10-Q 1 ofix-20230930.htm 10-Q 10-Q
0000884624Q3false--12-31http://fasb.org/us-gaap/2023#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2023#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesNoncurrent00008846242022-04-012022-06-300000884624ofix:NeoMedicalMember2023-09-300000884624ofix:SeaspineHoldingsCorporationMembersrt:ScenarioPreviouslyReportedMember2023-01-050000884624srt:MinimumMemberofix:SeaspineHoldingsCorporationMemberofix:DevelopedTechnologyMember2023-01-050000884624us-gaap:AccumulatedTranslationAdjustmentMember2023-01-012023-09-300000884624us-gaap:NonUsMember2022-01-012022-09-300000884624ofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMember2023-01-012023-09-300000884624us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300000884624us-gaap:EmployeeStockMember2022-01-012022-09-300000884624us-gaap:CostOfSalesMember2023-01-012023-09-300000884624us-gaap:RetainedEarningsMember2023-01-012023-03-310000884624us-gaap:InProcessResearchAndDevelopmentMemberofix:SeaspineHoldingsCorporationMember2023-01-050000884624us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300000884624ofix:LattusMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000884624ofix:GlobalOrthopedicsMember2023-01-012023-09-300000884624us-gaap:FairValueInputsLevel3Member2023-01-012023-09-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300000884624us-gaap:RestrictedStockUnitsRSUMemberus-gaap:EmployeeStockOptionMember2022-07-012022-09-300000884624us-gaap:AdditionalPaidInCapitalMember2023-06-300000884624us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000884624us-gaap:OperatingSegmentsMemberofix:GlobalOrthopedicsMember2023-01-012023-09-300000884624us-gaap:RestrictedStockUnitsRSUMemberus-gaap:EmployeeStockOptionMember2023-01-012023-09-300000884624us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300000884624us-gaap:AdditionalPaidInCapitalMember2022-09-300000884624us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300000884624ofix:NeoMedicalMemberofix:PreferredEquitySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000884624us-gaap:FairValueInputsLevel3Memberofix:LattusSpineMember2022-12-310000884624us-gaap:RetainedEarningsMember2021-12-3100008846242022-06-3000008846242021-12-310000884624ofix:GlobalOrthopedicsMembercountry:US2023-01-012023-09-300000884624ofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMemberus-gaap:SubsequentEventMemberus-gaap:BaseRateMember2023-11-062023-11-060000884624us-gaap:CorporateNonSegmentMember2023-07-012023-09-300000884624ofix:SeaspineHoldingsCorporationMemberofix:RestructuringCostsMember2023-09-300000884624us-gaap:CommonStockMember2022-01-012022-03-310000884624us-gaap:OtherDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000884624ofix:RetentionCostsMemberofix:SeaspineHoldingsCorporationMember2023-09-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300000884624us-gaap:OperatingSegmentsMemberofix:GlobalOrthopedicsMember2023-07-012023-09-300000884624ofix:GlobalSpineMember2023-09-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000884624srt:MaximumMemberofix:SeaspineHoldingsCorporationMemberofix:DevelopedTechnologyMember2023-01-050000884624us-gaap:CostOfSalesMember2022-07-012022-09-300000884624us-gaap:NonUsMemberofix:GlobalOrthopedicsMember2022-07-012022-09-300000884624country:US2023-01-012023-09-300000884624ofix:SeaspineHoldingsCorporationMemberofix:RestructuringCostsMember2023-01-012023-09-300000884624us-gaap:RetainedEarningsMember2022-07-012022-09-300000884624us-gaap:RetainedEarningsMember2022-01-012022-03-310000884624us-gaap:OtherCurrentLiabilitiesMember2023-09-300000884624ofix:MarketBasedPerformanceBasedRestrictedStockUnitsMember2023-07-012023-09-300000884624ofix:OrthofixSecuredRevolvingCreditFacilityMember2023-09-300000884624us-gaap:RetainedEarningsMember2023-07-012023-09-300000884624us-gaap:CommonStockMember2022-09-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000884624us-gaap:SellingAndMarketingExpenseMember2023-01-012023-09-300000884624us-gaap:AccumulatedTranslationAdjustmentMember2023-09-300000884624ofix:BlueTorchFinanceLLCMemberofix:SeniorSecuredDelayedDrawTermLoanMemberofix:FinancingAgreementMemberus-gaap:SubsequentEventMember2023-11-080000884624ofix:LattusSpineMember2023-01-012023-09-300000884624ofix:NeoMedicalMember2022-12-310000884624us-gaap:CommonStockMember2023-01-012023-03-310000884624us-gaap:RestrictedStockUnitsRSUMemberus-gaap:EmployeeStockOptionMember2023-07-012023-09-300000884624country:IT2023-09-300000884624us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300000884624us-gaap:InProcessResearchAndDevelopmentMemberofix:SeaspineHoldingsCorporationMember2023-01-052023-01-050000884624ofix:MarketBasedPerformanceBasedRestrictedStockUnitsMember2023-01-012023-09-300000884624us-gaap:NonUsMember2023-01-012023-09-300000884624ofix:GlobalSpineMemberus-gaap:NonUsMember2022-01-012022-09-300000884624ofix:TimeBasedRestrictedStockAwardsAndUnitsMember2022-01-012022-09-300000884624ofix:SeaspineHoldingsCorporationMembersrt:RestatementAdjustmentMember2023-01-050000884624ofix:BlueTorchFinanceLLCMemberofix:SeniorSecuredDelayedDrawTermLoanMemberofix:FinancingAgreementMemberus-gaap:SubsequentEventMember2023-11-062023-11-0600008846242023-09-300000884624ofix:RetentionCostsMemberofix:SeaspineHoldingsCorporationMember2023-01-012023-09-300000884624ofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMemberofix:FloorRateMemberus-gaap:SubsequentEventMember2023-11-062023-11-060000884624us-gaap:FairValueInputsLevel3Memberofix:LattusMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000884624ofix:GlobalOrthopedicsMembercountry:US2022-01-012022-09-300000884624us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300000884624ofix:SeveranceCostsMemberofix:SeaspineHoldingsCorporationMember2023-09-300000884624us-gaap:CommonStockMember2022-06-300000884624ofix:SeaSpineCreditFacilityMember2022-12-310000884624us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-3000008846242022-12-310000884624us-gaap:CostOfSalesMember2023-07-012023-09-300000884624ofix:SeaspineHoldingsCorporationMember2023-01-0500008846242023-01-012023-09-300000884624ofix:SeaspineHoldingsCorporationMembersrt:ScenarioPreviouslyReportedMemberofix:DevelopedTechnologyMember2023-01-050000884624us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300000884624ofix:GlobalSpineMember2022-12-310000884624us-gaap:CustomerRelationshipsMemberofix:SeaspineHoldingsCorporationMembersrt:ScenarioPreviouslyReportedMember2023-01-0500008846242023-04-012023-06-300000884624ofix:ConvertibleLoanAgreementMemberofix:NeoMedicalMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000884624ofix:SpinalImplantsBiologicsAndEnablingTechnologiesMember2022-01-012022-09-300000884624us-gaap:InProcessResearchAndDevelopmentMemberofix:SeaspineHoldingsCorporationMembersrt:ScenarioPreviouslyReportedMember2023-01-050000884624us-gaap:PreferredStockMemberofix:NeoMedicalMember2022-12-310000884624ofix:BoneGrowthTherapiesMember2023-01-012023-09-300000884624ofix:SeaspineHoldingsCorporationMember2023-01-052023-01-050000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000884624us-gaap:PreferredStockMemberofix:NeoMedicalMember2022-09-300000884624us-gaap:FairValueInputsLevel3Memberofix:LattusSpineMember2023-01-012023-09-300000884624us-gaap:NonUsMember2023-07-012023-09-300000884624ofix:LongTermBorrowingsUnderCreditFacilityMember2023-01-012023-09-300000884624ofix:NeoMedicalMember2023-01-012023-09-300000884624us-gaap:RetainedEarningsMember2023-04-012023-06-300000884624us-gaap:OperatingSegmentsMemberofix:GlobalSpineMember2022-07-012022-09-300000884624us-gaap:RetainedEarningsMember2022-06-300000884624us-gaap:PreferredStockMemberofix:NeoMedicalMember2023-01-012023-09-300000884624ofix:SpinalKineticsMemberus-gaap:FairValueInputsLevel3Member2022-01-012022-09-300000884624us-gaap:FairValueMeasurementsRecurringMember2023-09-300000884624us-gaap:PreferredStockMemberofix:NeoMedicalMember2021-12-310000884624us-gaap:CommonStockMember2021-12-310000884624us-gaap:AdditionalPaidInCapitalMember2021-12-310000884624us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310000884624us-gaap:FairValueInputsLevel3Memberofix:LattusSpineMember2023-09-3000008846242023-03-310000884624ofix:NeoMedicalMemberofix:ConvertibleLoanAgreementMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310000884624us-gaap:CommonStockMember2022-03-310000884624us-gaap:CommonStockMember2023-04-012023-06-3000008846242022-09-3000008846242022-07-012022-09-300000884624us-gaap:RevolvingCreditFacilityMemberofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMemberus-gaap:SubsequentEventMember2023-11-062023-11-060000884624us-gaap:FairValueInputsLevel3Memberofix:NeoMedicalMember2023-09-300000884624us-gaap:CustomerRelationshipsMemberofix:SeaspineHoldingsCorporationMember2023-01-050000884624us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300000884624ofix:LattusSpineMember2023-09-300000884624us-gaap:RetainedEarningsMember2022-03-310000884624ofix:GlobalSpineMemberus-gaap:NonUsMember2023-07-012023-09-300000884624ofix:LongTermBorrowingsUnderCreditFacilityMember2022-12-310000884624us-gaap:CorporateNonSegmentMember2023-01-012023-09-300000884624us-gaap:RevolvingCreditFacilityMember2023-01-012023-09-300000884624ofix:GlobalSpineMember2023-01-012023-09-3000008846242023-01-012023-03-310000884624us-gaap:PreferredStockMemberofix:NeoMedicalMember2023-09-300000884624us-gaap:RevolvingCreditFacilityMember2023-01-030000884624ofix:GlobalOrthopedicsMember2022-12-310000884624ofix:GlobalSpineMember2022-07-012022-09-300000884624us-gaap:EmployeeStockMember2023-07-012023-09-300000884624us-gaap:NonUsMemberofix:GlobalOrthopedicsMember2022-01-012022-09-300000884624ofix:NeoMedicalMember2023-01-012023-09-300000884624us-gaap:NonUsMemberofix:GlobalSpineMember2023-01-012023-09-300000884624us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300000884624ofix:GlobalOrthopedicsMembercountry:US2023-07-012023-09-300000884624us-gaap:RetainedEarningsMember2022-09-300000884624ofix:SeveranceCostsMemberofix:SeaspineHoldingsCorporationMember2023-01-012023-09-300000884624us-gaap:RevolvingCreditFacilityMemberus-gaap:SubsequentEventMember2023-10-010000884624us-gaap:OtherInvestmentsMember2023-01-012023-09-300000884624ofix:BoneGrowthTherapiesMember2022-07-012022-09-300000884624us-gaap:CommonStockMember2023-06-300000884624us-gaap:EmployeeStockOptionMember2022-01-012022-09-300000884624country:US2023-07-012023-09-300000884624us-gaap:RetainedEarningsMember2023-09-300000884624us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000884624us-gaap:CommonStockMember2023-09-300000884624us-gaap:EmployeeStockOptionMember2023-01-012023-09-300000884624ofix:SeaspineHoldingsCorporationMember2023-01-012023-09-300000884624us-gaap:AdditionalPaidInCapitalMember2022-03-310000884624ofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMemberofix:SeniorSecuredTermLoanMemberus-gaap:SubsequentEventMember2023-11-060000884624ofix:TimeBasedRestrictedStockAwardsAndUnitsMember2023-01-012023-09-300000884624ofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:SubsequentEventMember2023-11-062023-11-060000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300000884624us-gaap:AdditionalPaidInCapitalMember2022-12-310000884624us-gaap:OperatingSegmentsMemberofix:GlobalSpineMember2022-01-012022-09-300000884624ofix:TimeBasedRestrictedStockAwardsAndUnitsMember2022-07-012022-09-300000884624us-gaap:FairValueInputsLevel3Memberofix:NeoMedicalMember2022-01-012022-09-300000884624us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000884624us-gaap:SellingAndMarketingExpenseMember2022-01-012022-09-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000884624ofix:SpinalImplantsBiologicsAndEnablingTechnologiesMember2023-01-012023-09-300000884624us-gaap:FairValueInputsLevel3Memberofix:NeoMedicalMember2022-12-310000884624ofix:GlobalSpineMembercountry:US2023-01-012023-09-3000008846242023-07-012023-09-300000884624us-gaap:AdditionalPaidInCapitalMember2023-03-310000884624ofix:GlobalSpineMember2022-01-012022-09-300000884624us-gaap:RevolvingCreditFacilityMember2023-03-010000884624ofix:LongTermBorrowingsUnderCreditFacilityMember2023-09-300000884624us-gaap:OtherInvestmentsMember2022-12-310000884624ofix:GlobalSpineMembercountry:US2022-01-012022-09-300000884624country:US2022-01-012022-09-300000884624us-gaap:NonUsMemberofix:GlobalOrthopedicsMember2023-01-012023-09-300000884624us-gaap:FairValueInputsLevel3Memberofix:NeoMedicalMember2022-09-300000884624us-gaap:RevolvingCreditFacilityMember2023-09-300000884624ofix:NeoMedicalMemberus-gaap:FairValueInputsLevel2Memberofix:PreferredEquitySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-3000008846242022-03-310000884624us-gaap:CorporateNonSegmentMember2022-07-012022-09-300000884624ofix:SpinalKineticsMemberus-gaap:FairValueInputsLevel3Member2021-12-310000884624ofix:SeaSpineCreditFacilityMember2023-01-012023-09-300000884624us-gaap:OtherDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000884624us-gaap:PreferredStockMemberofix:NeoMedicalMember2020-10-012020-10-310000884624ofix:SeaSpineCreditFacilityMember2023-09-300000884624ofix:NeoMedicalMember2023-09-300000884624us-gaap:CommonStockMember2022-07-012022-09-300000884624us-gaap:AccumulatedTranslationAdjustmentMember2022-12-3100008846242023-11-060000884624us-gaap:OtherDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000884624ofix:GlobalOrthopedicsMember2023-09-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000884624us-gaap:RetainedEarningsMember2022-04-012022-06-300000884624us-gaap:EmployeeStockOptionMember2023-07-012023-09-300000884624ofix:SeaspineHoldingsCorporationMember2023-07-012023-09-300000884624us-gaap:AdditionalPaidInCapitalMember2023-09-300000884624us-gaap:AdditionalPaidInCapitalMember2022-06-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300000884624ofix:GlobalOrthopedicsMember2022-07-012022-09-300000884624ofix:SeaspineHoldingsCorporationMemberofix:PayrollTaxesMember2023-09-300000884624us-gaap:RetainedEarningsMember2022-12-310000884624us-gaap:RetainedEarningsMember2023-06-300000884624us-gaap:OperatingSegmentsMemberofix:GlobalSpineMember2023-07-012023-09-300000884624us-gaap:CommonStockMember2022-12-310000884624us-gaap:RestrictedStockUnitsRSUMemberus-gaap:EmployeeStockOptionMember2022-01-012022-09-300000884624ofix:GlobalOrthopedicsMember2022-01-012022-09-3000008846242022-01-012022-03-310000884624ofix:SpinalImplantsBiologicsAndEnablingTechnologiesMember2022-07-012022-09-300000884624us-gaap:RetainedEarningsMember2023-03-310000884624us-gaap:SellingAndMarketingExpenseMember2023-07-012023-09-300000884624us-gaap:EmployeeStockMember2023-01-012023-09-300000884624us-gaap:CostOfSalesMember2022-01-012022-09-300000884624us-gaap:CorporateNonSegmentMember2022-01-012022-09-300000884624us-gaap:OperatingSegmentsMemberofix:GlobalOrthopedicsMember2022-01-012022-09-300000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300000884624ofix:BoneGrowthTherapiesMember2022-01-012022-09-300000884624ofix:ConvertibleLoanAgreementMemberofix:NeoMedicalMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000884624us-gaap:CommonStockMember2022-04-012022-06-300000884624ofix:SeaspineHoldingsCorporationMemberofix:DevelopedTechnologyMember2023-01-050000884624us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000884624ofix:SeaspineHoldingsCorporationMemberofix:PayrollTaxesMember2023-01-012023-09-300000884624ofix:GlobalOrthopedicsMember2023-07-012023-09-300000884624ofix:LattusMember2023-01-052023-01-050000884624us-gaap:CommonStockMember2023-07-012023-09-3000008846242022-01-012022-09-300000884624ofix:TimeBasedRestrictedStockAwardsAndUnitsMember2023-07-012023-09-300000884624ofix:NeoMedicalMemberofix:PreferredEquitySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000884624ofix:GlobalOrthopedicsMembercountry:US2022-07-012022-09-300000884624ofix:BlueTorchFinanceLLCMemberofix:SeniorSecuredDelayedDrawTermLoanMemberofix:FinancingAgreementMemberus-gaap:SubsequentEventMember2023-11-060000884624ofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMemberofix:SeniorSecuredTermLoanMemberus-gaap:SubsequentEventMember2023-11-062023-11-060000884624us-gaap:RevolvingCreditFacilityMemberofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMemberus-gaap:SubsequentEventMember2023-11-0800008846242023-06-300000884624us-gaap:CommonStockMember2023-03-310000884624country:US2022-07-012022-09-300000884624us-gaap:EmployeeStockOptionMember2022-07-012022-09-300000884624ofix:BoneGrowthTherapiesMember2023-07-012023-09-300000884624ofix:NeoMedicalMember2020-10-310000884624us-gaap:PreferredStockMemberofix:NeoMedicalMember2022-01-012022-09-3000008846242023-01-052023-01-050000884624us-gaap:RevolvingCreditFacilityMemberofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMemberus-gaap:SubsequentEventMember2023-11-060000884624ofix:SpinalImplantsBiologicsAndEnablingTechnologiesMember2023-07-012023-09-300000884624us-gaap:OperatingSegmentsMemberofix:GlobalSpineMember2023-01-012023-09-300000884624us-gaap:FairValueInputsLevel3Memberofix:NeoMedicalMember2023-01-012023-09-300000884624ofix:GlobalSpineMembercountry:US2023-07-012023-09-300000884624us-gaap:SellingAndMarketingExpenseMember2022-07-012022-09-300000884624ofix:GlobalSpineMember2023-07-012023-09-300000884624us-gaap:OperatingSegmentsMemberofix:GlobalOrthopedicsMember2022-07-012022-09-300000884624ofix:NeoMedicalMember2021-10-310000884624us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300000884624ofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMemberus-gaap:SubsequentEventMemberofix:AdjustedTermSofrRateMember2023-11-062023-11-060000884624us-gaap:FairValueInputsLevel3Memberofix:NeoMedicalMember2021-12-310000884624us-gaap:FairValueMeasurementsRecurringMember2022-12-310000884624us-gaap:EmployeeStockMember2022-07-012022-09-300000884624ofix:OrthofixSecuredRevolvingCreditFacilityMember2023-01-012023-09-300000884624us-gaap:NonUsMemberofix:GlobalOrthopedicsMember2023-07-012023-09-300000884624ofix:BlueTorchFinanceLLCMemberofix:FinancingAgreementMemberofix:CreditSpreadAdjustmentMemberus-gaap:SubsequentEventMember2023-11-062023-11-060000884624us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300000884624ofix:GlobalSpineMemberus-gaap:NonUsMember2022-07-012022-09-300000884624us-gaap:NonUsMember2022-07-012022-09-300000884624ofix:MarketBasedPerformanceBasedRestrictedStockUnitsMember2022-07-012022-09-300000884624ofix:GlobalSpineMembercountry:US2022-07-012022-09-300000884624ofix:MarketBasedPerformanceBasedRestrictedStockUnitsMember2022-01-012022-09-300000884624ofix:OrthofixSecuredRevolvingCreditFacilityMember2022-12-31ofix:Segmentiso4217:EURxbrli:pureiso4217:USDxbrli:sharesxbrli:sharesiso4217:CHFiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to .

Commission File Number: 0-19961

 

img221715532_0.jpg 

ORTHOFIX MEDICAL INC.

(Exact name of registrant as specified in its charter)

Delaware

 

98-1340767

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

3451 Plano Parkway,

Lewisville, Texas

 

75056

(Address of principal executive offices)

 

(Zip Code)

(214) 937-2000

(Registrant’s telephone number, including area code)

 

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer

Accelerated filer

 

 

 

 

Non-Accelerated filer

Smaller Reporting Company

 

 

 

 

 

 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 6, 2023, 36,756,607 shares of common stock were issued and outstanding.

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock, $0.10 par value per share

 

OFIX

 

Nasdaq Global Select Market

 

 


 

Table of Contents

 

 

 

 

 

 

Page

PART I

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

4

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2023, and December 31, 2022

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023, and 2022

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2023, and 2022

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023, and 2022

 

7

 

 

 

 

 

 

 

Notes to the Unaudited Condensed Consolidated Financial Statements

 

8

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

32

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

32

 

 

 

 

 

PART II

 

OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

34

 

 

 

 

 

Item 1A.

 

Risk Factors

 

34

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

34

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

35

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

35

 

 

 

 

 

Item 5.

 

Other Information

 

35

 

 

 

 

 

Item 6.

 

Exhibits

 

35

 

 

 

 

 

SIGNATURES

 

36

 

2


 

Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts, and projections. All statements, other than statements of historical fact, contained in this report, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “intends,” “predicts,” “potential,” or “continue” or the negative version of those terms and other similar expressions. Forward-looking statements include, but are not limited to, statements about:

our future operations, sales, expenses, and financial performance;
the anticipated benefits of the merger with SeaSpine Holdings Corporation that was completed in January 2023, including the anticipated synergies and cost-savings from the merger, and our ability to successfully integrate SeaSpine's business with ours;
our operating results;
our plans for future products and enhancements of existing products;
anticipated growth and trends in our business;
the timing of and our ability to maintain and obtain regulatory clearances or approvals;
our belief that our cash and cash equivalents, investments, and access to our revolving line of credit will be sufficient to satisfy our anticipated cash requirements;
our relationships with customers and distributors;
our manufacturing abilities and the performance of our suppliers;
our ability to achieve market penetration and the success of our expansion efforts;
anticipated trends and challenges in the markets in which we operate; and
the impact of investigations, claims, and litigation.

Forward-looking statements are not guarantees of future performance and involve risks, uncertainties, estimates, and assumptions. Any or all forward-looking statements that we make may turn out to be wrong (due to inaccurate assumptions that we make or otherwise), and our actual outcomes and results may differ materially from those expressed in forward-looking statements. Potential risks and uncertainties that could cause actual results to differ materially include, but are not limited to, those set forth in Part I, Item 1A under the heading Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 10-K"); Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of the 2022 10-K; and elsewhere throughout the 2022 10-K, and in our reports filed with the U.S. Securities and Exchange Commission (the "SEC") subsequent to the date we filed the 2022 10-K with the SEC. You should not place undue reliance on any forward-looking statements. Further, any forward-looking statement in this report speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. Except as required by law, we undertake no obligation to update, and expressly disclaim any duty to update, our forward-looking statements, whether as a result of circumstances or events that arise after the date hereof, new information, or otherwise.

Trademarks

Solely for convenience, our trademarks and trade names in this report are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that we will not assert, to the fullest extent under applicable law, our rights thereto.

3


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ORTHOFIX MEDICAL INC.

Condensed Consolidated Balance Sheets

(U.S. Dollars, in thousands, except par value data)

 

September 30,
2023

 

 

December 31,
2022

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

33,663

 

 

$

50,700

 

Accounts receivable, net of allowances of $7,090 and $6,419, respectively

 

 

114,118

 

 

 

82,857

 

Inventories

 

 

221,745

 

 

 

100,150

 

Prepaid expenses and other current assets

 

 

24,170

 

 

 

22,283

 

Total current assets

 

 

393,696

 

 

 

255,990

 

Property, plant, and equipment, net

 

 

152,689

 

 

 

58,229

 

Intangible assets, net

 

 

121,021

 

 

 

47,388

 

Goodwill

 

 

194,767

 

 

 

71,317

 

Other long-term assets

 

 

43,479

 

 

 

25,705

 

Total assets

 

$

905,652

 

 

$

458,629

 

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

53,261

 

 

$

27,598

 

Current portion of finance lease liability

 

 

693

 

 

 

652

 

Other current liabilities

 

 

98,576

 

 

 

55,374

 

Total current liabilities

 

 

152,530

 

 

 

83,624

 

Long-term borrowings under credit facility

 

 

70,000

 

 

 

 

Long-term portion of finance lease liability

 

 

18,715

 

 

 

19,239

 

Other long-term liabilities

 

 

48,924

 

 

 

18,906

 

Total liabilities

 

 

290,169

 

 

 

121,769

 

Contingencies (Note 8)

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

Common shares $0.10 par value; 100,000 shares authorized;
    
36,750 and 20,162 issued and outstanding as of September 30,
    2023 and December 31, 2022, respectively

 

 

3,675

 

 

 

2,016

 

Additional paid-in capital

 

 

741,638

 

 

 

334,969

 

Retained earnings (accumulated deficit)

 

 

(127,970

)

 

 

1,251

 

Accumulated other comprehensive loss

 

 

(1,860

)

 

 

(1,376

)

Total shareholders’ equity

 

 

615,483

 

 

 

336,860

 

Total liabilities and shareholders’ equity

 

$

905,652

 

 

$

458,629

 

The accompanying notes form an integral part of these condensed consolidated financial statements

4


 

ORTHOFIX MEDICAL INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(Unaudited, U.S. Dollars, in thousands, except per share data)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net sales

 

$

184,006

 

 

$

113,996

 

 

$

546,226

 

 

$

338,484

 

Cost of sales

 

 

64,243

 

 

 

30,573

 

 

 

196,583

 

 

 

90,491

 

Gross profit

 

 

119,763

 

 

 

83,423

 

 

 

349,643

 

 

 

247,993

 

Sales and marketing

 

 

94,947

 

 

 

55,461

 

 

 

287,987

 

 

 

169,486

 

General and administrative

 

 

27,136

 

 

 

19,322

 

 

 

110,124

 

 

 

54,496

 

Research and development

 

 

18,559

 

 

 

11,943

 

 

 

61,290

 

 

 

35,913

 

Acquisition-related amortization and remeasurement (Note 12)

 

 

3,570

 

 

 

2,484

 

 

 

11,037

 

 

 

(9,678

)

Operating loss

 

 

(24,449

)

 

 

(5,787

)

 

 

(120,795

)

 

 

(2,224

)

Interest expense, net

 

 

(1,576

)

 

 

(277

)

 

 

(4,131

)

 

 

(1,059

)

Other expense, net

 

 

(2,360

)

 

 

(3,308

)

 

 

(1,704

)

 

 

(7,436

)

Loss before income taxes

 

 

(28,385

)

 

 

(9,372

)

 

 

(126,630

)

 

 

(10,719

)

Income tax expense

 

 

(472

)

 

 

(1,344

)

 

 

(2,591

)

 

 

(1,968

)

Net loss

 

$

(28,857

)

 

$

(10,716

)

 

$

(129,221

)

 

$

(12,687

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.77

)

 

$

(0.53

)

 

$

(3.53

)

 

$

(0.63

)

Diluted

 

 

(0.77

)

 

 

(0.53

)

 

 

(3.53

)

 

 

(0.63

)

Weighted average number of common shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

37,249

 

 

 

20,091

 

 

 

36,588

 

 

 

20,007

 

Diluted

 

 

37,249

 

 

 

20,091

 

 

 

36,588

 

 

 

20,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss, before tax

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on debt securities

 

 

(310

)

 

 

(236

)

 

 

8

 

 

 

(749

)

Currency translation adjustment

 

 

(1,442

)

 

 

(2,105

)

 

 

(492

)

 

 

(4,413

)

Other comprehensive loss, before tax

 

 

(1,752

)

 

 

(2,341

)

 

 

(484

)

 

 

(5,162

)

Income tax benefit (expense) related to other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss, net of tax

 

 

(1,752

)

 

 

(2,341

)

 

 

(484

)

 

 

(5,162

)

Comprehensive loss

 

$

(30,609

)

 

$

(13,057

)

 

$

(129,705

)

 

$

(17,849

)

The accompanying notes form an integral part of these condensed consolidated financial statements

5


 

ORTHOFIX MEDICAL INC.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

 

(Unaudited, U.S. Dollars, in thousands)

 

Number of
Common
Shares
Outstanding

 

 

Common
Shares

 

 

Additional
Paid-in
Capital

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive Income (Loss)

 

 

Total
Shareholders’
Equity

 

At December 31, 2022

 

 

20,162

 

 

$

2,016

 

 

$

334,969

 

 

$

1,251

 

 

$

(1,376

)

 

$

336,860

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(60,938

)

 

 

 

 

 

(60,938

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

430

 

 

 

430

 

Share-based compensation expense

 

 

 

 

 

 

 

 

13,020

 

 

 

 

 

 

 

 

 

13,020

 

Common shares issued in connection with SeaSpine merger

 

 

16,047

 

 

 

1,605

 

 

 

375,140

 

 

 

 

 

 

 

 

 

376,745

 

Common shares issued, net

 

 

254

 

 

 

26

 

 

 

(1,984

)

 

 

 

 

 

 

 

 

(1,958

)

At March 31, 2023

 

 

36,463

 

 

$

3,647

 

 

$

721,145

 

 

$

(59,687

)

 

$

(946

)

 

$

664,159

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(39,426

)

 

 

 

 

 

(39,426

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

838

 

 

 

838

 

Share-based compensation expense

 

 

 

 

 

 

 

 

13,246

 

 

 

 

 

 

 

 

 

13,246

 

Common shares issued, net

 

 

270

 

 

 

26

 

 

 

1,142

 

 

 

 

 

 

 

 

 

1,168

 

At June 30, 2023

 

 

36,733

 

 

$

3,673

 

 

$

735,533

 

 

$

(99,113

)

 

$

(108

)

 

$

639,985

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(28,857

)

 

 

 

 

 

(28,857

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,752

)

 

 

(1,752

)

Share-based compensation expense

 

 

 

 

 

 

 

 

6,274

 

 

 

 

 

 

 

 

 

6,274

 

Common shares issued, net

 

 

17

 

 

 

2

 

 

 

(169

)

 

 

 

 

 

 

 

 

(167

)

At September 30, 2023

 

 

36,750

 

 

$

3,675

 

 

$

741,638

 

 

$

(127,970

)

 

$

(1,860

)

 

$

615,483

 

 

 

(Unaudited, U.S. Dollars, in thousands)

 

Number of
Common
Shares
Outstanding

 

 

Common
Shares

 

 

Additional
Paid-in
Capital

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total
Shareholders’
Equity

 

At December 31, 2021

 

 

19,837

 

 

$

1,983

 

 

$

313,951

 

 

$

21,000

 

 

 

 

 

$

336,934

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(4,460

)

 

 

 

 

 

(4,460

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,162

)

 

 

(1,162

)

Share-based compensation expense

 

 

 

 

 

 

 

 

4,332

 

 

 

 

 

 

 

 

 

4,332

 

Common shares issued, net

 

 

5

 

 

 

1

 

 

 

(70

)

 

 

 

 

 

 

 

 

(69

)

At March 31, 2022

 

 

19,842

 

 

$

1,984

 

 

$

318,213

 

 

$

16,540

 

 

$

(1,162

)

 

$

335,575

 

Net income

 

 

 

 

 

 

 

 

 

 

 

2,489

 

 

 

 

 

 

2,489

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,659

)

 

 

(1,659

)

Share-based compensation expense

 

 

 

 

 

 

 

 

4,460

 

 

 

 

 

 

 

 

 

4,460

 

Common shares issued, net

 

 

158

 

 

 

16

 

 

 

1,065

 

 

 

 

 

 

 

 

 

1,081

 

At June 30, 2022

 

 

20,000

 

 

$

2,000

 

 

$

323,738

 

 

$

19,029

 

 

$

(2,821

)

 

$

341,946

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(10,716

)

 

 

 

 

 

(10,716

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,341

)

 

 

(2,341

)

Share-based compensation expense

 

 

 

 

 

 

 

 

4,729

 

 

 

 

 

 

 

 

 

4,729

 

Common shares issued, net

 

 

7

 

 

 

1

 

 

 

(80

)

 

 

 

 

 

 

 

 

(79

)

At September 30, 2022

 

 

20,007

 

 

$

2,001

 

 

$

328,387

 

 

$

8,313

 

 

$

(5,162

)

 

$

333,539

 

The accompanying notes form an integral part of these condensed consolidated financial statements

6


 

ORTHOFIX MEDICAL INC.

Condensed Consolidated Statements of Cash Flows

 

 

Nine Months Ended
September 30,

 

(Unaudited, U.S. Dollars, in thousands)

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(129,221

)

 

$

(12,687

)

Adjustments to reconcile net loss to net cash from operating activities

 

 

 

 

 

 

Depreciation and amortization

 

 

39,094

 

 

 

21,598

 

Inventory reserve expenses

 

 

24,013

 

 

 

9,856

 

Amortization of inventory fair value step up

 

 

29,006

 

 

 

 

Amortization of operating lease assets, debt costs, and other assets

 

 

4,506

 

 

 

2,321

 

Provision for expected credit losses

 

 

905

 

 

 

1,713

 

Deferred income taxes

 

 

1,148

 

 

 

21

 

Share-based compensation expense

 

 

32,540

 

 

 

13,521

 

Change in valuation of investment securities

 

 

(82

)

 

 

254

 

Change in fair value of contingent consideration