SeaSpine Holdings Corporation (NASDAQ: SPNE), a global medical
technology company focused on surgical solutions for the treatment
of spinal disorders, today announced financial results for the
three-months ended March 31, 2020.
Summary of First Quarter 2020 Financial Results and
Recent Accomplishments
- Revenue of $36.1 million, flat compared to the prior year
period
- U.S. revenue of $31.8 million, a decrease of less than 1%
compared to the prior year period
- U.S. Spinal Implants revenue of $14.5 million, a decrease of
3%
- U.S. Orthobiologics revenue of $17.3 million, an increase of
2%
- Completed alpha launches for NanoMetalene with Reef Topography
oblique and articulating interbody devices
- Completed alpha launch of a new Cervical Facet Fusion
System
- Received FDA 510(k) clearance for lordotic and parallel
expanding interbody implants under the Explorer™ brand
- Enacted numerous measures designed to ensure business
continuity, reduce operating expense, and preserve cash in response
to the ongoing COVID-19 pandemic
Keith C. Valentine, President and Chief Executive Officer, said,
“During these unprecedented times, we are focused on protecting our
employees’ health and safety while reducing costs for non-critical
expenses and programs. Despite a strong start to the year, the
deferral of most spinal-deformity, revision, and back pain
surgeries significantly impacted our business in March and
continued to do so through April and into May. We are working
closely with our surgeon advisors and key U.S. distributors to
determine the expected timing for the return of spinal surgery
procedures, and are encouraged by SeaSpine's strong presence in
many of the geographies that have begun to ease restrictions on
these surgeries, or are considering it in the near term.”
“While we temporarily deferred certain investments originally
planned for 2020, we prioritized the most critical product
development initiatives and introductions to satisfy expected
procedural mix later this year. Ultimately, we are focused on
maintaining the culture and operational readiness to emerge from
the pandemic stronger than ever,” Mr. Valentine concluded.
First Quarter 2020 Financial ResultsRevenue for
the first quarter of 2020 was $36.1 million, flat compared to the
first quarter of 2019. U.S. Spinal Implants revenue was $14.5
million, a 3% decrease compared to the same period of the prior
year. The decrease was driven by lower procedure volumes and
unit pricing, somewhat offset by a procedural mix shift to more
thoracolumbar procedures, which typically generate more revenue per
case compared to other procedures. U.S. Orthobiologics revenue was
$17.3 million, a 2% increase compared to the same period of the
prior year. The increase was driven by growth in recently
launched products.
Gross margin for the first quarter of 2020 was 61.8%, compared
to 62.4% for the same period of the prior year. The decrease in
gross margin was due to lower utilization of the Irvine
manufacturing facility and higher excess and obsolete inventory
charges.
Operating expense for the first quarter of 2020 was $35.0
million, a $3.4 million increase compared to the same period of the
prior year. This increase was driven primarily by $1.5
million in higher selling and marketing expenses and a $1.3 million
non-cash, intangible asset impairment charge associated with
acquired technology.
Net loss for the first quarter of 2020 was $12.6 million, a $3.6
million increase compared to same period of the prior
year.
At March 31, 2020, cash, cash equivalents and investments were
$105.2 million, and the Company had no outstanding debt under its
credit facility.
Updated 2020 Financial OutlookSeaSpine withdrew
its previously announced annual guidance for 2020 on April 6, 2020.
Given the uncertain scope and duration of the COVID-19 pandemic,
the Company remains unable to accurately estimate the impact of the
pandemic on its future operations and financial results.
Webcast and Conference Call
InformationSeaSpine’s management team will host a
conference call beginning today at 2:30 p.m. Pacific time / 5:30
p.m. Eastern time to discuss the financial results announced today.
Individuals interested in listening to the conference call may do
so by dialing (877) 418-4766 for callers in the U.S. or (614)
385-1253 for callers outside the U.S., using Conference ID:
6423409. To listen to the webcast and view the accompanying
slides, please visit the Investors section of the SeaSpine website
at: www.seaspine.com.
About SeaSpine SeaSpine (www.seaspine.com) is a
global medical technology company focused on the design,
development and commercialization of surgical solutions for the
treatment of patients suffering from spinal disorders. SeaSpine has
a comprehensive portfolio of orthobiologics and spinal implants
solutions to meet the varying combinations of products that
neurosurgeons and orthopedic spine surgeons need to perform fusion
procedures on the lumbar, thoracic and cervical spine. SeaSpine’s
orthobiologics products consist of a broad range of advanced and
traditional bone graft substitutes that are designed to improve
bone fusion rates following a wide range of orthopedic surgeries,
including spine, hip, and extremities procedures. SeaSpine’s spinal
implants portfolio consists of an extensive line of products to
facilitate spinal fusion in degenerative, minimally invasive
surgery (MIS), and complex spinal deformity procedures. Expertise
in both orthobiologic sciences and spinal implants product
development allows SeaSpine to offer its surgeon customers a
differentiated portfolio and a complete solution to meet their
fusion requirements. SeaSpine currently markets its products in the
United States and in approximately 30 countries worldwide through a
committed network of increasingly exclusive distribution
partners.
Forward-Looking StatementsSeaSpine cautions you
that statements included in this news release that are not a
description of historical facts are forward-looking statements that
are based on the Company’s current expectations and assumptions.
Such forward-looking statements include, but are not limited to,
statements relating to: the expected timing for the return of
spinal surgery procedures, the Company’s strength in the
geographies that have begun to ease restrictions on spinal surgery
procedures, and expectations regarding geographies that are
considering easing restrictions on spinal surgery procedures in the
near term; the Company’s ability to predict accurately and
prioritize the products for which there will be demand later this
year; and the Company’s ability to maintain the operational
readiness that enables it to emerge from the pandemic stronger than
ever. Among the factors that could cause or contribute to
material differences between the Company’s actual results and the
expectations indicated by the forward-looking statements are risks
and uncertainties that include, but are not limited to: the full
extent to which the COVID-19 pandemic will, directly or indirectly,
impact the Company’s business, results of operations and financial
condition, including its sales, expenses, supply chain integrity,
manufacturing capability, research and development activities, and
employee-related compensation, all of which currently are highly
uncertain; new information that may emerge concerning COVID-19, its
contagiousness and/or virulence, including as a result of a
resurgence in COVID-19 transmission and infection after the
loosening of “stay at home” restrictions or resumption of surgical
procedures, whether as a result thereof, as a result of
reinfection, as a result of a delay in the emergence of symptoms
following infection (or reinfection) by COVID-19, or as a result of
its ability to lay dormant following infection (or reinfection);
actions required or recommended to contain or treat COVID-19, in
light of any or all of the foregoing or other as-yet unanticipated
developments, whether related to COVID-19 directly or indirectly;
the direct and indirect economic impact, both domestically and
abroad, of COVID-19 as a result of any or all of the foregoing,
including actions taken by local, state, national and international
governmental agencies, whether such impact affects customers,
suppliers, or markets generally; and other risks and uncertainties
more fully described in the Company’s news releases and periodic
filings with the Securities and Exchange Commission. The Company’s
public filings with the Securities and Exchange Commission are
available at www.sec.gov.
You are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date when made. SeaSpine
does not intend to revise or update any forward-looking statement
set forth in this news release to reflect events or circumstances
arising after the date hereof, except as may be required by
law.
Investor Relations ContactLeigh
Salvo(415) 937-5402ir@seaspine.com
SEASPINE HOLDINGS CORPORATIONUNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In
thousands, except per share data) |
|
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Total revenue, net |
$ |
36,111 |
|
|
$ |
36,150 |
|
Cost of goods sold |
13,812 |
|
|
13,579 |
|
Gross profit |
22,299 |
|
|
22,571 |
|
Operating expenses: |
|
|
|
Selling and marketing |
20,476 |
|
|
18,974 |
|
General and
administrative |
8,554 |
|
|
8,334 |
|
Research and development |
3,895 |
|
|
3,512 |
|
Intangible amortization |
792 |
|
|
792 |
|
Impairment of intangible
assets |
1,325 |
|
|
— |
|
Total operating expenses |
35,042 |
|
|
31,612 |
|
Operating loss |
(12,743 |
) |
|
(9,041 |
) |
Other income, net |
227 |
|
|
73 |
|
Loss before income taxes |
(12,516 |
) |
|
(8,968 |
) |
Provision for income
taxes |
35 |
|
|
21 |
|
Net loss |
$ |
(12,551 |
) |
|
$ |
(8,989 |
) |
Net loss per share, basic and
diluted |
$ |
(0.48 |
) |
|
$ |
(0.48 |
) |
Weighted average shares used
to compute basic and diluted net loss per share |
26,420 |
|
|
18,872 |
|
|
|
|
|
|
|
SEASPINE HOLDINGS CORPORATIONCONDENSED
CONSOLIDATED BALANCE SHEET DATA(In thousands) |
|
|
March 31, 2020 |
|
December 31, |
|
(unaudited) |
|
2019 |
Cash and cash equivalents |
$ |
80,006 |
|
|
$ |
20,199 |
|
Short-term investments |
25,200 |
|
|
— |
|
Trade accounts receivable,
net |
20,005 |
|
|
24,902 |
|
Inventories |
47,682 |
|
|
47,155 |
|
Total current liabilities |
29,788 |
|
|
30,478 |
|
Total stockholders'
equity |
189,889 |
|
|
109,760 |
|
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