Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Orthofix Reports Second Quarter 2022 Results


Orthofix Medical Inc. (NASDAQ:OFIX) today reported its financial results for the quarter ended June 30, 2022. Net sales were $118.1 million, earnings per share ("EPS") was $0.12, and adjusted EPS was $0.08.

"We're pleased with our execution in the second quarter, which was led by double digit growth in our global orthopedic business as well as early commercial traction of new spine products. In addition, we made significant progress on our innovation initiatives, highlighted by the successful launches of the AccelStimtm Bone Healing Therapy and Virtuos Lyograft, as well as our recent partnerships with LimaCorporate and CGBio," said Orthofix President and Chief Executive Officer Jon Serbousek. "We had solid operational execution, despite the challenges that macro headwinds continue to present, including continued hospital staffing shortages, complex spine procedure softness, and patients deferring care due to economic pressures. In addition, currency fluctuations during the quarter dampened reported revenue results."

Continued Serbousek, "We remain incredibly bullish on the long-term opportunity here at Orthofix. While the macro environment is causing near-term volatility, we are fully committed to driving accelerated topline growth in the high single digits and continuing to execute towards increasing profitability. With the strength of our balance sheet as well as organic and inorganic investments made throughout the organization, we will work to continue to drive growth over the near term from key new product launches and channel expansion."

Financial Results Overview

The following table provides net sales by major product category by reporting segment:

 

 

Three Months Ended June 30,

 

(Unaudited, U.S. Dollars, in thousands)

 

2022

 

 

2021

 

 

Change

 

 

Constant

Currency

Change

 

Bone Growth Therapies

 

$

47,765

 

 

$

49,706

 

 

 

(3.9

%)

 

 

(3.9

%)

Spinal Implants

 

 

28,222

 

 

 

30,092

 

 

 

(6.2

%)

 

 

(5.4

%)

Biologics

 

 

14,795

 

 

 

14,852

 

 

 

(0.4

%)

 

 

(0.4

%)

Global Spine

 

 

90,782

 

 

 

94,650

 

 

 

(4.1

%)

 

 

(3.8

%)

Global Orthopedics

 

 

27,288

 

 

 

26,744

 

 

 

2.0

%

 

 

11.4

%

Net sales

 

$

118,070

 

 

$

121,394

 

 

 

(2.7

%)

 

 

(0.5

%)

 

Gross profit decreased $7.5 million to $86.5 million. Gross margin decreased to 73.2% compared to 77.4% in the prior year period.

Net income was $2.5 million, or $0.12 per share, compared to net income of $2.4 million, or $0.12 per share in the prior year period. Adjusted net income was $1.5 million, or $0.08 per share, compared to adjusted net income of $6.3 million, or $0.32 per share in the prior year period.

EBITDA was $10.0 million, compared to $12.8 million in the prior year period. Adjusted EBITDA was $11.4 million, or 9.7% of net sales, compared to $18.4 million, or 15.1% of net sales, in the prior year period.

Liquidity

As of June 30, 2022, cash and cash equivalents totaled $59.5 million, compared to $87.8 million as of December 31, 2021. As of June 30, 2022, the Company had no borrowings under its five year $300 million secured revolving credit facility. Cash flow from operations decreased $12.9 million to $(12.6) million, while free cash flow decreased $14.8 million to $(24.3) million.

CGBio Exclusive Recombinant Bone Growth Protein Partnership

On August 2, 2022, we announced our new long-term strategic license and distribution agreement with CGBio, a developer of innovative, synthetic bone grafts currently approved and commercially available in South Korea, Southeast Asia, Mexico, and India. The agreement grants us the exclusive right to conduct pre-clinical and clinical studies, commercialize, promote, market, and sell the Novosis (rhBMP-2) recombinant bone growth protein in the U.S. and Canada. Novosis is a novel composite bone graft material that is flowable and provides moldable handling characteristics that are unique compared to what is currently on the market in the U.S. and Canada and represents the next evolution of bone growth factor technology.

Business Outlook

As of the date hereof, the Company expects the following net sales results for the year ended December 31, 2022. These expectations are based on the current foreign currency exchange rates and do not include any additional exchange rate changes that may occur this year.

 

 

Current 2022 Outlook

 

Previous 2022 Outlook

(Unaudited, U.S. Dollars, in millions, except per share data)

 

Range

 

Range

Full year net sales

 

$455 - $465

 

$475 - $490

Full year net sales growth rates ? reported

 

(2%) - 0%

 

2% - 5%

Full year net sales growth rates ? constant currency

 

0% - 2%

 

4% - 7%

 

 

 

 

 

Full year adjusted EBITDA

 

$53 - $57

 

$56 - $61

Full year adjusted EBITDA as percentage of net sales 1

 

12%

 

12% - 13%

 

 

 

 

 

Full year adjusted EPS

 

$0.45-$0.55

 

$0.58-$0.73

 

1 Calculated using the midpoint of estimated full year net sales

The Company is not able to provide expectations of operating income or GAAP EPS, the closest comparable U.S. GAAP measures to Adjusted EBITDA and Adjusted EPS, respectively (each of which are non-GAAP measures), on a forward-looking basis because the Company is unable to predict without unreasonable efforts the ultimate outcome of matters (including legal proceedings, acquisition-related expenses, accounting fair value adjustments, and other such items) that will determine the quantitative amount of the items excluded from the applicable non-GAAP measure, which items are further described in the reconciliation tables and related descriptions below. These items are uncertain, depend on various factors, and could be material to the Company's results computed in accordance with U.S. GAAP.

Conference Call

Orthofix will host a conference call today at 8:30 AM Eastern time to discuss the Company's financial results for the second quarter of 2022. Interested parties may access the conference call by dialing (844) 200-6205 in the U.S. and Canada, and (929) 526-1599 all other locations, and referencing the access code 135199. A replay of the call will be available for three weeks by dialing (866) 813-9403 in the U.S. and Canada, and (929) 458-6194 in all other locations, and entering the access code 312854. A webcast of the conference call may be accessed at ir.Orthofix.com.

About Orthofix

Orthofix Medical Inc. is a global medical device company with a spine and orthopedics focus. The Company's mission is to deliver innovative, quality-driven solutions while partnering with health care professionals to improve patient mobility. Headquartered in Lewisville, Texas, Orthofix's spine and orthopedics products are distributed in more than 60 countries via the Company's sales representatives and distributors. For more information, please visit www.orthofix.com.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "projects," "intends," "predicts," "potential," or "continue" or other comparable terminology. These forward-looking statements are not guarantees of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict, including the risks described in Part I, Item 1A under the heading Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K"), and in Part II, Item 1A under the heading Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022. Factors that could cause or contribute to such differences may include, but are not limited to, (i) risks relating to the effects of the COVID-19 pandemic on our business, (ii) our ability to maintain operations to support our customers and patients in the near-term and to capitalize on future growth opportunities, (iii) risks associated with acceptance of surgical products and procedures by surgeons and hospitals, (iv) development and acceptance of new products or product enhancements, (v) clinical and statistical verification of the benefits achieved via the use of our products, (vi) our ability to adequately manage inventory, (vii) our ability to recruit and retain management and key personnel, (viii) global economic instability and potential supply chain disruption caused by Russia's unlawful invasion of Ukraine and resulting sanctions, and (ix) the other risks and uncertainties more fully described in our periodic filings with the Securities and Exchange Commission (the "SEC"). To the extent that the COVID-19 pandemic continues to adversely affect our business and financial results, it may also have the effect of heightening many of the other risks described in Part I, Item 1A under the heading Risk Factors in our 2021 Form 10-K, such as our ability to generate sufficient cash flows to run our business and our ability to protect our information technology networks and infrastructure from unauthorized access, misuse, malware, phishing and other events that could have a security impact as a result of our remote working environment or otherwise. As a result of these various risks, our actual outcomes and results may differ materially from those expressed in these forward-looking statements.

This list of risks, uncertainties, and other factors is not complete. We discuss some of these matters more fully, as well as certain risk factors that could affect our business, financial condition, results of operations, and prospects, in reports we file from time-to-time with the SEC, which are available to read at www.sec.gov. Any or all forward-looking statements that we make may turn out to be wrong (due to inaccurate assumptions that we make or otherwise), and our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to update, and expressly disclaim any duty to update, our forward-looking statements, whether as a result of circumstances or events that arise after the date hereof, new information, or otherwise.

ORTHOFIX MEDICAL INC.

Condensed Consolidated Statements of Operations

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(U.S. Dollars, in thousands, except share and per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Net sales

 

$

118,070

 

 

$

121,394

 

 

$

224,488

 

 

$

226,987

 

Cost of sales

 

 

31,600

 

 

 

27,439

 

 

 

59,918

 

 

 

53,353

 

Gross profit

 

 

86,470

 

 

 

93,955

 

 

 

164,570

 

 

 

173,634

 

Sales and marketing

 

 

59,888

 

 

 

57,338

 

 

 

114,025

 

 

 

108,123

 

General and administrative

 

 

15,846

 

 

 

18,335

 

 

 

35,174

 

 

 

34,779

 

Research and development

 

 

12,758

 

 

 

13,121

 

 

 

23,970

 

 

 

24,018

 

Acquisition-related amortization and remeasurement

 

 

(8,663

)

 

 

894

 

 

 

(12,162

)

 

 

5,363

 

Operating income

 

 

6,641

 

 

 

4,267

 

 

 

3,563

 

 

 

1,351

 

Interest expense, net

 

 

(407

)

 

 

(550

)

 

 

(782

)

 

 

(967

)

Other income (expense), net

 

 

(3,192

)

 

 

951

 

 

 

(4,128

)

 

 

(1,739

)

Income (loss) before income taxes

 

 

3,042

 

 

 

4,668

 

 

 

(1,347

)

 

 

(1,355

)

Income tax expense

 

 

(553

)

 

 

(2,248

)

 

 

(624

)

 

 

(2,041

)

Net income (loss)

 

$

2,489

 

 

$

2,420

 

 

$

(1,971

)

 

$

(3,396

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.12

 

 

$

0.12

 

 

$

(0.10

)

 

$

(0.17

)

Diluted

 

 

0.12

 

 

 

0.12

 

 

 

(0.10

)

 

 

(0.17

)

Weighted average number of common shares (in millions):

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20.0

 

 

 

19.7

 

 

 

20.0

 

 

 

19.6

 

Diluted

 

 

20.1

 

 

 

19.9

 

 

 

20.0

 

 

 

19.6

 

 

ORTHOFIX MEDICAL INC.

Condensed Consolidated Balance Sheets

(U.S. Dollars, in thousands, except par value data)

 

June 30,

2022

 

 

December 31,

2021

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

59,536

 

 

$

87,847

 

Accounts receivable, net of allowances of $5,589 and $4,944, respectively

 

 

77,069

 

 

 

78,560

 

Inventories

 

 

97,171

 

 

 

82,974

 

Prepaid expenses and other current assets

 

 

21,416

 

 

 

20,141

 

Total current assets

 

 

255,192

 

 

 

269,522

 

Property, plant, and equipment, net

 

 

58,676

 

 

 

59,252

 

Intangible assets, net

 

 

50,634

 

 

 

52,666

 

Goodwill

 

 

71,317

 

 

 

71,317

 

Deferred income taxes

 

 

1,454

 

 

 

1,771

 

Other long-term assets

 

 

24,383

 

 

 

22,095

 

Total assets

 

$

461,656

 

 

$

476,623

 

Liabilities and shareholders' equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

32,322

 

 

$

26,459

 

Current portion of finance lease liability

 

 

624

 

 

 

2,590

 

Other current liabilities

 

 

48,151

 

 

 

76,781

 

Total current liabilities

 

 

81,097

 

 

 

105,830

 

Long-term portion of finance lease liability

 

 

19,571

 

 

 

19,890

 

Other long-term liabilities

 

 

19,042

 

 

 

13,969

 

Total liabilities

 

 

119,710

 

 

 

139,689

 

Contingencies

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

Common shares $0.10 par value; 50,000 shares authorized;

20,000 and 19,837 issued and outstanding as of June 30,

2022 and December 31, 2021, respectively

 

 

2,000

 

 

 

1,983

 

Additional paid-in capital

 

 

323,738

 

 

 

313,951

 

Retained earnings

 

 

19,029

 

 

 

21,000

 

Accumulated other comprehensive loss

 

 

(2,821

)

 

 

?

 

Total shareholders' equity

 

 

341,946

 

 

 

336,934

 

Total liabilities and shareholders' equity

 

$

461,656

 

 

$

476,623

 

 

 

ORTHOFIX MEDICAL INC.

Non-GAAP Financial Measures

The following tables present reconciliations of operating income (loss), net income (loss), EPS, and net cash from operating activities, in each case calculated in accordance with U.S. generally accepted accounting principles ("GAAP"), to, as applicable, non-GAAP financial measures, referred to as "EBITDA," "Adjusted EBITDA," "Adjusted net income (loss)," "Adjusted EPS," and "Free cash flow" that exclude items specified in the tables. The GAAP measures shown in the tables below represent the most comparable GAAP measure to the applicable non-GAAP measure(s) shown in the table. A more detailed explanation of the items excluded from these non-GAAP financial measures, as well as why management believes the non-GAAP financial measures are useful to them, is included following the reconciliations. The non-GAAP adjusted results shown below and within this press release, which exclude the items specified in the reconciliation tables below, should not be construed as a substitute for, or a better indicator of, the Company's performance than the Company's GAAP results.

EBITDA and Adjusted EBITDA

 

 

 

Three Months Ended June 30, 2022

 

(Unaudited, U.S. Dollars, in thousands)

 

Total Orthofix

 

 

Global Spine

 

 

Global

Orthopedics

 

 

Corporate

 

Operating income (loss)

 

$

6,641

 

 

$

17,551

 

 

$

(2,290

)

 

$

(8,620

)

Other income (expense), net

 

 

(3,192

)

 

 

(810

)

 

 

(1,736

)

 

 

(646

)

Depreciation and amortization

 

 

4,461

 

 

 

2,137

 

 

 

1,441

 

 

 

883

 

Amortization of acquired intangibles

 

 

2,051

 

 

 

1,888

 

 

 

163

 

 

 

?

 

EBITDA

 

$

9,961

 

 

$

20,766

 

 

$

(2,422

)

 

$

(8,383

)

Share-based compensation

 

 

4,449

 

 

 

1,957

 

 

 

252

 

 

 

2,240

 

Foreign exchange impact

 

 

2,991

 

 

 

664

 

 

 

1,801

 

 

 

526

 

Strategic investments

 

 

1,824

 

 

 

39

 

 

 

270

 

 

 

1,515

 

Acquisition-related fair value adjustments

 

 

(10,714

)

 

 

(10,714

)

 

 

?

 

 

 

?

 

Loss on investment securities

 

 

123

 

 

 

?

 

 

 

?

 

 

 

123

 

Legal judgments/settlements

 

 

148

 

 

 

110

 

 

 

39

 

 

 

(1

)

Succession and transition charges

 

 

68

 

 

 

44

 

 

 

7

 

 

 

17

 

Medical device regulation

 

 

2,257

 

 

 

1,431

 

 

 

830

 

 

 

(4

)

Business interruption - COVID-19

 

 

316

 

 

 

313

 

 

 

3

 

 

 

?

 

Adjusted EBITDA

 

$

11,423

 

 

$

14,610

 

 

$

780

 

 

$

(3,967

)

As a % of net sales

 

 

9.7

%

 

 

12.4

%

 

 

0.7

%

 

 

-3.4

%

 

 

Six Months Ended June 30, 2022

 

(Unaudited, U.S. Dollars, in thousands)

 

Total Orthofix

 

 

Global Spine

 

 

Global

Orthopedics

 

 

Corporate

 

Operating income (loss)

 

$

3,563

 

 

$

28,918

 

 

$

(6,562

)

 

$

(18,793

)

Other income (expense), net

 

 

(4,128

)

 

 

(735

)

 

 

(2,477

)

 

 

(916

)

Depreciation and amortization

 

 

9,752

 

 

 

4,759

 

 

 

2,962

 

 

 

2,031

 

Amortization of acquired intangibles

 

 

4,276

 

 

 

3,717

 

 

 

559

 

 

 

?

 

EBITDA

 

$

13,463

 

 

$

36,659

 

 

$

(5,518

)

 

$

(17,678

)

Share-based compensation

 

 

8,697

 

 

 

3,411

 

 

 

853

 

 

 

4,433

 

Foreign exchange impact

 

 

4,233

 

 

 

1,037

 

 

 

2,512

 

 

 

684

 

Strategic investments

 

 

2,794

 

 

 

102

 

 

 

415

 

 

 

2,277

 

Acquisition-related fair value adjustments

 

 

(16,214

)

 

 

(16,214

)

 

 

?

 

 

 

?

 

Loss on investment securities

 

 

188

 

 

 

?

 

 

 

?

 

 

 

188

 

Legal judgments/settlements

 

 

341

 

 

 

116

 

 

 

223

 

 

 

2

 

Succession and transition charges

 

 

78

 

 

 

54

 

 

 

7

 

 

 

17

 

Medical device regulation

 

 

4,293

 

 

 

2,837

 

 

 

1,466

 

 

 

(10

)

Business interruption - COVID-19

 

 

659

 

 

 

641

 

 

 

18

 

 

 

?

 

Adjusted EBITDA

 

$

18,532

 

 

$

28,643

 

 

$

(24

)

 

$

(10,087

)

As a % of net sales

 

 

8.3

%

 

 

12.8

%

 

 

0.0

%

 

 

-4.5

%

 

 

Three Months Ended June 30, 2021

 

(Unaudited, U.S. Dollars, in thousands)

 

Total Orthofix

 

 

Global Spine

 

 

Global

Orthopedics

 

 

Corporate

 

Operating income (loss)

 

$

4,267

 

 

$

14,212

 

 

$

(1,037

)

 

$

(8,908

)

Other income (expense), net

 

 

951

 

 

 

398

 

 

 

645

 

 

 

(92

)

Depreciation and amortization

 

 

5,324

 

 

 

2,638

 

 

 

1,716

 

 

 

970

 

Amortization of acquired intangibles

 

 

2,235

 

 

 

1,784

 

 

 

451

 

 

 

?

 

EBITDA

 

$

12,777

 

 

$

19,032

 

 

$

1,775

 

 

$

(8,030

)

Share-based compensation

 

 

3,900

 

 

 

1,618

 

 

 

606

 

 

 

1,676

 

Foreign exchange impact

 

 

(1,061

)

 

 

(378

)

 

 

(775

)

 

 

92

 

Strategic investments

 

 

1,150

 

 

 

152

 

 

 

634

 

 

 

364

 

Acquisition-related fair value adjustments

 

 

(1,089

)

 

 

(714

)

 

 

?

 

 

 

(375

)

Legal judgments/settlements

 

 

61

 

 

 

1

 

 

 

59

 

 

 

1

 

Succession and transition charges

 

 

613

 

 

 

392

 

 

 

62

 

 

 

159

 

Medical device regulation

 

 

1,987

 

 

 

602

 

 

 

559

 

 

 

826

 

Business interruption - COVID-19

 

 

26

 

 

 

4

 

 

 

10

 

 

 

12

 

Adjusted EBITDA

 

$

18,364

 

 

$

20,709

 

 

$

2,930

 

 

$

(5,275

)

As a % of net sales

 

 

15.1

%

 

 

17.1

%

 

 

2.4

%

 

 

-4.3

%

 

 

Six Months Ended June 30, 2021

 

(Unaudited, U.S. Dollars, in thousands)

 

Total Orthofix

 

 

Global Spine

 

 

Global

Orthopedics

 

 

Corporate

 

Operating income (loss)

 

$

1,351

 

 

$

22,324

 

 

$

(3,899

)

 

$

(17,074

)

Other income (expense), net

 

 

(1,739

)

 

 

(218

)

 

 

(793

)

 

 

(728

)

Depreciation and amortization

 

 

10,532

 

 

 

5,252

 

 

 

3,337

 

 

 

1,943

 

Amortization of acquired intangibles

 

 

4,470

 

 

 

3,569

 

 

 

901

 

 

 

?

 

EBITDA

 

$

14,614

 

 

$

30,927

 

 

$

(454

)

 

$

(15,859

)

Share-based compensation

 

 

7,621

 

 

 

3,126

 

 

 

1,132

 

 

 

3,363

 

Foreign exchange impact

 

 

1,601

 

 

 

246

 

 

 

626

 

 

 

729

 

Strategic investments

 

 

2,561

 

 

 

152

 

 

 

1,734

 

 

 

675

 

Acquisition-related fair value adjustments

 

 

1,475

 

 

 

1,850

 

 

 

?

 

 

 

(375

)

Legal judgments/settlements

 

 

2

 

 

 

(50

)

 

 

105

 

 

 

(53

)

Succession and transition charges

 

 

643

 

 

 

422

 

 

 

62

 

 

 

159

 

Medical device regulation

 

 

3,811

 

 

 

1,105

 

 

 

1,066

 

 

 

1,640

 

Business interruption - COVID-19

 

 

47

 

 

 

6

 

 

 

16

 

 

 

25

 

Adjusted EBITDA

 

$

32,375

 

 

$

37,784

 

 

$

4,287

 

 

$

(9,696

)

As a % of net sales

 

 

14.3

%

 

 

16.6

%

 

 

1.9

%

 

 

-4.3

%

Adjusted Net Income (Loss)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(Unaudited, U.S. Dollars, in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income (loss)

 

$

2,489

 

 

$

2,420

 

 

$

(1,971

)

 

$

(3,396

)

Foreign exchange impact

 

 

2,991

 

 

 

(1,061

)

 

 

4,233

 

 

 

1,601

 

Strategic investments

 

 

1,817

 

 

 

1,181

 

 

 

2,782

 

 

 

2,633

 

Acquisition-related fair value adjustments

 

 

(10,714

)

 

 

(1,089

)

 

 

(16,214

)

 

 

1,475

 

Amortization of acquired intangibles

 

 

2,051

 

 

 

2,242

 

 

 

4,282

 

 

 

4,481

 

Loss on investment securities

 

 

123

 

 

 

?

 

 

 

188

 

 

 

?

 

Legal judgments/settlements

 

 

148

 

 

 

61

 

 

 

341

 

 

 

2

 

Succession and transition charges

 

 

68

 

 

 

613

 

 

 

78

 

 

 

643

 

Medical device regulation

 

 

2,260

 

 

 

1,987

 

 

 

4,296

 

 

 

3,811

 

Business interruption - COVID-19

 

 

318

 

 

 

28

 

 

 

663

 

 

 

51

 

Long-term income tax rate adjustment

 

 

(37

)

 

 

(82

)

 

 

819

 

 

 

(1,562

)

Adjusted net income (loss)

 

$

1,514

 

 

$

6,300

 

 

$

(503

)

 

$

9,739

 

 

Adjusted EPS

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(Unaudited, per diluted share)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

EPS

 

$

0.12

 

 

$

0.12

 

 

$

(0.10

)

 

$

(0.17

)

Foreign exchange impact

 

 

0.15

 

 

 

(0.05

)

 

 

0.21

 

 

 

0.08

 

Strategic investments

 

 

0.09

 

 

 

0.06

 

 

 

0.14

 

 

 

0.13

 

Acquisition-related fair value adjustments

 

 

(0.53

)

 

 

(0.05

)

 

 

(0.81

)

 

 

0.08

 

Amortization of acquired intangibles

 

 

0.10

 

 

 

0.11

 

 

 

0.21

 

 

 

0.22

 

Loss on investment securities

 

 

0.01

 

 

 

?

 

 

 

0.01

 

 

 

?

 

Legal judgments/settlements

 

 

0.01

 

 

 

?

 

 

 

0.02

 

 

 

?

 

Succession and transition charges

 

 

?

 

 

 

0.03

 

 

 

?

 

 

 

0.03

 

Medical device regulation

 

 

0.11

 

 

 

0.10

 

 

 

0.22

 

 

 

0.19

 

Business interruption - COVID-19

 

 

0.02

 

 

 

?

 

 

 

0.03

 

 

 

?

 

Long-term income tax rate adjustment

 

 

?

 

 

 

?

 

 

 

0.04

 

 

 

(0.07

)

Adjusted EPS

 

$

0.08

 

 

$

0.32

 

 

$

(0.03

)

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of diluted common shares

(treasury stock method, in millions)

 

 

20.1

 

 

 

20.0

 

 

 

20.0

 

 

 

19.9

 

Cash Flow and Free Cash Flow

 

 

 

Six Months Ended June 30,

 

(Unaudited, U.S. Dollars, in thousands)

 

2022

 

 

2021

 

Net cash from operating activities

 

$

(12,622

)

 

$

264

 

Net cash from investing activities

 

 

(13,161

)

 

 

(9,792

)

Net cash from financing activities

 

 

(1,324

)

 

 

(6,528

)

Effect of exchange rate changes on cash

 

 

(1,204

)

 

 

(243

)

Net change in cash and cash equivalents

 

$

(28,311

)

 

$

(16,299

)

 

 

 

Six Months Ended June 30,

 

(Unaudited, U.S. Dollars, in thousands)

 

2022

 

 

2021

 

Net cash from operating activities

 

$

(12,622

)

 

$

264

 

Capital expenditures

 

 

(11,703

)

 

 

(9,792

)

Free cash flow

 

$

(24,325

)

 

$

(9,528

)

 

Constant Currency

Constant currency is a non-GAAP measure, which we calculate by using foreign currency rates from the comparable, prior-year period, to present net sales at comparable rates. Constant currency can be presented for numerous GAAP measures, but is most commonly used by management to analyze net sales without the impact of changes in foreign currency rates.

EBITDA

EBITDA is a non-GAAP financial measure, which we calculate by adding interest income (expense), net; income tax expense (benefit); and depreciation and amortization to net income. EBITDA provides management with additional insight to its results of operations. EBITDA is the primary metric used by our Chief Operating Decision Maker in managing our business.

Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS

These non-GAAP financial measures provide management with additional insight to its results of operations and reflect the exclusion of the following items:

Free Cash Flow

Free cash flow is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operating activities. Free cash flow is an important indicator of how much cash is generated or used by our normal business operations, including capital expenditures. Management uses free cash flow to measure progress on its capital efficiency and cash flow initiatives.

Usefulness and Limitations of Non-GAAP Financial Measures

Management uses non-GAAP measures to evaluate performance period-over-period, analyze the underlying trends in our business, assess performance relative to competitors, and establish operational goals and forecasts that are used in allocating resources. Management uses these non-GAAP measures as the basis for evaluating the ability of the underlying operations to generate cash. In addition, management uses these non-GAAP measures to further its understanding of the performance of our business units.

Material Limitations Associated with the Use of Non-GAAP Financial Measures

The non-GAAP financial measures used in this press release may have limitations as analytical tools, and should not be considered in isolation or as a replacement for GAAP financial measures. Some of the limitations associated with the use of these non-GAAP financial measures are that they exclude items that reflect an economic cost and can have a material effect on cash flows. Similarly, certain non-cash expenses, such as share-based compensation, do not directly impact cash flows, but are part of total compensation costs accounted for under GAAP.

Compensation for Limitations Associated with Use of Non-GAAP Financial Measures

We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance. The GAAP results provide management with the ability to further understand our performance based on a defined set of criteria. Management believes that the non-GAAP measures reflect the underlying operating results of our businesses and provide an important measure of our overall performance. We provide detailed reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures above and encourage investors to review these reconciliations.

Usefulness of Non-GAAP Financial Measures to Investors

We believe that providing non-GAAP financial measures that exclude certain items provides investors with greater transparency to the information used by senior management in its financial and operational decision-making. Management believes it is important to provide investors with the same non-GAAP metrics it uses to supplement information regarding the performance and underlying trends of our business operations in order to facilitate comparisons to our historical operating results and internally evaluate the effectiveness of our operating strategies. We believe that disclosure of these non-GAAP financial measures also facilitates comparisons of our underlying operating performance with other companies in the industry that also supplement their GAAP results with non-GAAP financial measures.


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