The New SeaSpine Accelerating the Pace of Innovation & Design - August 2021
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The New SeaSpine Accelerating the Pace of Innovation & Design August 2021 ©2021 SeaSpine Orthopedics Corporation. All rights reserved. 1
Forward-looking Statements & Disclaimer This presentation includes statements that may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “expect,” “anticipate,” “project,” “forecast” and similar expressions, or the negative thereof, among others, generally identify forward-looking statements. Forward-looking statements used in this presentation include revenue guidance; future revenue and revenue growth; liquidity to fund growth; new product launches and market opportunity, market share and market share growth. SeaSpine® cautions that these forward-looking statements are based on management's current expectations, estimates, forecasts and projections, and assumptions management believes are reasonable, and are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the ongoing impact of the COVID-19 pandemic on the elective surgery market and the global healthcare system generally; risks that the COVID-19 pandemic may disrupt the Company’s business and/or the global healthcare system more severely than anticipated; surgeons’ willingness to use the Company’s existing and newly launched products; the Company’s ability to continue to invest in medical education and training, product development, and/or sales and marketing initiatives at levels sufficient to drive future revenue growth; the Company’s ability to attract new, high-quality distributors and potential disruption to the Company’s existing distribution network; continued pricing pressure, as well as exclusion from major healthcare systems; the risk of supply shortages and the associated, potentially long-term disruption to product sales; unexpected expense and delay; changes to laws and regulations applicable to the Company and the industry in which it competes; and general economic and business conditions in the markets in which the Company does business, both in the U.S. and abroad. Additional information about the factors that may affect the operations of SeaSpine and results is set forth in SeaSpine’s annual and quarterly reports filed with the U.S. Securities and Exchange Commission. Forward-looking statements contained in this presentation are made only as of the first day of the month and year set forth on the cover hereof and SeaSpine undertakes no obligation to release publicly any revisions or updates to forward- looking statements as a result of subsequent events or developments, except as required by law. ©2021 SeaSpine Orthopedics Corporation. All rights reserved. 2
®
SeaSpine Journey
Accell®
Bone
Matrix
NanoMetalene® Modular
Surface Fixation
Topography Systems
Our Beginning– The Journey/ Growth/Innovation
Keeping Foundation Transformation 2021 & Beyond
Spin-off of a spinal implants SeaSpine has established a Focus on better patient
and orthobiologics division profound identity as a outcomes through research
into a pure-play spine customer focused, pure-play and product development
company with a renewed spine company, creating its that is driven by science
focus on investing for growth unique pathway as a market- and data, coupled with
and innovation. share taker. Under proven market leading FLASH™
leadership the organization Navigation system with 7D
drives to create innovative Technology, SeaSpine aims
solutions and deepen to be a market leader in
partnership with committed, Spine.
growth-oriented distributors.
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 3
SEASPINE
TODAY
We collaborate with surgeons with the goal of developing
best-in-class, cost-effective solutions that combine
efficient spinal implant systems with industry leading
enabling technologies and orthobiologics to deliver
clinical value to the surgeon, hospital and patient.
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 4
Senior Leadership Team
An assembly of experienced leadership to drive vision forward with 230+ years in spine/orthopedics
Beau Standish, PhD, John Bostjancic Dennis Cirino Tyler Lipschultz Laetitia Cousin
PEng Senior Vice President, Senior Vice President, Senior Vice President, Vice President,
Chief Financial Officer Global Spinal Systems Orthobiologics & Business Development Regulatory & Quality Assurance
President Enabling Technologies
Keith C. Valentine Patrick Keran Bill Rhoda Frank Vizesi, PhD John Winge Troy Woolley
Senior Vice President General Manager of Process Vice President, Orthobiologics Vice President, Sales Vice President, Marketing
President & Chief Executive Officer General Counsel & Corporate Secretary Innovation & Development Research & Development,
& Clinical Affairs
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 5
Mariner® MIS
Foundational Products
Expected to Drive Mariner®
OsteoBallast®
OsteoStrand®
Double-Digit Growth Shoreline RT™
Differentiated, biologic-friendly
spinal implants and advanced
orthobiologics coupled with
market leading image Waveform TA
FLASH™ Navigation
guidance enabling technology with 7D Technology
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 6
Medical Education Programs
Furthering our commitment to deliver value to distributors and surgeons
95+
COASTs visits, trainings, labs
350+
Cases supported by MDMs:
Alpha cases, new users and
complex case support
Medical education programs were significantly limited in 2020 due to travel restrictions related to COVID-19 pandemic.
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 7
7D Surgical Navigation Value Proposition
Leading the charge in accuracy, safety and hospital economic benefit
FLASH™ SEGMENTAL SURGEON
REGISTRATION REGISTRATION CONTROL
RADIATION-FREE FLEXIBLE PURCHASE
OPTIONS
The acquisition of 7D Surgical closed on May 20, 2021.
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 8
SeaSpine is the Complete Procedural Solution
Market leading, radiation-free navigation in the OR for surgeon, staff and patient
INTERBODY FIXATION NAVIGATION SPINAL ACCESS ORTHOBIOLOGICS
PORTFOLIO SOLUTIONS SYSTEMS
NanoMetalene Modular Posterior Open / Radiation-Free MIS TLIF Retractor Premium DBM
with Reef Topography MIS Pedicle Screw Systems Image-Guidance System Products (#2 in US)
with Cranial and Spinal Lateral Retractor
3D Printed – Waveform Posterior OCT Systems Applications (in development) Vertically Integrated
Manufacturing
Expandable – Explorer Lateral Fixation Agnostic Imaging
Acquisition
Small Stature Fixation System
Segmental (FLASH™)
Revision System Registration
The acquisition of 7D Surgical closed on May 20, 2021
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 9
U.S. Spine and Orthobiologics Market
®
90% of SeaSpine SEASPINE
revenue is from the ADDRESSABLE
U.S. MARKET
U.S. market
$ 7.1B
$5.4B $1.7B
CERVICAL AND BONE GRAFT
THORACOLUMBAR SUBSTITUTES,
INTERBODY AND GROWTH FACTORS,
FIXATION DEVICES CELLULAR GRAFTS
SPINAL IMPLANTS ORTHOBIOLOGICS
Large established market with opportunity Opportunity to leverage #2 U.S. market
to take share through differentiated share position in demineralized bone
technology and value-added training/ matrix (DBM) and strong distribution
education to deliver clinical value and GPO/IDN relationships
Source: 2019 – Spine market report
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 10Addressing Over $2 Billion of New Market Segments Launch cadence, speed to market, complexity ©2021 SeaSpine Orthopedics Corporation. All rights reserved. 11
Midline
Revision
Deformity
Fixation $2.8B
Market Segment Addressing
less than 50%
of the market
Mariner® Degen Minimally
2017
Invasive
Surgery (MIS)
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 12Mariner Midline
2019
Mariner Revision
2019
Mariner
Deformity
Fixation $2.8B
2021
Market Segment Addressing
over $1.5 billion
of new market
segments
Mariner® Degen
2017
Mariner MIS
2019
NOTE: Estimated market size does not take into account any potential lasting impact from the COVID-19 pandemic
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 13Expandable
PEEK
Interbody $1.6B
Market Segment
3D
Printed
Composite
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 14PEEK
2015
Expandable
Interbody $1.6B
Market Segment
Composite
2015
3D
Printed
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 15Peek
Expandable
2020
Interbody $2.8B
Market Segment Addressing over
NanoMetalene®
$800 million with Reef™
of new market Topography
segments
3D
Printed
2021
NOTE: Estimated market size does not take into account any potential lasting impact from the COVID-19 pandemic
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 16©2021 SeaSpine Orthopedics Corporation. All rights reserved. 17
Engineered™
Scientific Surface Economically Viable
Fusion Topography Solutions
Modular Systems
Modularity Cutting Edge
Innovation
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 18BEST IN CLASS Advanced DBM Product Portfolio
Proprietary macro features
ADVANCED
DBMS
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 19Do Cells Improve Bone Healing in Spine? Preclinical Study ©2021 SeaSpine Orthopedics Corporation. All rights reserved. 20
Study Goal
Determine the effectiveness of cells in spinal fusion by testing Cellular Bone Matrices
(CBMs) both with and without cells in the scientifically valid athymic rat spinal fusion model
Sample
# Size Sample Size
Group Description Lots (# rats) (fusion masses) Fusion Rate
Leading CBM 1 DBM Particles w/ cells (DEAD) 3 N=9 N=18 0/18 (0%)
DBM Particles w/ cells (LIVE) 3 N=9 N=18 0/18 (0%)
Leading CBM 2 DBM Fibers w/ cells (DEAD) 3 N=9 N=18 11/18 (61%)
DBM Fibers w/ cells (LIVE) 3 N=9 N=18 11/18 (61%)
OsteoStrand Plus DBM Fibers 3 N=9 N=18 17/18 (94%)
Abedi, MD, A., Formanek, BA, B., Russell, PhD, N., et al. “Examination of the Role of Cells in Commercially Available Cellular Allografts in Spine Fusion.” The Journal of Bone & Joint Surgery. October 20, 2020; 102 (24): e135. DOI 10.2106/JBJS.20.00330
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 21Not Fused Partially Fused Fused
Conclusion
• SeaSpine’s OsteoStrand Plus
DBM product outperformed the
cellular graft products tested
• The cellular component of
CBMs did not improve bone
formation in spine in rats
0/36 fused (0%) 22/36 fused (61%) 17/18 fused (94%)
Leading CBM 1 Leading CBM 2 OsteoStrand Plus /
SeaSpine
Abedi, MD, A., Formanek, BA, B., Russell, PhD, N., et al. “Examination of the Role of Cells in Commercially Available Cellular Allografts in Spine Fusion.” The Journal of Bone & Joint Surgery. October 20, 2020; 102 (24): e135. DOI 10.2106/JBJS.20.00330
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 22What Drives Spinal Fusion:
Cells or Growth Factors?
(it’s the growth factors)
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 23Financial Highlights
Q2 21 Financial Results and FY 21 Guidance
Q2 21 FY 2021 Liquidity
Revenue Guidance As of June 30, 2021
Total Revenue $47.5M Total Revenue • $120.7M cash and cash
• 66% Year-over-Year Growth • $201+6%
million to $205 million equivalents
(+7% 30%
• Reflects U.S.)to 33% YOY
US Revenue $42.6M growth vs. 2020
• 64% Year-over-Year Growth • $157.2M total potential
• Reflects 26% to 29% YOY
• Spinal Implants and Enabling growth vs. 2019
liquidity*
Technologies: 62% YOY Growth
• Orthobiologics: 67% YOY Growth Adjusted Gross Margin • No borrowings under credit
Int’l Revenue $4.9M / 81% Growth • 100 to 150 bps increase vs. 2020 facility
56%
Revenue and Adjusted Gross Margin guidance information is as of August 2, 2021, based on guidance provided by SeaSpine leadership on that date. Inclusion of this information in this presentation is not a confirmation or an
update of, and should not be construed or otherwise assumed to reflect any confirmation or update of, that guidance by SeaSpine leadership as of any date other than August 2, 2021.
Adjusted Gross Margin is a non-GAAP financial measure that is not calculated in accordance with generally accepted accounting principles, or GAAP. This non-GAAP financial measure should not be considered a replacement
for, and should be read together with, the most directly comparable GAAP financial measure. Reconciliations to the most directly comparable GAAP measures are provided in Appendix A to this presentation.
*Total potential liquidity reflects cash on hand plus maximum potential borrowing capacity of credit facility, assuming exercise of $10M accordion feature, and based on eligible accounts receivable
and inventory and assuming minimum fixed charge coverage ratio is not achieved
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 24Financial Highlights
Accelerating Revenue Growth from Investments in Product Innovation
Total Revenue ($ in millions) New Product Revenue ($ in millions)
$70.0 80.0%
$160.0 19% 20% US Spinal Implants New Product Revenue
74.0%
$159.1 66.1% 70.0%
$154.3 $60.0 US Orthobiologics New Product Revenue
$143.4 57.8%
15% 60.0%
$120.0 $128.9 $131.8 $50.0 US Spinal Implants New Products as % of Total
11% 46.6%
50.0%
9% 10% US Ortho New Products as % of Total
$40.0 40.0%
$80.0 $89.4 40.0%
30.1% 31.5%
$30.0
5%
2% 30.0%
21.9%
$20.0
$40.0 20.0%
0%
-3% 9.7% 8.4%
-3% $10.0 10.0%
2.3%
$- -5%
$0.0 0.0%
2016 2017 2018 2019 2020 H1 2021
Q3/Q4 15 2016 2017 2018 2019 2020 H1 21
Total Revenue Revenue Growth
• 2020 revenue and revenue growth were negatively impacted by deferral of spine surgeries caused by the COVID-19 pandemic.
• YTD 2021 revenue growth is vs. comparable period for 2019, which management believes is a more informative comparison than 2020 because of
the significant adverse impacts of COVID-19 on 2020 revenue
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 25Financial Highlights
Adjusted Gross Margin Expansion and Adjusted EBITDA Improvement
Adjusted Gross Margin Adjusted EBITDA Loss ($ in millions)
$35.0 69.0%
68.0% -$0.5 $(0.1)
68.0%
$30.0
67.0%
$(3.9) $(3.5)
$25.0
66.0% $(5.2)
-$3.0 $(6.2)
$20.0 64.5% 65.0% $(6.8)
64.0%
$15.0 63.5% $30.6 64.0%
$29.4 $29.4
$26.9
$22.6 63.0% -$5.5
$10.0 63.3%
$18.1
62.6% 62.0%
$5.0
61.0%
$0.0 60.0% -$8.0
Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Adjusted Gross Profit Adjusted Gross Margin
• Q3 2020 Adjusted Gross Margin benefitted from very low excess and obsolete inventory charges, primarily as a result of atypically low investment
in spinal implant set purchases and deployments in the first half of 2020 due to COVID-19 business risks
• Q3 2020 Adjusted EBITDA loss benefitted from a sharp rebound in revenue and the benefits of reduced travel expense, tradeshow cancellations
and cost reduction measures implemented by SeaSpine in response to COVID-19 business risks
Adjusted Gross Margin and Adjusted EBITDA Loss are non-GAAP financial measures that are not calculated in accordance with generally accepted accounting principles, or
GAAP. These non-GAAP financial measures should not be considered a replacement for, and should be read together with, the most directly comparable GAAP financial
measures. Reconciliations to the most directly comparable GAAP measures are provided in Appendix A to this presentation.
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 26Financial Highlights
Strong Liquidity Position Enables Continued Investment in Growth
TOTAL POTENTIAL LIQUIDITY ($ in millions)
$160.0 $157.2
$140.0 $36.5
➢ Cash and Access to Cash to Fund our
$113.3
Growth Strategy
$120.0
$100.0 $90.5 ➢ Investments to Support Growth
$36.5
o New Product Launches
$80.0
$59.9 $36.5 o Deploy Additional Spinal Implant Sets
$56.7
$60.0 $47.0 $120.7 o Training & Education
$41.1
$40.0
$26.5 $37.3 o Clinical Evidence/Studies
$36.5 $76.8
$26.5 $54.0
o Strategic acquisitions ($28.3M cash
$20.0 $47.0 $26.5
$33.4 used in May 2021 for 7D Surgical
$14.6 $20.2
$-
$10.8 acquisition)
Jul-15 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Jun-21
Cash and Investments Credit Facility Capacity Total Potential Liquidity
➢ Liquidity position further strengthened by
$94.5M follow-on offering executed in
Total Potential Liquidity reflects cash on hand plus maximum potential borrowing capacity of credit facility, April 2021
assuming exercise of $10M accordion feature, and based on eligible accounts receivable and inventory and
assuming minimum fixed charge coverage ratio is not achieved
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 27Investment Innovative Procedural
Solutions and Enabling
Improved Clinical
Outcomes and
Highlights Technologies Economic Value
Focused, pure-play
spine market-share taker
Strengthened Distributor Well Capitalized to
Partnerships Execute Strategy
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 28Final image –stretching on the beach or ©2021 SeaSpine Orthopedics Corporation. All rights reserved. 29
APPENDIX A
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
($ in millions) Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 In addition to GAAP results, SeaSpine provides two non-GAAP
financial measures: earnings (loss) before interest, taxes, depreciation
Revenue $ 36.1 $ 28.6 $ 43.2 $ 46.4 $ 42.0 $ 47.5 and amortization and excluding the impact of stock-based
Cost of goods sold 13.8 11.7 14.1 17.3 15.4 17.5 compensation, intangible asset impairment charges, spinal set
Gross profit $ 22.3 $ 16.9 $ 29.1 $ 29.1 $ 26.6 $ 30.0 instrument replacement and impairment expenses, idle manufacturing
plant costs, other income / expense, and acquisition and integration-
Gross margin % 61.8% 59.2% 67.4% 62.8% 63.4% 63.2% related charges (“Adjusted EBITDA Loss”) and gross margin excluding
technology-related intangible asset amortization expense and idle
Non-GAAP adjustments manufacturing plant costs (“Adjusted Gross Margin”).
Technology-related intangible asset amortization $ 0.3 $ 0.2 $ 0.3 $ 0.3 $ 0.3 $ 0.6 Management believes that the presentation of Adjusted EBITDA Loss
Idle manufacturing plant costs - 1.0 - - - - and Adjusted Gross Margin provides important supplemental
Adjusted Gross Profit $ 22.6 $ 18.1 $ 29.4 $ 29.4 $ 26.9 $ 30.6 information to management and investors regarding financial and
business trends relating to SeaSpine’s results of operations.
Adjusted Gross Margin 62.6% 63.5% 68.0% 63.3% 64.0% 64.5% Management uses Adjusted EBITDA Loss and Adjusted Gross Margin
when evaluating operating performance because it believes that the
exclusion of the items described above, for which the amounts and/or
timing may vary significantly depending upon SeaSpine’s acquisition
($ in millions) Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
and integration activities, for which the amounts are non-cash in
GAAP net loss $ (12.6) $ (13.7) $ (6.6) $ (10.3) $ (12.7) $ (5.2) nature, and/or for which the amounts are not expected to recur at the
Non-GAAP adjustments same magnitude, provides a supplemental measure of our operating
results that facilitates comparability of our financial condition and
Depreciation and intangible asset amortization $ 2.6 $ 2.6 $ 2.7 $ 2.8 $ 2.7 $ 3.1
operating performance from period to period, against our business
Other expense (income) (0.2) (0.0) (0.1) (0.1) 0.2 $ (6.1) model objectives, and against other companies in our industry.
Provision for income taxes 0.0 0.0 0.1 0.1 0.0 $ 0.2 Management has chosen to provide this information to investors so
they can analyze our operating results in the same way that
Idle manufacturing plant costs - 1.0 - - - $ -
management does and use this information in their assessment of our
Spinal set instrument replacement expense 0.4 0.5 0.6 1.2 0.7 $ 0.9 core business and the valuation of SeaSpine.
Spinal set instrument impairment expense 0.2 - - - - $ -
Reconciliations of these non-GAAP financial measures to their nearest
Stock-based compensation 2.0 2.8 3.2 2.4 2.5 $ 3.1
GAAP financial measures are provided in the tables to the left.
Acquisition and integration-related charges - - - - 1.3 $ 0.5
Impairment on intangible assets 1.3 - - - - $ - For further information regarding our use of non-GAAP financial
measures, please refer to the Current Report on Form 8-K that
Total Non-GAAP adjustments $ 6.3 $ 6.9 $ 6.4 $ 6.5 $ 7.5 $ 1.7
SeaSpine filed with the Securities and Exchange Commission on
Adjusted EBITDA loss $ (6.2) $ (6.8) $ (0.1) $ (3.9) $ (5.2) $ (3.5) August 2, 2021.
©2021 SeaSpine Orthopedics Corporation. All rights reserved. 30You can also read
