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Product / Company Performance

Spinal Implant Growth Drives SeaSpine to Record Revenues -

SeaSpine reported 3Q19 revenue of USD $39.9MM, +11.3% vs. 3Q18.

  • SeaSpine raised 2019 full year guidance to the range of $157MM (+9%) to $158MM (+10%)
  • Recorded the highest quarterly revenue in the company’s history, with U.S. revenue for spinal implants growing 16% vs. 3Q18; spine sales were driven by the Shoreline and Mariner systems
  • Spinal implant case volume increased more than 10% and revenue per procedure grew 5%, but these drivers were partially offset by continuing low single-digit price declines
  • New and recently launched products contributed more than 53% of U.S. spinal implant revenue, +45% from the previous year
  • Launched four new products in the quarter:
    • Mariner MIS Posterior Fixation System
    • Mariner Outrigger Revision System
    • Shoreline RT Cervical Interbody Implant System, featuring Reef Topography
    • Regatta Lateral MIS system
  • Pursuing a robust development pipeline with more than 20 projects underway, including a procedure specific retractor, next generation cervical plating system, new posterior cervical fixation system, new interbody designs and a suite of 3D-printed interbody devices designed in collaboration with restor3d
  • The company’s first 3D-printed interbody device is expected to launch in 2H20
  • Orthobiologics sales driven by OsteoStrand Plus, resulting in expected cannibalization of legacy particulate demineralized bone matrix (DBM) products; per leadership, this cannibalization will have a benefit to cash flow management as production of legacy products is scaled down
  • At NASS 2019, SeaSpine presented data from a study by Dr. Jeff Wang and Dr. Scott Boden demonstrating no benefit to the viable cell component of cellular bone matrices in “the well-accepted athymic rat posterolateral fusion model;” these results indicate superior fusion with OsteoStrand Plus DBM. SeaSpine believes it is now the number two player in the U.S. DBM market, following DePuy Synthes
  • The company continues to add increasingly exclusive distributors and expects them to be the most meaningful drivers of future revenue growth; these distributors generated 57% of U.S. revenue in the quarter, up 19% year over year.
  • ORTHOWORLD projects SeaSpine full year 2019 revenue of $157.3MM, +9.6% vs. 2018

 

“We feel like we have been the lone investors in [the DBM] space over the past few years, not only in how we invested in our manufacturing of our new stranded DBM products, but how we’ve done the science behind them. We feel strongly that it’s the right time to double down in this space. It’s the only product I know of in spine that has zero reimbursement pushback from payers. This is an area in which we can continue to show that we’re at the right price point and continue to deliver as good if not better clinical efficacy than the competition.” – SeaSpine President and CEO Keith Valentine on the company’s success with DBM products

 

ORTHOWORLD estimates segment sales and growth on an as-reported basis, as follows ($MM).

  3Q19 3Q18 $ Chg % Chg
Spine $26.7 $20.0 $6.8 33.9%
Orthobiologics $2.5 $2.0 $0.4 21.3%
Total $29.2 $22.0 $7.2 32.7%
  9Mo 19 9Mo 18 $ Chg % Chg
Spine $74.0 $60.2 $13.8 23.0%
Orthobiologics $7.1 $6.1 $0.9 15.3%
Total $81.1 $66.3 $14.8 22.3%

ORTHOWORLD estimates orthopaedic sales by geographic region as follows ($MM).

  3Q19 3Q18 $ Chg % Chg
US $28.1 $21.0 $7.1 33.6%
Ex-US $1.2 $2.0 -$0.9 -42.7%
Total $29.2 $22.0 $7.2 32.7%

Net earnings are as follows ($MM).

  Amt % of Sales
Sales $29.2  
   Cost of Sales -$9.3 31.7%
   Selling and Admin -$26.8 91.8%
   R & D -$4.0 13.6%
   Other -$0.8 2.7%
Net Earnings -$11.6 -39.7%

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

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