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Segment Information
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Segment Information Segment Information
The Company conducts its continuing operations through the Prevention and Recovery and Reconstructive operating segments, which also represent the Company’s reportable segments.

▪Prevention and Recovery - a leader in orthopedic solutions and recovery sciences, providing devices, software and services across the patient care continuum from injury prevention to rehabilitation after surgery, injury, or from degenerative disease.

•Reconstructive - an innovation-driven leader offering a comprehensive suite of reconstructive joint products for the hip, knee, shoulder, elbow, foot, ankle, and finger.

In conjunction with revising its reporting structure, the Company allocated $1.1 billion and $0.8 billion of goodwill to the Prevention and Recovery and Reconstructive segments, respectively. The total segment assets as of the beginning of the second quarter were $2.8 billion and $1.8 billion for the Prevention and Recovery and Reconstructive segments, respectively. There have not been any material changes to the segment assets since the start of the second quarter.
The Company’s management evaluates the operating results of each of its reportable segments based upon Net sales and Adjusted EBITDA, which excludes the effect of restructuring and other charges, MDR and related costs, strategic transaction costs, stock-based compensation, depreciation and other amortization charges, amortization of acquired intangibles, insurance settlement gains, and inventory step-up from the operating income of the Company’s operating segments. The amounts presented below have been recast for the change in operating segments for all periods presented.

The Company’s segment results were as follows:
Three Months EndedNine Months Ended
September 30, 2022October 1, 2021September 30, 2022October 1, 2021
(In thousands)
Net sales:
Prevention and Recovery$256,502 $256,229 $765,121 $757,822 
Reconstructive127,312 103,694 389,267 269,308 
$383,814 $359,923 $1,154,388 $1,027,130 
Segment Adjusted EBITDA(1):
Prevention and Recovery$39,532 $40,432 $101,050 $94,982 
Reconstructive17,677 16,040 60,076 49,389 
$57,209 $56,472 $161,126 $144,371 
(1) The following is a reconciliation of Operating loss to Adjusted EBITDA:
Three Months EndedNine Months Ended
September 30, 2022October 1, 2021September 30, 2022October 1, 2021
(In thousands)
Operating loss (GAAP)$(17,919)$(16,107)$(42,993)$(44,589)
Restructuring and other charges(1)
2,989 2,230 8,497 5,193 
MDR and other costs(2)
3,600 1,902 10,648 5,574 
Strategic transaction costs8,146 11,362 32,549 15,780 
Stock-based compensation7,205 6,253 21,734 19,000 
Depreciation and other amortization18,159 18,397 56,109 51,639 
Amortization of acquired intangibles31,993 31,025 94,603 88,067 
Insurance settlement (gain) loss(3)
975 — (32,059)— 
Inventory step-up2,061 1,410 12,038 3,707 
Adjusted EBITDA (non-GAAP)$57,209 $56,472 $161,126 $144,371 
(1) Restructuring and other charges includes $0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022.
(2) Primarily related to costs specific to compliance with medical device reporting regulations and other requirements of the European Union Medical Devices Regulation. These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations.
(3) Insurance settlement (gain) loss is related to the 2019 acquisition of DJO.