Due to the adverse effect on the previously announced third quarter 2022 financial results and revenue guidance that resulted from additional rebate claims related to certain of the Company’s products and a non-cash impairment charge required by
Q3 Financial Summary & Recent Highlights:
Net Sales of$128 .7 million, up$19 .8 million, or 18.2%, year-over-year as reported (19.1% constant currency*) and down (0.5%) organically* (0.3% constant currency*)- Net Loss of
$145.7 million , compared to Net Loss of$2 .3 million in prior-year period - Adjusted EBITDA* of
$21.0 million , compared to$21.3 million in prior-year period - Loss per share of Class A common stock of
$1.76 , compared to$0.03 in prior-year period - Non-GAAP earnings per share of Class A common stock* of
$0.06 , compared to$0.19 in prior-year period
“We remain focused on delivering above market revenue growth and driving enhanced profitability while improving our internal processes for efficiencies and effectiveness," commented
Third Quarter 2022 Financial Results:
The following table represents net sales by geographic region, and by vertical, for the three months ended
Three Months Ended | Change as Reported | Constant Currency* Change | |||||||||||||
$ | % | % | |||||||||||||
Pain Treatments | $ | 47,010 | $ | 55,963 | $ | (8,953 | ) | (16.0 | %) | (16.0 | %) | ||||
Restorative Therapies | 38,096 | 25,634 | 12,462 | 48.6 | % | 48.6 | % | ||||||||
Surgical Solutions | 31,182 | 17,565 | 13,617 | 77.5 | % | 77.5 | % | ||||||||
Total | 116,288 | 99,162 | 17,126 | 17.3 | % | 17.3 | % | ||||||||
International | |||||||||||||||
Pain Treatments | 5,090 | 4,672 | 418 | 8.9 | % | 20.5 | % | ||||||||
Restorative Therapies | 4,047 | 4,841 | (794 | ) | (16.4 | %) | (9.6 | %) | |||||||
Surgical Solutions | 3,237 | 215 | 3,022 | NM | NM | ||||||||||
12,374 | 9,728 | 2,646 | 27.2 | % | 38.9 | % | |||||||||
Total net sales | $ | 128,662 | $ | 108,890 | $ | 19,772 | 18.2 | % | 19.1 | % |
Total net sales were
Gross profit was
Operating loss was (
Net loss was
Adjusted EBITDA* was
Loss per share of Class A common stock was
Non-GAAP earnings per share of Class A common stock* was
Balance Sheet:
As of
Updated Full Year 2022 Financial Guidance:
For the twelve months ending
- Net sales of
$517 million to$522 million , representing year-over-year growth of approximately 20% to 21%, representing an update to the prior guidance of$547.5 million to$562.5 million . - Adjusted EBITDA* of
$75 million to$79 million , compared to$80.8 million for the year endedDecember 31, 2021 , and representing an update from the prior guidance of$94 million to$104 million . - Non-GAAP EPS* of
$0.20 to$0.25 , compared to$0.75 for the year endedDecember 31, 2021 , and representing an update from the prior guidance of$0.47 to$0.57 .
During the second quarter of 2022, prior to obtaining the results from our Phase 2 trial, we elected to discontinue the development of MOTYS, to focus our resources on other priorities, including the integration of our recent acquisitions and our expanded R&D and product development portfolio we inherited with these acquisitions. We may assess further strategic options at a future date. Adjusted EBITDA and Non-GAAP EPS guidance reflect costs related to the fulfillment of remaining regulatory obligations as an adjusting item. Please see footnote (j) to the table "Reconciliation of Net (Loss) Income to Adjusted EBITDA (unaudited)" below for additional information regarding the reconciling item for MOTYS Costs (as defined below).
The Company does not provide
The Company's guidance reflects its current expectations regarding the impact of COVID-19 on its business. The severity and duration of the COVID-19 pandemic are outside of the Company’s control and, given the uncertain nature of the pandemic, could cause the Company’s future operating results to be different from our current expectations, particularly if the impact of the pandemic worsens.
Presentation: This press release presents historical results, for the periods presented, of
About
Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements concerning our financial guidance (including expected MOTYS Costs) and expected financial performance; our business strategy, position and operations; expected sales trends, opportunities, market position and growth (including from the acquisition of CartiHeal); our integration plans; and expected impacts of the COVID-19 pandemic. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.
Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could cause our actual results to differ materially from those contemplated in this press release include, but are not limited to, the risk that the material weakness we identified or a new material risk could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner; our ability to complete acquisitions or successfully integrate new businesses, such as CartiHeal, products or technologies in a cost-effective and non-disruptive manner; we might not be able to continue to fund our operations for at least the next twelve months as a going concern; we might not meet certain of our debt covenants under our Credit Agreement and might be required to repay our indebtedness; we might not be able to fund the remainder of the deferred consideration for the CartiHeal acquisition as it becomes due; our business may continue to experience adverse impacts as a result of the COVID-19 pandemic; we are highly dependent on a limited number of products; our long-term growth depends on our ability to develop, acquire and commercialize new products, line extensions or expanded indications; we may be unable to successfully commercialize newly developed or acquired products or therapies in
Consolidated balance sheets
As of
(Amounts in thousands, except share amounts) (unaudited)
2022 | 2021 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 34,359 | $ | 43,933 | |||
Restricted cash | 23 | 5,280 | |||||
Accounts receivable, net | 132,185 | 124,963 | |||||
Inventory | 76,952 | 61,688 | |||||
Prepaid and other current assets | 27,563 | 27,239 | |||||
Total current assets | 271,082 | 263,103 | |||||
Restricted cash, less current portion | — | 50,000 | |||||
Property and equipment, net | 26,643 | 22,985 | |||||
15,359 | 147,623 | ||||||
Intangible assets, net | 1,055,601 | 695,193 | |||||
Operating lease assets | 16,304 | 17,186 | |||||
Deferred tax assets | — | 481 | |||||
Investment and other assets | 13,033 | 29,291 | |||||
Total assets | $ | 1,398,022 | $ | 1,225,862 | |||
Liabilities and Members’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 19,075 | $ | 16,915 | |||
Accrued liabilities | 116,890 | 131,473 | |||||
Accrued equity-based compensation | — | 10,875 | |||||
Current portion of long-term debt | 31,302 | 18,038 | |||||
Current portion of deferred consideration | 117,615 | — | |||||
Other current liabilities | 3,491 | 3,558 | |||||
Total current liabilities | 288,373 | 180,859 | |||||
Long-term debt, less current portion | 393,102 | 339,644 | |||||
Deferred income taxes | 159,300 | 133,518 | |||||
Deferred consideration | 71,923 | — | |||||
Contingent consideration | 81,914 | 16,329 | |||||
Other long-term liabilities | 24,264 | 21,723 | |||||
Total liabilities | 1,018,876 | 692,073 | |||||
Stockholders’ Equity: | |||||||
Preferred stock, | |||||||
Class A common stock, | 64 | 59 | |||||
Class B common stock, | 16 | 16 | |||||
Additional paid-in capital | 478,033 | 465,272 | |||||
Accumulated deficit | (133,376 | ) | (6,602 | ) | |||
Accumulated other comprehensive (loss) income | (1,340 | ) | 179 | ||||
Total stockholders’ equity attributable to | 343,397 | 458,924 | |||||
Noncontrolling interest | 35,749 | 74,865 | |||||
Total stockholders’ equity | 379,146 | 533,789 | |||||
Total liabilities and stockholders’ equity | $ | 1,398,022 | $ | 1,225,862 |
Consolidated statements of operations and comprehensive (loss) income
(Amounts in thousands, except share and per share data, unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
Net sales | $ | 128,662 | $ | 108,890 | $ | 386,283 | $ | 300,484 | |||||||
Cost of sales (including depreciation and amortization of | 44,127 | 29,821 | 129,392 | 85,546 | |||||||||||
Gross profit | 84,535 | 79,069 | 256,891 | 214,938 | |||||||||||
Selling, general and administrative expense | 79,194 | 69,636 | 254,938 | 173,372 | |||||||||||
Research and development expense | 5,840 | 6,153 | 19,134 | 11,936 | |||||||||||
Restructuring costs | 575 | 1,798 | 2,159 | 1,798 | |||||||||||
Change in fair value of contingent consideration | 3,142 | 651 | 3,684 | 1,292 | |||||||||||
Depreciation and amortization | 7,442 | 1,878 | 13,392 | 5,655 | |||||||||||
Impairment of goodwill | 189,197 | — | 189,197 | — | |||||||||||
Impairment of variable interest entity assets | — | — | — | 5,674 | |||||||||||
Operating (loss) income | (200,855 | ) | (1,047 | ) | (225,613 | ) | 15,211 | ||||||||
Interest expense, net | 9,894 | 1,347 | 10,922 | 152 | |||||||||||
Other (income) expense | (23,272 | ) | 757 | (22,350 | ) | 2,821 | |||||||||
Other (income) expense | (13,378 | ) | 2,104 | (11,428 | ) | 2,973 | |||||||||
(Loss) income before income taxes | (187,477 | ) | (3,151 | ) | (214,185 | ) | 12,238 | ||||||||
Income tax (benefit) expense, net | (41,779 | ) | (882 | ) | (45,667 | ) | 759 | ||||||||
Net (loss) income | (145,698 | ) | (2,269 | ) | (168,518 | ) | 11,479 | ||||||||
Loss attributable to noncontrolling interest | 37,453 | 1,198 | 41,744 | 8,260 | |||||||||||
Net (loss) income attributable to | $ | (108,245 | ) | $ | (1,071 | ) | $ | (126,774 | ) | $ | 19,739 | ||||
Net (loss) income | $ | (145,698 | ) | $ | (2,269 | ) | $ | (168,518 | ) | $ | 11,479 | ||||
Other comprehensive loss, net of tax | |||||||||||||||
Change in foreign currency translation adjustments | (723 | ) | (366 | ) | (1,912 | ) | (1,225 | ) | |||||||
Comprehensive loss | (146,421 | ) | (2,635 | ) | (170,430 | ) | 10,254 | ||||||||
Comprehensive loss attributable to noncontrolling interest | 37,600 | 1,300 | 42,137 | 8,182 | |||||||||||
Comprehensive (loss) income attributable to | $ | (108,821 | ) | $ | (1,335 | ) | $ | (128,293 | ) | $ | 18,436 | ||||
Loss per share of Class A common stock(1): | |||||||||||||||
Basic and Diluted | $ | (1.76 | ) | $ | (0.03 | ) | $ | (2.07 | ) | $ | (0.15 | ) | |||
Weighted-average shares of Class A common stock outstanding(1): | |||||||||||||||
Basic and diluted | 61,674,254 | 41,837,581 | 61,208,941 | 41,816,706 | |||||||||||
(1)Per share information for the nine months ended |
Consolidated condensed statements of cash flows
(Amounts in thousands, unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
Operating activities: | |||||||||||||||
Net (loss) income | $ | (145,698 | ) | $ | (2,269 | ) | $ | (168,518 | ) | $ | 11,479 | ||||
Adjustments to reconcile net (loss) income to net cash from operating activities: | |||||||||||||||
Depreciation and amortization | 18,780 | 8,522 | 43,643 | 23,185 | |||||||||||
Equity-based compensation | 4,648 | 5,938 | 14,153 | (10,621 | ) | ||||||||||
Change in fair value of contingent consideration | 3,142 | 651 | 3,684 | 1,292 | |||||||||||
Change in fair value of Equity Participation Rights | — | — | — | (2,774 | ) | ||||||||||
Change in fair value of interest rate swap | (2,222 | ) | (81 | ) | (6,418 | ) | (1,391 | ) | |||||||
Revaluation gain on previously held equity interest in CartiHeal | (23,709 | ) | — | (23,709 | ) | — | |||||||||
Impairment of goodwill | 189,197 | — | 189,197 | — | |||||||||||
Impairments related to variable interest entity | — | — | — | 7,043 | |||||||||||
Deferred income taxes | (19,456 | ) | (722 | ) | (47,154 | ) | (1,703 | ) | |||||||
Unrealized loss on foreign currency fluctuations | 1,906 | 770 | 2,926 | 1,224 | |||||||||||
Other, net | 1,127 | 356 | 4,040 | 269 | |||||||||||
Changes in working capital | (28,416 | ) | (2,578 | ) | (30,625 | ) | (18,129 | ) | |||||||
Net cash from operating activities | (701 | ) | 10,587 | (18,781 | ) | 9,874 | |||||||||
Investing activities: | |||||||||||||||
Acquisition of CartiHeal, net of cash acquired | (54,841 | ) | — | (104,841 | ) | — | |||||||||
Acquisition of Bioness, net of cash acquired | — | (1,000 | ) | — | (46,790 | ) | |||||||||
Purchase of property and equipment | (1,649 | ) | (1,926 | ) | (6,639 | ) | (4,568 | ) | |||||||
Investments and acquisition of distribution rights | — | (10,260 | ) | (1,478 | ) | (11,124 | ) | ||||||||
Other | 156 | — | (75 | ) | — | ||||||||||
Net cash from investing activities | (56,334 | ) | (13,186 | ) | (113,033 | ) | (62,482 | ) | |||||||
Financing activities: | |||||||||||||||
Proceeds from issuance of Class A common stock sold in initial public offering, net of underwriting discounts and offering costs | — | — | — | 107,777 | |||||||||||
Proceeds from issuance of Class A and B common stock | 482 | 417 | 4,739 | 747 | |||||||||||
Tax withholdings on equity-based compensation | — | — | (3,352 | ) | — | ||||||||||
Borrowing on revolver | — | — | 25,000 | — | |||||||||||
Payment on revolver | (25,000 | ) | — | (25,000 | ) | — | |||||||||
Proceeds from the issuance of long-term debt, net of issuance costs | 79,659 | — | 79,659 | — | |||||||||||
Payments on long-term debt | (4,509 | ) | (3,750 | ) | (13,528 | ) | (11,250 | ) | |||||||
Refunds from members | — | (996 | ) | — | (183 | ) | |||||||||
Other, net | 22 | (17 | ) | (4 | ) | (28 | ) | ||||||||
Net cash from financing activities | 50,654 | (4,346 | ) | 67,514 | 97,063 | ||||||||||
Effect of exchange rate changes on cash | (238 | ) | (206 | ) | (531 | ) | (377 | ) | |||||||
Net change in cash, cash equivalents and restricted cash | (6,619 | ) | (7,151 | ) | (64,831 | ) | 44,078 | ||||||||
Cash, cash equivalents and restricted cash at the beginning of the period | 41,001 | 138,068 | 99,213 | 86,839 | |||||||||||
Cash, cash equivalents and restricted cash at the end of the period | $ | 34,382 | $ | 130,917 | $ | 34,382 | $ | 130,917 |
Use of Non-GAAP Financial Measures
Organic Revenue Growth
The Company defines the term “organic revenue” as revenue in the stated period excluding the impact from business acquisitions and divestitures. The Company uses the related term “organic revenue growth” to refer to the financial performance metric of comparing the stated period's organic revenue with the reported revenue of the corresponding period in the prior year. The Company believes that these non-GAAP financial measures, when taken together with our GAAP financial measures, allow the Company and its investors to better measure the Company’s performance and evaluate long-term performance trends. Organic revenue growth also facilitates easier comparisons of the Company’s performance with prior and future periods and relative comparisons to its peers. The Company excludes the effect of acquisitions and divestitures because these activities can have a significant impact on the Company's reported results, which the Company believes makes comparisons of long-term performance trends difficult for management and investors.
Adjusted EBITDA, Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Income, Non-GAAP Operating Expense, Non-GAAP Operating Margin, Non-GAAP Net Income, and Non-GAAP Earnings per share of Class A Common Stock
We present Adjusted EBITDA, Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Income, Non-GAAP Operating Expense, Non-GAAP Operating Margin, Non-GAAP Net Income, and Non-GAAP Earnings per share of Class A common stock, all non-GAAP financial measures, to supplement our GAAP financial reporting, because we believe these measures are useful indicators of our operating performance. We revised our prior year presentation of our Non-GAAP measures to condense the adjustments in order to simplify the presentation. Prior periods have been recast to conform to the current periods.
We define Adjusted EBITDA as net (loss) income from continuing operations before depreciation and amortization, provision of income taxes and interest expense (income), net, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include acquisition and related costs, remeasurement gains and losses on investments, impairments on goodwill, restructuring and succession charges, equity compensation expense, equity loss in unconsolidated investments, foreign currency impact, and other items. See the table below for a reconciliation of net (loss) income to Adjusted EBITDA. Our management uses Adjusted EBITDA principally as a measure of our operating performance and believes that Adjusted EBITDA is useful to our investors because it is frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. Our management also uses Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections.
Our management uses Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Income, Non-GAAP Operating Expense, Non-GAAP Operating Margin and Non-GAAP Net Income principally as measures of our operating performance and believes that these non-GAAP financial measures are useful to better understand the long term performance of our core business and to facilitate comparison of our results to those of peer companies. Our management also uses these non-GAAP financial measures for planning purposes, including the preparation of our annual operating budget and financial projections.
We define Non-GAAP Gross Profit as gross profit, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization included in the cost of goods sold and acquisition and related costs in the cost of goods sold. We define Non-GAAP Gross Margin as Non-GAAP Gross Profit divided by net sales. See the table below for a reconciliation of gross profit and gross margin to Non-GAAP Gross Profit and Non-GAAP Gross Margin.
We define Non-GAAP Operating Income as operating income, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization, acquisition and related costs, remeasurement gains and losses on investments, impairments on goodwill, restructuring and succession charges, and other items. Non-GAAP Operating Margin is defined as Non-GAAP Operating Income divided by net sales. See the table below for a reconciliation of operating (loss) income and operating margin to Non-GAAP Operating Income and Non-GAAP Operating Margin.
We define Non-GAAP Operating Expense as operating expenses, adjusted to exclude certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization, acquisition and related costs, remeasurements gains and losses on investments, impairments on goodwill, restructuring and succession charges, and other items. See the table below for a reconciliation of operating expenses to Non-GAAP Operating Expenses.
We define Non-GAAP Net Income as Net Income, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization, acquisition and related costs, restructuring and succession charges, other items, and the tax effect of adjusting items. Starting in the fourth quarter of 2021, we revised our presentation of Non-GAAP Net Income to include the income tax effect of adjusting items. The income tax effect was calculated by applying management's expectation of a long-term normalized effective tax rate to the adjusting items. Prior period presentation has been recast to conform to current period presentation. See the table below for a reconciliation of Net (Loss) Income to Non-GAAP Net Income.
We define Non-GAAP Earnings per Class A share as Earnings per Class A share, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization, acquisition and related costs, restructuring and succession charges, other items, and the tax effect of adjusting items divided by weighted average number of shares of Class A common stock outstanding during the period. Starting in the fourth quarter of 2021, we revised our presentation of Non-GAAP Earnings per Class A share to include the income tax effect of adjusting items. The income tax effect was calculated by applying management's expectation of a long-term normalized effective tax rate to the adjusting items. Prior period presentation has been recast to conform to current period presentation. See the table below for a reconciliation of loss per Class A share to Non-GAAP Earnings per Class A share.
Limitations of the Usefulness of Non-GAAP Measures
Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for, or as superior to, the financial information prepared and presented in accordance with GAAP. These measures might exclude certain normal recurring expenses. Therefore, these measures may not provide a complete understanding of the Company's performance and should be reviewed in conjunction with the GAAP financial measures. Additionally, other companies might define their non-GAAP financial measures differently than we do. Investors are encouraged to review the reconciliation of the non-GAAP measures provided in this press release, including in the tables below, to their most directly comparable GAAP measures.
Reconciliation of Net (Loss) Income to Adjusted EBITDA (unaudited)
Three Months Ended | Nine Months Ended | Twelve Months Ended | |||||||||||||||||
($, thousands) | |||||||||||||||||||
Net (loss) income | $ | (145,698 | ) | $ | (2,269 | ) | $ | (168,518 | ) | $ | 11,479 | $ | 9,586 | ||||||
Interest expense, net | 9,894 | 1,347 | 10,922 | 152 | 1,112 | ||||||||||||||
Income tax (benefit) expense, net | (41,779 | ) | (882 | ) | (45,667 | ) | 759 | (1,966 | ) | ||||||||||
Depreciation and amortization(a) | 18,780 | 8,522 | 43,643 | 23,185 | 34,875 | ||||||||||||||
Acquisition and related costs(b) | 6,319 | 5,914 | 20,292 | 14,044 | 21,978 | ||||||||||||||
Gain on remeasurement of | (23,709 | ) | — | (23,709 | ) | — | — | ||||||||||||
Restructuring and succession charges(d) | 575 | 1,798 | 2,847 | 2,142 | 3,717 | ||||||||||||||
Equity compensation(e) | 4,648 | 5,938 | 14,153 | (10,621 | ) | (4,512 | ) | ||||||||||||
Equity loss in unconsolidated investments(f) | 322 | 419 | 1,003 | 1,320 | 1,868 | ||||||||||||||
Foreign currency impact(g) | 581 | 17 | 1,122 | (47 | ) | 132 | |||||||||||||
Impairment of goodwill(h) | 189,197 | — | 189,197 | — | — | ||||||||||||||
Impairments related to variable interest entity(i) | — | — | — | 7,043 | 7,043 | ||||||||||||||
Other items(j) | 1,909 | 511 | 5,796 | 2,816 | 6,926 | ||||||||||||||
Adjusted EBITDA | $ | 21,039 | $ | 21,315 | $ | 51,081 | $ | 52,272 | $ | 80,759 |
(a) Includes for the three months ended
Includes for the year ended
(b) Includes acquisition and integration costs related to completed acquisitions, amortization of inventory step-up associated with acquired entities, and changes in fair value of contingent consideration.
(c) Represents the gain on remeasurement of the Company’s equity method investment in CartiHeal based upon the fair value of consideration transferred for the CartiHeal acquisition.
(d) Costs incurred were the result of adopting acquisition related restructuring plans to reduce headcount, reorganize management structure, and to consolidate certain facilities, and costs related to executive transitions.
(e) The three and nine months ended
(f) Represents CartiHeal equity investment losses.
(g) Includes realized and unrealized gains and losses from fluctuations in foreign currency.
(h) Represents a non-cash impairment charge due to the recent decline in the Company’s market capitalization subsequent to its previously announced financial results for the three and nine months ended
(i) Represents the loss on impairment of Harbor Medtech Inc.’s (Harbor) long-lived assets and the Company’s investment in Harbor.
(j) Other items primarily includes charges associated with strategic transactions, such as potential acquisitions; public company preparation costs, which primarily includes accounting and legal fees; and MOTYS Costs. During the second quarter of 2022, prior to obtaining the results from our Phase 2 trial, we elected to discontinue the development of MOTYS, to focus our resources on other priorities, including the integration of our recent acquisitions and our expanded R&D and product development portfolio we inherited with these acquisitions. We incurred
Reconciliation of Other Reported GAAP Measures to Non-GAAP Measures
Three Months Ended | Gross Profit | SG&A | R&D | Operating (Loss)/Income | Net Income | EPS(h) | |||||||||||||||
Reported GAAP measure | $ | 84,535 | $ | 279,550 | $ | 5,840 | $ | (200,855 | ) | $ | (145,698 | ) | $ | (1.76 | ) | ||||||
Reported GAAP margin | 65.7 | % | (156.1 | )% | |||||||||||||||||
Depreciation and amortization(a) | 11,331 | 7,442 | 7 | 18,780 | 18,780 | 0.25 | |||||||||||||||
Acquisition and related costs(b) | — | 6,320 | — | 6,320 | 6,319 | 0.08 | |||||||||||||||
Gain on remeasurement of | — | — | — | — | (23,709 | ) | (0.31 | ) | |||||||||||||
Restructuring and succession charges(d) | — | 575 | — | 575 | 575 | 0.01 | |||||||||||||||
Impairment of goodwill(e) | — | 189,197 | — | 189,197 | 189,197 | 2.44 | |||||||||||||||
Other items(g) | — | 151 | 1,758 | 1,909 | 1,909 | 0.02 | |||||||||||||||
Tax effect of adjusting items(h) | — | — | — | — | (41,844 | ) | (0.68 | ) | |||||||||||||
Non-GAAP measure | $ | 95,866 | $ | 75,865 | $ | 4,075 | $ | 15,926 | $ | 5,529 | $ | 0.05 | |||||||||
Non-GAAP margin | 74.5 | % | 12.4 | % | |||||||||||||||||
Non-GAAP Gross Margin | Non-GAAP SG&A | Non-GAAP R&D | Non-GAAP Operating Income | Non-GAAP Net Income | Adjusted EPS |
Three Months Ended | Gross Profit | SG&A | R&D | Operating (Loss)/Income | Net (Loss)/Income | EPS(h) | |||||||||||||||
Reported GAAP measure | $ | 79,069 | $ | 73,963 | $ | 6,153 | $ | (1,047 | ) | $ | (2,269 | ) | $ | (0.03 | ) | ||||||
Reported GAAP margin | 72.6 | % | (1.0 | )% | |||||||||||||||||
Depreciation and amortization(a) | 6,637 | 1,878 | 7 | 8,522 | 8,522 | 0.15 | |||||||||||||||
Acquisition and related costs(b) | — | 5,914 | — | 5,914 | 5,914 | 0.10 | |||||||||||||||
Restructuring and succession charges(d) | — | 1,798 | — | 1,798 | 1,798 | 0.03 | |||||||||||||||
Impairments related to variable interest entity(f) | — | — | — | — | — | — | |||||||||||||||
Other items(g) | — | 511 | — | 511 | 511 | 0.01 | |||||||||||||||
Tax effect of adjusting items(h) | — | — | — | — | (3,823 | ) | (0.07 | ) | |||||||||||||
Non-GAAP measure | $ | 85,706 | $ | 63,862 | $ | 6,146 | $ | 15,698 | $ | 10,653 | $ | 0.19 | |||||||||
Non-GAAP margin | 78.7 | % | 14.4 | % | |||||||||||||||||
Non-GAAP Gross Margin | Non-GAAP SG&A | Non-GAAP R&D | Non-GAAP Operating Income | Non-GAAP Net Income | Adjusted EPS |
Nine Months Ended | Gross Profit | SG&A | R&D | Operating (Loss)/Income | Net (Loss)/Income | EPS(h) | |||||||||||||||
Reported GAAP measure | $ | 256,891 | $ | 463,370 | $ | 19,134 | $ | (225,613 | ) | $ | (168,518 | ) | $ | (2.07 | ) | ||||||
Reported GAAP margin | 66.5 | % | (58.4 | )% | |||||||||||||||||
Depreciation and amortization(a) | 30,233 | 13,392 | 18 | 43,643 | 43,643 | 0.57 | |||||||||||||||
Acquisition and related costs(b) | 5,607 | 14,686 | — | 20,293 | 20,292 | 0.26 | |||||||||||||||
Gain on remeasurement of | — | — | — | — | (23,709 | ) | (0.31 | ) | |||||||||||||
Restructuring and succession charges(d) | — | 2,847 | — | 2,847 | 2,847 | 0.04 | |||||||||||||||
Impairment of goodwill(e) | — | 189,197 | — | 189,197 | 189,197 | 2.46 | |||||||||||||||
Other items(g) | — | 3,254 | 2,542 | 5,796 | 5,796 | 0.08 | |||||||||||||||
Tax effect of adjusting items(h) | — | — | — | — | (53,017 | ) | (0.83 | ) | |||||||||||||
Non-GAAP measure | $ | 292,731 | $ | 239,994 | $ | 16,574 | $ | 36,163 | $ | 16,531 | $ | 0.20 | |||||||||
Non-GAAP margin | 75.8 | % | 9.4 | % | |||||||||||||||||
Non-GAAP Gross Margin | Non-GAAP SG&A | Non-GAAP R&D | Non-GAAP Operating Income | Non-GAAP Net Income | Adjusted EPS |
Nine Months Ended | Gross Profit | SG&A | R&D | Operating Income | Net Income | EPS(h) | |||||||||||||||
Reported GAAP measure | $ | 214,938 | $ | 187,791 | $ | 11,936 | $ | 15,211 | $ | 11,479 | $ | (0.15 | ) | ||||||||
Reported GAAP margin | 71.5 | % | 5.1 | % | |||||||||||||||||
Depreciation and amortization(a) | 17,491 | 5,655 | 39 | 23,185 | 23,185 | 0.40 | |||||||||||||||
Acquisition and related costs(b) | 2,106 | 11,938 | — | 14,044 | 14,044 | 0.24 | |||||||||||||||
Restructuring and succession charges(d) | — | 2,142 | — | 2,142 | 2,142 | 0.04 | |||||||||||||||
Impairments related to variable interest entity(f) | — | 5,674 | — | 5,674 | 7,043 | 0.03 | |||||||||||||||
Other items(g) | — | 2,816 | — | 2,816 | 2,816 | 0.05 | |||||||||||||||
Tax effect of adjusting items(h) | — | — | — | — | (11,240 | ) | (0.18 | ) | |||||||||||||
Non-GAAP measure | $ | 234,535 | $ | 159,566 | $ | 11,897 | $ | 63,072 | $ | 49,469 | $ | 0.43 | |||||||||
Non-GAAP margin | 78.1 | % | 21.0 | % | |||||||||||||||||
Non-GAAP Gross Margin | Non-GAAP SG&A | Non-GAAP R&D | Non-GAAP Operating Income | Non-GAAP Net Income | Adjusted EPS |
(a) Includes for the three months ended
(b) Consists of acquisition related items such as integration costs, amortization of inventory step-up and changes in fair value of contingent consideration.
(c) Represents the gain on remeasurement of the Company’s equity method investment in CartiHeal based upon the fair value of consideration transferred for the CartiHeal acquisition.
(d) Consists of restructuring plans to reduce headcount, reorganize management structure and consolidate certain facilities, as well as executive leadership transition costs.
(e) Represents a non-cash impairment charge due to the recent decline in the Company’s market capitalization subsequent to its previously announced financial results for the three and nine months ended
(f) Represents loss on impairment of Harbor’s long-lived assets and the Company’s investment in Harbor.
(g) Other items primarily includes charges associated with strategic transactions, such as potential acquisitions; public company preparation costs, which primarily includes accounting and legal fees; and MOTYS Costs.
(h) Includes
(i) Adjustments are pro-rated to exclude the weighted average non-controlling interest ownership of 20.4% and 27.8%, respectively, for the three and nine months ended
Year Ended | EPS(g) | ||
Reported GAAP measure | $ | (0.15 | ) |
Depreciation and amortization(a) | 0.59 | ||
Acquisition and related costs(b) | 0.37 | ||
Restructuring and succession charges(c) | 0.06 | ||
Impairments related to variable interest entity(d) | 0.02 | ||
Other items(e) | 0.12 | ||
Tax effect of adjusting items(f) | (0.26 | ) | |
Non-GAAP measure | $ | 0.75 |
(a) Includes for the year ended
(b) Consists of acquisition related items such as integration costs, amortization of inventory step-up, and changes in fair value of contingent consideration.
(c) Consists of restructuring plans to reduce headcount, reorganize management structure and consolidate certain facilities, as well as executive leadership transition costs.
(d) Represents loss on impairment of Harbor’s long-lived assets and the Company’s investment in Harbor.
(e) Other items primarily consists of charges associated with strategic transactions, such as potential acquisitions, and debt retirement and modification costs.
(f) Calculated by applying a normalized statutory rate of 22.8% to the adjustments to Non-GAAP Net Income. The tax effect on adjustments to EPS is normalized to exclude the effect of the non-controlling ownership interest.
(g) Adjustments are pro-rated to exclude the weighted average non-controlling interest ownership of 23.5% for the year ended
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