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H.S. junior Avg
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New words:
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Removed:
affecting, analytical, aneurysm, applicability, appointed, assumed, autism, bargain, big, brain, bringing, CA, capacity, caring, coincide, comprised, computed, concentrated, consisted, consummated, contest, Dearborn, decompression, degree, dementia, description, detected, deteriorate, determining, dispute, disputed, earnout, economic, efficient, embedded, employment, Enterprise, ERP, error, evenly, eventual, expensed, feasibility, HOLOTM, identifiable, imaging, improving, inadequate, intercranial, Interlaminar, Kopley, leader, licensee, lieu, likelihood, location, magnetic, Marquette, Master, mission, ML, moderate, month, neural, neuro, neurosurgery, neurovascular, noncontrolling, nonexclusive, ongoing, operative, pathological, performing, periodic, Peter, planning, Poznan, predicted, produce, projecting, promissory, redeemable, reference, representing, residing, resonance, Resource, return, reversing, revision, segmenting, selection, simulation, stake, stated, stroke, strong, talent, technological, tomography, underwriting, wide
Financial report summary
?Risks
- We may not have sufficient cash flows from operating activities, cash on hand and available capital sources to finance capital expenditures and other working capital needs and to finance contingent consideration and forward contract arrangements when they become due.
- Our auditors have issued a “going concern” audit opinion.
- Our recurring losses from operations raise substantial doubt about our ability to continue as a going concern. There is no assurance that we will be successful in executing upon our operating plan and be able to maintain an adequate level of liquidity, which would result in the Company not being able to continue as a going concern.
- Based on our current cash flow forecast, Surgalign needs to raise additional capital within the next 9 months, and currently does not have sufficient cash on hand to meet our short-term capital requirements into the fourth quarter of 2023 which could jeopardize its ability to continue its business operations.
- We have a history of net losses, we expect to continue to incur net losses in the near future, and we may not achieve or maintain profitability.
- Our operating results have fluctuated significantly in the past and may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations.
- The COVID-19 pandemic and related variants have had and may continue to have a material, adverse impact on our business.
- If we fail to realize the potential benefits of our Holo Surgical Acquisition and our acquisition of equity interests in INN, it will adversely affect our business, financial condition, results of operations and prospects.
- Consolidation in the healthcare industry could lead to demands for price concessions or to the exclusion of some suppliers from certain of our markets, which could have an adverse effect on our business, financial condition, results of operations and prospects.
- Security breaches, loss of data and other disruptions could compromise sensitive information related to our business, prevent us from accessing critical information or expose us to liability, which could adversely affect our business and our reputation and could also result in fines and lawsuits.
- If we fail to maintain existing strategic relationships or are unable to identify distributors of our implants, our revenues may decrease.
- Our success depends on the continued acceptance of our surgical implants and technologies by the medical community, and rapid technological changes could result in reduced demand for our implants and products.
- Supply chain disruptions could adversely impact our operations and financial condition.
- If we, our suppliers, or parties who manufacture our products fail to maintain the high quality standards that implants require, if we are unable to procure processing capacity as required, or if the parties who manufacture our products experience disruptions in their ability to procure materials to manufacture our products, our commercial opportunity will be reduced or eliminated.
- To be commercially successful, we must effectively demonstrate to physicians the competitive advantage of our products.
- A disruption in our relationship with our former OEM Businesses could have a material adverse impact on our business, financial condition, and results of operations.
- If we are not successful in expanding our distribution activities, we will not be able to pursue one of our strategies for increasing revenues.
- We maintain our cash at financial institutions, often in balances that exceed federally insured limits.
- Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and its financial condition and results of operations.
- We and certain of our suppliers may be subject to extensive government regulation that increases our costs and could limit our ability to market or sell our products.
- If we fail to obtain, or experience significant delays in obtaining, FDA clearances or approvals for our future products or modifications to our products, our ability to commercially distribute and market our products could suffer.
- The safety of our products is not yet supported by long-term clinical data and may therefore prove to be less safe and effective than initially thought.
- Our business is subject to complex and evolving U.S. and international laws and regulation regarding privacy and data protection. Many of these laws and regulations are subject to change and uncertain interpretation and could result in claims, changes to our business practices, penalties, increased cost of operations, or otherwise harm our business.
- If third-party payers fail to provide appropriate levels of reimbursement for the use of our implants, our revenues could be adversely affected.
- We are subject to federal, state, and foreign laws and regulations, including fraud and abuse laws, as well as anti-bribery laws, and could face substantial penalties if we fail to fully comply with such regulations and laws.
- We may be subject to suit under a state or federal whistleblower statute.
- If our patents and the other means we use to protect our intellectual property prove to be inadequate, our competitors and other parties could exploit our intellectual property or develop and commercialize products and
- technologies similar or identical to ours and our ability to successfully commercialize any products may be adversely affected.
- If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
- Our success depends in part on our ability to operate without infringing on, misappropriating, or otherwise violating the intellectual property and proprietary rights of others, and if we are unable to do so we may be liable for damages.
- We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.
- Our stock price has been, and could continue to be, volatile.
- The future issuance or sale of shares of our common stock, or the perception that such issuances or sales could occur, may negatively impact our stock price and you may experience significant dilution, as a result of future issuances of our securities.
- Certain provisions in our charter and bylaws and under Delaware law, and the terms of certain milestone obligations to which we are subject, may inhibit potential acquisition bids for our company and prevent changes in our management, which may adversely affect the price of our common stock.
- We face intense competition, which could result in reduced acceptance and demand for our implants and technologies.
- If we fail to successfully develop and introduce new features to existing solutions, our revenues, operating results and reputation could suffer.
- We may not be able to keep pace with changes in technology or provide timely enhancements to our products and services.
- We or our competitors may be exposed to product or professional liability claims which could cause us to be liable for damages or cause investors to think we will be liable for similar claims in the future.
- Adverse litigation judgments or settlements resulting from legal proceedings in which we may be involved could expose us to monetary damages or limit our ability to operate our business.
- Our insurance policies protect us only from some business risk, which will leave us exposed to significant uninsured liabilities.
- We are dependent on our key management and technical personnel for continued success.
- Any acquisitions, strategic investments, divestures, mergers, or joint ventures we make may require the issuance of a significant amount of equity or debt securities and may not be scientifically or commercially successful.
Management Discussion
- Revenues – Total revenues decreased $3.9 million, or 18.7%, to $16.7 million for the three months ended March 31, 2023, compared to $20.6 million for the three months ended March 31, 2022. The decrease in revenue was primarily related to the restructuring efforts and rationalization of products which occurred during the fourth quarter of 2023. In addition with the sale of the Coflex inventory line, the Company only had two months of Coflex revenue during the first quarter ended March 31, 2023 as compared to the first quarter ended March 31, 2022.
- Gross profit – Gross profit decreased $3.5 million or 24.8% to $10.7 million for the three months ended March 31, 2023 compared to $14.2 million for the three months ended March 31, 2022. Gross profit percentage decreased by 5.2% to 63.7% from 68.9% for the three months ended March 31, 2022. The decrease in gross profit was primarily attributed to lower revenue during the quarter compared to prior periods. The lower gross profit percentage is attributable to product mix and the continued execution on the Company’s product rationalization efforts.
- Operating expenses - Total operating expenses increased by $1.3 million or 5.8% to $24.4 million for the three months ended March 31, 2023 compared to $23.1 million for the three months ended March 31, 2022. The primary driver for the increase is a decrease in $7.4 million of gains from the revaluation of the acquisition contingency. This amount is partially offset by a $4.2 million decrease in “General and administrative” expenses and $1.5 million in “Research and development” expenses both related to a reduction in spending caused by the simplification of the Company’s distribution and administrative infrastructure and the restructuring efforts during the first quarter ended March 31, 2023.