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Business segment information | 9 Months Ended
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Sep. 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 President and 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 September 30, |  |  | Nine Months Ended September 30, |
(Unaudited, U.S. Dollars, in thousands) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Adjusted EBITDA by reporting segment |  |  |  |  |  |  |  |  |  |  |  |
Global Spine |  | $ | 26,795 |  |  | $ | 22,593 |  |  | $ | 74,373 |  |  | $ | 58,832 |
Global Orthopedics |  |  | 3,271 |  |  |  | 477 |  |  |  | 1,958 |  |  |  | 386 |
Adjusted EBITDA |  | $ | 30,066 |  |  | $ | 23,070 |  |  | $ | 76,331 |  |  | $ | 59,218 |
Reconciling items: |  |  |  |  |  |  |  |  |  |  |  |
Corporate operating expenses |  | $ | 10,886 |  |  | $ | 9,549 |  |  | $ | 32,853 |  |  | $ | 32,574 |
Interest expense, net |  |  | 5,210 |  |  |  | 1,576 |  |  |  | 14,711 |  |  |  | 4,131 |
Depreciation and amortization |  |  | 15,173 |  |  |  | 13,097 |  |  |  | 44,067 |  |  |  | 39,094 |
Share-based compensation expense |  |  | 6,531 |  |  |  | 6,274 |  |  |  | 25,290 |  |  |  | 32,540 |
Foreign exchange impact |  |  | (1,176 | ) |  |  | 1,909 |  |  |  | 1,263 |  |  |  | 1,057 |
SeaSpine merger-related costs |  |  | 2,616 |  |  |  | 5,416 |  |  |  | 12,992 |  |  |  | 34,362 |
Strategic investments |  |  | 39 |  |  |  | 484 |  |  |  | 470 |  |  |  | 1,454 |
Acquisition-related fair value adjustments |  |  | 5,017 |  |  |  | 7,122 |  |  |  | 15,351 |  |  |  | 26,907 |
Interest and loss on investments |  |  | 3,567 |  |  |  | 429 |  |  |  | 5,120 |  |  |  | 429 |
Litigation and investigation costs |  |  | 8,335 |  |  |  | 3,851 |  |  |  | 10,318 |  |  |  | 5,611 |
Succession charges |  |  | 505 |  |  |  | (92 | ) |  |  | 8,061 |  |  |  | 170 |
Medical device regulation |  |  | — |  |  |  | 1,840 |  |  |  | — |  |  |  | 7,519 |
Loss before income taxes |  | $ | (26,637 | ) |  | $ | (28,385 | ) |  | $ | (94,165 | ) |  | $ | (126,630 | )
The following table presents depreciation and amortization by reporting segment:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(Unaudited, U.S. Dollars, in thousands) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Global Spine |  | $ | 11,512 |  |  | $ | 10,255 |  |  | $ | 34,484 |  |  | $ | 30,222 |
Global Orthopedics |  |  | 2,964 |  |  |  | 1,823 |  |  |  | 7,363 |  |  |  | 5,171 |
Corporate |  |  | 697 |  |  |  | 1,019 |  |  |  | 2,220 |  |  |  | 3,701 |
Total |  | $ | 15,173 |  |  | $ | 13,097 |  |  | $ | 44,067 |  |  | $ | 39,094 |
Geographical information The table below presents net sales by geographic destination for each reporting segment and for the consolidated Company:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(Unaudited, U.S. Dollars, in thousands) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Global Spine |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 158,036 |  |  | $ | 145,764 |  |  | $ | 469,092 |  |  | $ | 432,581 |
International |  |  | 8,068 |  |  |  | 8,588 |  |  |  | 26,339 |  |  |  | 28,953 |
Total Global Spine |  |  | 166,104 |  |  |  | 154,352 |  |  |  | 495,431 |  |  |  | 461,534 |
Global Orthopedics |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  |  | 8,604 |  |  |  | 7,482 |  |  |  | 24,500 |  |  |  | 21,341 |
International |  |  | 21,898 |  |  |  | 22,172 |  |  |  | 63,903 |  |  |  | 63,351 |
Total Global Orthopedics |  |  | 30,502 |  |  |  | 29,654 |  |  |  | 88,403 |  |  |  | 84,692 |
Consolidated |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  |  | 166,640 |  |  |  | 153,246 |  |  |  | 493,592 |  |  |  | 453,922 |
International |  |  | 29,966 |  |  |  | 30,760 |  |  |  | 90,242 |  |  |  | 92,304 |
Net sales |  | $ | 196,606 |  |  | $ | 184,006 |  |  | $ | 583,834 |  |  | $ | 546,226 |
The following data includes net sales by geographic area:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(Unaudited, U.S. Dollars, in thousands) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
U.S. |  | $ | 166,640 |  |  | $ | 153,246 |  |  | $ | 493,592 |  |  | $ | 453,922 |
Italy |  |  | 5,142 |  |  |  | 4,552 |  |  |  | 15,401 |  |  |  | 14,669 |
France |  |  | 2,996 |  |  |  | 2,934 |  |  |  | 9,022 |  |  |  | 8,205 |
United Kingdom |  |  | 2,937 |  |  |  | 2,932 |  |  |  | 8,191 |  |  |  | 8,252 |
Germany |  |  | 2,165 |  |  |  | 3,268 |  |  |  | 6,663 |  |  |  | 8,627 |
Brazil |  |  | 1,096 |  |  |  | 1,842 |  |  |  | 4,332 |  |  |  | 4,607 |
Others |  |  | 15,630 |  |  |  | 15,232 |  |  |  | 46,633 |  |  |  | 47,944 |
Net Sales |  | $ | 196,606 |  |  | $ | 184,006 |  |  | $ | 583,834 |  |  | $ | 546,226 |
The following data includes property, plant, and equipment by geographic area:
(U.S. Dollars, in thousands) |  | September 30, 2024 |  |  | December 31, 2023 |
|  | (Unaudited) |  |  |  |
U.S. |  | $ | 131,653 |  |  | $ | 142,727 |
Italy |  |  | 9,636 |  |  |  | 10,187 |
Germany |  |  | 2,197 |  |  |  | 3,030 |
Others |  |  | 3,199 |  |  |  | 3,116 |
Total |  | $ | 146,685 |  |  | $ | 159,060 |

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- Definition The entire disclosure for reporting segments including data and tables. 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