Financial

RTI Surgical® Announces First Quarter 2019 Results

DEERFIELD, Ill., May 02, 2019 (GLOBE NEWSWIRE) — RTI Surgical Holdings, Inc. (Nasdaq: RTIX), a global surgical implant company, reported operating results for the first quarter of 2019.

First Quarter 2019 Highlights:

  • Revenue of $69.7 million, inclusive of $2.0 million from acquisition of Paradigm Spine
  • Net loss of $9.1 million, inclusive of $9.0 million of net non-recurring acquisition and integration expenses
  • Adjusted EBITDA of $6.6 million, or 10% of revenue
  • Completed acquisition of Paradigm Spine and its primary product the coflex® Interlaminar Stabilization® device

“RTI Surgical experienced a solid start to 2019, completing the acquisition of Paradigm Spine and making significant progress integrating the coflex device into our growing and increasingly differentiated spine portfolio,” said Camille Farhat, President and CEO, RTI Surgical. “To drive the continued adoption and growth of coflex and our novel spine products, we are focused on accelerated reimbursement, physician engagement and sales execution. To that end, we have restructured and expanded our spine commercial team to focus on growing our customer base and better supporting our surgeon customers with enhanced resources and specialized training.”

Farhat continued, “RTI’s overall performance in the first quarter of 2019 reflects the continued strategic and operational progress made towards reducing complexity, driving operational excellence and accelerating the growth of the company.”

First Quarter 2019

RTI’s worldwide revenues for the first quarter of 2019 were $69.7 million, compared with $69.9 million during the same period in the prior year.  Gross profit for the first quarter of 2019 was $38.0 million, or 54.5% of revenues, a significant increase compared to $33.7 million, or 48.2% of revenues, in the first quarter of 2018.  Gross profit for the first quarter of 2018 was impacted by an inventory charge of $1.0 million from the write-off of inventory related to our international restructuring and $0.2 million due to the purchase accounting step-up of Zyga inventory.

During the first quarter of 2019, RTI incurred $9.0 million in non-recurring pre-tax acquisition and integration costs related primarily to its acquisition of Paradigm Spine LLC. During the first quarter of 2018, the company incurred $1.8 million of non-recurring charges.

Net loss applicable to common shares was $9.1 million, or $0.14 per fully diluted common share in the first quarter of 2019, compared to net loss applicable to common shares of $1.9 million, or $0.03 per fully diluted common share in the first quarter of 2018. As outlined in the reconciliation tables that follow, excluding the impact of the acquisition and integration charges, Adjusted Net Income applicable to common shares was $0.5 million, or $0.01 per fully diluted common share in the first quarter of 2019 compared to $0.5 million, or $0.01 per fully diluted common share, in the first quarter of 2018.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), for the first quarter of 2019 was $6.6 million, or 10% of revenues, compared with $7.8 million, or 11% of revenues for the first quarter of 2018.  The decline in Adjusted EBITDA was primarily driven by increased patent litigation costs and operating expenses resulting from accelerating growth due to incremental operating costs from the acquisition of Paradigm Spine completed in early March of 2019, and partially offset by gross margin expansion associated with the efforts to reduce complexity and increase operational excellence initiated during 2018.

Fiscal 2019 Outlook

Based on our recent financial results and current business outlook, the Company confirms the following financial guidance for 2019:

  • The Company expects full year revenues in the range of approximately $325 million to $335 million, representing approximately 15% to 19% growth over the prior year.
  • The Company expects full year Adjusted EBITDA to be in the range of approximately $36 million to $40 million, representing approximately 7% to 19% growth over the prior year.

The Company noted that guidance is based on the following assumptions:

  • Relatively stable economic and market conditions and regulatory environment;
  • Ongoing positive impacts from efforts to reduce complexity and implement operational excellence;
  • The successful integration of Paradigm Spine which closed in early March 2019 and a positive EBITDA contribution from Paradigm Spine;
  • Sustained favorable reimbursement from private payors; and,
  • The successful ongoing transition from map3® to ViBone®.

Conference Call
RTI will host a conference call and audio webcast at 9:00 a.m. ET today. The conference call can be accessed by dialing (877) 383-7419 (U.S.) or (760) 666-3754 (International), using conference ID 4267595. The webcast can be accessed through the investor section of RTI’s website at www.rtix.com/investors. A replay of the conference call will be available on RTI’s website for one month following the call.

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Josh Sandberg

Josh Sandberg is the President of Ortho Spine Partners and Partner for The De Angelis Group. He also serves as Co-Founder and Editor of OrthoSpineNews.

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