SeaSpine Announces Fourth Quarter and Full-Year 2020 Results

Reports Record Quarterly Revenue, Driven by U.S. Sales Channel

March 1, 2021 4:05 PM EST

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CARLSBAD, Calif., March 01, 2021 (GLOBE NEWSWIRE) -- SeaSpine Holdings Corporation (NASDAQ: SPNE), a global medical technology company focused on surgical solutions for the treatment of spinal disorders, announced today financial results for the three-months and full-year ended December 31, 2020.

Summary Fourth Quarter 2020 Financial Results and Recent Accomplishments

  • Revenue of $46.4 million, an increase of 6.2% year-over-year
  • U.S. revenue of $42.1 million, an increase of 7.2% year-over-year
    • U.S. spinal implants revenue of $20.7 million, an increase of 8.3% year-over-year
    • U.S. orthobiologics revenue of $21.4 million, an increase of 6.2% year-over-year
  • Publication in The Journal of Bone and Joint Surgery of results from a preclinical study demonstrating SeaSpine’s OsteoStrand® Plus DBM product outperformed the tested cellular bone matrix products
  • Limited commercial launch of the following additions to the product portfolio:
    • Admiral™ ACP System, a next-generation system designed to be used as supplemental fixation for ACDF procedures in conjunction with the Company’s interbody offerings
    • Meridian™ ALIF System with Reef™ A Interbody, which provides maximum modularity either in standalone No-profile or TruProfile® configurations
    • Regatta® Lateral Plate System, designed to bring maximum fixation with minimum profile using the Company’s TruProfile technology
  • Full commercial launch of a minimally invasive, pedicle-based TLIF retractor compatible with the Company’s Mariner® system

“Our fourth quarter results reflected record revenue and meaningful growth in both our spinal implants and orthobiologics portfolios, despite the greater impact of the pandemic on surgery volumes compared to the third quarter. Our results were particularly encouraging when compared to the fourth quarter of 2019, which included 21% growth in our U.S. spinal implants portfolio,” said Keith Valentine, President and Chief Executive Officer. “Despite all the uncertainty and disruption we faced in 2020, the entire SeaSpine organization remained committed to our mission to deliver cost effective spinal implants and orthobiologics procedural solutions to surgeons and hospitals to improve the quality of patient lives. That focus translated into 19 product launches in 2020, the most ever in a single year for SeaSpine, and nearly 9% year-over-year U.S. revenue growth in the second half of 2020 compared to the second half of 2019.”

Fourth Quarter 2020 Financial ResultsRevenue for the fourth quarter of 2020 totaled $46.4 million, an increase of 6.2% compared to the fourth quarter of 2019. U.S. revenue was $42.1 million, a 7.2% increase compared to the fourth quarter of 2019. The increase in U.S. revenue was driven by both the spinal implants and orthobiologics portfolios. Sales of new and recently launched products represented 68% and 35% of U.S. spinal implants and U.S. orthobiologics revenue, respectively. International revenue was $4.3 million, a 3.2% decrease compared to the fourth quarter of 2019.

Spinal implants revenue totaled $23.1 million, a 7.0% increase compared to the fourth quarter of 2019. The increase in spinal implant revenue was driven by growth in recently launched products, led primarily by the Mariner MIS and Revision systems, the NorthStar OCT™ System, and the Company’s expanded line of NanoMetalene® interbody devices featuring Reef Topography.

Orthobiologics revenue totaled $23.3 million, a 5.4% increase compared to the fourth quarter of 2019. The increase in orthobiologics revenue was driven primarily by growth in recently launched products, led by the OsteoStrand Plus product.

Gross margin for the fourth quarter of 2020 was 62.8%, compared to 64.2% for the fourth quarter of 2019. The decrease in gross margin was due to higher spinal implant excess and obsolete inventory provisions in the current year.

Operating expenses for the fourth quarter of 2020 totaled $39.5 million, a $2.6 million increase compared to $36.9 million for the fourth quarter of 2019. The increase in operating expenses was driven primarily by $1.8 million in higher selling and marketing expenses, the majority of which relates to selling commissions and spinal implant set depreciation and instrument deployment costs, $0.3 million in higher research and development expenses, and $0.5 million in higher general and administrative expenses.

Net loss for the fourth quarter of 2020 was $10.3 million, compared to a net loss of $8.6 million for the fourth quarter of 2019.

Cash, cash equivalents and short-term investments at December 31, 2020 totaled $76.8 million, and the Company had no amounts outstanding under its credit facility.

2020 Financial ResultsRevenue for the year ended December 31, 2020 totaled $154.3 million, a decrease of 3.0% compared to the prior year. U.S. revenue was $138.9 million, a 2.1% decrease compared to 2019. Spinal implants revenue totaled $75.9 million, a 2.3% decrease compared to 2019. Orthobiologics revenue totaled $78.4 million, a 3.6% decrease compared to 2019.

Gross margin for 2020 was 63.2%, compared to 63.6% for 2019. The decrease in gross margin was primarily driven by idle plant costs associated with a nearly two-month shutdown of orthobiologics manufacturing operations at the Company’s Irvine facility during the second quarter due to the pandemic.

Operating expenses for 2020 totaled $140.9 million, a $0.6 million increase compared to $140.3 million for 2019. The increase was driven primarily by $2.3 million in higher general and administrative expenses, $1.1 million in higher research and development expenses, and $0.9 million in higher selling and marketing expenses, which were offset by $3.7 million lower intangible asset impairment charges.

Net loss for 2020 was $43.2 million, compared to a net loss of $39.3 million for 2019.

Webcast and Conference Call InformationThe Company’s management team will host a conference call beginning today at 1:30pm PT/4:30pm ET to discuss the financial results and recent business developments. Individuals interested in listening to the conference call may do so by dialing (877) 418-4766 for domestic callers or (614) 385-1253 for international callers, using Conference ID: 3485218. To listen to a live webcast, please visit the Investors section of the SeaSpine website at: www.seaspine.com.

About SeaSpineSeaSpine (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 patients’ 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 in this news release that are not a description of historical facts are forward-looking statements based on the Company’s current expectations and assumptions. Such forward-looking statements include, but are not limited to, statements relating to: the Company’s commitment to its mission to deliver cost effective spinal implants and orthobiologics procedural solutions to surgeons and hospitals to improve the quality of patient lives. 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: surgeons’ willingness to adopt the Company’s newly launched products; the ability of newly launched products to meet the needs of surgeons and patients, including as a result of the lack of clinical validation of products in limited commercial (or “alpha”) launch; continued pricing pressure and exclusion from major healthcare systems; the risk of supply shortages and associated disruption to product sales, including as a result of the Company’s dependence on a limited number of third-party suppliers for components and raw materials, or otherwise; the Company’s ability to continue to invest in medical education and training, product development, and/or sales and marketing initiatives at levels sufficient to drive future revenue growth; general economic and business conditions in the markets in which the Company does business, both in the U.S. and abroad; 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 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 CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 Quarter Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
Total revenue, net$46,436  $43,739  $154,345  $159,083 
Cost of goods sold17,296  15,676  56,841  57,979 
Gross profit29,140  28,063  97,504  101,104 
Operating expenses:       
Selling and marketing24,652  22,893  84,304  83,445 
General and administrative9,567  9,096  35,874  33,594 
Research and development4,472  4,130  16,258  15,125 
Intangible amortization792  792  3,169  3,169 
Impairment of intangible assets    1,325  4,993 
Total operating expenses39,483  36,911  140,930  140,326 
Operating loss(10,343) (8,848) (43,426) (39,222)
Other (income) expense net(86) (351) (463) (302)
Loss before income taxes(10,257) (8,497) (42,963) (38,920)
Provision for income taxes86  91  218  356 
Net loss$(10,343) $(8,588) $(43,181) $(39,276)
Net Loss per share, basic and diluted$(0.37) $(0.45) $(1.59) $(2.07)
Weighted average shares used to compute basic and diluted net loss per share27,639  19,065  27,222  18,977 

SEASPINE HOLDINGS CORPORATIONUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET DATA (In thousands)

 December 31,2020 December 31,2019
    
Cash and cash equivalents$76,813  $20,199 
Trade accounts receivable, net26,154  24,902 
Inventories54,041  47,155 
Total current liabilities30,727  30,478 
Paycheck Protection Program loan payable (long-term portion)5,059   
Total stockholders’ equity171,718  109,760 

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Source: SeaSpine Holdings Corporation


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