SeaSpine’s Q3 Revenue Stalls

SeaSpine Holdings Corporation’s finances seem stuck in a holding pattern.

The spinal solutions firm recently released its third-quarter earnings report that showed revenue stuck at 2016 levels ($31.7 million). Total U.S. revenue slipped 0.8 percent to $28.2 million for the three months ending Sept. 30 due to low-single digit price declines and decreased usage of SeaSpine’s legacy spinal implant systems, which outpaced the revenue growth contributed by recently launched products.

U.S. Orthobiologics revenue totaled $14.9 million, increasing 2 percent compared to the third quarter of 2016. U.S. Spinal Implants revenue totaled $13.3 million, decreasing 3.9 percent compared to the same period last year. “We are pleased with our results this quarter and confident that our strategy to reposition SeaSpine for growth is on track,” said Keith Valentine, president and CEO of SeaSpine. “We are confident that our recent and upcoming product launches, combined with an even stronger distribution network, will generate growth as we head into 2018.”

International revenue rose 7.4 percent to $3.5 million. Gross margin for the third quarter of 2017 was 61.6 percent, compared to 56.3 percent for the same period in 2016.  The increase in gross margin was mainly driven by lower manufacturing costs for orthobiologics products manufactured at the company’s Irvine, Calif., facility. 
 
Operating expenses totaled $27.3 million, compared to $27.4 million for the same period of the prior year.  A $200,000 increase in R&D expenses was more than offset by lower selling, general and administrative and intangible amortization expenses.  SG&A expense for the third quarter of 2017 included the benefit of a $1.2 million non-cash gain related to a reduction in the fair market value of contingent consideration liabilities associated with the NLT Spine acquisition, which was mostly offset by higher selling commissions compared to the third quarter of 2016.
 
Net loss for the third quarter of 2017 was $7.5 million, compared to a net loss of $9.5 million for the third quarter of 2016.

Cash and cash equivalents at Sept. 30 totaled $16.7 million, and the company had no amounts outstanding under its $30 million credit facility. During the third quarter of 2017, SeaSpine paid off all outstanding borrowings plus accrued interest totaling $4.1 million. The company realized $11 million in net proceeds in the third quarter of 2017 through the sale of approximately 1.02 million shares of its common stock under its “at the market” equity offering program and used a portion of those proceeds to fully pay down the credit facility.

During Q3, SeaSpine launched the Shoreline Anterior Cervical Standalone (ACS) System, featuring TruProfile technology, providing surgeons the ability to intraoperatively address a wide range of anatomy, surgical situations or bone. It also implemented the limited commercial launch of OsteoStrand Demineralized Bone Fibers and successfully completed initial surgeries.

SeaSpine improved its liquidity position, with total cash balance $4.4 million higher than at June 30, 2017, and all outstanding debt and interest paid down during the third quarter.
 
SeaSpine expects full-year 2017 revenue guidance to be in the range of $130 million to $132 million, reflecting growth of 1 percent to 2.5 percent over full-year 2016 revenue.
 
SeaSpine designs, develops, and commercializes surgical solutions for spinal disorders. SeaSpine has a 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 advanced and traditional bone graft substitutes 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 products to facilitate spinal fusion in minimally invasive surgery (MIS), complex spine, deformity and degenerative procedures. SeaSpine currently markets its products in the United States and in over 30 countries worldwide.