Bioventus Inc

Previous wording

We reclassified revenue and expense of the SonicOne Ultrasonic Cleansing and Debridement Systems (“SonicOne”) from the Restorative Therapies to the Surgical Solutions business in 2024. SonicOne’s capabilities to remove devitalized or necrotic tissue and fiber deposits more closely aligns with Surgical Solutions’ soft tissue management. SonicOne revenue reclassified for the three months ended April 1, 2023 totaled $1,712 and $65 for the U.S. and International reporting segments, respectively.

Current wording

We reclassified revenue and expense of the SonicOne Ultrasonic Cleansing and Debridement Systems (“SonicOne”) from the Restorative Therapies to the Surgical Solutions business in the first quarter of 2024. SonicOne’s capabilities to remove devitalized or necrotic tissue and fiber deposits more closely aligns with Surgical Solutions’ soft tissue management. SonicOne revenue reclassified for the three and six months ended July 1, 2023 totaled $1.8 million and $3.5 million, respectively, for the U.S. reporting segment and $0.1 million in both periods for the International reporting segment.

Previous wording

On May 22, 2023, we closed the sale of certain assets within our Wound Business, including the TheraSkin and TheraGenesis products (collectively, the “Wound Business” or the “Disposal Group”), for potential consideration of $84.7 million, including $34.7 million at closing, $5.0 million deferred for 18 months and up to $45.0 million in potential earn-out payments (“Earn-out Payments”), which are based on the achievement of certain revenue thresholds by the purchaser of the Wound Business for sales of the TheraSkin and TheraGenesis products during the 2024, 2025, and 2026 fiscal years. We incurred $3.9 million in transactional fees resulting from the sale of the Wound Business and used the proceeds from the sale of the Wound Business to prepay $30.0 million of long-term debt obligations.

Current wording

On May 22, 2023, we closed the sale of certain assets within our Wound Business, including the TheraSkin and TheraGenesis products (collectively, the “Wound Business”), for potential consideration of $84.7 million, including $34.7 million at closing, $5.0 million deferred for 18 months and up to $45.0 million in potential earn-out payments, which are based on the achievement of certain revenue thresholds by the purchaser of the Wound Business for sales of the TheraSkin and TheraGenesis products during the 2024, 2025, and 2026 fiscal years. We incurred $3.9 million in transactional fees resulting from the sale of the Wound Business and used the proceeds from the sale of the Wound Business to prepay $30.0 million of long-term debt obligations.

Previous wording

We evaluated the Wound Business for impairment prior to its sale and recorded a $78.6 million impairment within the consolidated statements of operations and comprehensive loss during the three months ended April 1, 2023 as a result of this evaluation to reduce the intangible assets of the Disposal Group to reflect their respective fair values, less any costs to sell. The fair value of the Disposal Group’s intangibles were determined based on the consideration received for the Wound Business.

Current wording

We evaluated the Wound Business for impairment prior to its sale and recorded a $78.6 million impairment within the consolidated statements of operations and comprehensive loss during the six months ended July 1, 2023 as a result of this evaluation to reduce the intangible assets of the Wound Business to reflect their respective fair values, less any costs to sell. The fair values of its intangibles were determined based on the consideration received for the Wound Business.

Previous wording

(a)Includes for the three months ended March 30, 2024 and April 1, 2023, respectively, depreciation and amortization of $10,025 and $14,339 in cost of sales and $1,760 and $2,134 in operating expenses presented in the consolidated condensed statements of operations and comprehensive loss.

Current wording

(a)Includes for the three months ended June 29, 2024 and July 1, 2023 and the six months ended June 29, 2024 and July 1, 2023, respectively, depreciation and amortization of $11,021, $12,301, $21,046 and $26,640 in cost of sales and $2,069, $2,299, $3,829 and $4,433 in operating expenses presented in the consolidated statements of operations and comprehensive loss.

Previous wording

(e)Includes compensation expense resulting from awards granted under our equity-based compensation plans.

Current wording

(e)Includes compensation expense resulting from awards granted under our equity-based compensation plans. The three and six months ended July 1, 2023 includes the reversal of equity compensation expenses totaling $3,803 related to the transition of our executive leadership.

Previous wording

(g)Represents a non-cash impairment charge for intangible assets attributable to our Wound Business due to our decision to divest the business.

Current wording

(g)Represents a non-cash impairment charge for intangible assets solely attributable to our Advanced Rehabilitation Business in 2024 due to our decision to divest the business. Activity in 2023 relates to the non-cash impairment charge attributable to our divested Wound Business.

Previous wording

(h)Other items primarily includes charges associated with strategic transactions, such as potential acquisitions or divestitures and a transformative project to redesign systems and information processing.

Current wording

(i)Other items primarily includes charges associated with strategic transactions, such as potential acquisitions or divestitures and a transformative project to redesign systems and information processing. We incurred $0.3 million and $1.2 million in costs, respectively, during the three and six months ended July 1, 2023 related to MOTYS. Other items for the three and six months ended July 1, 2023 also includes severance costs totaling $2.3 million related to the transition of our executive leadership.

Previous wording

We present Adjusted EBITDA, a non-GAAP financial measure, because we believe it is a useful indicator that management uses as a measure of operating performance as well as for planning purposes, including the preparation of our annual operating budget and financial projections. We believe that Adjusted EBITDA is useful to our investors because it is frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. We define Adjusted EBITDA as net loss from continuing operations before depreciation and amortization, provision of income taxes and interest expense, net, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include acquisition and related costs, certain shareholder litigation costs, impairments of assets, restructuring and succession charges, equity compensation expense, financial restructuring costs and other items. We included certain shareholder litigation costs as a new item within our Adjusted EBITDA calculation during the first quarter of 2024 as it was the first period in which costs related to this type of litigation were material to our business. Costs related to this shareholder litigation are unrelated to our ongoing operations and were nominal in prior periods. Adjusted EBITDA by segment is comprised of net sales and costs directly attributable to a segment, as well as an allocation of corporate overhead costs primarily based on a ratio of net sales by segment to total consolidated net sales.

Current wording

We present Adjusted EBITDA, a non-GAAP financial measure, because we believe it is a useful indicator that management uses as a measure of operating performance as well as for planning purposes, including the preparation of our annual operating budget and financial projections. We believe that Adjusted EBITDA is useful to our investors because it is frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. We define Adjusted EBITDA as net loss from continuing operations before depreciation and amortization, provision of income taxes and interest expense, net, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include acquisition and related costs, certain shareholder litigation costs, impairments of assets, restructuring and succession charges, equity compensation expense, financial restructuring costs and other items. Adjusted EBITDA by segment is comprised of net sales and costs directly attributable to a segment, as well as an allocation of corporate overhead costs primarily based on a ratio of net sales by segment to total consolidated net sales.

Previous wording

Net sales increased $10.3 million, or 9.9%, compared to the prior year period. Changes by business were: (i) Pain Treatments—$9.6 million increase due to volume; (ii) Restorative Therapies—$5.5 million decrease due to the divestiture of our Wound Business, partially offset with a volume increase for our Exogen Bone Stimulation System; and (iii) Surgical Solutions—$6.1 million increase due to volume growth.

Current wording

Net sales increased $13.6 million, or 11.2%, compared to three months ended July 1, 2023. Changes by business were: (i) Pain Treatments—$9.6 million increase due to volume; (ii) Restorative Therapies—$2.6 million decrease due to the divestiture of our Wound Business, partially offset with a volume increase for our Exogen Bone Stimulation System; and (iii) Surgical Solutions—$6.6 million increase due to volume growth.

Previous wording

Gross profit increased $13.9 million, or 21.2%, primarily due to volume growth in Pain Treatments, Surgical Solutions and our Exogen Bone Stimulation System, partially offset by the Wound Business divestiture. Gross margin increased due to product mix.

Current wording

Gross profit increased $14.7 million, or 18.5%, primarily due to volume growth in Pain Treatments, Surgical Solutions and our Exogen Bone Stimulation System, partially offset by the Wound Business divestiture. Gross margin increased due to product mix.

Previous wording

Gross profit increased $0.6 million, or 7.1%, primarily due to volume growth in Pain Treatments. Gross margin increased due to product mix.

Current wording

Gross profit increased $28.5 million, or 19.7%, primarily due to volume growth in Pain Treatments, Surgical Solutions and our Exogen Bone Stimulation System, partially offset by the Wound Business divestiture. Gross margin increased due to product mix.

Previous wording

Selling, general and administrative expenses decreased $2.5 million, or 3.0%, primarily due to a decline in consulting expenses of $7.0 million and bad debt of $2.1 million. These decreases were partially offset with increases in: (i) compensation-related costs of $4.3 million; (ii) equity-based compensation costs of $1.3 million; and (iii) corporate and employee health insurance of $1.0 million.

Current wording

Selling, general and administrative expenses increased $17.5 million, or 11.2%, due to increases in: (i) accounting and legal costs of $10.8 million, primarily related to the settlement of shareholder litigation; (ii) equity-based compensation of $7.6 million; and (iii) compensation-related costs of $7.1 million. These increases were partially offset with a decline in consulting expenses of $8.6 million.

Previous wording

Research and development expense decreased by $1.2 million, or 31.1%, primarily due to a decrease of $0.7 million in consulting costs and $0.6 million in equity-based compensation.

Current wording

Research and development expense decreased by $0.6 million, or 8.1%, primarily due to a decrease in consulting costs.

Previous wording

The Company’s previously announced restructuring plans were completed in 2023. Costs incurred during the first quarter of 2023 is primarily the result of an initiative to align the Company’s organizational and management cost structure to improve profitability and cash flow through headcount reduction and cutting third-party related costs.

Current wording

Restructuring activity related to our previously announced restructuring plans were completed in 2023. Costs incurred during the three and six months ended July 1, 2023 are primarily the result of an initiative to align the Company’s organizational and management cost structure to improve profitability and cash flow through headcount reduction and cutting third-party related costs.

Previous wording

The fair value of contingent consideration during the three months ended March 30, 2024 remained consistent with the prior year comparable period. The activity for both periods relates to contingent consideration associated with the acquisition of Bioness in March 2021.

Current wording

The fair value of contingent consideration during the three and six months ended June 29, 2024 remained consistent with the prior year comparable period. The activity for both periods relates to contingent consideration associated with the acquisition of Bioness in March 2021.

Previous wording

Depreciation and amortization decreased during the three months ended March 30, 2024 compared with the prior year comparable period. The decrease was primarily the result of the impairment of intellectual property intangible assets associated with the Wound Business, which was divested during the second quarter of 2023.

Current wording

Depreciation and amortization decreased during the three and six months ended June 29, 2024 compared with the prior year comparable period. The decrease was primarily the result of the impairment of intellectual property intangible assets associated with the Wound Business, which was divested during the second quarter of 2023.

Previous wording

Our decision to divest the Wound Business required us to evaluate whether certain of its assets were impaired. We recorded a $78.6 million non-cash impairment charge as a result of this evaluation to reduce the intangible assets to their fair values less costs to sell. The fair value of intangibles of the Wound Business was determined based on the consideration offered for the Wound Business.

Current wording

Our decision to potentially divest the Advanced Rehabilitation Business in 2024 and divest the Wound Business in 2023 required us to evaluate whether certain of their assets were impaired. We recorded a $31.9 million non-cash impairment charge as a result of the evaluation of the Advanced Rehabilitation Business during the three and six months ended June 29, 2024 and a $78.6 million non-cash impairment charge related to the Wound Business during the six months ended July 1, 2023 as a result of their respective evaluations to reduce the intangible assets to their fair values less costs to sell. The fair value of intangibles for the Advanced Rehabilitation and Wound Businesses were determined based on the consideration offered.

Previous wording

Interest expense, net increased $0.6 million due to slightly higher interest rates partially offset with a decrease in outstanding debt. Other expense (income) decreased $1.7 million due to the 2023 receipt of $1.5 million from the settlement of a legal claim.

Current wording

Interest expense, net remained consistent with the prior year comparable period. Other expense (income) decreased $1.3 million due to the 2023 receipt of $1.5 million from the settlement of a legal claim.

Previous wording

Income tax expense was incurred for the three months ended March 30, 2024 compared to a benefit in the prior year comparable period primarily due to an increase in taxable income in certain entities.

Current wording

Income tax expense was incurred for the three and six months ended June 29, 2024 compared to a benefit in the prior year comparable period primarily due to losses in certain entities.

Previous wording

Subsequent to the IPO and related transactions, we are the sole managing member of BV LLC in which we owned 80.1% and 79.9% at March 30, 2024 and December 31 2023, respectively. We have a majority economic interest, the sole voting interest in, and control the management of BV LLC. As a result, we consolidate the financial results of BV LLC and report a noncontrolling interest representing the 19.9% that is owned by the Continuing LLC Owner. Noncontrolling interest activity during the three months ended March 30, 2024 was the result of losses recorded.

Current wording

Subsequent to the IPO and related transactions, we are the sole managing member of BV LLC in which we owned 80.5% and 79.9% at June 29, 2024 and December 31 2023, respectively. We have a majority economic interest, the sole voting interest in, and control the management of BV LLC. As a result, we consolidate the financial results of BV LLC and report a noncontrolling interest representing the 19.5% that is owned by the Continuing LLC Owner. Noncontrolling interest activity during the three and six months ended June 29, 2024 was the result of losses recorded.

Previous wording

Adjusted EBITDA increased $5.0 million, or 34.3%, primarily due higher gross profit, partially offset with an increase in compensation costs and other administrative expenses.

Current wording

Adjusted EBITDA increased $11.9 million, or 30.2%, primarily due higher gross profit, partially offset with an increase in compensation costs and other administrative expenses.

Previous wording

Cash, cash equivalents and restricted cash as of March 30, 2024 totaled $25.2 million, compared to $37.0 million as of December 31, 2023. The decrease in cash was primarily due to the following:

Current wording

Cash, cash equivalents and restricted cash as of June 29, 2024 totaled $32.0 million, compared to $37.0 million as of December 31, 2023. The decrease in cash was primarily due to the following:

Previous wording

Net cash from operating activities from continuing operations decreased $10.7 million, due to: (i) increases in employee compensation as we annually pay bonuses and raise wages during the first quarter and no bonuses were paid during the first quarter of 2023; (ii) a rise in interest payments due to higher interest rates; and (iii) an increase in inventory purchases. These operating cash outflows were partially offset with an increase in cash collections from the growth in sales and timing of payments on accounts payable.

Current wording

Net cash from operating activities from continuing operations decreased $6.3 million, due to: (i) increases in employee compensation as we annually pay bonuses and raise wages during the first quarter and no bonuses were paid during the first quarter of 2023; (ii) a rise in interest payments due to higher interest rates; and (iii) an increase in inventory purchases. These operating cash outflows were partially offset with an increase in cash collections from the growth in sales and timing of payments on accounts payable.

Previous wording

Net cash from investing activities from continuing operations increased $2.6 million, due to a decrease of $3.3 million in capital expenditures, primarily within information technology. This was partially offset with $0.7 million purchase of distribution rights for one of our HA products.

Current wording

Net cash from investing activities from continuing operations decreased $31.0 million, due to the $34.9 million receipt of cash resulting from the sale of our Wound Business in 2023 and a $0.7 million purchase of distribution rights for one of our HA products in 2024. These were partially offset with a $4.6 million decrease in capital expenditures, primarily within information technology.