Business segment information

6 Months Ended

Jun. 30, 2019

12. Business segment information

During the first quarter of 2019, the Company changed its reporting segments from four reporting segments, previously reported as Bone Growth Therapies, Spinal Implants, Biologics, and Orthofix Extremities, to two reporting segments: Global Spine and Global Extremities. Additionally, the Company changed the performance measure used to evaluate segment performance from Non-GAAP net margin to earnings before interest income (expense), net, income taxes, depreciation and amortization (“EBITDA”). These changes were made to align how the chief operating decision maker manages the business, reviews operating performance and allocates resources. The Company has revised its segment reporting to represent how the business is now managed and restated prior periods to conform to the current segment presentation. Corporate activities are comprised of the operating expenses and activities of the Company not necessarily identifiable within the two reporting segments, such as human resources, finance, legal, and information technology functions.

As part of the change in reporting segments, the Company performed a quantitative assessment of goodwill immediately prior to and subsequently following the change in reporting segments. The analysis did not result in an impairment. In addition, the net carrying value of goodwill that was previously reported under the prior reporting segments (i) Bone Growth Therapies (ii) Spinal Implants and (iii) Biologics have been consolidated and are included within the Global Spine reporting segment as of June 30, 2019.

As mentioned above, the primary metric used in managing the Company is EBITDA. The table below presents EBITDA by reporting segment:

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. Dollars, in thousands)	2019			2018			2019			2018
Global Spine	$	16,523		$	19,030		$	27,098		$	37,855
Global Extremities		2,750			488			2,577			3,816
Corporate		(12,880	)		(12,692	)		(22,407	)		(19,694	)
Total EBITDA	$	6,393		$	6,826		$	7,268		$	21,977
Depreciation and amortization		(6,178	)		(4,554	)		(11,905	)		(8,923	)
Interest income (expense), net		457			(251	)		200			(434	)
Income (loss) before income taxes	$	672		$	2,021		$	(4,437	)	$	12,620

Geographical information

The table below presents net sales by geographic destination for each reporting unit and for the consolidated Company:

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2019		2018		2019		2018
Global Spine
U.S.	$	84,601	$	81,722	$	164,127	$	159,760
International		5,478		5,037		11,870		8,204
Total Global Spine		90,079		86,759		175,997		167,964

Global Extremities
U.S.		6,844		7,023		13,442		13,939
International		18,927		17,765		35,523		38,353
Total Global Extremities		25,771		24,788		48,965		52,292

Consolidated
U.S.		91,445		88,745		177,569		173,699
International		24,405		22,802		47,393		46,557
Net sales	$	115,850	$	111,547	$	224,962	$	220,256