Business segment information

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Business segment information

16. Business segment information

The Company's operations are 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 the CODM, reviews financial information and makes resource allocation decisions among businesses. The primary metric used by the CODM in managing the Company is adjusted earnings before interest, tax, depreciation, and amortization (“adjusted EBITDA”, a non-GAAP financial measure). Adjusted EBITDA represents earnings before interest income (expense), income taxes, depreciation, and amortization, and excludes the impact of share-based compensation, gains and losses related to changes in foreign exchange rates, charges related to the SeaSpine merger and other strategic investments, acquisition-related fair value adjustments, gains and/or losses on investments, litigation and investigation charges, charges related to initial compliance with regulations set forth by the European Union Medical Device Regulation, gains and/or losses related to the realized effects the COVID-19 pandemic has had on the Company's business operations, and succession charges.

Corporate activities are comprised of operating expenses not directly identifiable within the two reporting segments, such as human resources, finance, legal, and information technology functions. The Company neither discretely allocates assets, other than goodwill, to its operating segments nor evaluates the operating segments using discrete asset information.

Global Spine

The Global Spine reporting segment offers two primary product categories: (i) Bone Growth Therapies and (ii) Spinal Implants, Biologics, and Enabling Technologies.

The Bone Growth Therapies product category manufactures, distributes, sells, and provides support services for market leading devices used adjunctively in high-risk spinal fusion procedures and to treat both nonunion and acute fractures in the orthopedic space. 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 acute and nonunion fractures. This product category uses distributors and a direct sales channel to sell its devices to hospitals, healthcare providers, and patients, in the U.S.

Spinal Implants, Biologics, and Enabling Technologies is comprised of (i) a broad portfolio of spine fixation and motion preservation implant products used in surgical procedures of the spine, (ii) one of the most comprehensive biologics portfolios in both the demineralized bone matrix and cellular allograft market segments, and (iii) image-guided surgical solutions to facilitate degenerative, minimally invasive, and complex surgical procedures. Spinal Implants, Biologics, and Enabling Technologies products are sold through a network of distributors and sales representatives to hospitals and healthcare providers on a global basis for Spinal Implants and Enabling Technologies, and primarily within the U.S. for Biologics.

Global Orthopedics

The Global Orthopedics reporting segment offers products and solutions for limb deformity correction and complex limb reconstruction with a focus on use in trauma, adult and pediatric limb reconstruction, and foot and ankle procedures. This reporting segment specializes in the design, development, and marketing of external and internal fixation orthopedic products that are coupled with enabling digital technologies to serve the complete patient treatment pathway. We sell these products through a global network of distributors and sales representatives to hospitals, healthcare organizations, 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,
	2023					2022					2021
(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	$	212,530		28.5	%	$	187,247		40.7	%	$	187,448		40.4	%
Spinal Implants, Biologics, and Enabling Technologies		418,789		56.1	%		165,927		36.0	%		171,515		36.9	%
Global Spine		631,319		84.6	%		353,174		76.7	%		358,963		77.3	%
Global Orthopedics		115,322		15.4	%		107,539		23.3	%		105,516		22.7	%
Net sales	$	746,641		100.0	%	$	460,713		100.0	%	$	464,479		100.0	%

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

	Year Ended December 31,
(U.S. Dollars, in thousands)	2023			2022			2021
Adjusted EBITDA by reporting segment
Global Spine	$	91,115		$	62,692		$	71,086
Global Orthopedics		442			5,267			9,260
Corporate		(45,272	)		(19,406	)		(19,084	)
Consolidated adjusted EBITDA	$	46,285		$	48,553		$	61,262
Reconciling items:
Interest expense, net	$	8,631		$	1,288		$	1,837
Depreciation and amortization		53,063			29,019			41,355
Share-based compensation expense		35,707			18,443			15,432
Foreign exchange impact		(1,581	)		3,291			3,981
SeaSpine merger-related costs		36,623			12,010			—
Strategic investments		2,272			4,018			5,700
Acquisition-related fair value adjustments		33,393			(15,595	)		(2,014	)
(Gain) loss on investments		1,781			187			(644	)
Litigation and investigation costs		14,453			803			33
Medical device regulation		9,446			10,261			8,018
Business interruption - COVID-19		—			2,387			320
Succession charges		1,176			147			739
Loss before income taxes	$	(148,679	)	$	(17,706	)	$	(13,495	)

The following table presents depreciation and amortization by reporting segment:

	Year Ended December 31,
(U.S. Dollars, in thousands)	2023		2022		2021
Global Spine	$	41,213	$	18,213	$	17,548
Global Orthopedics		7,158		6,696		8,233
Corporate		4,692		4,110		3,818
Total	$	53,063	$	29,019	$	29,599

Geographical information

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)	2023		2022		2021
Global Spine
U.S.	$	591,937	$	332,846	$	337,455
International		39,382		20,328		21,508
Total Global Spine		631,319		353,174		358,963
Global Orthopedics
U.S.	$	28,892		25,997		24,490
International		86,430		81,542		81,026
Total Global Orthopedics		115,322		107,539		105,516
Consolidated
U.S.		620,829		358,843		361,945
International		125,812		101,870		102,534
Net sales	$	746,641	$	460,713	$	464,479

The following data includes net sales by geographic destination:

	Year Ended December 31,
(U.S. Dollars, in thousands)	2023		2022		2021
U.S.	$	620,829	$	358,843	$	361,945
Italy		20,060		19,098		20,187
Germany		11,467		11,569		13,716
United Kingdom		10,910		10,171		10,552
France		11,096		10,377		10,475
Brazil		6,452		5,668		5,108
Others		65,827		44,987		42,496
Net sales	$	746,641	$	460,713	$	464,479

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

(U.S. Dollars, in thousands)	2023		2022
U.S.	$	142,727	$	44,802
Italy		10,187		8,535
Germany		3,030		3,115
Others		3,116		1,777
Total	$	159,060	$	58,229