Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 25, 2019 | Jun. 30, 2018 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | SPNE | ||
Entity Registrant Name | SeaSpine Holdings Corporation | ||
Entity Central Index Key | 1,637,761 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 18,880,072 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 145,318,669 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Total revenue, net | $ 143,443 | $ 131,814 |
Cost of goods sold | 55,969 | 51,826 |
Gross profit | 87,474 | 79,988 |
Operating expenses: | ||
Selling, general and administrative | 105,387 | 97,303 |
Research and development | 12,058 | 12,180 |
Intangible amortization | 3,168 | 3,168 |
Total operating expenses | 120,613 | 112,651 |
Operating loss | (33,139) | (32,663) |
Other expense (income), net | 256 | (430) |
Loss before income taxes | (33,395) | (32,233) |
Provision (benefit) for income taxes | 129 | (118) |
Net loss | $ (33,524) | $ (32,115) |
Net Loss per share, basic and diluted (in dollars per share) | $ (2.18) | $ (2.58) |
Weighted average shares used to compute basic and diluted net loss per share | 15,358 | 12,426 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (33,524) | $ (32,115) |
Other comprehensive (loss) income | ||
Change in foreign currency translation adjustments | (345) | 678 |
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax | (3) | 0 |
Comprehensive loss | $ (33,872) | $ (31,437) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 24,233 | $ 10,788 |
Short-term Investments | 29,800 | 0 |
Trade accounts receivable, net of allowances of $850 and $466 | 20,335 | 21,872 |
Inventories | 42,742 | 41,721 |
Prepaid expenses and other current assets | 2,948 | 2,037 |
Total current assets | 120,058 | 76,418 |
Property, plant and equipment, net | 22,623 | 22,063 |
Intangible assets, net | 28,712 | 35,207 |
Other assets | 949 | 786 |
Total assets | 172,342 | 134,474 |
Current liabilities: | ||
Accounts payable, trade | 9,214 | 7,385 |
Accrued compensation | 7,900 | 5,833 |
Accrued commissions | 5,451 | 5,793 |
Contingent consideration liabilities | 129 | 207 |
Other accrued expenses and current liabilities | 3,852 | 3,939 |
Total current liabilities | 26,546 | 23,157 |
Contingent consideration liabilities | 2,367 | 4,228 |
Other liabilities | 1,344 | 1,436 |
Total liabilities | 30,257 | 28,821 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value; 15,000 authorized; no shares issued and outstanding at December 31, 2018 and December 31, 2017 | 0 | 0 |
Common stock, $0.01 par value; 60,000 authorized; 18,669 and 13,508 shares issued and outstanding at December 31, 2018 and 2017, respectively | 187 | 135 |
Additional paid-in capital | 277,096 | 206,844 |
Accumulated other comprehensive income | 1,602 | 1,950 |
Accumulated deficit | (136,800) | (103,276) |
Total stockholders' equity | 142,085 | 105,653 |
Total liabilities and stockholders' equity | $ 172,342 | $ 134,474 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 850 | $ 466 |
Preferred stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock issued (in shares) | 0 | 0 |
Preferred stock outstanding (in shares) | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 60,000,000 | 60,000,000 |
Common stock issued (in shares) | 18,669,000 | 13,508,000 |
Common stock outstanding (in shares) | 18,669,000 | 13,508,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (33,524) | $ (32,115) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 10,695 | 10,871 |
Instrument replacement expense | 1,818 | 1,848 |
Impairment of spinal instruments | 527 | 0 |
Provision for excess and obsolete inventories | 3,430 | 4,399 |
Amortization of debt issuance costs | 113 | 139 |
Deferred income tax benefit | 126 | (78) |
Stock-based compensation | 5,800 | 6,067 |
Gain from change in fair value of contingent consideration liabilities | (1,802) | (975) |
Gain from release of foreign tax liability | 0 | (1,512) |
Changes in assets and liabilities | ||
Accounts receivable | 1,383 | (612) |
Inventories | (3,454) | 1,206 |
Prepaid expenses and other current assets | (963) | (211) |
Other non-current assets | (249) | 72 |
Accounts payable | 1,860 | (2,080) |
Income taxes payable | 16 | 0 |
Accrued commissions | (341) | 1,394 |
Other accrued expenses and current liabilities | 2,297 | 2,630 |
Other non-current liabilities | (290) | 335 |
Net cash used in operating activities | (12,558) | (8,622) |
INVESTING ACTIVITIES: | ||
Payments to Acquire Available-for-sale Securities, Debt | (29,756) | 0 |
Purchases of property and equipment | (8,348) | (7,446) |
Additions to technology assets | 0 | (200) |
Net cash used in investing activities | (38,104) | (7,646) |
FINANCING ACTIVITIES: | ||
Borrowings under credit facility | 7,000 | 0 |
Repayments of credit facility | (7,000) | (4,020) |
Repayments of short term debt | 0 | (445) |
Proceeds from issuance of common stock- employee stock purchase plan and exercise of stock options | 2,520 | 1,021 |
Proceeds from issuance of common stock, net of offering costs | 62,611 | 15,557 |
Repurchases of common stock for income tax withheld upon vesting of restricted stock | (627) | (50) |
Payment for Contingent Consideration Liability, Financing Activities | (137) | (23) |
Debt issuance costs | (170) | 0 |
Net cash provided by financing activities | 64,197 | 12,040 |
Effect of exchange rate changes on cash and cash equivalents | (90) | 450 |
Net change in cash and cash equivalents | 13,445 | (3,778) |
Cash and cash equivalents at beginning of period | 10,788 | 14,566 |
Cash and cash equivalents at end of period | 24,233 | 10,788 |
Non-cash investing activities: | ||
Property and equipment in liabilities | 973 | 925 |
Supplemental cash flow information: | ||
Interest paid | 441 | 373 |
Income taxes paid | $ 130 | $ 89 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | ATM offering [Member] | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Private Placement [Member]Common Stock | Private Placement [Member]Additional Paid-In Capital |
Balance at beginning of period (in shares) at Dec. 31, 2016 | 11,258,000 | |||||||
Balance at beginning of period at Dec. 31, 2016 | $ 110,977 | $ 113 | $ 180,753 | $ 1,272 | $ (71,161) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (32,115) | (32,115) | ||||||
Foreign currency translation adjustment | 678 | 678 | ||||||
Restricted stock issued | 253,000 | |||||||
Restricted stock issued | 970 | $ 2 | 968 | |||||
Issuance of common stock under employee stock purchase plan | 150,000 | |||||||
Issuance of common stock under employee stock purchase plan | 986 | $ 2 | 984 | |||||
Issuance of common stock- NLT Spine Ltd contingent closing consideration | 350,000 | |||||||
Issuance of common stock- NLT Spine Ltd contingent closing consideration | 2,548 | $ 3 | 2,545 | |||||
Issuance of common stock- ATM transactions | 1,500,000 | |||||||
Issuance of common stock- ATM transactions | 15,557 | $ 15 | 15,542 | |||||
Issuance of common stock- exercise of stock options | 5,000 | |||||||
Issuance of common stock- exercise of stock options | 35 | 35 | ||||||
Restricted stock forfeited | (1,000) | |||||||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards | (7,000) | |||||||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards | (50) | (50) | ||||||
Stock-based compensation | $ 6,067 | 6,067 | ||||||
Balance at end of period (in shares) at Dec. 31, 2017 | 13,508,000 | 13,508,000 | ||||||
Balance at end of period at Dec. 31, 2017 | $ 105,653 | $ 135 | 206,844 | 1,950 | (103,276) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax | 0 | |||||||
Net loss | (33,524) | |||||||
Foreign currency translation adjustment | (345) | (345) | ||||||
Restricted stock issued | 259,000 | |||||||
Restricted stock issued | 2 | $ 3 | (1) | |||||
Issuance of common stock under employee stock purchase plan | 160,000 | |||||||
Issuance of common stock under employee stock purchase plan | $ 1,109 | $ 2 | 1,107 | |||||
Issuance of common stock- ATM transactions | 3,737,500 | 3,738,000 | 882,000 | |||||
Issuance of common stock- ATM transactions | $ 54,097 | $ 9 | 54,060 | $ 8,514 | $ 37 | $ 8,505 | ||
Issuance of common stock- exercise of stock options | 124,000 | |||||||
Issuance of common stock- exercise of stock options | 1,411 | 1,410 | ||||||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards | (2,000) | |||||||
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards | (629) | (629) | ||||||
Stock-based compensation | $ 5,800 | 5,800 | ||||||
Balance at end of period (in shares) at Dec. 31, 2018 | 18,669,000 | 18,669,000 | ||||||
Balance at end of period at Dec. 31, 2018 | $ 142,085 | $ 187 | $ 277,096 | $ 1,602 | $ (136,800) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax | $ (3) |
BUSINESS
BUSINESS | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS | BUSINESS AND BASIS OF PRESENTATION Business SeaSpine Holdings Corporation was incorporated in Delaware on February 12, 2015 in connection with the spin-off of the orthobiologics and spinal implant business of Integra LifeSciences Holdings Corporation, a diversified medical technology company. The spin-off occurred on July 1, 2015. Unless the context indicates otherwise, (i) references to "SeaSpine" or the "Company" refer to SeaSpine Holdings Corporation and its wholly-owned subsidiaries, and (ii) references to "Integra" refer to Integra LifeSciences Holdings Corporation and its subsidiaries other than SeaSpine. Basis of Presentation and Principles of Consolidation The Company prepared the consolidated financial statements included in this report in accordance with accounting principles generally accepted in the U.S. (GAAP). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The SEC adopted amendments to the definition of “smaller reporting company” that became effective in September 2018. Under the new definition, generally, a company qualifies as a smaller reporting company if it has a public float of less than $250 million as of the last business day of its second fiscal quarter. If a company qualifies as a smaller reporting company on that date, it may elect to reflect that determination and use the smaller reporting company scaled disclosure accommodations in its subsequent SEC filings. Our public float as of June 30, 2018, the last business day of our most recent second fiscal quarter, was less than $250 million, and as such, we qualify as a smaller reporting company and are following certain of the scaled disclosure accommodations, including providing audited financial statements and management discussion and analysis for our two most recent fiscal years, in contrast to other reporting companies, which must provide audited financial statements and management discussion and analysis for their three most recent fiscal years. We will measure our public float as of June 30th every year and will continue to qualify as a smaller reporting company until our public float is $250 million or more as of such date. Concentration of Risk PcoMed Integra and PcoMed, LLC (PcoMed) entered into a Supply Agreement on May 15, 2013 (Supply Agreement), which was subsequently assigned to the Company by Integra on May 21, 2015. For the year ending December 31, 2018, the sales of products incorporating the technology licensed and supplied to the Company pursuant to the Supply Agreement exceeded 10% of the Company's revenue. Pursuant to the Supply Agreement, PcoMed granted the Company a worldwide exclusive license to sell certain of its products treated with certain proprietary PcoMed technology (Treatment) for use in the spinal interbody and intervertebral market (Treated Products). PcoMed serves as the sole supplier of the Treatment. As consideration for the license and the Treatment, the Company paid to PcoMed initial milestone payments prior to the initial sale and the Company will pay PcoMed a low single digit royalty on the Company’s net sales of all Treated Products. In the event the Company fails to meet any of its payment obligations, the license will, at PcoMed’s option and following a cure period, convert to a non-exclusive license. The Supply Agreement contains customary representations and termination provisions, including for material breach and bankruptcy. Each of the Company and PcoMed retain the rights to their respective intellectual property. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and other credits, net realizable value of inventories, discount rates and estimated projected cash flows used to value and test impairments of identifiable intangible and long-lived assets, depreciation and amortization periods for identifiable intangible and long-lived assets, assumptions related to the timing and probability of product launch dates, discount rates matched to the estimated timing of payments, probability of success rates, and estimated net sales for contingent considerations in business combinations, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation and loss contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances. Actual results could differ from these estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents include cash readily available in checking and money market accounts. Investments The Company has designated its entire portfolio of fixed income securities as available-for-sale. These securities are recorded at fair value based on quoted market prices with unrealized gains and losses, net of deferred income taxes, accounted for as a component of accumulated other comprehensive income in stockholders’ equity. The Company’s short-term investments have maturities of greater than three and less than 12 months when purchased and are carried at fair value. In accordance with FASB Accounting Standards Codification 320, Investments - Debt and Equity Securities, the Company assesses whether it intends to sell or it is more likely than not that it will be required to sell a debt security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that the Company does not intend to sell and will not be required to sell prior to recovery of its amortized cost basis, the Company separates the amount of the impairment into the amount that is credit-related (referred to as the credit loss component) and the amount due to all other factors. The credit loss component is recognized in net income and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit-related and is recognized in accumulated other comprehensive income (“AOCI”). For debt securities that are intended to be sold, or that management believes are more likely than not to be required to be sold prior to recovery, the full impairment is recognized immediately in earnings. Realized gains and losses on sales of investments are determined on a specific-identification basis. Interest income is recognized on an accrual basis. See Note 5. Balance Sheet Details, for further discussion regarding investments. Fair Value of Financial Instruments The carrying amounts of cash, cash equivalents, receivables, accounts payable and accrued expenses at December 31, 2018 and 2017, are considered to approximate fair value because of the short term nature of those items. The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following three categories: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The carrying amount of short-term investments at December 31, 2018 are carried at fair value based on quoted market prices in active markets. This fair value measurement is categorized within Level 1 of the fair value hierarchy. The carrying amounts of contingent consideration liabilities at December 31, 2018 and 2017 pursuant to the business combinations (see Note 6- Fair Value Measurements ) are measured at fair value on a recurring basis, and are classified within Level 3 of the fair value hierarchy because they use significant unobservable inputs. Trade Accounts Receivable and Allowances Trade accounts receivable in the accompanying consolidated balance sheets are presented net of allowances for doubtful accounts and sales returns and other credits. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowances for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowances for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowances for doubtful accounts are recorded to selling, general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. Inventories Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost, the value determined by the first-in, first-out method, or market. At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of the Company's current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions, a review of the shelf life expiration dates for products, as well as the feasibility of reworking or using excess or obsolete products or components in the production or assembly of other products that are not obsolete or for which there are not excess quantities in inventory. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. The Company capitalizes inventory costs associated with certain products prior to regulatory approval, based on management’s judgment of probable economic benefit. The Company could be required to expense previously capitalized costs related to pre-approval inventory upon a change in such judgment, due to, among other potential factors, a denial or delay of approval by necessary regulatory bodies or a decision by management to discontinue the related development program. No such amounts were capitalized at December 31, 2018 or 2017. Property, Plant, and Equipment Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment charges. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life. The cost of major additions and improvements is capitalized, while maintenance and repair costs that do not improve or extend the lives of the respective assets are charged to operations as incurred. The cost of computer software obtained for internal use is accounted for in accordance with the Accounting Standards Codification 350-40, Internal-Use Software. The cost of purchased spinal instruments which the Company consigns to hospitals and independent sales agents to support surgeries is initially capitalized as construction in progress. The amount is then reclassified to spinal instruments and sets and depreciation is initiated when instruments are put together in a newly built set with spinal implants, or directly expensed for the instruments that are used to replace damaged instruments in an existing set. The depreciation expense and direct expense for replacement instruments are recorded in selling, general and administrative expense. Business Combinations The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of the acquisition. Any purchase price in excess of these net assets is recorded as goodwill, and any fair value of these net assets, excluding goodwill, in excess of the purchase price is recorded as a bargain purchase gain. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. Contingent consideration liability is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent consideration liability are recognized in the statement of operations. Contingent consideration liability related to acquisitions consist of commercial milestone payments and contingent royalty payments, and are valued using discounted cash flow techniques. The fair value of commercial milestone payments and contingent royalty payments reflects management’s expectations of probability and amount of payment, and increases or decreases as the probability and amount of payment or expectation of timing of payment changes. Identifiable Intangible Assets Identifiable intangible assets are initially recorded at fair value at the time of acquisition generally using an income or cost approach. The Company capitalizes costs incurred to renew or extend the term of recognized intangible assets and amortizes those costs over their expected useful lives. Impairment of Long-Lived Assets Long-lived assets held and used by the Company, including property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets to be held and used, a recoverability test is performed using projected undiscounted net cash flows applicable to the long-lived assets. If an impairment exists, the amount of such impairment is calculated based on the estimated fair value of the asset. Impairments to long-lived assets to be disposed of are recorded based upon the difference between the carrying value and the fair value of the applicable assets. There was no impairment of intangible or tangible long-lived assets in any of the periods presented. Foreign Currency The Company generates revenues outside the United States in multiple foreign currencies including euros, Swiss francs and in U.S. dollar-denominated transactions conducted with customers who generate revenue in currencies other than the U.S. dollar. The Company also incurs operating expenses in euros and Swiss francs. All assets and liabilities of foreign subsidiaries which have a functional currency other than the U.S. dollar are translated at the rate of exchange at year-end, while elements of the income statement are translated at the average exchange rates in effect during the year. The net effect of these translation adjustments is shown as a component of accumulated other comprehensive income (loss). These currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in non-U.S. subsidiaries. Foreign currency transaction gains and losses are reported in other income (expense), net. Income Taxes The Company recognizes tax benefits in its financial statements when its uncertain tax positions are more likely than not to be sustained upon audit. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company recognizes deferred tax assets for deductible temporary differences, operating loss carryforwards and tax credit carryforwards. Deferred tax assets are reduced by valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Revenue Recognition Net sales are derived primarily from the sale of orthobiologics and spinal implant products globally. Sales are reported net of returns, rebates, group purchasing organization fees and other customer allowances. Allowances and estimates of returns and other credits are recorded in the sales returns reserve. Certain contracts with stocking distributors contain provisions to repurchase inventory upon termination of the contract or discontinuation of a product line. Included in the sales returns reserve is an estimate of repurchases that are likely to be returned under these provisions. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred title and risk of loss have passed to the customer, there is a fixed or determinable sales price and collectability of that sales price is reasonably assured. In the United States, the Company generates most of its revenue by consigning its orthobiologics products and by consigning or loaning its spinal implant sets to hospitals and independent sales agents, who in turn either deliver them to hospitals for a single surgical procedure, after which they are returned to the Company, or leave them with hospitals that are high volume users for multiple procedures. The spinal implant sets typically contain the instruments, disposables, and spinal implants required to complete a surgery. The Company ships replacement inventory to independent sales agents to replace the consigned inventory used in surgeries. The Company maintains and replenishes loaned sets at its facility and returns them to a hospital or independent sales agent for the next procedure. The Company recognizes revenue on these consigned or loaned products when they have been used or implanted in a surgical procedure. For all other sales transactions, including sales to stocking distributors and private label partners, the Company recognizes revenue when the products are shipped to the customer or stocking distributors and the transfer of title and risk of loss occurs. There is generally no customer acceptance or other condition that prevents the Company from recognizing revenue in accordance with the delivery terms for these sales transactions. Product royalties account for less than 1% of total revenue for any of the periods presented, and are estimated and recognized in the same period that the royalty-based products are sold by licensees. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information and expected sales trends. Differences between actual revenues and estimated royalty revenues are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been material. Shipping and Handling Fees and Costs Shipping and handling costs of $1.8 million and $1.6 million for product shipments for loaning of spinal implants and instrumentation sets and costs incurred for internal movement of inventory were recorded in selling, general and administrative expense during the years ended December 31, 2018 and 2017, respectively. Research and Development Research and development costs, including salaries, stock-based compensation, depreciation, consultant and other external fees, and facility costs directly attributable to research and development activities, are expensed in the period in which they are incurred. Stock-Based Compensation The Company's stock-based compensation has been recognized through the consolidated statement of operations and the Company's additional paid-in capital account on the consolidated balance sheet. The Company applies the authoritative guidance for stock-based compensation. This guidance requires companies to recognize the expense related to the fair value of their stock-based compensation awards. Stock-based compensation expense for stock option awards was based on the fair value on the grant date using the Black-Scholes-Merton option pricing model. The fair value of restricted stock granted prior to the spin-off was based on the Integra’s stock price at the grant date, and the fair value of restricted stock granted after the spin-off was based on the Company's stock price at the grant date. The long form method was used in the determination of the windfall tax benefit in accordance with the guidance. The stock-based compensation is initially measured at the fair value of the awards on the grant date and is then recognized on a ratable basis in the financial statements over the requisite service period of the award. Stock-based compensation expense was $5.8 million in 2018 and $6.1 million in 2017. Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, which is held at major financial institutions, and trade receivables. The Company’s products are sold on an uncollateralized basis and on credit terms based upon a credit risk assessment of each customer. A portion of the Company’s trade receivables to customers outside the United States includes sales to foreign stocking distributors, who then sell to government owned or supported healthcare systems. The ongoing economic conditions in certain European countries, especially Greece, Ireland, Italy, Portugal and Spain remain uncertain. Accounts receivable from customers in these countries are not a material amount of the Company’s overall receivables. None of the Company’s customers accounted for 10% or more of the net sales or accounts receivable for any of the periods presented. Recent Accounting Standards Not Yet Adopted The Company qualifies as an “emerging growth company” (EGC) under the Jumpstart Our Business Startups (JOBS) Act and elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, which permits EGCs to defer compliance with new or revised accounting standards (the EGC extension) until non-issuers must comply with such standards. Accordingly, so long as the Company continues to qualify as an EGC, the Company will not have to adopt or comply with new or revised accounting standards until non-issuers must adopt or comply with such standards. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU or Update) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard provides a five-step approach to be applied to all contracts with customers. The new standard also requires expanded disclosure about revenue recognition. The new standard as amended by ASU 2015-14, ASU 2016-10 and ASU 2016-12, was effective for the Company beginning on January 1, 2019. The Company performed an assessment of the impact of this new standard on its consolidated financial statements. In assessing the impact, the Company outlined all revenue streams, and considered the five steps outlined in the standard for product sales, from which substantially all the Company's revenue is generated. The Company analyzed the impact of this new standard on all revenue streams and on all contracts with customers, including by reviewing contracts and current accounting policies and practices to identify differences that would result from applying the requirements under the new standard. The Company adopted the new standard using the modified retrospective method under which the cumulative effect of initially applying the new guidance to open contracts as of December 31, 2018 is recognized as an adjustment to the opening balance of retained earnings as of January 1, 2019. The Company has completed the assessment of the new standard and is finalizing the new required disclosures. Under the new standard, the Company has made the accounting policy election to account for shipping and handling activities performed after the control of a good has been transferred to the customer as a fulfillment cost. Overall, the timing of revenue recognition under the new standard is not materially different from the Company's current revenue recognition policy. Based on the Company’s analysis of open contracts as of December 31, 2018, the cumulative effect of applying the new standard is not material. In February 2016, the FASB issued Update No. 2016-02, Leases (Topic 842) . The new standard requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than twelve months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new standard must be adopted using the modified retrospective approach. The standard will be effective for the Company beginning on January 1, 2020 with early adoption permitted. The Company does not plan to early adopt and expects to apply the transition practical expedients allowed by the standard. In July 2018, the FASB issued Update No. 2018-10, Codification Improvements to Topic 842 (Leases) and Update No. 2018-11, Leases (Topic 842):Targeted Improvements. The amendments in ASU 2018-10 and ASU 2018-11 provide additional clarification and implementation guidance on certain aspects of ASU 2016-02 and have the same effective date and transition requirements as ASU 2016-02. Note 8 to the Condensed Consolidated Financial Statements provides details on the Company’s current lease arrangements. While the Company continues to evaluate the impact of this new standard on its consolidated financial statements, the Company currently expects the primary impact will be to record right-of-use assets and lease liabilities for existing operating leases in the consolidated balance sheets. The Company does not currently expect the adoption of this new standard to have a material impact on its consolidated results of operations or cash flows. In June 2018, the FASB issued Update No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This Update will require an entity to apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606. The new standard will be effective for the Company beginning on January 1, 2020. Early adoption is permitted but no earlier than an entity's adoption date of Topic 606. The Company is evaluating the impact of this standard on its consolidated financial statements. In July 2018, the FASB issued Update No. 2018-09, Codification Improvements . This Update includes several amendments to the Codification intended to clarify, improve, or correct errors in the Codification. Some amendments do not require transition guidance and are effective upon issuance. The amendments requiring transition guidance will be effective for the Company beginning on January 1, 2020. The Company is evaluating the impact of this standard on its consolidated financial statements. In August 2018, the FASB issued Update No. 2018-13, Fair Value Measurement (Topic 820)-Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement . The amendments in this Update modify the disclosure requirements on fair value measurements in Topic 820 based on the concepts in the Concepts Statement including the consideration of costs and benefits. The new standard will be effective for the Company beginning on January 1, 2020. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. The Company is evaluating the impact of this standard on its consolidated financial statements. In August 2018, the FASB issued Update No. 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40) . The amendments in this Update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The new standard will be effective for the Company beginning on January 1, 2021. Early adoption is permitted. The Company is evaluating the impact of this standard on its consolidated financial statements. Recently Adopted Accounting Standards In August 2016, the FASB issued Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard addresses eight specific cash flow issues related to cash receipts and cash payments with the objective of reducing the existing diversity of presentation and classification in the statement of cash flows. The new standard will be effective for the Company beginning on January 1, 2019. Early adoption is permitted and should be applied using a retrospective transition method to each period presented. Adoption of this new guidance had no impact on the Company’s cash flows statements. In May 2017, the FASB issued Update No. 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting. The new standard provides guidance regarding which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The new standard was effective for the Company beginning on January 1, 2018. Adoption of this new guidance had no impact on the Company’s consolidated financial statements. Net Loss Per Share Basic and diluted net loss per share was calculated using the weighted-average number of shares of common stock outstanding during the period. The weighted average number of shares used to compute diluted net loss per share excludes any assumed exercise of stock options, any assumed issuance of common stock under restricted stock awards and units, and any assumed issuances under the Company's 2015 Employee Stock Purchase Plan, as the effect, in each case, would be antidilutive. Common stock equivalents of 3.4 million and 3.3 million shares for the years ended December 31, 2018 and 2017, respectively, were excluded from the calculation because of their antidilutive effect. |
TRANSACTIONS WITH INTEGRA
TRANSACTIONS WITH INTEGRA | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
TRANSACTIONS WITH INTEGRA | TRANSACTIONS WITH INTEGRA Related-party Transactions Prior to the spin-off, and pursuant to certain supply agreements subsequent to the spin-off, SeaSpine purchased a portion of raw materials and finished goods from Integra for SeaSpine's Mozaik family of products, and SeaSpine contract manufactured certain finished goods for Integra. The Company's purchases of raw materials and Mozaik product finished goods from Integra for the year ended December 31, 2017 totaled $0.6 million . The Company's sale of finished goods to Integra under its contract manufacturing arrangement for the year ended December 31, 2017 totaled $0.4 million . The Company determined that Integra does not meet the definition of a related party requiring disclosure in accordance with Accounting Standards Codification Topic 850, Related Party Disclosures as of December 31, 2018. |
DEBT AND INTEREST
DEBT AND INTEREST | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
DEBT AND INTEREST | DEBT AND INTEREST Credit Agreement In December 2015, the Company entered into a three -year credit facility with Wells Fargo Bank, National Association, which was amended in October 2016 and in July 2018 (as amended, the Credit Facility). The Credit Facility provides an asset-backed revolving line of credit of up to $30.0 million with a maturity date of July 27, 2021, which is subject to a one -time, one -year extension at the Company's election. In addition, under the Credit Facility, at any time through July 27, 2020, the Company may increase the $30.0 million borrowing limit by up to an additional $10.0 million , subject to the Company having sufficient amounts of eligible accounts receivable and inventory and to customary conditions precedent, including obtaining the commitment of lenders to provide such additional amount. In connection with the Credit Facility, the Company was required to become a guarantor and to provide a security interest in substantially all its assets for the benefit of the counterparty. In June 2018 and September 2018, the Company borrowed $4.0 million and $3.0 million under the Credit Facility, respectively. The Company elected to have the LIBOR rate apply to the amounts borrowed with an interest period of six months commencing on June 28, 2018 and three months commencing on September 25, 2018, respectively. On November 2, 2018, the Company repaid the entire $7.3 million of outstanding borrowings plus accrued interest under the Credit Facility. There were no amounts outstanding under the Credit Facility at December 31, 2018 or 2017. At December 31, 2018 , the Company had $23.4 million of current borrowing capacity thereunder. Debt issuance costs and legal fees related to the Credit Facility totaling $0.6 million were recorded as a deferred asset and are being amortized ratably over the term of the arrangement. Borrowings under the Credit Facility accrue interest at the rate then applicable to base rate loans (as customarily defined), unless and until converted into LIBOR rate loans (as customarily defined) in accordance with the Credit Facility. Borrowings bear interest at a floating annual rate equal to (a) during any month for which the Company's average excess availability (as customarily defined) is greater than $20.0 million , (i) base rate plus 1.25 percentage points for base rate loans and (ii) LIBOR rate plus 2.25 percentage points for LIBOR rate loans, (b) during any month for which the Company's average excess availability is greater than $10.0 million but less than or equal to $20.0 million , (i) base rate plus 1.50 percentage points for base rate loans and (ii) LIBOR rate plus 2.50 percentage points for LIBOR rate loans and (c) during any month for which the Company's average excess availability is less than or equal to $10.0 million , (i) base rate plus 1.75 percentage points for base rate loans and (ii) LIBOR rate plus 2.75 percentage points for LIBOR rate loans. The Company will also pay an unused line fee based on the average amount borrowed under the Credit Facility for the most recently completed month. If such average amount is 25% or greater of the maximum borrowing capacity, the unused fee will be equal to 0.375% per annum of the amount unused under the Credit Facility, and if such average amount is less than 25%, the unused line fee will be equal to 0.50% per annum of the amount unused under the Credit Facility. The unused line fee is due on the first day of each month. The Credit Facility contains various customary affirmative and negative covenants, including prohibiting the Company from incurring indebtedness without the lender’s consent. The Credit Facility also includes a financial covenant, that requires the Company to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 for the applicable measurement period, if the Company's Total Liquidity (as defined in the Credit Facility) is less than $5.0 million . The Company was in compliance with all applicable covenants at December 31, 2018 . The Credit Facility also includes customary events of default, including events of default relating to non-payment of amounts due under the Credit Facility, material inaccuracy of representations and warranties, violation of covenants, bankruptcy and insolvency, failure to comply with health care laws, violation of certain of the Company’s existing agreements, and the occurrence of a change of control. Under the Credit Facility, if an event of default occurs, the lender will have the right to terminate the commitments and accelerate the maturity of any loans outstanding. |
BALANCE SHEET DETAILS
BALANCE SHEET DETAILS | 12 Months Ended |
Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |
BALANCE SHEET DETAILS | BALANCE SHEET DETAILS Short-term investments. T he amortized cost, estimated fair value and gross unrealized gains and losses on investments as of December 31, 2018 are shown in the table below: Amortized Cost Gross Unrealized Fair Value Gains (Losses) As of December 31, 2018 (In thousands) U.S. Treasury Bills $ 29,803 — $ (3 ) $ 29,800 As of December 31, 2018, the Company’s investment portfolio included 9 U.S. Treasury Bills in an unrealized loss position. There were no other-than-temporary impairments on debt securities or realized gains or losses during the year ended December 31, 2018. There were no investments held as of December 31, 2017. Inventories. Inventories consisted of: December 31, 2018 December 31, 2017 (In thousands) Finished goods $ 27,589 $ 31,008 Work in process 10,367 6,909 Raw materials 4,786 3,804 $ 42,742 $ 41,721 Property, Plant and Equipment . Property, plant and equipment, net and corresponding useful lives were: December 31, 2018 December 31, 2017 Useful Lives (In thousands) Leasehold improvement $ 5,724 $ 5,312 Shorter of lease term or useful life Machinery and production equipment 7,752 7,030 3-10 years Spinal instruments and sets 23,212 20,340 5 years Information systems and hardware 7,290 7,375 3-7 years Furniture and fixtures 1,222 991 3-5 years Construction in progress 7,013 8,136 Total 52,213 49,184 Less accumulated depreciation and amortization (29,590 ) (27,121 ) Property, plant and equipment, net $ 22,623 $ 22,063 The balance of construction in progress as of December 31, 2018 and 2017 consists primarily of spinal instruments not yet placed into service. Depreciation and amortization expenses totaled $4.2 million and $4.1 million for the years ended December 31, 2018 and 2017, respectively, and included $0.8 million expenses that were presented within cost of goods sold for each year ended December 31, 2018 and 2017. The cost of purchased instruments used to replace damaged instruments in existing sets and recorded directly to the instrument replacement expense totaled $1.8 million for each year ended December 31, 2018 and 2017. For the year ended December 31, 2018, the Company recorded impairment charges totaling $0.5 million against spinal instruments that are no longer expected to be placed into service. No impairment charges against spinal instruments were recorded for the year ended December 31, 2017. Identifiable Intangible Assets. The components of the Company’s identifiable intangible assets were: December 31, 2018 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Product technology 12 years $ 40,769 $ (29,153 ) $ 11,616 Customer relationships 12 years 56,830 (39,734 ) 17,096 Trademarks/brand names — 300 (300 ) — $ 97,899 $ (69,187 ) $ 28,712 December 31, 2017 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Product technology 12 years $ 40,769 $ (25,827 ) $ 14,942 Customer relationships 12 years 56,830 (36,565 ) 20,265 Trademarks/brand names — 300 (300 ) — $ 97,899 $ (62,692 ) $ 35,207 Annual amortization expense (including amounts reported in cost of goods sold) is expected to be approximately, $5.8 million in 2019 , $4.9 million in 2020 , $4.9 million in 2021 , $4.8 million in 2022 , and $4.2 million in 2023 . Amortization expense totaled $6.5 million and $6.8 million for the years ended December 31, 2018 and 2017 , respectively, and included $3.3 million and $3.6 million , respectively, of amortization of product technology intangible assets that was presented within cost of goods sold. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS In August 2016, the Company entered into an asset purchase agreement with N.L.T Spine Ltd. (NLT), and NLT Spine, Inc., a wholly owned subsidiary of NLT, pursuant to which the Company agreed to purchase certain of the assets of NLT’s medical device business, including substantially all of NLT’s medical device intellectual property related to the ownership, design, development, manufacture, marketing and commercial exploitation of certain expandable interbody devices. The acquisition was undertaken to increase the Company's product offering in expandable interbody devices. At the initial closing under the asset purchase agreement, the Company entered into (i) an exclusive license agreement with NLT, pursuant to which the Company received an exclusive, worldwide license to make, use, import, offer for sale, sell and otherwise commercially exploit NLT’s expandable interbody device products , (ii) a transition services agreement with NLT, pursuant to which NLT agreed to provide certain services with respect to the continued development of the acquired intellectual property and (iii) a non-competition and non-solicitation agreement with NLT, pursuant to which NLT and its affiliates agreed not to compete with the Company with respect to the acquired intellectual property, subject to certain exceptions. The purchase price consisted of an initial cash payment to NLT of $1.0 million , which was paid in September 2016 upon the initial closing, and the issuance in January 2017 of 350,000 shares of the Company’s common stock with a total fair value of $2.5 million at issuance as contingent closing consideration upon the satisfaction of certain conditions, including FDA 510(K) clearance of one of the acquired product technologies. In accordance with the terms of the asset purchase agreement, the number of shares issued was determined based on the volume weighted average closing price (VWAP) of the Company's common stock during the 20 trading day period ending one trading day prior to the issuance date, subject to a minimum and maximum VWAP of $10.00 and $17.00 , respectively. The VWAP over such 20 -trading day period was $7.58 and therefore $10.00 was used. The Company is also obligated to pay up to a maximum of $5.0 million in milestone payments, payable at the Company's election in cash or in shares of its common stock, which are contingent on the Company's achievement of four independent events related to the commercialization of the acquired product technologies. Additionally, the Company is required to pay royalty payments, in cash, to NLT equal to declining (over time) percentages of the Company’s future net sales of certain of the acquired product technologies not to exceed $43.0 million in the aggregate. The Company has the option to terminate any future obligation to make royalty payments by making a one-time cash payment to NLT of $18.0 million . The Company accounted for this transaction as a business combination in accordance with ASC 805 Business Combinations , and as such, the assets acquired have been recorded at their respective fair values. There were no liabilities assumed. The determination of fair value for the identifiable intangible assets acquired requires extensive use of estimates and judgments. Significant estimates include estimating cash flows and determining the appropriate discount rate, which are considered significant unobservable inputs (Level 3) under the fair value concepts defined in ASC 820. Intangible assets acquired were valued at $9.3 million as of the initial closing date and recorded as product technology intangible assets, which are being amortized ratably over a useful life of 10 years from the initial closing. Acquisition costs of $0.5 million incurred were recorded as selling, marketing and administrative expenses. The Company estimated the fair value of the contingent consideration, including contingent milestone payments and contingent royalty payments, using a probability weighted approach that considers the possible outcomes based on assumptions related to the timing and probability of the product launch dates, discount rates matched to the timing of payments, and probability of success rates and discount adjustments on the related cash flows. Subsequent to the acquisition date, at each reporting period, the contingent consideration liabilities will be remeasured at current fair value with changes to be recorded in the consolidated statements of operations. The total purchase price was allocated entirely to product technology intangible asset. The amortization charges for acquired intangible assets and research and development expenses for the purchased assets are included in the consolidated statement of operations for the years ended December 31, 2018 and 2017. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The fair values of the Company’s assets and liabilities, including contingent consideration liabilities, are measured at fair value on a recurring basis, and are determined under the fair value categories as follows (in thousands): Total Quoted Price in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2018: Short-term investments $ 29,800 $ 29,800 $ — $ — Total Assets Contingent consideration liabilities- current $ 129 $ — $ — $ 129 Contingent consideration liabilities- non-current 2,367 — — 2,367 Total contingent consideration $ 2,496 $ — $ — $ 2,496 Total Quoted Price in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2017: Contingent consideration liabilities- current $ 207 $ — $ — $ 207 Contingent consideration liabilities- non-current 4,228 — — 4,228 Total contingent consideration $ 4,435 $ — $ — $ 4,435 Short-term investments are classified with Level 1 of the fair value hierarchy because they use quoted market prices in active markets for identical assets. In August 2016, the Company entered into an asset purchase agreement with N.L.T Spine Ltd. (NLT), and NLT Spine, Inc., a wholly owned subsidiary of NLT, pursuant to which the Company agreed to purchase certain of the assets of NLT’s medical device business, including substantially all of NLT’s medical device intellectual property related to the ownership, design, development, manufacture, marketing and commercial exploitation of certain expandable interbody devices. The acquisition was undertaken to increase the Company's product offering in expandable interbody devices. The purchase price consisted of an initial cash payment to NLT of $1.0 million , which was paid in September 2016 upon the initial closing, and the issuance in January 2017 of 350,000 shares of the Company’s common stock with a total fair value of $2.5 million at issuance as contingent closing consideration upon the satisfaction of certain conditions, including FDA 510(K) clearance of one of the acquired product technologies. In accordance with the terms of the asset purchase agreement, the number of shares issued was determined based on the volume weighted average closing price (VWAP) of the Company's common stock during the 20 trading day period ending one trading day prior to the issuance date, subject to a minimum and maximum VWAP of $10.00 and $17.00 , respectively. The VWAP over such 20 -trading day period was $7.58 and therefore $10.00 was used. The Company is also obligated to pay up to a maximum of $5.0 million in milestone payments, payable at the Company's election in cash or in shares of its common stock, which are contingent on the Company's achievement of four independent events related to the commercialization of the acquired product technologies. Additionally, the Company must pay royalty payments, in cash, to NLT equal to declining (over time) percentages of the Company’s future net sales of certain of the acquired product technologies not to exceed $43.0 million in the aggregate. The Company has the option to terminate any future obligation to make royalty payments by making a one-time cash payment to NLT of $18.0 million . Contingent consideration liabilities are classified within Level 3 of the fair value hierarchy because they use significant unobservable inputs. For those liabilities, fair value is determined using a probability-weighted discounted cash flow model and significant inputs which are not observable in the market. The significant inputs include assumptions related to the timing and probability of the product launch dates, discount rates matched to the timing of payments, and probability of success rates. The following table sets forth the changes in the estimated fair value of the Company’s liabilities measured on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2018 and 2017. The gain from change in fair value of contingent closing consideration is the difference between the fair value of shares expected to be issued to NLT based on assumptions as of December 31, 2016, including the forecasted issuance date and stock price and the fair value of the shares actually issued to NLT on January 31, 2017. The gain from change in fair value of contingent milestone and royalty payments resulted from updated estimated timing of payments, probability of success rates, the passage of time, updated discount rates matched to the estimated timing of payments, actual net sales of certain products for the year ended December 31, 2018 , and lower estimated net sales for future royalty payment periods. A change in estimated timing of payments, probability of success rates, or estimated net sales for future royalty payment periods would be expected to have a material impact on the fair value of contingent milestone and royalty payments. Year Ended December 31, 2018 2017 (in thousands) Beginning Balance as of January 1 $ 4,435 $ 7,980 Contingent consideration liabilities settled (137 ) (2,570 ) Gain from change in fair value of contingent closing consideration recorded in other income — (112 ) Gain from change in fair value of contingent milestone and royalty payments recorded in selling, general and administrative expenses (1,802 ) (863 ) Ending Balance as of December 31 $ 2,496 $ 4,435 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | EQUITY AND STOCK-BASED COMPENSATION Common Stock On January 31, 2017, the Company issued 350,000 shares of common stock to NLT as the settlement of contingent closing consideration under the asset purchase agreement entered into with NLT in August 2016. The total fair value of such shares was $2.5 million at issuance. See Note 6, "Fair Value Measurements" above. In August 2016, the Company entered into an equity distribution agreement (Distribution Agreement) with Piper Jaffray & Co. (Piper Jaffray), pursuant to which the Company may offer and sell shares of its common stock in “at the market” (ATM) offerings (as defined in Rule 415 of the Securities Act of 1933, as amended) having an aggregate offering price up to $25.0 million in gross proceeds from time to time through Piper Jaffray acting as sales agent. The shares offered and sold under the Distribution Agreement are covered by a registration statement on Form S-3 declared effective on August 24, 2016. Under the Distribution Agreement, the Company sold 1,500,000 shares of common stock at an average price per share of $10.78 and received net proceeds of approximately $15.6 million (net of $0.6 million of offering costs) during the year ended December 31, 2017. Additionally, during the year ended December 31, 2018, the Company sold an additional 882,332 shares of common stock at an average price per share of $10.00 and received net proceeds of approximately $8.5 million (net of $0.3 million offering costs), which consumed the remaining capacity under the Distribution Agreement. The Company intends to continue using the net proceeds for general corporate purposes, including sales and marketing expenditures aimed at growing its business, research and development expenditures focused on product development, and investments in inventory and spinal instruments and sets. In May 2018, the Company entered into another equity distribution agreement with Piper Jaffray (the May 2018 Distribution Agreement), pursuant to which the Company may offer and sell shares of its common stock in ATM offerings having an aggregate offering price up to $50.0 million in gross proceeds from time to time through Piper Jaffray acting as sales agent. The shares offered and sold under the May 2018 Distribution Agreement are covered by a registration statement on Form S-3 declared effective on August 24, 2016. The Company did not sell any shares of common stock under the May 2018 Distribution Agreement during the year ended December 31, 2018. Future sales, if any, will depend on a variety of factors including, but not limited to, market conditions, the trading price of the Company's common stock and the Company's capital needs. The Company intends to use any net proceeds for general corporate purposes, including sales and marketing expenditures aimed at growing its business, research and development expenditures focused on product development, and investments in inventory and spinal instruments and sets. On October 11, 2018, the Company entered into an Underwriting Agreement (Underwriting Agreement) with Wells Fargo Securities, LLC, Piper Jaffray & Co. and Cantor Fitzgerald & Co. acting as joint bookrunning managers and as representatives of the underwriters relating to the issuance and sale of 3,250,000 shares of the Company’s common stock. The price to the public in the offering was $15.50 per share, before underwriting discounts and commissions. The Company granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 487,500 shares of common stock. The underwriters exercised this option and the offering closed on October 15, 2018 with the sale of 3,737,500 shares of the Company's common stock. The net proceeds to the Company from the offering were approximately $54.1 million , after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company used a portion of the net proceeds from the offering to repay all of its then-outstanding borrowings under the Credit Facility, and intends to use the remaining proceeds for general corporate purposes, including general and administrative expenses, capital expenditures and general working capital purposes. Equity Award Plans Stock-based compensation expense, all related to employees and non-employee directors, was recognized as follows: December 31 2018 2017 (In Thousands) Selling, general and administrative $ 5,272 $ 5,136 Research and development 365 790 Cost of goods sold 163 141 Total stock-based compensation expense 5,800 6,067 Total estimated tax benefit related to stock-based compensation expense — — Net effect on net income $ 5,800 $ 6,067 As of June 30, 2015, Integra had stock options, restricted stock awards, performance stock awards, contract stock awards and restricted stock units outstanding under three plans, the 2000 Equity Incentive Plan, the 2001 Equity Incentive Plan, and the 2003 Equity Incentive Plan. In connection with the spin-off, Integra equity awards granted to individuals who became employees of SeaSpine were converted to equity awards denominated in SeaSpine common stock. In general, each post-conversion award is subject to the same terms and conditions as were applicable to the pre-conversion award. In May 2015, the Company adopted the 2015 Incentive Award Plan, which was subsequently amended and restated with approval of the Company's stockholders. In February and March 2018, the Company's board of directors approved amendments to the plan that increased the share reserve by an aggregate of 2,726,000 shares over the then-existing share reserve thereunder, subject to stockholder approval. The Company's stockholders approved both amendments on May 30, 2018 (the 2015 Incentive Award Plan, as amended and restated to date, the Restated Plan). Under the Restated Plan, the Company can grant its employees, non-employee directors and consultants incentive stock options and non-qualified stock options, restricted stock, performance stock, dividend equivalent rights, stock appreciation rights, stock payment awards and other incentive awards. The aggregate number of shares that may be issued or transferred pursuant to awards under the Restated Plan is the sum of (1) the number of shares issuable upon exercise or vesting of the number of Integra equity awards converted to the Company's equity awards under the Restated Plan as of the date of the spin-off and (2) 6,235,500 shares of its common stock in respect of awards granted under the 2015 Plan. As of December 31, 2018 , there were 2,636,659 shares available to grant under the 2015 Plan. In 2016, the Company established the 2016 Employment Inducement Incentive Award Plan (the 2016 Plan). The plan is a broad-based incentive plan which allows for the issuance of stock-based awards, including non-qualified stock options, restricted stock awards, performance awards, restricted stock unit awards and stock appreciation rights, to any prospective officer or other employee who has not previously been an employee or director of SeaSpine or an affiliate or who is commencing employment with SeaSpine or an affiliate following a bona-fide period of non-employment by SeaSpine or an affiliate. An aggregate of 1,000,000 shares are reserved for issuance under the 2016 Plan. The Company has awarded no shares under the 2016 Plan as of December 31, 2018 . As a result of the stockholders' approval of the Restated Plan, the Company's board of directors will not grant any awards under the 2016 Inducement Plan. In June 2018, the Company established the 2018 Employment Inducement Incentive Award Plan (the 2018 Inducement Plan). The terms of the 2018 Plan are substantially similar to the terms of the Restated Plan with three principal exceptions: (1) incentive stock options may not be granted under the 2018 Inducement Plan; (2) there are no annual limits on awards that may be issued to an individual under the 2018 Inducement Plan; and (3) awards granted under the 2018 Inducement Plan are not required to be subject to any minimum vesting period. An aggregate of 2,000,000 shares are reserved under the 2018 Inducement Plan. As of December 31, 2018, 1,933,281 shares were available for issuance under the 2018 Inducement Plan. Restricted Stock Awards and Restricted Stock Units Restricted stock awards granted to non-employee directors generally have a requisite service period of one year; restricted stock units granted to employees generally have a requisite service period of three years. Both are subject to graded vesting. The Company expenses the fair value of restricted stock awards and of restricted stock units on an accelerated basis over the vesting period or requisite service period, whichever is shorter. Stock-based compensation expense related to restricted stock awards and to restricted stock units includes an estimate for forfeitures. The expected forfeiture rate of all equity-based compensation is based on historical experience of pre-vesting forfeitures on awards by each homogenous group of shareowners. For awards granted to non-executive employees, the forfeiture rate is estimated to be 13% and 15% annually for the years ended December 31, 2018 and 2017, respectively. There is no forfeiture rate applied to awards granted to non-employee directors or executive employees because their pre-vesting forfeitures are anticipated to be highly unlikely. As individual awards become fully vested, stock-based compensation expense is adjusted to recognize actual forfeitures. The following table summarizes restricted stock awards and restricted stock units granted to SeaSpine employees and non-employee directors during the year ended December 31, 2018 : Restricted Stock Awards and Units Shares (In thousands) Weighted Average Grant Date Fair Value Per Share Unvested, January 1, 2018 725 $7.82 Granted 665 10.72 Cancellations (108) 8.46 Released/Vested (306) 8.41 Unvested, December 31, 2018 976 $9.56 The weighted average grant date fair value of restricted stock awards and units granted during the years ended December 31, 2018 and 2017 was $10.72 and $7.89 , respectively. The total fair value of shares vested in 2018 and 2017 was $2.6 million and $2.2 million , respectively. The Company recognized $4.9 million and $3.8 million in expense related to restricted stock awards and restricted stock units for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018 , there was approximately $3.7 million of total unrecognized compensation expense related to the unvested portions of these awards. This cost is expected to be recognized over a weighted-average period of approximately 1.2 years. Stock Options Stock option grants to employees generally have a requisite service period of four years , and stock option grants to non-employee directors generally have a requisite service period of one year . Both are subject to graded vesting. The Company records stock-based compensation expense associated with stock options on an accelerated basis over the various vesting periods within each grant and based on their fair value at the date of grant using the Black-Scholes-Merton option pricing model. The following weighted-average assumptions were used in the calculation of fair value for options grants for the years ended December 31, 2018 and 2017: December 31 2018 2017 Expected dividend yield 0 % 0 % Risk-free interest rate 2.8 % 2.0 % Expected volatility 25.6 % 35.7 % Expected term (in years) 4.9 5.1 The Company considered that it has never paid, and does not currently intend to pay, cash dividends. The risk-free interest rates are derived from the U.S. Treasury yield curve in effect on the date of grant for instruments with a remaining term similar to the expected term of the options. Due to the Company’s limited historical data, the expected volatility is calculated based upon the historical volatility of comparable companies in the medical device industry whose share prices are publicly available for a sufficient period of time. The expected term of "plain vanilla" options is calculated using the simplified method as prescribed by accounting guidance for stock-based compensation. A "plain vanilla" option is an option with these characteristics: (1) the option is granted at-the-money; (2) exercisability is conditional only on satisfaction of a service condition through the vesting date; (3) employees who terminate their service prior to vesting forfeit the option; (4) employees who terminate their service after vesting are granted limited time to exercise their options; and (5) the option is nontransferable and non-hedgeable. The expected term of any other option is based on disclosures from similar companies with similar grants. In addition, the Company applies an expected forfeiture rate when amortizing stock-based compensation expense. The expected forfeiture rate of options is based on historical experience of pre-vesting forfeitures on awards by each homogenous group of shareowners. The forfeiture rate of options granted to non-executive employees is estimated to be 13% and 15% annually for the years ended December 31, 2018 and 2017, respectively. There is no forfeiture rate applied for non-employee directors and executive employees as their pre-vesting forfeitures are anticipated to be highly unlikely. As individual grant awards become fully vested, stock-based compensation expense is adjusted to recognize actual forfeitures. A summary of the options granted during the year ended December 31, 2018 and the total number of options outstanding as of that date and changes since January 1, 2018 are set forth below: Number of Shares Outstanding (In thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Life (In years) Aggregate Intrinsic Value (In thousands) Outstanding, January 1, 2018 2,560 $ 14.51 5.96 $ 238 Granted 28 $ 12.47 — — Exercised (124 ) $ 11.38 — — Forfeited (143 ) $ 14.81 — — Outstanding, December 31, 2018 2,321 $ 14.64 5.06 $ 8,365 Vested or expected to vest, December 31, 2018 2,311 $ 14.65 5.05 $ 8,307 Exercisable, December 31, 2018 1,949 $ 14.76 5.04 $ 6,777 The weighted average grant date fair value of options granted during the years ended December 31, 2018 and 2017 was $3.49 and $2.63 , respectively. The total fair value of shares vested in 2018 and 2017 was $1.4 million and $2.2 million , respectively. The Company recognized $0.6 million and $1.7 million in expense related to stock options for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018 , there was approximately $0.2 million of total unrecognized compensation expense related to unvested stock options. This cost is expected to be recognized over a weighted-average period of approximately 0.6 years. Employee Stock Purchase Plan In May 2015, the Company adopted the SeaSpine Holdings Corporation 2015 Employee Stock Purchase Plan, which was amended in December 2015 (as amended, the ESPP). Under the ESPP, eligible employees may purchase shares of the Company’s common stock through payroll deductions of up to 15% of eligible compensation during an offering period. Generally, each offering will be for a period of twenty-four months as determined by the Company's board of directors. There are four six-month purchase periods in each offering period for contributions to be made and to be converted into shares at the end of the purchase period. In no event may an employee purchase more than 2,500 shares per purchase period based on the closing price on the first trading date of an offering period or more than $25,000 worth of stock during any calendar year. The purchase price for shares to be purchased under the ESPP is 85% of the lesser of the market price of the Company's common stock on the first trading date of an offering period or on any purchase date during an offering period (June 30 or December 31). The ESPP authorizes the issuance of up to 400,000 shares of common stock pursuant to purchase rights granted to employees. On November 2, 2018, the Company's board of directors approved the issuance of an additional 400,000 shares of common stock under the ESPP, subject to stockholder approval. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the IRC). The first offering period under the ESPP commenced on January 1, 2016 and ended on December 31, 2017. However, the ESPP contains a restart feature, such that if the market price of the stock at the end of any six-month purchase period is lower than the market price at the original grant date of an offering period, that offering period will terminate after that purchase date, and a new two-year offering period will commence on the January 1 or July 1 immediately following the date the original offering period terminated. This restart feature was first triggered on the purchase date that occurred on June 30, 2016, such that the offering period that commenced on January 1, 2016 was terminated, and a new two-year offering period commenced on July 1, 2016. This restart feature was triggered again on the purchase date that occurred on December 31, 2016, such that the offering period that commenced on July 1, 2016 was terminated, and a new two-year offering period commenced on January 1, 2017 and ended on December 31, 2018. The Company applied share-based payment modification accounting to the awards that were initially valued at the grant date to determine the amount of any incremental fair value associated with the modified awards. The impact to stock-based compensation expense for modifications during the year ended December 31, 2018 , was immaterial. During the years ended December 31, 2018 and 2017, there were 160,059 and 150,020 shares of common stock, respectively, purchased under the ESPP. The Company recognized $0.3 million and $0.6 million in expense related to the ESPP for the years ended December 31, 2018 and 2017, respectively. The Company estimates the fair value of shares issued to employees under the ESPP using the Black-Scholes-Merton option-pricing model. The following weighted average assumptions were used in the calculation of fair value of shares under the ESPP at the grant date for the years ended December 31, 2018 and 2017, respectively: December 31 2018 2017 Expected dividend yield 0 % 0 % Risk-free interest rate 2.0 % 1.0 % Expected volatility 29.4 % 28.1 % Expected term (in years) 1.3 1.2 |
LEASE
LEASE | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
LEASE | LEASES The Company leases administrative, manufacturing, research, and distribution facilities and various manufacturing, office and transportation equipment through operating lease agreements. Future minimum lease payments under the Company's operating leases at December 31, 2018 are: Payments Due by Calendar Year (In thousands) 2019 $ 2,150 2020 2,181 2021 2,219 2022 2,239 2023 1,564 Thereafter 4,664 Total minimum lease payments $ 15,017 Total lease expense for the years ended December 31, 2018 and 2017 was $2.1 million and $2.2 million , respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company is subject to income taxes in the U.S., Switzerland and France. Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are calculated based on the difference between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using the enacted income tax rates expected to be in effect during the years in which the temporary differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Significant judgment is required in determining whether a valuation allowance should be recorded against deferred tax assets. In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. In the event that the Company changes its determination as to the amount of deferred tax assets that can be realized, the Company will adjust its valuation allowance with a corresponding impact to income tax expense in the period in which such determination is made. Income Tax Provision (Benefit) Income (loss) before income taxes consisted of: Year Ended December 31, 2018 2017 (In thousands) United States operations $ (33,843 ) $ (34,886 ) Foreign operations 448 2,653 $ (33,395 ) $ (32,233 ) A reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate is: Year Ended December 31, 2018 2017 Federal statutory rate 21.0% 35.0% Increase (decrease) in income taxes resulting from: State income taxes, net of federal tax benefit 3.2% 4.1% Foreign operations (0.5)% (0.2)% Changes in valuation allowances (25.5)% 43.2% Uncertain tax positions 0.3% 0.3% Research and development credit 0.2% 0.2% Other 0.9% 0.8% Change in rate resulting from the 2017 Tax Act (83.0)% Effective tax rate (0.4)% 0.4% The provision/(benefit) for income taxes consisted of: Year Ended December 31, 2018 2017 (In thousands) Current: Federal $ (93 ) $ (102 ) State 52 20 Foreign 44 42 Total current $ 3 $ (40 ) Deferred: Federal — — State — — Foreign 126 (78 ) Total deferred $ 126 $ (78 ) Provision (benefit) for income taxes $ 129 $ (118 ) The income tax effects of significant temporary differences that give rise to deferred tax assets and liabilities, shown before jurisdictional netting, are presented below: Year Ended December 31, 2018 2017 (In thousands) Deferred tax assets: Doubtful accounts $ 212 $ 116 Inventory related items 9,677 8,976 Tax credits 229 158 Accrued vacation 340 348 Accrued bonus 1,192 815 Stock compensation 3,790 3,129 Net operating loss carryforwards 30,210 22,175 Intangible and fixed assets 10,611 12,054 Other 942 686 Total deferred tax assets 57,203 48,457 Less valuation allowance (55,954 ) (47,433 ) Deferred tax assets after valuation allowance $ 1,249 $ 1,024 Deferred tax liabilities: Other 817 469 Total deferred tax liabilities $ 817 $ 469 Net deferred tax assets $ 432 $ 555 At December 31, 2018, the Company had net operating loss carryforwards of $122.4 million for federal and state income tax purposes. The Company also had foreign net operating loss carryforwards of $1.9 million . These tax loss carryforwards begin to expire in 2021 and 2027 for foreign and federal and state income tax, respectively, and will expire through 2037. The tax expense recorded for net operating losses, net of valuation allowance, was $0.1 million which relates only to foreign net operating losses. At December 31, 2017, the Company had net operating loss carryforwards of $88.3 million for federal and state income tax purposes. The Company also had foreign net operating loss carryforwards of $2.7 million . These tax loss carryforwards begin to expire in 2018 and 2027 for foreign and federal and state income tax, respectively, and will expire through 2037. The tax benefit recorded for net operating losses, net of valuation allowance, was less than $0.1 million which relates only to foreign net operating losses. The valuation allowance relates to deferred tax assets for certain items that will be deductible for income tax purposes under very limited circumstances and for which the Company believes it is not more likely than not that it will realize the associated tax benefit. However, in the event that the Company determines that it would be able to realize more or less than the recorded amount of net deferred tax assets, an adjustment to the deferred tax asset valuation allowance would be recorded in the period such a determination is made. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax planning strategies in making this assessment. Based upon the levels of historical taxable income, projections of future taxable income and the reversal of deferred tax liabilities over the periods in which the deferred tax assets are deductible, management believes it is more-likely-than-not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowance. The amount of deferred tax asset considered realizable, however, could change in the near term if estimates which require significant judgment of future taxable income during the carryforward period are increased or decreased. The Tax Cuts and Jobs Act (the 2017 Tax Act) was enacted on December 22, 2017. The 2017 Tax Act reduces the U.S federal corporate tax rate from 35% to 21% . Accordingly, the Company modified the value of the deferred tax assets and liabilities including the net operating loss carryover at December 31, 2017. Prior to enactment of the new tax reform, the Company had total net deferred tax assets of $74.1 million before valuation allowance at December 31, 2017. Taking the new tax reform into consideration, the Company's total net deferred tax assets were $48.0 million before valuation allowance at December 31, 2017. The Company is not subject to the new transition tax on accumulated foreign earnings enacted by the 2017 Tax Act because its foreign operations have been included in its US tax filings pursuant to an election to disregard the Company's foreign subsidiaries for federal income tax purposes. A reconciliation of the Company’s uncertain tax benefits is as follows: Year Ended December 31, 2018 2017 (In thousands) Balance, beginning of year $ 277 $ 305 Gross increases: Prior years’ tax positions 1 5 Additions to tax positions in prior years due to spin-off — Current year tax positions 71 74 Gross decreases: Settlements — Statute of limitations lapses (94 ) (107 ) Balance, end of year $ 255 $ 277 Approximately $0.3 million of the balance at December 31, 2018 relates to uncertain tax positions that, if recognized, would affect the annual effective tax rate. There is $0.1 million related to tax positions for which it is reasonably possible that the total amounts could be reduced during the twelve months following December 31, 2018, as a result of expiring statutes of limitations. The Company recognizes interest and penalties relating to uncertain tax positions in income tax expense. The amounts recorded in 2018 and 2017 were not significant. The Company files income tax returns as prescribed by tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state, local and foreign jurisdictions where applicable based on the statute of limitations that apply in each jurisdiction. The Company has no open tax audits with any taxing authority as of December 31, 2018. The Company is still subject to income tax examinations by US federal and state tax authorities for the years 2015 through 2018. Open years for foreign jurisdictions are from 2014 through 2018. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss carryforward amount. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES In consideration for certain technology, manufacturing, distribution, and selling rights and licenses granted to the Company, the Company has agreed to pay royalties on sales of certain products sold by the Company. The royalty payments that the Company made under these agreements are included in the consolidated statements of operations as a component of cost of goods sold. The Company is subject to various legal proceedings in the ordinary course of its business with respect to its products, its current or former employees, and its commercial relationships, some of which have been settled by the Company. In the opinion of management, such proceedings are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material adverse effect on the Company's financial condition. However, it is possible that the Company's results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies. The Company accrues for loss contingencies when it is deemed probable that a loss has been incurred and that loss is estimable. The amounts accrued are based on the full amount of the estimated loss before considering insurance proceeds, and do not include an estimate for legal fees expected to be incurred in connection with the loss contingency. While uncertainty exists, the Company does not believe there are any pending legal proceedings that would have a material impact on the Company’s financial position, cash flows or results of operations. |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION Management assessed its segment reporting based on how it internally manages and reports the results of its business to its chief operating decision maker. Management reviews financial results, manages the business and allocates resources on an aggregate basis. Therefore, financial results are reported in a single operating segment: the development, manufacture and marketing of orthobiologics and of spinal implants. The Company reports revenue in two product categories: orthobiologics and spinal implants. Orthobiologics products consist of a broad range of advanced and traditional bone graft substitutes that are designed to improve bone fusion rates following surgery. The spinal implants portfolio consists of an extensive line of products for minimally invasive surgery, complex spine, deformity and degenerative procedures. Revenue, net consisted of the following: Year Ended December 31, 2018 2017 (In thousands) Orthobiologics $ 75,339 $ 69,128 Spinal implants 68,104 62,686 Total Revenue, net $ 143,443 $ 131,814 The Company attributes revenues to geographic areas based on the location of the customer. Total revenue by major geographic area consisted of the following: 2018 2017 United States $ 127,883 $ 118,405 International 15,560 13,409 Total Revenue, net $ 143,443 $ 131,814 |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLAN | EMPLOYEE BENEFIT PLAN The Company has a defined contribution savings plan under section 401(k) of the IRC. The plan covers substantially all employees. The Company matches employee contributions made to the plan according to a specified formula. The Company’s matching contributions totaled approximately $0.7 million and $0.6 million for the years ended 2018 and 2017, respectively. |
SELECTED QUARTERLY INFORMATION
SELECTED QUARTERLY INFORMATION - UNAUDITED | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
SELECTED QUARTERLY INFORMATION - UNAUDITED | SELECTED QUARTERLY INFORMATION - UNAUDITED First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share data) Total revenue, net: 2018 $ 33,175 $ 36,409 $ 35,834 $ 38,025 2017 31,894 34,196 31,742 33,982 Gross profit: 2018 $ 20,996 $ 21,849 $ 21,587 $ 23,042 2017 18,722 20,202 19,566 21,498 Net loss: 2018 $ (7,105 ) $ (7,361 ) $ (9,532 ) $ (9,526 ) 2017 (9,103 ) (8,043 ) (7,462 ) (7,507 ) Basic/diluted net loss per common share (1) : 2018 $ (0.50 ) $ (0.50 ) $ (0.65 ) $ (0.53 ) 2017 (0.79 ) (0.68 ) (0.58 ) (0.56 ) (1) Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts do not necessarily add to the annual amount because of differences in the weighted average common shares outstanding during each period principally due to the effect of the Company’s issuing or canceled shares of its common stock during the year. |
SUBSEQUENT EVENT (Notes)
SUBSEQUENT EVENT (Notes) | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENT |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2018 | |
Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS Balance at Beginning of Period Charged to Costs and Expenses Charged to Other Accounts Additions/Deductions Balance at End of Period Description (In thousands) Year ended December 31, 2018: Allowance for doubtful accounts and sales returns and other credits 466 21 — 363 850 Inventory Reserves 27,071 4,686 — (2,448 ) 29,309 Deferred tax asset valuation allowance 47,433 8,521 — — 55,954 Year ended December 31, 2017: Allowance for doubtful accounts and sales returns and other credits $ 483 $ 47 $ — $ (64 ) $ 466 Inventory Reserves $ 24,919 $ 4,597 $ — $ (2,445 ) $ 27,071 Deferred tax asset valuation allowance 61,118 (13,685 ) — — 47,433 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and other credits, net realizable value of inventories, discount rates and estimated projected cash flows used to value and test impairments of identifiable intangible and long-lived assets, depreciation and amortization periods for identifiable intangible and long-lived assets, assumptions related to the timing and probability of product launch dates, discount rates matched to the estimated timing of payments, probability of success rates, and estimated net sales for contingent considerations in business combinations, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation and loss contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances. Actual results could differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents include cash readily available in checking and money market accounts. |
Investment, Policy [Policy Text Block] | Investments The Company has designated its entire portfolio of fixed income securities as available-for-sale. These securities are recorded at fair value based on quoted market prices with unrealized gains and losses, net of deferred income taxes, accounted for as a component of accumulated other comprehensive income in stockholders’ equity. The Company’s short-term investments have maturities of greater than three and less than 12 months when purchased and are carried at fair value. In accordance with FASB Accounting Standards Codification 320, Investments - Debt and Equity Securities, the Company assesses whether it intends to sell or it is more likely than not that it will be required to sell a debt security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that the Company does not intend to sell and will not be required to sell prior to recovery of its amortized cost basis, the Company separates the amount of the impairment into the amount that is credit-related (referred to as the credit loss component) and the amount due to all other factors. The credit loss component is recognized in net income and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit-related and is recognized in accumulated other comprehensive income (“AOCI”). For debt securities that are intended to be sold, or that management believes are more likely than not to be required to be sold prior to recovery, the full impairment is recognized immediately in earnings. Realized gains and losses on sales of investments are determined on a specific-identification basis. Interest income is recognized on an accrual basis. See Note 5. Balance Sheet Details, for further discussion regarding investments. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash, cash equivalents, receivables, accounts payable and accrued expenses at December 31, 2018 and 2017, are considered to approximate fair value because of the short term nature of those items. The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following three categories: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The carrying amount of short-term investments at December 31, 2018 are carried at fair value based on quoted market prices in active markets. This fair value measurement is categorized within Level 1 of the fair value hierarchy. The carrying amounts of contingent consideration liabilities at December 31, 2018 and 2017 pursuant to the business combinations (see Note 6- Fair Value Measurements ) are measured at fair value on a recurring basis, and are classified within Level 3 of the fair value hierarchy because they use significant unobservable inputs. |
Trade Accounts Receivable and Allowances | Trade Accounts Receivable and Allowances Trade accounts receivable in the accompanying consolidated balance sheets are presented net of allowances for doubtful accounts and sales returns and other credits. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowances for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowances for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowances for doubtful accounts are recorded to selling, general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. |
Inventories | Inventories Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost, the value determined by the first-in, first-out method, or market. At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of the Company's current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions, a review of the shelf life expiration dates for products, as well as the feasibility of reworking or using excess or obsolete products or components in the production or assembly of other products that are not obsolete or for which there are not excess quantities in inventory. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. The Company capitalizes inventory costs associated with certain products prior to regulatory approval, based on management’s judgment of probable economic benefit. The Company could be required to expense previously capitalized costs related to pre-approval inventory upon a change in such judgment, due to, among other potential factors, a denial or delay of approval by necessary regulatory bodies or a decision by management to discontinue the related development program. No such amounts were capitalized at December 31, 2018 or 2017. |
Property, Plant and Equipment | Property, Plant, and Equipment Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment charges. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life. The cost of major additions and improvements is capitalized, while maintenance and repair costs that do not improve or extend the lives of the respective assets are charged to operations as incurred. The cost of computer software obtained for internal use is accounted for in accordance with the Accounting Standards Codification 350-40, Internal-Use Software. The cost of purchased spinal instruments which the Company consigns to hospitals and independent sales agents to support surgeries is initially capitalized as construction in progress. The amount is then reclassified to spinal instruments and sets and depreciation is initiated when instruments are put together in a newly built set with spinal implants, or directly expensed for the instruments that are used to replace damaged instruments in an existing set. The depreciation expense and direct expense for replacement instruments are recorded in selling, general and administrative expense. |
Business Combinations | Business Combinations The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of the acquisition. Any purchase price in excess of these net assets is recorded as goodwill, and any fair value of these net assets, excluding goodwill, in excess of the purchase price is recorded as a bargain purchase gain. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. Contingent consideration liability is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent consideration liability are recognized in the statement of operations. Contingent consideration liability related to acquisitions consist of commercial milestone payments and contingent royalty payments, and are valued using discounted cash flow techniques. The fair value of commercial milestone payments and contingent royalty payments reflects management’s expectations of probability and amount of payment, and increases or decreases as the probability and amount of payment or expectation of timing of payment changes. |
Identifiable Intangible Assets | Identifiable Intangible Assets Identifiable intangible assets are initially recorded at fair value at the time of acquisition generally using an income or cost approach. The Company capitalizes costs incurred to renew or extend the term of recognized intangible assets and amortizes those costs over their expected useful lives. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets held and used by the Company, including property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets to be held and used, a recoverability test is performed using projected undiscounted net cash flows applicable to the long-lived assets. If an impairment exists, the amount of such impairment is calculated based on the estimated fair value of the asset. Impairments to long-lived assets to be disposed of are recorded based upon the difference between the carrying value and the fair value of the applicable assets. There was no impairment of intangible or tangible long-lived assets in any of the periods presented. |
Foreign Currency | Foreign Currency The Company generates revenues outside the United States in multiple foreign currencies including euros, Swiss francs and in U.S. dollar-denominated transactions conducted with customers who generate revenue in currencies other than the U.S. dollar. The Company also incurs operating expenses in euros and Swiss francs. All assets and liabilities of foreign subsidiaries which have a functional currency other than the U.S. dollar are translated at the rate of exchange at year-end, while elements of the income statement are translated at the average exchange rates in effect during the year. The net effect of these translation adjustments is shown as a component of accumulated other comprehensive income (loss). These currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in non-U.S. subsidiaries. Foreign currency transaction gains and losses are reported in other income (expense), net. |
Income Taxes | Income Taxes The Company recognizes tax benefits in its financial statements when its uncertain tax positions are more likely than not to be sustained upon audit. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company recognizes deferred tax assets for deductible temporary differences, operating loss carryforwards and tax credit carryforwards. Deferred tax assets are reduced by valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. |
Revenue Recognition | Revenue Recognition Net sales are derived primarily from the sale of orthobiologics and spinal implant products globally. Sales are reported net of returns, rebates, group purchasing organization fees and other customer allowances. Allowances and estimates of returns and other credits are recorded in the sales returns reserve. Certain contracts with stocking distributors contain provisions to repurchase inventory upon termination of the contract or discontinuation of a product line. Included in the sales returns reserve is an estimate of repurchases that are likely to be returned under these provisions. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred title and risk of loss have passed to the customer, there is a fixed or determinable sales price and collectability of that sales price is reasonably assured. In the United States, the Company generates most of its revenue by consigning its orthobiologics products and by consigning or loaning its spinal implant sets to hospitals and independent sales agents, who in turn either deliver them to hospitals for a single surgical procedure, after which they are returned to the Company, or leave them with hospitals that are high volume users for multiple procedures. The spinal implant sets typically contain the instruments, disposables, and spinal implants required to complete a surgery. The Company ships replacement inventory to independent sales agents to replace the consigned inventory used in surgeries. The Company maintains and replenishes loaned sets at its facility and returns them to a hospital or independent sales agent for the next procedure. The Company recognizes revenue on these consigned or loaned products when they have been used or implanted in a surgical procedure. For all other sales transactions, including sales to stocking distributors and private label partners, the Company recognizes revenue when the products are shipped to the customer or stocking distributors and the transfer of title and risk of loss occurs. There is generally no customer acceptance or other condition that prevents the Company from recognizing revenue in accordance with the delivery terms for these sales transactions. Product royalties account for less than 1% of total revenue for any of the periods presented, and are estimated and recognized in the same period that the royalty-based products are sold by licensees. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information and expected sales trends. Differences between actual revenues and estimated royalty revenues are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been material. |
Shipping and Handling Fees and Costs | Shipping and Handling Fees and Costs Shipping and handling costs of $1.8 million and $1.6 million for product shipments for loaning of spinal implants and instrumentation sets and costs incurred for internal movement of inventory were recorded in selling, general and administrative expense during the years ended December 31, 2018 and 2017, respectively. |
Research and Development | Research and Development Research and development costs, including salaries, stock-based compensation, depreciation, consultant and other external fees, and facility costs directly attributable to research and development activities, are expensed in the period in which they are incurred. |
Stock-Based Compensation | Stock-Based Compensation The Company's stock-based compensation has been recognized through the consolidated statement of operations and the Company's additional paid-in capital account on the consolidated balance sheet. The Company applies the authoritative guidance for stock-based compensation. This guidance requires companies to recognize the expense related to the fair value of their stock-based compensation awards. Stock-based compensation expense for stock option awards was based on the fair value on the grant date using the Black-Scholes-Merton option pricing model. The fair value of restricted stock granted prior to the spin-off was based on the Integra’s stock price at the grant date, and the fair value of restricted stock granted after the spin-off was based on the Company's stock price at the grant date. The long form method was used in the determination of the windfall tax benefit in accordance with the guidance. The stock-based compensation is initially measured at the fair value of the awards on the grant date and is then recognized on a ratable basis in the financial statements over the requisite service period of the award. Stock-based compensation expense was $5.8 million in 2018 and $6.1 million in 2017. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, which is held at major financial institutions, and trade receivables. The Company’s products are sold on an uncollateralized basis and on credit terms based upon a credit risk assessment of each customer. A portion of the Company’s trade receivables to customers outside the United States includes sales to foreign stocking distributors, who then sell to government owned or supported healthcare systems. The ongoing economic conditions in certain European countries, especially Greece, Ireland, Italy, Portugal and Spain remain uncertain. Accounts receivable from customers in these countries are not a material amount of the Company’s overall receivables. None of the Company’s customers accounted for 10% or more of the net sales or accounts receivable for any of the periods presented. |
Recently Issued and Adopted Accounting Standards | Recent Accounting Standards Not Yet Adopted The Company qualifies as an “emerging growth company” (EGC) under the Jumpstart Our Business Startups (JOBS) Act and elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, which permits EGCs to defer compliance with new or revised accounting standards (the EGC extension) until non-issuers must comply with such standards. Accordingly, so long as the Company continues to qualify as an EGC, the Company will not have to adopt or comply with new or revised accounting standards until non-issuers must adopt or comply with such standards. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU or Update) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard provides a five-step approach to be applied to all contracts with customers. The new standard also requires expanded disclosure about revenue recognition. The new standard as amended by ASU 2015-14, ASU 2016-10 and ASU 2016-12, was effective for the Company beginning on January 1, 2019. The Company performed an assessment of the impact of this new standard on its consolidated financial statements. In assessing the impact, the Company outlined all revenue streams, and considered the five steps outlined in the standard for product sales, from which substantially all the Company's revenue is generated. The Company analyzed the impact of this new standard on all revenue streams and on all contracts with customers, including by reviewing contracts and current accounting policies and practices to identify differences that would result from applying the requirements under the new standard. The Company adopted the new standard using the modified retrospective method under which the cumulative effect of initially applying the new guidance to open contracts as of December 31, 2018 is recognized as an adjustment to the opening balance of retained earnings as of January 1, 2019. The Company has completed the assessment of the new standard and is finalizing the new required disclosures. Under the new standard, the Company has made the accounting policy election to account for shipping and handling activities performed after the control of a good has been transferred to the customer as a fulfillment cost. Overall, the timing of revenue recognition under the new standard is not materially different from the Company's current revenue recognition policy. Based on the Company’s analysis of open contracts as of December 31, 2018, the cumulative effect of applying the new standard is not material. In February 2016, the FASB issued Update No. 2016-02, Leases (Topic 842) . The new standard requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than twelve months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new standard must be adopted using the modified retrospective approach. The standard will be effective for the Company beginning on January 1, 2020 with early adoption permitted. The Company does not plan to early adopt and expects to apply the transition practical expedients allowed by the standard. In July 2018, the FASB issued Update No. 2018-10, Codification Improvements to Topic 842 (Leases) and Update No. 2018-11, Leases (Topic 842):Targeted Improvements. The amendments in ASU 2018-10 and ASU 2018-11 provide additional clarification and implementation guidance on certain aspects of ASU 2016-02 and have the same effective date and transition requirements as ASU 2016-02. Note 8 to the Condensed Consolidated Financial Statements provides details on the Company’s current lease arrangements. While the Company continues to evaluate the impact of this new standard on its consolidated financial statements, the Company currently expects the primary impact will be to record right-of-use assets and lease liabilities for existing operating leases in the consolidated balance sheets. The Company does not currently expect the adoption of this new standard to have a material impact on its consolidated results of operations or cash flows. In June 2018, the FASB issued Update No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This Update will require an entity to apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606. The new standard will be effective for the Company beginning on January 1, 2020. Early adoption is permitted but no earlier than an entity's adoption date of Topic 606. The Company is evaluating the impact of this standard on its consolidated financial statements. In July 2018, the FASB issued Update No. 2018-09, Codification Improvements . This Update includes several amendments to the Codification intended to clarify, improve, or correct errors in the Codification. Some amendments do not require transition guidance and are effective upon issuance. The amendments requiring transition guidance will be effective for the Company beginning on January 1, 2020. The Company is evaluating the impact of this standard on its consolidated financial statements. In August 2018, the FASB issued Update No. 2018-13, Fair Value Measurement (Topic 820)-Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement . The amendments in this Update modify the disclosure requirements on fair value measurements in Topic 820 based on the concepts in the Concepts Statement including the consideration of costs and benefits. The new standard will be effective for the Company beginning on January 1, 2020. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. The Company is evaluating the impact of this standard on its consolidated financial statements. In August 2018, the FASB issued Update No. 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40) . The amendments in this Update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The new standard will be effective for the Company beginning on January 1, 2021. Early adoption is permitted. The Company is evaluating the impact of this standard on its consolidated financial statements. Recently Adopted Accounting Standards In August 2016, the FASB issued Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard addresses eight specific cash flow issues related to cash receipts and cash payments with the objective of reducing the existing diversity of presentation and classification in the statement of cash flows. The new standard will be effective for the Company beginning on January 1, 2019. Early adoption is permitted and should be applied using a retrospective transition method to each period presented. Adoption of this new guidance had no impact on the Company’s cash flows statements. In May 2017, the FASB issued Update No. 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting. The new standard provides guidance regarding which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The new standard was effective for the Company beginning on January 1, 2018. Adoption of this new guidance had no impact on the Company’s consolidated financial statements. |
Net Loss Per Share | Net Loss Per Share Basic and diluted net loss per share was calculated using the weighted-average number of shares of common stock outstanding during the period. The weighted average number of shares used to compute diluted net loss per share excludes any assumed exercise of stock options, any assumed issuance of common stock under restricted stock awards and units, and any assumed issuances under the Company's 2015 Employee Stock Purchase Plan, as the effect, in each case, would be antidilutive. Common stock equivalents of 3.4 million and 3.3 million shares for the years ended December 31, 2018 and 2017, respectively, were excluded from the calculation because of their antidilutive effect. |
TRANSACTIONS WITH INTEGRA (Tabl
TRANSACTIONS WITH INTEGRA (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transaction [Line Items] | |
TRANSACTIONS WITH INTEGRA | TRANSACTIONS WITH INTEGRA Related-party Transactions Prior to the spin-off, and pursuant to certain supply agreements subsequent to the spin-off, SeaSpine purchased a portion of raw materials and finished goods from Integra for SeaSpine's Mozaik family of products, and SeaSpine contract manufactured certain finished goods for Integra. The Company's purchases of raw materials and Mozaik product finished goods from Integra for the year ended December 31, 2017 totaled $0.6 million . The Company's sale of finished goods to Integra under its contract manufacturing arrangement for the year ended December 31, 2017 totaled $0.4 million . The Company determined that Integra does not meet the definition of a related party requiring disclosure in accordance with Accounting Standards Codification Topic 850, Related Party Disclosures as of December 31, 2018. |
BALANCE SHEET DETAILS (Tables)
BALANCE SHEET DETAILS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |
Available-for-sale Securities, Debt Securities, Current | Amortized Cost Gross Unrealized Fair Value Gains (Losses) As of December 31, 2018 (In thousands) U.S. Treasury Bills $ 29,803 — $ (3 ) $ 29,800 |
Schedule of Inventory, Net | Inventories consisted of: December 31, 2018 December 31, 2017 (In thousands) Finished goods $ 27,589 $ 31,008 Work in process 10,367 6,909 Raw materials 4,786 3,804 $ 42,742 $ 41,721 |
Schedule of Property, Plant and Equipment | Property, plant and equipment, net and corresponding useful lives were: December 31, 2018 December 31, 2017 Useful Lives (In thousands) Leasehold improvement $ 5,724 $ 5,312 Shorter of lease term or useful life Machinery and production equipment 7,752 7,030 3-10 years Spinal instruments and sets 23,212 20,340 5 years Information systems and hardware 7,290 7,375 3-7 years Furniture and fixtures 1,222 991 3-5 years Construction in progress 7,013 8,136 Total 52,213 49,184 Less accumulated depreciation and amortization (29,590 ) (27,121 ) Property, plant and equipment, net $ 22,623 $ 22,063 |
Schedule of Components of Identifiable Intangible Assets | The components of the Company’s identifiable intangible assets were: December 31, 2018 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Product technology 12 years $ 40,769 $ (29,153 ) $ 11,616 Customer relationships 12 years 56,830 (39,734 ) 17,096 Trademarks/brand names — 300 (300 ) — $ 97,899 $ (69,187 ) $ 28,712 December 31, 2017 Weighted Average Life Cost Accumulated Amortization Net (In thousands) Product technology 12 years $ 40,769 $ (25,827 ) $ 14,942 Customer relationships 12 years 56,830 (36,565 ) 20,265 Trademarks/brand names — 300 (300 ) — $ 97,899 $ (62,692 ) $ 35,207 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The Company estimated the fair value of the contingent consideration, including contingent milestone payments and contingent royalty payments, using a probability weighted approach that considers the possible outcomes based on assumptions related to the timing and probability of the product launch dates, discount rates matched to the timing of payments, and probability of success rates and discount adjustments on the related cash flows. Subsequent to the acquisition date, at each reporting period, the contingent consideration liabilities will be remeasured at current fair value with changes to be recorded in the consolidated |
Business Acquisition, Pro Forma Information | The amortization charges for acquired intangible assets and research and development expenses for the purchased assets are included in the consolidated statement of operations for the years ended December 31, 2018 and 2017. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | ||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The fair values of the Company’s assets and liabilities, including contingent consideration liabilities, are measured at fair value on a recurring basis, and are determined under the fair value categories as follows (in thousands): Total Quoted Price in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2018: Short-term investments $ 29,800 $ 29,800 $ — $ — Total Assets Contingent consideration liabilities- current $ 129 $ — $ — $ 129 Contingent consideration liabilities- non-current 2,367 — — 2,367 Total contingent consideration $ 2,496 $ — $ — $ 2,496 | Total Quoted Price in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2017: Contingent consideration liabilities- current $ 207 $ — $ — $ 207 Contingent consideration liabilities- non-current 4,228 — — 4,228 Total contingent consideration $ 4,435 $ — $ — $ 4,435 |
Schedule of Liabilities Measured on Recurring Basis, Unobservable Inputs | A change in estimated timing of payments, probability of success rates, or estimated net sales for future royalty payment periods would be expected to have a material impact on the fair value of contingent milestone and royalty payments. Year Ended December 31, 2018 2017 (in thousands) Beginning Balance as of January 1 $ 4,435 $ 7,980 Contingent consideration liabilities settled (137 ) (2,570 ) Gain from change in fair value of contingent closing consideration recorded in other income — (112 ) Gain from change in fair value of contingent milestone and royalty payments recorded in selling, general and administrative expenses (1,802 ) (863 ) Ending Balance as of December 31 $ 2,496 $ 4,435 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock-Based Compensation Expense | Stock-based compensation expense, all related to employees and non-employee directors, was recognized as follows: December 31 2018 2017 (In Thousands) Selling, general and administrative $ 5,272 $ 5,136 Research and development 365 790 Cost of goods sold 163 141 Total stock-based compensation expense 5,800 6,067 Total estimated tax benefit related to stock-based compensation expense — — Net effect on net income $ 5,800 $ 6,067 |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The following table summarizes restricted stock awards and restricted stock units granted to SeaSpine employees and non-employee directors during the year ended December 31, 2018 : Restricted Stock Awards and Units Shares (In thousands) Weighted Average Grant Date Fair Value Per Share Unvested, January 1, 2018 725 $7.82 Granted 665 10.72 Cancellations (108) 8.46 Released/Vested (306) 8.41 Unvested, December 31, 2018 976 $9.56 |
Schedule of Valuation Assumptions for Stock Options | The following weighted-average assumptions were used in the calculation of fair value for options grants for the years ended December 31, 2018 and 2017: December 31 2018 2017 Expected dividend yield 0 % 0 % Risk-free interest rate 2.8 % 2.0 % Expected volatility 25.6 % 35.7 % Expected term (in years) 4.9 5.1 |
Schedule of Stock Option Activity | A summary of the options granted during the year ended December 31, 2018 and the total number of options outstanding as of that date and changes since January 1, 2018 are set forth below: Number of Shares Outstanding (In thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Life (In years) Aggregate Intrinsic Value (In thousands) Outstanding, January 1, 2018 2,560 $ 14.51 5.96 $ 238 Granted 28 $ 12.47 — — Exercised (124 ) $ 11.38 — — Forfeited (143 ) $ 14.81 — — Outstanding, December 31, 2018 2,321 $ 14.64 5.06 $ 8,365 Vested or expected to vest, December 31, 2018 2,311 $ 14.65 5.05 $ 8,307 Exercisable, December 31, 2018 1,949 $ 14.76 5.04 $ 6,777 |
Schedule of Valuation Assumptions for ESPP | The following weighted average assumptions were used in the calculation of fair value of shares under the ESPP at the grant date for the years ended December 31, 2018 and 2017, respectively: December 31 2018 2017 Expected dividend yield 0 % 0 % Risk-free interest rate 2.0 % 1.0 % Expected volatility 29.4 % 28.1 % Expected term (in years) 1.3 1.2 |
LEASE (Tables)
LEASE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments under the Company's operating leases at December 31, 2018 are: Payments Due by Calendar Year (In thousands) 2019 $ 2,150 2020 2,181 2021 2,219 2022 2,239 2023 1,564 Thereafter 4,664 Total minimum lease payments $ 15,017 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | before income taxes consisted of: Year Ended December 31, 2018 2017 (In thousands) United States operations $ (33,843 ) $ (34,886 ) Foreign operations 448 2,653 $ (33,395 ) $ (32,233 ) |
Schedule of effective income tax rate reconciliation | A reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate is: Year Ended December 31, 2018 2017 Federal statutory rate 21.0% 35.0% Increase (decrease) in income taxes resulting from: State income taxes, net of federal tax benefit 3.2% 4.1% Foreign operations (0.5)% (0.2)% Changes in valuation allowances (25.5)% 43.2% Uncertain tax positions 0.3% 0.3% Research and development credit 0.2% 0.2% Other 0.9% 0.8% Change in rate resulting from the 2017 Tax Act (83.0)% Effective tax rate (0.4)% 0.4% |
Schedule of Components of Income Tax Expense (Benefit) | The provision/(benefit) for income taxes consisted of: Year Ended December 31, 2018 2017 (In thousands) Current: Federal $ (93 ) $ (102 ) State 52 20 Foreign 44 42 Total current $ 3 $ (40 ) Deferred: Federal — — State — — Foreign 126 (78 ) Total deferred $ 126 $ (78 ) Provision (benefit) for income taxes $ 129 $ (118 ) |
Schedule of Deferred Tax Assets and Liabilities | The income tax effects of significant temporary differences that give rise to deferred tax assets and liabilities, shown before jurisdictional netting, are presented below: Year Ended December 31, 2018 2017 (In thousands) Deferred tax assets: Doubtful accounts $ 212 $ 116 Inventory related items 9,677 8,976 Tax credits 229 158 Accrued vacation 340 348 Accrued bonus 1,192 815 Stock compensation 3,790 3,129 Net operating loss carryforwards 30,210 22,175 Intangible and fixed assets 10,611 12,054 Other 942 686 Total deferred tax assets 57,203 48,457 Less valuation allowance (55,954 ) (47,433 ) Deferred tax assets after valuation allowance $ 1,249 $ 1,024 Deferred tax liabilities: Other 817 469 Total deferred tax liabilities $ 817 $ 469 Net deferred tax assets $ 432 $ 555 |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the Company’s uncertain tax benefits is as follows: Year Ended December 31, 2018 2017 (In thousands) Balance, beginning of year $ 277 $ 305 Gross increases: Prior years’ tax positions 1 5 Additions to tax positions in prior years due to spin-off — Current year tax positions 71 74 Gross decreases: Settlements — Statute of limitations lapses (94 ) (107 ) Balance, end of year $ 255 $ 277 |
SEGMENT AND GEOGRAPHIC INFORM_2
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Segment | Revenue, net consisted of the following: Year Ended December 31, 2018 2017 (In thousands) Orthobiologics $ 75,339 $ 69,128 Spinal implants 68,104 62,686 Total Revenue, net $ 143,443 $ 131,814 |
Total Revenue By Major Geographic Area | The Company attributes revenues to geographic areas based on the location of the customer. Total revenue by major geographic area consisted of the following: 2018 2017 United States $ 127,883 $ 118,405 International 15,560 13,409 Total Revenue, net $ 143,443 $ 131,814 |
SELECTED QUARTERLY INFORMATIO_2
SELECTED QUARTERLY INFORMATION - UNAUDITED (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share data) Total revenue, net: 2018 $ 33,175 $ 36,409 $ 35,834 $ 38,025 2017 31,894 34,196 31,742 33,982 Gross profit: 2018 $ 20,996 $ 21,849 $ 21,587 $ 23,042 2017 18,722 20,202 19,566 21,498 Net loss: 2018 $ (7,105 ) $ (7,361 ) $ (9,532 ) $ (9,526 ) 2017 (9,103 ) (8,043 ) (7,462 ) (7,507 ) Basic/diluted net loss per common share (1) : 2018 $ (0.50 ) $ (0.50 ) $ (0.65 ) $ (0.53 ) 2017 (0.79 ) (0.68 ) (0.58 ) (0.56 ) (1) Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts do not necessarily add to the annual amount because of differences in the weighted average common shares outstanding during each period principally due to the effect of the Company’s issuing or canceled shares of its common stock during the year. |
BUSINESS Float (Details)
BUSINESS Float (Details) | Jun. 30, 2018USD ($) |
Basis of Presentation [Abstract] | |
Entity Public Float | $ 145,318,669 |
BUSINESS Narrative (Details)
BUSINESS Narrative (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Concentration Risk [Line Items] | |
Concentration Risk, Supplier | 0.1 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Narrative (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | |||
Product royalties as a percent of total revenue, less than (as a percent) | 1.00% | 1.00% | 1.00% |
Shipping and handling costs | $ 1,800 | $ 1,600 | |
Stock-based compensation expense | $ 5,800 | $ 6,067 | |
Weighted average shares used to compute basic and diluted net loss per share | 15,358 | 12,426 | |
Antidilutive dilutive securities (in shares) | 3,400 | 3,300 |
TRANSACTIONS WITH INTEGRA Narra
TRANSACTIONS WITH INTEGRA Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Purchases | $ 3,454 | $ (1,206) |
Stock-based compensation | $ 5,800 | 6,067 |
Integra | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Purchases | 600 | |
Sale of finished goods | $ 400 |
TRANSACTIONS WITH INTEGRA Alloc
TRANSACTIONS WITH INTEGRA Allocated Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Cost of goods sold | $ 55,969 | $ 51,826 |
Selling, general and administrative | 105,387 | 97,303 |
Research and development | $ 12,058 | $ 12,180 |
DEBT AND INTEREST Credit Agreem
DEBT AND INTEREST Credit Agreement (Details) | Jul. 27, 2021USD ($)extension | Dec. 24, 2015 | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Line of Credit Facility [Line Items] | ||||||
Line of credit borrowings | $ 7,000,000 | $ 0 | ||||
Repayment of Long-Term Debt and Accrued Interest | 7,300,000 | |||||
Remaining borrowing capacity | 23,400,000 | |||||
Credit Agreement | ||||||
Line of Credit Facility [Line Items] | ||||||
Expiration period (in years) | 3 years | |||||
Number of extensions | extension | 1 | |||||
Extension period (in years) | 1 year | |||||
Debt Issuance Costs, Line of Credit Arrangements, Gross | $ 0.6 | |||||
Minimum fixed charge ratio | 1.1 | |||||
Minimum liquidity | $ 5,000,000 | |||||
Credit Agreement | Minimum | ||||||
Line of Credit Facility [Line Items] | ||||||
Average excess availability | $ 10,000,000 | |||||
Unused line fee (as a percent) | 0.375% | |||||
Credit Agreement | Maximum | ||||||
Line of Credit Facility [Line Items] | ||||||
Average excess availability | $ 20,000,000 | |||||
Unused line fee (as a percent) | 0.50% | |||||
Credit Agreement | Revolving Credit Facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Borrowing capacity | $ 30,000,000 | |||||
Line of Credit Facility, Increase in Borrowing Capacity | $ 10,000,000 | |||||
Line of credit borrowings | $ 3,000,000 | $ 4,000,000 | ||||
Long-term Line of Credit | $ 0 | $ 0 | ||||
Credit Agreement, Contingent Interest Rate One | Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate (as a percent) | 1.25% | |||||
Credit Agreement, Contingent Interest Rate One | LIBOR | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate (as a percent) | 2.25% | |||||
Credit Agreement. Contingent Interest Rate Two | Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate (as a percent) | 1.50% | |||||
Credit Agreement. Contingent Interest Rate Two | LIBOR | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate (as a percent) | 2.50% | |||||
Credit Agreement, Contingent Interest Rate Three | Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate (as a percent) | 1.75% | |||||
Credit Agreement, Contingent Interest Rate Three | LIBOR | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate (as a percent) | 2.75% |
BALANCE SHEET DETAILS Schedule
BALANCE SHEET DETAILS Schedule of Inventories, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | ||
Finished goods | $ 27,589 | $ 31,008 |
Work in process | 10,367 | 6,909 |
Raw materials | 4,786 | 3,804 |
Inventories, net | $ 42,742 | $ 41,721 |
BALANCE SHEET DETAILS Property,
BALANCE SHEET DETAILS Property, Plant and Equipment Balances (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Total | $ 52,213 | $ 49,184 |
Less accumulated depreciation and amortization | (29,590) | (27,121) |
Property, plant and equipment, net | 22,623 | 22,063 |
Leasehold improvement | ||
Property, Plant and Equipment [Line Items] | ||
Total | 5,724 | 5,312 |
Machinery and production equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 7,752 | 7,030 |
Machinery and production equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 3 years | |
Machinery and production equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 10 years | |
Spinal instruments and sets | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 23,212 | 20,340 |
Useful Lives (in years) | 5 years | |
Information systems and hardware | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 7,290 | 7,375 |
Information systems and hardware | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 3 years | |
Information systems and hardware | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 7 years | |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 1,222 | 991 |
Furniture and fixtures | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 3 years | |
Furniture and fixtures | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Lives (in years) | 5 years | |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 7,013 | $ 8,136 |
BALANCE SHEET DETAILS Propert_2
BALANCE SHEET DETAILS Property, Plant and Equipment Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 4,200 | $ 4,100 |
Instrument replacement expense | 1,818 | 1,848 |
Impairment of spinal instruments | 527 | 0 |
Cost of goods sold | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 800 | $ 800 |
BALANCE SHEET DETAILS Component
BALANCE SHEET DETAILS Components of Company's Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 97,899 | $ 97,899 |
Accumulated Amortization | (69,187) | (62,692) |
Net | $ 28,712 | $ 35,207 |
Product technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Life (in years) | 12 years | 12 years |
Cost | $ 40,769 | $ 40,769 |
Accumulated Amortization | (29,153) | (25,827) |
Net | $ 11,616 | $ 14,942 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Life (in years) | 12 years | 12 years |
Cost | $ 56,830 | $ 56,830 |
Accumulated Amortization | (39,734) | (36,565) |
Net | 17,096 | 20,265 |
Trademarks/brand names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 300 | 300 |
Accumulated Amortization | (300) | (300) |
Net | $ 0 | $ 0 |
BALANCE SHEET DETAILS Identifia
BALANCE SHEET DETAILS Identifiable Intangible Assets Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Annual amortization expense expected to approximate in 2017 | $ 5.8 | |
Annual amortization expense expected to approximate in 2018 | 4.9 | |
Annual amortization expense expected to approximate in 2019 | 4.9 | |
Annual amortization expense expected to approximate in 2020 | 4.8 | |
Annual amortization expense expected to approximate in 2021 | 4.2 | |
Intangible asset amortization | 6.5 | $ 6.8 |
Product technology | Cost of goods sold | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible asset amortization | $ 3.3 | $ 3.6 |
BALANCE SHEET DETAILS Investmen
BALANCE SHEET DETAILS Investments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Debt Securities, Amortized Cost Basis | $ 29,803,000 | |
Available-for-sale Debt Securities Gross Unrealized Gain | 0 | |
Available-for-sale Debt Securities, Gross Unrealized Loss | (3,000) | |
Short-term Investments | $ 29,800,000 | $ 0 |
BUSINESS COMBINATIONS Narrative
BUSINESS COMBINATIONS Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 26, 2016 | Jan. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition, Contingent Consideration [Line Items] | ||||
Business combination, consideration transferred | $ 1,000 | |||
Business combination, equity interest issued or issuable (in shares) | 350,000 | |||
Business combination, equity interest issued or issuable, value assigned | $ 2,500 | |||
Business combination, trading period for determination of volume weighted average closing price | 20 days | |||
Volume Weighted Average Closing Price (in dollars per share) | $ 7.58 | |||
Business combination, intangibles assets acquired | $ 9,300 | |||
Acquired intangible assets useful life | 10 years | |||
Intangible asset amortization | $ 6,500 | $ 6,800 | ||
Research and development | $ 12,058 | $ 12,180 | ||
Business acquisition, transaction costs | $ 500 | |||
Minimum | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Volume Weighted Average Closing Price (in dollars per share) | 10 | |||
Maximum | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Volume Weighted Average Closing Price (in dollars per share) | $ 17 | |||
Contingent milestone payments | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Business combination, contingent consideration arrangements, range of outcomes, value, high | 5,000 | |||
Contingent asset purchase payments | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Business combination, contingent consideration arrangements, range of outcomes, value, high | 43,000 | |||
Business combination, contingent consideration arrangements, range of outcomes, value, low | $ 18,000 |
BUSINESS COMBINATIONS Prelimina
BUSINESS COMBINATIONS Preliminary Estimated Fair Values of NLTs Assets Acquired and Liabilities Assumed (Details) $ in Millions | Sep. 26, 2016USD ($) |
Business Acquisition [Line Items] | |
Business combination, consideration transferred | $ 1 |
BUSINESS COMBINATIONS Results o
BUSINESS COMBINATIONS Results of Operations and Financial Position of the NLT Purchased Assets (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating loss | $ (33,139) | $ (32,663) | ||||||||
Net loss | $ (9,526) | $ (9,532) | $ (7,361) | $ (7,105) | $ (7,507) | $ (7,462) | $ (8,043) | $ (9,103) | $ (33,524) | $ (32,115) |
Net Loss per share, basic and diluted (in dollars per share) | $ (0.53) | $ (0.65) | $ (0.50) | $ (0.50) | $ (0.56) | $ (0.58) | $ (0.68) | $ (0.79) | $ (2.18) | $ (2.58) |
Weighted average shares used to compute basic and diluted net loss per share | 15,358 | 12,426 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Short-term Investments | $ 29,800 | $ 0 | |
Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liabilities- current | 129 | 207 | |
Contingent consideration liabilities- non-current | 2,367 | 4,228 | |
Total contingent consideration | 2,496 | 4,435 | |
Recurring | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Short-term Investments | 29,800 | ||
Contingent consideration liabilities- current | 0 | 0 | |
Contingent consideration liabilities- non-current | 0 | 0 | |
Total contingent consideration | 0 | 0 | |
Recurring | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Short-term Investments | 0 | ||
Contingent consideration liabilities- current | 0 | 0 | |
Contingent consideration liabilities- non-current | 0 | 0 | |
Total contingent consideration | 0 | 0 | |
Recurring | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Short-term Investments | 0 | ||
Contingent consideration liabilities- current | 129 | 207 | |
Contingent consideration liabilities- non-current | 2,367 | 4,228 | |
Total contingent consideration | $ 2,496 | $ 4,435 | $ 7,980 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in Contingent Consideration Liabilities (Details) - Recurring - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent Consideration Liability, Fair Value Disclosure | $ 2,496 | $ 4,435 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent Consideration Liability, Fair Value Disclosure | 2,496 | 4,435 | $ 7,980 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Settlements | (137) | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases | (2,570) | ||
Other Income [Member] | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings | 0 | (112) | |
Selling, General and Administrative Expenses [Member] | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings | $ (1,802) | $ (863) |
STOCK-BASED COMPENSATION Common
STOCK-BASED COMPENSATION Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 350,000 | ||
Business combination, equity interest issued or issuable, value assigned | $ 2,500 | ||
Stock Issued During Period, Shares, New Issues | 3,737,500 | ||
Shares Issued, Price Per Share | $ 15.50 | ||
Proceeds from the issuance of common stock- employee stock purchase plan and exercise of options | $ 62,611 | $ 15,557 | |
ATM offering [Member] | |||
Stock Issued During Period, Shares, New Issues | 882,332 | 1,500,000 | |
Shares Issued, Price Per Share | $ 10 | $ 10.78 | |
Proceeds from the issuance of common stock- employee stock purchase plan and exercise of options | $ 8,500 | $ 15,600 | |
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | 300 | $ 600 | |
Private Placement [Member] | |||
Proceeds from the issuance of common stock- employee stock purchase plan and exercise of options | 54,100 | ||
Maximum [Member] | |||
CommonStockSharesToBeIssuedValue | 50,000 | ||
Maximum [Member] | ATM offering [Member] | |||
CommonStockSharesToBeIssuedValue | $ 25,000 |
STOCK-BASED COMPENSATION Stock-
STOCK-BASED COMPENSATION Stock-Based Compensation Expense Breakout (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation expense | $ 5,800 | $ 6,067 |
Total estimated tax benefit related to stock-based compensation expense | 0 | 0 |
Net effect on net income | 5,800 | 6,067 |
Selling, general and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation expense | 5,272 | 5,136 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation expense | 365 | 790 |
Cost of goods sold | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation expense | $ 163 | $ 141 |
STOCK-BASED COMPENSATION Equity
STOCK-BASED COMPENSATION Equity Award Plans (Details) | Dec. 31, 2018shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares available for grant (in shares) | 2,636,659 |
Number of shares authorized (in share) | 6,235,500 |
2016 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares authorized (in share) | 1,000,000 |
2018 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares available for grant (in shares) | 1,933,281 |
Number of shares authorized (in share) | 2,000,000 |
STOCK-BASED COMPENSATION Restri
STOCK-BASED COMPENSATION Restricted Stock Awards and Restricted Stock Units Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Forfeiture rate (as a percent) | 13.00% | 15.00% |
Stock-based compensation | $ 5,800 | $ 6,067 |
Restricted Stock and Restricted Stock Unit | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 10.72 | $ 7.89 |
Fair market value of shares vested | $ 2,200 | |
Stock-based compensation | 4,900 | $ 3,800 |
Unrecognized compensation expense | $ 3,700 | |
Recognition period (in years) | 1 year 2 months |
STOCK-BASED COMPENSATION Rest_2
STOCK-BASED COMPENSATION Restricted Stock Awards and Restricted Stock Units Activity (Details) - Restricted Stock and Restricted Stock Unit - $ / shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Shares (In thousands) | ||
Unvested at beginning of period (in shares) | 725 | |
Granted (in shares) | 665 | |
Cancellations (in shares) | (108) | |
Released/Vested (in shares) | (306) | |
Unvested at end of period (in shares) | 976 | 725 |
Weighted Average Grant Date Fair Value Per Share | ||
Unvested at beginning of period (in dollars per share) | $ 7.82 | |
Granted (in dollars per share) | 10.72 | $ 7.89 |
Cancellations (in dollars per share) | 8.46 | |
Released/Vested (in dollars per share) | 8.41 | |
Unvested at end of period (in dollars per share) | $ 9.56 | $ 7.82 |
STOCK-BASED COMPENSATION Stock
STOCK-BASED COMPENSATION Stock Options Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Forfeiture rate (as a percent) | 13.00% | 15.00% |
Stock-based compensation | $ 5,800 | $ 6,067 |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 3.49 | $ 2.63 |
Fair value of options vested | $ 1,400 | $ 2,200 |
Stock-based compensation | 600 | $ 1,700 |
Unrecognized compensation cost | $ 200 | |
Recognition period (in years) | 7 months | |
Employee | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Requisite service period (in years) | 4 years | |
Director | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Requisite service period (in years) | 1 year |
STOCK-BASED COMPENSATION Stoc_2
STOCK-BASED COMPENSATION Stock Options Weighted-Average Assumptions (Details) - Employee Stock Option - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 3.49 | $ 2.63 |
Expected dividend yield (as a percent) | 0.00% | 0.00% |
Risk-free interest rate (as a percent) | 2.80% | 2.00% |
Expected volatility (as a percent) | 25.60% | 35.70% |
Expected term (in years) | 4 years 11 months | 5 years 1 month |
STOCK-BASED COMPENSATION Stoc_3
STOCK-BASED COMPENSATION Stock Options Activity (Details) - Employee Stock Option - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Shares Outstanding (In thousands) | ||
Outstanding at beginning of period (in shares) | 2,560 | |
Granted (in shares) | 28 | |
Exercised (in shares) | (124) | |
Forfeited (in shares) | (143) | |
Outstanding at end of period (in shares) | 2,321 | 2,560 |
Weighted Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 14.51 | |
Granted (in dollars per share) | 12.47 | |
Exercised (in dollars per share) | 11.38 | |
Forfeited (in dollars per share) | 14.81 | |
Outstanding at end of period (in dollars per share) | $ 14.64 | $ 14.51 |
Vested or expected to vest | ||
Number of Shares Outstanding (In thousands) (in shares) | 2,311 | |
Weighted Average Exercise Price (in dollars per share) | $ 14.65 | |
Weighted Average Remaining Contractual Life (In years) | 5 years 17 days | |
Aggregate Intrinsic Value (In thousands) | $ 8,307 | |
Additional Information | ||
Outstanding, Weighted Average Remaining Contractual Life (In years) | 5 years 23 days | 5 years 11 months 16 days |
Outstanding, Aggregate Intrinsic Value (In thousands) | $ 8,365 | $ 238 |
Exercisable, Number of Shares Outstanding (In thousands) (in shares) | 1,949 | |
Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 14.76 | |
Exercisable, Weighted Average Remaining Contractual Life (In years) | 5 years 15 days | |
Exercisable, Aggregate Intrinsic Value (In thousands) | $ 6,777 |
STOCK-BASED COMPENSATION Employ
STOCK-BASED COMPENSATION Employee Stock Purchase Plan Narrative (Details) - USD ($) | Nov. 02, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized (in share) | 6,235,500 | ||
Compensation expense | $ 5,800,000 | $ 6,067,000 | |
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | $ 600,000 | $ 300,000 | |
Employee Stock Purchase Plan | Employee Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum contributions (as a percent) | 15.00% | ||
Maximum shares investment allowed | 2,500 | ||
Maximum annual contributions | $ 25,000 | ||
Purchase price (as a percent) | 85.00% | ||
Number of shares authorized (in share) | 400,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 400,000 | ||
Number of shares purchased | 160,059 | 150,020 |
STOCK-BASED COMPENSATION Empl_2
STOCK-BASED COMPENSATION Employee Stock Purchase Plan Weighted-Average Assumptions (Details) - Employee Stock Purchase Plan | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend yield (as a percent) | 0.00% | 0.00% |
Risk-free interest rate (as a percent) | 2.00% | 1.00% |
Expected volatility (as a percent) | 29.40% | 28.10% |
Expected term (in years) | 1 year 3 months | 1 year 2 months |
LEASE Operating lease annual pa
LEASE Operating lease annual payment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Leased Assets [Line Items] | ||
Operating Leases, Rent Expense | $ 2,100 | $ 2,200 |
2,018 | 2,150 | |
2,019 | 2,181 | |
2,020 | 2,219 | |
2,021 | 2,239 | |
2,022 | 1,564 | |
Thereafter | 4,664 | |
Total minimum lease payments | $ 15,017 |
INCOME TAXES Narrative (Details
INCOME TAXES Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Operating Loss Carryforwards [Line Items] | ||
Deferred Tax Assets, Prior to Tax Cuts and Jobs Act, Net | $ 74.1 | |
Deferred Tax Assets, Net | 48 | |
Tax benefit | $ 0.1 | 0.1 |
Unrecognized tax benefits that would impact effective tax rate | 0.3 | |
Amounts expected to be reduced | 0.1 | |
Internal Revenue Service (IRS) And State and Local Jurisdiction | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 122.4 | 88.3 |
Foreign Tax Authority | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 1.9 | $ 2.7 |
INCOME TAXES Loss before income
INCOME TAXES Loss before income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
United States operations | $ (33,843) | $ (34,886) |
Foreign operations | 448 | 2,653 |
Loss before income taxes | $ (33,395) | $ (32,233) |
INCOME TAXES Reconciliation of
INCOME TAXES Reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory rate | 21.00% | 35.00% |
Increase (decrease) in income taxes resulting from: | ||
State income taxes, net of federal tax benefit | 3.20% | 4.10% |
Foreign operations | (0.50%) | (0.20%) |
Changes in valuation allowances | (25.50%) | 43.20% |
Uncertain tax positions | 0.30% | 0.30% |
Research and development credit | 0.20% | 0.20% |
Other | 0.90% | 0.80% |
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent | (83.00%) | |
Effective tax rate | (0.40%) | 0.40% |
INCOME TAXES Provision for inco
INCOME TAXES Provision for income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | ||
Federal | $ (93) | $ (102) |
State | 52 | 20 |
Foreign | 44 | 42 |
Total current | 3 | (40) |
Deferred: | ||
Federal | 0 | 0 |
State | 0 | 0 |
Foreign | 126 | (78) |
Total deferred | 126 | (78) |
Provision (benefit) for income taxes | $ 129 | $ (118) |
INCOME TAXES Deferred tax asset
INCOME TAXES Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Doubtful accounts | $ 212 | $ 116 |
Inventory related items | 9,677 | 8,976 |
Tax credits | 229 | 158 |
Accrued vacation | 340 | 348 |
Accrued bonus | 1,192 | 815 |
Stock compensation | 3,790 | 3,129 |
Net operating loss carryforwards | 30,210 | 22,175 |
Intangible & fixed assets | 10,611 | 12,054 |
Other | 942 | 686 |
Total deferred tax assets | 57,203 | 48,457 |
Less valuation allowance | (55,954) | (47,433) |
Deferred tax assets after valuation allowance | 1,249 | 1,024 |
Deferred tax liabilities: | ||
Other | 817 | 469 |
Total deferred tax liabilities | 817 | 469 |
Deferred Tax Assets, Net of Valuation Allowance | $ 432 | $ 555 |
INCOME TAXES Uncertain tax bene
INCOME TAXES Uncertain tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance, beginning of year | $ 277 | $ 305 |
Prior years’ tax positions | 1 | 5 |
Additions to tax positions in prior years due to spin-off | 0 | |
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions | 71 | 74 |
Settlements | 0 | |
Statute of limitations lapses | (94) | (107) |
Balance, end of year | $ 255 | $ 277 |
SEGMENT AND GEOGRAPHIC INFORM_3
SEGMENT AND GEOGRAPHIC INFORMATION Narrative (Details) | 12 Months Ended |
Dec. 31, 2018product | |
Segment Reporting [Abstract] | |
Number of product categories | 2 |
SEGMENT AND GEOGRAPHIC INFORM_4
SEGMENT AND GEOGRAPHIC INFORMATION Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 143,443 | $ 131,814 |
United States | ||
Segment Reporting Information [Line Items] | ||
Revenues | 127,883 | 118,405 |
International | ||
Segment Reporting Information [Line Items] | ||
Revenues | 15,560 | 13,409 |
Orthobiologics | ||
Segment Reporting Information [Line Items] | ||
Revenues | 75,339 | 69,128 |
Spinal implants | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 68,104 | $ 62,686 |
EMPLOYEE BENEFIT PLAN Narrative
EMPLOYEE BENEFIT PLAN Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Retirement Benefits [Abstract] | ||
Contributions | $ 0.7 | $ 0.6 |
SELECTED QUARTERLY INFORMATIO_3
SELECTED QUARTERLY INFORMATION - UNAUDITED Financials (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||
Total revenue, net | $ 38,025 | $ 35,834 | $ 36,409 | $ 33,175 | $ 33,982 | $ 31,742 | $ 34,196 | $ 31,894 | $ 143,443 | $ 131,814 |
Gross profit | 23,042 | 21,587 | 21,849 | 20,996 | 21,498 | 19,566 | 20,202 | 18,722 | 87,474 | 79,988 |
Net loss | $ (9,526) | $ (9,532) | $ (7,361) | $ (7,105) | $ (7,507) | $ (7,462) | $ (8,043) | $ (9,103) | $ (33,524) | $ (32,115) |
Net Loss per share, basic and diluted (in dollars per share) | $ (0.53) | $ (0.65) | $ (0.50) | $ (0.50) | $ (0.56) | $ (0.58) | $ (0.68) | $ (0.79) | $ (2.18) | $ (2.58) |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) | Dec. 31, 2018shares |
Subsequent Event [Line Items] | |
Number of shares authorized (in share) | 6,235,500 |
2016 Plan [Member] | |
Subsequent Event [Line Items] | |
Number of shares authorized (in share) | 1,000,000 |
SCHEDULE II - VALUATION AND Q_2
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Inventory Valuation Reserves | $ 29,309 | $ 27,071 | $ 24,919 |
Allowance for doubtful accounts and sales returns and other credits | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 466 | 483 | |
Charged to Costs and Expenses | 21 | 47 | |
Charged to Other Accounts | 0 | 0 | |
Additions/Deductions | 363 | (64) | |
Balance at End of Period | 850 | 466 | |
Inventory Valuation Reserve [Member] | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Charged to Costs and Expenses | 4,686 | 4,597 | |
Valuation Allowances and Reserves, Period Increase (Decrease) | (2,448) | (2,445) | |
Deferred tax asset valuation allowance | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 47,433 | 61,118 | |
Charged to Costs and Expenses | 8,521 | (13,685) | |
Charged to Other Accounts | 0 | 0 | |
Additions/Deductions | 0 | 0 | |
Balance at End of Period | $ 55,954 | $ 47,433 |