Deerfield, Ill., May 2, 2019 – 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 revenueCompleted acquisition of Paradigm Spine and its primary product the coflex® Interlaminar Stabilization® device
- 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®.
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.
About RTI Surgical Holdings, Inc.
RTI Surgical is a leading global surgical implant company providing surgeons with safe biologic, metal and synthetic implants. Committed to delivering a higher standard, RTI’s implants are used in sports medicine, plastic surgery, spine, orthopedic and trauma procedures and are distributed in more than 40 countries. RTI has four manufacturing facilities throughout the U.S. and Europe. RTI is accredited in the U.S. by the American Association of Tissue Banks and is a member of AdvaMed. For more information, please visit www.rtix.com. Connect with us on LinkedIn and Twitter.
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which may include statements regarding the continued contribution of the OEM franchise to RTI’s growth, the impact of operational priorities on costs and their impact on RTI’s financial performance, RTI’s ability to meet its commitments, the implementation of RTI’s strategic initiatives, the acceleration of RTI’s growth, future performance and organic growth, the reduction in complexity of RTI’s operations, RTI’s ability to maintain partnerships in the organ procurement community, RTI’s ability to expand the number of patients it is able to serve, the impact of the transition from map3® to ViBone®, our growth strategy in spine, the expected integration of, and potential impact from, the Paradigm Spine, LLC acquisition, the integration of Zyga’s operations, the success of our new product development efforts, anticipated financial results, growth rates, new product introductions, future operational improvements, fiscal 2019 guidance and underlying assumptions. These forward-looking statements are based on management’s current expectations, estimates and projections about our industry, our management’s beliefs and certain assumptions made by our management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. The forward-looking statements are not guarantees of future performance and are based on certain assumptions including RTI’s ability to reduce inventory, manage expenses and accomplish its goals and strategies, the quality of the new product offerings from RTI, general economic conditions, as well as those within RTI’s industry, RTI’s ability to integrate acquisitions into existing operations, and numerous other factors and risks identified in the Company’s Form 10-K for the fiscal year ended December 31, 2018 and other filings with the Securities and Exchange Commission (SEC). Our actual results may differ materially from the anticipated results reflected in these forward-looking statements. Copies of the Company’s SEC filings may be obtained by contacting the Company or the SEC or by visiting RTI’s website at www.rtix.com or the SEC’s website at www.sec.gov. We undertake no obligation to update these forward-looking statements except as may be required by law.