Business segment information

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Business segment information

16. Business segment information

As of December 31, 2022, the Company's operations were managed through two reporting segments: Global Spine and Global Orthopedics. These reporting segments represent the operating segments for which the Chief Executive Officer, who is also Chief Operating Decision Maker (the “CODM”), reviews financial information and makes resource allocation decisions among businesses. As of December 31, 2022, the primary metric used by the CODM in managing the Company is earnings before interest, tax, depreciation, and amortization (“EBITDA”). The Company neither discretely allocates assets, other than goodwill, to its operating segments nor evaluates the operating segments using discrete asset information.

Following the merger with SeaSpine, which was completed on January 5, 2023, the Company expects to reassess its reporting segments in the first quarter of 2023 based on how the operations of the newly combined company will be managed The Company will also reassess its identified segment profitability metric at that time. Accordingly, the reporting segment information below has been prepared based on the Company's two historical reporting segments, which were utilized in managing operations for the year ended December 31, 2022.

Global Spine

The Global Spine reporting segment offers three primary product categories: Bone Growth Therapies, Spinal Implants, and Biologics.

The Bone Growth Therapies product category manufactures, distributes, and provides support services of market leading bone growth stimulator devices that enhance bone fusion. These Class III medical devices are indicated as an adjunctive, noninvasive treatment to improve fusion success rates in the cervical and lumbar spine as well as a therapeutic treatment for non-spine fractures that have not healed (non-unions). This product category uses distributors and sales representatives to sell its devices to hospitals, healthcare providers, and patients, primarily in the U.S.

The Spinal Implants product category designs, develops, and markets a broad portfolio of motion preservation and fixation implant products used in surgical procedures of the spine. Spinal Implants distributes its products through a global network of distributors and sales representatives to sell spine products to hospitals and healthcare providers.

The Biologics product category provides a portfolio of regenerative products and tissue forms that allow physicians to successfully treat a variety of spinal and orthopedic conditions. This product category specializes in the marketing of the Company’s regeneration tissue forms and distributes its tissues to hospitals and healthcare providers, primarily in the U.S., through a network of independent distributors and sales representatives. The partnership with MTF allows the Company to exclusively market the Virtuos Lyograph, Trinity Evolution, FiberFuse Advanced, FiberFuse Strip, and certain other tissue forms for musculoskeletal defects to enhance bony fusion.

Global Orthopedics

The Global Orthopedics reporting segment offers products and solutions that allow physicians to successfully treat a variety of orthopedic conditions unrelated to the spine. This reporting segment specializes in the design, development, and marketing of the Company’s orthopedic products used in fracture repair, deformity correction, and bone reconstruction procedures. Global Orthopedics distributes its products through a global network of distributors and sales representatives to sell orthopedic products to hospitals, and healthcare providers.

Corporate

Corporate activities are comprised of the operating expenses and activities of the Company not necessarily identifiable within the two reporting segments.

The table below presents net sales by major product category by reporting segment:

	Year Ended December 31,
	2022					2021					2020
(U.S. Dollars, in thousands)	Net Sales		Percent of Total Net Sales			Net Sales		Percent of Total Net Sales			Net Sales		Percent of Total Net Sales
Bone Growth Therapies	$	187,247		40.7	%	$	187,448		40.4	%	$	171,396		42.2	%
Spinal Implants		109,546		23.8	%		115,094		24.8	%		94,857		23.3	%
Biologics		56,381		12.2	%		56,421		12.1	%		55,482		13.6	%
Global Spine		353,174		76.7	%		358,963		77.3	%		321,735		79.1	%
Global Orthopedics		107,539		23.3	%		105,516		22.7	%		84,827		20.9	%
Net sales	$	460,713		100.0	%	$	464,479		100.0	%	$	406,562		100.0	%

The following table presents EBITDA, the primary metric used in managing the Company, by reporting segment:

	Year Ended December 31,
(U.S. Dollars, in thousands)	2022			2021			2020
Global Spine	$	60,649		$	58,014		$	63,036
Global Orthopedics		(4,037	)		3,374			(4,993	)
Corporate		(44,011	)		(31,691	)		(25,382	)
Total EBITDA		12,601			29,697			32,661
Depreciation and amortization		(29,019	)		(29,599	)		(30,546	)
Goodwill impairment		—			(11,756	)		—
Interest expense, net		(1,288	)		(1,837	)		(2,483	)
Loss before income taxes	$	(17,706	)	$	(13,495	)	$	(368	)

The following table presents depreciation and amortization by reporting segment:

	Year Ended December 31,
(U.S. Dollars, in thousands)	2022		2021		2020
Global Spine	$	18,213	$	17,548	$	18,362
Global Orthopedics		6,696		8,233		7,896
Corporate		4,110		3,818		4,288
Total	$	29,019	$	29,599	$	30,546

Geographical information

The following data includes net sales by geographic destination:

	Year Ended December 31,
(U.S. Dollars, in thousands)	2022		2021		2020
U.S.	$	358,843	$	361,945	$	327,280
Italy		19,098		20,187		18,733
Germany		11,569		13,716		11,940
United Kingdom		10,171		10,552		7,147
France		10,377		10,475		8,354
Brazil		5,668		5,108		2,347
Others		44,987		42,496		30,761
Net sales	$	460,713	$	464,479	$	406,562

The table below presents net sales by geographic destination for each reporting segment and for the consolidated Company:

	Year Ended December 31,
(U.S. Dollars, in thousands)	2022		2021		2020
Global Spine
U.S.	$	332,846	$	337,455	$	304,595
International		20,328		21,508		17,140
Total Global Spine		353,174		358,963		321,735
Global Orthopedics
U.S.	$	25,997		24,490		22,685
International		81,542		81,026		62,142
Total Global Orthopedics		107,539		105,516		84,827
Consolidated
U.S.		358,843		361,945		327,280
International		101,870		102,534		79,282
Net sales	$	460,713	$	464,479	$	406,562

The following data includes property, plant, and equipment by geographic area:

(U.S. Dollars, in thousands)	2022		2021
U.S.	$	44,802	$	45,090
Italy		8,535		9,412
Germany		3,115		2,544
United Kingdom		1,149		1,193
Brazil		85		91
Others		543		922
Total	$	58,229	$	59,252