Business segment information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Business segment information

12. Business segment information

We manage our business by our four strategic business units (“SBUs”), which are comprised of BioStim, Biologics, Extremity Fixation, and Spine Fixation supported by Corporate activities. These SBUs represent the segments for which our Chief Executive Officer, who is also Chief Operating Decision Maker (the “CODM”), reviews financial information and makes resource allocation decisions among business units. The primary metric used by the CODM in managing the Company is net margin, which is defined as gross profit less sales and marketing expense. The Company neither discretely allocates assets, other than goodwill, to its operating segments nor evaluates the operating segments using discrete asset information. Accordingly, our segment information has been prepared based on our four SBUs reporting segments. These four segments are discussed below.

BioStim

The BioStim SBU manufactures, distributes, and provides support services of market leading devices that enhance bone fusion. These Class III medical devices are indicated as an adjunctive, noninvasive treatment to improve fusion success rates in cervical and lumbar spine as well as a therapeutic treatment for non-spine fractures that have not healed (non-unions). These devices utilize Orthofix’s patented pulsed electromagnetic field (“PEMF”) technology, which is supported by strong basic mechanism of action data in the scientific literature and as well as strong level one randomized controlled clinical trials in the medical literature.  Current research and clinical studies are also underway to identify potential new clinical indications.  This SBU uses distributors and sales representatives to sell its devices to hospitals, doctors and other healthcare providers, primarily in the U.S.

Biologics

The Biologics SBU provides a portfolio of regenerative products and tissue forms that allow physicians to successfully treat a variety of spinal and orthopedic conditions. This SBU specializes in the marketing of the Company’s regeneration tissue forms. Biologics markets its tissues through a network of distributors, independent sales representatives and affiliates to supply to hospitals, doctors, and other healthcare providers, primarily in the U.S. Our partnership with MTF allows us to exclusively market our Trinity Evolution^® and Trinity ELITE^® tissue forms for musculoskeletal defects to enhance bony fusion.

Extremity Fixation

The Extremity Fixation SBU offers products and solutions that allow physicians to successfully treat a variety of orthopedic conditions unrelated to the spine. This SBU specializes in the design, development, and marketing of the Company’s orthopedic products used in fracture repair, deformity correction and bone reconstruction procedures. Extremity Fixation distributes its products through a network of distributors, sales representatives and affiliates to sell orthopedic products to hospitals, doctors, and other health providers, globally.

Spine Fixation

The Spine Fixation SBU specializes in the design, development and marketing of a broad portfolio of implant products used in surgical procedures of the spine. Spine Fixation distributes its products through a network of distributors, sales representatives, and affiliates to sell spine products to hospitals, doctors and other healthcare providers, globally.

Corporate

Corporate activities are comprised of the operating expenses, including share-based compensation, of Orthofix International N.V. and its holding company subsidiaries, along with activities not necessarily identifiable within the four SBUs.

Net Sales by SBU:

The table below presents net sales by SBU reporting segment. Net sales include product sales and marketing service fees.

	Year Ended December 31,
(U.S. Dollars in thousands)	2015					2014					2013
	Net Sales		Percent of Total Net Sales			Net Sales		Percent of Total Net Sales			Net Sales		Percent of Total Net Sales
BioStim	$	164,955		41.6	%	$	154,676		38.5	%	$	145,085		36.5	%
Biologics		59,832		15.1	%		55,881		13.9	%		53,746		13.5	%
Extremity Fixation		96,034		24.2	%		109,678		27.3	%		103,359		26.0	%
Spine Fixation		75,668		19.1	%		82,042		20.4	%		95,421		24.0	%
Total net sales	$	396,489		100.0	%	$	402,277		100.0	%	$	397,611		100.0	%

The table below presents net margin, defined as gross profit less sales and marketing expenses by SBU reporting segment:

Net Margin by SBU	Year Ended December 31,
(U.S. Dollars in thousands)	2015			2014			2013
Net margin
BioStim	$	67,878		$	66,096		$	63,847
Biologics		27,226			26,629			24,794
Extremity Fixation		29,493			31,586			23,704
Spine Fixation		8,547			14,243			4,329
Corporate		(1,260	)		(1,736	)		(1,443	)
Total net margin	$	131,884		$	136,818		$	115,231
General and administrative		87,157			79,074			67,517
Research and development		26,389			24,994			26,768
Restatements and related costs		9,083			15,614			12,945
Impairment of goodwill		—			—			19,193
Operating income (loss)	$	9,255		$	17,136		$	(11,192	)

The following table presents depreciation and amortization by SBU reporting segment:

	Year Ended December 31,
(U.S. Dollars in thousands)	2015		2014			2013
BioStim	$	2,933	$	1,623		$	1,979
Biologics		1,157		1,161			648
Extremity Fixation		6,636		8,442			7,265
Spine Fixation		10,050		11,711			12,834
Corporate		147		(59	)		96
Total	$	20,923	$	22,878		$	22,822

Geographical information

The following data includes net sales by geographic destination:

(U.S. Dollars in thousands)	2015		2014		2013
U.S.	$	305,505	$	294,682	$	293,032
Italy		15,655		19,573		16,755
United Kingdom		11,376		11,402		10,002
Brazil		13,512		19,633		26,786
Others		50,441		56,987		51,036
Total net sales	$	396,489	$	402,277	$	397,611

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

(U.S. Dollars in thousands)	2015		2014
U.S.	$	42,534	$	37,029
Italy		6,015		6,865
United Kingdom		998		1,368
Brazil		1,036		1,308
Others		1,723		1,979
Total	$	52,306	$	48,549