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Business segment information
 9 Months Ended
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