February 28, 2019 | 3:20 PM by Jay Kunstman | jkunstman@jaguaranalytics.com

Behind The Numbers – SeaSpine Holdings (SPNE)

As a global medical technology company, SeaSpine is focused on the design, development and commercialization of surgical solutions for the treatment of patients suffering from spinal disorders. The company has a comprehensive portfolio of orthobiologics and spinal implants solutions to meet the varying combinations of products that neurosurgeons and orthopedic spine surgeons need to perform fusion procedures on the lumbar, thoracic and cervical spine.

Last month, on January 7th, the company would announce Q4 preliminary results:

-Sees Q4 Revenue of $37.6M – $38M vs $36.31M estimate – Beat
-Sees FY18 Revenue of $143M – $143.4M vs $141.71M estimate – Beat
-Sees FY19 Revenue of $152M – $156M vs $153.37M estimate – Beat

Fast forward to after the close yesterday, in which the company officially announced Q4 numbers:

-EPS of ($0.53) vs ($0.42) estimate – Miss
-Revenue of $38M vs $37.15M estimate – Beat
-Revenue increased 12% Y/Y
-U.S. Revenue increased 9% Y/Y
-U.S. Orthobiologics Revenue increased 10% Y/Y
-U.S. Spinal Implant Revenue increased 8% Y/Y
-International Revenue increased 45%

-Orthobiologics was led by the OsteoStrand Plus product and increased sales of its legacy demineralized bone matrix products to new customers.

-Spinal Implants were led by growth from new and recently launched products, particularly their Mariner, Shoreline, and Ventura NanoMetalene systems.

-International was led by strength of a recently added spinal implants distributor in Australia and solid orthobiologics growth in Latin America and Europe.

2019 Product Cycle

CEO Keith Valentine, in his prepared remarks would discuss the company’s 2019 outlook saying, “Looking ahead over the next 12 months, we have another robust cycle of product launches planned.”

Mariner System – The company will continue to leverage and extend the application of their foundational Mariner modular pedicle screw platform with the anticipated launches of its Mariner Outrigger and Mariner MIS system around mid-year 2019. As the degenerative market continues to shift more to minimally invasive procedures, SeaSpine will be well positioned to capture more market share with the launch of the Mariner system.

Shoreline – It also plans to launch a line extension of its Shoreline anterior cervical interbody system that incorporates their proprietary reef technology, a 3D surface structure enhanced with NanoMetalene that enables unique, bone-friendly titanium properties. The alpha launch of the Shoreline extension is anticipated for third quarter 2019.

Orthobiologics – The company has planned for late 2019 the launch of a new packaging configuration for its OsteoStrand and OsteoStrand Plus demineralized bone fibers products to simplify the intraoperative hydration method of the DBM Fibers and to improve the procedural integration and delivery of the product with our Rapid Graft Delivery System. “This effort emphasizes our desire to not only launch differentiated and innovative new products but to also make them easier to use in the hands of surgeons.”

Piper Jaffray analyst Matt O’Brien was out with a note last night saying, “This afternoon on the call we learned about a number of new products the company will be launching over the next couple of years that will continue to broaden the company’s DDD portfolio. We believe it will soon represent one of the most compelling product offerings in the entire industry. With this ammunition available, we believe the company’s existing exclusive distributors will be able to continue capturing share in the large WW market for spinal implants. Further, we believe this product portfolio will allow SPNE to onboard additional, top-tier distribution partners. We believe these dynamics, along with a cache of new instrument sets the company is deploying will set up SPNE to deliver some of the best growth in spine going forward.

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