LOS ANGELES, Aug. 22, 2024 /PRNewswire/ -- The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against Orthofix Medical Inc. ("Orthofix" or "the Company") (NASDAQ: OFIX) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission. Investors who purchased the Company's securities between October 11, 2022, and September 12, 2023, inclusive (the "Class ...

NEW YORK, Aug. 21, 2024 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against Orthofix Medical Inc. ("Orthofix" or the "Company") (NASDAQ: OFIX) in the United States District Court for the Eastern District of Texas on behalf of all persons and entities who purchased or otherwise acquired Orthofix securities between October 11, 2022, and September 12, 2023, both dates inclusive (the "Class Period"). I ...

ATLANTA, Aug. 19, 2024 (GLOBE NEWSWIRE) -- Holzer & Holzer, LLC is investigating whether Orthofix Medical Inc. ("Orthofix" or "the Company") (NASDAQ: OFIX) complied with federal securities laws. On September 12, 2023, Orthofix announced it had terminated three executives in the Company for cause, following an investigation conducted by independent counsel. The Company stated that "the Board determined that each of these executives engaged in repeated inappropriate and offensive conduct that violated multipl ...

Company Overview - Orthofix Medical Inc. has received FDA 510(k) clearance for the Fitbone Transport and Lengthening System, which is designed to treat large bone defects in the femur and tibia due to trauma or other conditions [5] - The Fitbone system is the only intramedullary nail intended to extend or transfer bone in a single surgical procedure, allowing for significant advancements in limb restoration and deformity repair [5][6] Product Details - The Fitbone TAA Intramedullary Lengthening System is intended for limb lengthening of the femur and tibia, enabling axial and torsional corrections as part of the procedure [2] - The system incorporates advanced technology, including a motorized intramedullary nail and an external control set, allowing patients to manage the distraction phase at home [6] - The Fitbone system has been integrated into the OrthoNext digital platform, which enhances preoperative planning and limb correction accuracy [4] Market Performance - In the past six months, Orthofix Medical's shares have increased by 4.2%, outperforming the industry average rise of 1.9% [8] - The global orthopedic extension devices market was valued at $937.2 million in 2023 and is projected to grow at a rate of 4% from 2023 to 2030, indicating potential revenue growth for Orthofix Medical post-FDA clearance [11] Competitive Position - Orthofix Medical is noted as the only orthopedic company providing a full range of internal and external fixation options for limb restoration and deformity repair [3]

SOURCE The Schall Law Firm LOS ANGELES, July 9, 2024 /PRNewswire/ -- The Schall Law Firm, a national shareholder rights litigation firm, announces that it is investigating claims on behalf of investors of Orthofix Medical Inc. ("Orthofix" or "the Company") (NASDAQ: OFIX) for violations of the securities laws. If you are a shareholder who suffered a loss, click here to participate. We also encourage you to contact Brian Schall of the Schall Law Firm, 2049 Century Park East, Suite 2460, Los Angeles, CA 90067, ...

LOS ANGELES, May 16, 2024 (GLOBE NEWSWIRE) -- MedTech Breakthrough, an independent market intelligence organization that recognizes the top companies, technologies and products in the global digital health and medical technology market, today announced that Orthofix Medical Inc. (NASDAQ:OFIX), a leading global spine and orthopedics company, has been selected as winner of the "Best Patient Experience Solution" award in the 8th annual MedTech Breakthrough Awards program. The 2024 MedTech Breakthrough Award re ...

Price Performance In the past six months, OFIX's shares have gained 41.2% compared with the industry's rise of 23.9%. The S&P 500 increased 16.2% in the same time frame. More on the News The Rodeo Telescopic Nail is a novel surgical tool designed to cure fractures or abnormalities in individuals with osteogenesis imperfecta (OI). In addition to telescoping to suit pediatric patients' natural growth, the nail implant stabilizes the patient's limb. Orthofix Medical Inc. (OFIX) recently announced the receipt o ...

Orthofix Medical Inc. (NASDAQ:OFIX) Q1 2024 Earnings Conference Call May 7, 2024 8:30 AM ET Company Participants Louisa Smith – Gilmartin Group Massimo Calafiore – President and Chief Executive Officer Julie Andrews – Chief Financial Officer Conference Call Participants Mathew Blackman – Stifel Jason Wittes – ROTH MKM Jeff Cohen – Ladenburg Thalmann Operator Thank you for standing by. My name is Jale, and I’ll be your conference operator today. At this time I’d like welcome everyone to the Orthofix Q1 2024 ...

Supplemental Financials 1Q24 Earnings () ORTHOFIX® Forward Looking Statements ©2024 Orthofix Medical Inc. All rights reserved | 1 May 7, 2024 ©2024 Orthofix Medical Inc. All rights reserved | Q1 Adjusted Gross Margin: 70.3% vs 70.7% in 1Q23 Q1 R&D: $19.5M; 10.3% of sales vs $23.3M in 1Q23; 13.3% of sales This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, relatin ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Orthofix Medical Inc.'s unaudited condensed consolidated financial statements for Q1 2024 and 2023, including balance sheets, operations, equity, cash flows, and notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (U.S. Dollars, in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------------------- | :--------------- | :---------------- | | Cash and cash equivalents | $26,964 | $33,107 | | Total current assets | $398,978 | $420,443 | | Total assets | $906,050 | $925,315 | | Total current liabilities | $150,621 | $165,223 | | Total liabilities | $335,735 | $326,585 | | Total shareholders' equity | $570,315 | $598,730 | | Total liabilities and shareholders' equity | $906,050 | $925,315 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (Three Months Ended March 31, U.S. Dollars, in thousands, except per share data) | Metric | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Net sales | $188,608 | $175,204 | | Gross profit | $127,242 | $110,329 | | Operating loss | $(29,337) | $(59,714) | | Net loss | $(36,020) | $(60,938) | | Basic net loss per common share | $(0.95) | $(1.71) | | Diluted net loss per common share | $(0.95) | $(1.71) | | Comprehensive loss | $(35,387) | $(60,508) | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited, U.S. Dollars, in thousands) | Metric | At December 31, 2023 | At March 31, 2024 | | :-------------------------------- | :------------------- | :---------------- | | Total Shareholders' Equity | $598,730 | $570,315 | | Net loss | N/A | $(36,020) | | Other comprehensive income, net of tax | N/A | $633 | | Share-based compensation expense | N/A | $8,800 | | Common shares issued, net | N/A | $(1,828) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | | :------------------------------------------ | :------- | :------- | | Net cash used in operating activities | $(18,595) | $(34,020) | | Net cash provided by (used in) investing activities | $(10,867) | $17,084 | | Net cash provided by financing activities | $21,453 | $15,983 | | Effect of exchange rate changes on cash | $(284) | $221 | | Net change in cash and cash equivalents | $(8,293) | $(732) | | Cash, cash equivalents, and restricted cash at end of period | $29,464 | $49,968 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Business and Basis of Presentation](index=10&type=section&id=1.%20Business%20and%20basis%20of%20presentation) - Orthofix Medical Inc. is a leading global spine and orthopedics company with a comprehensive portfolio of biologics, innovative spinal hardware, bone growth therapies, specialized orthopedic solutions, and a leading surgical navigation system[18](index=18&type=chunk) - The Company's products are distributed in more than 60 countries worldwide[18](index=18&type=chunk) [2. Recently Adopted Accounting Standards, Recently Issued Accounting Pronouncements](index=10&type=section&id=2.%20Recently%20adopted%20accounting%20standards,%20recently%20issued%20accounting%20pronouncements) - Adopted ASU 2022-03 (Fair Value Measurement of Equity Securities) effective January 1, 2024, with no material financial impact but modified disclosures[22](index=22&type=chunk) - Adopted ASU 2023-07 (Improvements to Reportable Segment Disclosures) effective January 1, 2024, enhancing disclosures about operating segments[23](index=23&type=chunk) - Currently evaluating the impact of ASU 2023-06 (Disclosure Improvements) and ASU 2023-09 (Improvements to Income Tax Disclosures), effective various dates and January 1, 2025, respectively[24](index=24&type=chunk) [3. Mergers and Acquisitions](index=11&type=section&id=3.%20Mergers%20and%20acquisitions) - The merger with SeaSpine Holdings Corporation was completed on January 5, 2023, creating a leading global spine and orthopedics company[25](index=25&type=chunk) - The Company finalized its valuation of assets acquired and liabilities assumed from the SeaSpine merger during the fourth quarter of 2023[26](index=26&type=chunk) SeaSpine Financial Contribution (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | | :------- | :----- | :----- | | Net sales | $70,500 | $60,900 | | Net loss | $(14,300) | $(27,900) | [4. Inventories](index=12&type=section&id=4.%20Inventories) Inventories (U.S. Dollars, in thousands) | Category | March 31, 2024 | December 31, 2023 | | :--------------- | :--------------- | :---------------- | | Raw materials | $30,903 | $28,390 | | Work-in-process | $56,193 | $53,510 | | Finished products | $131,980 | $140,266 | | **Total Inventories** | **$219,076** | **$222,166** | [5. Leases](index=13&type=section&id=5.%20Leases) Lease Portfolio Summary (U.S. Dollars, in thousands) | Category | March 31, 2024 | December 31, 2023 | | :-------------------- | :--------------- | :---------------- | | Total ROU assets | $35,208 | $36,214 | | Total lease liabilities | $38,975 | $39,842 | Supplemental Cash Flow Information Related to Leases (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Operating cash flows from operating leases | $2,162 | $1,674 | | Operating cash flows from finance leases | $210 | $214 | | Financing cash flows from finance leases | $172 | $160 | [6. Long-term Debt](index=13&type=section&id=6.%20Long-term%20debt) Long-term Debt (U.S. Dollars, in thousands) | Category | March 31, 2024 | December 31, 2023 | | :-------------------------------------------------- | :--------------- | :---------------- | | Total indebtedness from initial term loan and delayed draw term loan | $118,196 | $94,357 | | Current portion of long-term debt | $3,125 | $1,250 | | Long-term debt | $115,071 | $93,107 | | **Total indebtedness outstanding** | **$118,196** | **$94,357** | - The Company borrowed **$15.0 million** under its Revolving Credit Facility on January 10, 2024, and the **$25.0 million** Delayed Draw Term Loan was fully funded on March 22, 2024, with proceeds used to repay the Revolving Credit Facility[30](index=30&type=chunk)[31](index=31&type=chunk) - As of March 31, 2024, the Company was in compliance with all required financial covenants[32](index=32&type=chunk) [7. Fair Value Measurements and Investments](index=15&type=section&id=7.%20Fair%20value%20measurements%20and%20investments) Fair Value Measurements of Financial Assets and Liabilities (U.S. Dollars, in thousands) | Category | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :--------------- | :---------------- | | Total Assets (Fair Value) | $14,637 | $13,020 | | Total Liabilities (Fair Value) | $(11,274) | $(10,174) | - The Neo Medical Convertible Loan, previously measured using unobservable inputs, is now classified as a Level 2 financial asset due to fair value estimation based on observable market inputs, and is set to convert into preferred equity securities in April 2024[36](index=36&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) - The estimated fair value of the Lattus contingent consideration increased to **$9.67 million** as of March 31, 2024, from **$8.50 million** at January 1, 2024, determined using Monte Carlo simulation and discounted cash flow models[43](index=43&type=chunk)[44](index=44&type=chunk) [8. Commitments and Contingencies](index=18&type=section&id=8.%20Commitments%20and%20Contingencies) - Former executives (Valentine, Bostjancic, and Keran) filed arbitration claims for wrongful termination, seeking severance payments and forfeited equity grants; the Company intends to vigorously defend these claims[47](index=47&type=chunk)[48](index=48&type=chunk) - The Company has options to purchase distributor businesses, which, if all exercised, could result in the issuance of approximately **1.5 million shares** of common stock[49](index=49&type=chunk) Italian Medical Device Payback (IMDP) Expense (U.S. Dollars, in thousands) | Period | Expense | | :-------------------------------- | :------ | | Three Months Ended March 31, 2024 | $300 | | Three Months Ended March 31, 2023 | $300 | - As of March 31, 2024, the Company accrued **$7.7 million** related to the IMDP, classified within other long-term liabilities, with the actual liability subject to legal proceedings and further clarification[52](index=52&type=chunk) [9. Accumulated Other Comprehensive Loss](index=19&type=section&id=9.%20Accumulated%20other%20comprehensive%20loss) Accumulated Other Comprehensive Loss (U.S. Dollars, in thousands) | Component | December 31, 2023 | March 31, 2024 | Change (QoQ) | | :-------------------------- | :---------------- | :------------- | :----------- | | Currency Translation Adjustments | $(1,065) | $(2,103) | $(1,038) | | Neo Medical Convertible Loans | $(228) | $1,443 | $1,671 | | Other Investments | $0 | $0 | $0 | | **Total** | **$(1,293)** | **$(660)** | **$633** | [10. Revenue Recognition and Accounts Receivable](index=19&type=section&id=10.%20Revenue%20recognition%20and%20accounts%20receivable) Net Sales by Major Product Category (Three Months Ended March 31, U.S. Dollars, in thousands) | Category | 2024 | 2023 | Change | | :------------------------------------------ | :----- | :----- | :----- | | Bone Growth Therapies | $52,477 | $47,714 | 10.0% | | Spinal Implants, Biologics, and Enabling Technologies | $108,816 | $101,492 | 7.2% | | **Global Spine** | **$161,293** | **$149,206** | **8.1%** | | Global Orthopedics | $27,315 | $25,998 | 5.1% | | **Net sales** | **$188,608** | **$175,204** | **7.7%** | Product Sales and Marketing Service Fees (Three Months Ended March 31, U.S. Dollars, in thousands) | Category | 2024 | 2023 | | :---------------------- | :----- | :----- | | Product sales | $175,831 | $162,248 | | Marketing service fees | $12,777 | $12,956 | | **Net sales** | **$188,608** | **$175,204** | Allowance for Expected Credit Losses (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Beginning balance | $7,130 | $6,419 | | Current period provision for expected credit losses | $1,376 | $208 | | Ending balance | $8,398 | $6,691 | [11. Business Segment Information](index=20&type=section&id=11.%20Business%20segment%20information) - The Company's operations are managed through two reporting segments: Global Spine and Global Orthopedics[57](index=57&type=chunk) - Adjusted EBITDA is the primary metric used by the Chief Operating Decision Maker (CODM) for managing the Company[57](index=57&type=chunk) Net Sales by Reporting Segment (Three Months Ended March 31, U.S. Dollars, in thousands) | Segment | 2024 | 2023 | Change | | :------------------ | :----- | :----- | :----- | | Global Spine | $161,293 | $149,206 | 8.1% | | Global Orthopedics | $27,315 | $25,998 | 5.1% | | **Net sales** | **$188,608** | **$175,204** | **7.7%** | Adjusted EBITDA by Reporting Segment (Three Months Ended March 31, U.S. Dollars, in thousands) | Segment | 2024 | 2023 | | :-------------------------- | :----- | :----- | | Global Spine | $19,890 | $14,981 | | Global Orthopedics | $(1,492) | $44 | | Corporate | $(10,733) | $(11,821) | | **Consolidated adjusted EBITDA** | **$7,665** | **$3,204** | [12. Acquisition-related Amortization and Remeasurement](index=23&type=section&id=12.%20Acquisition-related%20amortization%20and%20remeasurement) Acquisition-related Amortization and Remeasurement (Three Months Ended March 31, U.S. Dollars, in thousands) | Component | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Amortization of acquired intangibles | $4,226 | $4,134 | | Changes in fair value of contingent consideration | $1,170 | $0 | | **Total** | **$5,396** | **$4,134** | [13. Share-based Compensation](index=23&type=section&id=13.%20Share-based%20compensation) Share-based Compensation Expense by Category (Three Months Ended March 31, U.S. Dollars, in thousands) | Category | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Cost of sales | $576 | $471 | | Sales and marketing | $1,667 | $2,249 | | General and administrative | $5,548 | $9,104 | | Research and development | $1,009 | $1,196 | | **Total** | **$8,800** | **$13,020** | - During 2024, the Company awarded grants valued at approximately **$14.9 million** to new executive leadership (President and CEO, CFO, Chief People & Business Operations Officer, and Chief Legal Officer) as an inducement to accept employment[71](index=71&type=chunk) [14. Income Taxes](index=25&type=section&id=14.%20Income%20taxes) Income Tax Expense and Effective Tax Rate (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | | :------------------ | :----- | :----- | | Income tax expense | $(851) | $(611) | | Effective tax rate | (2.4%) | (1.0%) | - The effective tax rate for Q1 2024 was primarily affected by certain losses not benefited and tax amortization on acquired intangibles[73](index=73&type=chunk) [15. Earnings Per Share ("EPS")](index=26&type=section&id=15.%20Earnings%20per%20share%20(%22EPS%22)) Net Loss Per Common Share (Three Months Ended March 31) | Metric | 2024 | 2023 | | :-------------------------- | :----- | :----- | | Basic Net Loss Per Share | $(0.95) | $(1.71) | | Diluted Net Loss Per Share | $(0.95) | $(1.71) | - **6.7 million** weighted average outstanding stock options and restricted stock units were anti-dilutive and excluded from diluted EPS computation for the three months ended March 31, 2024[75](index=75&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes Orthofix Medical Inc.'s Q1 2024 financial condition and operations, focusing on key metrics, segment performance, and liquidity changes post-SeaSpine merger [Executive Summary](index=27&type=section&id=Executive%20Summary) - Orthofix is a leading global spine and orthopedics company following its merger with SeaSpine in January 2023[78](index=78&type=chunk) Q1 2024 Key Financial Highlights (U.S. Dollars, in millions) | Metric | Value | Change YoY | | :-------------------------------- | :------ | :--------- | | Net Sales | $188.6 | +7.7% | | Bone Growth Therapies Net Sales Growth | 10.0% | N/A | | U.S. Spine Fixation Net Sales Growth | 16% | N/A | | Global Orthopedics Net Sales Growth | 5% | N/A | | Net Loss | $(36) | Reduced from $(60.9)M | | Non-GAAP Adjusted EBITDA | $8 | +$4.5M (220 bps expansion) | [Net Sales by Product Category and Reporting Segment](index=27&type=section&id=Net%20Sales%20by%20Product%20Category%20and%20Reporting%20Segment) Net Sales by Product Category and Reporting Segment (Three Months Ended March 31, U.S. Dollars, in thousands) | Category | 2024 | 2023 | Reported Change | Constant Currency Change | | :------------------------------------------ | :----- | :----- | :-------------- | :----------------------- | | Bone Growth Therapies | $52,477 | $47,714 | 10.0% | 10.0% | | Spinal Implants, Biologics, and Enabling Technologies | $108,816 | $101,492 | 7.2% | 7.2% | | **Global Spine** | **$161,293** | **$149,206** | **8.1%** | **8.1%** | | Global Orthopedics | $27,315 | $25,998 | 5.1% | 3.8% | | **Net sales** | **$188,608** | **$175,204** | **7.7%** | **7.5%** | [Global Spine](index=29&type=section&id=Global%20Spine) - Global Spine net sales increased by **$12.1 million**, or **8.1%**, to **$161.3 million** for the three months ended March 31, 2024[81](index=81&type=chunk) - Bone Growth Therapies net sales increased by **10.0%**, driven by increased gross order volumes from direct sales channel investments and continued growth and adoption of AccelStim[81](index=81&type=chunk) - Spinal Implants, Biologics, and Enabling Technologies net sales increased by **7.2%**, primarily due to increased sales growth from new and existing high-volume distribution partners, particularly within Spinal Implants (cervical, interbody, and thoracolumbar franchises)[81](index=81&type=chunk) [Global Orthopedics](index=30&type=section&id=Global%20Orthopedics) - Global Orthopedics net sales increased by **$1.3 million**, or **5.1%**, to **$27.3 million** for the three months ended March 31, 2024[83](index=83&type=chunk) - U.S. Orthopedic net sales grew by **$1.5 million** or **22.9%**, largely due to investments in recent product launches, commercial execution, and surgeon education programs[84](index=84&type=chunk) - International sales were flat compared to the prior year due to healthcare provider strikes in the UK and timing of certain stocking distributors' orders[84](index=84&type=chunk) [Gross Profit](index=30&type=section&id=Gross%20Profit) Gross Profit (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :---------- | :----- | :----- | :------- | | Net sales | $188,608 | $175,204 | 7.7% | | Cost of sales | $61,366 | $64,875 | (5.4%) | | **Gross profit** | **$127,242** | **$110,329** | **15.3%** | | Gross margin | 67.5% | 63.0% | 4.5% pts | - The increase in gross profit was driven primarily by net sales growth across all principal product categories and an **$8.6 million** reduction in amortization of the inventory fair value step-up recognized in the Merger[85](index=85&type=chunk) [Sales and Marketing Expense](index=30&type=section&id=Sales%20and%20Marketing%20Expense) Sales and Marketing Expense (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :-------------------------- | :----- | :----- | :------- | | Sales and marketing expense | $100,043 | $93,791 | 6.7% | | As a percentage of net sales | 52.9% | 53.5% | (0.6%) pts | - The increase was due to a **$3.4 million** rise in variable compensation expenses (commissions) and a **$2.9 million** increase in depreciation expense related to deployed instrumentation, partially offset by merger synergies[86](index=86&type=chunk) [General and Administrative Expense](index=31&type=section&id=General%20and%20Administrative%20Expense) General and Administrative Expense (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :-------------------------------- | :----- | :----- | :------- | | General and administrative expense | $31,648 | $48,811 | (35.2%) | | As a percentage of net sales | 16.8% | 27.9% | (11.1%) pts | - The decrease was primarily due to a **$16.2 million** reduction in integration-related expenses and realization of Merger-related synergies, and a **$3.6 million** decrease in share-based compensation expense[90](index=90&type=chunk) - This decrease was partially offset by a **$2.2 million** increase in succession charges resulting from recent executive leadership changes[90](index=90&type=chunk) [Research and Development Expense](index=31&type=section&id=Research%20and%20Development%20Expense) Research and Development Expense (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :-------------------------- | :----- | :----- | :------- | | Research and development expense | $19,492 | $23,307 | (16.4%) | | As a percentage of net sales | 10.3% | 13.3% | (3.0%) pts | - The decrease was driven by a **$2.3 million** reduction in costs to comply with European Union Medical Device Regulations and a **$1.4 million** decrease in merger and integration-related expenses, partially offset by increased clinical spend for the M6-C artificial disc study[91](index=91&type=chunk) [Acquisition-related Amortization and Remeasurement](index=31&type=section&id=Acquisition-related%20Amortization%20and%20Remeasurement) Acquisition-related Amortization and Remeasurement (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :------------------------------------------ | :----- | :----- | :------- | | Acquisition-related amortization and remeasurement | $5,396 | $4,134 | 30.5% | | As a percentage of net sales | 2.9% | 2.4% | 0.5% pts | - The increase was primarily due to a **$1.2 million** remeasurement of a contingent consideration obligation with Lattus Spine LLC assumed in the Merger[90](index=90&type=chunk) [Non-operating Income and Expense](index=32&type=section&id=Non-operating%20Income%20and%20Expense) Non-operating Income and Expense (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :-------------------------- | :------- | :------- | :------- | | Interest expense, net | $(4,558) | $(1,289) | 253.6% | | Other income (expense), net | $(1,274) | $676 | (288.5%) | - Interest expense, net, increased by **$3.3 million** due to a **$3.6 million** increase in outstanding indebtedness, partially offset by a **$0.6 million** decrease from an early termination prepayment penalty in 2023[95](index=95&type=chunk) - Other income (expense), net, decreased by **$2.0 million**, primarily due to a **$2.2 million** unfavorable change in foreign currency exchange rates (non-cash remeasurement loss of **$1.6 million** in 2024 vs. gain of **$0.6 million** in 2023), partially offset by a **$0.3 million** increase from the reversal of expected credit loss on the Neo Medical convertible loan[95](index=95&type=chunk) [Income Taxes](index=32&type=section&id=Income%20Taxes) Income Tax Expense and Effective Tax Rate (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :------------------ | :----- | :----- | :------- | | Income tax expense | $851 | $611 | 39.3% | | Effective tax rate | (2.4%) | (1.0%) | (1.4%) pts | - The increase in tax expense was primarily a result of changes in valuation allowances and tax amortization on certain acquired intangibles[96](index=96&type=chunk) [Segment Review](index=33&type=section&id=Segment%20Review) Adjusted EBITDA by Reporting Segment (Three Months Ended March 31, U.S. Dollars, in thousands) | Segment | 2024 | 2023 | | :-------------------------- | :----- | :----- | | Global Spine | $19,890 | $14,981 | | Global Orthopedics | $(1,492) | $44 | | Corporate | $(10,733) | $(11,821) | | **Consolidated adjusted EBITDA** | **$7,665** | **$3,204** | - Consolidated Adjusted EBITDA improved significantly, partly due to a decrease in SeaSpine merger-related costs from **$20.7 million** in 2023 to **$4.5 million** in 2024[98](index=98&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Cash, Cash Equivalents, and Restricted Cash (U.S. Dollars, in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :------------------------------------------ | :--------------- | :---------------- | | Cash, cash equivalents, and restricted cash | $29,464 | $37,757 | Net Change in Cash and Cash Equivalents (Three Months Ended March 31, U.S. Dollars, in thousands) | Activity | 2024 | 2023 | Change | | :------------------------------------------ | :------- | :------- | :------- | | Net cash used in operating activities | $(18,595) | $(34,020) | $15,425 | | Net cash provided by (used in) investing activities | $(10,867) | $17,084 | $(27,951) | | Net cash provided by financing activities | $21,453 | $15,983 | $5,470 | | Effect of exchange rate changes on cash | $(284) | $221 | $(505) | | **Net change in cash and cash equivalents** | **$(8,293)** | **$(732)** | **$(7,561)** | Free Cash Flow (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | Change | | :-------------------------- | :------- | :------- | :------- | | Net cash used in operating activities | $(18,595) | $(34,020) | $15,425 | | Capital expenditures | $(10,817) | $(11,835) | $1,018 | | **Free cash flow** | **$(29,412)** | **$(45,855)** | **$16,443** | [Operating Activities](index=34&type=section&id=Operating%20Activities) - Cash flows from operating activities increased by **$15.4 million**, primarily due to a favorable change in net loss of **$24.9 million**[100](index=100&type=chunk)[105](index=105&type=chunk) - Days sales in receivables were **61 days** at March 31, 2024, compared to **58 days** at March 31, 2023[100](index=100&type=chunk) - Inventory turns improved to **1.2 times** as of March 31, 2024, compared to **0.7 times** as of March 31, 2023[100](index=100&type=chunk) [Investing Activities](index=34&type=section&id=Investing%20Activities) - Cash flows from investing activities decreased by **$28.0 million**, primarily due to a **$29.4 million** decrease attributable to cash acquired as a result of the Merger in 2023[101](index=101&type=chunk)[106](index=106&type=chunk) - This decrease was partially offset by a **$1.0 million** decrease in capital expenditures and a **$0.5 million** decrease in other investing activities in 2024 compared to 2023[106](index=106&type=chunk) [Financing Activities](index=34&type=section&id=Financing%20Activities) - Cash flows from financing activities increased by **$5.5 million**, driven by a **$6.9 million** increase associated with net borrowing activities related to credit facilities and the assumption of SeaSpine's outstanding indebtedness[101](index=101&type=chunk)[106](index=106&type=chunk) - This increase was partially offset by **$1.5 million** in debt issuance costs and other financing activities[106](index=106&type=chunk) [Credit Facilities](index=34&type=section&id=Credit%20Facilities) - The Company's credit facilities include a **$100.0 million** Initial Term Loan, a **$25.0 million** Delayed Draw Term Loan, and a **$25.0 million** Revolving Credit Facility, all maturing on November 6, 2027[101](index=101&type=chunk) - As of March 31, 2024, **$100.0 million** was outstanding under the Initial Term Loan and **$25.0 million** under the Delayed Draw Term Loan, with no borrowings on available lines of credit in Italy[101](index=101&type=chunk)[104](index=104&type=chunk) - The Company was in compliance with all required financial covenants as of March 31, 2024[102](index=102&type=chunk) [Other](index=35&type=section&id=Other) - The estimated fair value of the Lattus Spine LLC contingent consideration was **$9.7 million** as of March 31, 2024[107](index=107&type=chunk) - A **$1.0 million** contingent consideration payment for the IGEA S.p.A. Exclusive License and Distribution Agreement was accrued within other current liabilities as of March 31, 2024[110](index=110&type=chunk) - There were no material off-balance sheet arrangements as of March 31, 2024, and no significant changes to contractual obligations or critical accounting estimates from the 2023 Form 10-K[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) - The Company uses non-GAAP financial measures, including Constant Currency, Adjusted EBITDA, and Free Cash Flow, to provide greater transparency and facilitate comparisons to historical operating results and industry peers[115](index=115&type=chunk) - Constant currency is calculated by using foreign currency rates from the comparable, prior-year period to present net sales without the impact of changes in foreign currency rates[117](index=117&type=chunk) - Adjusted EBITDA is the primary metric used by the Chief Operating Decision Maker and excludes various non-operating and non-cash items[118](index=118&type=chunk) - Free cash flow is calculated by subtracting capital expenditures from net cash from operating activities, used as an indicator of cash generation/usage and capital efficiency[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Reports no material changes to the company's market risks since the disclosures in its 2023 Annual Report on Form 10-K - There have been no material changes to the Company's market risks as disclosed in its Form 10-K for the year ended December 31, 2023[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Addresses disclosure controls and procedures, reporting a continuing material weakness in internal control over financial reporting and ongoing remediation efforts [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The Company's disclosure controls and procedures were not effective as of March 31, 2024, due to a continuing material weakness in internal control over financial reporting[121](index=121&type=chunk) [Material Weakness in Internal Control over Financial Reporting](index=36&type=section&id=Material%20Weakness%20in%20Internal%20Control%20over%20Financial%20Reporting) - A material weakness was identified in the design and operation of certain management review controls pertaining to business combinations and assessing recoverability of goodwill[125](index=125&type=chunk) - The weakness resulted from insufficient evidence supporting the precision over the determination of certain estimates and the operating effectiveness of associated review controls[125](index=125&type=chunk) - This material weakness did not result in any misstatements to the consolidated financial statements or disclosures[125](index=125&type=chunk) [Remediation of the Material Weakness](index=38&type=section&id=Remediation%20of%20the%20Material%20Weakness) - Management is actively working to strengthen disclosure controls and internal control over financial reporting, including realigning finance staff and hiring key personnel (new CFO, SVP of Finance and Strategy, and other supporting roles)[127](index=127&type=chunk) - Remediation initiatives include evaluating skill set gaps, providing ongoing training, and enhancing controls over the completeness and accuracy of information used in financial reporting and forecasted financial results, particularly for business combinations and goodwill impairment[128](index=128&type=chunk) - Remediation efforts are ongoing and expected to continue beyond the quarter ended March 31, 2024[128](index=128&type=chunk) [Changes in Internal Control over Financial Reporting](index=39&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - Other than the ongoing remediation activities for the identified material weakness, there have been no other material changes in internal control over financial reporting during the quarterly period[130](index=130&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) Incorporates legal proceedings information by reference from Note 8 to the Unaudited Condensed Consolidated Financial Statements - Information regarding legal proceedings is incorporated by reference from Note 8 to the Unaudited Condensed Consolidated Financial Statements[132](index=132&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) Reports no material changes to risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in the Company's Form 10-K for the year ended December 31, 2023[133](index=133&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Confirms no repurchases of common stock by the company during the first quarter of 2024 - The Company did not make any repurchases of its common stock during the first quarter of 2024[134](index=134&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - This item is not applicable[135](index=135&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - This item is not applicable[136](index=136&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) Reports no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the last fiscal quarter - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the last fiscal quarter[137](index=137&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with Form 10-Q, including letter agreements, executive inducement plans, and certifications - Exhibits include letter agreements, inducement plans for new executive officers (CEO, CFO, CLO, CP&BOO), and certifications (Rule 13a-14(a)/15d-14(a) and Section 1350)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) SIGNATURES - The report was signed on May 7, 2024, by Massimo Calafiore, President and Chief Executive Officer, and Julie Andrews, Chief Financial Officer[146](index=146&type=chunk)