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Business segment information
 6 Months Ended
Jun. 30, 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.

 

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

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

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

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Adjusted EBITDA by reporting segment

 

 

 

 

 

 

 

 

 

 

 

 

Global Spine

 

$

27,688

 

 

$

21,258

 

 

$

47,578

 

 

$

36,239

 

Global Orthopedics

 

 

179

 

 

 

(135

)

 

 

(1,313

)

 

 

(91

)

Adjusted EBITDA

 

$

27,867

 

 

$

21,123

 

 

$

46,265

 

 

$

36,148

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate operating expenses

 

$

11,234

 

 

$

11,204

 

 

$

21,967

 

 

$

23,025

 

Interest expense, net

 

 

4,943

 

 

 

1,266

 

 

 

9,501

 

 

 

2,555

 

Depreciation and amortization

 

 

14,032

 

 

 

13,327

 

 

 

28,894

 

 

 

25,997

 

Share-based compensation expense

 

 

9,959

 

 

 

13,246

 

 

 

18,759

 

 

 

26,266

 

Foreign exchange impact

 

 

851

 

 

 

(269

)

 

 

2,439

 

 

 

(852

)

SeaSpine merger-related costs

 

 

5,897

 

 

 

8,206

 

 

 

10,376

 

 

 

28,946

 

Strategic investments

 

 

311

 

 

 

309

 

 

 

431

 

 

 

970

 

Acquisition-related fair value adjustments

 

 

6,117

 

 

 

8,149

 

 

 

10,334

 

 

 

19,785

 

Interest and loss on investments

 

 

1,813

 

 

 

—

 

 

 

1,553

 

 

 

—

 

Litigation and investigation costs

 

 

(277

)

 

 

1,291

 

 

 

1,983

 

 

 

1,760

 

Succession charges

 

 

5,346

 

 

 

262

 

 

 

7,556

 

 

 

262

 

Medical device regulation

 

 

—

 

 

 

2,050

 

 

 

—

 

 

 

5,679

 

Loss before income taxes

 

$

(32,359

)

 

$

(37,918

)

 

$

(67,528

)

 

$

(98,245

)

The following table presents depreciation and amortization by reporting segment:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

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

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Global Spine

 

$

11,044

 

 

$

10,368

 

 

$

22,973

 

 

$

19,967

 

Global Orthopedics

 

 

2,191

 

 

 

1,719

 

 

 

4,398

 

 

 

3,348

 

Corporate

 

 

797

 

 

 

1,240

 

 

 

1,523

 

 

 

2,682

 

Total

 

$

14,032

 

 

$

13,327

 

 

$

28,894

 

 

$

25,997

 

Geographical information

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

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

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

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Global Spine

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

159,191

 

 

$

147,360

 

 

$

311,056

 

 

$

286,817

 

International

 

 

8,843

 

 

 

10,616

 

 

 

18,271

 

 

 

20,365

 

Total Global Spine

 

 

168,034

 

 

 

157,976

 

 

 

329,327

 

 

 

307,182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Orthopedics

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

7,742

 

 

 

7,223

 

 

 

15,896

 

 

 

13,859

 

International

 

 

22,844

 

 

 

21,817

 

 

 

42,005

 

 

 

41,179

 

Total Global Orthopedics

 

 

30,586

 

 

 

29,040

 

 

 

57,901

 

 

 

55,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

166,933

 

 

 

154,583

 

 

 

326,952

 

 

 

300,676

 

International

 

 

31,687

 

 

 

32,433

 

 

 

60,276

 

 

 

61,544

 

Net sales

 

$

198,620

 

 

$

187,016

 

 

$

387,228

 

 

$

362,220

 

 

The following data includes net sales by geographic area:

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

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

 

2024

 

 

2023

 

 

2024

 

 

2023

 

U.S.

 

$

166,933

 

 

$

154,583

 

 

$

326,952

 

 

$

300,676

 

Italy

 

 

5,257

 

 

 

5,262

 

 

 

10,259

 

 

 

10,117

 

France

 

 

3,510

 

 

 

2,811

 

 

 

6,026

 

 

 

5,271

 

United Kingdom

 

 

2,623

 

 

 

2,540

 

 

 

5,254

 

 

 

5,320

 

Germany

 

 

2,393

 

 

 

2,721

 

 

 

4,498

 

 

 

5,359

 

Brazil

 

 

1,708

 

 

 

1,882

 

 

 

3,236

 

 

 

2,765

 

Others

 

 

16,196

 

 

 

17,217

 

 

 

31,003

 

 

 

32,712

 

Net Sales

 

$

198,620

 

 

$

187,016

 

 

$

387,228

 

 

$

362,220

 

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

(U.S. Dollars, in thousands)

 

June 30,
2024

 

 

December 31,
2023

 

 

 

(Unaudited)

 

 

 

 

U.S.

 

$

138,757

 

 

$

142,727

 

Italy

 

 

9,571

 

 

 

10,187

 

Germany

 

 

2,388

 

 

 

3,030

 

Others

 

 

3,395

 

 

 

3,116

 

Total

 

$

154,111

 

 

$

159,060