphis, Tennessee. European offices are in Driebergen, The Netherlands, with R&D facilities in Netanya, Israel. For more information, visit www.activeimplants.com.

CAUTION Investigational device. Limited by United States law to investigational use.

Contacts

For Active Implants, LLC
Joni Ramirez, 323-532-0746
joni@merrymancommunications.com


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April 27, 2017 OrthoSpineNews

WARSAW, Ind., April 27, 2017 /PRNewswire/ — Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) today reported financial results for the quarter ended March 31, 2017.  The Company reported first quarter net sales of $1.98 billion, an increase of 3.8% over the prior year period, and an increase of 4.5% on a constant currency basis.  Excluding approximately 220 basis points of contribution from the LDR Holding Corporation acquisition, revenue increased by 2.3% over the first quarter of 2016.  Diluted earnings per share for the quarter were $1.47 reported, an increase of 172.2% over the prior year period.  Adjusted diluted earnings per share for the quarter were $2.13, an increase of 6.0% over the prior year period.

“Zimmer Biomet delivered first quarter revenue and adjusted earnings growth consistent with our expectations, as we positioned the Company for sales acceleration in the second half of the year,” said David Dvorak, President and CEO of Zimmer Biomet.  “During the quarter, we made progress towards improving our global supply chain throughput, in concert with ongoing, focused investments to harmonize and optimize our global manufacturing and quality systems.  We will continue driving these priorities as we progress through the balance of 2017, while leveraging our specialized sales channels and advancing the commercialization of differentiated clinical offerings.”

Net earnings for the first quarter were $299.4 million, an increase of 175.2% over the prior year period, and $433.4 million on an adjusted basis, an increase of 6.4% over the prior year period.  Operating cash flow for the first quarter was $275.4 million.

In the quarter, the Company paid $48.1 million in dividends and declared a first quarter dividend of $0.24 per share.

Guidance

The Company updated its full-year 2017 constant currency revenue and adjusted earnings per share guidance.  The Company now estimates full-year, constant currency revenue to increase between 3.2% and 4.2% compared to the prior year, inclusive of approximately 120 basis points of contribution from the LDR transaction.  Previously, the Company had expected full-year, constant currency revenue to increase between 3.7% and 4.7%, inclusive of the LDR contribution.  The Company now expects foreign currency translation to decrease revenue for the full year by approximately 1.2%.  Previously, the Company had estimated foreign currency translation to decrease revenue by 1.5%.  Therefore, the Company now expects full-year 2017 revenue to increase between 2.0% and 3.0% when compared to full-year 2016, or to be in a range of $7.835 billion to $7.915 billion.  Previously, the Company had estimated revenue growth to be in a range of 2.2% to 3.2% when compared to full-year 2016, or to be in a range of $7.855 billion to $7.930 billion.  Revenue growth, excluding the contribution from LDR on a constant currency basis, is also expected to be in a range of 2.0% to 3.0% for the full-year 2017.  Previously, the Company had estimated full-year revenue growth to be in a range of 2.5% to 3.5% on a similar basis.

Additionally, the Company now expects its full-year 2017 diluted earnings per share to be in a range of $4.68 to $4.88, and in a range of $8.50 to $8.60 on an adjusted basis.  Previously, the Company had expected diluted earnings per share to be in a range of $4.37 to $4.67 on a reported basis, and in a range of $8.50 to $8.68 on an adjusted basis.

Conference Call

The Company will conduct its first quarter 2017 investor conference call today, April 27, 2017, at 8:00 a.m. Eastern Time.  The live audio webcast can be accessed via Zimmer Biomet’s Investor Relations website at http://investor.zimmerbiomet.com.  It will be archived for replay following the conference call.

Individuals in the U.S. and Canada who wish to dial into the conference call may do so by dialing (888) 312-9837 and entering conference ID 7278985.  For a complete listing of international toll-free and local numbers, please visit http://investor.zimmerbiomet.com.  A digital recording will be available 24 hours after the completion of the conference call, from April 28, 2017 to May 28, 2017.  To access the recording, U.S. callers should dial (888) 203-1112 and international callers should dial +1 (719) 457-0820, and enter the Access Code ID 7278985.

Sales Table

The following first quarter sales table provides results by geography and product category, as well as the percentage change compared to the prior year quarter on a reported basis and a constant currency basis.

Constant

Net

Currency

Sales

% Change

% Change

Geographic Results

Americas

$            1,235

4.9

%

4.7

%

EMEA

453

(0.7)

3.1

Asia Pacific

289

6.9

5.9

Total 

$            1,977

3.8

%

4.5

%

Product Categories

Knees

   Americas

$              429

(0.1)

%

(0.2)

%

   EMEA

168

(3.4)

0.9

   Asia Pacific

105

5.0

3.1

       Total

702

(0.2)

0.6

Hips

   Americas

246

0.2

   EMEA

136

(0.5)

2.7

   Asia Pacific

93

9.5

8.9

       Total

475

1.7

2.4

S.E.T (1)

425

6.0

6.5

Dental

108

(0.7)

0.1

Spine & CMF

186

32.0

32.1

Other

81

(1.8)

(1.2)

Total

$            1,977

3.8

%

4.5

%

(1) Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma

About the Company

Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products.

We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.

We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet.

Website Information

We routinely post important information for investors on our website, www.zimmerbiomet.com, in the “Investor Relations” section.  We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD.  Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts.  The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Note on Non-GAAP Financial Measures

This press release includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).  These non-GAAP financial measures may not be comparable to similar measures reported by other companies and should be considered in addition to, and not as a substitute for, or superior to, other measures prepared in accordance with GAAP.

Sales growth information for the three-month period ended March 31, 2017 is presented on a GAAP (reported) basis and on a constant currency basis, as well as on a basis that excludes the contribution from the Company’s acquisition of LDR Holding Corporation in July 2016.  Projected revenue growth information for the year ended December 31, 2017 is presented on a GAAP basis and on a constant currency basis, as well as on a basis that excludes the contribution from the LDR transaction.  Constant currency growth rates exclude the effects of foreign currency exchange rates.  They are calculated by translating current and prior-period sales at the same predetermined exchange rate.  The translated results are then used to determine year-over-year percentage increases or decreases.

Net earnings, diluted earnings per share and projected diluted earnings per share are presented on a GAAP (reported) basis and on an adjusted basis.  Adjusted earnings and earnings per share measures exclude the effects of inventory step-up; certain inventory and manufacturing-related charges connected to discontinuing certain product lines, quality enhancement and remediation efforts; special items; intangible asset amortization; any related effects on our income tax provision associated with these items; and other certain tax adjustments.  Special items include expenses resulting directly from our business combinations and/or global restructuring, quality and operational excellence initiatives, including employee termination benefits, certain contract terminations, consulting and professional fees, dedicated project personnel, asset impairment or loss on disposal charges and other items.  Other certain tax adjustments include internal restructuring transactions that lower the tax rate on deferred tax liabilities recorded on intangible assets recognized as part of acquisition-related accounting or provide the Company access to offshore funds in a tax efficient manner.

We use these non-GAAP financial measures internally to evaluate the performance of the business and believe they are useful measures that provide meaningful supplemental information to investors to consider when evaluating the performance of the Company.  We believe these measures offer the ability to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported operating results, to perform trend analysis, to better identify operating trends that may otherwise be masked or distorted by these types of items and to provide additional transparency of certain items.  In addition, certain of these non-GAAP financial measures are used as performance metrics in our incentive compensation programs.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release.

Cautionary Statement Regarding Forward-Looking Statements

This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” “sees” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology.  All statements other than statements of historical or current fact are, or may be deemed to be, forward-looking statements.  Such statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially.  These risks and uncertainties include, but are not limited to: the possibility that the anticipated synergies and other benefits from mergers and acquisitions will not be realized, or will not be realized within the expected time periods; the risks and uncertainties related to our ability to successfully integrate the operations, products, employees and distributors of acquired companies; the effect of the potential disruption of management’s attention from ongoing business operations due to integration matters related to mergers and acquisitions; the effect of mergers and acquisitions on our relationships with customers, vendors and lenders and on our operating results and businesses generally; compliance with the Deferred Prosecution Agreement entered into in January 2017; the success of our quality and operational excellence initiatives; challenges relating to changes in and compliance with governmental laws and regulations, including regulations of the U.S. Food and Drug Administration (the “FDA”) and foreign government regulators, such as more stringent requirements for regulatory clearance of products; the ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA, while continuing to satisfy the demand for our products; the outcome of government investigations; price and product competition; changes in customer demand for our products and services caused by demographic changes or other factors; the impact of healthcare reform measures; reductions in reimbursement levels by third-party payors and cost containment efforts of healthcare purchasing organizations; dependence on new product development, technological advances and innovation; shifts in the product category or regional sales mix of our products and services; supply and prices of raw materials and products; control of costs and expenses; the ability to obtain and maintain adequate intellectual property protection; the ability to form and implement alliances; changes in tax obligations arising from tax reform measures or examinations by tax authorities; product liability and intellectual property litigation losses; the ability to retain the independent agents and distributors who market our products; dependence on a limited number of suppliers for key raw materials and outsourced activities; changes in general industry and market conditions, including domestic and international growth rates and general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations; and the impact of the ongoing economic uncertainty affecting countries in the Euro zone on the ability to collect accounts receivable in affected countries.  For a further list and description of such risks and uncertainties, see our reports filed with the U.S. Securities and Exchange Commission.  Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, www.zimmerbiomet.com or on request from us.  We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be set forth in our periodic reports.  Readers of this communication are cautioned not to place undue reliance on these forward-looking statements, since, while management believes the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate.  This cautionary statement is applicable to all forward-looking statements contained in this communication.

 ZIMMER BIOMET HOLDINGS, INC. 

 CONSOLIDATED STATEMENTS OF EARNINGS 

 FOR THE THREE MONTHS ENDED MARCH 31, 2017 and 2016 

 (in millions, except per share amounts, unaudited) 

2017

2016

 Net Sales 

$     1,977.3

$     1,904.0

 Cost of products sold, excluding intangible asset amortization 

512.9

640.6

 Intangible asset amortization 

152.0

126.6

 Research and development 

91.1

85.7

 Selling, general and administrative 

760.8

716.9

 Special items 

110.1

88.7

      Operating expenses 

1,626.9

1,658.5

 Operating Profit 

350.4

245.5

 Other expense, net 

(2.8)

(3.8)

 Interest income  

0.5

1.3

 Interest expense 

(82.9)

(88.2)

 Earnings before income taxes 

265.2

154.8

 (Benefit) provision for income taxes 

(34.1)

46.1

 Net Earnings 

299.3

108.7

 Less: Net Loss attributable to noncontrolling interest 

(0.1)

(0.1)

 Net Earnings of Zimmer Biomet Holdings, Inc. 

$        299.4

$        108.8

 Earnings Per Common Share 

     Basic 

$          1.49

$          0.54

     Diluted 

$          1.47

$          0.54

 Weighted Average Common Shares Outstanding 

     Basic 

201.1

200.1

     Diluted 

203.1

202.2

 Cash Dividends Declared Per Common Share 

$          0.24

$          0.24

 ZIMMER BIOMET HOLDINGS, INC. 

 CONDENSED CONSOLIDATED BALANCE SHEETS 

 (in millions, unaudited) 

March 31,

December 31,

2017

2016

 Assets 

 Current Assets: 

   Cash and cash equivalents 

$            1,039.5

$               634.1

   Receivables, net 

1,600.1

1,604.4

   Inventories 

1,977.0

1,959.4

   Other current assets 

463.3

465.7

       Total current assets 

5,079.9

4,663.6

 Property, plant and equipment, net 

2,053.2

2,037.9

 Goodwill 

10,685.1

10,643.9

 Intangible assets, net 

8,650.6

8,785.4

 Other assets 

519.0

553.6

 Total Assets 

$          26,987.8

$          26,684.4

 Liabilities and Stockholders’ Equity 

 Current liabilities 

$            1,681.1

$            1,805.9

 Current portion of long-term debt 

975.0

575.6

 Other long-term liabilities 

3,859.7

3,967.2

 Long-term debt 

10,537.8

10,665.8

 Stockholders’ equity 

9,934.2

9,669.9

 Total Liabilities and Stockholders’ Equity 

$          26,987.8

$          26,684.4

 ZIMMER BIOMET HOLDINGS, INC. 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 

 FOR THE THREE MONTHS ENDED MARCH 31, 2017 and 2016 

 (in millions, unaudited) 

2017

2016

 Cash flows provided by (used in) operating activities 

 Net earnings 

$        299.3

$        108.7

 Depreciation and amortization 

267.6

246.9

 Share-based compensation 

14.0

12.7

 Inventory step-up 

14.6

153.7

 Changes in operating assets and liabilities, net of acquired assets and liabilities 

     Income taxes 

(86.9)

(33.7)

     Receivables 

26.8

(83.4)

     Inventories 

(11.5)

38.3

     Accounts payable and accrued expenses 

(137.0)

(116.3)

     Other assets and liabilities 

(111.5)

(54.1)

 Net cash provided by operating activities 

275.4

272.8

 Cash flows provided by (used in) investing activities 

 Additions to instruments 

(86.4)

(85.1)

 Additions to other property, plant and equipment 

(43.1)

(27.6)

 Purchases of investments 

(0.3)

 Sales of investments 

223.5

 Other investing activities 

(3.6)

(14.7)

 Net cash (used in) provided by investing activities 

(133.1)

95.8

 Cash flows provided by (used in) financing activities 

 Proceeds from multicurrency revolving facility 

400.0

 Payments on term loan 

(150.0)

(400.0)

 Net (payments) proceeds on other debt 

(0.7)

0.3

 Dividends paid to stockholders 

(48.1)

(44.6)

 Proceeds from employee stock compensation plans 

66.1

31.3

 Business combination contingent consideration payments 

(6.0)

 Restricted stock witholdings 

(5.2)

(4.4)

 Repurchase of common stock 

(415.5)

 Net cash provided by (used in) financing activities 

256.1

(832.9)

 Effect of exchange rates on cash and cash equivalents 

7.0

1.8

 Increase (decrease) in cash and cash equivalents 

405.4

(462.5)

 Cash and cash equivalents, beginning of period 

634.1

1,459.3

 Cash and cash equivalents, end of period 

$     1,039.5

$        996.8

 ZIMMER BIOMET HOLDINGS, INC. 

 NET SALES BY GEOGRAPHY 

 FOR THE THREE MONTHS ENDED MARCH 31, 2017 and 2016 

 (in millions, unaudited) 

Three Months Ended March 31, 

2017

2016

% Inc /
(Dec)

 Americas 

$     1,234.8

$     1,177.3

4.9

%

 EMEA 

453.2

456.2

(0.7)

 Asia Pacific 

289.3

270.5

6.9

 Total 

$     1,977.3

$     1,904.0

3.8

 ZIMMER BIOMET HOLDINGS, INC. 

 NET SALES BY PRODUCT CATEGORY 

 FOR THE THREE MONTHS ENDED MARCH 31, 2017 and 2016 

 (in millions, unaudited) 

 Three Months Ended March 31, 

2017

2016

% Inc /
(Dec)

 Knees 

$        701.8

$        703.2

(0.2)

%

 Hips 

475.7

467.9

1.7

 S.E.T 

425.1

401.0

6.0

 Dental 

107.8

108.6

(0.7)

 Spine & CMF 

186.3

141.2

32.0

 Other 

80.6

82.1

(1.8)

 Total 

$     1,977.3

$     1,904.0

3.8

ZIMMER BIOMET HOLDINGS, INC.

 RECONCILIATION OF REPORTED NET SALES % CHANGE TO

CONSTANT CURRENCY % CHANGE AND

% CHANGE EXCLUDING LDR HOLDING CORPORATION

(unaudited)

For the Three Months Ended

March 31, 2017

Foreign

Constant

Exchange

Currency

 % Change 

Impact

% Change

Geographic Results

Americas

4.9

%

0.2

%

4.7

%

EMEA

(0.7)

(3.8)

3.1

Asia Pacific

6.9

1.0

5.9

Total 

3.8

%

(0.7)

%

4.5

%

Product Categories

Knees

   Americas

(0.1)

%

0.1

%

(0.2)

%

   EMEA

(3.4)

(4.3)

0.9

   Asia Pacific

5.0

1.9

3.1

       Total

(0.2)

(0.8)

0.6

Hips

   Americas

0.2

0.2

   EMEA

(0.5)

(3.2)

2.7

   Asia Pacific

9.5

0.6

8.9

       Total

1.7

(0.7)

2.4

S.E.T

6.0

(0.5)

6.5

Dental

(0.7)

(0.8)

0.1

Spine & CMF

32.0

(0.1)

32.1

Other

(1.8)

(0.6)

(1.2)

       Total

3.8

%

(0.7)

%

4.5

%

Impact of LDR Holding Corporation

(2.2)

(2.2)

% Change excluding LDR Holding Corporation

1.6

%

(0.7)

%

2.3

%

 ZIMMER BIOMET HOLDINGS, INC. 

 RECONCILIATION OF NET EARNINGS TO ADJUSTED NET EARNINGS 

 FOR THE THREE MONTHS ENDED MARCH 31, 2017 and 2016 

 (in millions, unaudited) 

 Three Months 

 Ended March 31, 

2017

2016

Net Earnings of Zimmer Biomet Holdings, Inc.

$       299.4

$       108.8

Inventory step-up and other inventory 

   and manufacturing-related charges

23.2

178.3

Intangible asset amortization

152.0

126.6

Special items

   Biomet merger-related

37.0

79.1

   Other special items

73.1

9.6

Merger-related expense in other expense, net

1.5

Taxes on above items (1)

(83.1)

(109.5)

Other certain tax adjustments(2)

(69.7)

14.3

Adjusted Net Earnings

$       433.4

$       407.2

(1) The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes,
as well as permanent items.  For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory
rates where the items were incurred. 

(2) In 2017, other certain tax adjustments relate to a tax restructuring that lowered the tax rate on deferred tax liabilities recorded on intangible assets recognized in acquisition-related accounting.  The 2016 adjustment relates to internal restructuring transactions that provide the Company access to cash in a tax efficient manner. 

 ZIMMER BIOMET HOLDINGS, INC. 

      RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS 

 FOR THE THREE MONTHS ENDED MARCH 31, 2017 and 2016 

 (unaudited) 

 Three Months 

 Ended March 31, 

2017

2016

Diluted EPS

$                   1.47

$                       0.54

Inventory step-up and other inventory 

   and manufacturing-related charges

0.11

0.87

Intangible asset amortization

0.75

0.63

Special items

   Biomet merger-related

0.18

0.39

   Other special items

0.36

0.05

Merger-related expense in other expense, net

0.01

Taxes on above items (1)

(0.41)

(0.54)

Other certain tax adjustments(2)

(0.34)

0.07

Adjusted Diluted EPS

$                   2.13

$                       2.01

(1) The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes, as well as permanent items.  For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory rates where the items were incurred.

(2) In 2017, other certain tax adjustments relate to a tax restructuring that lowered the tax rate on deferred tax liabilities recorded on intangible assets recognized in acquisition-related accounting.  The 2016 adjustment relates to internal restructuring transactions that provide the Company access to cash in a tax efficient manner. 

 

 

ZIMMER BIOMET HOLDINGS, INC.
SUMMARY OF EXPENSES INCLUDED IN SPECIAL ITEMS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 and 2016
(in millions, unaudited)
 

 Three Months 

 Ended March 31, 

2017

2016

 Biomet merger-related 

 Consulting and professional fees 

$     18.7

$     36.1

 Employee termination benefits 

(3.0)

4.1

 Dedicated project personnel 

8.7

21.7

 Relocated facilities 

2.8

1.7

 Contract terminations 

10.1

 Information technology integration 

2.3

1.4

 Other 

7.5

4.0

 Total Biomet merger-related 

37.0

79.1

 Other 

 Consulting and professional fees 

50.4

6.9

 Employee termination benefits 

1.2

 Dedicated project personnel 

12.8

1.8

 Relocated facilities 

2.4

0.2

 Certain litigation matters 

7.0

 Information technology integration 

0.5

0.1

 Contingent consideration adjustments 

(3.6)

 Other 

2.4

0.6

 Total Other 

73.1

9.6

 Special items 

$   110.1

$     88.7

ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF 2017 PROJECTED REVENUE % GROWTH TO

2017 PROJECTED CONSTANT CURRENCY % GROWTH

(unaudited)

 Projected Year Ended December 31, 2017: 

 High 

 Low 

 Revenue % growth 

3.0

%

2.0

%

 Foreign exchange impact 

1.2

1.2

    Constant currency % growth 

4.2

%

3.2

%

 Impact of LDR Holding Corporation 

(1.2)

(1.2)

    Constant currency % growth excluding LDR Holding Corporation 

3.0

%

2.0

%

 ZIMMER BIOMET HOLDINGS, INC. 

 RECONCILIATION OF 2017 PROJECTED DILUTED EPS 

 AND PROJECTED ADJUSTED DILUTED EPS 

 (unaudited) 

Projected Year Ended December 31, 2017:

High

Low

Diluted EPS

$                      4.88

$            4.68

Inventory step-up and other inventory and manufacturing related

   charges, intangible asset amortization, special items and other expense 

5.80

5.94

Taxes on above items(1) and other certain tax adjustments

(2.08)

(2.12)

Adjusted Diluted EPS

$                      8.60

$            8.50

(1) The tax effect for the U.S. jurisdiction is estimated based on an effective rate considering federal and state taxes, as well as permanent items.  For jurisdictions outside the U.S., the tax effect is estimated based upon the statutory rates where the items are projected to be incurred.

 

SOURCE Zimmer Biomet Holdings, Inc.


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April 27, 2017 OrthoSpineNews

April 25, 2017

ALPHARETTA, Ga.–(BUSINESS WIRE)–Cartiva, Inc. (Company), a developer of innovative products for treating cartilage damage and osteoarthritis, announced today that it has completed enrollment and treatment of all 50 patients in a multi-center study evaluating the safety and effectiveness of Cartiva Synthetic Cartilage Implant (SCI) for first carpometacarpal (CMC) joint osteoarthritis at the base of the thumb. The study was conducted at nine sites in Canada and the United Kingdom. Basal thumb arthritis is estimated to afflict more than two million American adults, and up to one-third of post-menopausal women.

Cartiva SCI is a proprietary biocompatible polymer device designed to mimic natural cartilage. In July 2016, the Company received Premarket Approval from the FDA for use of Cartiva SCI in the treatment of osteoarthritis at the base of the great toe. The thumb implant treats osteoarthritis in patients with diseased or damaged articular surface in the first CMC joint. It is implanted in the metacarpal base to replace damaged cartilage without destroying or removing healthy tissue. The implant’s design minimizes bone resection while preserving the trapezium. This may provide a quicker, less painful recovery than ligament reconstruction tendon interposition (LRTI) surgery or trapeziectomy.

In late February the Company attended a pre-submission meeting with the Food and Drug Administration (FDA) to discuss this new indication. The Company will review the interim six-month results at an investigator meeting next month.

Mr. Philip Sauve, MB BS, FRCSEd (Tr&Ortho) a Consultant Trauma and Orthopaedic Surgeon at Queen Alexandra Hospital in Portsmouth, England who has treated twelve patients with Cartiva, said “So far we have had good results. Their pain is reducing, their grip strength is increasing and so their function is improving. These early results are very promising but we will have to wait to see how the Cartiva implant performs over a longer period of time. For that group of patients who are maybe still working and still very active, I think it’s a really good option.”

“Cartiva SCI for CMC is a unique product that could greatly benefit patients suffering from this debilitating condition,” said Mr. L. Christopher Bainbridge, MB ChB, FRCSEd, Consultant Hand and Peripheral Nerve Surgeon, Pulvertaft Hand Centre, Royal Derby Hospital, and Chief UK Investigator of the study. “With treatment complete, we are now focused on patient follow-up and data analysis.”

“Completion of on-time enrollment was an important milestone for the Company” said Tim Patrick, president and CEO, Cartiva, Inc. “We look forward to working with FDA to make Cartiva SCI for CMC available in the United States for this promising indication.”

Osteoarthritis of the CMC Joint

Osteoarthritis of the CMC joint— also known as thumb basal joint arthritis,—is a debilitating condition impacting 8% to 12% of the general population and as many as 33% of postmenopausal women. It causes pain, swelling, instability, deformity, loss of motion and weakness, making it difficult to perform a variety of tasks, such as turning doorknobs and opening jars. Current surgical options for later-stage patients for fail conservative treatments include joint fusion, total or partial trapeziectomy, arthroplasty, or LRTI (ligament reconstruction and tendon interposition) which has been done for more than 40 years.

About Cartiva, Inc.

Based in Alpharetta, Ga., Cartiva, Inc. develops and markets innovative solutions for patients with cartilage damage and osteoarthritis. Cartiva’s venture investors include New Enterprise Associates and Windham Venture Partners. Additional information is available on the company’s website at www.cartiva.net.

Contacts

Cartiva, Inc.
Peter Pizzo, 770-754-3855
Chief Financial Officer


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April 27, 2017 OrthoSpineNews

April 26, 2017

UTICA, N.Y.–(BUSINESS WIRE)–CONMED Corporation (Nasdaq:CNMD) today announced financial results for the first quarter ended March 31, 2017.

First Quarter 2017 Highlights

  • Sales of $186.6 million increased 3.0% as reported compared to the first quarter of 2016. On a constant currency basis, sales increased 3.7%.
  • International revenue grew 2.4% as reported and 3.9% in constant currency, driven by continued growth in General Surgery and Orthopedics.
  • Domestic General Surgery sales grew 9.5%, contributing to 3.5% overall domestic revenue growth.
  • Diluted net loss per share (GAAP) was $0.16, compared to diluted net loss per share (GAAP) of $0.08 in the first quarter of 2016.
  • Adjusted diluted net earnings per share(1) were $0.38 versus $0.42 in the prior-year period.

“We are encouraged by our first quarter results, which exhibited continued strength across our key international markets, as well as solid performance within our U.S. General Surgery business. While our domestic Orthopedics business remains a challenge, the first quarter represents improved sequential performance, and we remain focused on returning this business to positive growth,” commented Curt R. Hartman, CONMED’s President and Chief Executive Officer.

Sales Analysis

For the quarter ended March 31, 2017, domestic sales, which represented 53.3% of total revenue, increased 3.5%, as year-over-year growth of 9.5% in General Surgery was partially offset by a decline of 3.7% in Orthopedics. International sales, which represented 46.7% of total revenue, increased 2.4% compared to the first quarter of 2016 on a reported basis. Foreign currency exchange rates, including the effects of the FX hedging program, had a negative impact of $1.3 million on first quarter sales. In constant currency, international sales increased 3.9% versus the prior-year period.

Earnings Analysis

For the quarter ended March 31, 2017, reported net loss totaled $4.5 million, compared to a reported net loss of $2.3 million a year ago. Reported diluted net loss per share was $0.16 in the quarter, compared to a reported diluted net loss per share of $0.08 in the prior-year period. Reported net loss for 2017 includes litigation, business acquisition, and restructuring costs, and reported net loss for 2016 includes business acquisition, restructuring, and debt refinancing costs. The increase in reported net loss resulted primarily from the $12.2 million Lexion case jury verdict against the Company in 2017, which was partially offset by lower acquisition related costs when compared to the prior period. The effect of each of these items on reported net loss and reported diluted net loss per share appears in the reconciliation of GAAP to non-GAAP measures below.

The Company excludes the after-tax costs of special items including litigation, acquisitions, restructurings, gains on the sale of assets, debt refinancings, as well as amortization of intangible assets, net of tax, from its adjusted diluted net earnings per share. Excluding the impact of these items, adjusted net earnings(2) of $10.6 million decreased 8.7% year over year and adjusted diluted net earnings per share(1) of $0.38 decreased 9.5% year over year. The decrease in adjusted net earnings resulted primarily from the unfavorable impact of foreign exchange rates, partially offset by higher sales growth.

2017 Outlook

There is no change to CONMED’s previously issued financial guidance. The Company continues to expect 2017 constant currency sales growth in the range of 1% to 3%. Based on exchange rates as of April 21, 2017, the negative impact to 2017 sales from foreign exchange is still anticipated to be approximately 0.5%.

In addition, the Company continues to expect adjusted diluted net earnings per share in the range of $1.85 to $1.95, which includes an estimated negative impact from foreign exchange based on exchange rates as of April 21, 2017. The adjusted diluted net earnings per share estimates for 2017 exclude the cost of special items including acquisition costs, litigation costs, and restructuring costs, which are now estimated in the range of $16.5 to $18.5 million, net of tax, and amortization of intangible assets, which are still estimated in the range of $12 to $14 million, net of tax.

Supplemental Financial Disclosures

(1) A reconciliation of reported diluted net loss per share to adjusted diluted net earnings per share, a non-GAAP financial measure, appears below.

(2) A reconciliation of reported net loss to adjusted net earnings, a non-GAAP financial measure, appears below.

Conference Call

The Company’s management will host a conference call today at 4:30 p.m. ET to discuss its first quarter 2017 results.

To participate in the conference call, dial 844-889-7792 (domestic) or 661-378-9936 (international) and enter the passcode 4521460.

This conference call will also be webcast and can be accessed from the “Investors” section of CONMED’s web site at www.conmed.com. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.

A recording of the call will also be available from 7:30 p.m. ET on Wednesday, April 26, 2017, until 7:30 p.m. ET on Wednesday, May 10, 2017. To hear this recording, dial 855-859-2056 (domestic) or 404-537-3406 (international) and enter the passcode 4521460.

About CONMED Corporation

CONMED is a medical technology company that provides surgical devices and equipment for minimally invasive procedures. The Company’s products are used by surgeons and physicians in a variety of specialties, including orthopedics, general surgery, gynecology, neurosurgery and gastroenterology. CONMED has a direct selling presence in 17 countries, and international sales constitute approximately 50% of the Company’s total sales. Headquartered in Utica, New York, the Company employs approximately 3,300 people. For more information, visit www.conmed.com.

Forward-Looking Statements

This press release and today’s conference call may contain forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties, which could cause actual results, performance, or trends to differ materially from those expressed in the forward-looking statements herein or in previous disclosures. For example, in addition to general industry and economic conditions, factors that could cause actual results to differ materially from those in the forward-looking statements may include, but are not limited to, the risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Any and all forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and relate to the Company’s performance on a going-forward basis. The Company believes that all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management’s expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct.

Supplemental Information – Reconciliation of GAAP to Non-GAAP Financial Measures

The Company supplements the reporting of its financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; adjusted gross profit; cost of sales excluding specified items; adjusted selling and administrative expenses; adjusted operating income; adjusted income tax expense; adjusted effective income tax rate; adjusted net earnings and adjusted diluted net earnings per share (EPS). The Company believes that these non-GAAP measures provide meaningful information to assist investors and shareholders in understanding its financial results and assessing its prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures described above are important indicators of its operations because they exclude items that may not be indicative of, or are unrelated to, its core operating results and provide a baseline for analyzing trends in the Company’s underlying business. Further, the presentation of EBITDA is a non-GAAP measurement that management considers useful for measuring aspects of the Company’s cash flow. Management uses these non-GAAP financial measures for reviewing the operating results and analyzing potential future business trends in connection with its budget process and bases certain management incentive compensation on these non-GAAP financial measures.

To measure percentage sales growth in constant currency, the Company removes the impact of changes in foreign currency exchange rates that affect the comparability and trend of sales. To measure earnings performance on a consistent and comparable basis, the Company excludes certain items that affect the comparability of operating results and the trend of earnings. These adjustments are irregular in timing, may not be indicative of past and future performance and are therefore excluded to allow investors to better understand underlying operating trends.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, cost of sales, selling and administrative expenses, operating income, income tax expense, effective income tax rate, net earnings (loss) and diluted net earnings (loss) per share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures below, provide a more complete understanding of the business. The Company strongly encourages investors and shareholders to review its financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Consolidated Condensed Statements of Loss

(in thousands, except per share amounts, unaudited)

Three Months Ended

March 31,

2017 2016
Net sales $ 186,567 $ 181,201
Cost of sales 86,682 83,461
Gross profit 99,885 97,740
% of sales 53.5 % 53.9 %
Selling and administrative expense 94,761 85,943
Research & development expense 7,618 8,258
Income (loss) from operations (2,494 ) 3,539
% of sales -1.3 % 2.0 %
Other expense 2,942
Interest expense 4,119 3,830
Loss before income taxes (6,613 ) (3,233 )
Benefit from income taxes (2,068 ) (968 )
Net loss $ (4,545 ) $ (2,265 )
Basic EPS $ (0.16 ) $ (0.08 )
Diluted EPS (0.16 ) (0.08 )
Basic shares 27,867 27,721
Diluted shares 27,867 27,721

Consolidated Condensed Balance Sheets

(in thousands, unaudited)

March December

2017

2016

Assets:
Cash and cash equivalents $ 34,660 $ 27,428
Accounts receivable, net 139,855 148,244
Inventories 140,083 135,869
Other current assets 18,905 18,971
Total Current Assets 333,503 330,512
Property, plant and equipment, net 119,742 122,029
Goodwill 398,154 397,664
Other intangible assets, net 414,766 419,549
Other assets 61,860 59,229
Total Assets $ 1,328,025 $ 1,328,983
Liabilities and Shareholders’ Equity:
Current liabilities $ 125,445 $ 113,952
Long-term debt, excluding current maturities 487,045 488,288
Other liabilities 140,013 146,167
Shareholders’ equity 575,522 580,576
Total Liabilities and Shareholders’ Equity $ 1,328,025 $ 1,328,983

Consolidated Condensed Statements of Cash Flows

Three Months Ended March 31, 2017 and 2016

(in thousands, unaudited)

2017 2016
Operating Activities
Net loss $ (4,545 ) $ (2,265 )
Depreciation and amortization 13,924 13,258
Stock-based compensation expense 1,955 2,489
Deferred income taxes (4,266 ) (2,942 )
Changes in operating assets and liabilities and other, net 8,230 (27,098 )
Net cash provided by (used in) operating activities 15,298 (16,558 )
Investing Activities
Payments related to business acquisitions (256,424 )
Purchases of property, plant and equipment (2,584 ) (2,789 )
Net cash used in investing activities (2,584 ) (259,213 )
Financing Activities
Payments on term loan (2,188 ) (2,188 )
Proceeds from term loan 175,000
Proceeds from revolving line of credit 38,000 137,000
Payments on revolving line of credit (36,000 ) (58,995 )
Payments related to debt issue costs (5,556 )
Payment related to distribution agreement (16,667 )
Dividend payments on common stock (5,566 ) (5,542 )
Other, net (512 ) (612 )
Net cash provided by (used in) financing activities (6,266 ) 222,440
Effect of exchange rate changes on cash and cash equivalents 784 721
Net increase (decrease) in cash and cash equivalents 7,232 (52,610 )
Cash and cash equivalents at beginning of period 27,428 72,504
Cash and cash equivalents at end of period $ 34,660 $ 19,894

Sales Summary

(in millions, unaudited)

Three Months Ended March 31,
% Change
Domestic International

As

Constant

As

As

Constant

2017 2016

Reported

Currency

Reported

Reported

Currency

Orthopedic Surgery $ 103.8 $ 105.3 -1.4% -0.7% -3.7% 0.2% 1.5%
General Surgery 82.8 75.9 9.1% 9.7% 9.5% 8.0% 10.1%
$ 186.6 $ 181.2 3.0% 3.7% 3.5% 2.4% 3.9%
Single-use Products $ 149.8 $ 144.9 3.3% 4.0% 3.6% 3.0% 4.5%
Capital Products 36.8 36.3 1.5% 2.4% 2.9% 0.1% 1.9%
$ 186.6 $ 181.2 3.0% 3.7% 3.5% 2.4% 3.9%
Domestic $ 99.4 $ 96.1 3.5% 3.5%
International 87.2 85.1 2.4% 3.9%
$ 186.6 $ 181.2 3.0% 3.7%

Reconciliation of Reported Net Loss to Adjusted Net Earnings

(in thousands, except per share amounts, unaudited)

Three Months Ended March 31, 2017

Selling &

Operating

Tax

Effective

Net

Gross

Administrative

Income

Other

Expense

Tax

Income

Diluted

Profit

Expense

(Loss)

Expense

(Benefit)

Rate

(Loss)

EPS

As reported $ 99,885 $ 94,761 $ (2,494 ) $ $ (2,068 ) 31.3 % $ (4,545 ) $ (0.16 )
% of sales 53.5 % 50.8 % -1.3 %
Restructuring costs (1) 1,169 (1,322 ) 2,491 782 1,709 0.06
Business acquisition costs (2) (1,488 ) 1,488 467 1,021 0.04

Patent settlement costs and other(3)

(1,048 ) 1,048 329 719 0.02

SurgiQuest litigation verdict (4)

(12,200 ) 12,200 3,831 8,369 0.30
$ 101,054 $ 78,703 $ 14,733 $ $ 3,341 31.5 % $ 7,273 $ 0.26
% of sales 54.2 % 42.2 % 7.9 %
Amortization of intangible assets $ 1,500 $ (3,650 ) $ 5,150 $ $ 1,821 3,329 0.12
Adjusted earnings $ 10,602 $ 0.38
Three Months Ended March 31, 2016

Selling &

Tax

Effective

Net

Gross

Administrative

Operating

Other

Expense

Tax

Income

Diluted

Profit

Expense

Income

Expense

(Benefit)

Rate

(Loss)

EPS

As reported $ 97,740 $ 85,943 $ 3,539 $ 2,942 $ (968 ) 29.9 % $ (2,265 ) $ (0.08 )
% of sales 53.9 % 47.4 % 2.0 %
Restructuring costs (1) 864 (2,791 ) 3,655 1,156 2,499 0.09
Business acquisition costs (2) (9,045 ) 9,045 2,872 6,173 0.22

Debt refinancing costs (5)

(2,942 ) 930 2,012 0.07
$ 98,604 $ 74,107 $ 16,239 $ $ 3,990 32.2 % $ 8,419 $ 0.30
% of sales 54.4 % 40.9 % 9.0 %
Amortization of intangible assets $ 1,500 $ (3,496 ) $ 4,996 $ $ 1,799 3,197 0.12
Adjusted earnings $ 11,616 $ 0.42
(1) In 2017 and 2016, the Company restructured certain operations, sales, marketing and administrative functions and incurred severance and other related costs.
(2) In 2017 and 2016, the Company incurred investment banking fees, consulting fees, legal fees, and integration related costs associated with the acquisition of SurgiQuest, Inc.
(3) In 2017, the Company incurred patent settlement costs and other legal related fees.
(4) In 2017, the Company incurred litigation fees as a result of the unfavorable verdict in the Lexion vs. SurgiQuest, Inc. case.
(5) In 2016, in conjunction with the acquisition of SurgiQuest, Inc., the Company refinanced its existing credit facility and incurred one-time fees associated with a back stop arrangement, as well as costs associated with the early extinguishment of debt.

Reconciliation of Reported Net Loss to EBITDA & Adjusted EBITDA

(in thousands, unaudited)

2017 2016
Net loss $ (4,545 ) $ (2,265 )
Benefit from income taxes (2,068 ) (968 )
Interest expense 4,119 3,830
Depreciation 4,866 4,986
Amortization 8,798 8,012
EBITDA $ 11,170 $ 13,595
Stock based compensation 1,955 1,769
Restructuring costs 2,491 3,655
Business acquisition costs 1,488 9,045
Patent settlement costs and other 1,048
SurgiQuest litigation verdict 12,200
Debt refinancing costs 2,942
Adjusted EBITDA $ 30,352 $ 31,006
EBITDA Margin
EBITDA 6.0 % 7.5 %
Adjusted EBITDA 16.3 % 17.1 %

Contacts

CONMED Corporation
Luke A. Pomilio, 315-624-3202
Chief Financial Officer
LukePomilio@conmed.com


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April 27, 2017 OrthoSpineNews

April 26, 2017

NOBLESVILLE, Ind.–(BUSINESS WIRE)–Nexxt Spine, LLC, a medical device company focused on designing, manufacturing and distributing innovative spinal solutions, today announced the full market release of the INERTIA CORTI-FIXX™ Cortical-Cancellous Pedicle Screw System. Corti-Fixx screws are designed to achieve greater cortical bone purchase with a smaller midline incision when utilized in a medial to lateral pedicle approach known as the Cortical Bone Trajectory (CBT).

Corti-Fixx implants and instruments are built upon the Inertia Pedicle Screw System’s foundation and offer an alternative to traditional pedicle screw fixation. The unique dual to quad lead threads double the number of screw-to-bone contact points within the pedicle thereby increasing resistance to pull out.

Andy Elsbury, President of Nexxt Spine, stated, “Trends within the spine market call for less invasive procedures that are simple, reliable and reproducible. The Corti-Fixx screw further differentiates the Inertia Pedicle Screw System and provides multiple solutions for fixation in diminished bone quality through an open or MIS approach.”

About Nexxt Spine

Nexxt Spine, LLC is a privately held medical device manufacturer dedicated to increasing procedural efficiency and patient outcomes through development of innovative products, manufactured on the most technologically advanced platforms, and utilizing irreproachable quality standards to treat painful and debilitating spinal pathologies.

Additional information can be found at www.nexxtspine.com.

Contacts

Nexxt Spine, LLC
Sarah Koch, 317-436-7801
SKoch@NexxtSpine.com


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April 27, 2017 OrthoSpineNews

PLAINSBORO, N.J., April 26, 2017 (GLOBE NEWSWIRE) — Integra LifeSciences Holdings Corporation (NASDAQ:IART), a leading global medical technology company, today reported its financial results for the first quarter ending March 31, 2017.

Highlights:

  • First quarter revenue increased 9.2% over the prior year quarter to $258.6 million, and organic revenue increased 6.4%. Derma Sciences contributed $10.4 million of revenue to first quarter results;
  • GAAP gross margin increased 230 basis points over the prior year quarter to 66.5%, and adjusted gross margin increased 100 basis points to 70.2%;
  • Operating cash flow increased 15.4% over the prior year quarter to $28.9 million, resulting in free cash flow conversion of 85.1% on a trailing twelve month basis, compared to 65.4% in the prior year period;
  • Closed Derma Sciences acquisition and on track to complete commercial integration by mid-year;
  • Secured financing for the planned acquisition of Codman Neurosurgery; and,
  • Maintaining previously issued 2017 full-year sales, organic growth, EPS and cash flow guidance.

Total revenues for the first quarter were $258.6 million, reflecting an increase of $21.9 million, or 9.2%, over the first quarter of 2016. Both global segments contributed to the growth, with revenue in Orthopedics and Tissue Technologies and Specialty Surgical Solutions increasing by 19.6% and 3.4%, respectively, compared to the prior year.

Excluding the revenue contribution from acquisitions and the effect of currency exchange rates and discontinued products, revenues increased 6.4% over the first quarter of 2016.

“We are off to a solid start in 2017, which gives us increased confidence in delivering on our full-year 2017 financial guidance,” said Peter Arduini, Integra’s president and chief executive officer. “We completed the acquisition of Derma Sciences, launched several new products that will drive growth in the second half of the year, and remain on track to complete the planned acquisition of Codman Neurosurgery in the fourth quarter of 2017.”

The company reported GAAP net income of $6.4 million, or $0.08 per diluted share, for the first quarter of 2017, compared to a GAAP net income of $13.4 million, or $0.18 per diluted share, for the first quarter of 2016. The year-over-year declines largely resulted from acquisition-related expenses associated with the Derma Sciences and Codman Neurosurgery transactions.

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

Adjusted net income for the first quarter of 2017 was $30.9 million, an increase of 9.3% over the prior year, and compares to adjusted net income of $28.3 million in the first quarter of 2016. Adjusted earnings per share for the first quarter of 2017 was $0.39, compared to $0.38, in the first quarter of 2016.

Adjusted EBITDA for the first quarter of 2017 was $55.2 million, or 21.3% of revenue, compared to $52.1 million, or 22.0% of revenue, in the first quarter of 2016. The slight decrease in adjusted EBITDA margin primarily resulted from the dilution caused by the Derma Sciences acquisition.

Operating cash flow for the first quarter was $28.9 million, an increase of 15.4% from the prior-year period.  Trailing twelve-month adjusted free cash flow conversion ended March 31, 2017 was 85.1%, versus 65.4% in the prior year.

Outlook for 2017

Based on first quarter results and the outlook for the remainder of the year, the company is maintaining its full-year 2017 revenue guidance range of $1.12 billion to $1.14 billion, and full-year 2017 organic revenue growth range of 7.0% to 8.5%. The company also is maintaining its full-year GAAP and adjusted earnings per share guidance ranges of $0.49 to $0.55 and $1.88 to $1.94, respectively.

“Based on our first quarter results and the sequential improvements that we expect over the course of the year, we remain confident that we will achieve our full-year projections,” said Glenn Coleman, Integra’s chief financial officer. “We also successfully executed and secured an extension of our term loan facility with favorable terms, which we will use to pay for the planned acquisition of Codman Neurosurgery later this year.”

In the future, the company may record, or expects to record, certain additional revenues, gains, expenses, or charges as described in the Discussion of Adjusted Financial Measures below which will be excluded from the calculation of adjusted EBITDA, adjusted earnings per share for historical periods and in adjusted earnings per share guidance.

Conference Call and Presentation Available Online

Integra has scheduled a conference call for 8:30 AM ET today, Wednesday, April 26, 2017, to discuss financial results for the first quarter 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.  That presentation can be found on investor.integralife.com.

Access to the live call is available by dialing (719) 457-2618 and using the passcode 3686388. The call can also be accessed via a webcast link provided on investor.integralife.com.  Access to the replay will be available through May 1, 2017, by dialing (719) 457-0820 and using the passcode 3686388. The webcast will also be archived on the website.

Integra LifeSciences 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 and 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 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, the following: 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 be 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, adjusted earnings per diluted share, adjusted diluted weighted average shares outstanding, free cash flow and adjusted free cash flow conversion.  Organic revenues consist of total revenues excluding the effects of currency exchange rates, acquired revenues and product discontinuances.  Adjusted EBITDA consists of GAAP net income from continuing operations, excluding: (i) depreciation and amortization; (ii) other income (expense); (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 income from continuing operations, excluding: (i) global enterprise resource planning (“ERP”) implementation charges; (ii) structural optimization charges; (iii) certain employee severance charges; (iv) acquisition-related charges; (v) convertible debt non-cash interest; (vi) intangible asset amortization expense; (vii) discontinued product lines charges; 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 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 adjusted diluted weighted average shares outstanding.  The measure of free cash flow consists of GAAP net cash provided by continuing operating activities from continuing operations 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 adjusted revenues and GAAP Adjusted Net Income from continuing operations to adjusted EBITDA, and adjusted net income, and GAAP earnings per diluted share to adjusted earnings per diluted share all for the three months ended March 31, 2017 and 2016, and the free cash flow and free cash flow conversion for the three months ended March 31, 2017 and 2016 and the twelve months ended March 31, 2017 and 2016, 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 free cash flow conversion measures provide 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 March 31,
2017 2016
Total revenues, net $ 258,636 $ 236,770
Costs and expenses:
Cost of goods sold 86,585 84,773
Research and development 15,494 14,451
Selling, general and administrative 142,497 111,975
Intangible asset amortization 4,101 3,471
Total costs and expenses 248,677 214,670
Operating income 9,959 22,100
Interest income 7 6
Interest expense (5,131 ) (6,373 )
Other income (expense), net (90 ) (738 )
Income from continuing operations before taxes 4,745 14,995
Income tax expense (1,649 ) 1,576
Net income $ 6,394 $ 13,419
Net income per share:
Diluted net income per share $ 0.08 $ 0.18
Weighted average common shares outstanding for diluted net income per share 78,394 76,466

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 March 31,
2017 2016 Change
Specialty Surgical Solutions $ 156,290 $ 151,175 3.4 %
Orthopedics and Tissue Technologies 102,346 85,595 19.6 %
Total revenue $ 258,636 $ 236,770 9.2 %
Impact of changes in currency exchange rates $ 1,365 $
Less contribution of revenues from acquisitions* (10,404 )
Less contribution of revenues from discontinued products (433 ) (2,541 )
Total organic revenues $ 249,164 $ 234,229 6.4 %
* Acquisitions include Derma Sciences

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

(In thousands)
Three Months Ended March 31, 2017
Item   Total Amount   COGS(a)   SG&A(b)   R&D(c)   Amort.(d)   OI&E(e) Tax(f)
Global ERP implementation charges $ 2,427 $ $ 2,427 $ $ $ $
Structural optimization charges 1,586 898 688
Acquisition-related charges* 20,317 643 19,674
Certain employee severance charges 125 125
Discontinued product lines charges 1,025 1,025
Intangible asset amortization expense 10,966 6,865 4,101
Estimated income tax impact from above adjustments and other items (11,951) (11,951)
Total adjustments $ 24,495 $ 9,431 $ 22,914 $ $ 4,101 $ $ (11,951)
Depreciation expense 8,751
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)  OI&E – Interest (income) expense, net and other (income) expense, net
f)  Tax – Income tax expense
* Acquisition related charges are primarily associated with the Derma Sciences and Codman Neurosurgery acquisitions and include banking, legal, consulting and other expenses
Three months ended March 31, 2016
(In thousands)
Item   Total Amount   COGS (a)   SG&A (b)   Amort. (c)   OI&E (d)  Tax (e)
Global ERP implementation charges $ 3,324 $ $ 3,324 $ $ $
Structural optimization charges 1,709 985 724
Acquisition-related charges 6,041 3,652 2,389
Certain employee severance charges 650 211 439
Intangible asset amortization expense 10,536 7,065 3,471
Convertible debt noncash interest 2,064 2,064
Estimated income tax impact from above adjustments and other items (9,480) (9,480)
Total adjustments $ 14,844 $ 11,913 $ 6,876 $ 3,471 $ 2,064 $ (9,480)
Depreciation expense 7,717
a)  COGS – Cost of goods sold
b)  SG&A – Selling, general and administrative
c)  Amort. – Intangible asset amortization
d)  OI&E – Interest (income) expense, net and other (income) expense, net
e)  Tax – Income tax expense
RECONCILIATION OF NON-GAAP ADJUSTMENTS – GAAP NET INCOME FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended March 31,
 2017  2016
GAAP net income from continuing operations $ 6,394 $ 13,419
Non-GAAP adjustments:
Depreciation and intangible asset amortization expense 19,717 18,253
Other (income) expense, net 90 738
Interest expense, net 5,124 6,367
Income tax expense (1,649 ) 1,576
Global ERP implementation charges 2,427 3,324
Structural optimization charges 1,586 1,709
Acquisition-related charges 20,317 6,041
Certain employee severance charges 125 650
Discontinued product lines charges 1,025
Total of non-GAAP adjustments 48,762 38,658
Adjusted EBITDA $ 55,156 $ 52,077
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 March 31,
2017 2016
GAAP net income from continuing operations $ 6,394 $ 13,419
Non-GAAP adjustments:
Global ERP implementation charges 2,427 3,324
Structural optimization charges 1,586 1,709
Acquisition-related charges 20,317 6,041
Certain employee severance charges 125 650
Discontinued product lines charges 1,025
Intangible asset amortization expense 10,966 10,536
Convertible debt noncash interest 2,064
Estimated income tax impact from adjustments and other items (11,951 ) (9,480 )
Total of non-GAAP adjustments 24,495 14,844
Adjusted net income $ 30,889 $ 28,263
Adjusted diluted net income per share $ 0.39 $ 0.38
Weighted average common shares outstanding for diluted net income per share 78,394 76,466
Weighted average common shares outstanding adjustment for economic benefit of convertible bond hedge transactions (1,306 )
Weighted average common shares outstanding for adjusted diluted net income per share 78,394 75,160
CONDENSED BALANCE SHEET DATA
(UNAUDITED)
(In thousands)
  March 31,
2017
December 31,
2016
Cash and cash equivalents $ 124,113 $ 102,055
Accounts receivable, net 158,234 148,186
Inventories, net 239,809 217,263
Bank line of credit 855,000 665,000
Stockholders’ equity $ 852,491 $ 839,667

 

CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
Three Months Ended
March 31, 2017 March 31, 2016
Net cash provided by operating activities $ 28,882 $ 25,030
Net cash used in investing activities (193,143 ) (6,730 )
Net cash provided by financing activities 185,039 9,952
Effect of exchange rate changes on cash and cash equivalents 1,280 702
Net increase in cash and cash equivalents $ 22,058 $ 28,954
RECONCILIATION OF NON-GAAP ADJUSTMENTS – GAAP OPERATING CASH FLOW TO
MEASURES OF FREE CASH FLOW AND FREE CASH FLOW CONVERSION
(UNAUDITED)
(In thousands)
Three Months Ended
March 31,
 2017  2016
GAAP net cash provided by continuing operating activities $   28,880 $   25,030
Purchases of property and equipment from continuing operations (9,191 ) (10,895 )
Free cash flow 19,689 14,135
Adjusted net income * $   30,889 $   28,263
Adjusted free cash flow conversion   63.7 %   50.0 %
Twelve Months Endied
March 31,
 2017  2016
GAAP net cash provided by continuing operating activities** $   163,040 $   112,792
Purchases of property and equipment from continuing operations (45,624 ) (38,978 )
Free cash flow 117,416 73,814
Adjusted net income * $   137,990 $   112,921
Adjusted free cash flow conversion   85.1 %   65.4 %
* Adjusted net income for quarters ended March 31, 2017 and 2016 are reconciled above.  Adjusted net income for remaining quarters in the trailing twelve months calculation have been previously reconciled and are publicly available in the Quarterly Earnings Call Presentations and the Historical Financial Results: Continuing Operations presentation on our website at investor.integralife.com under Events & Presentations.
** Operating cash flow excludes $42.8M of accreted interest payment associated with the 2016 Convertible Notes.
The Company calculates adjusted free cash flow conversion by dividing its free cash flow by adjusted net income.  The Company believes this measure is useful in evaluating the significance of the cash special charges in its adjusted earnings measures.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
RECONCILIATION OF NON-GAAP ADJUSTMENTS – GUIDANCE
Recorded Year to Date Projected Year Ended
(In thousands, except per share amounts) March 31, 2017 December 31, 2017
Low High
GAAP net income $   6,394 $   39,250 $   43,750
Non-GAAP adjustments:
Global ERP implementation charges 2,427 7,400 7,400
Structural optimization charges 1,586 19,000 19,000
Acquisition-related charges 20,317 78,500 78,500
Certain employee severance charges 125 125 125
Discontinued product lines charges 1,025 1,025 1,025
Intangible asset amortization expense 10,966 47,800 47,800
Estimated income tax impact from adjustments and other items (11,951 ) (44,000 ) (44,000 )
Total of non-GAAP adjustments 24,495 109,850 109,850
Adjusted net income $   30,889 $   149,100 $   153,600
GAAP diluted net income per share $ 0.08 $ 0.49 $ 0.55
Non-GAAP adjustments detailed above (per share) $ 0.31 $ 1.39 $ 1.39
Adjusted diluted net income per share $ 0.39 $ 1.88 $ 1.94
Weighted average common shares outstanding for diluted net income per share 78,394 79,500 79,000

 

GUIDANCE – SPECIAL CHARGES
Item YTD
Amount
FY
Guidance
COGS SG&A  R&D  Amort. Interest
(Inc)Exp
Tax
Global ERP implementation charges $   2,427 $   7,400 $  — $   7,400  $  —  $  — $  — $  —
Structural optimization charges 1,586 19,000 10,500 8,500
Acquisition-related charges 20,317 78,500 9,000 69,500
Certain employee severance charges 125 125 125
Discontinued product lines charges 1,025 1,025 1,025
Intangible asset amortization expense 10,966 47,800 31,000 16,800
Convertible debt non-cash interest
Estimated income tax impact from adjustments and other items (11,951 ) (44,000 ) (44,000 )
Total 24,495 109,850 51,525 85,525 16,800 (44,000 )

 

Contact:

Investor Relations:
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

Endovapor2-with-probes-1-1.jpg

April 26, 2017 OrthoSpineNews

April 26, 2017

IRVINE, Calif.–(BUSINESS WIRE)–joimax®, the German based market leader of technologies and training methods for endoscopic minimally invasive spinal surgery, today announced it has received 510(k) clearance from the U.S. Food and Drug Administration (FDA) to market its Endovapor® 2 Multi Radio Frequency System.

The patented device generates electrical power for monopolar and bipolar cutting and coagulation of tissue structures in surgical operations. The joimax® Endovapor® 2 is an all-in-one generator with specially integrated programs for spinal cord surgery with interdisciplinary application. The device is equipped with two monopolar and two bipolar sockets and an easy and intuitive touchpad technology. With arc control for safe application and easy neutral electrode monitoring, it combines a variety of different electro-surgical modes and effects.

“After receiving the FDA clearance for the joimax® Vaporflex® and Legato® electrosurgical probes in early November 2016, this is another milestone in strengthening the joimax® position as an expert in endoscopic minimally invasive spine surgery,” states Wolfgang Ries, Founder and CEO of joimax®.

During the AANS, joimax® participated in the CME endoscopic cadaveric workshop with two stations and held a very successful US-expert meeting including topics such as training procedures, clinical Research and future technologies.

About joimax® Founded in Karlsruhe, Germany, in 2001, joimax® is the leading developer and marketer of complete systems for endoscopic minimally invasive spinal surgery. With TESSYS® (transforaminal), iLESSYS® (interlaminar) and CESSYS® (cervical) for decompression procedures, MultiZYTE® RT (e.g. for rhizotomy) and with MultiZYTE® SI for SI-Joint therapy or with EndoLIF® and Percusys® for endoscopic minimally invasive assisted stabilizations, proven endoscopic systems are provided that, together, cover a whole variety of indications.

In procedures for herniated disc, stenosis, pain therapy or spinal stabilization treatment, surgeons utilize joimax® technologies to operate through small incisions – under local or full anesthetic – via tissue and muscle-sparing corridors through natural openings into the spinal canal (e.g. intervertebral foramen, the “Kambin triangle”).

Contacts

Press Contact USA:
joimax® Inc.
Melissa Brumley
001 949 859 3472
Melissa.brumley@joimaxusa.com


stryker-headquarters.jpg

April 26, 2017 OrthoSpineNews

By GlobeNewswire,  April 25, 2017

Kalamazoo, Michigan – April 25, 2017 – Stryker Corporation (NYSE:SYK) reported operating results for the first quarter of 2017:

First Quarter Highlights

Net sales grew 18.4% to $2.96 billion (18.8% constant currency)

MedSurg 36.2 % or 36.6% constant currency
Orthopaedics 7.4 % or 7.8% constant currency
Neurotechnology and Spine 7.3 % or 7.7% constant currency

Reported net earnings per diluted share increased 9.3% to $1.17

Adjusted net earnings per diluted share(1) increased 19.4% to $1.48

“Our positive momentum continued in the first quarter, as we demonstrated our ongoing commitment to deliver organic sales growth at the high end of med-tech and leveraged earnings gains,” said Kevin A. Lobo, Chairman and Chief Executive Officer. “Our results were well-balanced across business segments and geographies, and position us well for another strong year in 2017.”

Sales Analysis

Consolidated net sales of $2.96 billion increased 18.4% in the quarter as reported and 18.8% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.4%. Excluding the 10.6% impact of acquisitions, net sales in the quarter increased 8.2% in constant currency, including 9.2% from increased unit volume partially offset by 1.0% due to lower prices. The acquisition of Sage Products LLC and Physio-Control International, Inc. contributed $245 million to our consolidated net sales in the quarter.

MedSurg net sales of $1.31 billion increased 36.2% in the quarter as reported and 36.6% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.4%. Excluding the 25.8% impact of acquisitions, net sales in the quarter increased 10.8% in constant currency, including 9.8% from increased unit volume and 1.0% due to higher prices.

Orthopaedics net sales of $1.14 billion increased 7.4% in the quarter as reported and 7.8% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.4%. Excluding the 0.6% impact of acquisitions, net sales in the quarter increased 7.2% in constant currency, including 9.9% from increased unit volume partially offset by 2.7% due to lower prices.

Neurotechnology and Spine net sales of $0.52 billion increased 7.3% in the quarter as reported and 7.7% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.4%. Excluding the 2.4% impact of acquisitions, net sales in the quarter increased 5.3% in constant currency, including 6.3% from increased unit volume partially offset by 1.0% due to lower prices.

Earnings Analysis

Reported net earnings of $444 million increased 10.4% in the quarter. Reported net earnings per diluted share of $1.17 increased 9.3% in the quarter. Reported net earnings include certain charges for the amortization of purchased intangible assets, Rejuvenate and ABG II and other recall matters, restructuring-related activities and acquisition and integration related activities. The effect of each of these matters on reported net earnings and net earnings per diluted share appears in the reconciliation of actual results to adjusted results below. Excluding the impact of these charges increases gross profit margin in the quarter from 66.4% to 66.5% and increases operating income margin from 18.7% to 24.2%. Excluding the impact of the items described above, adjusted net earnings(2) of $560 million increased 19.7% in the quarter. Adjusted net earnings per diluted share(1) of $1.48 increased 19.4% in the quarter.

2017 Outlook

We continue to expect 2017 organic sales growth to be in the range of 5.5% – 6.5% and adjusted net earnings per diluted share(3) to be in the range of $6.35 – $6.45. For the second quarter we expect adjusted net earnings per diluted share(3) to be in the range of $1.48 – $1.52. If foreign currency exchange rates hold near current levels, we expect net sales in the second quarter and full year to be negatively impacted by approximately 1.0% and adjusted net earnings per diluted share to be negatively impacted by approximately $0.03 to $0.04 in the second quarter and $0.10 to $0.12 in the full year.

(1) A reconciliation of reported net earnings per diluted share to adjusted net earnings per diluted share, a non-GAAP financial measure, and other important information appears below.

(2) A reconciliation of reported net earnings to adjusted net earnings, a non-GAAP financial measure, and other important information appears below.

(3) A reconciliation of expected net earnings per diluted share to expected adjusted net earnings per diluted share for the second quarter and full year and other important information appears below.

Conference Call on Tuesday, April 25, 2017

As previously announced, the Company will host a conference call on Tuesday, April 25, 2017 at 4:30 p.m., Eastern Time, to discuss the Company’s operating results for the quarter ended March 31, 2017 and provide an operational update.

To participate in the conference call dial (844) 826-0610 (domestic) or (973) 453-3249 (international) and be prepared to provide conference ID number 26016220 to the operator.

A simultaneous webcast of the call will be accessible via the Company’s website at www.stryker.com. The call will be archived on the Investors page of this site.

A recording of the call will also be available from 8:00 p.m., Eastern Time, on Tuesday, April 25, 2017, until 11:59 p.m., Eastern Time, on Tuesday, May 2, 2017. To hear this recording you may dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and enter conference ID number 26016220.

Caution Concerning Forward-Looking Statements

This press release contains information that includes or is based on forward-looking statements within the meaning of the federal securities laws that are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: weakening of economic conditions that could adversely affect the level of demand for our products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; changes in foreign exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products; potential supply disruptions; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; the ultimate total cost with respect to the Rejuvenate and ABG II matter; the impact of investigative and legal proceedings and compliance risks; resolution of tax audits; the impact of the federal legislation to reform the United States healthcare system; changes in financial markets; changes in the competitive environment; our ability to integrate acquisitions; and our ability to realize anticipated cost savings. Additional information concerning these and other factors is contained in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Stryker is one of the world’s leading medical technology companies and, together with our customers, we are driven to make healthcare better. The Company offers a diverse array of innovative products and services in Orthopaedics, Medical and Surgical, and Neurotechnology and Spine that help improve patient and hospital outcomes. Stryker is active in over 100 countries around the world. Please contact us for more information at www.stryker.com.

For investor inquiries please contact:

Katherine A. Owen, Stryker Corporation, 269-385-2600 or katherine.owen@stryker.com

For media inquiries please contact:

Yin Becker, Stryker Corporation, 269-385-2600 or yin.becker@stryker.com

 

STRYKER CORPORATION

For the Three Months March 31

(Unaudited – Millions of Dollars, Except Per Share Amounts)

CONDENSED STATEMENTS OF EARNINGS

Three Months
2017 2016 % Change
Net sales $ 2,955 $ 2,495 18.4 %
Cost of sales 993 801 24.0
Gross profit $ 1,962 $ 1,694 15.8 %
% of sales 66.4 % 67.9 %
Research, development and engineering expenses 192 159 20.8
Selling, general and administrative expenses 1,102 944 16.7
Recall charges 26 19 36.8
Intangible asset amortization 88 53 66.0
Total operating expenses $ 1,408 $ 1,175 19.8 %
Operating income $ 554 $ 519 6.7 %
% of sales 18.7 % 20.8 %
Other income (expense), net (55 ) (38 ) 44.7
Earnings before income taxes $ 499 $ 481 3.7 %
Income taxes 55 79 (30.4 )
Net earnings $ 444 $ 402 10.4 %
Net earnings per share of common stock:
Basic $ 1.19 $ 1.08 10.2 %
Diluted $ 1.17 $ 1.07 9.3 %
Weighted-average shares outstanding – in millions:
Basic 373.4 373.2
Diluted 379.3 377.4

 

CONDENSED BALANCE SHEETS
March December
2017 2016
ASSETS
Cash and cash equivalents $ 3,213 $ 3,316
Marketable securities 66 68
Accounts receivable, net 1,875 1,967
Inventories 2,172 2,030
Other current assets 563 480
Total current assets $ 7,889 $ 7,861
Property, plant and equipment, net 1,655 1,569
Goodwill and other intangibles, net 9,839 9,864
Other noncurrent assets 1,134 1,141
Total assets $ 20,517 $ 20,435
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities $ 2,033 $ 2,554
Accrued recall expenses 521 594
Other noncurrent liabilities 1,075 1,051
Long-term debt, excluding current maturities 7,184 6,686
Shareholders’ equity 9,704 9,550
Total liabilities and shareholders’ equity $ 20,517 $ 20,435

 

CONDENSED STATEMENTS OF CASH FLOWS
Three Months
2017 2016
Operating activities
Net earnings $ 444 $ 402
Depreciation 62 49
Amortization of intangible assets 88 53
Changes in operating assets and liabilities and other, net (443 ) (242 )
Net cash provided by operating activities $ 151 $ 262
Investing activities
Acquisitions, net of cash acquired $ (9 ) $ (23 )
Change in marketable securities, net 2 195
Purchases of property, plant and equipment (139 ) (115 )
Net cash (used in) provided by investing activities $ (146 ) $ 57
Financing activities
Borrowings/repayments of debt, net $ 304 $ 3,455
Dividends paid (159 ) (142 )
Repurchase of common stock (230 ) (13 )
Other financing (52 ) (41 )
Net cash (used in) provided by financing activities $ (137 ) $ 3,259
Effect of exchange rate changes on cash and cash equivalents 29 19
Change in cash and cash equivalents $ (103 ) $ 3,597

 

STRYKER CORPORATION

For the Three Months Ended March 31

(Unaudited – Millions of Dollars)

CONDENSED SALES ANALYSIS

Three Months
Percentage Change
2016 2015 As Reported Constant

Currency

Geographic:
United States $ 2,166 $ 1,822 18.9 % 18.9 %
International 789 673 17.2 18.5
Total $ 2,955 $ 2,495 18.4 % 18.8 %
Segment:
MedSurg $ 1,305 $ 958 36.2 % 36.6 %
Orthopaedics 1,135 1,057 7.4 7.8
Neurotechnology and Spine 515 480 7.3 7.7
Total $ 2,955 $ 2,495 18.4 % 18.8 %

 

SUPPLEMENTAL SALES GROWTH ANALYSIS
Three Months
United States International
Percentage Change
2017 2016 As Reported Constant Currency As Reported As Reported Constant Currency
MedSurg:
Instruments $ 394 $ 365 7.8 % 8.2 % 7.8 % 8.1 % 9.8 %
Endoscopy 373 328 13.6 13.8 14.6 10.5 11.1
Medical 475 207 130.4 131.7 118.6 186.4 193.5
Sustainability 63 58 7.5 7.5 7.4 52.6 47.8
Total MedSurg $ 1,305 $ 958 36.2 % 36.6 % 34.6 % 42.9 % 44.7 %
Orthopaedics:
Knees $ 391 $ 361 8.5 % 8.7 % 7.4 % 11.6 % 12.3 %
Hips 320 316 1.2 2.0 2.0 (0.1 ) 2.0
Trauma and Extremities 352 327 7.6 8.3 10.0 3.6 5.5
Other 72 53 34.2 34.0 25.7 79.3 76.0
Total Orthopaedics $ 1,135 $ 1,057 7.4 % 7.8 % 7.8 % 6.4 % 7.9 %
Neurotechnology and Spine:
Neurotechnology $ 331 $ 301 9.8 % 10.1 % 9.7 % 9.8 % 10.7 %
Spine 184 179 3.2 3.5 2.3 5.9 7.5
Total Neurotechnology and Spine $ 515 $ 480 7.3 % 7.7 % 6.7 % 8.8 % 9.8 %
Total $ 2,955 $ 2,495 18.4 % 18.8 % 18.9 % 17.2 % 18.5 %

 

SUPPLEMENTAL INFORMATION – RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

We supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; percentage organic sales growth; adjusted gross profit; cost of sales excluding specified items; adjusted selling, general and administrative expenses; adjusted operating income; adjusted effective income tax rate; adjusted net earnings; and adjusted net earnings per diluted share. We believe that these non-GAAP measures provide meaningful information to assist shareholders in understanding our financial results and assessing our prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures described above are important indicators of our operations because they exclude items that may not be indicative of or are unrelated to our core operating results and provide a baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures for reviewing the operating results of reportable business segments and analyzing potential future business trends in connection with our budget process and bases certain management incentive compensation on these non-GAAP financial measures.

To measure percentage sales growth in constant currency, we remove the impact of changes in foreign currency exchange rates that affect the comparability and trend of sales. Percentage sales growth in constant currency is calculated by translating current and prior year results at the same foreign currency exchange rate. To measure percentage organic sales growth, we remove the impact of changes in foreign currency exchange rates and acquisitions that affect the comparability and trend of sales. Percentage organic sales growth is calculated by translating current and prior year results at the same foreign currency exchange rate excluding the impact of acquisitions. To measure earnings performance on a consistent and comparable basis, we exclude certain items that affect the comparability of operating results and the trend of earnings.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, selling, general and administrative expenses, operating income, effective income tax rate, net earnings and net earnings per diluted share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the reconciliations to corresponding GAAP financial measures below, provide a more complete understanding of our business. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following reconciles the non-GAAP financial measures discussed above with the most directly comparable GAAP financial measures:

STRYKER CORPORATION

For the Three Months March 31

(Unaudited – Millions of Dollars, Except Per Share Amounts)

RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS

2017 Gross Profit Selling, General & Administrative Expenses Amortization of Intangible Assets Operating Income Net Earnings Effective

Tax Rate

Diluted EPS
Reported $ 1,962 $ 1,102 $ 88 $ 554 $ 444 11.1 % $ 1.17
Acquisition and integration related charges: (a)
Inventory stepped up to fair value (1 ) (1 ) (0.2 )
Other acquisition and integration related (10 ) 10 7 0.3 0.02
Amortization of purchased intangible assets (88 ) 88 61 2.9 0.16
Restructuring-related charges (b) 5 (33 ) 38 27 1.0 0.07
Rejuvenate and other recall matters (c) 26 21 0.2 0.06
Adjusted $ 1,966 $ 1,059 $ $ 715 $ 560 15.3 % $ 1.48

 

2016 Gross Profit Selling, General & Administrative Expenses Amortization of Intangible Assets Operating Income Net Earnings Effective

Tax Rate

Diluted EPS
Reported $ 1,694 $ 944 $ 53 $ 519 $ 402 16.4 % $ 1.07
Acquisition and integration related charges: (a)
Other acquisition and integration related (5 ) 5 3 0.1 0.01
Amortization of purchased intangible assets (53 ) 53 39 1.1 0.10
Restructuring-related charges (b) 3 (17 ) 20 15 0.4 0.04
Rejuvenate and other recall matters (c) 19 17 0.04
Legal matters (d) 12 (12 ) (8 ) (0.6 ) (0.02 )
Adjusted $ 1,697 $ 934 $ $ 604 $ 468 17.4 % $ 1.24

 

(a) Charges represent certain acquisition and integration related costs associated with acquisitions.
(b) Charges represent the cost associated with certain restructuring-related charges associated with workforce reductions, facility rationalizations and other restructuring-related activities.
(c) Charges represent changes in our best estimate of the minimum end of the range of probable loss to resolve the Rejuvenate recall and other recall matters.
(d) Amount represents a gain associated with a legal settlement in 2016.

 

STRYKER CORPORATION

For the Three Months June 30, 2017 and Full Year December 31, 2017

RECONCILIATION OF EXPECTED NET EARNINGS PER DILUTED SHARE TO EXPECTED ADJUSTED NET EARNINGS PER DILUTED SHARE

Three Months Full Year
Low High Low High
Expected – Reported $ 1.23 $ 1.33 $ 5.44 $ 5.69
Acquisition and integration related charges 0.05 0.02 0.10 0.05
Amortization of purchased intangible assets 0.15 0.15 0.61 0.61
Restructuring-related charges 0.05 0.02 0.20 0.10
Rejuvenate and other recall matters
Expected – Adjusted $ 1.48 $ 1.52 $ 6.35 $ 6.45

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Stryker Corporation via Globenewswire

Read more: http://www.nasdaq.com/press-release/stryker-reports-first-quarter-2017-results-20170425-01526#ixzz4fOLfrhZk


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April 26, 2017 OrthoSpineNews

April 25, 2017

GAINESVILLE, Fla.–(BUSINESS WIRE)–Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone and joint restoration products and biologic solutions for extremities, knee and hip, announced today that revenue for the first quarter of 2017 increased 6% to $69.5 million from $65.3 million in the first quarter of 2016, and 7% on a constant currency basis. Domestic revenue increased 7% to $47.7 million and international revenue increased 5% to $21.8 million in the first quarter of 2017. Diluted earnings per share for the first quarter was $0.32 based on net income of $4.6 million, compared to first quarter 2016 net income of $4.4 million and diluted earnings per share of $0.31.

First Quarter Segment Performance

  • Extremity revenues increased 21% to $30.0 million from $24.8 million, a 21% constant currency increase
  • Knee revenue increased 1% to $20.0 million from $19.8 million, a 1% constant currency increase
  • Hip revenue increased 6% to $12.1 million from $11.4 million, a 6% constant currency increase
  • Other revenues decreased 20% to $7.3 million from $9.2 million, a 19% constant currency decrease. The Other segment includes an aggregation of the former Biologics and Spine segment

Management Comment

Exactech CEO and President David Petty said, “With three new revision systems now in full launch, we leveraged our sales channel and improvements in our supply chain to deliver a strong start to 2017. The innovative features of our Optetrak Logic® CC revision knee and Alteon® Monobloc hip systems continue to attract new surgeons, improve patient outcomes and post growth in those segments. Our extremities business continued to accelerate, attracting record attendance at our global medical education programs. At the ten-year clinical milestone, our Equinoxe® reverse platform shoulder system remains a core driver of customer satisfaction while new products like our humeral reconstruction prosthesis contribute to a robust new customer pipeline.

“The sales increase of 6% to $69.5 million was above our expectations as domestic revenue increased 7% to $47.7 million, and excluding the impact of the divested US spine assets during the quarter, domestic sales increased 11%. International revenue increased 5% to $21.8 million, and a 7% increase on a constant currency basis,” Petty said.

Chief Financial Officer Jody Phillips said, “Gross margins increased to 70% from 69% for the first quarter a year ago due to strength in our US extremities business. Total operating expenses for the quarter increased 10% to $42.5 million primarily due to heavy investments we continue to make in our product development pipeline with research and development expenses increasing 23% during the quarter. Sales and marketing expenses increased 7% to $25.1 million due to variable selling expenses and investments in our medical education and training programs. Transition costs associated with divestiture of our spine assets were less than originally projected at a total of $0.5 million resulting in a $0.02 diluted EPS impact on the quarter and as a result we produced a net income increase of 4% to $4.6 million for the quarter.”

Looking forward, Exactech updated 2017 revenue guidance to $266-$272 million and increased diluted EPS target to $1.24-$1.30, including the impact of the first quarter $0.02 diluted earnings per share costs related to the spine business transition. On an adjusted basis, the diluted EPS target is $1.26-$1.32. For the second quarter of 2017, the company anticipates revenues of $66.5-$68.5 million and diluted EPS of $0.32-$0.34. The foregoing statements regarding targets for the quarter and full year are forward-looking and actual results may differ materially. These are the company’s targets, not predictions of actual performance.

The financial statements are below.

Conference Call

The company will hold a conference call with CEO David Petty and key members of the management team Wednesday, April 26th at 10:00 a.m. Eastern Time. The call will cover Exactech’s first quarter 2017 results. Mr. Petty will open the conference call and a question-and-answer session will follow.

To participate in the call, dial 877-874-1569 any time after 9:50 a.m. Eastern Time on April 26. International and local callers should dial 719-325-4888. A live webcast of the call will be available at http://www.hawkassociates.com/profile/exac.cfm or http://public.viavid.com/index.php?id=123876.

About Exactech

Based in Gainesville, Fla., Exactech develops and markets orthopaedic implant devices, related surgical instruments and biologic materials and services to hospitals and physicians. The company manufactures many of its orthopaedic devices at its Gainesville facility. Exactech’s orthopaedic products are used in the restoration of bones and joints that have deteriorated as a result of injury or diseases such as arthritis. Exactech markets its products in the United States, in addition to more than 30 markets in Europe, Latin America, Asia and the Pacific. Additional information about Exactech, Inc. can be found at http://www.exac.com. Copies of Exactech’s press releases, SEC filings, current price quotes and other valuable information for investors may be found at http://www.exac.com and http://www.hawkassociates.com.

An investment profile on Exactech may be found at http://www.hawkassociates.com/profile/exac.cfm. To receive future releases in e-mail alerts, sign up at http://www.hawkassociates.com/about/alert.

This release contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which represent the company’s expectations or beliefs concerning future events of the company’s financial performance. These forward-looking statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include the effect of competitive pricing, the company’s dependence on the ability of third party manufacturers to produce components on a basis which is cost-effective to the company, market acceptance of the company’s products and the effects of government regulation. Results actually achieved may differ materially from expected results included in these statements.

EXACTECH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited) (audited)
March 31, December 31,
2017 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11,173 $ 13,052
Trade receivables, net of allowances of $1,641 and $1,473 58,596 53,051
Prepaid expenses and other assets, net 4,119 3,075
Income taxes receivable 2,487 2,140
Inventories, current 66,189 65,264
Assets held for sale 6,477
Total current assets 142,564 143,059
PROPERTY AND EQUIPMENT:
Land 4,484 4,474
Machinery and equipment 42,447 42,034
Surgical instruments 139,739 132,134
Furniture and fixtures 4,864 4,700
Facilities 21,804 21,726
Projects in process 5,457 2,473
Total property and equipment 218,795 207,541
Accumulated depreciation (104,473 ) (100,234 )
Net property and equipment 114,322 107,307
OTHER ASSETS:
Deferred financing and deposits, net 800 968
Equity investment 2,004 2,047
Deferred tax asset 887
Non-current inventory 13,107 15,723
Product licenses and designs, net 8,860 9,102
Patents and trademarks, net 769 821
Customer relationships, net 488 476
Goodwill 14,181 13,819
Total other assets 40,209 43,843
TOTAL ASSETS $ 297,095 $ 294,209
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 16,738 $ 17,566
Income taxes payable 1,425 780
Accrued expenses 14,441 11,832
Other current liabilities 2,805 2,927
Total current liabilities 35,409 33,105
LONG-TERM LIABILITIES:
Deferred tax liabilities 2,458 1,773
Long-term debt, net of current portion 16,000 20,000
Other long-term liabilities 2,951 5,089
Total long-term liabilities 21,409 26,862
Total liabilities 56,818 59,967
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock 145 144
Additional paid-in capital 88,998 87,319
Treasury Stock (3,042 ) (3,042 )
Accumulated other comprehensive loss, net of tax (8,840 ) (8,611 )
Retained earnings 163,016 158,432
Total shareholders’ equity 240,277 234,242
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 297,095 $ 294,209
EXACTECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)

Three Month Periods

Ended March 31,

2017 2016
NET SALES $ 69,482 $ 65,298
COST OF GOODS SOLD 20,641 20,368
Gross profit 48,841 44,930
OPERATING EXPENSES:
Sales and marketing 25,053 23,319
General and administrative 6,536 5,914
Research and development 6,224 5,070
Depreciation and amortization 4,659 4,324
Total operating expenses 42,472 38,627
INCOME (LOSS) FROM OPERATIONS 6,369 6,303
OTHER INCOME (EXPENSE):
Interest income 3 4
Other income (loss) 143 40
Interest expense (226 ) (262 )
Foreign currency exchange gain 562 494
Total other income (expense) 482 276
INCOME BEFORE INCOME TAX AND EQUITY IN LOSS OF INVESTEE 6,851 6,579
PROVISION FOR INCOME TAXES 2,224 2,177
INCOME BEFORE EQUITY IN LOSS OF INVESTEE 4,627 4,402
EQUITY IN LOSS OF INVESTEE, NET OF TAX (43 )
NET INCOME $ 4,584 $ 4,402
BASIC EARNINGS PER SHARE $ 0.32 $ 0.31
DILUTED EARNINGS PER SHARE $ 0.32 $ 0.31
SHARES – BASIC 14,272 14,057
SHARES – DILUTED 14,454 14,173

Non-GAAP Disclosure and Reconciliation

We present certain non-GAAP results as a supplement to our financial results based on GAAP, as we believe it is useful to exclude certain items in order to focus on what we regard to be a more reliable indicator of the underlying operating performance of our business. Because we operate internationally, we present the percentage change in sales by reporting segment on a constant currency basis, which is a non-GAAP financial measure. We calculate this change on a constant currency basis by translating current period sales at the comparable average historical exchange rates for the same period in the prior year. We believe that presenting the percentage change in sales on a constant currency basis assists in the understanding of actual sales fluctuations by excluding the impact of foreign currency fluctuations.

Additionally, we report on a non-GAAP basis adjusted sales, gross margin, operating expenses, income, and diluted earnings per share excluding charges related to the spine assets we sold January 2017. We believe the exclusion of spine sales and costs provides the reader with more comparable financials to better analyze the reported periods. The following items have been adjusted:

  • Sales, cost of goods sold, and operating expenses from our spine products
  • Transition charges related to the sale of our spine assets
  • Personnel and severance costs related to the transition

Three Months March 31, 2017

Three Months March 31, 2016

Change %

Reported

US Spine Adjusted Reported US Spine Adjusted

Reported

Adjusted
Domestic sales $ 47,673 $ 282 $ 47,391 $ 44,573 $ 1,798 42,775
International sales 21,809 21,809 20,725 20,725
Total sales 69,482 282 69,200 $ 65,298 $ 1,798 63,500 6.4 % 9.0 %
Gross profit 48,841 187 48,654 44,930 1,220 43,710 8.7 11.3
Operating expense 42,472 702 41,770 38,627 1,472 37,155 10.0 12.4
Other income 482 482 276 276 74.6 74.6
Income before income tax and equity in loss of investee 6,851 (515 ) 7,366 6,579 (252 ) 6,831 4.1 6.3
Income tax 2,224 (137 ) 2,361 2,177 (94 ) 2,271 2.2 3.9
Equity in loss of investee (43 ) (43

)

Net income (loss) $ 4,584 $ (378 ) $ 4,962 $ 4,402 $ (158 ) $ 4,560 4.1 8.8
Diluted EPS $ 0.32 $ (0.02 ) $ 0.34 $ 0.31 $ (0.01 ) $ 0.32

We also provide adjusted forward looking guidance on diluted earnings per share for the full year for 2017. We believe this adjusted guidance will assist in comparative measures. The following reconciles the guidance ranges to expected guidance on a GAAP basis:

Twelve Months Ended
December 31, 2017
Expected diluted EPS range on GAAP basis $1.24 – $1.30
Adjustment: Spine asset divestiture 0.02
Adjusted total diluted EPS range $1.26-$1.32

Contacts

Exactech, Inc.
Investor contacts
Jody Phillips, 352-377-1140
Executive Vice President of Finance &
Chief Financial Officer
or
Hawk Associates
Julie Marshall or Frank Hawkins, 305-451-1888
EXAC@hawkassociates.com
or
Media contact
Priscilla Bennett, 352-377-1140
Vice President, Corporate & Marketing Communication