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Business segment information
 3 Months Ended
Mar. 31, 2024
Segment Reporting [Abstract]  
Business segment information

11. Business segment information

The Company's operations are managed through two reporting segments: Global Spine and Global Orthopedics. These reporting segments represent the operating segments for which the Chief Executive Officer, who is also the CODM, reviews financial information and makes resource allocation decisions among businesses. The primary metric used by the CODM in managing the Company is adjusted earnings before interest, tax, depreciation, and amortization (“adjusted EBITDA”, a non-GAAP financial measure). Adjusted EBITDA represents earnings before interest income (expense), income taxes, depreciation, and amortization, and excludes the impact of share-based compensation, gains and losses related to changes in foreign exchange rates, charges related to the SeaSpine merger and other strategic investments, acquisition-related fair value adjustments, gains and/or losses on investments, litigation and investigation charges, charges related to initial compliance with regulations set forth by the European Union Medical Device Regulation, and succession charges.

Corporate activities are comprised of operating expenses not directly identifiable within the two reporting segments, such as human resources, finance, legal, and information technology functions. The Company neither discretely allocates assets, other than goodwill, to its operating segments nor evaluates the operating segments using discrete asset information.

Global Spine

The Global Spine reporting segment offers two primary product categories: (i) Bone Growth Therapies and (ii) Spinal Implants, Biologics, and Enabling Technologies.

The Bone Growth Therapies product category manufactures, distributes, sells, and provides support services for market leading devices used adjunctively in high-risk spinal fusion procedures and to treat both nonunion and acute fractures in the orthopedic space. These Class III medical devices are indicated as an adjunctive, noninvasive treatment to improve fusion success rates in the cervical and lumbar spine as well as a therapeutic treatment for non-spine acute and nonunion fractures. This product category uses distributors and a direct sales channel to sell its devices to hospitals, healthcare providers, and patients, in the U.S.

Spinal Implants, Biologics, and Enabling Technologies is comprised of (i) a broad portfolio of spine fixation and motion preservation implant products used in surgical procedures of the spine, (ii) one of the most comprehensive biologics portfolios in both the demineralized bone matrix and cellular allograft market segments, and (iii) image-guided surgical solutions to facilitate degenerative, minimally invasive, and complex surgical procedures. Spinal Implants, Biologics, and Enabling Technologies products are sold through a network of distributors and sales representatives to hospitals and healthcare providers on a global basis for Spinal Implants and Enabling Technologies, and primarily within the U.S. for Biologics.

Global Orthopedics

The Global Orthopedics reporting segment offers products and solutions for limb deformity correction and complex limb reconstruction with a focus on use in trauma, adult and pediatric limb reconstruction, and foot and ankle procedures. This reporting segment specializes in the design, development, and marketing of external and internal fixation orthopedic products that are coupled with enabling digital technologies to serve the complete patient treatment pathway. We sell these products through a global network of distributors and sales representatives to hospitals, healthcare organizations, and healthcare providers.

Corporate

Corporate activities are comprised of the operating expenses and activities of the Company not necessarily identifiable within the two reporting segments.

The table below presents net sales by major product category by reporting segment:

 

 

Three Months Ended March 31,

 

(Unaudited, U.S. Dollars, in thousands)

 

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

%

The following table presents adjusted EBITDA, the primary metric used in managing the Company, by reporting segment:

 

 

Three Months Ended March 31,

 

(Unaudited, U.S. Dollars, in thousands)

 

2024

 

 

2023

 

Adjusted EBITDA by reporting segment

 

 

 

 

 

 

Global Spine

 

$

19,890

 

 

$

14,981

 

Global Orthopedics

 

 

(1,492

)

 

 

44

 

Corporate

 

 

(10,733

)

 

 

(11,821

)

Consolidated adjusted EBITDA

 

$

7,665

 

 

$

3,204

 

 

 

 

 

 

 

 

Reconciling items:

 

 

 

 

 

 

Interest expense, net

 

$

4,558

 

 

$

1,289

 

Depreciation and amortization

 

 

14,862

 

 

 

12,670

 

Share-based compensation expense

 

 

8,800

 

 

 

13,020

 

Foreign exchange impact

 

 

1,588

 

 

 

(583

)

SeaSpine merger-related costs

 

 

4,520

 

 

 

20,740

 

Strategic investments

 

 

120

 

 

 

661

 

Acquisition-related fair value adjustments

 

 

4,217

 

 

 

11,636

 

Interest and loss on investments

 

 

(260

)

 

 

—

 

Litigation and investigation costs

 

 

2,260

 

 

 

469

 

Succession charges

 

 

2,210

 

 

 

—

 

Medical device regulation

 

 

—

 

 

 

3,629

 

All other

 

 

(41

)

 

 

—

 

Loss before income taxes

 

$

(35,169

)

 

$

(60,327

)

The following table presents depreciation and amortization by reporting segment:

 

 

Three Months Ended March 31,

 

(Unaudited, U.S. Dollars, in thousands)

 

2024

 

 

2023

 

Global Spine

 

$

11,929

 

 

$

9,599

 

Global Orthopedics

 

 

2,207

 

 

 

1,629

 

Corporate

 

 

726

 

 

 

1,442

 

Total

 

$

14,862

 

 

$

12,670

 

 

Geographical information

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

 

 

Three Months Ended
March 31,

 

(Unaudited, U.S. Dollars, in thousands)

 

2024

 

 

2023

 

Global Spine

 

 

 

 

 

 

U.S.

 

$

151,865

 

 

$

139,457

 

International

 

 

9,428

 

 

 

9,749

 

Total Global Spine

 

 

161,293

 

 

 

149,206

 

 

 

 

 

 

 

 

Global Orthopedics

 

 

 

 

 

 

U.S.

 

 

8,154

 

 

 

6,636

 

International

 

 

19,161

 

 

 

19,362

 

Total Global Orthopedics

 

 

27,315

 

 

 

25,998

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

U.S.

 

 

160,019

 

 

 

146,093

 

International

 

 

28,589

 

 

 

29,111

 

Net sales

 

$

188,608

 

 

$

175,204

 

The following data includes property, plant, and equipment by geographic area:

(U.S. Dollars, in thousands)

 

March 31,
2024

 

 

December 31,
2023

 

 

 

(Unaudited)

 

 

 

 

U.S.

 

$

142,355

 

 

$

142,727

 

Italy

 

 

10,033

 

 

 

10,187

 

Germany

 

 

2,620

 

 

 

3,030

 

Others

 

 

3,124

 

 

 

3,116

 

Total

 

$

158,132

 

 

$

159,060