Business segment information

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Business segment information

9. Business segment information

The table below present net sales, which includes product sales and marketing service fees, by reporting segment:

	Three Months Ended September 30,
(U.S. Dollars, in thousands)	2017		2016		Change
BioStim	$	44,427	$	42,956		3.4	%
Biologics		15,218		14,335		6.2	%
Extremity Fixation		25,447		24,314		4.7	%
Spine Fixation		20,155		16,892		19.3	%
Net sales	$	105,247	$	98,497		6.9	%

	Nine Months Ended September 30,
(U.S. Dollars, in thousands)	2017		2016		Change
BioStim	$	136,140	$	128,758		5.7	%
Biologics		45,866		42,685		7.5	%
Extremity Fixation		74,139		75,840		-2.2	%
Spine Fixation		60,782		53,968		12.6	%
Net sales	$	316,927	$	301,251		5.2	%

The primary metric used in managing the Company is non-GAAP net margin, which is an internal metric that the Company defines as gross profit less sales and marketing expense. The table below presents non-GAAP net margin by reporting segment:

	Three Months Ended September 30,						Nine Months Ended September 30,
(U.S. Dollars, in thousands)	2017			2016			2017			2016
BioStim	$	18,285		$	19,996		$	54,887		$	54,980
Biologics		6,010			6,821			18,651			19,642
Extremity Fixation		7,723			8,834			20,901			24,170
Spine Fixation		2,122			1,388			6,825			5,925
Corporate		(103	)		(139	)		(308	)		(581	)
Non-GAAP net margin	$	34,037		$	36,900		$	100,956		$	104,136
General and administrative		18,068			19,272			56,759			54,822
Research and development		6,935			6,858			21,246			21,294
Charges related to U.S. Government resolutions		—			1,499			—			14,369
Operating income	$	9,034		$	9,271		$	22,951		$	13,651
Interest income (expense), net		(15	)		471			106			320
Other income (expense), net		479			(634	)		(3,284	)		1,346
Income before income taxes	$	9,498		$	9,108		$	19,773		$	15,317