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Share Name | Share Symbol | Market | Type |
---|---|---|---|
SeaSpine Holdings Corporation | NASDAQ:SPNE | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 9.54 | 9.00 | 9.35 | 0 | 01:00:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
|
47-3251758
|
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
|
|
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
|
|
|
|
5770 Armada Drive, Carlsbad, California
|
|
92008
|
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
|
|
(ZIP CODE)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock
|
SPNE
|
The Nasdaq Global Select Market
|
Large accelerated filer
|
o
|
Accelerated filer
|
x
|
|
|
|
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
x
|
|
|
|
|
|
|
Emerging growth company
|
x
|
|
|
|
Page
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 31.1
|
|
Exhibit 31.2
|
|
Exhibit 32.1
|
|
Exhibit 32.2
|
|
EX-101 INSTANCE DOCUMENT
|
|
EX-101 SCHEMA DOCUMENT
|
|
EX-101 CALCULATION LINKBASE DOCUMENT
|
|
EX-101 DEFINITION LINKBASE DOCUMENT
|
|
EX-101 LABELS LINKBASE DOCUMENT
|
|
EX-101 PRESENTATION LINKBASE DOCUMENT
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Total revenue, net
|
$
|
36,111
|
|
|
$
|
36,150
|
|
Cost of goods sold
|
13,812
|
|
|
13,579
|
|
||
Gross profit
|
22,299
|
|
|
22,571
|
|
||
Operating expenses:
|
|
|
|
||||
Selling and marketing
|
20,476
|
|
|
18,974
|
|
||
General and administrative
|
8,554
|
|
|
8,334
|
|
||
Research and development
|
3,895
|
|
|
3,512
|
|
||
Intangible amortization
|
792
|
|
|
792
|
|
||
Impairment of intangible assets
|
1,325
|
|
|
—
|
|
||
Total operating expenses
|
35,042
|
|
|
31,612
|
|
||
Operating loss
|
(12,743
|
)
|
|
(9,041
|
)
|
||
Other income, net
|
227
|
|
|
73
|
|
||
Loss before income taxes
|
(12,516
|
)
|
|
(8,968
|
)
|
||
Provision for income taxes
|
35
|
|
|
21
|
|
||
Net loss
|
$
|
(12,551
|
)
|
|
$
|
(8,989
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.48
|
)
|
|
$
|
(0.48
|
)
|
Weighted average shares used to compute basic and diluted net loss per share
|
26,420
|
|
|
18,872
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net loss
|
$
|
(12,551
|
)
|
|
$
|
(8,989
|
)
|
Other comprehensive (loss) income
|
|
|
|
||||
Foreign currency translation adjustments
|
(164
|
)
|
|
(169
|
)
|
||
Unrealized gain on investments
|
190
|
|
|
11
|
|
||
Comprehensive loss
|
$
|
(12,525
|
)
|
|
$
|
(9,147
|
)
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
80,006
|
|
|
$
|
20,199
|
|
Short-term investments
|
25,200
|
|
|
—
|
|
||
Trade accounts receivable, net of allowances of $90 and $111
|
20,005
|
|
|
24,902
|
|
||
Inventories, net
|
47,682
|
|
|
47,155
|
|
||
Prepaid expenses and other current assets
|
2,966
|
|
|
3,906
|
|
||
Total current assets
|
175,859
|
|
|
96,162
|
|
||
Property, plant and equipment, net
|
25,792
|
|
|
25,751
|
|
||
Right of use assets
|
8,710
|
|
|
—
|
|
||
Intangible assets, net
|
16,761
|
|
|
19,173
|
|
||
Other assets
|
605
|
|
|
632
|
|
||
Total assets
|
$
|
227,727
|
|
|
$
|
141,718
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable, trade
|
$
|
11,046
|
|
|
$
|
7,448
|
|
Accrued compensation
|
4,194
|
|
|
7,879
|
|
||
Accrued commissions
|
5,824
|
|
|
7,843
|
|
||
Contingent consideration liabilities
|
1,959
|
|
|
1,864
|
|
||
Short-term lease liability
|
2,095
|
|
|
—
|
|
||
Other accrued expenses and current liabilities
|
4,670
|
|
|
5,444
|
|
||
Total current liabilities
|
29,788
|
|
|
30,478
|
|
||
Contingent consideration liabilities, net of current portion
|
86
|
|
|
230
|
|
||
Long-term lease liability
|
7,964
|
|
|
—
|
|
||
Other liabilities
|
—
|
|
|
1,250
|
|
||
Total liabilities
|
37,838
|
|
|
31,958
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.01 par value; 15,000 authorized; no shares issued and outstanding at March 31, 2020 and December 31, 2019
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 60,000 authorized; 27,237 and 19,124 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
|
272
|
|
|
191
|
|
||
Additional paid-in capital
|
376,784
|
|
|
284,211
|
|
||
Accumulated other comprehensive income
|
1,460
|
|
|
1,434
|
|
||
Accumulated deficit
|
(188,627
|
)
|
|
(176,076
|
)
|
||
Total stockholders' equity
|
189,889
|
|
|
109,760
|
|
||
Total liabilities and stockholders' equity
|
$
|
227,727
|
|
|
$
|
141,718
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net loss
|
$
|
(12,551
|
)
|
|
$
|
(8,989
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,608
|
|
|
2,770
|
|
||
Instrument replacement expense
|
379
|
|
|
548
|
|
||
Impairment of intangible assets
|
1,325
|
|
|
—
|
|
||
Impairment of spinal instruments
|
234
|
|
|
30
|
|
||
Provision for excess and obsolete inventories
|
2,104
|
|
|
741
|
|
||
Amortization of debt issuance costs
|
19
|
|
|
19
|
|
||
Deferred income tax provision
|
14
|
|
|
6
|
|
||
Stock-based compensation
|
1,983
|
|
|
1,947
|
|
||
(Gain)/loss from change in fair value of contingent consideration liabilities
|
(16
|
)
|
|
64
|
|
||
Non-cash lease expense, net
|
(40
|
)
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
4,853
|
|
|
(458
|
)
|
||
Inventories
|
(2,354
|
)
|
|
(2,890
|
)
|
||
Prepaid expenses and other current assets
|
937
|
|
|
757
|
|
||
Other non-current assets
|
(7
|
)
|
|
(1
|
)
|
||
Accounts payable
|
3,458
|
|
|
3,782
|
|
||
Accrued commissions
|
(2,021
|
)
|
|
(161
|
)
|
||
Other accrued expenses and current liabilities
|
(3,628
|
)
|
|
(3,423
|
)
|
||
Other non-current liabilities
|
(7
|
)
|
|
85
|
|
||
Net cash used in operating activities
|
(2,710
|
)
|
|
(5,173
|
)
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of property and equipment
|
(2,196
|
)
|
|
(2,208
|
)
|
||
Additions to technology assets
|
(850
|
)
|
|
—
|
|
||
Purchases of short-term investments
|
(25,007
|
)
|
|
—
|
|
||
Maturities of short-term investments
|
—
|
|
|
5,000
|
|
||
Net cash (used in) provided by investing activities
|
(28,053
|
)
|
|
2,792
|
|
||
FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from exercise of stock options
|
902
|
|
|
143
|
|
||
Proceeds from issuance of common stock, net of offering costs
|
91,622
|
|
|
—
|
|
||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units
|
(1,855
|
)
|
|
(1,849
|
)
|
||
Payment of contingent consideration liabilities in connection with acquisition of
business
|
(33
|
)
|
|
(30
|
)
|
||
Net cash provided by (used in) financing activities
|
90,636
|
|
|
(1,736
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(66
|
)
|
|
(64
|
)
|
||
Net change in cash and cash equivalents
|
59,807
|
|
|
(4,181
|
)
|
||
Cash and cash equivalents at beginning of period
|
20,199
|
|
|
24,233
|
|
||
Cash and cash equivalents at end of period
|
$
|
80,006
|
|
|
$
|
20,052
|
|
Supplemental cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
38
|
|
|
$
|
38
|
|
Income taxes paid
|
$
|
14
|
|
|
$
|
6
|
|
Non-cash investing activities:
|
|
|
|
||||
Property and equipment in liabilities
|
$
|
1,055
|
|
|
$
|
1,891
|
|
|
Common Stock
|
|
Additional
|
|
Accumulated Other
|
|
|
|
Total
|
|||||||||||||
|
Number of
|
|
|
|
Paid-In
|
|
Comprehensive
|
|
Accumulated
|
|
Stockholders'
|
|||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
Income
|
|
Deficit
|
|
Equity
|
|||||||||||
Balance December 31, 2019
|
19,124
|
|
|
$
|
191
|
|
|
$
|
284,211
|
|
|
$
|
1,434
|
|
|
$
|
(176,076
|
)
|
|
$
|
109,760
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
(12,551
|
)
|
|
(12,551
|
)
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(164
|
)
|
|
—
|
|
|
(164
|
)
|
|||||
Unrealized gain on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
190
|
|
|
—
|
|
|
190
|
|
|||||
Restricted stock issued
|
213
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Issuance of common stock - public offering
|
7,820
|
|
|
78
|
|
|
91,544
|
|
|
—
|
|
|
—
|
|
|
91,622
|
|
|||||
Issuance of common stock - exercise of stock options
|
80
|
|
|
1
|
|
|
901
|
|
|
—
|
|
|
—
|
|
|
902
|
|
|||||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units
|
—
|
|
|
—
|
|
|
(1,855
|
)
|
|
—
|
|
|
—
|
|
|
(1,855
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
1,983
|
|
|
—
|
|
|
—
|
|
|
1,983
|
|
|||||
Balance March 31, 2020
|
27,237
|
|
|
272
|
|
|
376,784
|
|
|
1,460
|
|
|
(188,627
|
)
|
|
189,889
|
|
|
Common Stock
|
|
Additional
|
|
Accumulated Other
|
|
|
|
Total
|
|||||||||||||
|
Number of
|
|
|
|
Paid-In
|
|
Comprehensive
|
|
Accumulated
|
|
Stockholders'
|
|||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
Income
|
|
Deficit
|
|
Equity
|
|||||||||||
Balance December 31, 2018
|
18,669
|
|
|
$
|
187
|
|
|
$
|
277,096
|
|
|
$
|
1,602
|
|
|
$
|
(136,800
|
)
|
|
$
|
142,085
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,989
|
)
|
|
(8,989
|
)
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(169
|
)
|
|
—
|
|
|
(169
|
)
|
|||||
Unrealized gain on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|||||
Restricted stock issued
|
216
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Issuance of common stock- exercise of stock options
|
11
|
|
|
—
|
|
|
143
|
|
|
—
|
|
|
—
|
|
|
143
|
|
|||||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units
|
—
|
|
|
—
|
|
|
(1,851
|
)
|
|
—
|
|
|
—
|
|
|
(1,851
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
1,947
|
|
|
—
|
|
|
—
|
|
|
1,947
|
|
|||||
Balance March 31, 2019
|
18,896
|
|
|
189
|
|
|
277,335
|
|
|
1,444
|
|
|
(145,789
|
)
|
|
133,179
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(In thousands)
|
||||||
Finished goods
|
$
|
31,194
|
|
|
$
|
30,042
|
|
Work in process
|
9,943
|
|
|
10,847
|
|
||
Raw materials
|
6,545
|
|
|
6,266
|
|
||
|
$
|
47,682
|
|
|
$
|
47,155
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
Useful Lives
|
||||
|
(In thousands)
|
|
|
||||||
Leasehold improvements
|
$
|
5,937
|
|
|
$
|
5,878
|
|
|
Shorter of lease term or useful life
|
Machinery and production equipment
|
8,712
|
|
|
8,562
|
|
|
3-10 years
|
||
Spinal instruments and sets
|
28,216
|
|
|
25,511
|
|
|
4-5 years
|
||
Information systems and hardware
|
7,498
|
|
|
7,442
|
|
|
3-7 years
|
||
Furniture and fixtures
|
1,420
|
|
|
1,412
|
|
|
3-5 years
|
||
Construction in progress
|
8,305
|
|
|
9,716
|
|
|
|
||
Total
|
60,088
|
|
|
58,521
|
|
|
|
||
Less accumulated depreciation and amortization
|
(34,296
|
)
|
|
(32,770
|
)
|
|
|
||
Property, plant and equipment, net
|
$
|
25,792
|
|
|
$
|
25,751
|
|
|
|
|
|
Total
|
|
Quoted Price in Active Market (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
March 31, 2020:
|
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
|
$
|
25,200
|
|
|
$
|
25,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities- current
|
|
$
|
1,959
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,959
|
|
Contingent consideration liabilities- non-current
|
|
86
|
|
|
—
|
|
|
—
|
|
|
86
|
|
||||
Total contingent consideration
|
|
$
|
2,045
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,045
|
|
|
|
Total
|
|
Quoted Price in Active Market (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
December 31, 2019:
|
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities- current
|
|
$
|
1,864
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,864
|
|
Contingent consideration liabilities- non-current
|
|
230
|
|
|
—
|
|
|
—
|
|
|
230
|
|
||||
Total contingent consideration
|
|
$
|
2,094
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,094
|
|
Three Months Ended March 31, 2020:
|
|
(in thousands)
|
|
|
Balance as of January 1, 2020
|
|
$
|
2,094
|
|
Contingent consideration liabilities settled
|
|
(33
|
)
|
|
Gain from change in fair value of contingent consideration recorded in general and administrative expenses
|
|
(16
|
)
|
|
Fair value at March 31, 2020
|
|
$
|
2,045
|
|
|
|
Three Months Ended March 31,
|
||||
|
|
2020
|
|
2019
|
||
Expected dividend yield
|
|
—
|
%
|
|
—
|
%
|
Risk-free interest rate
|
|
1.6
|
%
|
|
2.5
|
%
|
Expected volatility
|
|
43.8
|
%
|
|
30.3
|
%
|
Expected term (in years)
|
|
3.0
|
|
|
2.9
|
|
|
Three Months Ended March 31,
|
||||
|
2020
|
|
2019
|
||
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
Risk-free interest rate
|
1.6
|
%
|
|
2.5
|
%
|
Expected volatility
|
34.4
|
%
|
|
39.0
|
%
|
Expected term (in years)
|
1.2
|
|
|
1.2
|
|
(in thousands)
|
December 31, 2019
|
|
Impact of Adoption of ASC 842
|
|
January 1, 2020
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Right of use assets
|
$
|
—
|
|
|
$
|
9,059
|
|
|
$
|
9,059
|
|
Total assets
|
$
|
141,718
|
|
|
$
|
9,059
|
|
|
$
|
150,777
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Other accrued expenses and current liabilities
|
5,444
|
|
|
(138
|
)
|
|
5,306
|
|
|||
Current portion of operating lease liabilities
|
—
|
|
|
2,080
|
|
|
2,080
|
|
|||
Total current liabilities
|
30,478
|
|
|
1,942
|
|
|
32,420
|
|
|||
Operating lease liabilities, net of current portion
|
—
|
|
|
8,367
|
|
|
8,367
|
|
|||
Other liabilities
|
1,250
|
|
|
(1,250
|
)
|
|
—
|
|
|||
Total liabilities
|
$
|
31,958
|
|
|
$
|
9,059
|
|
|
$
|
41,017
|
|
Total stockholders' equity
|
$
|
109,760
|
|
|
$
|
—
|
|
|
$
|
109,760
|
|
Total liabilities and stockholders' equity
|
$
|
141,718
|
|
|
$
|
9,059
|
|
|
$
|
150,777
|
|
|
Operating Leases
|
|
|
|
(In thousands)
|
|
|
2020
|
2,300
|
|
|
2021
|
2,217
|
|
|
2022
|
2,237
|
|
|
2023
|
1,562
|
|
|
2024
|
1,368
|
|
|
Thereafter
|
3,277
|
|
|
Total undiscounted value of lease liabilities
|
$
|
12,961
|
|
Less: present value adjustment
|
(2,201
|
)
|
|
Less: short-term leases not capitalized
|
(701
|
)
|
|
Present value of lease liabilities
|
10,059
|
|
|
Less: current portion of lease liability
|
(2,095
|
)
|
|
Operating lease liability, less current portion
|
$
|
7,964
|
|
|
Three Months Ended March 31,
|
||||
|
2020
|
|
2019
|
||
|
|
|
|
||
Reported income tax expense rate
|
(0.3
|
)%
|
|
(0.2
|
)%
|
|
Three Months Ended March 31, 2020
|
||||||||||
|
United States
|
|
International
|
|
Total
|
||||||
Orthobiologics
|
$
|
17,361
|
|
|
$
|
2,260
|
|
|
$
|
19,621
|
|
Spinal implants
|
14,452
|
|
|
2,038
|
|
|
16,490
|
|
|||
Total revenue, net
|
$
|
31,813
|
|
|
$
|
4,298
|
|
|
$
|
36,111
|
|
|
Three Months Ended March 31, 2019
|
||||||||||
|
United States
|
|
International
|
|
Total
|
||||||
Orthobiologics
|
$
|
17,038
|
|
|
$
|
1,988
|
|
|
$
|
19,026
|
|
Spinal implants
|
14,947
|
|
|
2,177
|
|
|
17,124
|
|
|||
Total revenue, net
|
$
|
31,985
|
|
|
$
|
4,165
|
|
|
$
|
36,150
|
|
•
|
our expectations and estimates concerning future financial performance, financing plans and the impact of competition;
|
•
|
our ability to successfully develop new and next-generation products and the costs associated with designing and developing those new and next-generation products, including risks inherent in newly initiated collaborations, such as with restor3d, Inc. and 7D Surgical, or use of nascent manufacturing techniques, such as additive processing/3D printing;
|
•
|
physicians’ willingness to adopt our recently launched and planned products, customers’ continued willingness to pay for our products and third-party payors’ willingness to provide or continue coverage and appropriate reimbursement for any of our products and our ability to secure regulatory clearance and/or approval for products in development;
|
•
|
our ability to attract and retain new, high-quality distributors, whether as a result of perceived deficiencies, or gaps, in our existing product portfolio, inability to reach agreement on financial or other contractual terms or otherwise, as well as disruption associated with restrictive covenants to, which distributors may be subject and potential litigation and expense associate therewith;
|
•
|
the impact that the COVID-19 pandemic may have with respect to deferrals of procedures using our products, disruptions or restrictions on the ability of many of our employees and of third parties on which we rely to work effectively, and temporary closures of our facilities and of the facilities of our customers and suppliers;
|
•
|
the full extent to which the COVID-19 pandemic will, directly or indirectly, impact our business, results of operations and financial condition, including our sales, expenses, supply chain integrity, manufacturing capability, research and development activities, and employee-related compensation, including as a result of (1) a resurgence in COVID-19 transmission and infection after the loosening of “stay at home” restrictions or resumption of surgical procedures, (2) actions required or recommended to contain or treat COVID-19, in light of any or all of the foregoing or other as-yet unanticipated developments, and (3) the direct and indirect economic impact, both domestically and abroad, of COVID-19 as a result of any or all of the foregoing, including actions taken by local, state, national and international governmental agencies, whether such impact affects customers, suppliers, or markets generally, all of which currently are highly uncertain;
|
•
|
our ability to continue to invest in medical education and training, product development, and/or sales and commercial marketing initiatives at levels sufficient to drive future revenue growth;
|
•
|
anticipated trends in our business, including consolidation among hospital systems, healthcare reform in the United States, increased pricing pressure from our competitors or hospitals, exclusion from major healthcare systems, whether as a result of unwillingness to provide required pricing or otherwise, and changes in third-party payment systems;
|
•
|
the risk of supply shortages, and the associated potentially long-term disruption to product sales, including as a result of our dependence on PcoMed to supply products incorporating NanoMetalene technology and a limited number of third-party suppliers for components and raw materials and certain processing services;
|
•
|
unexpected expenses and delay and our ability to manage timelines and costs related to manufacturing our products including as a result of litigation or developing and supporting the full commercial launch of new products;
|
•
|
our ability to obtain additional debt and equity financing to fund capital expenditures and working capital requirements and acquisitions;
|
•
|
our ability to complete acquisitions, integrate operations post-acquisition and maintain relationships with customers of acquired entities;
|
•
|
our ability to support the safety and efficacy of our products with long-term clinical data;
|
•
|
existing and future regulations affecting our business, both in the United States and internationally, and enforcement of those regulations;
|
•
|
our ability to protect our intellectual property, including unpatented trade secrets, and to operate without infringing or misappropriating the proprietary rights of others;
|
•
|
general economic and business conditions, in both domestic and international markets; and
|
•
|
other risk factors described in the section entitled “Risk Factors” of the 2019 10-K, in Item 8.01 of our Current Report on Form 8-K dated April 6, 2020, and in Part II, Item 1A of our Quarterly Reports on Form 10-Q for quarters ended after December 31, 2019.
|
•
|
Surgery Deferrals: To date, among other impacts on our business related to the pandemic, surgeons and their patients are required, or are choosing, to defer surgery procedures in which our products otherwise would be used and many facilities that specialize in the procedures in which our products otherwise would be used have closed or reduced operating hours. The duration of surgery deferrals and the timing and extent of the economic impact of the pandemic, and the pace at which the economy recovers therefrom, cannot be determined at this time. We continue to work closely with our surgeon customers, distributors and suppliers to navigate through this unforeseen event while maintaining flexible operations.
|
•
|
Operations. Our sales, marketing and research and development efforts have continued since the outbreak of the pandemic, but steps we have taken in response to the pandemic have adversely affected our business. To protect the safety, health and well-being of our employees, distributor and surgeon customers, and communities, we implemented preventative measures including travel restrictions, the temporary closures of certain of our facilities, and requiring all office-based employees to work from home, except for those related to manufacturing, distribution and select others, as permitted under governmental orders. Similarly, most of our independent sales agents currently are working largely using virtual and online engagement tools and tactics, instead of in-person sales and marketing programs. The change in the manner in which our workforce is functioning could adversely affect sales and could delay the product launches we planned in 2020 and beyond, and could adversely effect our future revenue growth or such growth may not be consistent with the timelines we anticipated previously.
|
•
|
Cost Containment: We continue to carefully manage expenses and cash spend to preserve liquidity and we initiated actions to generate savings in areas such as travel, events, clinical studies, and consulting. We also implemented a freeze on new hires and our senior leadership team voluntarily agreed to a 25% reduction in their base salaries from April 26, 2020 through June 20, 2020.
|
•
|
Product Development: We continue to evaluate the timing and scope of planned product development and launch initiatives and capital expenditures and inventory growth investments to support those initiatives. Based on that evaluation, we expect to delay and/or reduce some of the spending associated with these initiatives, which could delay the product launches we planned in 2020 and beyond, and could adversely effect our future revenue growth or such growth may not be consistent with the timelines we anticipated previously.
|
•
|
1Q 2020 Results. Due to the impacts from the COVID-19 pandemic, our total revenue, net, gross profit and gross margin for the first quarter of 2020 were relatively flat compared to the same period in 2019. Given that onset of the COVID-19 impacts in the United States occurred toward the end of the first quarter of 2020, we expect the negative financial impacts of COVID-19 to be significantly greater in the second quarter of 2020 compared to the first quarter of 2020.
|
•
|
Outlook. There is considerable uncertainty and lack of visibility regarding our near-term revenue growth prospects and product development plans due to the rapidly evolving environment and continued uncertainties resulting from the COVID-19 pandemic. On April 6, 2020, we withdrew our previously announced full year 2020 guidance, including regarding the growth of our U.S. spinal implants portfolio, which was issued on February 26, 2020. At this time, the full extent of the impact of the COVID-19 pandemic on our business, financial condition and results of operations is uncertain and cannot be predicted with reasonable accuracy and will depend on future developments that are also uncertain and cannot be predicted with reasonable accuracy, including new information that may emerge concerning the degree to which COVID-19 is both contagious and virulent and the actions required to contain COVID-19 or to treat its impact. For these reasons, at this time, we cannot provide guidance as to our expectations for our revenue for the full-year 2020, the
|
|
Three Months Ended March 31,
|
|
2020 vs. 2019
|
|||||||
(In thousands, except percentages)
|
2020
|
|
2019
|
|
% Change
|
|||||
Total revenue, net
|
$
|
36,111
|
|
|
$
|
36,150
|
|
|
—
|
%
|
Cost of goods sold
|
13,812
|
|
|
13,579
|
|
|
2
|
%
|
||
Gross profit
|
22,299
|
|
|
22,571
|
|
|
(1
|
)%
|
||
Gross margin
|
61.8
|
%
|
|
62.4
|
%
|
|
|
|||
Operating expenses:
|
|
|
|
|
|
|||||
Selling and marketing
|
20,476
|
|
|
18,974
|
|
|
8
|
%
|
||
General and administrative
|
8,554
|
|
|
8,334
|
|
|
3
|
%
|
||
Research and development
|
3,895
|
|
|
3,512
|
|
|
11
|
%
|
||
Intangible amortization
|
792
|
|
|
792
|
|
|
—
|
%
|
||
Impairment of intangible assets
|
1,325
|
|
|
—
|
|
|
100
|
%
|
||
Total operating expenses
|
35,042
|
|
|
31,612
|
|
|
11
|
%
|
||
Operating loss
|
(12,743
|
)
|
|
(9,041
|
)
|
|
41
|
%
|
||
Other income, net
|
227
|
|
|
73
|
|
|
211
|
%
|
||
Loss before income taxes
|
(12,516
|
)
|
|
(8,968
|
)
|
|
40
|
%
|
||
Provision for income taxes
|
35
|
|
|
21
|
|
|
67
|
%
|
||
Net loss
|
$
|
(12,551
|
)
|
|
$
|
(8,989
|
)
|
|
40
|
%
|
|
|
Three Months Ended March 31,
|
|
2020 vs. 2019
|
|||||||
|
|
2020
|
|
2019
|
|
% Change
|
|||||
|
|
(In thousands)
|
|
|
|||||||
Orthobiologics
|
|
$
|
19,621
|
|
|
$
|
19,026
|
|
|
3
|
%
|
United States
|
|
17,361
|
|
|
17,038
|
|
|
2
|
%
|
||
International
|
|
2,260
|
|
|
1,988
|
|
|
14
|
%
|
||
|
|
|
|
|
|
|
|||||
Spinal Implants
|
|
$
|
16,490
|
|
|
$
|
17,124
|
|
|
(4
|
)%
|
United States
|
|
14,452
|
|
|
14,947
|
|
|
(3
|
)%
|
||
International
|
|
2,038
|
|
|
2,177
|
|
|
(6
|
)%
|
||
|
|
|
|
|
|
|
|||||
Total revenue, net
|
|
$
|
36,111
|
|
|
$
|
36,150
|
|
|
—
|
%
|
|
|
Three Months Ended March 31,
|
|
2020 vs. 2019
|
|||||||
|
|
2020
|
|
2019
|
|
% Change
|
|||||
|
|
(In thousands)
|
|
|
|||||||
United States
|
|
$
|
31,813
|
|
|
$
|
31,985
|
|
|
(1
|
)%
|
International
|
|
4,298
|
|
|
4,165
|
|
|
3
|
%
|
||
Total revenue, net
|
|
$
|
36,111
|
|
|
$
|
36,150
|
|
|
—
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Loss before income taxes
|
$
|
(12,516
|
)
|
|
$
|
(8,968
|
)
|
Provision for income taxes
|
35
|
|
|
21
|
|
||
Effective tax rate
|
(0.3
|
)%
|
|
(0.2
|
)%
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Special Charges/(Gains):
|
(In thousands)
|
||||||
Impairment of intangible assets(1)
|
$
|
1,325
|
|
|
$
|
—
|
|
(Gain) / Loss from change in fair value of contingent consideration liabilities(2)
|
(16
|
)
|
|
64
|
|
||
Total Special Charges
|
$
|
1,309
|
|
|
$
|
64
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Impairment of intangible assets
|
$
|
1,325
|
|
|
$
|
—
|
|
General and administrative
|
(16
|
)
|
|
64
|
|
||
Total Special Charges
|
$
|
1,309
|
|
|
$
|
64
|
|
|
Three Months Ended March 31,
|
|
2020 vs. 2019
|
|||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
|
(In thousands)
|
|
|
|||||||
Net cash used in operating activities
|
$
|
(2,710
|
)
|
|
$
|
(5,173
|
)
|
|
(48
|
)%
|
Net cash (used in) provided by investing activities
|
(28,053
|
)
|
|
2,792
|
|
|
NM
|
|
||
Net cash provided by (used in) financing activities
|
90,636
|
|
|
(1,736
|
)
|
|
NM
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(66
|
)
|
|
(64
|
)
|
|
3
|
%
|
||
Net change in cash and cash equivalents
|
$
|
59,807
|
|
|
$
|
(4,181
|
)
|
|
NM
|
|
(1)
|
our ability to compete successfully in the highly competitive industry in which we operate as result of the uncertainty of the full extent of the impact of the pandemic on our business, financial condition and results of operations (see “We operate in an industry and in market segments that are highly competitive and we may not compete successfully” in the 10-K Risk Factors);
|
(2)
|
our ability to (a) effectively demonstrate to neurosurgeon and orthopedic spine surgeons the merits of our products compared to those of our competitors and (b) successfully educate and train surgeons and their staff on the proper use of our products in light of the temporary closure of our hands-on cadaveric training facility in Carlsbad, California, which is the primary manner in which we offer such education and training (see “To be commercially successful, we must
|
(3)
|
our ability to develop and launch new products in a timely and consistent manner in light of (a) the significantly curtailed use of our hands-on cadaveric training facility in Carlsbad, California, which will limit our ability to develop and launch the products we believe will drive our future revenue growth on the timelines we anticipated previously, or at all, (b) the change in the manner in which our workforce is functioning and (c) the changes impacting workforce function at the FDA and other regulatory bodies, as well as changes impacting workforce function at the facilities at which we seek to have new products approved for use (see “We may not develop new products in a timely and consistent manner, and failure to do so may adversely affect the attractiveness of our overall product portfolio to our surgeon customers and negatively impact our sales and market share” in the 10-K Risk Factors);
|
(4)
|
our ability to maintain or expand our network of independent sales agents and stocking distributors (see “If we are unable to maintain and expand our network of independent sales agents and stocking distributors, we may not maintain or grow our revenue” in the 10-K Risk Factors);
|
(5)
|
an inability to conduct clinical studies effectively to demonstrate the safety and efficacy of our products as a result of, among other things, cost-savings measure we implement or the closure or reduced operating hours of the sites at which such clinical studies would be conducted (see “Sales of, or the price at which we sell, our products may be adversely affected unless the safety and efficacy of our products, alone and relative to competitive products, is demonstrated in clinical studies” and “If the third parties on which we rely to conduct our clinical studies and to assist us with pre-clinical development do not perform as contractually required or expected, we may not obtain regulatory clearance, approval or a CE Certificate of Conformity for or commercialize our products” in the 10-K Risk Factors);
|
(6)
|
our ability to maintain the integrity of our data and to avoid security breaches, loss of data, and other disruptions that could compromise sensitive information as a result of most of our workforce working remotely in environments that may be less secure than our office environment and the increased use of video conferencing and other technologies to conduct business virtually in light of the COVID-19 pandemic (see “We depend on information technology and if our information technology fails to operate adequately or fails to properly maintain the integrity of our data, our business could be materially and adversely affected” and “Security breaches, loss of data and other disruptions could compromise sensitive information related to our business, prevent us from accessing critical information or expose us to liability, which could adversely affect our business and our reputation” in the 10-K Risk Factors);
|
(7)
|
increased exposure to uninsured risks (see “Our insurance policies are expensive and protect us only from some risks, which will leave us exposed to significant uninsured liabilities” in the 10-K Risk Factors);
|
(8)
|
our inability to increase our international sales and a potential adverse impact by changes in foreign currency exchange rates in light of the COVID-19 pandemic (see “We are exposed to a variety of risks relating to our international sales and operations” in the 10-K Risk Factors);
|
(9)
|
fluctuation in our sales volumes and operating results as a result of the adverse effects of the COVID-19 pandemic (see “Our sales volumes and our operating results may fluctuate” in the 10-K Risk Factors); and
|
(10)
|
increased economic instability around the world in light of the COVID-19 pandemic (see “Continuing economic instability, including challenges faced by European countries, may adversely affect the ability of hospitals and other customers to access funds or otherwise have available liquidity, which could reduce orders for our products or impede our ability to obtain new customers, particularly in European markets” in the 10-K Risk Factors).
|
Period
|
|
Total Number of Shares Purchased (1)
|
|
|
Average Price Paid per Share
|
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
|
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
|
|
|
|
|
|
|
|
|
|
|
|
|||||
January 1 - January 31
|
|
151,478
|
|
|
$
|
12.01
|
|
|
—
|
|
|
—
|
|
February 1 - February 29
|
|
1,621
|
|
|
$
|
14.86
|
|
|
—
|
|
|
—
|
|
March 1 - March 31
|
|
678
|
|
|
$
|
14.13
|
|
|
—
|
|
|
—
|
|
(1)
|
These shares were surrendered to the Company to satisfy tax withholdings obligations in connection with the vesting of restricted stock awards.
|
Exhibit No.
|
|
Description
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101.INS*†
|
|
XBRL Instance Document
|
|
|
|
101.SCH*†
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*†
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*†
|
|
XBRL Definition Linkbase Document
|
|
|
|
101.LAB*†
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
|
|
101.PRE*†
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith
|
**
|
These certifications are being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and are not being
filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation by reference language in such filing.
|
|
|
|
|
|
|
|
SEASPINE HOLDINGS CORPORATION
|
|
|
|
|
Date:
|
May 6, 2020
|
|
/s/ Keith C. Valentine
|
|
|
|
Keith C. Valentine
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
May 6, 2020
|
|
/s/ John J. Bostjancic
|
|
|
|
John J. Bostjancic
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
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