0001637761-21-000185 | 10-Q | XBRL Viewer

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2021	Nov. 01, 2021
Document Documentand Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	001-36905
Entity Registrant Name	SeaSpine Holdings Corporation
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-3251758
Entity Address, Address Line One	5770 Armada Drive
Entity Address, City or Town	Carlsbad
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92008
City Area Code	760
Local Phone Number	727-8399
Title of 12(b) Security	Common Stock
Trading Symbol	SPNE
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		36,441,778
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001637761
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer

CONDENSED COMBINED STATEMENT OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Statement [Abstract]
Total revenue, net	$ 46,445	$ 43,209	$ 135,862	$ 107,909
Cost of goods sold	18,289	14,074	51,137	39,545
Gross profit	28,156	29,135	84,725	68,364
Selling and marketing	27,578	22,163	76,413	59,652
General and administrative	11,642	8,908	32,055	26,307
Research and development	6,262	3,917	15,618	11,786
Intangible amortization	942	793	2,577	2,377
Impairment of intangible assets	0	0	0	1,325
Total operating expenses	46,424	35,781	126,663	101,447
Operating loss	(18,268)	(6,646)	(41,938)	(33,083)
Other (expense) income, net	(231)	136	5,689	377
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest, Total	(18,499)	(6,510)	(36,249)	(32,706)
(Benefit) provision for income taxes	(872)	64	(689)	132
Net loss	$ (17,627)	$ (6,574)	$ (35,560)	$ (32,838)
Net loss per share, basic and diluted	$ (0.48)	$ (0.24)	$ (1.09)	$ (1.21)
Weighted average shares used to compute basic and diluted net loss per share	36,419	27,536	32,638	27,082

CONDENSED COMBINED STATEMENTS OF COMPREHENSIVE LOSS Statement - USD ($) $ in Thousands	3 Months Ended						6 Months Ended	9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Net loss	$ (17,627)	$ (5,213)	$ (12,720)	$ (6,574)	$ (13,713)	$ (12,551)		$ (35,560)	$ (32,838)
Foreign currency translation adjustments	(170)	102		347			$ (255)	(425)	325
Debt Securities, Available-for-sale, Unrealized Gain (Loss)	0			(70)	$ (89)	$ 190		0	31
Comprehensive loss	$ (17,797)	$ (5,111)		$ (6,297)			$ (18,188)	$ (35,985)	$ (32,482)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

CONDENSED COMBINED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 102,433	$ 76,813
Trade accounts receivable, net of allowances of $111 and $192	29,075	26,154
Inventories, net	70,931	54,041
Prepaid expenses and other current assets	4,741	3,884
Total current assets	207,180	160,892
Property, plant and equipment, net	43,087	31,422
Right of use assets	7,360	7,658
Intangible assets, net	56,343	13,883
Goodwill	75,583	0
Other assets	447	546
Total assets	390,000	214,401
Current liabilities:
Accounts payable, trade	17,999	5,006
Accrued compensation	8,483	8,198
Accrued commissions	9,257	8,199
Short-term debt	0	1,114
Short-term lease liability	2,240	2,147
Deferred revenue	1,352	102
Other accrued expenses and current liabilities	8,365	5,961
Total current liabilities	47,696	30,727
Long-term debt	0	5,059
Long-term lease liability	6,339	6,802
Deferred Income Tax Liabilities, Net	9,049	0
Other liabilities	75	95
Total liabilities	63,159	42,683
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 15,000 authorized; no shares issued and outstanding at September 30, 2021 and December 31, 2020	0	0
Common stock, $0.01 par value; 60,000 authorized; 36,427 and 27,729 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	364	277
Additional paid-in capital	579,595	388,574
Accumulated other comprehensive income	1,699	2,124
Accumulated deficit	(254,817)	(219,257)
Total stockholders' equity	326,841	171,718
Total liabilities and stockholders' equity	$ 390,000	$ 214,401

CONDENSED COMBINED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for trade accounts receivable	$ 111	$ 192
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	15,000,000	15,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	60,000,000	60,000,000
Common Stock, Shares, Issued	36,427,000	27,729,000
Common Stock, Shares, Outstanding	36,427,000	27,729,000

CONDENSED COMBINED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
OPERATING ACTIVITIES:
Net loss	$ (35,560)	$ (32,838)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	10,280	7,929
Instrument replacement expense	2,665	1,555
Impairment of intangible assets	0	1,325
Impairment of spinal instruments	0	210
Provision for excess and obsolete inventories	3,891	3,365
Stock-based compensation	8,791	7,934
Gain on forgiveness of Paycheck Protection Program Loan	(6,173)	0
Other	429	209
Changes in assets and liabilities, net of the effects from acquisition:
Accounts receivable	(753)	1,606
Inventories	(17,995)	(6,436)
Prepaid expenses and other current assets	248	1,755
Other non-current assets	220	(10)
Accounts payable	9,729	140
Accrued commissions	1,053	(825)
Other accrued expenses and current liabilities	1,405	66
Other non-current liabilities	(607)	(17)
Net cash used in operating activities	(22,377)	(14,032)
INVESTING ACTIVITIES:
Purchases of property and equipment	(16,894)	(9,571)
Additions to technology assets	1,161	850
Purchases of short-term investments	0	(25,007)
Maturities of short-term investments	0	10,000
Acquisitions	28,331	0
Net cash used in investing activities	(46,386)	(25,428)
FINANCING ACTIVITIES:
Borrowings under credit facility	20,000	0
Proceeds from Paycheck Protection Program Loan	0	7,173
Repayments of credit facility	20,000	0
Repayments of Paycheck Protection Program Loan	0	(1,000)
Debt issuance costs	(45)	0
Proceeds from issuance of common stock- employee stock purchase plan	1,016	698
Proceeds from exercise of stock options	1,996	1,073
Proceeds from issuance of common stock, net of offering costs	94,531	91,622
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units	(2,781)	(2,069)
Payment of contingent royalty consideration liabilities in connection with acquisition of business	(33)	(109)
Net cash provided by financing activities	94,684	97,388
Effect of exchange rate changes on cash and cash equivalents	(301)	61
Net change in cash and cash equivalents	25,620	57,989
Cash and cash equivalents at end of period	102,433	78,188
Cash and cash equivalents at beginning of period	76,813	20,199
Supplemental cash flow information:
Interest paid	253	126
Income taxes paid	148	115
Noncash Investing and Financing Items [Abstract]
Property and equipment in liabilities	4,648	1,187
Intangible assets in liabilities	200	0
Issuance of common stock - Acquisition	61,048	0
Exchangeable shares - Acquisition	26,505	0
Settlement of contingent closing consideration liabilities with stock issuance in connection with acquisition of business	$ 0	$ 2,000

CONDENSED COMBINED STATEMENT OF EQUITY Statement - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings [Member]
Beginning Balance, Shares, Outstanding at Dec. 31, 2019		19,124,000
Beginning Balance at Dec. 31, 2019	$ 109,760	$ 191	$ 284,211	$ 1,434	$ (176,076)
Net loss	(12,551)				(12,551)
Foreign currency translation adjustment (see Note 1)	(164)			(164)
Debt Securities, Available-for-sale, Unrealized Gain (Loss)	190			190
Stock Issued During Period, Shares, Restricted Stock Award, Gross		213,000
Restricted stock issued	(2)	$ (2)	0
Issuance of common stock, net of offering costs- ATM transactions		7,820,000
Issuance of common stock, net of offering costs- ATM transactions	91,622	$ 78	91,544
Issuance of common stock- exercise of stock options		80,000
Issuance of common stock- exercise of stock options	902	$ 1	901
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units		0
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units	(1,855)		(1,855)
Stock-based compensation	1,983		1,983
Ending Balance, Shares, Outstanding at Mar. 31, 2020		27,237,000
Ending Balance at Mar. 31, 2020	189,889	$ 272	376,784	1,460	(188,627)
Beginning Balance, Shares, Outstanding at Dec. 31, 2019		19,124,000
Beginning Balance at Dec. 31, 2019	109,760	$ 191	284,211	1,434	(176,076)
Net loss	(32,838)
Debt Securities, Available-for-sale, Unrealized Gain (Loss)	31
Issuance of common stock - Acquisition	0
Exchangeable shares - Acquisition	0
Ending Balance, Shares, Outstanding at Sep. 30, 2020		27,621,000
Ending Balance at Sep. 30, 2020	178,538	$ 276	385,386	1,790	(208,914)
Beginning Balance, Shares, Outstanding at Mar. 31, 2020		27,237,000
Beginning Balance at Mar. 31, 2020	189,889	$ 272	376,784	1,460	(188,627)
Net loss	(13,713)				(13,713)
Foreign currency translation adjustment (see Note 1)	142			142
Debt Securities, Available-for-sale, Unrealized Gain (Loss)	(89)			(89)
Stock Issued During Period, Shares, Restricted Stock Award, Gross		79,000
Restricted stock issued	0	$ (1)	(1)
Stock Issued During Period, Shares, Employee Stock Purchase Plans		78,000
Stock Issued During Period, Value, Employee Stock Purchase Plan	698	$ 1	697
Issuance of common stock- exercise of stock options		5,000
Issuance of common stock- exercise of stock options	46		46
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units		0
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units	(43)		(43)
Stock-based compensation	2,769		2,769
Ending Balance, Shares, Outstanding at Jun. 30, 2020		27,399,000
Ending Balance at Jun. 30, 2020	179,699	$ 274	380,252	1,513	(202,340)
Net loss	(6,574)				(6,574)
Foreign currency translation adjustment (see Note 1)	347			347
Debt Securities, Available-for-sale, Unrealized Gain (Loss)	(70)			(70)
Stock Issued During Period, Shares, Restricted Stock Award, Gross		33,000
Restricted stock issued	0
Stock Issued During Period, Value, NLT Acquisition	2,000	$ 2	1,998
Shares Issued During Period, Shares, NLT Acquisition		176,000
Issuance of common stock- exercise of stock options		13,000
Issuance of common stock- exercise of stock options	125		125
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units	(171)		(171)
Stock-based compensation	3,182		3,182
Ending Balance, Shares, Outstanding at Sep. 30, 2020		27,621,000
Ending Balance at Sep. 30, 2020	$ 178,538	$ 276	385,386	1,790	(208,914)
Beginning Balance, Shares, Outstanding at Dec. 31, 2020	27,729,000	27,729,000
Beginning Balance at Dec. 31, 2020	$ 171,718	$ 277	388,574	2,124	(219,257)
Net loss	(12,720)				(12,720)
Foreign currency translation adjustment (see Note 1)	(357)			(357)
Stock Issued During Period, Shares, Restricted Stock Award, Gross		175,000
Restricted stock issued	(2)	$ (2)	0
Issuance of common stock- exercise of stock options		44,000
Issuance of common stock- exercise of stock options	496	$ 0	496
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units	(2,418)		(2,418)
Stock-based compensation	2,546		2,546
Ending Balance, Shares, Outstanding at Mar. 31, 2021		27,948,000
Ending Balance at Mar. 31, 2021	$ 159,267	$ 279	389,198	1,767	(231,977)
Beginning Balance, Shares, Outstanding at Dec. 31, 2020	27,729,000	27,729,000
Beginning Balance at Dec. 31, 2020	$ 171,718	$ 277	388,574	2,124	(219,257)
Net loss	(35,560)
Debt Securities, Available-for-sale, Unrealized Gain (Loss)	0
Issuance of common stock - Acquisition	61,048	$ 61,048
Exchangeable shares - Acquisition	$ 26,505
Ending Balance, Shares, Outstanding at Sep. 30, 2021	36,427,000	36,427,000
Ending Balance at Sep. 30, 2021	$ 326,841	$ 364	579,595	1,699	(254,817)
Beginning Balance, Shares, Outstanding at Mar. 31, 2021		27,948,000
Beginning Balance at Mar. 31, 2021	159,267	$ 279	389,198	1,767	(231,977)
Net loss	(5,213)				(5,213)
Foreign currency translation adjustment (see Note 1)	102			102
Stock Issued During Period, Shares, Restricted Stock Award, Gross		71,000
Restricted stock issued	0	$ (1)	(1)
Issuance of common stock, net of offering costs- ATM transactions		5,175,000
Issuance of common stock, net of offering costs- ATM transactions	94,531	$ 52	94,479
Stock Issued During Period, Shares, Employee Stock Purchase Plans		109,000
Stock Issued During Period, Value, Employee Stock Purchase Plan	1,016	$ 1	1,015
Stock Issued During Period, Shares, Acquisitions		2,991,000
Issuance of common stock - Acquisition	61,048	$ 30	61,018
Stock Issued During Period, Shares, Other		0
Exchangeable shares - Acquisition	26,505	$ 0	26,505
Issuance of common stock- exercise of stock options		81,000
Issuance of common stock- exercise of stock options	1,107	$ 1	1,106
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units		0
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units	(126)		(126)
Stock-based compensation	3,096		3,096
Ending Balance, Shares, Outstanding at Jun. 30, 2021		36,375,000
Ending Balance at Jun. 30, 2021	341,333	$ 364	576,290	1,869	(237,190)
Net loss	(17,627)				(17,627)
Foreign currency translation adjustment (see Note 1)	(170)			(170)
Debt Securities, Available-for-sale, Unrealized Gain (Loss)	0
Stock Issued During Period, Shares, Restricted Stock Award, Gross		22,000
Restricted stock issued	0
Issuance of common stock- exercise of stock options		30,000
Issuance of common stock- exercise of stock options	393		393
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units		0
Repurchases of common stock for income tax withheld upon vesting of restricted stock awards and restricted stock units	(237)		(237)
Stock-based compensation	$ 3,149		3,149
Ending Balance, Shares, Outstanding at Sep. 30, 2021	36,427,000	36,427,000
Ending Balance at Sep. 30, 2021	$ 326,841	$ 364	$ 579,595	$ 1,699	$ (254,817)

BUSINESS

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BUSINESS

BUSINESS AND BASIS OF PRESENTATION

Business

SeaSpine Holdings Corporation was incorporated in Delaware on February 12, 2015. Unless the context indicates otherwise, references to "SeaSpine" or the "Company" refer to SeaSpine Holdings Corporation and its wholly-owned subsidiaries.

SeaSpine is a global medical technology company focused on the design, development and commercialization of surgical solutions for the treatment of patients suffering from spinal disorders. SeaSpine has a comprehensive portfolio of orthobiologics and spinal implant solutions, as well as a surgical navigation system, to meet the varying combinations of products that neurosurgeons and orthopedic spine surgeons need to perform fusion procedures in the lumbar, thoracic and cervical spine. The Company believes this broad combined portfolio of products is essential to meet the “complete solution” requirements of such surgeons.

Basis of Presentation and Principles of Consolidation

The Company prepared the unaudited interim condensed consolidated financial statements included in this report in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information and the rules and regulations of the Securities and Exchange Commission (SEC) related to quarterly reports on Form 10-Q.

The Company’s financial statements are presented on a consolidated basis. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The unaudited interim condensed consolidated financial statements do not include all information and disclosures required by GAAP for annual audited financial statements and should be read with the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC. In the opinion of management, the unaudited interim condensed consolidated financial statements included in this report have been prepared on the same basis as the Company's audited consolidated financial statements and include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations, cash flows, and statement of equity for periods presented. The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results expected for the full year. The condensed consolidated balance sheet as of December 31, 2020 was derived from the audited consolidated balance sheet for the year ended December 31, 2020. Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Under current SEC rules, generally, a company qualifies as a "smaller reporting company" if it has a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter. If a company qualifies as a smaller reporting company on that date, it may elect to reflect that determination and use the smaller reporting company scaled disclosure accommodations in its subsequent SEC filings until the beginning of the first quarter of the fiscal year following the date it determines it does not qualify as a smaller reporting company. The Company's public float as of June 30, 2020 was less than $250 million, and as such, the Company qualified as a smaller reporting company, elected to reflect that determination and intends to use certain of the scaled disclosure accommodations in its SEC filings made during and for the year ended December 31, 2021. The Company's public float as of June 30, 2021, the last business day of its most recent second fiscal quarter, was more than $250 million, and as such, the Company will no longer qualify as a smaller reporting company as of January 1, 2022. However, the Company is not required to reflect the change in its smaller reporting company status or comply with the non-scaled disclosure obligations until the Company’s first quarterly report on Form 10-Q for the three-month period ended March 31, 2022.

Prior period revisions

During the third quarter of 2021, the Company made a revision related to the functional currency of its recently acquired Canadian company, 7D Surgical Inc., a corporation incorporated under the laws of the Province of Ontario (7D Surgical) (see Note 3, "Business Acquisition"). Prior to July 1, 2021, the functional currency for 7D Surgical was the Canadian dollar. The Company reassessed the functional currency and determined that the functional currency is the U.S. dollar based on management's analysis of the primary economic environment in which 7D Surgical operates. The Company revised the presentation of the unaudited statements for the prior quarter ending June 30, 2021 to reflect this determination and will revise such information to the extent it is presented in future filings.

The Company assessed the materiality of the error, both quantitatively and qualitatively, in accordance with the SEC’s Staff Accounting Bulletin No. 99, and concluded that the error was not material to any of its previously reported unaudited financial statements based upon qualitative aspects of the error. However, in order to correctly present other comprehensive income, previously issued unaudited financial statements have been revised and are presented “As Revised” in the tables below. The $3.2 million adjustment noted in the tables below reflects the change in foreign currency fluctuations.


	Three Months Ended						Six Months Ended
	June 30, 2021						June 30, 2021
	As Reported		Adjustment		As Revised		As Reported		Adjustment		As Revised
	(In thousands)
Condensed Consolidated Statements of Comprehensive Loss:
Foreign currency translation adjustments	$	(3,070)	$	3,172	$	102	$	(3,427)	$	3,172	$	(255)
Comprehensive loss	(8,283)		3,172		(5,111)		(21,360)		3,172		(18,188)

	As of June 30, 2021
	As Reported		Adjustment		As Revised
Condensed Consolidated Statements of Equity:
Accumulated other comprehensive (loss) income	$	(1,303)	$	3,172	$	1,869
Foreign currency translation adjustments	(3,070)		3,172		102
Total stockholders' equity	338,161		3,172		341,333

Condensed Consolidated Balance Sheet:
Intangible assets, net	$	57,015	$	1,203	$	58,218
Goodwill	73,845		1,983		75,828
Other assets	389		(14)		375
Total assets	397,212		3,172		400,384

Accumulated other comprehensive (loss) income	$	(1,303)	$	3,172	$	1,869
Total stockholders' equity	338,161		3,172		341,333

Concentration of Risk

In March 2021, the Company and PcoMed, LLC (PcoMed) entered into a supply agreement (the Supply Agreement).

Pursuant to the Supply Agreement, PcoMed granted the Company a worldwide right to sell and commercialize any implantable spinal surgery interbody and/or intervertebral medical device designed and/or manufactured by or for the Company treated by PcoMed with certain proprietary PcoMed technology (Processed Parts) for use in spinal interbody and/or intervertebral surgical methods and procedures. The right is exclusive to the Company through January 14, 2022; thereafter, it will be non-exclusive. The Supply Agreement replaces and supersedes a prior supply agreement between the Company and PcoMed entered into in May 2013, which expired in January 2021.

For the nine months ending September 30, 2021 and 2020, the sales of products incorporating the NanoMetalene® technology provided under the Supply Agreement exceeded 10% of the Company's revenue.

Pursuant to the Supply Agreement, PcoMed will supply up to designated minimum amounts of Processed Parts per week and per month per the Company's request. In addition, if requested by the Company, PcoMed must use commercially reasonable efforts to supply Processed Parts in excess of those minimum amounts. The Company agreed to pay PcoMed (a) a low single digit royalty on a monthly basis on the Company's net sales of all Processed Parts, (b) a minimum processing fee for each contract year during the term of the Supply Agreement, payable in four equal quarterly installments, which offsets on a dollar-for-dollar basis the processing fees the Company would otherwise pay for Processed Parts each contract year and (c) additional processing fees payable monthly based on the number and type of Processed Parts supplied by PcoMed.

The Supply Agreement contains customary representations, warranties, covenants and indemnification obligations on the part of both parties. Each of the Company and PcoMed retain the rights to their respective intellectual property. The Supply Agreement may be terminated by the Company or PcoMed for cause in the event of an uncured material default or breach or a bankruptcy or similar proceeding. Unless terminated earlier pursuant to its terms, the term of the Supply Agreement is March 1,

2021 through January 14, 2024. During the term of the Supply Agreement, PcoMed agreed not to enter into any agreement or consummate any transaction with any third party relating to a change in control of PcoMed without first affording the Company, in accordance with the terms of the Supply Agreement, the opportunity to negotiate for the acquisition of PcoMed.

The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash. Cash balances are maintained primarily at major financial institutions in the United States and exceed the regulatory limit of $250,000 insured by the Federal Deposit Insurance Corporation (FDIC). The Company has not experienced any credit losses associated with its cash balances.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Sep. 30, 2021
Accounting Policies [Abstract]
Significant Accounting Policies [Text Block]	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Below is a summary of certain of the Company's significant accounting policies. For a comprehensive description of the Company's accounting policies, refer to the Annual Report on Form 10-K for the year ended December 31, 2020. Use of Estimates Preparing consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and other credits, net realizable value of inventories, discount rates and estimated projected cash flows used to value and test impairments of goodwill, identifiable intangible and long-lived assets, fair value estimates related to business combinations, assumptions related to the timing and probability of product launch dates, discount rates matched to the estimated timing of payments, probability of success rates and discount adjustments on the related cash flows for contingent considerations in business combinations, depreciation and amortization periods for identifiable intangible and long-lived assets, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation and loss contingencies. These estimates are based on historical experience and on various other assumptions believed to be reasonable under the current circumstances. Actual results could differ from these estimates. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including revenues, expenses, manufacturing, research and development costs and employee-related compensation, will depend on future developments that are highly uncertain, including as a result of variants of the virus that causes COVID-19 or other information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. The Company has made estimates of the impact of the pandemic within its financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates. Revenue Recognition Net sales are derived primarily from the sale of orthobiologics and spinal implant and enabling technology products globally. Revenue is recognized when obligations under the terms of a contract with the Company's customer are satisfied which occurs with the transfer of control of the Company's products. This occurs either upon shipment or delivery of goods, depending on whether the contract is Free on Board (FOB) origin or FOB destination, or, in other situations such as consignment arrangements, when the products are used in a surgical procedure (implanted in a patient) and in the case of capital equipment, when the equipment has been accepted by the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer (transaction price). To the extent that the transaction price includes variable consideration, such as discounts, list price discounts, rebates, volume discounts and customer payment penalties, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. The Company reduces revenue by estimates of potential future product returns and other allowances. Provisions for product returns and other allowances are recorded as a reduction to revenue in the period sales are recognized. The Company estimates the amount of sales returns and allowances that will eventually be incurred. Certain contracts with stocking distributors contain provisions requiring the Company to repurchase inventory upon termination of the contract or discontinuation of a product line. Included in the sales returns reserve within other current liabilities is an estimate of repurchases that are likely to be made under these provisions. Management analyzes sales programs that are in effect, contractual arrangements, market acceptance and historical trends when evaluating the adequacy of sales returns and allowance accounts. In certain sales arrangements, the Company fulfills its obligations and bills the customer for the products prior to the shipment of goods. The Company allocates the transaction price to the multiple performance obligations under these contracts, including delivery of the products and the third-party logistics (3PL) performance obligations. Revenue related to product sales under these arrangements is not recognized until the Company delivers the products to the customer’s dedicated space within the Company’s facility, at which point the customer obtains control of the products. Revenue from the related 3PL obligations consists of revenue from storage of products which is recognized ratably over the service period, and revenue from shipping services which is recognized upon performance of such obligation. Additionally, the Company allocates the transaction price to the multiple performance obligations under the contracts related to the sale of capital equipment, including the capital equipment, tools and software, the training and installation and the service. Revenue related to capital equipment, tools and software under these arrangements is recognized upon customer acceptance of the system. Revenue from training and installation is recognized upon completion of the training and installation process. Revenue from service contracts is recognized over the term of the contract. Under certain contracts, the transfer of capital equipment occurs over time as the customer's purchase commitments on other spinal implant and orthobiologics products are met. The Company allocates the transaction price to the multiple performance obligations under these contracts related to the sale of the products (recognized either upon the shipment or delivery of goods, as discussed above), the lease of capital equipment (recognized over the contract period), and of the sale of capital equipment (recognized once the purchase commitments are met). Deferred revenue primarily consists of payments received in advance of revenue recognition from the sales of the Company's capital equipment and related products as described above and is recognized as the revenue recognition criteria are met. Product royalties account for less than 1% of total revenue for any of the periods presented, and are estimated and recognized in the same period that the royalty-based products are sold by licensees. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information and expected sales trends. Differences between actual revenues and estimated royalty revenues are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been material. Business Combinations The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets assumed, such excess is allocated to goodwill. The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and estimates made by management. The Company records the net assets and results of operations of an acquired entity from the acquisition date impacting asset valuations and liabilities assumed. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred. Identifiable Intangible Assets Upon acquisition, identifiable intangible assets are recorded at fair value and are carried at cost less accumulated amortization. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. The carrying values of all intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Goodwill Goodwill represents the excess of the purchase prices of an acquired business over the fair value of the underlying net tangible and intangible assets. The Company is required to assess goodwill and other indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company performs its annual impairment assessment in the fourth quarter of each year. Recent Accounting Standards Not Yet Adopted In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU or Update) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires credit losses on most financial assets measured at amortized cost, including trade receivables, and certain other instruments to be measured using an expected credit loss model, referred to as the current expected credit loss (CECL) model. Under this model, entities will estimate credit losses over the entire contractual term of the instrument. The new standard will be effective for the Company beginning January 1, 2022. The FASB subsequently issued other related ASUs that amend ASU No. 2016-13 to provide clarification and additional guidance. The Company is evaluating the impact of this standard on its consolidated financial statements. In April 2019, the FASB issued Update No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This Update includes several amendments to the FASB Accounting Standards Codification (Codification) intended to clarify, improve, or correct errors therein. Some amendments do not require transition guidance and are effective upon issuance. The amendments requiring transition guidance have the same effective date as Update No. 2016-13 and will be effective for the Company beginning on January 1, 2022. The Company is evaluating the impact of this standard on its consolidated financial statements. In May 2021, the FASB issued Update No. 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This Update addresses issuer's accounting for certain modifications or exchanges of freestanding equity-classified written call options. The new standard will be effective for the Company beginning January 1, 2022 and early adoption is permitted. The Company is evaluating the impact of this standard on its consolidated financial statements. In July 2021, the FASB issued Update No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. Under this standard, lessors will classify leases with variable payments that do not depend on an index or rate as operating leases if a different classification would result in a commencement date selling loss. The new standard will be effective for the Company beginning January 1, 2022 and early adoption is permitted. The Company is evaluating the impact of this standard on its consolidated financial statements. Recently Adopted Accounting Standards In August 2018, the FASB issued Update No. 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40). The amendments in this Update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The new standard was effective for the Company beginning on January 1, 2021. The adoption of this new standard had no material impact on its consolidated financial statements. In March 2020, the FASB issued Update No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR, or another reference rate expected to be discontinued, due to the reference rate reform. The new standard was effective for the Company beginning March 12, 2020. The adoption of this new standard had no material impact on its consolidated financial statements. Net Loss Per Share Basic and diluted net loss per share was calculated using the weighted-average number of shares of common stock outstanding during the period. The weighted average number of shares used to compute diluted net loss per share excludes any assumed issuance of common stock upon exercise of stock options, any assumed issuance of common stock under restricted stock awards or units, and any assumed issuances under the Company's employee stock purchase plan, because the effect, in each case, would be antidilutive. Common stock equivalents, including the Exchangeable Shares (as defined below), of 6.5 million and 4.3 million shares for the nine months ended September 30, 2021 and 2020, respectively, were excluded from the calculation because of their antidilutive effect.

BUSINESS ACQUISITION Disclosure

9 Months Ended

Sep. 30, 2021

Business Combinations [Abstract]

Business Combination Disclosure

BUSINESS ACQUISITION

7D Surgical Acquisition

In March 2021, the Company entered into an arrangement agreement (the Arrangement Agreement) with 7D Surgical, Project Maple Leaf Acquisition ULC, an unlimited liability company incorporated under the laws of the Province of British Columbia and wholly owned subsidiary of the Company (Purchaser Sub), and Michael Cadotte and Joel Rose, as the 7D Surgical shareholders’ representatives.

On May 20, 2021, the acquisition contemplated by the Arrangement Agreement was consummated by way of a court-approved plan of arrangement under Ontario law (Plan of Arrangement) in which Purchaser Sub acquired all outstanding shares of 7D Surgical, including those 7D Surgical shares issuable upon exercise of outstanding options, and 7D Surgical became a wholly owned subsidiary of the Company (the Acquisition).

Pursuant to the Arrangement Agreement and the Plan of Arrangement, the Company acquired 7D Surgical for a total purchase price consisting of $27.5 million in cash (subject to adjustments as provided for in the Arrangement Agreement for 7D Surgical closing cash, working capital and net indebtedness), 2,991,054 shares of the Company’s common stock (the Company Shares) and 1,298,648 Exchangeable Shares (as defined below). Pursuant to the Arrangement Agreement, Canadian-resident 7D Surgical shareholders could elect to receive, in lieu of their portion of the Company Shares, an equivalent number of Class B common shares of Purchaser Sub (the Exchangeable Shares), which are exchangeable on a 1:1 basis for shares of the Company’s common stock, subject to customary adjustments. The Company may require all outstanding Exchangeable Shares to be exchanged upon the occurrence of certain events and at any time following the fifth anniversary of the closing date of the Acquisition. While outstanding, holders of Exchangeable Shares will be entitled to receive dividends economically equivalent to the dividends declared by the Company with respect to its common stock, but will not be entitled to cast votes on matters for which holders of the Company’s common stock are entitled to vote.

The Company Shares and the Exchangeable Shares were issued in connection with the consummation of the Plan of Arrangement pursuant to the exemption from registration under the Securities Act of 1933, as amended (the Securities Act), provided by Section 3(a)(10) of the Securities Act based on the final order of the Ontario Superior Court of Justice issued in May 2021, approving the Plan of Arrangement following a hearing by the court upon the fairness of the terms and conditions on which all persons to whom it is proposed the securities will be issued had the right to appear. The Company agreed to register for resale all shares of Company common stock issuable in exchange for the Exchangeable Shares on a registration statement to be effective within ninety days of the closing date of the Acquisition.

This acquisition was treated as a business combination and the consideration transferred was allocated to the fair value of 7D Surgical's assets acquired and liabilities assumed, including identifiable intangible assets. The acquisition was treated as an asset purchase for US taxation and is treated as a stock purchase for Canadian taxation. The preliminary fair value of consideration transferred consisted of the following:


	Preliminary Fair Value
	(In thousands)
Common stock issued	$	61,048
Exchangeable shares	26,505
Cash	33,457
	$	121,010

The Company incurred $2.0 million of transactions costs directly related to the acquisition that is reflected in general and administrative expenses in the condensed consolidated statements of operations.

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition:


	Preliminary Fair Value
	(In thousands)
Cash	$	5,127
Other assets	6,569
Intangible assets	46,000
Goodwill	75,583
Deferred tax liability, net	(9,910)
Other liabilities	(2,359)
	$	121,010

Preliminary goodwill from the acquisition primarily relates to the future economic benefits arising from the assets acquired and is consistent with the Company's stated intentions and strategy. Other assets include accounts receivable, inventory, tax credits and fixed assets. Other liabilities include accounts payable and accrued liabilities.

The preliminary fair value of 7D Surgical's identifiable intangible assets was $46 million at May 20, 2021, consisting of $40 million of patents and technology, and $6 million of other intangible assets.

The estimated fair values assigned to identifiable assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. Therefore, the provisional measurements of fair value reflected are subject to change and such changes could be significant. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable, but no later than one year from the acquisition date.

The results of operations of 7D Surgical for the period from May 20, 2021 through September 30, 2021 are included in the Company's condensed consolidated financial statements as of September 30, 2021.

Pro Forma Financial Information

The following unaudited pro forma financial information summarizes the combined results of operations as though the companies were combined as of the beginning of 2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands)				(In thousands)
Total Revenue, net	$	46,445	$	45,240	$	139,899	$	114,001
Net Loss	$	(17,627)	$	(7,449)	$	(39,838)	$	(35,462)

The pro forma financial information for all periods presented above has been calculated after adjusting the results to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets as though the acquisition occurred as of the beginning of 2020. As noted above, the allocation is preliminary and changes to the value of the finalization of our valuation could result in changes to the amount of amortization expense from acquired intangible assets included in the pro forma financial information presented above. The Company's historical condensed consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2020.

DEBT AND INTEREST	9 Months Ended
DEBT AND INTEREST	Sep. 30, 2021
Debt Disclosure [Abstract]
Debt Disclosure [Text Block]	DEBT AND INTEREST Credit Agreement In December 2015, the Company entered into a three-year credit facility with Wells Fargo Bank, National Association (as amended, the Credit Facility). The Credit Facility provides an asset-backed revolving line of credit of up to $30.0 million with a maturity date of July 27, 2021, which was subject to a one-time, one-year extension at the Company's election. In July 2021, the Company elected to extend the term of the Credit Facility such that the maturity date is now July 27, 2022. In addition, under the Credit Facility, at any time through July 27, 2021, the Company could have increased the $30.0 million borrowing limit by up to an additional $10.0 million, subject to the Company having sufficient amounts of eligible accounts receivable and inventory and to customary conditions precedent, including obtaining the commitment of lenders to provide such additional amount. The Company did not elect to increase the borrowing limit. In connection with entering into the Credit Facility, the Company was required to become a guarantor and to provide a security interest in substantially all its assets for the benefit of the counterparty. There were no amounts outstanding under the Credit Facility at September 30, 2021 or December 31, 2020. In March 2021, the Company borrowed $20.0 million under the Credit Facility. As of March 31, 2021, the effective interest rate on the amounts borrowed was 4.50%. In April 2021, the Company repaid the entire $20.0 million of outstanding borrowings under the Credit Facility. At September 30, 2021, the Company had $24.4 million of current borrowing capacity under the Credit Facility before the requirement to maintain the minimum fixed charge coverage ratio as discussed below. Debt issuance costs and legal fees related to the Credit Facility totaling $0.6 million were recorded as a deferred asset and are being amortized ratably over the term of the arrangement. Borrowings under the Credit Facility accrue interest at the rate then applicable to base rate loans (as customarily defined), unless and until converted into LIBOR rate loans (as customarily defined) in accordance with the Credit Facility. Borrowings bear interest at a floating annual rate equal to (a) during any month for which the Company's average excess availability (as customarily defined) is greater than $20.0 million, (i) base rate plus 1.25 percentage points for base rate loans and (ii) LIBOR rate plus 2.25 percentage points for LIBOR rate loans, (b) during any month for which the Company's average excess availability is greater than $10.0 million but less than or equal to $20.0 million, (i) base rate plus 1.50 percentage points for base rate loans and (ii) LIBOR rate plus 2.50 percentage points for LIBOR rate loans and (c) during any month for which the Company's average excess availability is less than or equal to $10.0 million, (i) base rate plus 1.75 percentage points for base rate loans and (ii) LIBOR rate plus 2.75 percentage points for LIBOR rate loans. The Company also pays an unused line fee based on the average amount borrowed under the Credit Facility for the most recently completed month. If such average amount is 25% or greater of the maximum borrowing capacity, the unused fee will be equal to 0.375% per annum of the amount unused under the Credit Facility, and if such average amount is less than 25%, the unused line fee will be equal to 0.50% per annum of the amount unused under the Credit Facility. The unused line fee is due on the first day of each month. The Credit Facility contains various customary affirmative and negative covenants, including prohibiting the Company from incurring indebtedness without the lender’s consent. The Credit Facility also includes a financial covenant that requires the Company to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 for the applicable measurement period, if the Company's Total Liquidity (as defined in the Credit Facility) is less than $5.0 million. The Company was in compliance with all applicable covenants at September 30, 2021. The Credit Facility also includes customary events of default, including events of default relating to non-payment of amounts due under the Credit Facility, material inaccuracy of representations and warranties, violation of covenants, bankruptcy and insolvency, failure to comply with health care laws, violation of certain of the Company’s existing agreements, and the occurrence of a change of control. Under the Credit Facility, if an event of default occurs, the lender will have the right to terminate the commitments and accelerate the maturity of any loans outstanding. Paycheck Protection Program In April 2020, due to the economic uncertainty resulting from the impact of the COVID-19 pandemic on the Company's operations and to support its ongoing operations and retain all employees, the Company applied for a loan under the Paycheck Protection Program (PPP) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Company received a loan in the original principal amount of $7.2 million. The Company subsequently repaid $1.0 million of the loan. Under the terms of the PPP, subject to specified limitations, the loan may be forgiven if the proceeds are used in accordance with the CARES Act. The Company used the loan proceeds for purposes consistent with the terms of the PPP and applied for forgiveness of the entire $6.2 million loan balance, which was granted in June 2021. The $6.2 million gain on the loan forgiveness is included in other income, net, in the condensed consolidated statement of operations. There are no amounts outstanding under the loan at September 30, 2021. The loan is subject to audit by the Small Business Association (SBA) for up to six years after the date of loan forgiveness. Should the SBA determine that the Company did not qualify for all or part of the loan, the Company would need to repay all or a part of the loan.

INVENTORIES

9 Months Ended

Sep. 30, 2021

Inventory, Net [Abstract]

INVENTORIES

Inventories consisted of:


	September 30, 2021		December 31, 2020
	(In thousands)
Finished goods	$	50,708	$	37,689
Work in process	15,749		10,087
Raw materials	4,474		6,265
	$	70,931	$	54,041

PROPERTY, PLANT AND EQUIPMENT

3 Months Ended

Sep. 30, 2021

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment charges. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life. The cost of major additions and improvements is capitalized, while maintenance and repair costs that do not improve or extend the lives of the respective assets are charged to operations as incurred. The cost of computer software obtained for internal use is accounted for in accordance with the Codification 350-40, Internal-Use Software.

The cost of purchased spinal instruments that the Company consigns to hospitals and independent sales agents to support surgeries is initially capitalized as construction in progress. The amount is then either reclassified to spinal instruments and sets, and depreciation is initiated when instruments are put together in a newly built set with spinal implants, or directly expensed for the instruments used to replace damaged instruments in an existing set. The depreciation expense and direct expense for replacement instruments are recorded in selling and marketing expense.

Property, plant and equipment balances and corresponding useful lives were as follows:


	September 30, 2021		December 31, 2020		Useful Lives
	(In thousands)
Leasehold improvements	$	6,503	$	5,976	Shorter of lease term or useful life
Machinery and production equipment	10,466		9,577			3	-	10	years
Spinal instruments and sets	42,851		30,275			4	-	6	years
Information systems and hardware	8,123		7,554			3	-	7	years
Furniture and fixtures	1,697		1,640			3	-	5	years
Construction in progress	15,345		12,645
Total	84,985		67,667
Less accumulated depreciation and amortization	(41,898)		(36,245)
Property, plant and equipment, net	$	43,087	$	31,422

Depreciation and amortization expenses totaled $2.2 million and $1.7 million for the three months ended September 30, 2021 and 2020, respectively, and $5.5 million and $4.8 million for the nine months ended September 30, 2021 and 2020, respectively. The cost of purchased instruments used to replace damaged instruments in existing sets and recorded directly to instrument replacement expense totaled $1.0 million and $0.6 million for the three months ended September 30, 2021 and 2020, respectively, and $2.7 million and $1.6 million for the nine months ended September 30, 2021 and 2020, respectively.

IDENTIFIABLE INTANGIBLE ASSETS

3 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure

IDENTIFIABLE INTANGIBLE ASSETS

Identifiable intangible assets are initially recorded at fair value at the time of acquisition, generally using an income or cost approach. The Company capitalizes costs incurred to renew or extend the term of recognized intangible assets and amortizes those costs over their expected useful lives.

Primarily as a result of an expected shift in future product revenue mix more toward a parallel expanding interbody device based on the Company’s internally developed technology and, in turn, lower future revenue anticipated for the lordotic expanding implant based on technology the Company acquired from N.L.T. Spine Ltd. (NLT) and NLT Spine, Inc., a wholly owned subsidiary of NLT, the Company's estimated future net sales associated with those NLT product technologies decreased. Accordingly, the Company evaluated the ongoing value of the product technology intangible assets associated with the acquisition of these assets. Based on this evaluation, the Company determined that intangible assets with a carrying amount of $1.6 million were no longer recoverable and were impaired, and the Company wrote those intangible assets down to their estimated fair value of $0.3 million at March 31, 2020. Significant estimates used in determining the estimated fair value include measurements estimating cash flows and determining the appropriate discount rate, which are considered Level 3 inputs under Codification 820.

The components of the Company’s identifiable intangible assets were:


	September 30, 2021
	Weighted Average Life	Cost		Accumulated Amortization		Net
	(Dollars in thousands)
Product technology	11 years	$	73,942	$	(31,934)	$	42,008
Customer relationships	12 years	56,830		(48,449)		$	8,381
Trademarks/brand names	—	300		(300)		$	—
Other intangibles	10 years	$	6,161	$	(207)	$	5,954
		$	137,233	$	(80,890)	$	56,343


	December 31, 2020
	Weighted Average Life	Cost		Accumulated Amortization		Net
	(Dollars in thousands)
Product technology	12 years	$	32,891	$	(29,766)	$	3,125
Customer relationships	12 years	56,830		(46,072)		10,758
Trademarks/brand names	—	300		(300)		—

		$	90,021	$	(76,138)	$	13,883

Annual amortization expense (including amounts reported in cost of goods sold) is expected to be approximately $7.0 million in 2021, $8.8 million in 2022, $8.2 million in 2023, $6.2 million in 2024, and $4.9 million in 2025. For the three months ended September 30, 2021 and 2020, amortization expense totaled $2.2 million and $1.0 million, respectively, and included $1.3 million and $0.3 million, respectively, of amortization of product technology intangible assets that is presented within cost of goods sold.

EQUITY AND STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Shareholders' Equity and Share-based Payments

EQUITY AND STOCK-BASED COMPENSATION

Common Stock

In July 2020 and August 2020, the Company issued 100,100 shares and 75,585 shares of its common stock to NLT, respectively, as settlement of contingent milestone payments pursuant to the terms of the asset purchase agreement entered into with NLT in August 2016.

In January 2020, the Company entered into an Underwriting Agreement with Piper Sandler & Co. and Canaccord Genuity LLC relating to the issuance and sale of 6,800,000 shares of the Company’s common stock at a price to the public of $12.50 per share, before underwriting discounts and commissions. Under the terms of that agreement, the Company granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 1,020,000 shares of common stock. The underwriters exercised this option and the offering closed on January 10, 2020 with the sale of 7,820,000 shares of common stock, resulting in net proceeds to the Company of approximately $92 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The offering was made pursuant to the Company’s shelf registration statement on Form S-3 that was declared effective on May 22, 2019.

In April 2021, the Company entered into an Underwriting Agreement with Piper Sandler & Co., Canaccord Genuity LLC, and Stifel, Nicolaus & Company, Incorporated relating to the issuance and sale of 4,500,000 shares of the Company's common stock at a price to the public of $19.50 per share, before underwriting discounts and commissions. Under the terms of that agreement, the Company granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 675,000 shares of common stock. The underwriters exercised this option and the offering closed on April 20, 2021 with the sale of 5,175,000 shares of common stock, resulting in net proceeds to the Company of approximately $95 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company used a portion of the net proceeds from the offering to repay all of its outstanding borrowings under the Credit Facility and to finance the cash consideration of $27.5 million for the Company's acquisition of 7D Surgical.

In May 2021, the Company issued 2,991,054 shares of the Company’s common stock and 1,298,648 Exchangeable Shares in connection with Company's acquisition of 7D Surgical.

Equity Award Plans

In May 2015, the Company adopted the 2015 Incentive Award Plan, which was subsequently amended and restated with approval of the Company's stockholders. In February and March 2018, the Company's board of directors approved amendments to the plan that increased the share reserve by an aggregate of 2,726,000 shares over the then-existing share reserve thereunder, subject to stockholder approval. The Company's stockholders approved both amendments in May 2018. In April 2020, the Company's board of directors approved an amendment to the plan that, among other things, increased the share reserve by an aggregate of 3,500,000 shares over the then-existing share reserve thereunder, subject to stockholder approval. The Company's stockholders approved the amendment in June 2020 (the 2015 Incentive Award Plan, as amended and restated to date, the Restated Plan). Under the Restated Plan, the Company can grant its employees, non-employee directors and consultants incentive stock options and non-qualified stock options, restricted stock, performance stock, dividend equivalent rights, stock appreciation rights, stock payment awards and other incentive awards. The aggregate number of shares that may be issued or transferred pursuant to awards under the Restated Plan is the sum of (1) the number of shares issuable upon exercise or vesting of the equity awards issued by the Company's former parent company prior to the spin-off that were converted into the Company's equity awards under the Restated Plan as of the date of the spin-off and (2) 9,735,500 shares of the Company's common stock in respect of awards granted under the Restated Plan. As of September 30, 2021, 2,987,847 shares were available for issuance under the Restated Plan.

In June 2018, the Company established the 2018 Employment Inducement Incentive Award Plan (the 2018 Inducement Plan). The terms of the 2018 Inducement Plan are substantially similar to the terms of the Restated Plan with these principal exceptions: (1) incentive stock options may not be granted under the 2018 Inducement Plan; (2) there are no annual limits on awards that may be issued to an individual under the 2018 Inducement Plan; (3) awards granted under the 2018 Inducement Plan are not required to be subject to any minimum vesting period; and (4) awards may be granted under the 2018 Inducement Plan only to those individuals and in those circumstances described below. An aggregate of 2,000,000 shares are reserved under the 2018 Inducement Plan. As of September 30, 2021, 1,926,206 shares were available for issuance under the 2018 Inducement Plan. As a result of the approval of the amendment to the Restated Plan by the Company's stockholders in June 2020, no awards will be granted under the 2018 Inducement Plan in the future.

In August 2020, the Company adopted the 2020 Employment Inducement Incentive Award Plan (the 2020 Inducement Plan). The terms of the 2020 Inducement Plan are substantially similar to the terms of the Restated Plan with four principal exceptions: (1) incentive stock options may not be granted under the 2020 Inducement Plan; (2) there are no annual limits on

awards that may be issued to an individual under the 2020 Inducement Plan; (3) awards granted under the 2020 Inducement Plan are not required to be subject to any minimum vesting period; and (4) awards may be granted under the 2020 Inducement Plan only to those individuals and in those circumstances described below. An aggregate of 2,000,000 shares are reserved under the 2020 Inducement Plan. As of September 30, 2021, 1,315,157 shares were available for issuance under the 2020 Inducement Plan.

Both the 2018 Inducement Plan and the 2020 Inducement Plan were adopted by the Company’s board of directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under those plans may only be made to an employee who has not previously been an employee or member of the Company's board of directors or of any board of directors of any parent or subsidiary of the Company, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary.

Forfeiture Rate Assumptions

Stock-based compensation expense related to all equity awards includes an estimate for forfeitures. The expected forfeiture rate of all equity-based compensation is based on historical experience of pre-vesting forfeitures on awards and options by each homogeneous group of shareowners. For awards and options granted to non-executive employees, the forfeiture rate is estimated to be 9% and 13% annually for the nine months ended September 30, 2021 and 2020, respectively. There is no forfeiture rate applied to awards or options granted to non-employee directors or executive employees because their pre-vesting forfeitures are anticipated to be highly unlikely. As individual awards and options become fully vested, stock-based compensation expense is adjusted to recognize actual forfeitures.

Restricted Stock Awards and Restricted Stock Units

Restricted stock award and restricted stock unit grants to employees generally have a requisite service period of three years, and restricted stock award and restricted stock unit grants to non-employee directors generally have a requisite service period of one year. Both are subject to graded vesting. The Company expenses the fair value of restricted stock awards and restricted stock units on an accelerated basis over the vesting period or requisite service period, whichever is shorter.

No restricted stock units were granted to non-employee directors during the three or nine months ended September 30, 2021 or 2020. There were 65,540 restricted stock awards granted to non-employee directors during the nine months ended September 30, 2021. No restricted stock awards were granted to non-employee directors during the three months ended September 30, 2021. During the three and nine months ended September 30, 2020, there were 4,894 and 77,414 restricted stock awards granted to non-employee directors, respectively.

During the three and nine months ended September 30, 2021, 10,600 and 409,385 restricted stock units were granted to employees, respectively. During the three and nine months ended September 30, 2020, 22,650 and 399,404 restricted stock units were granted to employees, respectively. No restricted stock awards were granted to employees during the three or nine months ended September 30, 2021 or 2020.

As of September 30, 2021, there was approximately $5.6 million of unrecognized compensation expense related to the unvested portions of restricted stock awards and restricted stock units. This expense is expected to be recognized over a weighted-average period of approximately 1.0 year.

Stock Options

Stock option grants to employees generally have a requisite service period of four to five years, and stock option grants to non-employee directors generally have a requisite service period of one year. Both are subject to graded vesting. The Company records stock-based compensation expense associated with stock options on an accelerated basis over the applicable vesting period within each grant and based on their fair value at the date of grant using the Black-Scholes-Merton option pricing model. There were 53,850 and 22,753 stock options granted during the three months ended September 30, 2021 and 2020, respectively, and 1,131,863 and 943,003 stock options granted during the nine months ended September 30, 2021 and 2020, respectively. The following weighted-average assumptions were used in the calculation of fair value for options granted during the period indicated.


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Expected dividend yield	—%	—%	—%	—%
Risk-free interest rate	0.6%	0.2%	0.6%	1.3%
Expected volatility	52.3%	52.6%	51.7%	46.4%
Expected term (in years)	4.3	3.8	4.9	4.9

The Company considered that it has never paid, and does not currently intend to pay, cash dividends. The risk-free interest rates are derived from the U.S. Treasury yield curve in effect on the date of grant for instruments with a remaining term similar to the expected term of the options. The expected volatility is calculated based upon the historical volatility of the Company's share prices. The expected term is calculated using the historical weighted average term of the Company’s options.

As of September 30, 2021, there was approximately $6.9 million of unrecognized compensation expense related to unvested stock options. This expense is expected to be recognized over a weighted-average period of approximately 1.8 years.

Employee Stock Purchase Plan

In May 2015, the Company adopted the SeaSpine Holdings Corporation 2015 Employee Stock Purchase Plan, which was amended in November 2018, as described below (as amended, the ESPP). Under the ESPP, eligible employees may purchase shares of the Company’s common stock through payroll deductions of up to 15% of eligible compensation during an offering period. Generally, each offering period will be for 24 months as determined by the Company's board of directors. There are four six-month purchase periods in each offering period for contributions to be made and to be converted into shares at the end of the purchase period. In no event may an employee purchase more than 2,500 shares per purchase period based on the closing price on the first trading date of an offering period or more than $25,000 worth of stock during any calendar year. The purchase price for shares to be purchased under the ESPP is 85% of the lesser of the market price of the Company's common stock on the first trading date of an offering period or on any purchase date during an offering period (June 30 or December 31).

Subject to stockholder approval, on and effective as of November 2, 2018, the Company's board of directors approved an amendment to the ESPP pursuant to which the share reserve under the ESPP would increase from 400,000 shares to 800,000 shares. The Company's stockholders approved that amendment in May 2019. In December 2020, the Company's board of directors approved the issuance of an additional 500,000 shares of common stock under the ESPP. The Company's stockholders approved that amendment in June 2021. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the IRC). The ESPP contains a restart feature, such that if the market price of the stock at the end of any six-month purchase period is lower than the market price at the original grant date of an offering period, that offering period will terminate after that purchase date, and a new two-year offering period will commence on the January 1 or July 1 immediately following the date the original offering period terminated. This restart feature was triggered on the purchase date that occurred on June 30, 2020, such that the offering period that commenced on January 1, 2020 was terminated, and a new two-year offering period commenced on July 1, 2020 and will end on June 30, 2022. The Company applied share-based payment modification accounting to the awards that were initially valued at the grant date to determine the amount of any incremental fair value associated with the modified awards. The impact to stock-based compensation expense for modifications during the nine months ended September 30, 2021 was immaterial.

During the nine months ended September 30, 2021 and 2020, there were 109,178 and 78,360 shares of common stock, respectively, purchased under the ESPP. The Company recognized $0.8 million and $0.7 million in expense related to the ESPP for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, 517,982 shares were available under the ESPP for future issuance.

The Company estimates the fair value of shares issued to employees under the ESPP using the Black-Scholes-Merton option-pricing model. The following weighted average assumptions were used in the calculation of fair value of shares under the ESPP at the grant date for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Expected dividend yield	—	%	—	%	—	%	—	%
Risk-free interest rate	0.1	%	0.2	%	0.1	%	0.7	%
Expected volatility	58.9	%	65.2	%	40.7	%	24.7	%
Expected term (in years)	1.3		1.3		0.8		0.8

LEASES

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Lessee, Operating Leases [Text Block]

. LEASES

The Company determines if an arrangement is a lease at inception. The Company's leases primarily relate to administrative, manufacturing, research, and distribution facilities and various manufacturing, office and transportation equipment. Lease assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company's incremental borrowing rate is used as a discount rate, based on the information available at the commencement date, in determining the present value of lease payments. Lease assets also include the impact of any prepayments made and are reduced by impact of any lease incentives.

The Company made an accounting policy election for short-term leases, such that the Company will not recognize a lease liability or lease asset on its balance sheet for leases with a lease term of twelve months or less as of the commencement date. Rather, any short-term lease payments will be recognized as an expense on a straight-line basis over the lease term. The current period short-term lease expense reasonably reflects the Company's short-term lease commitments.

The Company made a policy election for all classifications of leases to combine lease and non-lease components and to account for them as a single lease component. Variable lease payments are excluded from the lease liability and recognized in the period in which the obligation is incurred. Additionally, lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise the option.

The Company’s lease portfolio only includes operating leases. As of September 30, 2021, the weighted average remaining lease term of these operating leases was 5.4 years and the weighted average discount rate was 6.5%. For the three and nine months ended September 30, 2021, lease expense, which represents expense from operating leases, was $0.7 million and $1.8 million, respectively.

A summary of the Company's remaining lease liabilities at September 30, 2021 are as follows:


	Operating Leases
	(In thousands)

2021	1,038
2022	2,353
2023	1,684
2024	1,467
2025	1,497
Thereafter	2,769
Total undiscounted value of lease liabilities	$	10,808
Less: present value adjustment	(1,704)
Less: short-term leases not capitalized	(525)
Present value of lease liabilities	8,579
Less: current portion of lease liability	(2,240)
Operating lease liability, less current portion	$	6,339

INCOME TAXES

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

The following table summarizes the Company’s effective tax rate for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

Reported income tax expense rate	4.7	%	(1.0)	%	1.9	%	(0.4)	%

The Company recorded a benefit for income tax expense for the three and nine months ended September 30, 2021 primarily related to the acquisition of 7D Surgical. The Company recorded a provision for income taxes for the three and nine months ended 2020 primarily related to federal, foreign and state operations.

In addition, for all periods presented, the pretax losses incurred by the consolidated U.S. tax group received no corresponding tax benefit because the Company concluded that it is more-likely-than-not that the Company will be unable to realize the full value of any resulting deferred tax assets. The Company will continue to assess its position in future periods to determine if it is appropriate to reduce a portion of its valuation allowance in the future.

The acquisition of 7D Surgical was a treated as an asset purchase for US tax purposes and a stock purchase for Canadian tax purposes. As such, the Company recorded deferred tax assets and liabilities on its Canadian tax attributes. The Company is able to use its deferred tax liabilities as a source of income against a portion of its deferred tax assets. A valuation allowance was recorded for the portion of the deferred tax assets that is more-likely-than-not that the Company will be unable to realize.

On March 27, 2020, Congress enacted the CARES Act to provide certain relief as a result of the COVID-19 pandemic. The CARES Act, among other things, includes provisions relating to net operating loss carryback periods, alternative minimum tax credit refunds, and modification to the net interest deduction limitations. The CARES Act did not have a material impact on the Company's consolidated financial statements for the three or nine months ended September 30, 2021 or 2020.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

COMMITMENTS AND CONTINGENCIES	9 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2021
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES In consideration for certain technology, manufacturing, distribution, and selling rights and licenses granted to the Company, the Company agreed to pay royalties on sales of certain products sold by the Company. Except for the royalties paid to NLT, the royalties the Company paid are included as a component of cost of goods sold in the consolidated statements of operations. The Company is subject to various legal proceedings in the ordinary course of its business with respect to its products, its current or former employees, and its commercial relationships, some of which have been settled by the Company. In the opinion of management, such proceedings are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material adverse effect on the Company's financial condition. However, it is possible that the Company's results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies. The Company accrues for loss contingencies when it is deemed probable that a loss has been incurred and that loss is estimable. The amounts accrued are based on the full amount of the estimated loss before considering insurance proceeds, and do not include an estimate for legal fees expected to be incurred in connection with the loss contingency. While uncertainty exists, the Company does not believe there are any pending legal proceedings that would have a material impact on the Company’s financial position, cash flows or results of operations.

SEGMENT AND GEOGRAPHIC INFORMATION

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

Segment Reporting

Management assessed its segment reporting based on how it internally manages and reports the results of its business to its chief operating decision maker. Management reviews financial results, manages the business and allocates resources on an aggregate basis. Therefore, financial results are reported in a single operating segment: the development, manufacture and marketing of orthobiologics, spinal implants and image guided navigation systems. The Company reports revenue in two product categories: orthobiologics and spinal implants and enabling technologies. Orthobiologics products consist of a broad range of advanced and traditional bone graft substitutes that are designed to improve bone fusion rates following surgery. The spinal implants and enabling technologies portfolio consists of an extensive line of products for minimally invasive surgery, complex spine, deformity and degenerative procedures as well as a surgical navigation system. The Company attributes revenues to geographic areas based on the location of the customer.

The following table disaggregates revenue by major sales channel for each of the periods presented (in thousands):


	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
	United States		International		Total			United States		International		Total
Orthobiologics	$	20,145	$	2,083	$	22,228		$	60,389	$	6,898	$	67,287
Spinal Implants and Enabling Technologies	21,082		3,135		24,217			60,877		7,698		68,575
Total revenue, net	$	41,227	$	5,218	$	46,445		$	121,266	$	14,596	$	135,862


	Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
	United States		International		Total			United States		International		Total
Orthobiologics	$	19,896	$	1,711	$	21,607		$	49,922	$	5,161	$	55,083
Spinal Implants and Enabling Technologies	19,178		2,424		21,602			46,844		5,982		52,826
Total revenue, net	$	39,074	$	4,135	$	43,209		$	96,766	$	11,143	$	107,909

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Sep. 30, 2021
Accounting Policies [Abstract]
Use of Estimates	Use of Estimates Preparing consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and other credits, net realizable value of inventories, discount rates and estimated projected cash flows used to value and test impairments of goodwill, identifiable intangible and long-lived assets, fair value estimates related to business combinations, assumptions related to the timing and probability of product launch dates, discount rates matched to the estimated timing of payments, probability of success rates and discount adjustments on the related cash flows for contingent considerations in business combinations, depreciation and amortization periods for identifiable intangible and long-lived assets, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation and loss contingencies. These estimates are based on historical experience and on various other assumptions believed to be reasonable under the current circumstances. Actual results could differ from these estimates. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including revenues, expenses, manufacturing, research and development costs and employee-related compensation, will depend on future developments that are highly uncertain, including as a result of variants of the virus that causes COVID-19 or other information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. The Company has made estimates of the impact of the pandemic within its financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.
Recently Issued and Adopted Accounting Standards	Recent Accounting Standards Not Yet Adopted In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU or Update) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires credit losses on most financial assets measured at amortized cost, including trade receivables, and certain other instruments to be measured using an expected credit loss model, referred to as the current expected credit loss (CECL) model. Under this model, entities will estimate credit losses over the entire contractual term of the instrument. The new standard will be effective for the Company beginning January 1, 2022. The FASB subsequently issued other related ASUs that amend ASU No. 2016-13 to provide clarification and additional guidance. The Company is evaluating the impact of this standard on its consolidated financial statements. In April 2019, the FASB issued Update No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This Update includes several amendments to the FASB Accounting Standards Codification (Codification) intended to clarify, improve, or correct errors therein. Some amendments do not require transition guidance and are effective upon issuance. The amendments requiring transition guidance have the same effective date as Update No. 2016-13 and will be effective for the Company beginning on January 1, 2022. The Company is evaluating the impact of this standard on its consolidated financial statements. In May 2021, the FASB issued Update No. 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This Update addresses issuer's accounting for certain modifications or exchanges of freestanding equity-classified written call options. The new standard will be effective for the Company beginning January 1, 2022 and early adoption is permitted. The Company is evaluating the impact of this standard on its consolidated financial statements. In July 2021, the FASB issued Update No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. Under this standard, lessors will classify leases with variable payments that do not depend on an index or rate as operating leases if a different classification would result in a commencement date selling loss. The new standard will be effective for the Company beginning January 1, 2022 and early adoption is permitted. The Company is evaluating the impact of this standard on its consolidated financial statements. Recently Adopted Accounting Standards In August 2018, the FASB issued Update No. 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40). The amendments in this Update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The new standard was effective for the Company beginning on January 1, 2021. The adoption of this new standard had no material impact on its consolidated financial statements. In March 2020, the FASB issued Update No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR, or another reference rate expected to be discontinued, due to the reference rate reform. The new standard was effective for the Company beginning March 12, 2020. The adoption of this new standard had no material impact on its consolidated financial statements.
Earnings Per Share	Basic and diluted net loss per share was calculated using the weighted-average number of shares of common stock outstanding during the period. The weighted average number of shares used to compute diluted net loss per share excludes any assumed issuance of common stock upon exercise of stock options, any assumed issuance of common stock under restricted stock awards or units, and any assumed issuances under the Company's employee stock purchase plan, because the effect, in each case, would be antidilutive. Common stock equivalents, including the Exchangeable Shares (as defined below), of 6.5 million and 4.3 million shares for the nine months ended September 30, 2021 and 2020, respectively, were excluded from the calculation because of their antidilutive effect.

BUSINESS Prior Period Revisions (Tables)

9 Months Ended

Sep. 30, 2021

Prior Period Adjustment [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

The $3.2 million adjustment noted in the tables below reflects the change in foreign currency fluctuations.


	Three Months Ended						Six Months Ended
	June 30, 2021						June 30, 2021
	As Reported		Adjustment		As Revised		As Reported		Adjustment		As Revised
	(In thousands)
Condensed Consolidated Statements of Comprehensive Loss:
Foreign currency translation adjustments	$	(3,070)	$	3,172	$	102	$	(3,427)	$	3,172	$	(255)
Comprehensive loss	(8,283)		3,172		(5,111)		(21,360)		3,172		(18,188)

	As of June 30, 2021
	As Reported		Adjustment		As Revised
Condensed Consolidated Statements of Equity:
Accumulated other comprehensive (loss) income	$	(1,303)	$	3,172	$	1,869
Foreign currency translation adjustments	(3,070)		3,172		102
Total stockholders' equity	338,161		3,172		341,333

Condensed Consolidated Balance Sheet:
Intangible assets, net	$	57,015	$	1,203	$	58,218
Goodwill	73,845		1,983		75,828
Other assets	389		(14)		375
Total assets	397,212		3,172		400,384

Accumulated other comprehensive (loss) income	$	(1,303)	$	3,172	$	1,869
Total stockholders' equity	338,161		3,172		341,333

BUSINESS ACQUISITION (Tables)

9 Months Ended

Sep. 30, 2021

Business Combinations [Abstract]

Business Combination, Consideration Transferred [Table]


	Preliminary Fair Value
	(In thousands)
Common stock issued	$	61,048
Exchangeable shares	26,505
Cash	33,457
	$	121,010

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed


	Preliminary Fair Value
	(In thousands)
Cash	$	5,127
Other assets	6,569
Intangible assets	46,000
Goodwill	75,583
Deferred tax liability, net	(9,910)
Other liabilities	(2,359)
	$	121,010

Business Acquisition, Pro Forma Information


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands)				(In thousands)
Total Revenue, net	$	46,445	$	45,240	$	139,899	$	114,001
Net Loss	$	(17,627)	$	(7,449)	$	(39,838)	$	(35,462)

INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2021

Inventory, Net [Abstract]

Schedule of Inventory, Net

Inventories consisted of:


	September 30, 2021		December 31, 2020
	(In thousands)
Finished goods	$	50,708	$	37,689
Work in process	15,749		10,087
Raw materials	4,474		6,265
	$	70,931	$	54,041

PROPERTY, PLANT AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment balances and corresponding useful lives were as follows:


	September 30, 2021		December 31, 2020		Useful Lives
	(In thousands)
Leasehold improvements	$	6,503	$	5,976	Shorter of lease term or useful life
Machinery and production equipment	10,466		9,577			3	-	10	years
Spinal instruments and sets	42,851		30,275			4	-	6	years
Information systems and hardware	8,123		7,554			3	-	7	years
Furniture and fixtures	1,697		1,640			3	-	5	years
Construction in progress	15,345		12,645
Total	84,985		67,667
Less accumulated depreciation and amortization	(41,898)		(36,245)
Property, plant and equipment, net	$	43,087	$	31,422

IDENTIFIABLE INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Components of Company's Identifiable Intangible Assets

The components of the Company’s identifiable intangible assets were:


	September 30, 2021
	Weighted Average Life	Cost		Accumulated Amortization		Net
	(Dollars in thousands)
Product technology	11 years	$	73,942	$	(31,934)	$	42,008
Customer relationships	12 years	56,830		(48,449)		$	8,381
Trademarks/brand names	—	300		(300)		$	—
Other intangibles	10 years	$	6,161	$	(207)	$	5,954
		$	137,233	$	(80,890)	$	56,343


	December 31, 2020
	Weighted Average Life	Cost		Accumulated Amortization		Net
	(Dollars in thousands)
Product technology	12 years	$	32,891	$	(29,766)	$	3,125
Customer relationships	12 years	56,830		(46,072)		10,758
Trademarks/brand names	—	300		(300)		—

		$	90,021	$	(76,138)	$	13,883

EQUITY AND STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Expected dividend yield	—%	—%	—%	—%
Risk-free interest rate	0.6%	0.2%	0.6%	1.3%
Expected volatility	52.3%	52.6%	51.7%	46.4%
Expected term (in years)	4.3	3.8	4.9	4.9

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block]


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Expected dividend yield	—	%	—	%	—	%	—	%
Risk-free interest rate	0.1	%	0.2	%	0.1	%	0.7	%
Expected volatility	58.9	%	65.2	%	40.7	%	24.7	%
Expected term (in years)	1.3		1.3		0.8		0.8

LEASES (Tables)

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

A summary of the Company's remaining lease liabilities at September 30, 2021 are as follows:


	Operating Leases
	(In thousands)

2021	1,038
2022	2,353
2023	1,684
2024	1,467
2025	1,497
Thereafter	2,769
Total undiscounted value of lease liabilities	$	10,808
Less: present value adjustment	(1,704)
Less: short-term leases not capitalized	(525)
Present value of lease liabilities	8,579
Less: current portion of lease liability	(2,240)
Operating lease liability, less current portion	$	6,339

INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Schedule of effective income tax rate reconciliation

The following table summarizes the Company’s effective tax rate for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

Reported income tax expense rate	4.7	%	(1.0)	%	1.9	%	(0.4)	%

BUSINESS Prior Period Revisions Description (Details)	9 Months Ended
BUSINESS Prior Period Revisions Description (Details)	Sep. 30, 2021
Text Block [Abstract]
Error Corrections and Prior Period Adjustments, Description	During the third quarter of 2021, the Company made a revision related to the functional currency of its recently acquired Canadian company, 7D Surgical Inc., a corporation incorporated under the laws of the Province of Ontario (7D Surgical) (see Note 3, "Business Acquisition"). Prior to July 1, 2021, the functional currency for 7D Surgical was the Canadian dollar. The Company reassessed the functional currency and determined that the functional currency is the U.S. dollar based on management's analysis of the primary economic environment in which 7D Surgical operates. The Company revised the presentation of the unaudited statements for the prior quarter ending June 30, 2021 to reflect this determination and will revise such information to the extent it is presented in future filings. The Company assessed the materiality of the error, both quantitatively and qualitatively, in accordance with the SEC’s Staff Accounting Bulletin No. 99, and concluded that the error was not material to any of its previously reported unaudited financial statements based upon qualitative aspects of the error.

BUSINESS Prior Period Revisions (Details) - USD ($) $ in Thousands	3 Months Ended						6 Months Ended	9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Sep. 30, 2021	Sep. 30, 2020	May 20, 2021	Dec. 31, 2020	Dec. 31, 2019
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax	$ (170)	$ 102		$ 347			$ (255)	$ (425)	$ 325
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	(17,797)	(5,111)		(6,297)			(18,188)	(35,985)	(32,482)
Stockholders' Equity Attributable to Parent	326,841	341,333	$ 159,267	178,538	$ 179,699	$ 189,889	341,333	326,841	178,538		$ 171,718	$ 109,760
Temporary Equity, Foreign Currency Translation Adjustments	(170)	102	(357)	347	142	(164)
Intangible assets, net	56,343	58,218					58,218	56,343			13,883
Goodwill	75,583	75,828					75,828	75,583		$ 75,583	0
Other assets	447	375					375	447			546
Assets	390,000	400,384					400,384	390,000			214,401
Accumulated other comprehensive income	1,699	1,869					1,869	1,699			2,124
Accumulated Other Comprehensive Income (Loss) [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent	1,699	1,869	1,767	1,790	1,513	1,460	1,869	$ 1,699	$ 1,790		$ 2,124	$ 1,434
Temporary Equity, Foreign Currency Translation Adjustments	$ (170)	102	$ (357)	$ 347	$ 142	$ (164)
Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax		(3,070)					(3,427)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent		(8,283)					(21,360)
Stockholders' Equity Attributable to Parent		338,161					338,161
Temporary Equity, Foreign Currency Translation Adjustments		(3,070)
Intangible assets, net		57,015					57,015
Goodwill		73,845					73,845
Other assets		389					389
Assets		397,212					397,212
Accumulated other comprehensive income		(1,303)					(1,303)
Previously Reported \| Accumulated Other Comprehensive Income (Loss) [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent		(1,303)					(1,303)
Revision of Prior Period, Error Correction, Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax		3,172					3,172
Comprehensive Income (Loss), Net of Tax, Attributable to Parent		3,172					3,172
Stockholders' Equity Attributable to Parent		3,172					3,172
Temporary Equity, Foreign Currency Translation Adjustments		3,172
Intangible assets, net		1,203					1,203
Goodwill		1,983					1,983
Other assets		(14)					(14)
Assets		3,172					3,172
Accumulated other comprehensive income		3,172					3,172
Revision of Prior Period, Error Correction, Adjustment \| Accumulated Other Comprehensive Income (Loss) [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent		$ 3,172					$ 3,172

- Definition

Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.

+ References + Details

- Definition

Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

+ References

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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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+ Details