10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to  

Commission file number 001-38832

RTI Surgical Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	83-2540607
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
520 Lake Cook Road, Suite 315, Deerfield, Illinois	60015
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (877) 343-6832

RTI Surgical, Inc., 11621 Research Circle, Alachua, Florida, 32615

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of exchange on which registered
common stock, $0.001 par value	RTIX	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit such files.) Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes  ☐    No  ☒

Shares of common stock, $0.001 par value, outstanding on July 26, 2019:  73,897,965

RTI SURGICAL HOLDINGS, INC.

FORM 10-Q For the Quarter Ended June 30, 2019

Index

		Page #
Part I    Financial Information
Item 1	Unaudited Condensed Consolidated Financial Statements	3 - 24
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25 - 30
Item 3	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4	Controls and Procedures	31
Part II    Other Information
Item 1	Legal Proceedings	32
Item 1A	Risk Factors	32
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3	Defaults Upon Senior Securities	32
Item 4	Mine Safety Disclosures	32
Item 5	Other Information	32
Item 6	Exhibits	33
Signatures		34

Part IFinancial Information

Item 1.Unaudited Condensed Consolidated Financial Statements

RTI SURGICAL HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except share data)

	June 30,			December 31,
	2019			2018
Assets
Current Assets:
Cash and cash equivalents	$	4,518		$	10,949
Accounts receivable - less allowances of $3,103 at June 30, 2019
and $2,380 at December 31, 2018		56,163			48,351
Inventories - net		127,906			107,471
Prepaid and other current assets		8,733			8,791
Total current assets		197,320			175,562
Non-current inventories - net		20,445			-
Property, plant and equipment - net		79,691			77,954
Deferred tax assets - net		19,715			17,510
Goodwill		271,429			59,798
Other intangible assets - net		25,269			26,359
Other assets - net		7,542			4,003
Total assets	$	621,411		$	361,186
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable	$	20,766		$	26,309
Accrued expenses		24,668			24,683
Current portion of deferred revenue		4,744			4,908
Total current liabilities		50,178			55,900
Long-term obligations		165,081			49,073
Acquisition contingencies		98,372			4,986
Other long-term liabilities		2,562			633
Deferred revenue		325			744
Total liabilities		316,518			111,336
Commitments and contingencies (Note 22)
Preferred stock Series A, $.001 par value: 5,000,000 shares authorized; 50,000 shares    issued and outstanding		66,318			66,226
Stockholders' equity:
Common stock, $.001 par value: 150,000,000 shares authorized; 75,159,262 and    63,469,185 shares issued and outstanding, respectively		75			64
Additional paid-in capital		496,596			433,143
Accumulated other comprehensive loss		(7,268	)		(7,270	)
Accumulated deficit		(245,787	)		(237,444	)
Less treasury stock, 1,257,949 and 1,221,180 shares, respectively, at cost		(5,041	)		(4,869	)
Total stockholders' equity		238,575			183,624
Total liabilities and stockholders' equity	$	621,411		$	361,186

See notes to unaudited condensed consolidated financial statement.

3

RTI SURGICAL HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Gain (Loss)

(Unaudited, in thousands, except share and per share data)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Revenues	$	82,307		$	70,685		$	152,048		$	140,575
Costs of processing and distribution		37,562			40,645			69,299			76,853
Gross profit		44,745			30,040			82,749			63,722
Expenses:
Marketing, general and administrative		38,993			29,266			70,876			57,655
Research and development		3,868			3,270			8,204			6,691
Severance and restructuring costs		—			—			—			884
Gain on acquisition contingency		(1,590	)		—			(1,590	)		—
Asset impairment and abandonments		—			4,515			15			4,644
Acquisition and integration expenses		1,953			—			10,910			800
Total operating expenses		43,224			37,051			88,415			70,674
Operating income (loss)		1,521			(7,011	)		(5,666	)		(6,952	)
Other (expense) income:
Interest expense		(3,635	)		(777	)		(5,239	)		(1,612	)
Interest income		26			6			157			17
Loss on extinguishment of debt		—			(309	)		—			(309	)
Foreign exchange loss		(19	)		(71	)		(50	)		(22	)
Total other expense - net		(3,628	)		(1,151	)		(5,132	)		(1,926	)
Income (loss) before income tax benefit		(2,107	)		(8,162	)		(10,798	)		(8,878	)
Income tax benefit		2,851			2,702			2,455			2,453
Net income (loss)		744			(5,460	)		(8,343	)		(6,425	)
Convertible preferred dividend		—			(981	)		—			(1,947	)
Net income (loss) applicable to common shares		744			(6,441	)		(8,343	)		(8,372	)
Other comprehensive gain (loss):
Unrealized foreign currency translation gain (loss)		395			(914	)		2			(521	)
Comprehensive gain (loss)	$	1,139		$	(7,355	)	$	(8,341	)	$	(8,893	)
Net income (loss) per common share - basic	$	0.01		$	(0.10	)	$	(0.12	)	$	(0.13	)
Net income (loss) per common share - diluted	$	0.01		$	(0.10	)	$	(0.12	)	$	(0.13	)
Weighted average shares outstanding - basic		75,144,488			63,405,708			70,409,839			63,400,737
Weighted average shares outstanding - diluted		91,120,956			63,405,708			70,409,839			63,400,737

See notes to unaudited condensed consolidated financial statements.

4

RTI SURGICAL HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders' Equity

(Unaudited, in thousands)

	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Treasury Stock			Total
Balance, January 1, 2019	$	64	$	433,143		$	(7,270	)	$	(237,444	)	$	(4,869	)	$	183,624
Net loss		-		-			-			(9,087	)		-			(9,087	)
Foreign currency translation adjustment		-		-			(393	)		-			-			(393	)
Exercise of common stock options		-		284			-			-			-			284
Equity instruments issued in connection
with Paradigm Spine acquistion - net of fees		11		60,719			-			-			-			60,730
Stock-based compensation		-		1,163			-			-			-			1,163
Purchase of treasury stock		-		-			-			-			(130	)		(130	)
Amortization of preferred stock series A issuance costs		-		(46	)		-			-			-			(46	)
Balance, March 31, 2019		75		495,263			(7,663	)		(246,531	)		(4,999	)		236,145
Net income		—		—			—			744			—			744
Foreign currency translation adjustment		—		—			395			—			—			395
Exercise of common stock options		—		111			—			—			—			111
Stock-based compensation		—		1,267			—			—			—			1,267
Purchase of treasury stock		—		—			—			—			(42	)		(42	)
Amortization of preferred stock series A issuance costs		—		(45	)		—			—			—			(45	)
Balance, June 30, 2019	$	75	$	496,596		$	(7,268	)	$	(245,787	)	$	(5,041	)	$	238,575

	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Treasury Stock			Total
Balance, January 1, 2018	$	63	$	429,459		$	(6,329	)	$	(237,066	)	$	(4,390	)	$	181,737
Accumulated effect of adoption of
the revenue recognition standard		-		-			-			872			-			872
Net loss		-		-			-			(965	)		-			(965	)
Foreign currency translation adjustment		-		-			393			-			-			393
Exercise of common stock options		-		287			-			-			-			287
Stock-based compensation		-		1,280			-			-			-			1,280
Purchase of treasury stock		-		-			-			-			(363	)		(363	)
Amortization of preferred stock series A issuance costs		-		(46	)		-			-			-			(46	)
Preferred stock Series A dividend		-		(966	)		-			-			-			(966	)
Balance, March 31, 2018		63		430,014			(5,936	)		(237,159	)		(4,753	)		182,229
Net loss		—		—			—			(5,460	)		—			(5,460	)
Foreign currency translation adjustment		—		—			(914	)		—			—			(914	)
Exercise of common stock options		—		33			—			—			—			33
Stock-based compensation		—		1,290			—			—			—			1,290
Purchase of treasury stock		—		—			—			—			(77	)		(77	)
Amortization of preferred stock series A issuance costs		—		(45	)		—			—			—			(45	)
Preferred stock Series A dividend		—		(981	)		—			—			—			(981	)
Balance, June 30, 2018	$	63	$	430,311		$	(6,850	)	$	(242,619	)	$	(4,830	)	$	176,075

See notes to unaudited condensed consolidated financial statements.

5

RTI SURGICAL HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

	For the Six Months Ended
	June 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(8,343	)	$	(6,425	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization expense		7,491			7,068
Provision for bad debts and product returns		899			494
Provision for inventory write-downs		3,274			10,865
Amortization of deferred revenue		(2,585	)		(2,435	)
Deferred income tax benefit		(2,703	)		(2,671	)
Stock-based compensation		2,430			2,570
Asset impairment and abandonments		—			4,644
Gain on acquisition contingency		(1,590	)		—
Paid in kind interest expense		1,473			—
Other		877			610
Change in assets and liabilities:
Accounts receivable		(3,509	)		(7,640	)
Inventories		(1,078	)		(411	)
Accounts payable		(9,675	)		(3,803	)
Accrued expenses		(2,217	)		(2,592	)
Deferred revenue		2,000			2,000
Other operating assets and liabilities		145			7,104
Net cash (used in) provided by operating activities		(13,111	)		9,378
Cash flows from investing activities:
Purchases of property, plant and equipment		(6,912	)		(3,856	)
Patent and acquired intangible asset costs		(1,126	)		(728	)
Acquisition of Zyga Technology		—			(21,000	)
Acquisition of Paradigm Spine		(99,921	)		—
Net cash used in investing activities		(107,959	)		(25,584	)
Cash flows from financing activities:
Proceeds from exercise of common stock options		395			1,429
Proceeds from long-term obligations		115,000			74,425
Payments of debt issuance costs		(729	)		—
Payments on long-term obligations		—			(66,750	)
Other financing activities		—			(1,026	)
Net cash provided by financing activities		114,666			8,078
Effect of exchange rate changes on cash and cash equivalents		(27	)		(7	)
Net decrease in cash and cash equivalents		(6,431	)		(8,135	)
Cash and cash equivalents, beginning of period		10,949			22,381
Cash and cash equivalents, end of period	$	4,518		$	14,246
Supplemental cash flow disclosure:
Cash paid for interest	$	2,732		$	1,974
Income tax refunds, net of payments		1,982			6,698
Non-cash acquisition of property, plant and equipment		456			676
Increase in accrual for dividend payable		—			1,947
Non-cash acquisition of Paradigm		60,730			—
Non-cash common stock issuance		60,730			—

See notes to unaudited condensed consolidated financial statements.

6

RTI SURGICAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

1. Operations and Organization

RTI Surgical Holdings, Inc. and Subsidiaries (defined as the “Company” for matters occurring after March 8, 2019)is a global surgical implant company that designs, develops, manufactures and distributes biologic, metal and synthetic implants. The Company’s implants are used in orthopedic, spine, sports medicine, plastic surgery, trauma and other surgical procedures to repair and promote the natural healing of human bone and other human tissues and improve surgical outcomes. The Company manufactures metal and synthetic implants and processes donated human musculoskeletal and other tissue and bovine and porcine animal tissue in producing allograft and xenograft implants using its proprietary BIOCLEANSE®, TUTOPLAST® and CANCELLE® SP sterilization processes. The Company processes tissue at its facilities in Alachua, Florida and Neunkirchen, Germany and manufactures metal and synthetic implants in Marquette, Michigan and Greenville, North Carolina, respectively, and has a distribution and research center in Wurmlingen, Germany. The Company is accredited in the U.S. by the American Association of Tissue Banks and the Company is a member of AdvaMed. The Company’s implants are distributed directly to hospitals and free-standing surgery centers throughout the U.S. and in over 50 countries worldwide with the support of both its and third-party representatives as well as through larger purchasing companies.

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, which the Company considers necessary for a fair presentation of the results of operations for the periods shown.  The condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations, comprehensive loss and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, RTI Surgical, Inc. (defined as “Legacy RTI” for matters occurring after March 8, 2019, and as the “Company” for matters occurring before March 8, 2019), Paradigm Spine, LLC (“Paradigm”), Pioneer Surgical Technology, Inc. (“Pioneer Surgical”), Tutogen Medical, Inc. (“TMI”), and Zyga Technology, Inc. (“Zyga”). The condensed consolidated financial statements also include the accounts of RTI Donor Services, Inc. (“RTIDS”), which is a controlled entity.  Prior to the completion of the acquisition of Paradigm, the financial statements were that of RTI Surgical Inc. and subsidiaries. Subsequently, RTI Surgical Holdings, Inc. and Subsidiaries is the successor reporting company. See Note 6 for further discussion.

3. Recently Issued and Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASU”) 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases in “Leases (Topic 840).” ASU 2016-02 establishes a right-of-use (“ROU”) model that requires operating leases be recorded on the balance sheet through recognition of a liability for the discounted present value of future lease payments and a corresponding ROU asset. The ROU asset recorded at commencement of the lease represents the right to use the underlying asset over the lease term in exchange for the lease payments. Leases with an initial term of 12 months or less and do not have an option to purchase the underlying asset that is deemed reasonably certain to exercise are not recorded on the balance sheet; rather, rent expense for these leases is recognized on a straight-line basis over the lease term. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

Effective January 1, 2019, the Company adopted the new lease accounting standard using the optional transition method which allowed us to continue to apply the guidance under the lease standard in effect at the time in the comparative periods presented.  In addition, the Company elected the package of practical expedients, which allowed us to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs.  The Company has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. The Company has also elected the practical expedient allowing us to not separate the lease and non-lease components for all classes of underlying assets. Adoption of this standard resulted in the recording of operating lease ROU assets and corresponding operating lease liabilities of $3,164 and $3,155, respectively, as of January 1, 2019 with no impact on accumulated deficit.  Financial position for reporting periods beginning on or after January 1, 2019, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance. Note disclosures required in Topic 842 are reported in Note 4, Leases.

7

4. Leases

The Company’s leases are classified as operating leases and includes office space, automobiles, and copiers.  The Company does not have any finance leases and the Company’s operating leases do not have any residual value guarantees, restrictions or covenants. The Company does not have any leases that have not yet commenced as of June 30, 2019. The majority of our leases have remaining lease terms of 1 to 14 years, some of which include options to extend or terminate the leases.  The option to extend is only included in the lease term if the Company is reasonably certain of exercising that option. Operating lease ROU assets are presented within other assets-net on the Condensed Consolidated Balance Sheet.  The current portion of operating lease liabilities are presented within accrued expenses, and the non-current portion of operating lease liabilities are presented within other long-term liabilities on the Condensed Consolidated Balance Sheet.

A subset of the Company’s automobile and copier leases contain variable payments.  The variable lease payments for such automobile leases are based on actual mileage incurred at the standard contractual rate. The variable lease payments for such copier leases are based on actual copies incurred at the standard contractual rate.

The components of operating lease expense were as follows:

	For the Three Months Ended		For the Six Months Ended
	June 30, 2019		June 30, 2019
Operating lease cost	$	440	$	784
Short-term operating lease cost		—		36
Total operating lease cost	$	440	$	820

The Company does not have any variable lease costs.

Supplemental cash flow information related to operating leases was as follows:

	For the Three Months Ended		For the Six Months Ended
	June 30, 2019		June 30, 2019
Cash paid for amounts included in the measurement    of lease liabilities	$	397	$	691
ROU assets obtained in exchange for lease obligations		—		34

Supplemental balance sheet information related to operating leases was as follows:

	Balance Sheet Classification	June 30, 2019
Assets:
Right-of-use assets	Other assets - net	$	3,546
Liabilities:
Current	Accrued expenses	$	1,505
Noncurrent	Other long-term liabilities		2,117
Total operating lease liabilities		$	3,622

As of June 30, 2019, the weighted-average remaining lease term was 4.6 years. The Company’s lease agreements do not provide a readily determinable implicit rate nor is it available to the Company from its lessors. Instead, the Company estimates its incremental borrowing rate based on information available at lease commencement in order to discount lease payments to present value. The weighted-average discount rate of the Company’s operating leases was 4.7%, as of June 30, 2019.

8

As of June 30, 2019, maturities of operating lease liabilities were as follows:

Maturity of Operating Lease Liabilities	June 30, 2019
2019 (remaining)	$	879
2020		1,368
2021		565
2022		224
2023		160
2024 and beyond		875
Total future minimum lease payments		4,071
Less imputed interest		(449	)
Total	$	3,622

As previously disclosed in our 2018 Annual Report on Form 10-K, which followed the lease accounting prior to adoption of ASC 842, future commitments relating to operating leases for the five years and period thereafter as of December 31, 2018 were as follows:

Maturity of Operating Lease Liabilities	December 31, 2018
2019	$	1,374
2020		806
2021		276
2022		162
2023		166
2024 and beyond		882
Total future minimum lease payments	$	3,666

5.Revenue from Contracts with Customers

The Company operates in one reportable segment composed of four lines of business. The reporting of the Company’s lines of business are composed primarily of four franchises: spine; sports; original equipment manufacturer (“OEM”) and international. The following table presents revenues from these four categories for the three and six months ended June 30, 2019 and 2018:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenues:
Spine	$	26,671	$	18,934	$	46,676	$	38,197
Sports		14,024		14,190		27,803		27,625
OEM		32,483		31,170		61,474		61,290
International		9,129		6,391		16,095		13,463
Total revenues from contracts with customers	$	82,307	$	70,685	$	152,048	$	140,575

The following table presents revenues recognized at a point in time and over time for the three and six months ended June 30, 2019 and 2018:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenue recognized at a point in time	$	66,469	$	61,534	$	119,070	$	121,697
Revenue recognized over time		15,838		9,151		32,978		18,878
Total revenues from contracts with customers	$	82,307	$	70,685	$	152,048	$	140,575

The Company’s performance obligations consist mainly of transferring control of implants identified in the contracts. Some of the Company’s contracts offer assurance-type warranties in connection with the sale of a product to a customer. Assurance-type warranties provide a customer with assurance that the related product will function as the parties intended because it complies with

9

agreed-upon specifications. Such warranties do not represent a separate performance obligation and are not material to the condensed consolidated financial statements.

The opening and closing balances of the Company’s accounts receivable, contract asset and current and long-term contract liability for the six months ended June 30, 2019 and 2018 are as follows:

						Contract
			Contract			Liability
	Accounts		Liability			(Long-
	Receivable		(Current)			Term)
Opening 1/1/2019	$	48,351	$	5,425		$	744
Closing 6/30/2019		56,163		5,292			325
Increase/(decrease)		7,812		(133	)		(419	)
						Contract
			Contract			Liability
	Accounts		Liability			(Long-
	Receivable		(Current)			Term)
Opening 1/1/2018	$	39,095	$	5,978		$	3,741
Closing 6/30/2018		45,576		6,210			3,155
Increase/(decrease)		6,481		232			(586	)

Contract liabilities consist primarily of the return allowance described above, and of deferred revenue arising from upfront and annual exclusivity fees. The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the Company’s performance of the Company’s contractual obligations over time. The Company recognizes sales commissions as incurred because the amortization period is less than one year. The Company does not incur other incremental costs relating to obtaining a contract with a customer, and therefore, does not have contract assets, or impairment losses associated therewith. Revenue recognized for the six months ended June 30, 2019 and 2018, from amounts included in contract liabilities at the beginning of the period were $2,584 and $2,434, respectively.

6. Acquisition of Paradigm Spine, LLC

On March 8, 2019, pursuant to the Master Transaction Agreement (the “Master Transaction Agreement”), dated as of November 1, 2018, by and among Legacy RTI, PS Spine Holdco, LLC, a Delaware limited liability company (“PS Spine”), the Company, and Bears Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of the Company (“Merger Sub”), the Company acquired all of the outstanding equity interests of Paradigm, through a transaction in which: (i) PS Spine contributed all of the issued and outstanding equity interests in Paradigm to the Company (the “Contribution”); (ii) Merger Sub merged with and into Legacy RTI (the “Merger”), with Legacy RTI surviving as a wholly owned direct subsidiary of the Company; and (iii) the Company was renamed “RTI Surgical Holdings, Inc.” (collectively, the “Transaction”). Legacy RTI retained its existing name “RTI Surgical, Inc.”

Pursuant to the Master Transaction Agreement: (i) each share of common stock, par value $0.001 per share, of Legacy RTI issued and outstanding immediately prior to the Transaction (other than shares held by Legacy RTI as treasury shares or by the Company or Merger Sub immediately prior to the Transaction, which were automatically cancelled and ceased to exist) was converted automatically into one fully paid and non-assessable share of Company common stock , par value $0.001 per share; (ii) each share of Series A convertible preferred stock, par value $0.001 per share, of Legacy RTI issued and outstanding immediately prior to the Transaction (other than shares held by Legacy RTI as treasury shares or by the Company or Merger Sub immediately prior to the Transaction, which were automatically cancelled and ceased to exist) was converted automatically into one fully paid and non-assessable share of Series A convertible preferred stock, par value $0.001 per share, of the Company; and (iii) each stock option and restricted stock award granted by Legacy RTI was converted into a stock option or restricted stock award, as applicable, of the Company with respect to an equivalent number of shares of the Company common stock on the same terms and conditions as were applicable prior to the closing.

The consideration for the Contribution was $100,000 (the “Cash Consideration Amount”) in cash, subject to adjustment as described below, and 10,729,614 shares of Company common stock (the “Stock Consideration Amount”). The Stock Consideration Amount was determined by dividing $50,000 by the volume weighted average closing price of Legacy RTI’s common stock for the five business days prior to November 1, 2018 (the “Legacy RTI Price”). The Cash Consideration Amount was adjusted by a: (i) positive dollar for dollar adjustment based on the amount of Paradigm’s cash and cash equivalents at closing; (ii) negative dollar for dollar adjustment based on the amount of outstanding indebtedness and unpaid transaction expenses of Paradigm at closing; and (iii) negative dollar for dollar adjustment to the extent that Paradigm’s working capital (excluding indebtedness and transaction expenses) at closing did not exceed the working capital target of $7,000.

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In addition to the Cash Consideration Amount and the Stock Consideration Amount, the Company may be required to make further cash payments or issue additional shares of Company common stock to PS Spine in an amount up to $50,000 of shares of Company common stock to be valued based upon the Legacy RTI Price and an additional $100,000 of cash and/or Company common stock to be valued at the time of issuance, in each case, if certain revenue targets are achieved between closing, March 8, 2019, and December 31, 2022.  The Company estimates a contingent liability related to the revenue based earnout of $94,976 utilizing a Monte-Carlo simulation model. A Monte-Carlo simulation is an analytical method used to estimate fair value by performing a large number of simulations or trial runs and thereby determining a value based on the possible outcomes. Accounted for as a liability to be revalued at each reporting period, the preliminary fair value of the contingent liability was measured using Level 3 inputs, which includes weighted average cost of capital and projected revenues and costs. Acquisition and integration related costs were approximately $15,053, of which approximately $4,143 was incurred during 2018, $10,910(which includes business development expenses of $462 and severance expense of $896)was incurred for the six months ended June 30, 2019and is reflected separately in the accompanying condensed consolidated statements of comprehensive income (loss).

The Company has accounted for the acquisition of Paradigm under Accounting Standards Codification (“ASC”) 805, Business Combinations.  Paradigm’s results of operations are included in the condensed consolidated financial statements beginning after March 8, 2019, the acquisition date.

The purchase price was financed as follows:

	(In thousands)
Cash proceeds from second lien credit agreement	$	100,000
Fair market value of securities issued		60,730
Fair market value of contingent earnout		94,976
Total purchase price	$	255,706

The preliminary valuation of the acquired assets and liabilities is not yet complete, and as such, the Company has not yet finalized its allocation of the purchase price for the acquisition. The table below represents the preliminary allocation of the total consideration to Paradigm’s tangible assets and liabilities based on management’s preliminary estimate of their respective fair values as of March 8, 2019.

During the three months ended June 30, 2019, the Company made the following changes to the fair values of acquired assets and liabilities as follows:

	Balance at
	June 30, 2019			March 31, 2019			Change
	(In thousands)
Cash	$	79		$	79		$	-
Accounts receivable		5,220			5,220			-
Inventories		43,084			5,898			37,186
Other current assets		1,693			1,752			(59	)
Property, plant and equipment		379			379			-
Current liabilities		(6,380	)		(6,169	)		(211	)
Net tangible assets acquired		44,075			7,159			36,916
Goodwill		211,631			248,547			(36,916	)
Total net assets acquired	$	255,706		$	255,706		$	-

As of March 8, 2019, the inventory fair value was composed of current inventory of $19,703 and non-current inventory of $23,381. As a result of the inventory purchase price adjustment to fair value Paradigm inventory, the Company recorded $2,936 to costs of processing and distribution for the six months ended June 30, 2019, which includes $477 for the inventory sold over the three months ended March 31, 2019.

Total net assets acquired as of March 8, 2019, are all part of the Company’s only operating segment.  Fair values are based on management’s estimates and assumptions including variations of the income approach, the cost approach and the market approach.

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The Company believes that the acquisition of Paradigm, a spine focused business, offers the potential for substantial strategic and financial benefits. The transaction further advances the Company’s strategic transformation focused on reducing complexity, driving operational excellence and accelerating growth.  The Company believes the acquisition will enhance stockholder value through, among other things, enabling the Company to capitalize on the following strategic advantages and opportunities:

• Paradigm will strengthen the Company’s spine portfolio with the addition of the coflex® Interlaminar Stabilization® device. Coflex is a differentiated and minimally invasive motion preserving stabilization implant that is FDA PMA-approved for the treatment of moderate to severe lumbar spinal stenosis (“LSS”) in conjunction with decompression.

• Coflex allows the Company to provide surgeons who treat patients with moderate to severe LSS with a PMA-approved device supported by more than 12 years of clinical data and with expanding coverage from payors.

These potential benefits resulted in the Company paying a premium for Paradigm resulting in the preliminary recognition of $211,631 of goodwill assigned to the Company’s only operating segment and reporting unit.

The amount of Paradigm’s revenues and net income since the March 8, 2019, acquisition date, included in the Company’s Condensed Consolidated Statement of Comprehensive Loss for the six months ended June 30, 2019, excluding acquisition and integration related costs of approximately $10,910, are $12,096 and $490, respectively.

The following unaudited pro forma information shows the results of the Company’s operations as though the acquisition had occurred as of the beginning of the prior comparable period, January 1, 2018, (in thousands, except per share data):

	For the Six Months Ended
	June 30,
	2019			2018
Revenues	$	19,074		$	21,252
Net loss applicable to common shares		(10,406	)		(19,169	)
Net loss applicable to common shares excluding acquistion and integration costs		(1,219	)		(19,169	)

The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisition taken place as of the beginning of the periods presented, or the results that may occur in the future. The pro forma net loss was adjusted to exclude $10,910 of acquisition and integration related costs net of tax of $1,723 incurred during the six months ended June 30, 2019.

7. Acquisition of Zyga Technology, Inc.

On January 4, 2018, the Company acquired Zyga Technology, Inc. (“Zyga”), a leading spine-focused medical device company that develops and produces innovative minimally invasive devices to treat underserved conditions of the lumbar spine. Zyga’s primary product is the SImmetry® Sacroiliac Joint Fusion System. Under the terms of the merger agreement dated January 4, 2018, the Company acquired Zyga for $21,000 in consideration paid at closing (consisting of borrowings of $18,000 on the Company’s revolving credit facility and $3,000 cash on hand), $1,000 contingent upon the successful achievement of a clinical milestone, and a revenue based earnout consideration of up to $35,000. Based on a probability weighted model, the Company estimates a contingent liability related to the clinical milestone and revenue based earnout of $4,986. Acquisition related costs were approximately $1,430, of which approximately $630 was incurred in 2017 and $800 was incurred for the three months ended March 31, 2018 and is reflected separately in the accompanying Consolidated Statements of Comprehensive (Loss) Income.

The Company has accounted for the acquisition of Zyga under ASC 805, Business Combinations.  Zyga’s results of operations are included in the consolidated financial statements beginning after January 4, 2018, the acquisition date.

The purchase price was financed as follows:

	(In thousands)
Cash proceeds from revolving credit facility	$	18,000
Cash from RTI Surgical		3,000
Total purchase price	$	21,000

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In the fourth quarter of 2018, the Company completed its valuation of the purchase price allocation. The table below represents the final allocation of the total consideration to Zyga’s tangible and intangible assets and liabilities fair values as of January 4, 2018.

	(In thousands)
Inventories	$	1,099
Accounts receivable		573
Other current assets		53
Property, plant and equipment		151
Other assets		26
Deferred tax assets		4,715
Current liabilities		(947	)
Acquisition contingencies		(4,986	)
Net tangible assets acquired		684
Other intangible assets		6,760
Goodwill		13,556
Total net assets acquired	$	21,000

Total net assets acquired as of January 4, 2018, are all part of the Company’s only operating segment.  Fair values are based on management’s estimates and assumptions including variations of the income approach, the cost approach and the market approach. Other intangible assets include patents of $6,500 with a useful life of 13 years, trademarks of $80 with a useful life of 1 year and selling and marketing relationships of $180 with a useful life of 7 years.

The Company believes that the acquisition of Zyga has offered and continues to offer the potential for substantial strategic and financial benefits. The transaction further advances our strategic transformation focused on reducing complexity, driving operational excellence and accelerating growth.  The Company believes the acquisition will enhance stockholder value through, among other things, enabling the Company to capitalize on the following strategic advantages and opportunities:

• Zyga’s innovative minimally invasive treatment should accentuate our spine portfolio and opens significant opportunities to accelerate our Spine-focused expansion strategy.

• Zyga should leverage the core competencies of our Spine franchise by pursuing niche differentiated products, to gain scale and customer retention and support portfolio pull-through.

These potential benefits resulted in the Company paying a premium for Zyga resulting in the recognition of $13,556 of goodwill assigned to the Company’s only operating segment and reporting unit. For tax purposes, none of the goodwill is deductible.

The following unaudited pro forma information shows the results of the Company’s operations as though the acquisition had occurred as of the beginning of the prior comparable period, January 1, 2017, (in thousands, except per share data):

	For the Six Months Ended
	June 30,
	2018			2017
Revenues	$	2,439		$	2,364
Net loss applicable to common shares		(1,053	)		(2,192	)

The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisition taken place as of the beginning of the periods presented, or the results that may occur in the future. These amounts exclude costs incurred which are directly attributable to the acquisition, and which do not have a continuing impact on the combined companies’ operating results.

8. Stock-Based Compensation

The Company’s policy is to grant stock options at an exercise price equal to 100% of the market value of a share of common stock at closing on the date of the grant.  The Company’s stock options generally have five to ten-year contractual terms and vest over a one to five-year period from the date of grant.  The Company’s policy is to grant restricted stock awards at a fair value equal to 100% of the market value of a share of common stock at closing on the date of the grant. The Company’s restricted stock awards generally vest over one to three-year periods.

2018 Incentive Compensation Plan – On April 30, 2018, the Company’s stockholders approved and adopted the 2018 Incentive Compensation Plan (the “2018 Plan”). The 2018 Plan provides for the grant of incentive and nonqualified stock options and restricted stock

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to key employees, including officers and directors of the Company and consultants and advisors. The 2018 Plan allows for up to 5,726,035 shares of common stock to be issued with respect to awards granted.

Stock Options

As of June 30, 2019, there was $1,792 of total unrecognized stock-based compensation related to nonvested stock options. The expense related to these stock options is expected to be recognized over a weighted-average period of 2.25 years.

The following table summarizes information about stock options outstanding, exercisable and available for grant as of June 30, 2019:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price		Life (Years)		Value
Outstanding at January 1, 2019		4,295,744		$	3.76
Granted		374,224			4.71
Exercised		(118,500	)		3.34
Forfeited or expired		(65,304	)		4.08
Outstanding at June 30, 2019		4,486,164		$	3.84		5.73	$	2,467
Vested or expected to vest at June 30, 2019		4,192,575		$	3.80		5.50	$	2,442
Exercisable at June 30, 2019		2,499,185		$	3.65		3.65	$	1,738
Available for grant at June 30, 2019		4,234,994

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value of stock options for which the fair market value of the underlying common stock exceeded the respective stock option exercise price. Estimated forfeitures are based on the Company’s historical forfeiture activity. Compensation expense recognized for all option grants is net of estimated forfeitures and is recognized over the awards’ respective requisite service periods.

Other information concerning stock options are as follows:

	For the Six Months Ended
	June 30,
	2019		2018
Weighted average fair value of stock options granted	$	1.99	$	2.02
Aggregate intrinsic value of stock options exercised		161		98

The aggregate intrinsic value of stock options exercised in a period represents the pre-tax cumulative difference, for the stock options exercised during the period, between the fair market value of the underlying common stock and the stock option exercise prices.

Restricted Stock Awards

As of June 30, 2019, there was $3,561 of total unrecognized stock-based compensation related to unvested restricted stock awards.  That expense is expected to be recognized on a straight-line basis over a weighted-average period of 1.87 years. The following table summarizes information about unvested restricted stock awards as of June 30, 2019:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Unvested at January 1, 2019		1,075,215		$	4.29
Granted		625,476			4.85
Vested		(385,185	)		4.17
Forfeited		(9,865	)		4.43
Unvested at June 30, 2019		1,305,641		$	4.61

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Restricted Stock Units

As of June 30, 2019, there was $1,198 of total unrecognized stock-based compensation related to unvested restricted stock units.  That expense is expected to be recognized on a straight-line basis over a weighted-average period of 2.50 years. The following table summarizes information about unvested restricted stock units as of June 30, 2019:

			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Unvested at January 1, 2019		—	$	—
Granted		226,352		7.41
Vested		—		—
Forfeited		—		—
Unvested at June 30, 2019		226,352	$	7.41

For the three and six months ended June 30, 2019 and 2018, the Company recognized stock-based compensation as follows:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Stock-based compensation:
Costs of processing and distribution	$	36	$	33	$	72	$	66
Marketing, general and administrative		1,216		1,242		2,328		2,474
Research and development		15		15		30		30
Total	$	1,267	$	1,290	$	2,430	$	2,570

9. Net Income Per Common Share

A reconciliation of the number of shares of common stock used in the calculation of basic and diluted net income per common share is presented below:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Basic shares		75,144,488		63,405,708		70,409,839		63,400,737
Effect of dilutive securities:
Stock options		823,707		—		—		—
Preferred stock Series A		15,152,761		—		—		—
Diluted shares		91,120,956		63,405,708		70,409,839		63,400,737

For the three months ended June 30, 2019 and 2018, approximately 1,537,678 and 1,590,662, respectively, and for the six months ended June 30, 2019 and 2018, approximately 1,429,442 and 1,447,911, respectively, of issued stock options were not included in the computation of diluted net loss per common share because they were anti-dilutive because their exercise price exceeded the market price. For the three months ended June 30, 2019, options to purchase 823,707 shares of common stock were included in the computation of diluted income per share because dilutive shares are factored into this calculation when net income is reported.  For the three months ended June 30, 2018, options to purchase 659,785, and for the six months ended June 30, 2019 and 2018, options to purchase 808,904 and 618,776, respectively, shares of common stock were not included in the computation of diluted loss per share because dilutive shares are not factored into this calculation when a net loss is reported.

For the three months ended June 30, 2019, 50,000 shares of convertible preferred stock or 15,152,761of converted common stock and accrued but unpaid dividends were dilutive on an as if-converted basis and were included in the computation of diluted net income per common share. For the three months ended June 30, 2018 and for the six months ended June 30, 2019 and 2018, respectively, 50,000 shares of convertible preferred stock and accrued but unpaid dividends were anti-dilutive on an as if-converted basis and were not included in the computation of diluted net loss per common share.

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10. Inventories

Inventories by stage of completion are as follows:

	June 30,		December 31,
	2019		2018
Unprocessed tissue, raw materials and supplies	$	25,014	$	24,211
Tissue and work in process		30,502		31,796
Implantable tissue and finished goods		58,585		51,464
Purchase price adjustment for finished goods		34,250		-
Total		148,351		107,471
Less current portion		127,906		107,471
Long-term portion	$	20,445	$	-

For the three months ended June 30, 2019 and 2018, the Company had inventory write-downs of $1,744 and $8,224, respectively, and for the six months ended June 30, 2019 and 2018, the Company had inventory write-downs of $3,274 and $10,865, respectively, relating primarily to product obsolescence. As of June 30, 2019, the long-term portion of inventory relates to acquired Paradigm inventory which comprises of finished goods and purchase price adjustment of $1,608 and $18,837, respectively, see Note 6.

Included in the three months ended March 31, 2018, are $1,023 of product obsolescence which was due to the rationalization of our international distribution infrastructure.  Included in the three months ended June 30, 2018, was $6,559 of inventory write-off which was due to the suspension of the map3® implant.

11. Prepaid and Other Current Assets

Prepaid and Other Current Assets are as follows:

	June 30,		December 31,
	2019		2018
Income tax receivable	$	2,685	$	3,920
Prepaid expenses		5,275		4,127
Other		773		744
	$	8,733	$	8,791

12. Property, Plant and Equipment

Property, plant and equipment are as follows:

	June 30,			December 31,
	2019			2018
Land	$	2,020		$	2,020
Buildings and improvements		58,093			58,093
Processing equipment		44,624			42,599
Surgical instruments		25,829			24,070
Office equipment, furniture and fixtures		1,973			1,877
Computer equipment and software		19,102			18,873
Construction in process		11,593			8,934
		163,234			156,466
Less accumulated depreciation		(83,543	)		(78,512	)
	$	79,691		$	77,954

For the three months ended June 30, 2019 and 2018, the Company had depreciation expense in connection with property, plant and equipment of $2,800 and $2,524, respectively, and for the six months ended June 30, 2019 and 2018, the Company had depreciation expense in connection with property, plant and equipment of $5,539 and $5,147, respectively.  For the three months ended June 30, 2018, the Company had $1,797 of asset impairment and abandonment charges relating to the suspension of the map3® implant.

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13. Goodwill

Goodwill acquired during the six months ended June 30, 2019, includes the excess of the Paradigm purchase price over the sum of the amounts assigned to assets acquired less liabilities assumed.

	June 30,		December 31,
	2019		2018
Balance at January 1	$	59,798	$	46,242
Goodwill acquired related to Zyga acquisition		—		13,556
Goodwill acquired related to Paradigm acquisition		211,631		—
Balance at end of period	$	271,429	$	59,798

14. Other Intangible Assets

Other intangible assets are as follows:

	June 30, 2019						December 31, 2018
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Patents	$	16,256	$	4,727	$	11,529	$	16,092	$	4,194	$	11,898
Acquired licensing rights		7,528		1,902		5,626		11,852		6,468		5,384
Marketing and procurement and other intangible assets		20,205		12,091		8,114		20,356		11,279		9,077
Total	$	43,989	$	18,720	$	25,269	$	48,300	$	21,941	$	26,359

For the three months ended June 30, 2019 and 2018, the Company had amortization expense of other intangible assets of $995 and $960, respectively, and for the six months ended June 30, 2019 and 2018, the Company had amortization expense of other intangible assets of $1,952 and $1,921, respectively.  For the three months ended June 30, 2018, the Company had $2,718 of asset impairment and abandonment charges related to the suspension of the map3® implant.

At June 30, 2019, management’s estimates of future amortization expense for the next five years are as follows:

	Amortization
	Expense
2019 (remaining)	$	2,100
2020		4,100
2021		4,100
2022		4,100
2023		1,800
2024		1,800

15. Accrued Expenses

Accrued expenses are as follows:

	June 30,		December 31,
	2019		2018
Accrued compensation	$	6,175	$	8,678
Accrued severance and restructuring costs		758		931
Accrued executive transition costs		—		43
Accrued distributor commissions		3,825		3,907
Accrued donor recovery fees		4,692		4,088
Other		9,218		7,036
	$	24,668	$	24,683

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16. Short and Long-Term Obligations

Short and long-term obligations are as follows:

	June 30,			December 31,
	2019			2018
Ares Term loan	$	101,473		$	—
JPM facility		65,000			50,000
Less unamortized debt issuance costs		(1,392	)		(927	)
Total		165,081			49,073
Less current portion		—			—
Long-term portion	$	165,081		$	49,073

On June 5, 2018, the Company, along with its wholly-owned subsidiary, Pioneer Surgical, entered into a Credit Agreement (the “2018 Credit Agreement”), as borrowers, with JP Morgan Chase Bank, N.A., as lender (together with the various financial institutions as in the future may become parties thereto, the “JPM Lenders”) and as administrative agent for the JPM Lenders. The 2018 Credit Agreement provides for a revolving credit facility in the aggregate principal amount of up to $100,000 (the “JPM Facility”) (subsequently reduced to $75,000, as described below). The Company and Pioneer Surgical will be able to, at their option, and subject to customary conditions and JPM Lender approval, request an increase to the JPM Facility in an amount not to exceed $50,000.

The JPM Facility is guaranteed by the Company’s domestic subsidiaries and is secured by: (i) substantially all of the assets of the Company and Pioneer Surgical; (ii) substantially all of the assets of each of the Company’s domestic subsidiaries; and (iii) 65% of the stock of the Company’s foreign subsidiaries.

The initial borrowings made under the 2018 Credit Agreement will bear interest at a rate per annum equal to the monthly REVLIBOR30 Rate (“CBFR Loans”) plus an adjustable margin of up to 2.00% (the “CBFR Rate”). The Company may elect to convert the interest rate for the initial borrowings to a rate per annum equal to the adjusted LIBO Rate (“Eurodollar Loans”) plus an adjustable margin of up to 2.00% (the “JPM Eurodollar Rate”).  For all subsequent borrowings, the Company may elect to apply either the CBFR Rate or JPM Eurodollar Rate. The applicable margin is subject to adjustment after the end of each fiscal quarter, based upon the Company’s average quarterly availability. The maturity date of the JPM Facility is June 5, 2023. The Company may make optional prepayments on the JPM Facility without penalty. The Company paid certain customary closing costs and bank fees upon entering into the 2018 Credit Agreement.

The Company is subject to certain affirmative and negative covenants, including (but not limited to), covenants limiting the Company’s ability to: incur certain additional indebtedness; create certain liens; enter into sale and leaseback transactions; and consolidate or merge with, or convey, transfer or lease all or substantially all of its assets to another person. The Company is required to maintain a minimum fixed charge coverage ratio of at least 1.00:1.00 (the “JPM Required Minimum Fixed Charge Coverage Ratio”) during either of the following periods (each, a “JPM Covenant Testing Period”): (i) a period beginning on a date that a default has occurred and is continuing under the loan documents entered into by the Company in conjunction with the 2018 Credit Agreement through the first date on which no default has occurred and is continuing; or (ii) a period beginning on a date that availability under the JPM Facility is less than the specified covenant testing threshold and continuing until availability under the JPM Facility is greater than or equal to the specified covenant testing threshold for thirty (30) consecutive days. The JPM Required Minimum Fixed Charge Coverage Ratio is measured on the last day of each calendar month during the JPM Covenant Testing Period (each a “JPM Calculation Date”), and is calculated using the minimum fixed charge coverage ratio for the twelve (12) consecutive months ending on each JPM Calculation Date. The amounts owed under the 2018 Credit Agreement may be accelerated upon the occurrence of certain events of default customary for facilities for similarly rated borrowers.

First Amendment to Credit Agreement and Joinder Agreement

On March 8, 2019, the Company entered into a First Amendment to Credit Agreement and Joinder Agreement dated as of March 8, 2019 (the “2019 First Amendment”), among the Company, Legacy RTI, as a borrower, Pioneer Surgical, as a borrower, the other loan parties thereto as guarantors, JP Morgan Chase Bank, N.A., as lender (together with the various financial institutions as in the future may become parties thereto) and as administrative agent for the JPM Lenders. The 2019 First Amendment amended the 2018 Credit Agreement by: (i) reducing the aggregate revolving commitments available to Legacy RTI and Pioneer Surgical from $100,000 to $75,000; (ii) joining the Company and Paradigm, and its domestic subsidiaries as guarantors and loan parties to the 2018 Credit Agreement; (iii) permitting the Ares Term Loan (as defined below); and (iv) making certain other changes to the 2018 Credit Agreement consistent with the foregoing including pro rata reductions to certain thresholds that were based on the aggregate commitments under the 2018 Credit Agreement.

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At June 30, 2019, the interest rate for the JPM Facility was 4.19%. As of June 30, 2019, there was $65,000 outstanding on the JPM Facility and total remaining available credit on the JPM Facility was $10,000. The Company’s ability to access the JPM Facility is subject to and can be limited by the Company’s compliance with the Company’s financial and other covenants. The Company was in compliance with the financial covenants related to the JPM Facility as of June 30, 2019.

Second Lien Credit Agreement and Term Loan

On March 8, 2019, Legacy RTI entered into a Second Lien Credit Agreement dated as of March 8, 2019 (the “2019 Credit Agreement”), among Legacy RTI, as a borrower, the other loan parties thereto as guarantors (together with Legacy RTI, the “Ares Loan Parties”), Ares Capital Corporation, as lender (together with the various financial institutions as in the future may become parties thereto, the “Ares Lenders”) and as administrative agent for the Ares Lenders. The 2019 Credit Agreement provides for a term loan in the principal amount of up to $100,000 (the “Ares Term Loan”). The Ares Term Loan was advanced in a single borrowing on March 8, 2019.

The Ares Term Loan is guaranteed by the Company and each of the Company’s domestic subsidiaries and is secured by: (i) substantially all of the assets of Legacy RTI; (ii) substantially all of the assets of the Company; (iii) substantially all of the assets of the Company’s domestic subsidiaries; and (iv) 65% of the stock of the Company’s foreign subsidiaries.

The Ares Term Loan will bear interest at a rate per annum equal to, at the option of Legacy RTI: (i) the monthly Base Rate plus an adjustable margin of up to 7.50% (the “Base Rate”); or (ii) the LIBOR plus an adjustable margin of up to 8.50% (the “Ares Eurodollar Rate”). Subject to customary notices, Legacy RTI may elect to convert the Ares Term Loan from Base Rate to Ares Eurodollar Rate or from Ares Eurodollar Rate to Base Rate. The applicable margin is subject to adjustment after the end of each fiscal quarter, based upon the Ares Loan Parties’ total net leverage ratio. At any time during the period commencing on March 8, 2019 and ending on March 8, 2021, if the Ares Loan Parties’ total net leverage ratio is greater than 4.50:1.00, Legacy RTI shall have the option (the “PIK Option”) to elect to pay 50% of the interest that will accrue in the subsequent quarterly period in kind by capitalizing it and adding such amount to the principal balance of the Ares Term Loan. If Legacy RTI exercises the PIK Option, the adjustable margin applicable to the Ares Term Loan shall be increased by 0.75%.

The maturity date of the Ares Term Loan is December 5, 2023. Legacy RTI may make optional prepayments on the Ares Term Loan, provided that any such optional prepayments made on or prior to March 8, 2022, shall be subject to a make whole premium or a prepayment price, as the case may be. Legacy RTI is required to make mandatory prepayments of the Ares Term Loan based on excess cash flow and the Ares Loan Parties’ total net leverage ratio, upon the incurrence of certain indebtedness not otherwise permitted under the 2019 Credit Agreement, upon consummation of certain dispositions, and upon the receipt of certain proceeds of casualty events. Legacy RTI was required to pay certain customary closing costs and bank fees upon entering into the 2019 Credit Agreement.

Legacy RTI is subject to certain affirmative and negative covenants, including (but not limited to), covenants limiting Legacy RTI’s ability to: incur certain additional indebtedness; create certain liens; enter into sale and leaseback transactions; and consolidate or merge with, or convey, transfer or lease all or substantially all of its assets to another person. During any period beginning on a date that either: (i) a default has occurred and is continuing under the loan documents entered into by Legacy RTI in conjunction with the Credit Agreement (the “Ares Loan Documents”); or (ii) availability under the Ares Term Loan is less than the specified covenant testing threshold, and continuing until either (a) no default has occurred and is continuing under the Ares Loan Documents or (b) availability under the Ares Term Loan is greater than or equal to the specified covenant testing threshold for thirty (30) consecutive days, respectively, (the “Ares Covenant Testing Period”) Legacy RTI is required to maintain a minimum fixed charge coverage ratio of at least 0.91:1.00 (the “Ares Required Minimum Fixed Charge Coverage Ratio”). The Ares Required Minimum Fixed Charge Coverage Ratio is measured on the last day of each calendar month during the Ares Covenant Testing Period (each a “Ares Calculation Date”), and is calculated using the minimum fixed charge coverage ratio for the twelve (12) consecutive months ending on each Ares Calculation Date. The Ares Loan Parties are required to maintain an initial total net leverage ratio of 9.00:1.00, which ratio steps down each fiscal quarter of Legacy RTI resulting in a requirement that the Ares Loan Parties maintain a total net leverage ratio of 3.50:1.00 for the fiscal quarter ending June 30, 2021, and each fiscal quarter ending thereafter.

The amounts owed under the 2019 Credit Agreement may be accelerated upon the occurrence of certain events of default customary for facilities for similarly rated borrowers.

At June 30, 2019, the interest rate for the Ares Term Loan was 11.16%. The Company was in compliance with the financial covenants related to the Ares Term Loan as of June 30, 2019.

For the six months ended June 30, 2019 and 2018, interest expense associated with the amortization of debt issuance costs was $361 and $423, respectively. Included in the six months ended June 30, 2019, was $219 of accelerated amortization of debt issuance costs associated with the modification of the 2018 Credit Agreement.  For the six months ended June 30, 2019, the Company incurred total debt issuance cost of $826.

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17. Other long-term liabilities

Other long-term liabilities are as follows:

	June 30,		December 31,
	2019		2018
Acquisition contingencies	$	98,372	$	4,986
Other		2,562		633
	$	100,934	$	5,619

Acquisition contingencies represent the Company’s fair value estimate of the Zyga acquisition clinical and revenue milestones of $3,396 and the Company’s preliminary fair value estimate of the Paradigm acquisition revenue earnout contingency of $94,976. As of June 30, 2019, there was a $1,590 reduction in the contingent liability estimate of the Zyga acquisition revenue earnout, as the probability weighted model has been updated based on the current updated forecast for the performance of the Zyga product portfolio

18. Income Taxes

The Company expects its deferred tax assets of $19,715, net of the valuation allowance at June 30, 2019 of $3,076, to be realized through the generation of future taxable income and the reversal of existing taxable temporary differences.

The Company evaluates the need for deferred tax asset valuation allowances based on a more likely than not standard. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction.

The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidence.  It is difficult to conclude a valuation allowance is not required when there is significant objective and verifiable negative evidence, such as cumulative losses in recent years. The Company utilizes a rolling three-years of actual results as the primary measure of cumulative losses in recent years.

On a rolling three-years, the Company’s consolidated U.S. operations are in a cumulative income position.  However, one U.S. entity is in a three-year cumulative loss position. The Company has established a valuation allowance on its separate state deferred tax assets.

The Company’s foreign operations are in a three-year cumulative loss position.  Future taxable income exclusive of reversing temporary differences and carryforwards is one source of taxable income that may be available under the tax law to realize a tax benefit for deductible temporary differences and carryforwards.  Beginning in 2017, the Company began a restructuring plan, which was finalized in 2018. The efforts under this plan have led the Company to achieve operational improvements and a reduction in complexities which has contributed to current year and projected future earnings within its foreign subsidiary.  The Company considers the current year and projected future earnings to be objectively verifiable evidence which will allow the Company to fully utilize its foreign deferred tax assets.  The Company believes this positive evidence outweighs the negative evidence of its foreign subsidiaries’ cumulative three-year loss position. As a result, no valuation allowances have been established against its foreign subsidiaries’ deferred tax assets.  

The Company will continue to regularly assess the realizability of our deferred tax assets. Changes in historical earnings performance and future earnings projections, among other factors, may cause the Company to adjust its valuation allowance, which would impact the Company’s income tax expense in the period the Company determines that these factors have changed.

19. Preferred Stock

On June 12, 2013, the Company and WSHP Biologics Holdings, LLC, an affiliate of Water Street Healthcare Partners, a leading healthcare-focused private equity firm (“Water Street”), entered into an investment agreement. Pursuant to the terms of the investment agreement, the Company issued $50,000 of convertible preferred equity to Water Street in a private placement which closed on July 16, 2013, with preferred stock issuance costs of $1,290. Before July 16, 2018, the preferred stock accrued dividends at a rate of 6% per annum. Dividends that were not paid in cash in any quarter accrued on each outstanding share of preferred stock during such three-month period and accumulated.

On August 1, 2018, the Company and Water Street, a related party, entered into an Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock of RTI Surgical, Inc. (the “Amended and Restated Certificate of Designation”).  Pursuant to the Amended and Restated Certificate of Designation: (1) dividends on the Series A Preferred Stock will not accrue after July 16, 2018 (in the event of a default by the Company, dividends will begin accruing and will continue to accrue until the default is cured); (2) the Company may not force a redemption of the Series A Preferred Stock prior to July 16, 2020; and (3) the holders of the Series A

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Preferred Stock may not convert the Series A Preferred Stock into common stock prior to July 16, 2021 (with certain exceptions).  The Company evaluated and concluded on a qualitative basis the amendment qualifies as modification accounting to the preferred shares, which did not result in a change in the valuation of the shares.

Preferred stock is as follows:

	Preferred Stock Liquidation		Preferred Stock Issuance			Net
	Value		Costs			Total
Balance at January 1, 2019	$	66,519	$	(293	)	$	66,226
Accrued dividend payable		—		—			—
Amortization of preferred stock issuance costs		—		92			92
Balance at June 30, 2019	$	66,519	$	(201	)	$	66,318

20. Severance and Restructuring Costs

The Company recorded severance and restructuring costs related to the reduction of our organizational structure which resulted in $2,280 of expenses for the year ended December 31, 2018. As part of the acquisition of Paradigm, management implemented a plan which resulted in $896 of severance expenses for the six months ended June 30, 2019 included in acquisition and integration expenses within the Condensed Consolidated Statements of Comprehensive Gain (Loss). The total severance and restructuring costs are expected to be paid in full by the fourth quarter of 2019. Severance and restructuring payments are made over periods ranging from one month to twelve months and are not expected to have a material impact on cash flows of the Company in any quarterly period. The following table includes a roll-forward of severance and restructuring costs included in accrued expenses, see Note 15.

Accrued severance and restructuring costs at January 1, 2019	$	931
Severance and restructuring costs accrued in 2019		896
Subtotal severance and restructuring costs		1,827
Severance and restructuring related cash payments		(1,069	)
Accrued severance and restructuring charges at June 30, 2019	$	758

21. Executive Transition Costs

The Company recorded Chief Executive Officer retirement and transition costs related to the retirement of our former Chief Executive Officer pursuant to the Executive Transition Agreement dated August 29, 2012 (as amended and extended to date), which resulted in $4,404 of expenses for the year ended December 31, 2016. The total Chief Executive Officer retirement and transition costs were paid in full in the first quarter of 2019. The following table includes a roll-forward of executive transition costs included in accrued expenses, see Note 15.

Accrued executive transition costs at January 1, 2019	$	43
Cash payments		(43	)
Accrued executive transition costs at June 30, 2019	$	-

22. Commitments and Contingencies

Agreement to Acquire Paradigm– On March 8, 2019, pursuant to the Master Transaction Agreement, the Company acquired Paradigm in a cash and stock transaction valued at up to $300,000, consisting of $150,000 on March 8, 2019, plus potential future milestone payments. Established in 2005, Paradigm’s primary product is the coflex® Interlaminar Stabilization® device, a differentiated and minimally invasive motion preserving stabilization implant that is FDA premarket approved for the treatment of moderate to severe lumbar spinal stenosis in conjunction with decompression.

Under the terms of the agreement, the Company paid $100,000 in cash and issued 10,729,614 shares of the Company’s common stock.  The shares of Company common stock issued on March 8, 2019, were valued based on the volume weighted average closing trading price for the five trading days prior to the date of execution of the definitive agreement, representing $50,000 of value.  In addition, the Company may be required to pay up to an additional $150,000 in a combination of cash and Company common stock based on a revenue earnout consideration.  Based on a probability weighted model, the Company estimates a preliminary contingent liability related to the revenue based earnout of $94,976.  The Company has not completed its preliminary purchase price allocation.

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Acquisition of Zyga – On January 4, 2018, the Company acquired Zyga, a leading spine-focused medical device company that develops and produces innovative minimally invasive devices to treat underserved conditions of the lumbar spine. Zyga’s primary product is the SImmetry® Sacroiliac Joint Fusion System. Under the terms of the merger agreement dated January 4, 2018, the Company acquired Zyga for $21,000 in consideration paid at closing (consisting of borrowings of $18,000 on its revolving credit facility and $3,000 cash on hand), $1,000 contingent upon the successful achievement of a clinical milestone, and a revenue based earnout consideration of up to an additional $35,000.  Based on a probability weighted model, the Company estimates a contingent liability related to the clinical and revenue milestones of $3,396, see Note 17.

Distribution Agreement with Medtronic – On October 12, 2013, the Company entered into a replacement distribution agreement with Medtronic, plc. (“Medtronic”), as amended January 1, 2019, pursuant to which Medtronic will distribute certain allograft implants for use in spinal, general orthopedic and trauma surgery.  Under the terms of this distribution agreement, Medtronic is a non-exclusive distributor except for certain specified implants for which Medtronic is the exclusive distributor.  Medtronic will maintain its exclusivity with respect to these specified implants unless the cumulative fees received by the Company from Medtronic for these specified implants decline by a certain amount during any trailing 12-month period.  The initial term of this distribution agreement was to have been through December 31, 2017.  The term automatically renews for successive five-year periods, unless either party provides written notice of its intent not to renew at least one year prior to the expiration of the applicable renewal period.   The distribution agreement will continue at least through December 31, 2022.

Distribution Agreement with Zimmer Dental Inc. - On September 3, 2010, the Company entered into an exclusive distribution agreement with Zimmer Dental, Inc. (“Zimmer Dental”), a subsidiary of Zimmer, with an effective date of September 30, 2010, as amended from time to time.  The Agreement was assigned to Biomet 3i, LLC (“Biomet”), an affiliate of Zimmer Dental, on January 1, 2016.  The Agreement has an initial term of ten years.  Under the terms of this distribution agreement, the Company agreed to supply sterilized allograft and xenograft implants at an agreed upon transfer price, and Biomet agreed to be the exclusive distributor of the implants for dental and oral applications worldwide (except Ukraine), subject to certain Company obligations under an existing distribution agreement with a third party with respect to certain implants for the dental market.  In consideration for Biomet’s exclusive distribution rights, Biomet agreed to the following: 1) payment to the Company of $13,000 within ten days of the effective date (the “Upfront Payment”); 2) annual exclusivity fees (“Annual Exclusivity Fees”) paid annually as long as Biomet maintains exclusivity for the term of the contract to be paid at the beginning of each calendar year; and 3) annual purchase minimums to maintain exclusivity.  Upon occurrence of an event that materially and adversely affects Biomet’s ability to distribute the implants, Biomet may be entitled to certain refund rights with respect to the then current Annual Exclusivity Fee, where such refund would be in an amount limited by a formula specified in this agreement that is based substantially on the occurrence’s effect on Biomet’s revenues. The Upfront Payment, the Annual Exclusivity Fees and the fees associated with distributions of processed tissue are considered to be a single performance obligation. Accordingly, the Upfront Payment and the Annual Exclusivity Fees are deferred as received and are being recognized as other revenues over the term of this distribution agreement based on the expected contractual annual purchase minimums relative to the total contractual minimum purchase requirements in this distribution agreement.  Additionally, the Company considered the potential impact of this distribution agreement’s contractual refund provisions and does not expect these provisions to impact future expected revenue related to this distribution agreement.

The Company’s aforementioned revenue recognition methods related to the Zimmer distribution agreements do not result in the deferral of revenue less than amounts that would be refundable in the event the agreements were to be terminated in future periods.  Additionally, the Company evaluates the appropriateness of the aforementioned revenue recognition methods on an ongoing basis.

23. Legal Actions

The Company is, from time to time, involved in litigation relating to claims arising out of its operations in the ordinary course of business. The Company believes that none of these claims that were outstanding as of June 30, 2019, will have a material adverse impact on its financial position or results of operations.

Coloplast — The Company is presently named as co-defendant along with other companies in a small percentage of the transvaginal surgical mesh (“TSM”) mass tort claims being brought in various state and federal courts. The TSM litigation has as its catalyst various Public Health Notifications issued by the FDA with respect to the placement of certain TSM implants that were the subject of 510k regulatory clearance prior to their distribution. The Company does not process or otherwise manufacture for distribution in the U.S. any implants that were the subject of these FDA Public Health Notifications. The Company denies any allegations against it and intends to continue to vigorously defend itself.

In addition to claims made directly against the Company, Coloplast, a distributor of TSM’s and certain allografts processed and private labeled for them under a contract with the Company, has also been named as a defendant in individual TSM cases in various federal and state courts.  Coloplast requested that the Company indemnify or defend Coloplast in those claims which allege injuries caused by the Company’s allograft implants, and on April 24, 2014, Coloplast sued RTI Surgical, Inc. in the Fourth Judicial District of Minnesota for declaratory relief and breach of contract.  On December 11, 2014, Coloplast entered into a settlement agreement with RTI Surgical, Inc. and Tutogen Medical, Inc. (the “Company Parties”) resulting in dismissal of the case.  Under the terms of the settlement agreement, the Company Parties are responsible for the defense and indemnification of two categories of present and future claims:  (1) tissue only (where Coloplast is solely the distributor of Company processed allograft tissue and no Coloplast-manufactured or distributed synthetic mesh is identified) (“Tissue Only Claims”), and (2) tissue plus non-Coloplast

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synthetic mesh (“Tissue-Non-Coloplast Claims”) (the Tissue Only Claims and the Tissue-Non-Coloplast Claims being collectively referred to as “Indemnified Claims”).  As of June 30, 2019, there are a cumulative total of 1,117 Indemnified Claims for which the Company Parties are providing defense and indemnification.  The defense and indemnification of these cases are covered under the Company’s insurance policy subject to a reservation of rights by the insurer.

Based on the current information available to the Company, the impact that current or any future TSM litigation may have on the Company cannot be reasonably estimated.

LifeNet — On June 27, 2018, LifeNet Health, Inc. (“LifeNet”) filed a patent infringement lawsuit in the United States District Court for the Middle District of Florida (since moved to the Northern District of Florida) claiming infringement of five of its patents by the Company. The suit requests damages, enhanced damages, reimbursement of costs and expenses, reasonable attorney fees, and an injunction. The asserted patents are now expired. On April 7, 2019, the Court granted the Company’s request to stay the lawsuit pending the U.S. Patent Trial and Appeal Board’s (PTAB) decision, expected in the third quarter of 2019, whether to institute review of the patentability of LifeNet’s patents. The Company believes the suit is without merit and will vigorously defend its position.

The Company’s accounting policy is to accrue for legal costs as they are incurred.

24. Regulatory Actions

During the third quarter of 2018, the Company decided to stop procurement, manufacturing and distributing its map3® implants effective October 31, 2018. The map3® product has been either sold or destroyed and is off the market. In April 2019, the Company received a letter from the FDA indicating that no further corrective actions are necessary with respect to its previously issued Warning Letter in connection with the map3® product.

25. Segment Data

The Company distributes human tissue, bovine and porcine animal tissue, metal and synthetic implants through various distribution channels. The Company operates in one reportable segment composed of four franchises: spine; sports; OEM and international. Discrete financial information is not available for these four franchises. The following table presents revenues from these four franchises for the three and six months ended June 30, 2019 and 2018:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands)
Revenues:
Spine	$	26,671	$	18,934	$	46,676	$	38,197
Sports		14,024		14,190		27,803		27,625
OEM		32,483		31,170		61,474		61,290
International		9,129		6,391		16,095		13,463
Total revenues	$	82,307	$	70,685	$	152,048	$	140,575

The following table presents percentage of total revenues derived from the Company’s largest distributors:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Percent of revenues derived from:
Distributor
Zimmer Biomet Holdings, Inc.		17	%		20	%		19	%		21	%
Medtronic, PLC		7	%		8	%		8	%		8	%
DePuy Synthes		3	%		6	%		4	%		5	%

The following table presents property, plant and equipment - net by significant geographic location:

	June 30,		December 31,
	2019		2018
Property, plant and equipment - net:
Domestic	$	73,580	$	72,501
International		6,111		5,453
Total	$	79,691	$	77,954

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26. Subsequent Events

The Company evaluated subsequent events as of the issuance date of the condensed consolidated financial statements as defined by ASC 855 Subsequent Events, and identified no subsequent events that require adjustment to, or disclosure of, in these condensed consolidated financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Relating to Forward Looking Statements

Information contained in this filing contains “forward-looking statements” which can be identified by the use of forward-looking terminology such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “requires,” “hopes,” “assumes” or comparable terminology, or by discussions of strategy. There can be no assurance that the future results covered by these forward-looking statements will be achieved. Some of the matters described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2018, or in subsequent Quarterly Reports on Form 10-Q (including this one), constitute cautionary statements which identify some of the factors regarding these forward-looking statements, including certain risks and uncertainties, that could cause actual results to vary materially from the future results indicated in these forward-looking statements. Other factors could also cause actual results to vary materially from the future results indicated in such forward-looking statements.

Management Overview

RTI Surgical Holdings, Inc. and Subsidiaries (defined as the “Company” for matters occurring after March 8, 2019)is a global surgical implant company that designs, develops, manufactures and distributes biologic, metal and synthetic implants. Our implants are used in orthopedic, spine, sports medicine, general surgery, trauma and other surgical procedures to repair and promote the natural healing of human bone and other human tissues and improve surgical outcomes. We manufacture metal and synthetic implants and process donated human musculoskeletal and other tissue and bovine and porcine animal tissue in producing allograft and xenograft implants using our proprietary BIOCLEANSE®, TUTOPLAST® and CANCELLE® SP sterilization processes. We process tissue at our facilities in Alachua, Florida and Neunkirchen, Germany and manufacture metal and synthetic implants in Marquette, Michigan and Greenville, North Carolina, and we have a distribution and research center inWurmlingen, Germany. We are accredited in the U.S. by the American Association of Tissue Banks and we are a member of AdvaMed. Our implants are distributed directly to hospitals throughout the U.S. and in more than 40 countries worldwide with the support of both employee and third-party representatives as well as through larger purchasing companies. We were founded in 1997 and are headquartered in Deerfield, Illinois.

Domestic distributions and services accounted for 89% of total revenues in the first six months of 2019. Most of our implants are distributed directly to healthcare providers, hospitals and other healthcare facilities and various original equipment manufacturer (“OEM”) relationships.

International distributions and services accounted for 11% of total revenues in the first six months of 2019. Our implants are distributed in over 40 countries through a direct sales force in Germany and through stocking distributors in the rest of the world outside of Germany and the U.S.

We continue to implement a focused strategy to expand our spine and OEM operations and create long-term, profitable growth for the Company. The core components of our strategy are:

• Reduce Complexity. We are working to reduce complexity in our organization by divesting non-core assets and investing in core competencies.

• Drive Operational Excellence. We are working to optimize material cost and drive operational efficiency to reduce other direct costs by pursuing world class manufacturing.

• Accelerate Growth. We are investing in innovative, niche high growth product categories leveraging core competency in the spine market; utilizing core technologies to expand OEM relationships and drive organic growth; and building relevant scale in our spinal portfolio to improve importance to the consolidating healthcare market driven by integrated delivery networks and group purchasing organizations.

In line with our strategy, on March 8, 2019, we acquired Paradigm Spine, LLC (“Paradigm”), a leader in motion preservation and non-fusion spinal implant technology. Paradigm’s primary product is the coflex® Interlaminar Stabilization® device. Under the terms of the master transaction agreement dated March 8, 2019, we acquired Paradigm for $150.0 million in consideration paid at closing consisting of new debt financing of $100.0 million and $50.0 million of issued securities. In addition to the cash consideration amount and the stock consideration amount, we may be required to make further cash payments or issue additional shares of our common stock to Paradigm in an amount up to $50.0 million of shares of our common stock and an additional $100.0 million of cash and/or our common stock, in each case, if certain revenue targets are achieved between closing and December 31, 2022.

We believe this is a significant step toward focusing our business and advancing our efforts to generate predictable and sustainable operating results through disciplined execution and building scale to extend distribution of our products in those areas that offer the greatest opportunities to benefit our patients and shareholders.  

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We continue to maintain our commitment to research and development and the introduction of new strategically targeted allograft, xenograft, metal and synthetic implants as well as focused clinical efforts to support their acceptance in the marketplace. In addition, we consider strategic acquisitions from time to time for new implants and technologies intended to augment our existing implant offerings, as well as strategic dispositions from time to time in response to market trends or industry developments.

Critical Accounting Policies

There have been no significant changes to our critical accounting policies from those disclosed in our 2018 Annual Report on Form 10-K.

Results of Operations

Consolidated Financial Results

The following table reflects revenues for the three and six months ended June 30, 2019 and 2018, respectively.

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands)
Revenues:
Spine	$	26,671	$	18,934	$	46,676	$	38,197
Sports		14,024		14,190		27,803		27,625
OEM		32,483		31,170		61,474		61,290
International		9,129		6,391		16,095		13,463
Total revenues	$	82,307	$	70,685	$	152,048	$	140,575

Three Months Ended June 30, 2019, Compared With Three Months Ended June 30, 2018

Total Revenues – Our total revenues increased $11.6 million, or 16.4%, to $82.3 million for the three months ended June 30, 2019, compared to $70.7 million for the three months ended June 30, 2018, due to increased demand from certain OEM distributors, primarily in our dermis based implants and our coflex® Interlaminar Stabilization® implants, acquired through the acquisition of Paradigm, partially offset by the suspension of the map3® implant.

Spine – Revenues from spine implants increased $7.7 million, or 40.9%, to $26.7 million for the three months ended June 30, 2019, compared to $18.9 million for the three months ended June 30, 2018. Spine revenues increased primarily as a result of increased distributions of our legacy spine hardware implants and our coflex® Interlaminar Stabilization® implants, partially offset by the suspension of the map3® implant.

Sports – Revenues from sports allografts decreased $166,000, or 1.2%, to $14.0 million for the three months ended June 30, 2019, compared to $14.2 million for the three months ended June 30, 2018. Sports revenues decreased primarily as a result of lower distributions of our sports tendons and cartilage implants, partially offset by increased distributions of our Cortiva® implant.

OEM - Revenues from OEM increased $1.3 million, or 4.2%, to $32.5 million for the three months ended June 30, 2019, compared to $31.2 million for the three months ended June 30, 2018.  OEM revenues increased primarily due to increased demand from certain OEM distributors, primarily in our dermis based implants.

International – Revenues from international include distributions from our foreign affiliates as well as domestic export revenues.  International revenues increased $2.7 million, or 42.8%, to $9.1 million for the three months ended June 30, 2019, compared to $6.4 million for the three months ended June 30, 2018.  International revenues increased due to the introduction of our coflex® Interlaminar Stabilization® implants.

Costs of Processing and Distribution – Costs of processing and distribution decreased $3.1 million, or 7.6%, to $37.6 million for the three months ended June 30, 2019, compared to $40.6 million for the three months ended June 30, 2018. For the three months ended June 30, 2019 cost of processing and distribution included a $2.9 million charge related to the purchase accounting step-up of Paradigm inventory. For the three months ended June 30, 2018, costs of processing and distribution included an inventory charge of $6.6 million related to the suspension of the map3® implant and a $250,000 charge related to the purchase accounting step-up of Zyga inventory. Adjusted for the impact of purchase accounting step-up and other inventory charges, cost of processing and distribution increased $0.8 million or 2.3%, to $34.6 million, or 42.1% of revenue, for the three months ended June 30, 2019, compared to $33.8 million, or 47.9% of revenue, for the three months ended June 30, 2018.  The increase in costs of processing and distribution

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corresponds to the increase in revenue, partially offset by reduction in cost from our strategic initiative to optimize material cost and drive operational efficiency.

Marketing, General and Administrative Expenses – Marketing, general and administrative expenses increased $9.7 million, or 33.2%, to $39.0 million for the three months ended June 30, 2019, from $29.3 million for the three months ended June 30, 2018. The increase was primarily due to the Paradigm acquisition resulting in incremental headcount and marketing and administrative related expenses. Marketing, general and administrative expenses increased as a percentage of revenues from 41.4% for the three months ended June 30, 2018, to 47.4% for the three months ended June 30, 2019.

Research and Development Expenses – Research and development expenses increased $598,000, or 18.3%, to $3.9 million for the three months ended June 30, 2019, from $3.3 million for the three months ended June 30, 2018. The increase in research and development was in support of our strategic initiative to accelerate growth resulting in increased investment in new product development and clinical studies. Research and development expenses increased as a percentage of revenues from 4.6% for the three months ended June 30, 2018, to 4.7% for the three months ended June 30, 2019.

Gain on acquisition contingency – Gain on acquisition contingency was $1.6 million for the three months ended June 30, 2019.  The gain on acquisition contingency was the result of an adjustment to our estimate of obligation for future milestone payments on the Zyga acquisition. There was no gain on acquisition contingency for the three months ended June 30, 2018.

Asset impairment and abandonments – There were no asset impairment and abandonments for the three months ended June 30, 2019, as compared to $4.5 million for the three months ended June 30, 2018 related to the suspension of the map3® implant.

Acquisition and Integration Expenses – Acquisition and integration expenses were $2.0 million for the three months ended June 30, 2019.  Included in acquisition and integration expenses are business development expenses of $462,000 and severance expense of $500,000. There were no acquisition and integration expenses for the three months ended June 30, 2018.

Total Net Other Expense – Total net other expense, which includes interest expense, interest income, and foreign exchange loss, increased $2.5 million, or 215.2%, to $3.6 million for the three months ended June 30, 2019, from $1.2 million for the three months ended June 30, 2018. The increase in total net other expense is primarily due to higher interest expense as a result of new debt financing due to the purchase of Paradigm.

Income Tax Benefit – Income tax benefit for the three months ended June 30, 2019, was $2.9 million compared to $2.7 million for the three months ended June 30, 2018. Our effective tax rate for the three months ended June 30, 2019, was 135.3% compared to 33.1% for the three months ended June 30, 2018. Our effective tax rate for the three months ended June 30, 2019, was primarily impacted by the gain recognized on acquisition contingency and the charge related to the purchase accounting step-up of Paradigm inventory.

Six Months Ended June 30, 2019, Compared With Six Months Ended June 30, 2018

Total Revenues – Our total revenues increased $11.5 million, or 8.2%, to $152.0 million for the six months ended June 30, 2019, compared to $140.6 million for the six months ended June 30, 2018, due to increased demand from certain OEM distributors, primarily in our dermis based implants and our coflex® Interlaminar Stabilization® implants, acquired through the acquisition of Paradigm, partially offset by the suspension of the map3® implant.

Spine – Revenues from spine implants increased $8.5 million, or 22.2%, to $46.7 million for the six months ended June 30, 2019, compared to $38.2 million for the six months ended June 30, 2018. Spine revenues increased primarily as a result of increased distributions of our legacy spine hardware implants and our coflex® Interlaminar Stabilization® implants, partially offset by the suspension of the map3® implant.

Sports – Revenues from sports allografts of $27.8 million for the six months ended June 30, 2019, were comparable to the six months ended June 30, 2018.

OEM - Revenues from OEM of $61.5 million for the six months ended June 30, 2019, were comparable to the six months ended June 30, 2018.  

International – Revenues from international include distributions from our foreign affiliates as well as domestic export revenues.  International revenues increased $2.6 million, or 19.5%, to $16.1 million for the six months ended June 30, 2019, compared to $13.5 million for the six months ended June 30, 2018.  International revenues increased due to the introduction of our coflex® Interlaminar Stabilization® implants.

Costs of Processing and Distribution – Costs of processing and distribution decreased $7.6 million, or 9.8%, to $69.3 million for the six months ended June 30, 2019, compared to $76.9 million for the six months ended June 30, 2018. For the six months ended

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June 30, 2019 cost of processing and distribution included a $2.9 million charge related to the purchase accounting step-up of Paradigm inventory.For the six months ended June 30, 2018, costs of processing and distribution included an inventory write-off of $6.6 million related to the suspension ofthe map3® implant; an inventory charge of $1.0 million from the write-off of inventory related to our international restructuring and a $456,000 charge related to the purchase accounting step-up of Zyga inventory.Adjusted for the impact of purchase accounting step-up and other inventory charges, cost of processing and distribution decreased $2.5 million or 3.6%, to $66.4 million, or 43.6% of revenue, for the six months ended June 30, 2019, compared to $68.8 million, or 49.0% of revenue, for the six months ended June 30, 2018.  The decrease in costs of processing and distribution is due to the reduction in cost from our strategic initiative to optimize material cost and drive operational efficiency.

Marketing, General and Administrative Expenses – Marketing, general and administrative expenses increased $13.2 million, or 22.9%, to $70.9 million for the six months ended June 30, 2019, from $57.7 million for the six months ended June 30, 2018. The increase was primarily due to increased legal cost related to patent litigation and the Paradigm acquisition resulting in incremental headcount and marketing and administrative related expenses. Marketing, general and administrative expenses increased as a percentage of revenues from 41.0% for the six months ended June 30, 2018, to 46.6% for the six months ended June 30, 2019.

Research and Development Expenses – Research and development expenses increased $1.5 million, or 22.6%, to $8.2 million for the six months ended June 30, 2019, from $6.7 million for the six months ended June 30, 2018. The increase in research and development was in support of our strategic initiative to accelerate growth resulting in increased investment in new product development and clinical studies. Research and development expenses increased as a percentage of revenues from 4.8% for the six months ended June 30, 2018, to 5.4% for the six months ended June 30, 2019.

Severance and Restructuring Costs – There were no severance and restructuring costs for the six months ended June 30, 2019, as compared to $884,000 of expenses for the six months ended June 30, 2018.

Gain on acquisition contingency – Gain on acquisition contingency was $1.6 million for the six months ended June 30, 2019.  The gain on acquisition contingency was the result of an adjustment to our estimate of obligation for future milestone payments on the Zyga acquisition. There was no gain on acquisition contingency for the six months ended June 30, 2018.

Asset impairment and abandonments – There were no asset impairment and abandonments for the six months ended June 30, 2019, as compared to $4.6 million for the six months ended June 30, 2018 related to the suspension of the map3® implant.

Acquisition and Integration Expenses – Acquisition and integration expenses were $10.9 million for the six months ended June 30, 2019. Included in acquisition and integration expenses are business development expenses of $462,000 and severance expense of $896,000. Acquisition and integration expenses for the six months ended June 30, 2018, were $800,000 relating to the purchase of Zyga.

Total Net Other Expense – Total net other expense, which includes interest expense, interest income, and foreign exchange gain, increased $3.2 million, or 166.5%, to $5.1 million for the six months ended June 30, 2019, from $1.9 million for the six months ended June 30, 2018. The increase in total net other expense is primarily due to higher interest expense as a result of new debt financing due to the purchase of Paradigm.

Income Tax Benefit – Income tax benefit for the six months ended June 30, 2019, was $2.5 million compared to $2.5 million for the six months ended June 30, 2018. Our effective tax rate for the six months ended June 30, 2019, was 22.7% compared to 27.6% for the six months ended June 30, 2018. Our effective tax rate for the six months ended June 30, 2019, was primarily impacted by the gain recognized on acquisition contingency, charge related to the purchase accounting step-up of Paradigm inventory and non-deductible acquisition expenses relating to the purchase of Paradigm.

Non-GAAP Financial Measures

We utilize certain financial measures that are not calculated based on Generally Accepted Accounting Principles (“GAAP”). Certain of these financial measures are considered “non-GAAP” financial measures within the meaning of Item 10 of Regulation S-K promulgated by the SEC. We believe that non-GAAP financial measures provide an additional way of viewing aspects of our operations that, when viewed with the GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business. These non-GAAP financial measures are also used by our management to evaluate financial results and to plan and forecast future periods. However, non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Non-GAAP financial measures used by us may differ from the non-GAAP measures used by other companies, including our competitors.

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To supplement our consolidated financial statements presented on a GAAP basis, we disclose non-GAAP net income applicable to common shares and non-GAAP gross profit adjusted for certain amounts.  The calculation of the tax effect on the adjustments between GAAP net loss applicable to common shares and non-GAAP net income applicable to common shares is based upon our estimated annual GAAP tax rate, adjusted to account for items excluded from GAAP net loss applicable to common shares in calculating non-GAAP net income applicable to common shares.  Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP measures are included in the reconciliations below:

Non-GAAP Net Income Applicable to Common Shares, Adjusted:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Net loss applicable to common shares, as reported	$	744		$	(6,441	)	$	(8,343	)	$	(8,372	)
Severance and restructuring costs		—			—			—			884
Gain on acquisition contingency		(1,590	)		—			(1,590	)		—
Asset impairment and abandonments		—			4,515			—			4,515
Acquisition and integration expenses		1,953			—			10,910			800
Inventory write-off		—			6,559			—			7,582
Inventory purchase price adjustment		2,936			250			2,936			456
Loss on extinguishment of debt		—			309			—			309
Tax effect on adjustments		(3,313	)		(3,161	)		(2,696	)		(3,654	)
Non-GAAP net income applicable to common    shares, adjusted	$	730		$	2,031		$	1,217		$	2,520

Non-GAAP Gross Profit, Adjusted:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands)
Revenues	$	82,307	$	70,685	$	152,048	$	140,575
Costs of processing and distribution		37,562		40,645		69,299		76,853
Gross profit, as reported		44,745		30,040		82,749		63,722
Inventory write-off		—		6,559		—		7,582
Inventory purchase price adjustment		2,936		250		2,936		456
Non-GAAP gross profit, adjusted	$	47,681	$	36,849	$	85,685	$	71,760

The following are explanations of the adjustments that management excluded as part of the non-GAAP measures for the three and six months ended June 30, 2019 and 2018. Management removes the amount of these costs including the tax effect on the adjustments from our operating results to supplement a comparison to our past operating performance.

Severance and restructuring costs – These costs relate to the reduction of our organizational structure, primarily driven by simplification of our international operating infrastructure, specifically our distribution model.

Gain on acquisition contingency – The gain on acquisition contingency relates to an adjustment to our estimate of obligation for future milestone payments on the Zyga acquisition.

Asset impairment and abandonments – This adjustment represents an asset impairment and abandonments related to the suspension of the map3® implant.

Acquisition and integration expenses – These costs relate to acquisition and integration expenses due to the purchase of Paradigm and Zyga in 2019 and 2018, respectively.

Inventory write-off – These costs relate to an inventory write-off due to the rationalization of our international distribution infrastructure.

Inventory purchase price adjustment – These costs relate to the purchase price effects of acquired Paradigm and Zyga, respectively, inventory that was sold during the six months ended June 30, 2019 and 2018, respectively.

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Loss on extinguishment of debt – This adjustment represents costs relating to refinancing our debt.

Liquidity and Capital Resources

Our working capital at June 30, 2019, excluding the purchase accounting step-up of Paradigm inventory, increased $12.1 million to $131.7 million from $119.7 million at December 31, 2018, primarily as a result of the purchase of Paradigm. We acquired Paradigm for $100.0 million in cash consideration paid at closing consisting of new debt financing of $100.0 million.

At June 30, 2019, we had 70 days of revenues outstanding in trade accounts receivable, an increase of 7 days compared to December 31, 2018. The increase is primarily driven by the longer period receivables remain outstanding for contracts with customers where inventory is exclusively built with no alternative use to us, and where revenue is recognized over time under ASC 606. While we previously recorded revenue and receivables at the time of shipment, they are now recorded over time. The customer, however, is only billed at the time of shipment.

At June 30, 2019, excluding the purchase accounting step-up of Paradigm inventory, we had 320 days of inventory on hand, an increase of 41 days compared to December 31, 2018. The increase in inventory days is primarily due to the acquisition of Paradigm. We believe that our inventory levels will be adequate to support our on-going operations for the next twelve months.

We had $4.5 million of cash and cash equivalents at June 30, 2019. At June 30, 2019, our foreign subsidiaries held $1.9 million in cash. We intend to indefinitely reinvest the earnings of our foreign subsidiaries. If we were to repatriate indefinitely reinvested foreign funds, we would not be subject to additional U.S. federal income tax, however, we would be required to accrue and pay any applicable withholding tax and U.S. state income tax liabilities. We do not believe that this policy of indefinitely reinvesting the earnings of our foreign subsidiaries will have a material adverse effect on the business as a whole.

Our short and long-term obligations at June 30, 2019, increased $116.0 million to $165.1 million from $49.1 million at December 31, 2018. The increase in short and long-term obligations was primarily due to increased borrowing to finance the Paradigm acquisition.

On March 8, 2019, we acquired Paradigm, as discussed above under “Management Overview.”

As of June 30, 2019, we believe that our working capital, together with our borrowing ability under the JPM Facility, will be adequate to fund our ongoing operations for the next twelve months.

As of June 30, 2019, we have no material off-balance sheet arrangements.  

Certain Commitments.

Our long-term debt obligations and availability of credit as of June 30, 2019 are as follows:

	Outstanding			Available
	Balance			Credit
	(In thousands)
Ares Term loan	$	101,473
JPM facility		65,000		$	10,000
Less unamortized debt issuance costs		(1,392	)
Total	$	165,081

The following table provides a summary of our long-term debt obligations, operating lease obligations and other significant obligations as of June 30, 2019.

	Contractual Obligations Due by Period
	Total		Less than 1 Year		1-3 Years		4-5 Years		More than 5 Years
	(In thousands)
Long-term debt obligations	$	165,081	$	—	$	—	$	165,081	$	—
Operating lease obligations		4,071		879		1,933		384		875
Purchase obligations (1)		17,998		17,998		—		—		—
Total	$	187,150	$	18,877	$	1,933	$	165,465	$	875

(1) These amounts consist of contractual obligations for capital expenditures and open purchase orders.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to market risk from exposure to changes in interest rates based upon our financing, investing and cash management activities.  We are exposed to interest rate risk in the United States and Germany. Changes in interest rates affect interest income earned on cash and cash equivalents and interest expense on revolving credit arrangements. We have not entered into derivative transactions related to cash and cash equivalents or debt. Our borrowings under our the Ares Term Loan and JPM Facility expose us to market risk related to changes in interest rates. As of June 30, 2019, our outstanding floating rate indebtedness totaled $165.1 million. The primary base interest rate is LIBOR. Assuming the outstanding balance on our floating rate indebtedness remains constant over a year, a 100 basis point increase in the interest rate would decrease net income and cash flow by approximately $1.3 million. Other outstanding debt consists of fixed rate instruments. We do not expect changes in interest rates to have a material adverse effect on our income or our cash flows in 2019. However, we can give no assurance that interest rates will not significantly change in the future.

The value of the U.S. dollar compared to the Euro affects our financial results. Changes in exchange rates may positively or negatively affect revenues, gross margins, operating expenses and net income. Our international operations currently transact business primarily in the Euro. Assets and liabilities of foreign subsidiaries are translated at the period end exchange rate while revenues and expenses are translated at the average exchange rate for the period. Intercompany transactions are translated from the Euro to the U.S. dollar. Based on June 30, 2019 outstanding intercompany balances, a 1% change in currency rates would have had a de-minimis impact on our results of operations. We do not expect changes in exchange rates to have a material adverse effect on our income or our cash flows in 2019. However, we can give no assurance that exchange rates will not significantly change in the future.

Item 4. Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed on the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer pursuant to Rules 13a-15(b) or 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures include controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective as of the end of the period covered by this report.

We implemented ASU 2016-02 as of January 1, 2019. As a result, we made the following significant modifications to internal control over financial reporting, including changes to accounting policies and procedures and documentation practices:

• Updated our policies and procedures related to accounting for lease assets and liabilities and related income and expense

• Modified our contract review controls

• Added controls for reevaluating our significant assumptions and judgments on a quarterly basis.

• Added controls to address required disclosures regarding leases, including our significant assumptions and judgments used in applying ASC 842.

Other than the items described above, there have not been any changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the three months ended June 30, 2019, that materially affected, or that we believe are reasonably likely to materially affect, our internal control over financial reporting.

We are in the process of integrating Paradigm into our overall internal control over financial reporting processes.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is, from time to time, involved in litigation relating to claims arising out of its operations in the ordinary course of business. The Company believes that none of these claims that were outstanding as of June 30, 2019, will have a material adverse impact on its financial position or results of operations.

For a further description, we refer you to Part I, Item 1, Note 23 entitled “Legal Actions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of material legal proceedings.

Item 1A. Risk Factors

There has been no material change in our risk factors as previously disclosed in Part I, Item 1.A., Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on March 5, 2019, although certain risk factors with respect to the ability to close the Paradigm acquisition are no longer applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information with respect to our repurchases of our common stock during the six months ended June 30, 2019.

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2019 to January 31, 2019		9,192	$	4.10		—		—
February 1, 2019 to February 28, 2019		2,571	$	4.98		—		—
March 1, 2019 to March 31, 2019		17,258	$	4.98		—		—
April 1, 2019 to April 30, 2019		847	$	4.98		—		—
May 1, 2019 to May 31, 2019		6,901	$	4.90		—		—
June 1, 2019 to June 30, 2019		-	$	-		—		—
Total		36,769	$	4.63		—		—

(1) The purchases include amounts that are attributable to shares surrendered to us by employees to satisfy, in connection with the vesting of restricted stock awards, their tax withholdings obligations.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

2.1(1)	Master Transaction Agreement, dated as of November 1, 2018, by and among RTI Surgical, Inc., PS Spine Holdco, LLC, Bears Holding Sub, Inc., and Bears Merger Sub, Inc.
3.1(1)	Amended and Restated Certificate of Incorporation of the Company, effective as of March 8, 2019.
3.2(1)	Certificate of Designation of Series A Convertible Preferred Stock of the Company, effective as of March 8, 2019.
3.3(1)	Amended and Restated Bylaws of the Company, effective as of March 8, 2019.
31.1	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

(1) Incorporated by reference to Registrant’s Current Report on Form 8-K12B filed by the Registrant on March 11, 2019.

33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

RTI SURGICAL HOLDINGS, INC. (Registrant)
By:	/s/ Camille I. Farhat
	Camille I. Farhat President and Chief Executive Officer
By:	/s/ Jonathon M. Singer
	Jonathon M. Singer Chief Financial and Administrative Officer

Date: August 5, 2019

34

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

EXCHANGE ACT RULES 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Camille I. Farhat, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of RTI Surgical Holdings, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

/s/ Camille I. Farhat	Dated: August 5, 2019
Camille I. Farhat
President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

EXCHANGE ACT RULES 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jonathon M. Singer, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of RTI Surgical Holdings, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

/s/ Jonathon M. Singer	Dated:August 5, 2019
Jonathon M. Singer
Chief Financial and Administrative Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of RTI Surgical Holdings, Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Camille I. Farhat, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Camille I. Farhat	Dated: August 5, 2019
Camille I. Farhat
President and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of this Report or as a separate disclosure document.  A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of RTI Surgical Holdings, Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jonathon M. Singer, Chief Financial and Administrative Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jonathon M. Singer	Dated: August 5, 2019
Jonathon M. Singer
Chief Financial and Administrative Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of this Report or as a separate disclosure document.  A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Jul. 26, 2019
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Trading Symbol	RTIX
Entity Registrant Name	RTI Surgical Holdings, Inc.
Entity Central Index Key	0001760173
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		73,897,965
Entity File Number	001-38832
Entity Tax Identification Number	832540607
Entity Address, Address Line One	520 Lake Cook Road
Entity Address, Address Line Two	Suite 315
Entity Address, City or Town	Deerfield
Entity Address, State or Province	Illinois
Entity Address, Postal Zip Code	60015
City Area Code	877
Local Phone Number	343-6832
Entity Information, Former Legal or Registered Name	RTI Surgical, Inc.
Former Address [Member]
Entity Information [Line Items]
Entity Address, Address Line One	11621 Research Circle
Entity Address, City or Town	Alachua
Entity Address, State or Province	Florida
Entity Address, Postal Zip Code	32615

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current Assets:
Cash and cash equivalents	$ 4,518	$ 10,949
Accounts receivable - less allowances of $3,103 at June 30, 2019 and $2,380 at December 31, 2018	56,163	48,351
Inventories - net	127,906	107,471
Prepaid and other current assets	8,733	8,791
Total current assets	197,320	175,562
Non-current inventories - net	20,445
Property, plant and equipment - net	79,691	77,954
Deferred tax assets - net	19,715	17,510
Goodwill	271,429	59,798
Other intangible assets - net	25,269	26,359
Other assets - net	7,542	4,003
Total assets	621,411	361,186
Current Liabilities:
Accounts payable	20,766	26,309
Accrued expenses	24,668	24,683
Current portion of deferred revenue	4,744	4,908
Total current liabilities	50,178	55,900
Long-term obligations	165,081	49,073
Acquisition contingencies	98,372	4,986
Other long-term liabilities	2,562	633
Deferred revenue	325	744
Total liabilities	316,518	111,336
Commitments and contingencies (Note 22)
Preferred stock Series A, $.001 par value: 5,000,000 shares authorized; 50,000 shares issued and outstanding	66,318	66,226
Stockholders' equity:
Common stock, $.001 par value: 150,000,000 shares authorized; 75,159,262 and 63,469,185 shares issued and outstanding, respectively	75	64
Additional paid-in capital	496,596	433,143
Accumulated other comprehensive loss	(7,268)	(7,270)
Accumulated deficit	(245,787)	(237,444)
Less treasury stock, 1,257,949 and 1,221,180 shares, respectively, at cost	(5,041)	(4,869)
Total stockholders' equity	238,575	183,624
Total liabilities and stockholders' equity	$ 621,411	$ 361,186

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Accounts receivable, allowances	$ 3,103	$ 2,380
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	50,000	50,000
Preferred stock, shares outstanding	50,000	50,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	75,159,262	63,469,185
Common stock, shares outstanding	75,159,262	63,469,185
Treasury stock, shares	1,257,949	1,221,180

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Condensed Consolidated Statements of Comprehensive Gain (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Revenues	$ 82,307	$ 70,685	$ 152,048	$ 140,575
Costs of processing and distribution	37,562	40,645	69,299	76,853
Gross profit	44,745	30,040	82,749	63,722
Expenses:
Marketing, general and administrative	38,993	29,266	70,876	57,655
Research and development	3,868	3,270	8,204	6,691
Severance and restructuring costs				884
Gain on acquisition contingency	(1,590)		(1,590)
Asset impairment and abandonments		4,515	15	4,644
Acquisition and integration expenses	1,953		10,910	800
Total operating expenses	43,224	37,051	88,415	70,674
Operating income (loss)	1,521	(7,011)	(5,666)	(6,952)
Other (expense) income:
Interest expense	(3,635)	(777)	(5,239)	(1,612)
Interest income	26	6	157	17
Loss on extinguishment of debt		(309)		(309)
Foreign exchange loss	(19)	(71)	(50)	(22)
Total other expense - net	(3,628)	(1,151)	(5,132)	(1,926)
Income (loss) before income tax benefit	(2,107)	(8,162)	(10,798)	(8,878)
Income tax benefit	2,851	2,702	2,455	2,453
Net income (loss)	744	(5,460)	(8,343)	(6,425)
Convertible preferred dividend		(981)		(1,947)
Net income (loss) applicable to common shares	744	(6,441)	(8,343)	(8,372)
Other comprehensive gain (loss):
Unrealized foreign currency translation gain (loss)	395	(914)	2	(521)
Comprehensive gain (loss)	$ 1,139	$ (7,355)	$ (8,341)	$ (8,893)
Net income (loss) per common share - basic	$ 0.01	$ (0.10)	$ (0.12)	$ (0.13)
Net income (loss) per common share - diluted	$ 0.01	$ (0.10)	$ (0.12)	$ (0.13)
Weighted average shares outstanding - basic	75,144,488	63,405,708	70,409,839	63,400,737
Weighted average shares outstanding - diluted	91,120,956	63,405,708	70,409,839	63,400,737

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Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands	Total	Series A Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Additional Paid-in Capital [Member] Series A Preferred Stock [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]	Treasury Stock [Member]
Beginning Balance at Dec. 31, 2017	$ 181,737		$ 63	$ 429,459		$ (6,329)	$ (237,066)	$ (4,390)
Accumulated effect of adoption of the revenue recognition standard	872						872
Net (loss) income	(965)						(965)
Foreign currency translation adjustment	393					393
Exercise of common stock options	287			287
Stock-based compensation	1,280			1,280
Purchase of treasury stock	(363)							(363)
Amortization of preferred stock series A issuance costs		$ (46)			$ (46)
Preferred stock Series A dividend		(966)			(966)
Ending Balance at Mar. 31, 2018	182,229		63	430,014		(5,936)	(237,159)	(4,753)
Beginning Balance at Dec. 31, 2017	181,737		63	429,459		(6,329)	(237,066)	(4,390)
Net (loss) income	(6,425)
Foreign currency translation adjustment	(521)
Ending Balance at Jun. 30, 2018	176,075		63	430,311		(6,850)	(242,619)	(4,830)
Beginning Balance at Mar. 31, 2018	182,229		63	430,014		(5,936)	(237,159)	(4,753)
Net (loss) income	(5,460)						(5,460)
Foreign currency translation adjustment	(914)					(914)
Exercise of common stock options	33			33
Stock-based compensation	1,290			1,290
Purchase of treasury stock	(77)							(77)
Amortization of preferred stock series A issuance costs		(45)			(45)
Preferred stock Series A dividend		(981)			(981)
Ending Balance at Jun. 30, 2018	176,075		63	430,311		(6,850)	(242,619)	(4,830)
Beginning Balance at Dec. 31, 2018	183,624		64	433,143		(7,270)	(237,444)	(4,869)
Net (loss) income	(9,087)						(9,087)
Foreign currency translation adjustment	(393)					(393)
Exercise of common stock options	284			284
Equity instruments issued in connection with Paradigm Spine acquistion - net of fees	60,730		11	60,719
Stock-based compensation	1,163			1,163
Purchase of treasury stock	(130)							(130)
Amortization of preferred stock series A issuance costs		(46)			(46)
Ending Balance at Mar. 31, 2019	236,145		75	495,263		(7,663)	(246,531)	(4,999)
Beginning Balance at Dec. 31, 2018	183,624		64	433,143		(7,270)	(237,444)	(4,869)
Net (loss) income	(8,343)
Foreign currency translation adjustment	2
Ending Balance at Jun. 30, 2019	238,575		75	496,596		(7,268)	(245,787)	(5,041)
Beginning Balance at Mar. 31, 2019	236,145		75	495,263		(7,663)	(246,531)	(4,999)
Net (loss) income	744						744
Foreign currency translation adjustment	395					395
Exercise of common stock options	111			111
Stock-based compensation	1,267			1,267
Purchase of treasury stock	(42)							(42)
Amortization of preferred stock series A issuance costs		$ (45)			$ (45)
Ending Balance at Jun. 30, 2019	$ 238,575		$ 75	$ 496,596		$ (7,268)	$ (245,787)	$ (5,041)

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities:
Net loss	$ (8,343)	$ (6,425)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization expense	7,491	7,068
Provision for bad debts and product returns	899	494
Provision for inventory write-downs	3,274	10,865
Amortization of deferred revenue	(2,585)	(2,435)
Deferred income tax benefit	(2,703)	(2,671)
Stock-based compensation	2,430	2,570
Asset impairment and abandonments	15	4,644
Gain on acquisition contingency	(1,590)
Paid in kind interest expense	1,473
Other	877	610
Change in assets and liabilities:
Accounts receivable	(3,509)	(7,640)
Inventories	(1,078)	(411)
Accounts payable	(9,675)	(3,803)
Accrued expenses	(2,217)	(2,592)
Deferred revenue	2,000	2,000
Other operating assets and liabilities	145	7,104
Net cash (used in) provided by operating activities	(13,111)	9,378
Cash flows from investing activities:
Purchases of property, plant and equipment	(6,912)	(3,856)
Patent and acquired intangible asset costs	(1,126)	(728)
Net cash used in investing activities	(107,959)	(25,584)
Cash flows from financing activities:
Proceeds from exercise of common stock options	395	1,429
Proceeds from long-term obligations	115,000	74,425
Payments of debt issuance costs	(729)
Payments on long-term obligations		(66,750)
Other financing activities		(1,026)
Net cash provided by financing activities	114,666	8,078
Effect of exchange rate changes on cash and cash equivalents	(27)	(7)
Net decrease in cash and cash equivalents	(6,431)	(8,135)
Cash and cash equivalents, beginning of period	10,949	22,381
Cash and cash equivalents, end of period	4,518	14,246
Supplemental cash flow disclosure:
Cash paid for interest	2,732	1,974
Income tax refunds, net of payments	1,982	6,698
Non-cash acquisition of property, plant and equipment	456	676
Increase in accrual for dividend payable		1,947
Non-cash common stock issuance	60,730
Zyga Technology Inc [Member]
Cash flows from investing activities:
Payments to acquire businesses		$ (21,000)
Paradigm Spine [Member]
Cash flows from investing activities:
Payments to acquire businesses	(99,921)
Supplemental cash flow disclosure:
Non-cash acquisition of Paradigm	$ 60,730

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Operations and Organization

6 Months Ended

Jun. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Operations and Organization

1. Operations and Organization

RTI Surgical Holdings, Inc. and Subsidiaries (defined as the “Company” for matters occurring after March 8, 2019)is a global surgical implant company that designs, develops, manufactures and distributes biologic, metal and synthetic implants. The Company’s implants are used in orthopedic, spine, sports medicine, plastic surgery, trauma and other surgical procedures to repair and promote the natural healing of human bone and other human tissues and improve surgical outcomes. The Company manufactures metal and synthetic implants and processes donated human musculoskeletal and other tissue and bovine and porcine animal tissue in producing allograft and xenograft implants using its proprietary BIOCLEANSE®, TUTOPLAST® and CANCELLE® SP sterilization processes. The Company processes tissue at its facilities in Alachua, Florida and Neunkirchen, Germany and manufactures metal and synthetic implants in Marquette, Michigan and Greenville, North Carolina, respectively, and has a distribution and research center in Wurmlingen, Germany. The Company is accredited in the U.S. by the American Association of Tissue Banks and the Company is a member of AdvaMed. The Company’s implants are distributed directly to hospitals and free-standing surgery centers throughout the U.S. and in over 50 countries worldwide with the support of both its and third-party representatives as well as through larger purchasing companies.

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Basis of Presentation

6 Months Ended

Jun. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, which the Company considers necessary for a fair presentation of the results of operations for the periods shown.  The condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations, comprehensive loss and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, RTI Surgical, Inc. (defined as “Legacy RTI” for matters occurring after March 8, 2019, and as the “Company” for matters occurring before March 8, 2019), Paradigm Spine, LLC (“Paradigm”), Pioneer Surgical Technology, Inc. (“Pioneer Surgical”), Tutogen Medical, Inc. (“TMI”), and Zyga Technology, Inc. (“Zyga”). The condensed consolidated financial statements also include the accounts of RTI Donor Services, Inc. (“RTIDS”), which is a controlled entity.  Prior to the completion of the acquisition of Paradigm, the financial statements were that of RTI Surgical Inc. and subsidiaries. Subsequently, RTI Surgical Holdings, Inc. and Subsidiaries is the successor reporting company. See Note 6 for further discussion.

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Recently Issued and Adopted Accounting Standards

6 Months Ended

Jun. 30, 2019

Accounting Changes And Error Corrections [Abstract]

Recently Issued and Adopted Accounting Standards

3. Recently Issued and Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASU”) 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases in “Leases (Topic 840).” ASU 2016-02 establishes a right-of-use (“ROU”) model that requires operating leases be recorded on the balance sheet through recognition of a liability for the discounted present value of future lease payments and a corresponding ROU asset. The ROU asset recorded at commencement of the lease represents the right to use the underlying asset over the lease term in exchange for the lease payments. Leases with an initial term of 12 months or less and do not have an option to purchase the underlying asset that is deemed reasonably certain to exercise are not recorded on the balance sheet; rather, rent expense for these leases is recognized on a straight-line basis over the lease term. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

Effective January 1, 2019, the Company adopted the new lease accounting standard using the optional transition method which allowed us to continue to apply the guidance under the lease standard in effect at the time in the comparative periods presented.  In addition, the Company elected the package of practical expedients, which allowed us to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs.  The Company has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. The Company has also elected the practical expedient allowing us to not separate the lease and non-lease components for all classes of underlying assets. Adoption of this standard resulted in the recording of operating lease ROU assets and corresponding operating lease liabilities of $3,164 and $3,155, respectively, as of January 1, 2019 with no impact on accumulated deficit.  Financial position for reporting periods beginning on or after January 1, 2019, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance. Note disclosures required in Topic 842 are reported in Note 4, Leases.

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Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

4. Leases

The Company’s leases are classified as operating leases and includes office space, automobiles, and copiers.  The Company does not have any finance leases and the Company’s operating leases do not have any residual value guarantees, restrictions or covenants. The Company does not have any leases that have not yet commenced as of June 30, 2019. The majority of our leases have remaining lease terms of 1 to 14 years, some of which include options to extend or terminate the leases.  The option to extend is only included in the lease term if the Company is reasonably certain of exercising that option. Operating lease ROU assets are presented within other assets-net on the Condensed Consolidated Balance Sheet.  The current portion of operating lease liabilities are presented within accrued expenses, and the non-current portion of operating lease liabilities are presented within other long-term liabilities on the Condensed Consolidated Balance Sheet.

A subset of the Company’s automobile and copier leases contain variable payments.  The variable lease payments for such automobile leases are based on actual mileage incurred at the standard contractual rate. The variable lease payments for such copier leases are based on actual copies incurred at the standard contractual rate.

The components of operating lease expense were as follows:

	For the Three Months Ended		For the Six Months Ended
	June 30, 2019		June 30, 2019
Operating lease cost	$	440	$	784
Short-term operating lease cost		—		36
Total operating lease cost	$	440	$	820

The Company does not have any variable lease costs.

Supplemental cash flow information related to operating leases was as follows:

	For the Three Months Ended		For the Six Months Ended
	June 30, 2019		June 30, 2019
Cash paid for amounts included in the measurement    of lease liabilities	$	397	$	691
ROU assets obtained in exchange for lease obligations		—		34

Supplemental balance sheet information related to operating leases was as follows:

	Balance Sheet Classification	June 30, 2019
Assets:
Right-of-use assets	Other assets - net	$	3,546
Liabilities:
Current	Accrued expenses	$	1,505
Noncurrent	Other long-term liabilities		2,117
Total operating lease liabilities		$	3,622

As of June 30, 2019, the weighted-average remaining lease term was 4.6 years. The Company’s lease agreements do not provide a readily determinable implicit rate nor is it available to the Company from its lessors. Instead, the Company estimates its incremental borrowing rate based on information available at lease commencement in order to discount lease payments to present value. The weighted-average discount rate of the Company’s operating leases was 4.7%, as of June 30, 2019.

As of June 30, 2019, maturities of operating lease liabilities were as follows:

Maturity of Operating Lease Liabilities	June 30, 2019
2019 (remaining)	$	879
2020		1,368
2021		565
2022		224
2023		160
2024 and beyond		875
Total future minimum lease payments		4,071
Less imputed interest		(449	)
Total	$	3,622

As previously disclosed in our 2018 Annual Report on Form 10-K, which followed the lease accounting prior to adoption of ASC 842, future commitments relating to operating leases for the five years and period thereafter as of December 31, 2018 were as follows:

Maturity of Operating Lease Liabilities	December 31, 2018
2019	$	1,374
2020		806
2021		276
2022		162
2023		166
2024 and beyond		882
Total future minimum lease payments	$	3,666

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Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2019

Revenue From Contract With Customer [Abstract]

Revenue from Contracts with Customers

5.Revenue from Contracts with Customers

The Company operates in one reportable segment composed of four lines of business. The reporting of the Company’s lines of business are composed primarily of four franchises: spine; sports; original equipment manufacturer (“OEM”) and international. The following table presents revenues from these four categories for the three and six months ended June 30, 2019 and 2018:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenues:
Spine	$	26,671	$	18,934	$	46,676	$	38,197
Sports		14,024		14,190		27,803		27,625
OEM		32,483		31,170		61,474		61,290
International		9,129		6,391		16,095		13,463
Total revenues from contracts with customers	$	82,307	$	70,685	$	152,048	$	140,575

The following table presents revenues recognized at a point in time and over time for the three and six months ended June 30, 2019 and 2018:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenue recognized at a point in time	$	66,469	$	61,534	$	119,070	$	121,697
Revenue recognized over time		15,838		9,151		32,978		18,878
Total revenues from contracts with customers	$	82,307	$	70,685	$	152,048	$	140,575

The Company’s performance obligations consist mainly of transferring control of implants identified in the contracts. Some of the Company’s contracts offer assurance-type warranties in connection with the sale of a product to a customer. Assurance-type warranties provide a customer with assurance that the related product will function as the parties intended because it complies with agreed-upon specifications. Such warranties do not represent a separate performance obligation and are not material to the condensed consolidated financial statements.

The opening and closing balances of the Company’s accounts receivable, contract asset and current and long-term contract liability for the six months ended June 30, 2019 and 2018 are as follows:

						Contract
			Contract			Liability
	Accounts		Liability			(Long-
	Receivable		(Current)			Term)
Opening 1/1/2019	$	48,351	$	5,425		$	744
Closing 6/30/2019		56,163		5,292			325
Increase/(decrease)		7,812		(133	)		(419	)
						Contract
			Contract			Liability
	Accounts		Liability			(Long-
	Receivable		(Current)			Term)
Opening 1/1/2018	$	39,095	$	5,978		$	3,741
Closing 6/30/2018		45,576		6,210			3,155
Increase/(decrease)		6,481		232			(586	)

Contract liabilities consist primarily of the return allowance described above, and of deferred revenue arising from upfront and annual exclusivity fees. The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the Company’s performance of the Company’s contractual obligations over time. The Company recognizes sales commissions as incurred because the amortization period is less than one year. The Company does not incur other incremental costs relating to obtaining a contract with a customer, and therefore, does not have contract assets, or impairment losses associated therewith. Revenue recognized for the six months ended June 30, 2019 and 2018, from amounts included in contract liabilities at the beginning of the period were $2,584 and $2,434, respectively.

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Acquisition of Paradigm Spine, LLC

6 Months Ended

Jun. 30, 2019

Paradigm Spine [Member]

Acquisition

6. Acquisition of Paradigm Spine, LLC

On March 8, 2019, pursuant to the Master Transaction Agreement (the “Master Transaction Agreement”), dated as of November 1, 2018, by and among Legacy RTI, PS Spine Holdco, LLC, a Delaware limited liability company (“PS Spine”), the Company, and Bears Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of the Company (“Merger Sub”), the Company acquired all of the outstanding equity interests of Paradigm, through a transaction in which: (i) PS Spine contributed all of the issued and outstanding equity interests in Paradigm to the Company (the “Contribution”); (ii) Merger Sub merged with and into Legacy RTI (the “Merger”), with Legacy RTI surviving as a wholly owned direct subsidiary of the Company; and (iii) the Company was renamed “RTI Surgical Holdings, Inc.” (collectively, the “Transaction”). Legacy RTI retained its existing name “RTI Surgical, Inc.”

Pursuant to the Master Transaction Agreement: (i) each share of common stock, par value $0.001 per share, of Legacy RTI issued and outstanding immediately prior to the Transaction (other than shares held by Legacy RTI as treasury shares or by the Company or Merger Sub immediately prior to the Transaction, which were automatically cancelled and ceased to exist) was converted automatically into one fully paid and non-assessable share of Company common stock , par value $0.001 per share; (ii) each share of Series A convertible preferred stock, par value $0.001 per share, of Legacy RTI issued and outstanding immediately prior to the Transaction (other than shares held by Legacy RTI as treasury shares or by the Company or Merger Sub immediately prior to the Transaction, which were automatically cancelled and ceased to exist) was converted automatically into one fully paid and non-assessable share of Series A convertible preferred stock, par value $0.001 per share, of the Company; and (iii) each stock option and restricted stock award granted by Legacy RTI was converted into a stock option or restricted stock award, as applicable, of the Company with respect to an equivalent number of shares of the Company common stock on the same terms and conditions as were applicable prior to the closing.

The consideration for the Contribution was $100,000 (the “Cash Consideration Amount”) in cash, subject to adjustment as described below, and 10,729,614 shares of Company common stock (the “Stock Consideration Amount”). The Stock Consideration Amount was determined by dividing $50,000 by the volume weighted average closing price of Legacy RTI’s common stock for the five business days prior to November 1, 2018 (the “Legacy RTI Price”). The Cash Consideration Amount was adjusted by a: (i) positive dollar for dollar adjustment based on the amount of Paradigm’s cash and cash equivalents at closing; (ii) negative dollar for dollar adjustment based on the amount of outstanding indebtedness and unpaid transaction expenses of Paradigm at closing; and (iii) negative dollar for dollar adjustment to the extent that Paradigm’s working capital (excluding indebtedness and transaction expenses) at closing did not exceed the working capital target of $7,000.

In addition to the Cash Consideration Amount and the Stock Consideration Amount, the Company may be required to make further cash payments or issue additional shares of Company common stock to PS Spine in an amount up to $50,000 of shares of Company common stock to be valued based upon the Legacy RTI Price and an additional $100,000 of cash and/or Company common stock to be valued at the time of issuance, in each case, if certain revenue targets are achieved between closing, March 8, 2019, and December 31, 2022.  The Company estimates a contingent liability related to the revenue based earnout of $94,976 utilizing a Monte-Carlo simulation model. A Monte-Carlo simulation is an analytical method used to estimate fair value by performing a large number of simulations or trial runs and thereby determining a value based on the possible outcomes. Accounted for as a liability to be revalued at each reporting period, the preliminary fair value of the contingent liability was measured using Level 3 inputs, which includes weighted average cost of capital and projected revenues and costs. Acquisition and integration related costs were approximately $15,053, of which approximately $4,143 was incurred during 2018, $10,910 (which includes business development expenses of $462 and severance expense of $896) was incurred for the six months ended June 30, 2019 and is reflected separately in the accompanying condensed consolidated statements of comprehensive income (loss).

The Company has accounted for the acquisition of Paradigm under Accounting Standards Codification (“ASC”) 805, Business Combinations.  Paradigm’s results of operations are included in the condensed consolidated financial statements beginning after March 8, 2019, the acquisition date.

The purchase price was financed as follows:

	(In thousands)
Cash proceeds from second lien credit agreement	$	100,000
Fair market value of securities issued		60,730
Fair market value of contingent earnout		94,976
Total purchase price	$	255,706

The preliminary valuation of the acquired assets and liabilities is not yet complete, and as such, the Company has not yet finalized its allocation of the purchase price for the acquisition. The table below represents the preliminary allocation of the total consideration to Paradigm’s tangible assets and liabilities based on management’s preliminary estimate of their respective fair values as of March 8, 2019.

During the three months ended June 30, 2019, the Company made the following changes to the fair values of acquired assets and liabilities as follows:

	Balance at
	June 30, 2019			March 31, 2019			Change
	(In thousands)
Cash	$	79		$	79		$	-
Accounts receivable		5,220			5,220			-
Inventories		43,084			5,898			37,186
Other current assets		1,693			1,752			(59	)
Property, plant and equipment		379			379			-
Current liabilities		(6,380	)		(6,169	)		(211	)
Net tangible assets acquired		44,075			7,159			36,916
Goodwill		211,631			248,547			(36,916	)
Total net assets acquired	$	255,706		$	255,706		$	-

As of March 8, 2019, the inventory fair value was composed of current inventory of $19,703 and non-current inventory of $23,381. As a result of the inventory purchase price adjustment to fair value Paradigm inventory, the Company recorded $2,936 to costs of processing and distribution for the six months ended June 30, 2019, which includes $477 for the inventory sold over the three months ended March 31, 2019.

Total net assets acquired as of March 8, 2019, are all part of the Company’s only operating segment.  Fair values are based on management’s estimates and assumptions including variations of the income approach, the cost approach and the market approach.

The Company believes that the acquisition of Paradigm, a spine focused business, offers the potential for substantial strategic and financial benefits. The transaction further advances the Company’s strategic transformation focused on reducing complexity, driving operational excellence and accelerating growth.  The Company believes the acquisition will enhance stockholder value through, among other things, enabling the Company to capitalize on the following strategic advantages and opportunities:

• Paradigm will strengthen the Company’s spine portfolio with the addition of the coflex® Interlaminar Stabilization® device. Coflex is a differentiated and minimally invasive motion preserving stabilization implant that is FDA PMA-approved for the treatment of moderate to severe lumbar spinal stenosis (“LSS”) in conjunction with decompression.

• Coflex allows the Company to provide surgeons who treat patients with moderate to severe LSS with a PMA-approved device supported by more than 12 years of clinical data and with expanding coverage from payors.

These potential benefits resulted in the Company paying a premium for Paradigm resulting in the preliminary recognition of $211,631 of goodwill assigned to the Company’s only operating segment and reporting unit.

The amount of Paradigm’s revenues and net income since the March 8, 2019, acquisition date, included in the Company’s Condensed Consolidated Statement of Comprehensive Loss for the six months ended June 30, 2019, excluding acquisition and integration related costs of approximately $10,910, are $12,096 and $490, respectively.

The following unaudited pro forma information shows the results of the Company’s operations as though the acquisition had occurred as of the beginning of the prior comparable period, January 1, 2018, (in thousands, except per share data):

	For the Six Months Ended
	June 30,
	2019			2018
Revenues	$	19,074		$	21,252
Net loss applicable to common shares		(10,406	)		(19,169	)
Net loss applicable to common shares excluding acquistion and integration costs		(1,219	)		(19,169	)

The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisition taken place as of the beginning of the periods presented, or the results that may occur in the future. The pro forma net loss was adjusted to exclude $10,910 of acquisition and integration related costs net of tax of $1,723 incurred during the six months ended June 30, 2019.

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Acquisition of Zyga Technology, Inc

6 Months Ended

Jun. 30, 2019

Zyga Technology Inc [Member]

Acquisition

7. Acquisition of Zyga Technology, Inc.

On January 4, 2018, the Company acquired Zyga Technology, Inc. (“Zyga”), a leading spine-focused medical device company that develops and produces innovative minimally invasive devices to treat underserved conditions of the lumbar spine. Zyga’s primary product is the SImmetry® Sacroiliac Joint Fusion System. Under the terms of the merger agreement dated January 4, 2018, the Company acquired Zyga for $21,000 in consideration paid at closing (consisting of borrowings of $18,000 on the Company’s revolving credit facility and $3,000 cash on hand), $1,000 contingent upon the successful achievement of a clinical milestone, and a revenue based earnout consideration of up to $35,000. Based on a probability weighted model, the Company estimates a contingent liability related to the clinical milestone and revenue based earnout of $4,986. Acquisition related costs were approximately $1,430, of which approximately $630 was incurred in 2017 and $800 was incurred for the three months ended March 31, 2018 and is reflected separately in the accompanying Consolidated Statements of Comprehensive (Loss) Income.

The Company has accounted for the acquisition of Zyga under ASC 805, Business Combinations.  Zyga’s results of operations are included in the consolidated financial statements beginning after January 4, 2018, the acquisition date.

The purchase price was financed as follows:

	(In thousands)
Cash proceeds from revolving credit facility	$	18,000
Cash from RTI Surgical		3,000
Total purchase price	$	21,000

In the fourth quarter of 2018, the Company completed its valuation of the purchase price allocation. The table below represents the final allocation of the total consideration to Zyga’s tangible and intangible assets and liabilities fair values as of January 4, 2018.

	(In thousands)
Inventories	$	1,099
Accounts receivable		573
Other current assets		53
Property, plant and equipment		151
Other assets		26
Deferred tax assets		4,715
Current liabilities		(947	)
Acquisition contingencies		(4,986	)
Net tangible assets acquired		684
Other intangible assets		6,760
Goodwill		13,556
Total net assets acquired	$	21,000

Total net assets acquired as of January 4, 2018, are all part of the Company’s only operating segment.  Fair values are based on management’s estimates and assumptions including variations of the income approach, the cost approach and the market approach. Other intangible assets include patents of $6,500 with a useful life of 13 years, trademarks of $80 with a useful life of 1 year and selling and marketing relationships of $180 with a useful life of 7 years.

The Company believes that the acquisition of Zyga has offered and continues to offer the potential for substantial strategic and financial benefits. The transaction further advances our strategic transformation focused on reducing complexity, driving operational excellence and accelerating growth.  The Company believes the acquisition will enhance stockholder value through, among other things, enabling the Company to capitalize on the following strategic advantages and opportunities:

• Zyga’s innovative minimally invasive treatment should accentuate our spine portfolio and opens significant opportunities to accelerate our Spine-focused expansion strategy.

• Zyga should leverage the core competencies of our Spine franchise by pursuing niche differentiated products, to gain scale and customer retention and support portfolio pull-through.

These potential benefits resulted in the Company paying a premium for Zyga resulting in the recognition of $13,556 of goodwill assigned to the Company’s only operating segment and reporting unit. For tax purposes, none of the goodwill is deductible.

The following unaudited pro forma information shows the results of the Company’s operations as though the acquisition had occurred as of the beginning of the prior comparable period, January 1, 2017, (in thousands, except per share data):

	For the Six Months Ended
	June 30,
	2018			2017
Revenues	$	2,439		$	2,364
Net loss applicable to common shares		(1,053	)		(2,192	)

The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisition taken place as of the beginning of the periods presented, or the results that may occur in the future. These amounts exclude costs incurred which are directly attributable to the acquisition, and which do not have a continuing impact on the combined companies’ operating results.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

8. Stock-Based Compensation

The Company’s policy is to grant stock options at an exercise price equal to 100% of the market value of a share of common stock at closing on the date of the grant.  The Company’s stock options generally have five to ten-year contractual terms and vest over a one to five-year period from the date of grant.  The Company’s policy is to grant restricted stock awards at a fair value equal to 100% of the market value of a share of common stock at closing on the date of the grant. The Company’s restricted stock awards generally vest over one to three-year periods.

2018 Incentive Compensation Plan – On April 30, 2018, the Company’s stockholders approved and adopted the 2018 Incentive Compensation Plan (the “2018 Plan”). The 2018 Plan provides for the grant of incentive and nonqualified stock options and restricted stock to key employees, including officers and directors of the Company and consultants and advisors. The 2018 Plan allows for up to 5,726,035 shares of common stock to be issued with respect to awards granted.

Stock Options

As of June 30, 2019, there was $1,792 of total unrecognized stock-based compensation related to nonvested stock options. The expense related to these stock options is expected to be recognized over a weighted-average period of 2.25 years.

The following table summarizes information about stock options outstanding, exercisable and available for grant as of June 30, 2019:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price		Life (Years)		Value
Outstanding at January 1, 2019		4,295,744		$	3.76
Granted		374,224			4.71
Exercised		(118,500	)		3.34
Forfeited or expired		(65,304	)		4.08
Outstanding at June 30, 2019		4,486,164		$	3.84		5.73	$	2,467
Vested or expected to vest at June 30, 2019		4,192,575		$	3.80		5.50	$	2,442
Exercisable at June 30, 2019		2,499,185		$	3.65		3.65	$	1,738
Available for grant at June 30, 2019		4,234,994

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value of stock options for which the fair market value of the underlying common stock exceeded the respective stock option exercise price. Estimated forfeitures are based on the Company’s historical forfeiture activity. Compensation expense recognized for all option grants is net of estimated forfeitures and is recognized over the awards’ respective requisite service periods.

Other information concerning stock options are as follows:

	For the Six Months Ended
	June 30,
	2019		2018
Weighted average fair value of stock options granted	$	1.99	$	2.02
Aggregate intrinsic value of stock options exercised		161		98

The aggregate intrinsic value of stock options exercised in a period represents the pre-tax cumulative difference, for the stock options exercised during the period, between the fair market value of the underlying common stock and the stock option exercise prices.

Restricted Stock Awards

As of June 30, 2019, there was $3,561 of total unrecognized stock-based compensation related to unvested restricted stock awards.  That expense is expected to be recognized on a straight-line basis over a weighted-average period of 1.87 years. The following table summarizes information about unvested restricted stock awards as of June 30, 2019:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Unvested at January 1, 2019		1,075,215		$	4.29
Granted		625,476			4.85
Vested		(385,185	)		4.17
Forfeited		(9,865	)		4.43
Unvested at June 30, 2019		1,305,641		$	4.61

Restricted Stock Units

As of June 30, 2019, there was $1,198 of total unrecognized stock-based compensation related to unvested restricted stock units.  That expense is expected to be recognized on a straight-line basis over a weighted-average period of 2.50 years. The following table summarizes information about unvested restricted stock units as of June 30, 2019:

			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Unvested at January 1, 2019		—	$	—
Granted		226,352		7.41
Vested		—		—
Forfeited		—		—
Unvested at June 30, 2019		226,352	$	7.41

For the three and six months ended June 30, 2019 and 2018, the Company recognized stock-based compensation as follows:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Stock-based compensation:
Costs of processing and distribution	$	36	$	33	$	72	$	66
Marketing, general and administrative		1,216		1,242		2,328		2,474
Research and development		15		15		30		30
Total	$	1,267	$	1,290	$	2,430	$	2,570

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Net Income Per Common Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Net Income Per Common Share

9. Net Income Per Common Share

A reconciliation of the number of shares of common stock used in the calculation of basic and diluted net income per common share is presented below:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Basic shares		75,144,488		63,405,708		70,409,839		63,400,737
Effect of dilutive securities:
Stock options		823,707		—		—		—
Preferred stock Series A		15,152,761		—		—		—
Diluted shares		91,120,956		63,405,708		70,409,839		63,400,737

For the three months ended June 30, 2019 and 2018, approximately 1,537,678 and 1,590,662, respectively, and for the six months ended June 30, 2019 and 2018, approximately 1,429,442 and 1,447,911, respectively, of issued stock options were not included in the computation of diluted net loss per common share because they were anti-dilutive because their exercise price exceeded the market price. For the three months ended June 30, 2019, options to purchase 823,707 shares of common stock were included in the computation of diluted income per share because dilutive shares are factored into this calculation when net income is reported.  For the three months ended June 30, 2018, options to purchase 659,785, and for the six months ended June 30, 2019 and 2018, options to purchase 808,904 and 618,776, respectively, shares of common stock were not included in the computation of diluted loss per share because dilutive shares are not factored into this calculation when a net loss is reported.

For the three months ended June 30, 2019, 50,000 shares of convertible preferred stock or 15,152,761of converted common stock and accrued but unpaid dividends were dilutive on an as if-converted basis and were included in the computation of diluted net income per common share. For the three months ended June 30, 2018 and for the six months ended June 30, 2019 and 2018, respectively, 50,000 shares of convertible preferred stock and accrued but unpaid dividends were anti-dilutive on an as if-converted basis and were not included in the computation of diluted net loss per common share.

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Inventories

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Inventories

10. Inventories

Inventories by stage of completion are as follows:

	June 30,		December 31,
	2019		2018
Unprocessed tissue, raw materials and supplies	$	25,014	$	24,211
Tissue and work in process		30,502		31,796
Implantable tissue and finished goods		58,585		51,464
Purchase price adjustment for finished goods		34,250		-
Total		148,351		107,471
Less current portion		127,906		107,471
Long-term portion	$	20,445	$	-

For the three months ended June 30, 2019 and 2018, the Company had inventory write-downs of $1,744 and $8,224, respectively, and for the six months ended June 30, 2019 and 2018, the Company had inventory write-downs of $3,274 and $10,865, respectively, relating primarily to product obsolescence. As of June 30, 2019, the long-term portion of inventory relates to acquired Paradigm inventory which comprises of finished goods and purchase price adjustment of $1,608 and $18,837, respectively, see Note 6.

Included in the three months ended March 31, 2018, are $1,023 of product obsolescence which was due to the rationalization of our international distribution infrastructure.  Included in the three months ended June 30, 2018, was $6,559 of inventory write-off which was due to the suspension of the map3® implant.

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Prepaid and Other Current Assets

6 Months Ended

Jun. 30, 2019

Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]

Prepaid and Other Current Assets

11. Prepaid and Other Current Assets

Prepaid and Other Current Assets are as follows:

	June 30,		December 31,
	2019		2018
Income tax receivable	$	2,685	$	3,920
Prepaid expenses		5,275		4,127
Other		773		744
	$	8,733	$	8,791

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Property, Plant and Equipment

6 Months Ended

Jun. 30, 2019

Property Plant And Equipment [Abstract]

Property, Plant and Equipment

12. Property, Plant and Equipment

Property, plant and equipment are as follows:

	June 30,			December 31,
	2019			2018
Land	$	2,020		$	2,020
Buildings and improvements		58,093			58,093
Processing equipment		44,624			42,599
Surgical instruments		25,829			24,070
Office equipment, furniture and fixtures		1,973			1,877
Computer equipment and software		19,102			18,873
Construction in process		11,593			8,934
		163,234			156,466
Less accumulated depreciation		(83,543	)		(78,512	)
	$	79,691		$	77,954

For the three months ended June 30, 2019 and 2018, the Company had depreciation expense in connection with property, plant and equipment of $2,800 and $2,524, respectively, and for the six months ended June 30, 2019 and 2018, the Company had depreciation expense in connection with property, plant and equipment of $5,539 and $5,147, respectively.  For the three months ended June 30, 2018, the Company had $1,797 of asset impairment and abandonment charges relating to the suspension of the map3® implant.

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Goodwill

6 Months Ended

Jun. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill

13. Goodwill

Goodwill acquired during the six months ended June 30, 2019, includes the excess of the Paradigm purchase price over the sum of the amounts assigned to assets acquired less liabilities assumed.

	June 30,		December 31,
	2019		2018
Balance at January 1	$	59,798	$	46,242
Goodwill acquired related to Zyga acquisition		—		13,556
Goodwill acquired related to Paradigm acquisition		211,631		—
Balance at end of period	$	271,429	$	59,798

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Other Intangible Assets

6 Months Ended

Jun. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Other Intangible Assets

14. Other Intangible Assets

Other intangible assets are as follows:

	June 30, 2019						December 31, 2018
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Patents	$	16,256	$	4,727	$	11,529	$	16,092	$	4,194	$	11,898
Acquired licensing rights		7,528		1,902		5,626		11,852		6,468		5,384
Marketing and procurement and other intangible assets		20,205		12,091		8,114		20,356		11,279		9,077
Total	$	43,989	$	18,720	$	25,269	$	48,300	$	21,941	$	26,359

For the three months ended June 30, 2019 and 2018, the Company had amortization expense of other intangible assets of $995 and $960, respectively, and for the six months ended June 30, 2019 and 2018, the Company had amortization expense of other intangible assets of $1,952 and $1,921, respectively.  For the three months ended June 30, 2018, the Company had $2,718 of asset impairment and abandonment charges related to the suspension of the map3® implant.

At June 30, 2019, management’s estimates of future amortization expense for the next five years are as follows:

	Amortization
	Expense
2019 (remaining)	$	2,100
2020		4,100
2021		4,100
2022		4,100
2023		1,800
2024		1,800

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Accrued Expenses

6 Months Ended

Jun. 30, 2019

Other Liabilities Disclosure [Abstract]

Accrued Expenses

15. Accrued Expenses

Accrued expenses are as follows:

	June 30,		December 31,
	2019		2018
Accrued compensation	$	6,175	$	8,678
Accrued severance and restructuring costs		758		931
Accrued executive transition costs		—		43
Accrued distributor commissions		3,825		3,907
Accrued donor recovery fees		4,692		4,088
Other		9,218		7,036
	$	24,668	$	24,683

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Short and Long-Term Obligations

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Short and Long-Term Obligations

16. Short and Long-Term Obligations

Short and long-term obligations are as follows:

	June 30,			December 31,
	2019			2018
Ares Term loan	$	101,473		$	—
JPM facility		65,000			50,000
Less unamortized debt issuance costs		(1,392	)		(927	)
Total		165,081			49,073
Less current portion		—			—
Long-term portion	$	165,081		$	49,073

On June 5, 2018, the Company, along with its wholly-owned subsidiary, Pioneer Surgical, entered into a Credit Agreement (the “2018 Credit Agreement”), as borrowers, with JP Morgan Chase Bank, N.A., as lender (together with the various financial institutions as in the future may become parties thereto, the “JPM Lenders”) and as administrative agent for the JPM Lenders. The 2018 Credit Agreement provides for a revolving credit facility in the aggregate principal amount of up to $100,000 (the “JPM Facility”) (subsequently reduced to $75,000, as described below). The Company and Pioneer Surgical will be able to, at their option, and subject to customary conditions and JPM Lender approval, request an increase to the JPM Facility in an amount not to exceed $50,000.

The JPM Facility is guaranteed by the Company’s domestic subsidiaries and is secured by: (i) substantially all of the assets of the Company and Pioneer Surgical; (ii) substantially all of the assets of each of the Company’s domestic subsidiaries; and (iii) 65% of the stock of the Company’s foreign subsidiaries.

The initial borrowings made under the 2018 Credit Agreement will bear interest at a rate per annum equal to the monthly REVLIBOR30 Rate (“CBFR Loans”) plus an adjustable margin of up to 2.00% (the “CBFR Rate”). The Company may elect to convert the interest rate for the initial borrowings to a rate per annum equal to the adjusted LIBO Rate (“Eurodollar Loans”) plus an adjustable margin of up to 2.00% (the “JPM Eurodollar Rate”).  For all subsequent borrowings, the Company may elect to apply either the CBFR Rate or JPM Eurodollar Rate. The applicable margin is subject to adjustment after the end of each fiscal quarter, based upon the Company’s average quarterly availability. The maturity date of the JPM Facility is June 5, 2023. The Company may make optional prepayments on the JPM Facility without penalty. The Company paid certain customary closing costs and bank fees upon entering into the 2018 Credit Agreement.

The Company is subject to certain affirmative and negative covenants, including (but not limited to), covenants limiting the Company’s ability to: incur certain additional indebtedness; create certain liens; enter into sale and leaseback transactions; and consolidate or merge with, or convey, transfer or lease all or substantially all of its assets to another person. The Company is required to maintain a minimum fixed charge coverage ratio of at least 1.00:1.00 (the “JPM Required Minimum Fixed Charge Coverage Ratio”) during either of the following periods (each, a “JPM Covenant Testing Period”): (i) a period beginning on a date that a default has occurred and is continuing under the loan documents entered into by the Company in conjunction with the 2018 Credit Agreement through the first date on which no default has occurred and is continuing; or (ii) a period beginning on a date that availability under the JPM Facility is less than the specified covenant testing threshold and continuing until availability under the JPM Facility is greater than or equal to the specified covenant testing threshold for thirty (30) consecutive days. The JPM Required Minimum Fixed Charge Coverage Ratio is measured on the last day of each calendar month during the JPM Covenant Testing Period (each a “JPM Calculation Date”), and is calculated using the minimum fixed charge coverage ratio for the twelve (12) consecutive months ending on each JPM Calculation Date. The amounts owed under the 2018 Credit Agreement may be accelerated upon the occurrence of certain events of default customary for facilities for similarly rated borrowers.

First Amendment to Credit Agreement and Joinder Agreement

On March 8, 2019, the Company entered into a First Amendment to Credit Agreement and Joinder Agreement dated as of March 8, 2019 (the “2019 First Amendment”), among the Company, Legacy RTI, as a borrower, Pioneer Surgical, as a borrower, the other loan parties thereto as guarantors, JP Morgan Chase Bank, N.A., as lender (together with the various financial institutions as in the future may become parties thereto) and as administrative agent for the JPM Lenders. The 2019 First Amendment amended the 2018 Credit Agreement by: (i) reducing the aggregate revolving commitments available to Legacy RTI and Pioneer Surgical from $100,000 to $75,000; (ii) joining the Company and Paradigm, and its domestic subsidiaries as guarantors and loan parties to the 2018 Credit Agreement; (iii) permitting the Ares Term Loan (as defined below); and (iv) making certain other changes to the 2018 Credit Agreement consistent with the foregoing including pro rata reductions to certain thresholds that were based on the aggregate commitments under the 2018 Credit Agreement.

At June 30, 2019, the interest rate for the JPM Facility was 4.19%. As of June 30, 2019, there was $65,000 outstanding on the JPM Facility and total remaining available credit on the JPM Facility was $10,000. The Company’s ability to access the JPM Facility is subject to and can be limited by the Company’s compliance with the Company’s financial and other covenants. The Company was in compliance with the financial covenants related to the JPM Facility as of June 30, 2019.

Second Lien Credit Agreement and Term Loan

On March 8, 2019, Legacy RTI entered into a Second Lien Credit Agreement dated as of March 8, 2019 (the “2019 Credit Agreement”), among Legacy RTI, as a borrower, the other loan parties thereto as guarantors (together with Legacy RTI, the “Ares Loan Parties”), Ares Capital Corporation, as lender (together with the various financial institutions as in the future may become parties thereto, the “Ares Lenders”) and as administrative agent for the Ares Lenders. The 2019 Credit Agreement provides for a term loan in the principal amount of up to $100,000 (the “Ares Term Loan”). The Ares Term Loan was advanced in a single borrowing on March 8, 2019.

The Ares Term Loan is guaranteed by the Company and each of the Company’s domestic subsidiaries and is secured by: (i) substantially all of the assets of Legacy RTI; (ii) substantially all of the assets of the Company; (iii) substantially all of the assets of the Company’s domestic subsidiaries; and (iv) 65% of the stock of the Company’s foreign subsidiaries.

The Ares Term Loan will bear interest at a rate per annum equal to, at the option of Legacy RTI: (i) the monthly Base Rate plus an adjustable margin of up to 7.50% (the “Base Rate”); or (ii) the LIBOR plus an adjustable margin of up to 8.50% (the “Ares Eurodollar Rate”). Subject to customary notices, Legacy RTI may elect to convert the Ares Term Loan from Base Rate to Ares Eurodollar Rate or from Ares Eurodollar Rate to Base Rate. The applicable margin is subject to adjustment after the end of each fiscal quarter, based upon the Ares Loan Parties’ total net leverage ratio. At any time during the period commencing on March 8, 2019 and ending on March 8, 2021, if the Ares Loan Parties’ total net leverage ratio is greater than 4.50:1.00, Legacy RTI shall have the option (the “PIK Option”) to elect to pay 50% of the interest that will accrue in the subsequent quarterly period in kind by capitalizing it and adding such amount to the principal balance of the Ares Term Loan. If Legacy RTI exercises the PIK Option, the adjustable margin applicable to the Ares Term Loan shall be increased by 0.75%.

The maturity date of the Ares Term Loan is December 5, 2023. Legacy RTI may make optional prepayments on the Ares Term Loan, provided that any such optional prepayments made on or prior to March 8, 2022, shall be subject to a make whole premium or a prepayment price, as the case may be. Legacy RTI is required to make mandatory prepayments of the Ares Term Loan based on excess cash flow and the Ares Loan Parties’ total net leverage ratio, upon the incurrence of certain indebtedness not otherwise permitted under the 2019 Credit Agreement, upon consummation of certain dispositions, and upon the receipt of certain proceeds of casualty events. Legacy RTI was required to pay certain customary closing costs and bank fees upon entering into the 2019 Credit Agreement.

Legacy RTI is subject to certain affirmative and negative covenants, including (but not limited to), covenants limiting Legacy RTI’s ability to: incur certain additional indebtedness; create certain liens; enter into sale and leaseback transactions; and consolidate or merge with, or convey, transfer or lease all or substantially all of its assets to another person. During any period beginning on a date that either: (i) a default has occurred and is continuing under the loan documents entered into by Legacy RTI in conjunction with the Credit Agreement (the “Ares Loan Documents”); or (ii) availability under the Ares Term Loan is less than the specified covenant testing threshold, and continuing until either (a) no default has occurred and is continuing under the Ares Loan Documents or (b) availability under the Ares Term Loan is greater than or equal to the specified covenant testing threshold for thirty (30) consecutive days, respectively, (the “Ares Covenant Testing Period”) Legacy RTI is required to maintain a minimum fixed charge coverage ratio of at least 0.91:1.00 (the “Ares Required Minimum Fixed Charge Coverage Ratio”). The Ares Required Minimum Fixed Charge Coverage Ratio is measured on the last day of each calendar month during the Ares Covenant Testing Period (each a “Ares Calculation Date”), and is calculated using the minimum fixed charge coverage ratio for the twelve (12) consecutive months ending on each Ares Calculation Date. The Ares Loan Parties are required to maintain an initial total net leverage ratio of 9.00:1.00, which ratio steps down each fiscal quarter of Legacy RTI resulting in a requirement that the Ares Loan Parties maintain a total net leverage ratio of 3.50:1.00 for the fiscal quarter ending June 30, 2021, and each fiscal quarter ending thereafter.

The amounts owed under the 2019 Credit Agreement may be accelerated upon the occurrence of certain events of default customary for facilities for similarly rated borrowers.

At June 30, 2019, the interest rate for the Ares Term Loan was 11.16%. The Company was in compliance with the financial covenants related to the Ares Term Loan as of June 30, 2019.

For the six months ended June 30, 2019 and 2018, interest expense associated with the amortization of debt issuance costs was $361 and $423, respectively. Included in the six months ended June 30, 2019, was $219 of accelerated amortization of debt issuance costs associated with the modification of the 2018 Credit Agreement.  For the six months ended June 30, 2019, the Company incurred total debt issuance cost of $826.

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Other long-term liabilities

6 Months Ended

Jun. 30, 2019

Text Block [Abstract]

Other long-term liabilities

17. Other long-term liabilities

Other long-term liabilities are as follows:

	June 30,		December 31,
	2019		2018
Acquisition contingencies	$	98,372	$	4,986
Other		2,562		633
	$	100,934	$	5,619

Acquisition contingencies represent the Company’s fair value estimate of the Zyga acquisition clinical and revenue milestones of $3,396 and the Company’s preliminary fair value estimate of the Paradigm acquisition revenue earnout contingency of $94,976. As of June 30, 2019, there was a $1,590 reduction in the contingent liability estimate of the Zyga acquisition revenue earnout, as the probability weighted model has been updated based on the current updated forecast for the performance of the Zyga product portfolio

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Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

18. Income Taxes

The Company expects its deferred tax assets of $19,715, net of the valuation allowance at June 30, 2019 of $3,076, to be realized through the generation of future taxable income and the reversal of existing taxable temporary differences.

The Company evaluates the need for deferred tax asset valuation allowances based on a more likely than not standard. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction.

The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidence.  It is difficult to conclude a valuation allowance is not required when there is significant objective and verifiable negative evidence, such as cumulative losses in recent years. The Company utilizes a rolling three-years of actual results as the primary measure of cumulative losses in recent years.

On a rolling three-years, the Company’s consolidated U.S. operations are in a cumulative income position.  However, one U.S. entity is in a three-year cumulative loss position. The Company has established a valuation allowance on its separate state deferred tax assets.

The Company’s foreign operations are in a three-year cumulative loss position.  Future taxable income exclusive of reversing temporary differences and carryforwards is one source of taxable income that may be available under the tax law to realize a tax benefit for deductible temporary differences and carryforwards.  Beginning in 2017, the Company began a restructuring plan, which was finalized in 2018. The efforts under this plan have led the Company to achieve operational improvements and a reduction in complexities which has contributed to current year and projected future earnings within its foreign subsidiary.  The Company considers the current year and projected future earnings to be objectively verifiable evidence which will allow the Company to fully utilize its foreign deferred tax assets.  The Company believes this positive evidence outweighs the negative evidence of its foreign subsidiaries’ cumulative three-year loss position. As a result, no valuation allowances have been established against its foreign subsidiaries’ deferred tax assets.  

The Company will continue to regularly assess the realizability of our deferred tax assets. Changes in historical earnings performance and future earnings projections, among other factors, may cause the Company to adjust its valuation allowance, which would impact the Company’s income tax expense in the period the Company determines that these factors have changed.

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Preferred Stock

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Preferred Stock

19. Preferred Stock

On June 12, 2013, the Company and WSHP Biologics Holdings, LLC, an affiliate of Water Street Healthcare Partners, a leading healthcare-focused private equity firm (“Water Street”), entered into an investment agreement. Pursuant to the terms of the investment agreement, the Company issued $50,000 of convertible preferred equity to Water Street in a private placement which closed on July 16, 2013, with preferred stock issuance costs of $1,290. Before July 16, 2018, the preferred stock accrued dividends at a rate of 6% per annum. Dividends that were not paid in cash in any quarter accrued on each outstanding share of preferred stock during such three-month period and accumulated.

On August 1, 2018, the Company and Water Street, a related party, entered into an Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock of RTI Surgical, Inc. (the “Amended and Restated Certificate of Designation”).  Pursuant to the Amended and Restated Certificate of Designation: (1) dividends on the Series A Preferred Stock will not accrue after July 16, 2018 (in the event of a default by the Company, dividends will begin accruing and will continue to accrue until the default is cured); (2) the Company may not force a redemption of the Series A Preferred Stock prior to July 16, 2020; and (3) the holders of the Series A Preferred Stock may not convert the Series A Preferred Stock into common stock prior to July 16, 2021 (with certain exceptions).  The Company evaluated and concluded on a qualitative basis the amendment qualifies as modification accounting to the preferred shares, which did not result in a change in the valuation of the shares.

Preferred stock is as follows:

	Preferred Stock Liquidation		Preferred Stock Issuance			Net
	Value		Costs			Total
Balance at January 1, 2019	$	66,519	$	(293	)	$	66,226
Accrued dividend payable		—		—			—
Amortization of preferred stock issuance costs		—		92			92
Balance at June 30, 2019	$	66,519	$	(201	)	$	66,318

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Severance and Restructuring Costs

6 Months Ended

Jun. 30, 2019

Employee Severance [Member]

Severance and Restructuring Costs

20. Severance and Restructuring Costs

The Company recorded severance and restructuring costs related to the reduction of our organizational structure which resulted in $2,280 of expenses for the year ended December 31, 2018. As part of the acquisition of Paradigm, management implemented a plan which resulted in $896 of severance expenses for the six months ended June 30, 2019 included in acquisition and integration expenses within the Condensed Consolidated Statements of Comprehensive Gain (Loss). The total severance and restructuring costs are expected to be paid in full by the fourth quarter of 2019. Severance and restructuring payments are made over periods ranging from one month to twelve months and are not expected to have a material impact on cash flows of the Company in any quarterly period. The following table includes a roll-forward of severance and restructuring costs included in accrued expenses, see Note 15.

Accrued severance and restructuring costs at January 1, 2019	$	931
Severance and restructuring costs accrued in 2019		896
Subtotal severance and restructuring costs		1,827
Severance and restructuring related cash payments		(1,069	)
Accrued severance and restructuring charges at June 30, 2019	$	758

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Executive Transition Costs

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Executive Transition Costs

21. Executive Transition Costs

The Company recorded Chief Executive Officer retirement and transition costs related to the retirement of our former Chief Executive Officer pursuant to the Executive Transition Agreement dated August 29, 2012 (as amended and extended to date), which resulted in $4,404 of expenses for the year ended December 31, 2016. The total Chief Executive Officer retirement and transition costs were paid in full in the first quarter of 2019. The following table includes a roll-forward of executive transition costs included in accrued expenses, see Note 15.

Accrued executive transition costs at January 1, 2019	$	43
Cash payments		(43	)
Accrued executive transition costs at June 30, 2019	$	-

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

22. Commitments and Contingencies

Agreement to Acquire Paradigm– On March 8, 2019, pursuant to the Master Transaction Agreement, the Company acquired Paradigm in a cash and stock transaction valued at up to $300,000, consisting of $150,000 on March 8, 2019, plus potential future milestone payments. Established in 2005, Paradigm’s primary product is the coflex® Interlaminar Stabilization® device, a differentiated and minimally invasive motion preserving stabilization implant that is FDA premarket approved for the treatment of moderate to severe lumbar spinal stenosis in conjunction with decompression.

Under the terms of the agreement, the Company paid $100,000 in cash and issued 10,729,614 shares of the Company’s common stock.  The shares of Company common stock issued on March 8, 2019, were valued based on the volume weighted average closing trading price for the five trading days prior to the date of execution of the definitive agreement, representing $50,000 of value.  In addition, the Company may be required to pay up to an additional $150,000 in a combination of cash and Company common stock based on a revenue earnout consideration.  Based on a probability weighted model, the Company estimates a preliminary contingent liability related to the revenue based earnout of $94,976.  The Company has not completed its preliminary purchase price allocation.

Acquisition of Zyga – On January 4, 2018, the Company acquired Zyga, a leading spine-focused medical device company that develops and produces innovative minimally invasive devices to treat underserved conditions of the lumbar spine. Zyga’s primary product is the SImmetry® Sacroiliac Joint Fusion System. Under the terms of the merger agreement dated January 4, 2018, the Company acquired Zyga for $21,000 in consideration paid at closing (consisting of borrowings of $18,000 on its revolving credit facility and $3,000 cash on hand), $1,000 contingent upon the successful achievement of a clinical milestone, and a revenue based earnout consideration of up to an additional $35,000.  Based on a probability weighted model, the Company estimates a contingent liability related to the clinical and revenue milestones of $3,396, see Note 17.

Distribution Agreement with Medtronic – On October 12, 2013, the Company entered into a replacement distribution agreement with Medtronic, plc. (“Medtronic”), as amended January 1, 2019, pursuant to which Medtronic will distribute certain allograft implants for use in spinal, general orthopedic and trauma surgery.  Under the terms of this distribution agreement, Medtronic is a non-exclusive distributor except for certain specified implants for which Medtronic is the exclusive distributor.  Medtronic will maintain its exclusivity with respect to these specified implants unless the cumulative fees received by the Company from Medtronic for these specified implants decline by a certain amount during any trailing 12-month period.  The initial term of this distribution agreement was to have been through December 31, 2017.  The term automatically renews for successive five-year periods, unless either party provides written notice of its intent not to renew at least one year prior to the expiration of the applicable renewal period.   The distribution agreement will continue at least through December 31, 2022.

Distribution Agreement with Zimmer Dental Inc. - On September 3, 2010, the Company entered into an exclusive distribution agreement with Zimmer Dental, Inc. (“Zimmer Dental”), a subsidiary of Zimmer, with an effective date of September 30, 2010, as amended from time to time.  The Agreement was assigned to Biomet 3i, LLC (“Biomet”), an affiliate of Zimmer Dental, on January 1, 2016.  The Agreement has an initial term of ten years.  Under the terms of this distribution agreement, the Company agreed to supply sterilized allograft and xenograft implants at an agreed upon transfer price, and Biomet agreed to be the exclusive distributor of the implants for dental and oral applications worldwide (except Ukraine), subject to certain Company obligations under an existing distribution agreement with a third party with respect to certain implants for the dental market.  In consideration for Biomet’s exclusive distribution rights, Biomet agreed to the following: 1) payment to the Company of $13,000 within ten days of the effective date (the “Upfront Payment”); 2) annual exclusivity fees (“Annual Exclusivity Fees”) paid annually as long as Biomet maintains exclusivity for the term of the contract to be paid at the beginning of each calendar year; and 3) annual purchase minimums to maintain exclusivity.  Upon occurrence of an event that materially and adversely affects Biomet’s ability to distribute the implants, Biomet may be entitled to certain refund rights with respect to the then current Annual Exclusivity Fee, where such refund would be in an amount limited by a formula specified in this agreement that is based substantially on the occurrence’s effect on Biomet’s revenues. The Upfront Payment, the Annual Exclusivity Fees and the fees associated with distributions of processed tissue are considered to be a single performance obligation. Accordingly, the Upfront Payment and the Annual Exclusivity Fees are deferred as received and are being recognized as other revenues over the term of this distribution agreement based on the expected contractual annual purchase minimums relative to the total contractual minimum purchase requirements in this distribution agreement.  Additionally, the Company considered the potential impact of this distribution agreement’s contractual refund provisions and does not expect these provisions to impact future expected revenue related to this distribution agreement.

The Company’s aforementioned revenue recognition methods related to the Zimmer distribution agreements do not result in the deferral of revenue less than amounts that would be refundable in the event the agreements were to be terminated in future periods.  Additionally, the Company evaluates the appropriateness of the aforementioned revenue recognition methods on an ongoing basis.

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Legal Actions

6 Months Ended

Jun. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Legal Actions

23. Legal Actions

The Company is, from time to time, involved in litigation relating to claims arising out of its operations in the ordinary course of business. The Company believes that none of these claims that were outstanding as of June 30, 2019, will have a material adverse impact on its financial position or results of operations.

Coloplast — The Company is presently named as co-defendant along with other companies in a small percentage of the transvaginal surgical mesh (“TSM”) mass tort claims being brought in various state and federal courts. The TSM litigation has as its catalyst various Public Health Notifications issued by the FDA with respect to the placement of certain TSM implants that were the subject of 510k regulatory clearance prior to their distribution. The Company does not process or otherwise manufacture for distribution in the U.S. any implants that were the subject of these FDA Public Health Notifications. The Company denies any allegations against it and intends to continue to vigorously defend itself.

In addition to claims made directly against the Company, Coloplast, a distributor of TSM’s and certain allografts processed and private labeled for them under a contract with the Company, has also been named as a defendant in individual TSM cases in various federal and state courts.  Coloplast requested that the Company indemnify or defend Coloplast in those claims which allege injuries caused by the Company’s allograft implants, and on April 24, 2014, Coloplast sued RTI Surgical, Inc. in the Fourth Judicial District of Minnesota for declaratory relief and breach of contract.  On December 11, 2014, Coloplast entered into a settlement agreement with RTI Surgical, Inc. and Tutogen Medical, Inc. (the “Company Parties”) resulting in dismissal of the case.  Under the terms of the settlement agreement, the Company Parties are responsible for the defense and indemnification of two categories of present and future claims:  (1) tissue only (where Coloplast is solely the distributor of Company processed allograft tissue and no Coloplast-manufactured or distributed synthetic mesh is identified) (“Tissue Only Claims”), and (2) tissue plus non-Coloplast synthetic mesh (“Tissue-Non-Coloplast Claims”) (the Tissue Only Claims and the Tissue-Non-Coloplast Claims being collectively referred to as “Indemnified Claims”).  As of June 30, 2019, there are a cumulative total of 1,117 Indemnified Claims for which the Company Parties are providing defense and indemnification.  The defense and indemnification of these cases are covered under the Company’s insurance policy subject to a reservation of rights by the insurer.

Based on the current information available to the Company, the impact that current or any future TSM litigation may have on the Company cannot be reasonably estimated.

LifeNet — On June 27, 2018, LifeNet Health, Inc. (“LifeNet”) filed a patent infringement lawsuit in the United States District Court for the Middle District of Florida (since moved to the Northern District of Florida) claiming infringement of five of its patents by the Company. The suit requests damages, enhanced damages, reimbursement of costs and expenses, reasonable attorney fees, and an injunction. The asserted patents are now expired. On April 7, 2019, the Court granted the Company’s request to stay the lawsuit pending the U.S. Patent Trial and Appeal Board’s (PTAB) decision, expected in the third quarter of 2019, whether to institute review of the patentability of LifeNet’s patents. The Company believes the suit is without merit and will vigorously defend its position.

The Company’s accounting policy is to accrue for legal costs as they are incurred.

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Regulatory Actions

6 Months Ended

Jun. 30, 2019

Text Block [Abstract]

Regulatory Actions

24. Regulatory Actions

During the third quarter of 2018, the Company decided to stop procurement, manufacturing and distributing its map3® implants effective October 31, 2018. The map3® product has been either sold or destroyed and is off the market. In April 2019, the Company received a letter from the FDA indicating that no further corrective actions are necessary with respect to its previously issued Warning Letter in connection with the map3® product.

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Segment Data

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Data

25. Segment Data

The Company distributes human tissue, bovine and porcine animal tissue, metal and synthetic implants through various distribution channels. The Company operates in one reportable segment composed of four franchises: spine; sports; OEM and international. Discrete financial information is not available for these four franchises. The following table presents revenues from these four franchises for the three and six months ended June 30, 2019 and 2018:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands)
Revenues:
Spine	$	26,671	$	18,934	$	46,676	$	38,197
Sports		14,024		14,190		27,803		27,625
OEM		32,483		31,170		61,474		61,290
International		9,129		6,391		16,095		13,463
Total revenues	$	82,307	$	70,685	$	152,048	$	140,575

The following table presents percentage of total revenues derived from the Company’s largest distributors:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Percent of revenues derived from:
Distributor
Zimmer Biomet Holdings, Inc.		17	%		20	%		19	%		21	%
Medtronic, PLC		7	%		8	%		8	%		8	%
DePuy Synthes		3	%		6	%		4	%		5	%

The following table presents property, plant and equipment - net by significant geographic location:

	June 30,		December 31,
	2019		2018
Property, plant and equipment - net:
Domestic	$	73,580	$	72,501
International		6,111		5,453
Total	$	79,691	$	77,954

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Subsequent Events

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

26. Subsequent Events

The Company evaluated subsequent events as of the issuance date of the condensed consolidated financial statements as defined by ASC 855 Subsequent Events, and identified no subsequent events that require adjustment to, or disclosure of, in these condensed consolidated financial statements.

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Recently Issued and Adopted Accounting Standards (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Changes And Error Corrections [Abstract]

Recently Issued and Adopted Accounting Standards

Recently Issued and Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASU”) 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases in “Leases (Topic 840).” ASU 2016-02 establishes a right-of-use (“ROU”) model that requires operating leases be recorded on the balance sheet through recognition of a liability for the discounted present value of future lease payments and a corresponding ROU asset. The ROU asset recorded at commencement of the lease represents the right to use the underlying asset over the lease term in exchange for the lease payments. Leases with an initial term of 12 months or less and do not have an option to purchase the underlying asset that is deemed reasonably certain to exercise are not recorded on the balance sheet; rather, rent expense for these leases is recognized on a straight-line basis over the lease term. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

Effective January 1, 2019, the Company adopted the new lease accounting standard using the optional transition method which allowed us to continue to apply the guidance under the lease standard in effect at the time in the comparative periods presented.  In addition, the Company elected the package of practical expedients, which allowed us to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs.  The Company has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. The Company has also elected the practical expedient allowing us to not separate the lease and non-lease components for all classes of underlying assets. Adoption of this standard resulted in the recording of operating lease ROU assets and corresponding operating lease liabilities of $3,164 and $3,155, respectively, as of January 1, 2019 with no impact on accumulated deficit.  Financial position for reporting periods beginning on or after January 1, 2019, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance. Note disclosures required in Topic 842 are reported in Note 4, Leases.

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Schedule of Operating Leases

The components of operating lease expense were as follows:

	For the Three Months Ended		For the Six Months Ended
	June 30, 2019		June 30, 2019
Operating lease cost	$	440	$	784
Short-term operating lease cost		—		36
Total operating lease cost	$	440	$	820

Schedule of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to operating leases was as follows:

	For the Three Months Ended		For the Six Months Ended
	June 30, 2019		June 30, 2019
Cash paid for amounts included in the measurement    of lease liabilities	$	397	$	691
ROU assets obtained in exchange for lease obligations		—		34

Schedule of Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to operating leases was as follows:

	Balance Sheet Classification	June 30, 2019
Assets:
Right-of-use assets	Other assets - net	$	3,546
Liabilities:
Current	Accrued expenses	$	1,505
Noncurrent	Other long-term liabilities		2,117
Total operating lease liabilities		$	3,622

Schedule of Maturities of Operating Lease Liabilities

As of June 30, 2019, maturities of operating lease liabilities were as follows:

Maturity of Operating Lease Liabilities	June 30, 2019
2019 (remaining)	$	879
2020		1,368
2021		565
2022		224
2023		160
2024 and beyond		875
Total future minimum lease payments		4,071
Less imputed interest		(449	)
Total	$	3,622

Future Minimum Lease Commitments Under Non-Cancelable Operating Leases Prior to Adoption of ASC 842

As previously disclosed in our 2018 Annual Report on Form 10-K, which followed the lease accounting prior to adoption of ASC 842, future commitments relating to operating leases for the five years and period thereafter as of December 31, 2018 were as follows:

Maturity of Operating Lease Liabilities	December 31, 2018
2019	$	1,374
2020		806
2021		276
2022		162
2023		166
2024 and beyond		882
Total future minimum lease payments	$	3,666

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2019

Revenue From Contract With Customer [Abstract]

Revenue Recognition from Four Categories

The following table presents revenues from these four categories for the three and six months ended June 30, 2019 and 2018:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenues:
Spine	$	26,671	$	18,934	$	46,676	$	38,197
Sports		14,024		14,190		27,803		27,625
OEM		32,483		31,170		61,474		61,290
International		9,129		6,391		16,095		13,463
Total revenues from contracts with customers	$	82,307	$	70,685	$	152,048	$	140,575

Revenue Recognized at a Point in Time and Over Time

The following table presents revenues recognized at a point in time and over time for the three and six months ended June 30, 2019 and 2018:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenue recognized at a point in time	$	66,469	$	61,534	$	119,070	$	121,697
Revenue recognized over time		15,838		9,151		32,978		18,878
Total revenues from contracts with customers	$	82,307	$	70,685	$	152,048	$	140,575

Contract with Customer, Asset and Liability

The opening and closing balances of the Company’s accounts receivable, contract asset and current and long-term contract liability for the six months ended June 30, 2019 and 2018 are as follows:

						Contract
			Contract			Liability
	Accounts		Liability			(Long-
	Receivable		(Current)			Term)
Opening 1/1/2019	$	48,351	$	5,425		$	744
Closing 6/30/2019		56,163		5,292			325
Increase/(decrease)		7,812		(133	)		(419	)
						Contract
			Contract			Liability
	Accounts		Liability			(Long-
	Receivable		(Current)			Term)
Opening 1/1/2018	$	39,095	$	5,978		$	3,741
Closing 6/30/2018		45,576		6,210			3,155
Increase/(decrease)		6,481		232			(586	)

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Acquisition of Paradigm Spine, LLC (Tables) - Paradigm Spine [Member]

6 Months Ended

Jun. 30, 2019

Acquisition Purchase Price

The purchase price was financed as follows:

	(In thousands)
Cash proceeds from second lien credit agreement	$	100,000
Fair market value of securities issued		60,730
Fair market value of contingent earnout		94,976
Total purchase price	$	255,706

Summary of Changes to Fair Value of Acquired Assets and Liabilities

During the three months ended June 30, 2019, the Company made the following changes to the fair values of acquired assets and liabilities as follows:

	Balance at
	June 30, 2019			March 31, 2019			Change
	(In thousands)
Cash	$	79		$	79		$	-
Accounts receivable		5,220			5,220			-
Inventories		43,084			5,898			37,186
Other current assets		1,693			1,752			(59	)
Property, plant and equipment		379			379			-
Current liabilities		(6,380	)		(6,169	)		(211	)
Net tangible assets acquired		44,075			7,159			36,916
Goodwill		211,631			248,547			(36,916	)
Total net assets acquired	$	255,706		$	255,706		$	-

Pro Forma Information of Company's Operations

The following unaudited pro forma information shows the results of the Company’s operations as though the acquisition had occurred as of the beginning of the prior comparable period, January 1, 2018, (in thousands, except per share data):

	For the Six Months Ended
	June 30,
	2019			2018
Revenues	$	19,074		$	21,252
Net loss applicable to common shares		(10,406	)		(19,169	)
Net loss applicable to common shares excluding acquistion and integration costs		(1,219	)		(19,169	)

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Acquisition of Zyga Technology, Inc (Tables) - Zyga Technology Inc [Member]

6 Months Ended

Jun. 30, 2019

Acquisition Purchase Price

The purchase price was financed as follows:

	(In thousands)
Cash proceeds from revolving credit facility	$	18,000
Cash from RTI Surgical		3,000
Total purchase price	$	21,000

Summary of Final Allocation of Total Consideration to Tangible and Intangible Assets and Liabilities

The table below represents the final allocation of the total consideration to Zyga’s tangible and intangible assets and liabilities fair values as of January 4, 2018.

	(In thousands)
Inventories	$	1,099
Accounts receivable		573
Other current assets		53
Property, plant and equipment		151
Other assets		26
Deferred tax assets		4,715
Current liabilities		(947	)
Acquisition contingencies		(4,986	)
Net tangible assets acquired		684
Other intangible assets		6,760
Goodwill		13,556
Total net assets acquired	$	21,000

Pro Forma Information of Company's Operations

The following unaudited pro forma information shows the results of the Company’s operations as though the acquisition had occurred as of the beginning of the prior comparable period, January 1, 2017, (in thousands, except per share data):

	For the Six Months Ended
	June 30,
	2018			2017
Revenues	$	2,439		$	2,364
Net loss applicable to common shares		(1,053	)		(2,192	)

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2019

Stock Options Outstanding, Exercisable and Available for Grant

The following table summarizes information about stock options outstanding, exercisable and available for grant as of June 30, 2019:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price		Life (Years)		Value
Outstanding at January 1, 2019		4,295,744		$	3.76
Granted		374,224			4.71
Exercised		(118,500	)		3.34
Forfeited or expired		(65,304	)		4.08
Outstanding at June 30, 2019		4,486,164		$	3.84		5.73	$	2,467
Vested or expected to vest at June 30, 2019		4,192,575		$	3.80		5.50	$	2,442
Exercisable at June 30, 2019		2,499,185		$	3.65		3.65	$	1,738
Available for grant at June 30, 2019		4,234,994

Other Information Concerning Stock Options

Other information concerning stock options are as follows:

	For the Six Months Ended
	June 30,
	2019		2018
Weighted average fair value of stock options granted	$	1.99	$	2.02
Aggregate intrinsic value of stock options exercised		161		98

Unvested Restricted Stock Awards

The following table summarizes information about unvested restricted stock awards as of June 30, 2019:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Unvested at January 1, 2019		1,075,215		$	4.29
Granted		625,476			4.85
Vested		(385,185	)		4.17
Forfeited		(9,865	)		4.43
Unvested at June 30, 2019		1,305,641		$	4.61

Stock-Based Compensation Recognized

For the three and six months ended June 30, 2019 and 2018, the Company recognized stock-based compensation as follows:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Stock-based compensation:
Costs of processing and distribution	$	36	$	33	$	72	$	66
Marketing, general and administrative		1,216		1,242		2,328		2,474
Research and development		15		15		30		30
Total	$	1,267	$	1,290	$	2,430	$	2,570

Restricted Stock Units [Member]

Unvested Restricted Stock Awards

The following table summarizes information about unvested restricted stock units as of June 30, 2019:

			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Unvested at January 1, 2019		—	$	—
Granted		226,352		7.41
Vested		—		—
Forfeited		—		—
Unvested at June 30, 2019		226,352	$	7.41

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Net Income Per Common Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Reconciliation of Common Stock used in Calculation of Basic and Diluted Earnings Per Share

A reconciliation of the number of shares of common stock used in the calculation of basic and diluted net income per common share is presented below:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Basic shares		75,144,488		63,405,708		70,409,839		63,400,737
Effect of dilutive securities:
Stock options		823,707		—		—		—
Preferred stock Series A		15,152,761		—		—		—
Diluted shares		91,120,956		63,405,708		70,409,839		63,400,737

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Inventories (Tables)

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Components of Inventories

Inventories by stage of completion are as follows:

	June 30,		December 31,
	2019		2018
Unprocessed tissue, raw materials and supplies	$	25,014	$	24,211
Tissue and work in process		30,502		31,796
Implantable tissue and finished goods		58,585		51,464
Purchase price adjustment for finished goods		34,250		-
Total		148,351		107,471
Less current portion		127,906		107,471
Long-term portion	$	20,445	$	-

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Prepaid and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2019

Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]

Schedule of Prepaid and Other Current Assets

Prepaid and Other Current Assets are as follows:

	June 30,		December 31,
	2019		2018
Income tax receivable	$	2,685	$	3,920
Prepaid expenses		5,275		4,127
Other		773		744
	$	8,733	$	8,791

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Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2019

Property Plant And Equipment [Abstract]

Components of Property, Plant and Equipment

Property, plant and equipment are as follows:

	June 30,			December 31,
	2019			2018
Land	$	2,020		$	2,020
Buildings and improvements		58,093			58,093
Processing equipment		44,624			42,599
Surgical instruments		25,829			24,070
Office equipment, furniture and fixtures		1,973			1,877
Computer equipment and software		19,102			18,873
Construction in process		11,593			8,934
		163,234			156,466
Less accumulated depreciation		(83,543	)		(78,512	)
	$	79,691		$	77,954

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Goodwill (Tables)

6 Months Ended

Jun. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

	June 30,		December 31,
	2019		2018
Balance at January 1	$	59,798	$	46,242
Goodwill acquired related to Zyga acquisition		—		13,556
Goodwill acquired related to Paradigm acquisition		211,631		—
Balance at end of period	$	271,429	$	59,798

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Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Components of Other Intangible Assets

Other intangible assets are as follows:

	June 30, 2019						December 31, 2018
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Patents	$	16,256	$	4,727	$	11,529	$	16,092	$	4,194	$	11,898
Acquired licensing rights		7,528		1,902		5,626		11,852		6,468		5,384
Marketing and procurement and other intangible assets		20,205		12,091		8,114		20,356		11,279		9,077
Total	$	43,989	$	18,720	$	25,269	$	48,300	$	21,941	$	26,359

Estimates of Future Amortization Expense

At June 30, 2019, management’s estimates of future amortization expense for the next five years are as follows:

	Amortization
	Expense
2019 (remaining)	$	2,100
2020		4,100
2021		4,100
2022		4,100
2023		1,800
2024		1,800

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Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2019

Other Liabilities Disclosure [Abstract]

Accrued Expenses

Accrued expenses are as follows:

	June 30,		December 31,
	2019		2018
Accrued compensation	$	6,175	$	8,678
Accrued severance and restructuring costs		758		931
Accrued executive transition costs		—		43
Accrued distributor commissions		3,825		3,907
Accrued donor recovery fees		4,692		4,088
Other		9,218		7,036
	$	24,668	$	24,683

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Short and Long-Term Obligations (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Short and Long-Term Obligations

Short and long-term obligations are as follows:

	June 30,			December 31,
	2019			2018
Ares Term loan	$	101,473		$	—
JPM facility		65,000			50,000
Less unamortized debt issuance costs		(1,392	)		(927	)
Total		165,081			49,073
Less current portion		—			—
Long-term portion	$	165,081		$	49,073

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Other long-term liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Text Block [Abstract]

Summary of Other long-term liabilities

Other long-term liabilities are as follows:

	June 30,		December 31,
	2019		2018
Acquisition contingencies	$	98,372	$	4,986
Other		2,562		633
	$	100,934	$	5,619

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Preferred Stock (Tables)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Schedule of Preferred Stock

Preferred stock is as follows:

	Preferred Stock Liquidation		Preferred Stock Issuance			Net
	Value		Costs			Total
Balance at January 1, 2019	$	66,519	$	(293	)	$	66,226
Accrued dividend payable		—		—			—
Amortization of preferred stock issuance costs		—		92			92
Balance at June 30, 2019	$	66,519	$	(201	)	$	66,318

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Severance and Restructuring Costs (Tables)

6 Months Ended

Jun. 30, 2019

Employee Severance [Member]

Schedule of Restructuring Charges

The following table includes a roll-forward of severance and restructuring costs included in accrued expenses, see Note 15.

Accrued severance and restructuring costs at January 1, 2019	$	931
Severance and restructuring costs accrued in 2019		896
Subtotal severance and restructuring costs		1,827
Severance and restructuring related cash payments		(1,069	)
Accrued severance and restructuring charges at June 30, 2019	$	758

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Executive Transition Costs (Tables)

6 Months Ended

Jun. 30, 2019

Former Chief Executive Officer [Member]

Schedule of Restructuring Charges

The following table includes a roll-forward of executive transition costs included in accrued expenses, see Note 15.

Accrued executive transition costs at January 1, 2019	$	43
Cash payments		(43	)
Accrued executive transition costs at June 30, 2019	$	-

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Segment Data (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Revenues from Tissue Distribution and Other Revenues

The following table presents revenues from these four franchises for the three and six months ended June 30, 2019 and 2018:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands)
Revenues:
Spine	$	26,671	$	18,934	$	46,676	$	38,197
Sports		14,024		14,190		27,803		27,625
OEM		32,483		31,170		61,474		61,290
International		9,129		6,391		16,095		13,463
Total revenues	$	82,307	$	70,685	$	152,048	$	140,575

Schedule of Percentage of Total Revenues Derived from Company's Largest Distributors

The following table presents percentage of total revenues derived from the Company’s largest distributors:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Percent of revenues derived from:
Distributor
Zimmer Biomet Holdings, Inc.		17	%		20	%		19	%		21	%
Medtronic, PLC		7	%		8	%		8	%		8	%
DePuy Synthes		3	%		6	%		4	%		5	%

Schedule of Property, Plant and Equipment - Net by Significant Geographic Location

The following table presents property, plant and equipment - net by significant geographic location:

	June 30,		December 31,
	2019		2018
Property, plant and equipment - net:
Domestic	$	73,580	$	72,501
International		6,111		5,453
Total	$	79,691	$	77,954

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Operations and Organization - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2019 Country
Minimum [Member]
Operations And Organization [Line Items]
Number of countries that receive distribution	50

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Recently Issued and Adopted Accounting Standards - Additional Information (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
Operating lease, right-of-use asset		$ 3,164
Operating lease, liability	$ 3,622	$ 3,155
Maximum [Member]
Lease term	12 months

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Leases - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2019 USD ($)
Operating lease, description	The Company’s operating leases do not have any residual value guarantees, restrictions or covenants.
Lessee, operating lease, existence of residual value guarantees, restrictions or covenants	false
Lease not yet commenced, description	The Company does not have any leases that have not yet commenced as of June 30, 2019.
Operating lease remaining term	4 years 7 months 6 days
Lease not yet commenced, option to extend	The option to extend is only included in the lease term if the Company is reasonably certain of exercising that option.
Variable lease, costs	$ 0
Weighted-average discount rate, operating leases	4.70%
Minimum [Member]
Operating lease remaining term	1 year
Maximum [Member]
Operating lease remaining term	14 years

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Leases - Schedule of Operating Leases (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Leases [Abstract]
Operating lease cost	$ 440	$ 784
Short-term operating lease cost		36
Total operating lease cost	$ 440	$ 820

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Leases - Schedule of Supplemental Cash Flow Information Related to Leases (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Leases [Abstract]
Cash paid for amounts included in the measurement of lease liabilities	$ 397	$ 691
ROU assets obtained in exchange for lease obligations		$ 34

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Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
Right-of-use assets		$ 3,164
Total operating lease liabilities	$ 3,622	$ 3,155
Other Assets [Member]
Right-of-use assets	3,546
Accrued Expenses [Member]
Current	1,505
Other Long Term Liabilities [Member]
Noncurrent	$ 2,117

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Leases - Schedule of Maturities of Operating Lease Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
Leases [Abstract]
2019 (remaining)	$ 879
2020	1,368
2021	565
2022	224
2023	160
2024 and beyond	875
Total future minimum lease payments	4,071
Less imputed interest	(449)
Total	$ 3,622	$ 3,155

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Leases - Future Minimum Lease Commitments Under Non-Cancelable Operating Leases Prior to Adoption of ASC 842 (Detail) $ in Thousands	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 1,374
2020	806
2021	276
2022	162
2023	166
2024 and beyond	882
Total future minimum lease payments	$ 3,666

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Revenue from Contracts with Customers - Additional Information (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($) Segment BusinessUnit	Jun. 30, 2018 USD ($)
Revenue From Contract With Customer [Abstract]
Number of reportable segment | Segment	1
Number of business lines | BusinessUnit	4
Revenue recognized from amounts included in contract liabilities | $	$ 2,584	$ 2,434

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Revenue from Contracts with Customers - Revenue Recognition from Four Franchises (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenues	$ 82,307	$ 70,685	$ 152,048	$ 140,575
Spine [Member] | Tissue Distribution [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenues	26,671	18,934	46,676	38,197
Sports [Member] | Tissue Distribution [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenues	14,024	14,190	27,803	27,625
OEM [Member] | Tissue Distribution [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenues	32,483	31,170	61,474	61,290
International [Member] | Tissue Distribution [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenues	$ 9,129	$ 6,391	$ 16,095	$ 13,463

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Revenue from Contracts with Customers - Revenues Recognized at a Point in Time and Over Time (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenues	$ 82,307	$ 70,685	$ 152,048	$ 140,575
Transferred at Point in Time [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenues	66,469	61,534	119,070	121,697
Transferred over Time [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenues	$ 15,838	$ 9,151	$ 32,978	$ 18,878

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Revenue from Contracts with Customers - Contract with Customer, Asset and Liability (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jan. 01, 2019	Dec. 31, 2018	Jan. 01, 2018
Revenue From Contract With Customer [Abstract]
Accounts Receivable	$ 56,163	$ 45,576	$ 48,351	$ 48,351	$ 39,095
Contract Liability (Current)	5,292	6,210	5,425		5,978
Contract Liability (Long- Term)	325	3,155	$ 744		$ 3,741
Accounts Receivable, Increase/(decrease)	7,812	6,481
Contract Liability (Current), Increase/(decrease)	(133)	232
Contract Liability (Long-Term), Increase/(decrease)	$ (419)	$ (586)

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Acquisition of Paradigm Spine, LLC - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands		2 Months Ended	3 Months Ended	6 Months Ended		8 Months Ended
	Mar. 08, 2019	Dec. 31, 2018	Mar. 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Dec. 31, 2017
Business Combinations [Line Items]
Common stock par value		$ 0.001		$ 0.001		$ 0.001
Severance expenses					$ 884
Goodwill		$ 59,798		$ 271,429		$ 271,429	$ 46,242
Paradigm Spine [Member]
Business Combinations [Line Items]
Potential debt to finance business combination	$ 100,000
Number of common stock to be issued at closing, shares	10,729,614
Number of common stock to be issued at closing, value	$ 50,000
Cash consideration threshold working capital amount	7,000
Potential debt to finance business combination	100,000
Contingent liability	94,976
Acquisition and integration expenses		$ 4,143		10,910		15,053
Business development expenses				462
Severance expenses				896
Inventory fair value, current	19,703
Inventory fair value, noncurrent	23,381
Costs of processing and distribution				2,936
Business acquisition costs of processing and distribution related to inventory			$ 477
Goodwill	211,631		$ 248,547	211,631		$ 211,631
Revenue				12,096
Net loss				490
Proforma net loss exclude acquisition and integration related costs, net of tax				10,910
Business acquisition integration related costs tax				$ 1,723
Paradigm Spine [Member] | Maximum [Member]
Business Combinations [Line Items]
Number of common stock to be issued at closing, value	$ 50,000
Master Transaction Agreement [Member]
Business Combinations [Line Items]
Common stock par value	$ 0.001
Master Transaction Agreement [Member] | Series A Preferred Stock [Member]
Business Combinations [Line Items]
Common stock par value	0.001
Master Transaction Agreement [Member] | One Fully Paid and Nonassessable [Member]
Business Combinations [Line Items]
Common stock par value	0.001
Master Transaction Agreement [Member] | One Fully Paid and Nonassessable [Member] | Series A Preferred Stock [Member]
Business Combinations [Line Items]
Common stock par value	$ 0.001

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Acquisition of Paradigm Spine, LLC - Acquisition Purchase Price (Detail) - USD ($) $ in Thousands		6 Months Ended
	Mar. 08, 2019	Jun. 30, 2019	Jun. 30, 2018
Business Combinations [Line Items]
Cash proceeds from second lien credit agreement		$ 115,000	$ 74,425
Paradigm Spine [Member]
Business Combinations [Line Items]
Cash proceeds from second lien credit agreement	$ 100,000
Fair market value of securities issued	60,730
Fair market value of contingent earnout	94,976
Total purchase price	$ 255,706	$ 99,921

XML

Acquisition of Paradigm Spine, LLC - Summary of Changes to Fair Value of Acquired Assets and Liabilities (Detail) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Mar. 08, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Combinations [Line Items]
Goodwill	$ 271,429			$ 59,798	$ 46,242
Paradigm Spine [Member]
Business Combinations [Line Items]
Cash	79	$ 79
Accounts receivable	5,220	5,220
Inventories	43,084	5,898
Other current assets	1,693	1,752
Property, plant and equipment	379	379
Current liabilities	(6,380)	(6,169)
Net tangible assets acquired	44,075	7,159
Goodwill	211,631	248,547	$ 211,631
Total net assets acquired	255,706	$ 255,706
Change, Inventories	37,186
Change, Other current assets	(59)
Change, Current liabilities	(211)
Change, Net tangible assets acquired	36,916
Change, Goodwill	$ (36,916)

XML

Acquisition of Paradigm Spine, LLC. - Pro Forma Information of Company's Operations (Detail) - Paradigm Spine [Member] - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Business Acquisition Pro Forma Information [Line Items]
Revenues	$ 19,074	$ 21,252
Net loss applicable to common shares	(10,406)	(19,169)
Net loss applicable to common shares excluding acquistion and integration costs	$ (1,219)	$ (19,169)

XML

Acquisition of Zyga Technology Inc. - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 04, 2018	Jun. 30, 2019	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2018
Business Combinations [Line Items]
Acquisition and integration expenses		$ 1,953		$ 10,910	$ 800
Goodwill		271,429		271,429		$ 46,242	$ 59,798
Zyga Technology Inc [Member]
Business Combinations [Line Items]
Date of merger agreement	Jan. 04, 2018
Payments to acquire businesses	$ 21,000
Cash from RTI Surgical	3,000				$ 21,000
Acquisition related costs	1,430
Acquisition and integration expenses			$ 800			$ 630
Goodwill	13,556
Zyga Technology Inc [Member] | Patents [Member]
Business Combinations [Line Items]
Other intangible assets	$ 6,500
Other intangible assets, useful life	13 years
Zyga Technology Inc [Member] | Trademarks [Member]
Business Combinations [Line Items]
Other intangible assets	$ 80
Other intangible assets, useful life	1 year
Zyga Technology Inc [Member] | Marketing-Related Intangible Assets [Member]
Business Combinations [Line Items]
Other intangible assets	$ 180
Other intangible assets, useful life	7 years
Zyga Technology Inc [Member] | Revolving Credit Facility [Member]
Business Combinations [Line Items]
Cash proceeds from revolving credit facility	$ 18,000
Zyga Technology Inc [Member] | Clinical Milestones [Member]
Business Combinations [Line Items]
Earnout consideration	1,000	4,986		4,986
Zyga Technology Inc [Member] | Earn Out Payment [Member]
Business Combinations [Line Items]
Revenue based earnout consideration	$ 35,000	$ 4,986		$ 4,986

XML

Acquisition of Zyga Technology Inc. - Acquisition Purchase Price (Detail) - Zyga Technology Inc [Member] - USD ($) $ in Thousands		6 Months Ended
	Jan. 04, 2018	Jun. 30, 2018
Business Combinations [Line Items]
Cash from RTI Surgical	$ 3,000	$ 21,000
Total purchase price	21,000
Revolving Credit Facility [Member]
Business Combinations [Line Items]
Cash proceeds from revolving credit facility	$ 18,000

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Acquisition of Zyga Technology Inc. - Summary of Final Allocation of Total Consideration to Tangible and Intangible Assets and Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jan. 04, 2018	Dec. 31, 2017
Business Combinations [Line Items]
Acquisition contingencies	$ (98,372)	$ (4,986)
Goodwill	271,429	59,798		$ 46,242
Zyga Technology Inc [Member]
Business Combinations [Line Items]
Inventories			$ 1,099
Accounts receivable			573
Other current assets			53
Property, plant and equipment			151
Other assets			26
Deferred tax assets			4,715
Current liabilities			(947)
Acquisition contingencies	$ (98,372)	$ (4,986)	(4,986)
Net tangible assets acquired			684
Other intangible assets			6,760
Goodwill			13,556
Total net assets acquired			$ 21,000

XML

Acquisition of Zyga Technology, Inc. - Pro Forma Information of Company's Operations (Detail) - Zyga Technology Inc [Member] - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Business Acquisitions Pro Forma Infomation [Line Items]
Revenues	$ 2,439	$ 2,364
Net loss applicable to common shares	$ (1,053)	$ (2,192)

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Stock-Based Compensation - Additional Information (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of market value of common stock, stock options exercise price	100.00%
Percentage of market value of common stock, restricted stock award granted	100.00%
Total unrecognized stock-based compensation	$ 3,561
Stock-based compensation awards, weighted-average period recognized	1 year 10 months 13 days
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term of stock options granted	5 years
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term of stock options granted	10 years
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized stock-based compensation	$ 1,792
Stock-based compensation awards, weighted-average period recognized	2 years 3 months
Stock Option [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation award, vesting period	1 year
Stock Option [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation award, vesting period	5 years
Restricted Stock Awards [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation award, vesting period	1 year
Restricted Stock Awards [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation award, vesting period	3 years
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized stock-based compensation	$ 1,198
Stock-based compensation awards, weighted-average period recognized	2 years 6 months
2018 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock allowed to be issued | shares	5,726,035

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Stock-Based Compensation - Stock Options Outstanding, Exercisable and Available for Grant (Detail) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($) $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Outstanding, Number of Shares	4,295,744
Granted, Number of Shares	374,224
Exercised, Number of Shares	(118,500)
Forfeited or expired, Number of Shares	(65,304)
Outstanding, Number of Shares	4,486,164
Vested or expected to vest, Number of Shares	4,192,575
Exercisable, Number of Shares	2,499,185
Available for grant, Number of Shares	4,234,994
Outstanding, Weighted Average Exercise Price | $ / shares	$ 3.76
Granted, Weighted Average Exercise Price | $ / shares	4.71
Exercised, Weighted Average Exercise Price | $ / shares	3.34
Forfeited or expired, Weighted Average Exercise Price | $ / shares	4.08
Outstanding, Weighted Average Exercise Price | $ / shares	3.84
Vested or expected to vest, Weighted Average Exercise Price | $ / shares	3.80
Exercisable, Weighted Average Exercise Price | $ / shares	$ 3.65
Outstanding, Weighted Average Remaining Contractual Life (Years)	5 years 8 months 23 days
Vested or expected to vest, Weighted Average Remaining Contractual Life (Years)	5 years 6 months
Exercisable, Weighted Average Remaining Contractual Life (Years)	3 years 7 months 24 days
Outstanding, Aggregate Intrinsic Value | $	$ 2,467
Vested or expected to vest, Aggregate Intrinsic Value | $	2,442
Exercisable, Aggregate Intrinsic Value | $	$ 1,738

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Stock-Based Compensation - Other Information Concerning Stock Options (Detail) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Weighted average fair value of stock options granted	$ 1.99	$ 2.02
Aggregate intrinsic value of stock options exercised	$ 161	$ 98

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Stock-Based Compensation - Unvested Restricted Stock Awards (Detail)	6 Months Ended
	Jun. 30, 2019 $ / shares shares
Restricted Stock Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance, Number of shares | shares	1,075,215
Granted, Number of shares | shares	625,476
Vested, Number of shares | shares	(385,185)
Forfeited, Number of shares | shares	(9,865)
Ending Balance, Number of shares | shares	1,305,641
Beginning Balance, Weighted Average Grant Date Fair Value | $ / shares	$ 4.29
Granted, Weighted Average Grant Date Fair Value | $ / shares	4.85
Vested, Weighted Average Grant Date Fair Value | $ / shares	4.17
Forfeited, Weighted Average Grant Date Fair Value | $ / shares	4.43
Ending Balance, Weighted Average Grant Date Fair Value | $ / shares	$ 4.61
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, Number of shares | shares	226,352
Forfeited, Number of shares | shares	0
Ending Balance, Number of shares | shares	226,352
Granted, Weighted Average Grant Date Fair Value | $ / shares	$ 7.41
Forfeited, Weighted Average Grant Date Fair Value | $ / shares	0
Ending Balance, Weighted Average Grant Date Fair Value | $ / shares	$ 7.41

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Stock-Based Compensation - Stock-Based Compensation Recognized (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 1,267	$ 1,290	$ 2,430	$ 2,570
Costs of Processing and Distribution [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	36	33	72	66
Marketing General and Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	1,216	1,242	2,328	2,474
Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 15	$ 15	$ 30	$ 30

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Net Income Per Common Share - Reconciliation of Common Stock Used in Calculation of Basic and Diluted Earnings Per Share (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Basic shares	75,144,488	63,405,708	70,409,839	63,400,737
Effect of dilutive securities: Stock options	823,707
Preferred stock Series A	15,152,761
Diluted shares	91,120,956	63,405,708	70,409,839	63,400,737

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Net Income Per Common Share - Additional Information (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Options to purchase common stock included in computation of diluted income per share	823,707
Potential Dilutive Securities included in computation of diluted EPS	15,152,761
Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential Dilutive Securities included in computation of diluted EPS	50,000	50,000	50,000	50,000
Convertible Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential Dilutive Securities included in computation of diluted EPS	15,152,761
Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive stock excluded from the computation of diluted EPS		659,785	808,904	618,776
Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive stock excluded from the computation of diluted EPS	1,537,678	1,590,662	1,429,442	1,447,911

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Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Unprocessed tissue, raw materials and supplies	$ 25,014	$ 24,211
Tissue and work in process	30,502	31,796
Implantable tissue and finished goods	58,585	51,464
Purchase price adjustment for finished goods	34,250
Total	148,351	107,471
Inventories - net	127,906	$ 107,471
Long-term portion	$ 20,445

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Inventories - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Inventory [Line Items]
Provision for inventory write-downs	$ 1,744	$ 8,224		$ 3,274	$ 10,865
Product obsolescence			$ 1,023
Map3® Implant [Member]
Inventory [Line Items]
Provision for inventory write-downs		$ 6,559
Paradigm Spine [Member]
Inventory [Line Items]
Long-term portion of inventory relating to acquisition	$ 37,186
Paradigm Spine [Member] | Finished Goods [Member]
Inventory [Line Items]
Long-term portion of inventory relating to acquisition				1,608
Paradigm Spine [Member] | Purchase Price Adjustment [Member]
Inventory [Line Items]
Long-term portion of inventory relating to acquisition				$ 18,837

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Prepaid and Other Current Assets - Schedule of Prepaid and Other Current Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]
Income tax receivable	$ 2,685	$ 3,920
Prepaid expenses	5,275	4,127
Other	773	744
Prepaid and other current assets	$ 8,733	$ 8,791

XML

Property, Plant and Equipment - Components of Property, Plant and Equipment (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 163,234	$ 156,466
Less accumulated depreciation	(83,543)	(78,512)
Property, plant and equipment, net	79,691	77,954
Land [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	2,020	2,020
Building and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	58,093	58,093
Processing Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	44,624	42,599
Surgical Instruments [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	25,829	24,070
Office Equipment Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	1,973	1,877
Computer Equipment and Software [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	19,102	18,873
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 11,593	$ 8,934

XML

Property, Plant and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Property, Plant and Equipment [Line Items]
Depreciation expense in connection with property, plant and equipment	$ 2,800	$ 2,524	$ 5,539	$ 5,147
Asset impairment and abandonments		4,515	$ 15	$ 4,644
Map3® Implant [Member]
Property, Plant and Equipment [Line Items]
Asset impairment and abandonments		$ 1,797

XML

Goodwill - Schedule of Goodwill (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Goodwill [Line Items]
Beginning Balance	$ 59,798	$ 46,242
Ending Balance	271,429	59,798
Zyga Technology Inc [Member]
Goodwill [Line Items]
Goodwill acquired		$ 13,556
Paradigm Spine [Member]
Goodwill [Line Items]
Goodwill acquired	211,631
Ending Balance	$ 211,631

XML

Other Intangible Assets - Components of Other Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 43,989	$ 48,300
Accumulated Amortization	18,720	21,941
Net Carrying Amount	25,269	26,359
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	16,256	16,092
Accumulated Amortization	4,727	4,194
Net Carrying Amount	11,529	11,898
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	7,528	11,852
Accumulated Amortization	1,902	6,468
Net Carrying Amount	5,626	5,384
Marketing and Procurement and Other Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	20,205	20,356
Accumulated Amortization	12,091	11,279
Net Carrying Amount	$ 8,114	$ 9,077

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Other Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Finite-Lived Intangible Assets [Line Items]
Amortization expense of other intangible assets	$ 995	$ 960	$ 1,952	$ 1,921
Map3® Implant [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment and abandonment charges		$ 2,718

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Other Intangible Assets - Estimates of Future Amortization Expense (Detail) $ in Thousands	Jun. 30, 2019 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
2019 (remaining)	$ 2,100
2020	4,100
2021	4,100
2022	4,100
2023	1,800
2024	$ 1,800

XML

Accrued Expenses - Accrued Expenses (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Payables And Accruals [Abstract]
Accrued compensation	$ 6,175	$ 8,678
Accrued severance and restructuring costs	758	931
Accrued executive transition costs		43
Accrued distributor commissions	3,825	3,907
Accrued donor recovery fees	4,692	4,088
Other	9,218	7,036
Total accrued expenses	$ 24,668	$ 24,683

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Short and Long-Term Obligations - Short and Long-Term Obligations (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
Ares Term loan	$ 101,473	$ 0
JPM facility	65,000	50,000
Less unamortized debt issuance costs	(1,392)	(927)
Debt and capital lease obligation, total	165,081	49,073
Less current portion	0	0
Long-term portion	$ 165,081	$ 49,073

XML

Short and Long-Term Obligations - Additional Information (Detail) - USD ($) $ in Thousands		6 Months Ended
	Mar. 08, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2021	Jun. 05, 2018
Line of Credit Facility [Line Items]
Debt instrument, maturity date		Jun. 05, 2023
Amortization of debt issuance cost		$ 219
Debt issuance cost		$ 826
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Credit facility, variable interest rate		4.19%
Line of credit outstanding amount		$ 65,000
Line of credit remaining borrowing capacity		10,000
Amortization of debt issuance cost		$ 361	$ 423
Ares Term Loans [Member]
Line of Credit Facility [Line Items]
Debt instrument, maturity date		Dec. 05, 2023
Interest rate on term loan		11.16%
2018 Loan Agreement [Member]
Line of Credit Facility [Line Items]
Percentage of foreign subsidiaries stock held as collateral					65.00%
Credit facility guaranteed description		The JPM Facility is guaranteed by the Company’s domestic subsidiaries and is secured by: (i) substantially all of the assets of the Company and Pioneer Surgical; (ii) substantially all of the assets of each of the Company’s domestic subsidiaries; and (iii) 65% of the stock of the Company’s foreign subsidiaries.
Minimum fixed charge coverage ratio					0.01
Covenant Terms of Credit Facility		The Company is required to maintain a minimum fixed charge coverage ratio of at least 1.00:1.00 (the “JPM Required Minimum Fixed Charge Coverage Ratio”) during either of the following periods (each, a “JPM Covenant Testing Period”): (i) a period beginning on a date that a default has occurred and is continuing under the loan documents entered into by the Company in conjunction with the 2018 Credit Agreement through the first date on which no default has occurred and is continuing; or (ii) a period beginning on a date that availability under the JPM Facility is less than the specified covenant testing threshold and continuing until availability under the JPM Facility is greater than or equal to the specified covenant testing threshold for thirty (30) consecutive days.
2018 Loan Agreement [Member] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Credit facility, original borrowing capacity	$ 100,000				$ 100,000
Revolving line of credit commitment reduction amount	75,000
2018 Loan Agreement [Member] | Revolving Credit Facility [Member] | Debt Instrument Variable Rate Base CBFR Using Monthly REVLIBOR30 Rate [Member]
Line of Credit Facility [Line Items]
Credit facility, variable interest rate					2.00%
2018 Loan Agreement [Member] | Revolving Credit Facility [Member] | Debt Instrument Variable Rate Base Eurodollars Adjusted LIBO Rate [Member]
Line of Credit Facility [Line Items]
Credit facility, variable interest rate					2.00%
2018 Loan Agreement [Member] | Revolving Credit Facility [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Credit facility, additional borrowing capacity					$ 50,000
2019 Loan Agreement [Member]
Line of Credit Facility [Line Items]
Minimum leverage ratio		4.50%
Increase in term loan interest rate		0.75%
Paid in kind option to pay interest		50.00%
2019 Loan Agreement [Member] | Base Rate [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		7.50%
2019 Loan Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		8.50%
2019 Loan Agreement [Member] | Ares Term Loans [Member]
Line of Credit Facility [Line Items]
Credit facility, original borrowing capacity	$ 100,000
Percentage of foreign subsidiaries stock held as collateral					65.00%
Covenant Terms of Credit Facility		During any period beginning on a date that either: (i) a default has occurred and is continuing under the loan documents entered into by Legacy RTI in conjunction with the Credit Agreement (the “Ares Loan Documents”); or (ii) availability under the Ares Term Loan is less than the specified covenant testing threshold, and continuing until either (a) no default has occurred and is continuing under the Ares Loan Documents or (b) availability under the Ares Term Loan is greater than or equal to the specified covenant testing threshold for thirty (30) consecutive days,
Term loan guaranteed description		The Ares Term Loan is guaranteed by the Company and each of the Company’s domestic subsidiaries and is secured by: (i) substantially all of the assets of Legacy RTI; (ii) substantially all of the assets of the Company; (iii) substantially all of the assets of the Company’s domestic subsidiaries; and (iv) 65% of the stock of the Company’s foreign subsidiaries.
Minimum fixed charge coverage ratio		91.00%
Net leverage ratio		900.00%
2019 Loan Agreement [Member] | Ares Term Loans [Member] | Scenario, Forecast [Member]
Line of Credit Facility [Line Items]
Net leverage ratio				350.00%

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Other Long-Term Liabilities - Summary of Other Long-term Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jan. 04, 2018
Acquisition contingencies	$ 98,372	$ 4,986
Other	2,562	633
Total other long-term liabilities	100,934	5,619
Zyga Technology Inc [Member]
Acquisition contingencies	$ 98,372	$ 4,986	$ 4,986

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Other Long Term Liabilities - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Mar. 08, 2019	Jan. 04, 2018
Zyga Technology Inc [Member] | Clinical and Revenue Milestones Earnout Payment [Member]
Restructuring Cost and Reserve [Line Items]
Revenue earnout contingencies	$ 3,396		$ 3,396
Zyga Technology Inc [Member] | Earn Out Payment [Member]
Restructuring Cost and Reserve [Line Items]
Reduction in contingent liability	1,590
Paradigm Spine [Member]
Restructuring Cost and Reserve [Line Items]
Revenue earnout contingencies		$ 94,976
Paradigm Spine [Member] | Earn Out Payment [Member]
Restructuring Cost and Reserve [Line Items]
Revenue earnout contingencies	$ 94,976

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Income Taxes - Additional Information (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Income Tax Disclosure [Abstract]
Deferred tax assets	$ 19,715
Domestic deferred tax assets, valuation allowances	$ 3,076
Primary measure of cumulative losses, number of rolling years	3 years

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Preferred Stock - Additional Information (Detail) - USD ($) $ in Thousands	Jul. 16, 2013	Jun. 12, 2013	Jun. 30, 2019	Dec. 31, 2018
Series A Preferred Stock [Member]
Temporary Equity [Line Items]
Preferred stock issuance cost			$ (201)	$ (293)
Private Placement [Member] | Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Convertible preferred stock issued		$ 50,000
Preferred stock issuance cost	$ 1,290
Private Placement [Member] | Series A Preferred Stock [Member]
Temporary Equity [Line Items]
Preferred stock dividend rate	6.00%

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Preferred Stock - Schedule of Preferred Stock (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Temporary Equity [Line Items]
Net Total	$ 66,318	$ 66,226
Accrued dividend payable	0
Amortization of preferred stock issuance costs	92
Series A Preferred Stock [Member]
Temporary Equity [Line Items]
Net Total	66,519	66,519
Accrued dividend payable	0
Amortization of preferred stock issuance costs	92
Preferred stock issuance cost	$ (201)	$ (293)

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Severance and Restructuring Costs - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Restructuring Cost and Reserve [Line Items]
Severance and restructuring costs		$ 2,280
Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Severance and restructuring costs	$ 896
Paradigm Spine [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Severance and restructuring costs	$ 896

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Severance and Restructuring Costs - Schedule of Restructuring Charges (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Restructuring Cost and Reserve [Line Items]
Accrued severance and restructuring charges, beginning balance	$ 931
Severance and restructuring costs accrued in 2019		$ 2,280
Accrued severance and restructuring charges, ending balance	758	931
Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Accrued severance and restructuring charges, beginning balance	931
Severance and restructuring costs accrued in 2019	896
Subtotal severance and restructuring costs	1,827
Severance and restructuring related cash payments	(1,069)
Accrued severance and restructuring charges, ending balance	$ 758	$ 931

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Executive Transition Costs - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)
Former Chief Executive Officer [Member]
Postemployment Benefits Disclosure [Line Items]
Executive transition costs	$ 4,404

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Executive Transition Costs - Schedule of Restructuring Charges (Detail) - Chief Executive Officer and Chief Financial and Administrative Officer [Member] $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Restructuring Cost and Reserve [Line Items]
Accrued executive transition costs at January 1, 2019	$ 43
Cash payments	$ (43)

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Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands					6 Months Ended
	Mar. 08, 2019	Jan. 04, 2018	Oct. 12, 2013	Sep. 30, 2010	Jun. 30, 2019	Jun. 30, 2018
Medtronic [Member]
Commitment And Contingencies [Line Items]
Decline in cumulative fees received, trailing period			12 months
Distribution agreement automatic renewal term			5 years
Period prior to expiration of initial term for notice			1 year
Zimmer [Member]
Commitment And Contingencies [Line Items]
Initial agreement term				10 years
Upfront payment				$ 13,000
Upfront payment period				10 days
Paradigm Spine [Member]
Commitment And Contingencies [Line Items]
Agreement to acquire business	$ 300,000
Cash to be paid at closing	150,000
Potential debt to finance business combination	$ 100,000
Number of common stock to be issued at closing, shares	10,729,614
Number of common stock to be issued at closing, value	$ 50,000
Revenue based earnout considerations	94,976
Cash from RTI Surgical	255,706				$ 99,921
Earnout consideration	94,976
Paradigm Spine [Member] | Earn Out Payment [Member]
Commitment And Contingencies [Line Items]
Earnout consideration					94,976
Paradigm Spine [Member] | Maximum [Member]
Commitment And Contingencies [Line Items]
Revenue based earnout considerations	$ 150,000
Zyga Technology Inc [Member]
Commitment And Contingencies [Line Items]
Date of merger agreement		Jan. 04, 2018
Payments to acquire businesses		$ 21,000
Cash from RTI Surgical		3,000				$ 21,000
Zyga Technology Inc [Member] | Clinical Milestones [Member]
Commitment And Contingencies [Line Items]
Earnout consideration		1,000			4,986
Zyga Technology Inc [Member] | Earn Out Payment [Member]
Commitment And Contingencies [Line Items]
Revenue based earnout consideration		35,000			4,986
Zyga Technology Inc [Member] | Clinical and Revenue Milestones Earnout Payment [Member]
Commitment And Contingencies [Line Items]
Earnout consideration		3,396			$ 3,396
Zyga Technology Inc [Member] | Revolving Credit Facility [Member]
Commitment And Contingencies [Line Items]
Cash proceeds from credit facility		$ 18,000

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Legal Actions - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2019 Litigation Claim
Commitments And Contingencies Disclosure [Abstract]
Outstanding claims | Litigation	0
Claims for which the Company Parties are providing defense and indemnification | Claim	1,117

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Segment Data - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2019 Segment
Segment Reporting [Abstract]
Number of reportable segment	1
Lines of business	4

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Segment Data - Revenues from Tissue Distribution and Other Revenues (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Segment Reporting Information [Line Items]
Total revenues	$ 82,307	$ 70,685	$ 152,048	$ 140,575
Spine [Member] | Tissue Distribution [Member]
Segment Reporting Information [Line Items]
Total revenues	26,671	18,934	46,676	38,197
Sports [Member] | Tissue Distribution [Member]
Segment Reporting Information [Line Items]
Total revenues	14,024	14,190	27,803	27,625
OEM [Member] | Tissue Distribution [Member]
Segment Reporting Information [Line Items]
Total revenues	32,483	31,170	61,474	61,290
International [Member] | Tissue Distribution [Member]
Segment Reporting Information [Line Items]
Total revenues	$ 9,129	$ 6,391	$ 16,095	$ 13,463

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Segment Data - Schedule of Percentage of Total Revenues Derived from Company's Largest Distributors (Detail) - Distributors Concentration Risk [Member] - Sales Revenue, Net [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Zimmer [Member]
Concentration Risk [Line Items]
Percentage of sales revenue	17.00%	20.00%	19.00%	21.00%
Medtronic [Member]
Concentration Risk [Line Items]
Percentage of sales revenue	7.00%	8.00%	8.00%	8.00%
DePuy Synthes [Member]
Concentration Risk [Line Items]
Percentage of sales revenue	3.00%	6.00%	4.00%	5.00%

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Segment Data - Schedule of Property, Plant and Equipment - Net by Significant Geographic Location (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Property, plant and equipment - net	$ 79,691	$ 77,954
Domestic [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment - net	73,580	72,501
International [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment - net	$ 6,111	$ 5,453