SeaSpine Reports Third Quarter 2017 Financial Results
November 02 2017 - 4:03PM
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, 2017.
Third Quarter 2017 Financial Highlights and Recent
Accomplishments
- Revenue of $31.7 million, unchanged compared to the prior year
- U.S. revenue of $28.2 million, a decrease of 0.8%
year-over-year
- U.S. Orthobiologics revenue of $14.9 million, an increase of
2.0% year-over-year
- U.S. Spinal Implants revenue of $13.3 million, a decrease of
3.9% year-over-year
- International revenue of $3.5 million, an increase of 7.4%
year-over-year
- Full commercial launch of the Shoreline Anterior Cervical
Standalone (ACS) System, featuring TruProfile™ technology,
providing surgeons the ability to intraoperatively address a wide
range of anatomy, surgical situations or bone
- Limited commercial launch of OsteoStrand™ Demineralized Bone
Fibers and initial surgeries successfully completed
- Improved liquidity position, with total cash balance $4.4
million higher than at June 30, 2017, and all outstanding debt and
interest paid down during the third quarter
“We are pleased with our results this quarter and confident that
our strategy to reposition SeaSpine for growth is on track,” said
Keith Valentine, President and Chief Executive Officer of SeaSpine.
“We are confident that our recent and upcoming product launches,
combined with an even stronger distribution network, will generate
growth as we head into 2018.”
Third Quarter 2017 Financial ResultsRevenue for
the third quarter of 2017 totaled $31.7 million, unchanged compared
to the same period of the prior year. U.S. revenue was $28.2
million, a decrease of 0.8% compared to the same period of the
prior year. The decrease in U.S. revenue was primarily due to
low-single digit price declines and decreased usage of SeaSpine’s
legacy spinal implant systems, which outpaced the revenue growth
contributed by recently launched products.
U.S. Orthobiologics revenue totaled $14.9 million, increasing
2.0% compared to the third quarter of 2016. U.S. Spinal Implants
revenue totaled $13.3 million, decreasing 3.9% compared to the
third quarter of 2016.
Gross margin for the third quarter of 2017 was 61.6%, compared
to 56.3% for the same period in 2016. The increase in gross
margin was mainly driven by lower manufacturing costs for
orthobiologics products manufactured at the Company's Irvine,
California facility.
Operating expenses for the third quarter of 2017 totaled $27.3
million, compared to $27.4 million for the same period of the prior
year. A $0.2 million increase in R&D expense was more
than offset by lower selling, general and administrative and
intangible amortization expenses. SG&A expense for the
third quarter of 2017 included the benefit of a $1.2 million
non-cash gain related to a reduction in the fair market value of
contingent consideration liabilities associated with the NLT Spine
acquisition, which was mostly offset by higher selling commissions
compared to the third quarter of 2016.
Net loss for the third quarter of 2017 was $7.5 million,
compared to a net loss of $9.5 million for the third quarter of
2016.
Cash and cash equivalents at September 30, 2017 totaled $16.7
million, and the Company had no amounts outstanding under its $30.0
million credit facility. During the third quarter of 2017, the
Company paid off all outstanding borrowings plus accrued interest
totaling $4.1 million. The Company realized $11.0 million in net
proceeds in the third quarter of 2017 through the sale of
approximately 1,023,000 shares of its common stock under its "at
the market" equity offering program and used a portion of those
proceeds to fully pay down the credit facility.
2017 Financial OutlookSeaSpine expects
full-year 2017 revenue guidance to be in the range of $130 million
to $132 million, reflecting growth of 1% to 2.5% over full-year
2016 revenue.
Webcast and Conference Call InformationSeaSpine
will report complete financial results for the third quarter of
2017 on November 2, 2017 at 1:30 p.m. PT / 4:30 p.m. ET.
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: 97240039. To listen
to a live webcast, please visit the Investors section of the
SeaSpine website at: www.seaspine.com. A replay of the webcast will
be available until Wednesday, November 15, 2017.
About SeaSpineSeaSpine 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 implants
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
implants 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 implants product development
allows SeaSpine to offer its surgeon customers a differentiated
portfolio and 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 StatementsSeaSpine 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: the ability of the Company’s recent and
upcoming product launches, as well as its distribution network, to
generate growth as it heads into 2018; and the Company’s
expectations for full-year 2017 revenue. 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 the Company’s existing products and to adopt its newly
launched products, including the risk that the Company’s products
do not demonstrate adequate safety or efficacy, independently or
relative to competitive products, to support expected levels of
demand or pricing; the ability of newly launched products to
perform as designed and intended and to meet the clinical needs of
surgeons and patients; the Company’s ability to attract new,
high-quality distributors, whether as a result of inability to
reach agreement on financial or other contractual terms or
otherwise, disruption to the Company’s existing distribution
network as new distributors are added, and the ability of new
distributors to generate growth or offset disruption to existing
distributors; 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; the risk of
supply shortages, including as a result of the Company’s dependence
on a limited number of third-party suppliers for components and raw
materials or otherwise; unexpected expense, including as a result
of developing and supporting the launch of new products; the
Company’s ability to continue to invest in product development and
sales and marketing initiatives at levels sufficient to drive
future revenue growth; general economic and business conditions in
the markets in which the Company does business, both in the U.S.
and abroad; and other risks and uncertainties more fully described
in the Company’s 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.
Investor Relations ContactCarrie Mendivil(415)
937-5405ir@seaspine.com
SEASPINE HOLDINGS CORPORATION |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share data) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Total revenue, net |
$ |
31,742 |
|
|
$ |
31,741 |
|
|
$ |
97,832 |
|
|
$ |
96,341 |
|
Cost of goods sold |
12,176 |
|
|
13,881 |
|
|
39,342 |
|
|
42,094 |
|
Gross
profit |
19,566 |
|
|
17,860 |
|
|
58,490 |
|
|
54,247 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling, general and
administrative |
23,674 |
|
|
23,803 |
|
|
71,893 |
|
|
76,166 |
|
Research and
development |
2,834 |
|
|
2,600 |
|
|
9,228 |
|
|
8,534 |
|
Intangible
amortization |
792 |
|
|
955 |
|
|
2,376 |
|
|
3,517 |
|
Total
operating expenses |
27,300 |
|
|
27,358 |
|
|
83,497 |
|
|
88,217 |
|
Operating loss |
(7,734 |
) |
|
(9,498 |
) |
|
(25,007 |
) |
|
(33,970 |
) |
Other income (expense),
net |
215 |
|
|
(59 |
) |
|
387 |
|
|
(33 |
) |
Loss before income
taxes |
(7,519 |
) |
|
(9,557 |
) |
|
(24,620 |
) |
|
(34,003 |
) |
Benefit for income
taxes |
(57 |
) |
|
(103 |
) |
|
(12 |
) |
|
(559 |
) |
Net loss |
$ |
(7,462 |
) |
|
$ |
(9,454 |
) |
|
$ |
(24,608 |
) |
|
$ |
(33,444 |
) |
Net loss per share,
basic and diluted |
$ |
(0.58 |
) |
|
$ |
(0.84 |
) |
|
$ |
(2.04 |
) |
|
$ |
(2.98 |
) |
Weighted average shares
used to compute basic and diluted net loss per share |
12,815 |
|
|
11,271 |
|
|
12,079 |
|
|
11,206 |
|
SEASPINE HOLDINGS CORPORATION |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
DATA |
(In thousands) |
|
|
September 30, 2017 |
|
December 31, 2016 |
|
|
|
|
Cash and
cash equivalents |
$ |
16,689 |
|
|
$ |
14,566 |
|
Trade
accounts receivable, net of allowances of $519 and $483 |
19,822 |
|
|
20,982 |
|
Inventories |
42,276 |
|
|
45,299 |
|
Short-term debt |
— |
|
|
445 |
|
Total
current liabilities |
23,190 |
|
|
24,418 |
|
Long-term
borrowings under credit facility |
— |
|
|
3,835 |
|
Total
stockholders' equity |
110,956 |
|
|
110,977 |
|
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