CARLSBAD, Calif., Nov. 09, 2016 (GLOBE NEWSWIRE) — Alphatec Holdings, Inc. (Nasdaq:ATEC), the parent company of Alphatec Spine, Inc., a provider of spinal fusion technologies, announced today financial results for the third quarter ended September 30, 2016. Today the Company also announced that Donald Williams, the Chairman of the Company’s Audit Committee, has been named Lead Independent Director, effective immediately.

• Third quarter total net revenues of $26.7 million; revenue from the Company’s U.S. commercial business of $25.2 million.
• Cash totaled $25.6 million at the end of the third quarter.

Highlights of the Third quarter 2016 and Recent Activities

Operational Activities

• Closed sale of international business to Globus Medical on September 1, 2016 for $80 million in cash and $30 million, 5-year term loan.
• New capital structure established — reduced overall Company debt to $40.9 million at September 30, 2016.
• CEO search actively underway with a nationally recognized executive search firm.

Products and Portfolio

• Actively developing and commercializing products in the minimally invasive (MIS) and complex spine markets — two of the fastest growth segments for spine.
• Arsenal™ Deformity  — limited launch underway, including the addition of the Adolescent Idiopathic Scoliosis (AIS) module in Q4 2016.
• Battalion™ Lateral Spacer System and Squadron™ Lateral Retractor — received FDA 510(k) market clearance; preparing for limited market release in Q1 2017.
• XYcor® Expandable Spinal Spacer System — received FDA 510(k) market clearance; introduced to surgeons at NASS; limited market release anticipated in Q4 2016.

Supply Chain Operations

• Completed transition of international business to Globus Medical; successfully operating supply chain model to support ongoing supply agreement for international products.
• Completed corporate restructuring to align with the Company’s targeted focus on the U.S. markets and reduced workforce by 20%.
• Suppliers are engaged and actively collaborating with the Company to ensure the continuous flow of new and existing products through the supply chain.

“We are in the process of building an exciting new company, a new Alphatec, with a simplified operating model, new senior leadership and a positive new culture for our employees and our customers — all of which are supported by a broad portfolio of innovative products,” said Leslie Cross, Chairman and Chief Executive Officer of Alphatec Spine.  “Strategically, our focus for the new Alphatec is simple.  We must excel at managing our supply chain and we need to reinvigorate our sales performance and grow our U.S. business.  Today, we are actively working on both initiatives with a collective passion and sense of urgency.  This journey will take time and we anticipate both challenges and opportunities along the way.  I am confident that the leadership team has the skills and experience to drive the change needed to improve our performance and deliver enduring, profitable growth.   We look forward to sharing more details about our plans early in the new year.”

Mr. Cross added, “In addition, I am pleased to announce that Don Williams has accepted to serve as the Company’s Lead Independent Director.  Don has been an Alphatec board member since May 2015 and the Chairman of the Audit Committee since October 2015.  His experience in the public accounting industry and his contributions as a director on our board have been invaluable and we appreciate his continuing commitment to Alphatec.”

Discontinued and Continuing Operations
On September 1, 2016, the Company completed the sale of the Company’s international operations and distribution channel to Globus Medical.   Consequently, the Company’s financial results from the international business, excluding revenue and cost of sales with wholly owned subsidiaries, are reflected within discontinued operations for all periods presented. Going forward, the financial results from continuing operations will consist of net product revenue for the U.S. commercial business and the revenue associated with the supply agreement with Globus Medical. For more information on the details related to discontinued operations, please see the Company’s Form 10-Q filed with the Securities and Exchange Commission on November 9, 2016.

Quarter Ended September 30, 2016

U.S. commercial revenues for the third quarter of 2016 were $25.2 million, down 8%, compared to $27.4 million reported for the third quarter of 2015.   Within the Company’s direct hospital business, implant unit volume has increased over the prior year, however, this growth has been offset by mid-single digit price decline consistent with the pricing trends the Company has experienced for the past several years.  Revenue from the Company’s stocking business is down approximately 50% from the prior year.  The third quarter of 2016 was a difficult quarter for the Company given the distraction related to the sale of the international business, which contributed to a sequential decline in hospital implant unit volumes from the second quarter of 2016.  Today, with the successful sale and transition of the international business complete and an improved balance sheet, the Company is actively engaging with surgeon and distributor customers and building a plan to regain sales momentum and improve U.S. sales.

U.S. gross profit and gross margin for the third quarter of 2016 were $15.2 million and 60.4%, respectively, compared to $19.5 million and 71.3%, respectively, for the third quarter of 2015.

Gross margin declined 10.9 percentage points from the third quarter of 2016 primarily as a result of increased inventory costs due to lower than anticipated purchase volume and obsolete inventory reserve adjustments related to optimizing the Company’s product portfolio through active product lifecycle management.

Total operating expenses for the third quarter of 2016, excluding charges for restructuring and intangible asset impairment, were $17.1 million, reflecting a decrease of $4.6 million compared to the third quarter of 2015.  The Company has been actively monitoring its expenses and reducing costs across the general and administrative (G&A), research and development (R&D) and marketing and selling areas of the business, which contributed to this 21% overall reduction in total operating expenses.  The Company is making steady progress on its goal of reducing its operating expenses by $20 million and continues to look for additional opportunities to improve its cost structure to better align with its focus on the U.S. market going forward.

GAAP net loss for the third quarter of 2016 was $13.7 million or ($1.18) per share (basic and diluted), compared to a net loss of $160.3 million, or ($18.96) per share basic and diluted for the third quarter of 2015.  GAAP net loss for the third quarter of 2015 was unfavorably impacted by $164.3 million of non-cash impairment charges, as well as favorable $6.3 million of warrant fair-value adjustments attributable to the Company’s underlying stock price.

Adjusted EBITDA in the third quarter of 2016 was $709 thousand, or 2.7% of revenues, compared to $3.5 million, or 11.0% of revenues reported in the third quarter of 2015.  Third quarter 2016 adjusted EBITDA represents net income excluding effects of interest, taxes, depreciation, amortization, stock-based compensation and restructuring expenses.

Cash and cash equivalents were $25.6 million at September 30, 2016, compared to $9.5 million reported at June 30, 2016.  The increase is primarily the result of the proceeds from the sale of the international business and the associated borrowing under the debt facility with Globus Medical.

Total Current and Long-term Debt, which includes both MidCap Financial and Globus Medical, was $40.9 million at September 30, 2016.  This represents a decrease of $34.7 million from June 30, 2016 as a result of the Company applying a significant portion of the net proceeds from the sale of the international business to reduce the Company’s total debt and the addition of the $25 million initial draw down from the credit facility with Globus that occurred upon closing of the Globus transaction.

Nine Months Ended September 30, 2016

U.S. net revenues for the nine months ended September 30, 2016 were $82.4 million, down 3.1%, compared to $85.1 million reported for the nine months ended September 30, 2015.   Sales in the Company’s direct hospital business increased over the same period in the prior year, however, this growth was partially offset by mid-single digit price declines consistent with pricing trends the Company has experienced for the past several years.  Revenue from the Company’s stocking business is down approximately 50% from the same period in the prior year.

U.S. gross profit and gross margin for the nine months ended September 30, 2016 were $56.4 million and 68.4%, respectively, compared to $58.1 million and 68.3%, respectively, for the nine months ended September 30, 2015.

Gross margin increased slightly from the prior period primarily as a result of the absence of one-time charges that were present during the nine months in 2015 that are not present over the same period in 2016.

Total operating expenses for the nine months ended September 30, 2016, excluding charges for restructuring and intangible asset impairment, were $66.3 million, reflecting a decrease of $3.8 million compared to the nine months ended September 30, 2015.  The 5.5% improvement from prior period is primarily driven by expense reductions across R&D, marketing and G&A.

GAAP net loss for the nine months ended September 30, 2016 was $25.6 million or ($1.91) per share (basic and diluted), compared to a net loss of $168.8 million, or ($19.92) per share basic and diluted for the nine months ended September 30, 2015.  GAAP net loss for the nine months ended September 30, 2015 was unfavorably impacted by $164.3 million of non-cash impairment charges, as well as favorable $6.3 million of warrant fair-value adjustments attributable to the Company’s underlying stock price.

Adjusted EBITDA in the nine months ended September 30, 2016 was $3.3 million, or 3.5% of revenues, compared to $7.1 million, or 7.1% of revenues reported in the nine months ended September 30, 2015.  Nine months ended September 30, 2016 adjusted EBITDA represents net income excluding effects of interest, taxes, depreciation, amortization, stock-based compensation and restructuring expenses.

Non-GAAP Information

Alphatec Spine reports certain non-GAAP financial measures such as non-GAAP earnings and earnings per share, adjusted for effects of amortization and other non-recurring or expense items, such as impairments, loss on extinguishment of debt, and restructuring expenses.  Adjusted EBITDA included in this press release is a non-GAAP financial measure that represents net income (loss) excluding the effects of interest, taxes, depreciation, amortization, stock-based compensation expenses, in process research and development (IPR&D) expenses and other non-recurring income or expense items, such as impairments, restructuring expenses, severance expenses, litigation expenses, damages associated with ongoing litigation and transaction-related expenses.  The Company believes that non-GAAP adjusted EBITDA provides investors with an additional tool for evaluating the Company’s core performance, which management uses in its own evaluation of continuing operating performance, and a base-line for assessing the future earnings potential of the Company.  For completeness, management uses non-GAAP adjusted EBITDA in conjunction with GAAP earnings and earnings per common share measures.  These non-GAPP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.   Included below are reconciliations of the non-GAAP financial measures to the comparable GAAP financial measure.

About Alphatec Spine

Alphatec Spine, Inc., a wholly owned subsidiary of Alphatec Holdings, Inc., is a medical device company that designs, develops and markets spinal fusion technology products and solutions for the treatment of spinal disorders associated with disease and degeneration, congenital deformities and trauma. The Company’s mission is to improve lives by delivering advancements in spinal fusion technologies. The Company markets products in the U.S. via a direct sales force and independent distributors.

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

Forward Looking Statements

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainty. Such statements are based on management’s current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Alphatec Spine cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Forward looking statements include the references to the success of the Company’s initiatives to drive sales growth, increase margins and increase operating efficiencies.  The important factors that could cause actual operating results to differ significantly from those expressed or implied by such forward-looking statements include, but are not limited to:  the uncertainty of success in developing new products or products currently in Alphatec Spine’s pipeline, including the products discussed in this press release; the uncertainties in the Company’s ability to execute upon its strategic operating plan; the uncertainties regarding the ability to successfully license or acquire new products, and the commercial success of such products; failure to achieve acceptance of Alphatec Spine’s products by the surgeon community, including Battalion, Arsenal Deformity and XYcor; the Company’s ability to meet the product supply obligations set forth in the supply agreement with Globus Medical; failure to obtain FDA clearance or approval or international regulatory approvals for new products, including the products discussed in this press release, or unexpected or prolonged delays in the process; continuation of favorable third party payor reimbursement for procedures performed using the Company’s products; unanticipated expenses or liabilities or other adverse events affecting cash flow or the Company’s ability to successfully control its costs or achieve profitability; uncertainty of additional funding; the Company’s ability to compete with other competing products and with emerging new technologies; product liability exposure; an unsuccessful outcome in any litigation in which the Company is a defendant; patent infringement claims; claims related to the Company’s intellectual property and the Company’s ability to meet its financial obligations under its credit agreements and the Orthotec settlement agreement. The words “believe,” “will,” “should,” “expect,” “intend,” “estimate” and “anticipate,” variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement.  Please refer to the risks detailed from time to time in Alphatec Spine’s SEC reports, including its Annual Report Form 10-K for the year ended December 31, 2015, filed on March 15, 2016 with the Securities and Exchange Commission, and its Amended Annual Report Form 10-K/A filed on April 29, 2016, as well as other filings on Form 10-Q and periodic filings on Form 8-K. Alphatec Spine disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.

ALPHATEC HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts – unaudited)
			Three Months Ended								Nine Months Ended
			September 30,								September 30,
				2016				2015				2016				2015
	Revenues		$	26,711			$	31,687			$	93,158			$	99,597
	Cost of revenues			10,849				10,029				31,651				35,174
	Gross profit			15,862				21,658				61,507				64,423
				59.4	%			68.3	%			66.0	%			64.7	%
	Operating expenses:
	Research and development			1,087				1,850				6,799				9,538
	In-process research and development			–				274				–				274
	Sales and marketing			11,764				12,774				39,498				37,864
	General and administrative			4,136				6,541				19,760				21,579
	Amortization of acquired intangible assets			83				280				249				896
	Impairment of goodwill and intangibles			1,736				164,263				1,736				164,263
	Restructuring expenses			1,605				351				1,778				351
	Total operating expenses			20,411				186,333				69,820				234,765
	Operating income (loss)			(4,549	)			(164,675	)			(8,313	)			(170,342	)
	Interest and other income (expense), net			(10,511	)			5,194				(12,870	)			4,224
	Pretax net loss			(15,060	)			(159,481	)			(21,183	)			(166,118	)
	Income tax (benefit) provision			(4,997	)			(2,483	)			(4,962	)			(1,328	)
	Loss from continuing operations			(10,063	)			(156,998	)			(16,220	)			(164,790	)
	Loss from discontinued operations			(3,658	)			(3,267	)			(9,351	)			(3,983	)
	Net loss		$	(13,721	)		$	(160,265	)		$	(25,571	)		$	(168,773	)
	Net loss per share continuing operations		$	(1.18	)		$	(18.96	)		$	(1.91	)		$	(19.92	)
	Net loss per share discontinued operations			(0.43	)			(0.39	)			(1.10	)			(0.48	)
			$	(1.60	)		$	(19.35	)		$	(3.01	)		$	(20.40	)
	Weighted-average shares – basic and diluted			8,560				8,281				8,505				8,272

 

	ALPHATEC HOLDINGS, INC.
	CONDENSED CONSOLIDATED BALANCE SHEETS
	(in thousands – unaudited)
		September 30,				December 31,
			2016				2015
	ASSETS
	Current assets:
	Cash and cash equivalents	$	25,598			$	6,295
	Restricted Cash		–				2,350
	Accounts receivable, net		16,546				26,870
	Inventories, net		27,661				32,424
	Prepaid expenses and other current assets		2,941				3,138
	Current assets of discontinued operations		2,828				30,418
	Total current assets		75,574				101,495
	Property and equipment, net		13,712				16,067
	Intangibles, net		6,152				8,806
	Other assets		516				502
	Noncurrent assets of discontinued operations		71				19,471
	Total assets	$	96,025			$	146,341
	LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
	Current liabilities:
	Accounts payable	$	6,821			$	13,542
	Accrued expenses		30,705				21,175
	Common stock warrant liabilities		–				687
	Current portion of long-term debt		2,647				79,742
	Current liabilities of discontinued operations		2,207				9,891
	Total current liabilities		42,380				125,037
	Total long term liabilities		68,166				32,761
	Long term liabilities of discontinued operations		87				1,516
	Redeemable preferred stock		23,603				23,603
	Stockholders’ (deficit) equity		(38,211	)			(36,576	)
	Total liabilities and stockholders’ (deficit) equity	$	96,025			$	146,341

 

ALPHATEC HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share amounts – unaudited)
		Three Months Ended									Nine Months Ended
		September 30,									September 30,
			2016				2015					2016				2015
	Operating income (loss), as reported	$	(4,549	)		$	(164,675	)			$	(8,313	)		$	(170,342	)
	Add back:
	Depreciation		1,623				2,873					5,652				7,492
	Amortization of intangible assets		223				188					666				1,745
	Amortization of acquired intangible assets		83				280					249				896
	Total EBITDA		(2,620	)			(161,334	)				(1,746	)			(160,209	)
	Add back significant items:
	Stock-based compensation		(12	)			(78	)				1,510				2,440
	In-process research and development		–				274					–				274
	Goodwill and intangible impairment		1,736				164,263					1,736				164,263
	Restructuring and other charges		1,605				351					1,778				351
	EBITDA, as adjusted for significant items	$	709			$	3,476				$	3,278			$	7,119

 

ALPHATEC HOLDINGS, INC.
RECONCILIATION OF REVENUES AND GROSS PROFIT
(in thousands, except percentages – unaudited)
		Three Months Ended
		September 30,
			2016				2015			% Change
	Revenues by source
	U.S. commercial revenue	$	25,189			$	27,385				-8.0	%
	Other		1,522				4,302				-64.6	%
	Total revenues	$	26,711			$	31,687				-15.7	%
	Gross profit by source
	U.S.	$	15,206			$	19,512
	Other		656				2,146
	Total gross profit	$	15,862			$	21,658
	Gross profit margin by source
	U.S.		60.4	%			71.3	%
	Other		43.1	%			49.9	%
	Total gross profit margin		59.4	%			68.3	%
		Nine Months Ended
		September 30,								% Change
			2016				2015			As Reported
	Revenues by source
	U.S. base business	$	82,445			$	85,099				-3.1	%
	Other		10,713				14,498				-26.1	%
	Total revenues	$	93,158			$	99,597				-6.5	%
	Gross profit by source
	U.S.	$	56,430			$	58,092
	Other		5,077				6,331
	Total gross profit	$	61,507			$	64,423
	Gross profit margin by source
	U.S.		68.4	%			68.3	%
	Other		47.4	%			43.7	%
	Total gross profit margin		66.0	%			64.7	%

CONTACT: Investor/Media Contact:

 

Christine Zedelmayer

Investor Relations

Alphatec Spine, Inc.

(760) 494-6610

czedelmayer@alphatecspine.com

CARLSBAD, Calif., Nov. 09, 2016 (GLOBE NEWSWIRE) — SeaSpine Holdings Corporation (NASDAQ:SPNE), a global medical technology company focused on surgical solutions for the treatment of spinal disorders, announced today financial results for the third quarter ended September 30, 2016 and updated guidance for 2016.

Summary Third Quarter 2016 Financial Results and Recent Accomplishments

• Revenue of $31.7 million, a decline of 2.9% year-over-year
• S. revenue of $28.5 million, a decline of 5.5% year over year
  • S. orthobiologics revenue of $14.6 million
  • S. spinal hardware revenue of $13.9 million
• International revenue of $3.3 million, a 28.2% increase year over year
• Acquired minimally invasive expandable interbody portfolio technology from NLT Spine Ltd. (NLT), an Israel-based medical device company developing innovative spinal products
• Received 510(k) clearance from the FDA and launched three new products
  • Shoreline™ ACS Anterior Cervical Standalone System, featuring TruProfile™ technology
  • Mariner™ Posterior Lumbar Fixation System, designed to reduce the number of trays needed for surgery
  • Newport™ Extension System, designed to enable minimally invasive approaches in more complex surgical situations

“We continue to make progress towards expanding and upgrading our product portfolio with the launch of several new products and product line extensions. We are also building and strengthening relationships with high-potential distributors who are committed and excited for our new and future products,” said Keith Valentine, President and Chief Executive Officer.

“Revenue in the quarter, however, was impacted by larger than anticipated decline in sales volume of our legacy hardware and orthobiologics products that outpaced sales of our recently launched products, as well as ongoing pricing pressure. We have initiated several targeted, cost-reduction measures which we expect to significantly reduce our cash spend in 2017 while allowing us to continue to invest in the product development, sales and marketing initiatives that will drive future revenue growth.  I am confident that the cadence of new product introductions and traction we are building with new distributors, combined with our recent actions to streamline operations and reduce our cash spend, will put us back on track for growth in 2017.”

Third Quarter 2016 Financial Results

Revenue for the third quarter of 2016 totaled $31.7 million, a decrease of $1.0 million compared to $32.7 million reported for the same period of the prior year. Total revenue in the U.S. was $28.5 million, a 5.5% decrease over the prior year.

Revenue from orthobiologics products was $16.2 million, a 1.7% decrease compared to the third quarter of 2015. The decline in orthobiologics revenue was primarily driven by lower average selling prices and product mix due to increasing pricing pressures in the U.S. market. Revenue from spinal hardware was $15.6 million, a 4.0% decrease compared to the third quarter of 2015. The decline in spinal hardware revenue was primarily driven by lower demand for the Company’s older spinal fusion hardware products and continued pricing pressures in the U.S. market.

Gross margin for the third quarter of 2016 was 56.3%, compared to 46.9% for the same period in 2015.  The increase in gross margin was mainly driven by a $4.4 million charge recorded in the third quarter of 2015 for excess and obsolete spinal fusion hardware inventory, the substantial majority of which was purchased prior to the spin-off and a large portion of which was primarily intended for distribution in international markets.

Operating expenses for the third quarter of 2016 totaled $27.4 million, a decline of 8.7% compared to $30.0 million for the same period of the prior year, primarily the result of lower SG&A expenses.

Net loss for the third quarter of 2016 was $9.5 million, compared to a net loss of $14.2 million for the third quarter of 2015.

Cash and cash equivalents at September 30, 2016 were $20.8 million and the Company had $3.8 million of outstanding borrowings against its credit facility.

2016 Financial Outlook

SeaSpine lowered its estimate for full-year 2016 revenue to a range of $128 to $130 million, reflecting a 2% to 4% decline over full-year 2015 revenue.

Reduction-in-Force and Other Cost-Reduction Initiatives

In response to lower revenue expectations, the Company initiated a number of activities that, collectively, are expected to reduce cash spend in 2017 by approximately $9 million relative to 2016.  In particular, the Company today initiated a reduction-in-force that will contribute to an overall reduction in its current employee base of approximately 8%.

Webcast and Conference Call Information The Company’s management team will host a conference call beginning today at 1:30pm PT/4:30pm ET to discuss the financial results and recent business developments. Individuals interested in listening to the conference call may do so by dialing (877) 418-4766 for domestic callers or (614) 385-1253 for international callers, using Conference ID: 98611494. To listen to the webcast, please visit the investor relations section of the SeaSpine website at www.seaspine.com.

About SeaSpine

SeaSpine is a global medical technology company focused on the design, development and commercialization of surgical solutions for the treatment of patients suffering from spinal disorders. SeaSpine has a comprehensive portfolio of orthobiologics and spinal hardware solutions to meet the varying combinations of products that neurosurgeons and orthopedic spine surgeons need to perform fusion procedures on the lumbar, thoracic and cervical spine. SeaSpine’s orthobiologics products consist of a broad range of advanced and traditional bone graft substitutes that are designed to improve bone fusion rates following a wide range of orthopedic surgeries, including spine, hip, and extremities procedures. SeaSpine’s spinal hardware portfolio consists of an extensive line of products to facilitate spinal fusion in minimally invasive surgery (MIS), complex spine, deformity and degenerative procedures. Expertise in both orthobiologic sciences and spinal fusion hardware product development helps SeaSpine to offer its surgeon customers a complete solution to meet their fusion requirements. SeaSpine currently markets its products in the United States and in over 30 countries worldwide.

Forward-Looking Statements

SeaSpine cautions you that statements included in this news release that are not a description of historical facts are forward-looking statements that are based on the Company’s current expectations and assumptions. Such forward-looking statements include, but are not limited to, statements relating to: revenue expectations for full-year 2016 and estimated reductions in, and the Company’s ability to reduce, cash spend in 2017; the Company’s ability to continue to invest adequately in activities that will drive future revenue growth in light of cost-reduction initiates; and the Company’s ability to achieve revenue growth in 2017.  Among the factors that could cause or contribute to material differences between the Company’s actual results and the expectations indicated by the forward-looking statements are risks and uncertainties that include, but are not limited to: surgeons’ willingness to continue to use our existing products and to adopt our newly launched products; continued pricing pressure, whether as a result of consolidation in hospital systems, competitors or others, as well as exclusion from major healthcare systems, whether as a result of unwillingness to provide required pricing or otherwise; disruption to our existing distribution network as new distributors are added and the inability of new distributors to generate growth, or even offset lost business; the risk that our products do not demonstrate adequate safety or efficacy, independently or relative to competitive products, to support expected levels of demand or pricing, including in ongoing and future studies, the outcomes of which inherently are uncertain; the lack of clinical validation of products in “alpha release” and the fact they may require substantial additional development activities, which could introduce unexpected expense and delay; the risk of supply shortages, including as a result of our dependence on a limited number of third-party suppliers for components and raw materials, or otherwise; third-party payors’ willingness to continue to provide, for our existing products, and to initiate, for our newly launched products, appropriate coverage, coding and reimbursement and uncertainty resulting from healthcare reform, both in the U.S. and abroad; unexpected expense, including as a result of developing and launching new and next generation products and product line extensions; our ability to sustain current operations and to continue to invest in product development, sales and marketing initiatives at levels sufficient to drive future revenue growth in light of cost-reduction initiates; our ability to obtain funding on a timely basis on acceptable terms, or at all, to execute our business strategy; general economic and business conditions in the markets in which we do business, both in the U.S. and abroad; and other risks and uncertainties more fully described in our news releases and periodic filings with the Securities and Exchange Commission. The Company’s public filings with the Securities and Exchange Commission are available at www.sec.gov.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date when made. SeaSpine does not intend to revise or update any forward-looking statement set forth in this news release to reflect events or circumstances arising after the date hereof, except as may be required by law.

 

SEASPINE HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2016				2015				2016				2015
Total revenue, net	$	31,741			$	32,679			$	96,341			$	98,454
Cost of goods sold	13,881				17,341				42,094				44,448
Gross profit	17,860				15,338				54,247				54,006
Operating expenses:
Selling, general and administrative	23,803				26,348				76,166				83,059
Research and development	2,600				2,364				8,534				5,973
Intangible amortization	955				1,295				3,517				4,049
Total operating expenses	27,358				30,007				88,217				93,081
Operating loss	(9,498		)		(14,669		)		(33,970		)		(39,075		)
Other income (expense), net	(59		)		195				(33		)		(577		)
Loss before income taxes	(9,557		)		(14,474		)		(34,003		)		(39,652		)
Provision (benefit) for income taxes	(103		)		(275		)		(559		)		2,130
Net loss	$	(9,454	)		$	(14,199	)		$	(33,444	)		$	(41,782	)
Net loss per share, basic and diluted	$	(0.84	)		$	(1.27	)		$	(2.98	)		$	(3.75	)
Weighted average shares used to compute basic and diluted net loss per share	11,271				11,171				11,206				11,130

 

SEASPINE HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
(In thousands)
	September 30, 2016				December 31, 2015
Cash and cash equivalents	$	20,808			$	33,429
Trade accounts receivable, net	21,202				25,326
Inventories	48,176				51,271
Total current liabilities	28,344				26,035
Short-term debt	824				–
Long-term borrowings under credit facility	3,750				328
Total stockholders’ equity	119,631				147,339

 

Investor Relations Contact Lynn Pieper(415) 937-5402ir@seaspine.com

 

CAMBRIDGE, Mass., Nov. 07, 2016 (GLOBE NEWSWIRE) — Vericel Corporation (NASDAQ:VCEL), a leading developer of autologous expanded cell therapies for the treatment of severe diseases and conditions, today reported financial results for the third quarter ended September 30, 2016.

Total net revenues for the quarter ended September 30, 2016 were approximately $10.9 million and included approximately $8.3 million of Carticel^® (autologous cultured chondrocytes) net revenues and approximately $2.6 million of Epicel^® (cultured epidermal autografts) net revenues.  Total Carticel and Epicel net revenues for the quarter ended September 30, 2016 were approximately flat compared to total net product revenues in the third quarter of 2015, with Carticel net revenues increasing $0.6 million and Epicel net revenues decreasing $0.6 million compared to the same period in 2015.  While Epicel orders for the quarter ended September 30, 2016 were equal to the number of orders in the third quarter of 2015, the average number of grafts per order was lower in this quarter.  For the nine months ended September 30, 2016, total Carticel and Epicel net revenues were $37.9 million and included over $26.1 million of Carticel net revenues and over $11.7 million of Epicel net revenues.  Total Carticel and Epicel net revenues increased approximately 8% compared to the first nine months of 2015, with Carticel revenue increasing 9% and Epicel revenues increasing 5%, respectively, compared to the same period in 2015.

Gross profit for the quarter ended September 30, 2016 was $4.1 million, or 37% of net revenues, compared to $4.5 million, or 40% of net product revenues, for the third quarter of 2015.  Gross profit for the first nine months of 2016 was $17.1 million, or 45% of net revenues, compared to $16.5 million, or 46% of net product revenues, for the first nine months of 2015.

Research and development expenses for the quarter ended September 30, 2016 were $3.4 million compared to $3.7 million in the third quarter of 2015.  The decrease in third quarter research and development expenses is primarily due to a decrease in research, development, and regulatory consulting expenses for MACI^® (autologous cultured chondrocytes on porcine collagen membrane).  MACI is Vericel’s investigational third-generation autologous cultured chondrocyte product intended for the treatment of symptomatic full-thickness cartilage defects of the knee.  Development expenses for the ixmyelocel-T program were $1.9 million for the third quarter of 2016, which were primarily due to ongoing clinical development activities related to the double-blind portion of the ixCELL-DCM study and preparations for the open-label crossover extension portion of the study.

Selling, general and administrative expenses for the quarter ended September 30, 2016 were $7.0 million compared to $5.7 million for the same period in 2015.  The increase in selling, general and administrative expenses in 2016 is primarily due to the costs associated with Vericel’s new provider of patient support and reimbursement services for Carticel and MACI, if approved, and professional services related to preparing for the potential launch of MACI.

Loss from operations for the quarter ended September 30, 2016 was $6.4 million, compared to $4.9 million for the third quarter of 2015.  Material non-cash items impacting the operating loss for the quarter included $0.7 million of stock-based compensation expense and $0.5 million in depreciation and amortization expense.

Other expense for the quarter ended September 30, 2016 was $0.3 million compared to other income of $0.5 million for the same period in 2015.  The change in other expense for the quarter is primarily due to the change in the fair value of warrants in the third quarter of 2016 compared to the same period in 2015.

Vericel’s GAAP net loss for the quarter ended September 30, 2016 was $6.7 million, or $0.38 per share, compared to a net loss of $4.4 million, or $0.26 per share, for the same period in 2015. Vericel reported an adjusted net loss for the quarter ended September 30, 2016 of $6.5 million dollars, or $0.27 per share, compared to an adjusted net loss of $4.9 million, or $0.21 per share, for the same period in 2015.  The adjusted net loss excludes the non-cash change in the fair value of warrants and the non-cash accumulated dividend on the Series B convertible preferred stock.  The adjusted net loss per share includes common shares reserved as treasury shares received in exchange for the Series A non-voting convertible preferred stock.

As of September 30, 2016, the company had $8.9 million in cash compared to $14.6 million in cash at December 31, 2015.

Recent Business Highlights
During and since the third quarter of 2016, the company:

• Increased total Carticel and Epicel net revenues approximately 8% compared to the first nine months of 2015, with Carticel revenue increasing 9% and Epicel revenues increasing 5%, respectively, compared to the same period in 2015;
• Implemented the new agreement with Dohmen Life Science Services, LLC for patient support services, as well as payer contracting and product reimbursement services, for Carticel and MACI, if approved;
• Increased preparations for the potential launch of MACI in anticipation of the January 3, 2017 PDUFA goal date;
• Received FDA approval for in-house production of 3T3 cells used in the Epicel manufacturing process, which is expected to yield more than $1 million in annual savings in cost of product sales once the current inventory of purchased 3T3 cells is exhausted;
• Entered into an expanded $20 million credit facility and term loan with Silicon Valley Bank and MidCap Financial Services and a $25 million common stock at the market offering program with Cowen and Company, LLC;
• Announced the acceptance of an abstract for presentation on November 14, 2016 at the American Heart Association’s Scientific Sections 2016 entitled: “Reduction in Ventricular Arrhythmias with Ixmyelocel-T: Results from the ixCELL-DCM Trial”; and
• Initiated the open-label crossover portion of the ixCELL-DCM study with the first patient treated in October 2016.

“This is an exciting time for Vericel as we head into our historically strongest quarter of the year, prepare for the potential launch of MACI and expand our promotional efforts for Epicel,” said Nick Colangelo, president and CEO of Vericel. “We believe that the investments we are making to expand our commercial organization and implement new programs to support our patients and other key stakeholders will drive a period of significant growth for the company in 2017 and beyond.”

Conference Call Information
Today’s conference call will be available live at 4:30pm Eastern time in the Investors section of the Vericel website at http://investors.vcel.com/events.cfm. Please access the site at least 15 minutes prior to the scheduled start time in order to download the required audio software if necessary.  To participate in the live call by telephone, please call (877) 312-5881 and reference Vericel Corporation’s third-quarter 2016 investor conference call.  If calling from outside the U.S., please use the international phone number (253) 237-1173.

If you are unable to participate in the live call, the webcast will be available November 7, 2016. A replay of the call will also be available until 7:29 pm (EDT) on November 11, 2016 by calling (855) 859-2056, or from outside the U.S. (404) 537-3406.  The conference ID is 765207.

About Vericel Corporation
Vericel develops, manufactures, and markets autologous expanded cell therapies for the treatment of patients with serious diseases and conditions.  The company markets two cell therapy products in the United States.  Carticel^® (autologous cultured chondrocytes) is an autologous chondrocyte implant for the treatment of cartilage defects in the knee in patients who have had an inadequate response to a prior arthroscopic or other surgical repair procedure.  Epicel^® (cultured epidermal autografts) is a permanent skin replacement for the treatment of patients with deep dermal or full thickness burns greater than or equal to 30% of total body surface area.  Vericel is also developing two additional cell products.  MACI^®(autologous cultured chondrocytes on porcine collagen membrane) is a third generation autologous chondrocyte implant intended to treat cartilage defects in the knee.  Ixmyelocel‑T is an autologous multicellular therapy intended to treat advanced heart failure due to ischemic dilated cardiomyopathy (DCM).  For more information, please visit the company’s website at www.vcel.com.  

Epicel^®, Carticel^®, and MACI^® are registered trademarks of Vericel Corporation. © Vericel Corporation. All rights reserved.

Non-GAAP Financial Measures
Vericel has provided in this release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.  Vericel believes that the use of these non-GAAP financial measures provides supplementary information for investors to use in evaluating operating performance and in comparing its financial measures with other companies in Vericel’s industry.  The adjusted net loss excludes the non-cash change in the fair value of warrants and the non-cash accumulated dividend on the Series B convertible preferred stock.  The adjusted earnings per share includes common shares reserved as treasury shares received in exchange for the Series A non-voting convertible preferred stock.  Non-GAAP financial measures that Vericel uses may differ from measures that other companies may use.  In addition, non-GAAP financial measures are not required to be uniformly applied, are not audited and should not be considered in isolation or as substitutes for results prepared in accordance with GAAP.

This document contains forward-looking statements, including, without limitation, statements concerning anticipated progress, objectives and expectations regarding the commercial potential of our products and growth in revenues, intended product development, clinical activity timing, regulatory progress, including the potential clearance of MACI, and objectives and expectations regarding our company described herein, all of which involve certain risks and uncertainties. These statements are often, but are not always, made through the use of words or phrases such as “anticipates,” “intends,” “estimates,” “plans,” “expects,” “we believe,” “we intend,” and similar words or phrases, or future or conditional verbs such as “will,” “would,” “should,” “potential,” “could,” “may,” or similar expressions. Actual results may differ significantly from the expectations contained in the forward-looking statements. Among the factors that may result in differences are the inherent uncertainties associated with competitive developments, clinical trial and product development activities, regulatory approval requirements, estimating the commercial growth potential of our products and product candidates and growth in revenues and improvement in costs, market demand for our products, and our ability to supply or meet customer demand for our products. These and other significant factors are discussed in greater detail in Vericel’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (“SEC”) on March 14, 2016, Quarterly Reports on Form 10-Q and other filings with the SEC. These forward-looking statements reflect management’s current views and Vericel does not undertake to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date of this release except as required by law. 

CONTACT:             
Chad Rubin
The Trout Group
crubin@troutgroup.com
(646) 378-2947
or
Lee Stern
The Trout Group
lstern@troutgroup.com
(646) 378-2922

BELGRADE, Mont., Nov. 09, 2016 (GLOBE NEWSWIRE) — Xtant Medical Holdings, Inc. (NYSE MKT:XTNT), a leader in the development, manufacturing and marketing of orthopedic products for domestic and international markets, announced today that it has adjusted the subscription price and related pricing information for its previously announced rights offering of up to 15,000,000 units, each consisting of one share of common stock and one warrant to purchase one share of common stock. The subscription price is now $0.75 per unit. The subscription period for the rights commenced on October 31, 2016 and will remain open until 5:00 PM Eastern Time on Monday, November 14, 2016, unless extended by the company. Holders of rights will need to exercise their subscription rights prior to that date and time.

Investors that have subscribed at the previous price will now receive the new adjusted price, and any excess payment amount will be returned to investors following the closing of the offering. If exercising subscription rights through a broker, dealer, bank or other nominee, rights holders should promptly contact their nominee and submit subscription documents and payment for the units subscribed for in accordance with the instructions and within the time period provided by such nominee.The broker, dealer, bank or other nominee may establish a deadline before November 14, 2016 by which instructions to exercise subscription rights, along with the required subscription payment, must be received.

All holders of rights that wish to participate in the rights offering must deliver a properly completed and signed subscription rights statement, together with payment of the subscription price for both basic subscription rights and any over subscription privilege election, by mail or hand or overnight courier to the Subscription Agent, to be received before 5:00 PM Eastern Time on November 14, 2016. The Subscription Agent is:

Corporate Stock Transfer, Inc.

3200 Cherry Creek Drive South, Suite 430

Denver, Colorado 80209

Under the proposed rights offering, the Company has distributed two non-transferable subscription rights for each share of common stock held, or underlying convertible notes held, on the record date. Each subscription right entitles the holder to purchase one unit at the subscription price of $0.75 per unit. Each unit consists of one share of common stock and one warrant, with each warrant exercisable to purchase one share of common stock at an exercise price of $0.90 for five years from the date of issuance. After the one-year anniversary of issuance, the Company may redeem the warrants for $0.01 per warrant if the volume weighted average price of the Company’s common stock is greater than $2.25 for each of 10 consecutive trading days.

Holders who exercise their subscription rights in full will be entitled, if available, to subscribe for additional units that are not purchased by other shareholders or convertible note holders, on a pro rata basis and subject to ownership limitations.

Xtant Medical has engaged Maxim Group LLC as dealer-manager in the offering. The offering may only be made by means of a prospectus. Questions about the rights offering or requests for copies of the prospectus may be directed to:

Maxim Group LLC

405 Lexington Avenue

New York, NY 10174

Attention: Syndicate Department

Email: syndicate@maximgrp.com

Telephone: (212) 895-3745

The Company’s registration statement on Form S-1 was declared effective by the U.S. Securities and Exchange Commission (SEC) on October 31, 2016. The prospectus relating to and describing the terms of the rights offering has been filed with the SEC as a part of the registration statement and is available on the SEC’s web site at http://www.sec.gov.

This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor will there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Xtant Medical Holdings

Xtant Medical Holdings, Inc. (NYSE MKT:XTNT) develops, manufactures and markets class-leading regenerative medicine products and medical devices for domestic and international markets. Xtant products serve the specialized needs of orthopedic and neurological surgeons, including orthobiologics for the promotion of bone healing, implants and instrumentation for the treatment of spinal disease, tissue grafts for the treatment of orthopedic disorders, and biologics to promote healing following cranial, and foot and ankle surgeries. With core competencies in both biologic and non-biologic surgical technologies, Xtant can leverage its resources to successfully compete in global neurological and orthopedic surgery markets. For further information, please visit www.xtantmedical.com.

Important Cautions Regarding Forward-looking Statements

This press release contains certain disclosures that may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to significant risks and uncertainties. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “continue,” “efforts,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “projects,” “forecasts,” “strategy,” “will,” “goal,” “target,” “prospects,” “potential,” “optimistic,” “confident,” “likely,” “probable” or similar expressions or the negative thereof.

Statements of historical fact also may be deemed to be forward-looking statements. We caution that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others: our ability to integrate the acquisition of X-spine Systems, Inc. and any other business combinations or acquisitions successfully; our ability to remain listed on the NYSE MKT; our ability to obtain financing on reasonable terms; our ability to increase revenue; our ability to comply with the covenants in our credit facility; our ability to maintain sufficient liquidity to fund our operations; the ability of our sales force to achieve expected results; our ability to remain competitive; government regulations; our ability to innovate and develop new products; our ability to obtain donor cadavers for our products; our ability to engage and retain qualified technical personnel and members of our management team; the availability of our facilities; government and third-party coverage and reimbursement for our products; our ability to obtain regulatory approvals; our ability to successfully integrate recent and future business combinations or acquisitions; our ability to use our net operating loss carry-forwards to offset future taxable income; our ability to deduct all or a portion of the interest payments on the notes for U.S. federal income tax purposes; our ability to service our debt; product liability claims and other litigation to which we may be subjected; product recalls and defects; timing and results of clinical studies; our ability to obtain and protect our intellectual property and proprietary rights; infringement and ownership of intellectual property; our ability to remain accredited with the American Association of Tissue Banks; influence by our management; our ability to pay dividends; our ability to issue preferred stock; and other factors.

Additional risk factors are listed in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading “Risk Factors.” You should carefully consider the trends, risks and uncertainties described in this document, the Form 10-K and other reports filed with or furnished to the SEC before making any investment decision with respect to our securities. If any of these trends, risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline, and you could lose all or part of your investment. The Company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

Investor Contact 
CG CAPITAL
Rich Cockrell 
877.889.1972
xtant@cg.capital

Company Contact 
Xtant Medical
Molly Mason 
mmason@xtantmedical.com

8 November 2016

Smith & Nephew (NYSE:SNN; LSE:SN), the global medical technology business, announces that the U.S. health and wellness organization, Provider PPI LLC, has adopted its Episode of Care Assurance Program (eCAP), an innovation designed to mitigate risk associated with readmissions in value-based healthcare reimbursement models. Provider PPI LLC is a subsidiary of Highmark Health that provides group purchasing benefits to the hospitals of Allegheny Health Network and 60 additional healthcare providers in the western Pennsylvania region.

Unplanned readmissions are costly to hospitals, surgeons and patients and can result in significant financial implications under the Comprehensive Care for Joint Replacement Model (CJR) and Bundled Payments for Care Improvement (BPCI) initiative. For patients, an unplanned readmission can turn an elective procedure into an emergent procedure, complicating and extending the 90-day episode of care. For hospitals and surgeons focused on value, as defined by quality outcomes achieved through efficiency, unplanned readmissions can negatively influence overall quality scores.

“We are excited about the significant value that Smith & Nephew’s Episode of Care Assurance Program will bring to our member hospitals,” said Paul Gallagher, VP, Provider PPI.  “Joint replacement and wound care are important, busy clinical service lines for most every hospital in our group and this unique program provides an added level of quality assurance and cost control to their associated bundled payment protocols.”

The eCAP initiative pairs together Smith & Nephew’s entire line of primary total hip and knee reconstructive systems with two of its most innovative wound care products: PICO™ Single Use Negative Pressure Wound Therapy and ACTICOAT™ Flex 7 Silver-coated Antimicrobial Barrier Dressing. Smith & Nephew warrants the performance of its primary total knee systems, primary total hip systems, PICO Single Use Negative Pressure Wound Therapy System and ACTICOAT Flex 7 to perform as expected. If a patient is readmitted within 90 days following a procedure for a surgical site infection or to revise the implant due to a failure of a Smith & Nephew product, Smith & Nephew will pay a hospital’s unreimbursed costs for the readmission up to the purchase prices of the implant, PICO and ACTICOAT Flex 7.

This pioneering program can provide value and help to improve quality associated with lower extremity joint reconstruction surgery (LEJR). Building strong partnerships with healthcare institutions and providers is the core of Smith & Nephew’s mission and has been a central pillar of the company for over 160 years. By providing viable solutions in healthcare, Smith & Nephew supports healthcare professionals in their daily efforts to improve the lives of patients.

Enquiries

David Snyder Smith & Nephew	+1 (978)-749-1440
Investor/Analyst
Ingeborg Oie Smith & Nephew	+44 (0)20 7401 7646

About Smith & Nephew

Smith & Nephew is a global medical technology business dedicated to helping healthcare professionals improve people’s lives. With leadership positions in Orthopaedic Reconstruction, Advanced Wound Management, Sports Medicine and Trauma & Extremities, Smith & Nephew has around 15,000 employees and a presence in more than 100 countries. Annual sales in 2015 were more than $4.6 billion. Smith & Nephew is a member of the FTSE100 (LSE:SN, NYSE:SNN).

For more information about Smith & Nephew, please visit our website www.smith-nephew.com, follow @SmithNephewplc on Twitter or visit SmithNephewplc on Facebook.com.

 

^{Forward-looking Statements}

^{This document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and trading margins, market trends and our product pipeline are forward-looking statements. Phrases such as “aim”, “plan”, “intend”, “anticipate”, “well-placed”, “believe”, “estimate”, “expect”, “target”, “consider” and similar expressions are generally intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. For Smith & Nephew, these factors include: economic and financial conditions in the markets we serve, especially those affecting health care providers, payers and customers; price levels for established and innovative medical devices; developments in medical technology; regulatory approvals, reimbursement decisions or other government actions; product defects or recalls or other problems with quality management systems or failure to comply with related regulations; litigation relating to patent or other claims; legal compliance risks and related investigative, remedial or enforcement actions; disruption to our supply chain or operations or those of our suppliers; competition for qualified personnel; strategic actions, including acquisitions and dispositions, our success in performing due diligence, valuing and integrating acquired businesses; disruption that may result from transactions or other changes we make in our business plans or organisation to adapt to market developments; and numerous other matters that affect us or our markets, including those of a political, economic, business, competitive or reputational nature. Please refer to the documents that Smith & Nephew has filed with the U.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended, including Smith & Nephew’s most recent annual report on Form 20-F, for a discussion of certain of these factors. Any forward-looking statement is based on information available to Smith & Nephew as of the date of the statement. All written or oral forward-looking statements attributable to Smith & Nephew are qualified by this caution. Smith & Nephew does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances or in Smith & Nephew’s expectations.}

^{◊ Trademark of Smith & Nephew.}

November 8, 2016

Seikagaku Corporation (“Seikagaku”) (head office: Tokyo, Japan) today announced that it has entered into an exclusive distributorship agreement in the United States for VISCO-3™, a hyaluronic acid based viscosupplement product which requires three injections for the treatment of knee osteoarthritis pain, with Zimmer Biomet Holdings, Inc. (“Zimmer Biomet”) (head office: Warsaw, Indiana, U.S.A.).

As an aging population is growing in the U.S, expansion of the market for viscosupplement products is expected to continue. The market supports products with different numbers of injections, which are used according to the diverse needs of physicians and patients. Zimmer Biomet has sold Gel-One®, a single-injection viscosupplement product manufactured by Seikagaku, in the U.S. since 2012. With the conclusion of this agreement, Zimmer Biomet adds VISCO-3™ to its product line.

Seikagaku will have a line of products with three different numbers of injections, whole type of injection product, after the introduction of VISCO-3™ in the U.S. market, in addition to the existing Gel-One® single-injection treatment and SUPARTZ FX® five-injection treatment. In its role as the manufacturer of VISCO-3™, Seikagaku will continue to work to increase the presence of its products in the U.S., a key region in the growth strategy, by supporting the sales activities of the sales partner through the provision of academic information and measures to enhance the added value of products.

The impact of this matter on the consolidated financial results for the fiscal year ending March 31, 2017 will be minor and has been taken into account in the revised forecast of consolidated financial results disclosed on November 8, 2016.

< About VISCO-3™, a three-injection viscosupplement product > VISCO-3™, an injectable treatment the active ingredient of which is hyaluronic acid, was approved by the U.S. Food and Drug Administration (FDA) in December 2015 as a medical device indicated for knee osteoarthritis. It is a three-injection kit product for administering a three-dose treatment cycle (three doses given once weekly). Knee osteoarthritis is a disease characterized by the degeneration of articular cartilage and consequent swelling and pain. Injection of hyaluronic acid is a therapy used to curb the progress of symptoms.

< About Zimmer Biomet Holdings, Inc. > Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. Zimmer Biomet designs, manufactures and markets orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products. In the field of viscosupplement products, Zimmer Biomet is the sales partner in the U.S. for Gel-One® , Seikagaku’s single-injection product.

< Cautionary Notes > This press release contains forward-looking statements regarding future management strategies or performance forecasts. These statements are based on judgments derived from information that is currently available to Seikagaku and are subject to risk and uncertainty. Actual results and developments may differ significantly from these forward-looking statements due to various factors. Information about pharmaceutical products or medical devices (including products currently in development) included in this press release is not intended to constitute an advertisement or medical advice.