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Product / Company Performance

SeaSpine Reports 3Q18 Revenue of $35.8MM, +12.9% vs. 3Q17 -

By Mike Evers, ORTHOWORLD

 

SeaSpine reported 3Q18 revenue of US $35.8MM, +12.9% vs. 3Q17. Increasing market penetration and new products drove sales growth in both spinal hardware and orthobiologic product lines. The company also created financial flexibility through a public offering of common stock that earned $54MM.

New products were the story for SeaSpine’s strong third quarter. U.S. spinal implant growth was driven by recent launches like the Mariner and Shoreline systems. Products launched since the July 2015 spin-off from Integra LifeSciences comprised 47% of U.S. spinal implant revenue, up from 32% in 3Q17. Uptake of NanoMetalene products increased, as that franchise now accounts for 27% of spinal implant revenue for 3Q18, up from 15% in 3Q17.

U.S. biologics performance was driven by newer products like OsteoStrand Plus fibers-based DBM amid higher than expected sales of legacy DBM products. Orthobiologic growth was slightly offset by sales decline in the Mozaik Collagen Ceramic Matrix product line, but leadership is exploring internal and external options to refresh their synthetic bone graft substitute offerings.

Within the quarter, the company launched a 4.5mm rod system product line extension to the Daytona Small Stature Pediatric Deformity System. Leadership expects this addition to broaden the system’s reach and application. Product line extensions for the modular Mariner Pedicle Screw System are expected to launch in 4Q and early 2019, including a midline cortical screw system to address one of the fastest-growing MIS posterior interbody procedures.

The Regatta Lateral MIS interbody fusion system is conducting cases through alpha launch and is scheduled for full commercial launch in 1H19. It provides an opportunity to more deeply penetrate in existing accounts while reaching new customers who perform less invasive interbody fusion procedures. Regatta addresses a gap in SeaSpine’s lateral product portfolio, and leadership expects it to attract higher quality distributors. In further attempts to attract quality distributors, leadership said that portfolio expansion will focus on the largest portions of the market, with degenerative and MIS products in 2019 and deformity products in 2020.

SeaSpine’s $54MM public offering allowed the company to repay all outstanding debts. The company will leverage the additional capital to invest in innovation and commercialization of new products while also expanding their global distribution footprint.

For the quarter, ex-U.S. growth was driven by spinal implant stocking orders from a new distributor in  Austrailia. Leadership noted that the company has confidence in their market opportunity in Australia, especially considering Stryker’s acquisition of K2M, a top three player in the country.

ORTHOWORLD estimates SeaSpine 2018 revenue of $142MM, +7.7% vs. 2017.

SeaSpine 3Q18 and YTD segment sales and growth on an as-reported basis are as follows.

  3Q18 3Q17 $ Change % Change
Spine $17.3 $15.4 $1.9 12.3%
Orthobiologics $18.5 $16.3 $2.2 13.4%
Total  $35.8 $31.7 $4.1 12.9%

 

  YTD18 YTD17 $ Change % Change
Spine $50.3 $46.8 $3.5 7.5%
Orthobiologics $55.2 $51.1 $4.1 8.1%
Total  $105.4 $97.8 $7.6 7.8%

 

SeaSpine revenue by geographic region is as follows.

Geographic Region 3Q18 3Q17 $ Change % Change
US $31.72 $28.2 $3.5 12.3%
Ex-US $4.12 $3.5 $0.6 17.7%
Total  $35.8 $31.7 $4.1 12.9%

 

Net earnings for 3Q18 are as follows.

3Q18 Amount ($MM) % of Sales
Sales $35.8  
   Cost of Sales -$14.2 39.8%
   Administrative -$27.0 75.5%
   R&D -$3.2 8.9%
   Other -$0.9 2.4%
Net Earnings  -$9.5 -26.6%

 

Sources: SeaSpine; ORTHOWORLD estimates. All revenue figures presented in USD $MM.

Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.

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