10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 0-19961

 

ORTHOFIX MEDICAL INC.

(Exact name of registrant as specified in its charter)

Delaware	98-1340767
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3451 Plano Parkway, Lewisville, Texas	75056
(Address of principal executive offices)	(Zip Code)

(214) 937-2000

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer	☐	Accelerated filer	☒
Non-Accelerated filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of August 1, 2022, 20,003,637 shares of common stock were issued and outstanding.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.10 par value per share	OFIX	Nasdaq Global Select Market

Table of Contents

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	4
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2022 and 2021	5
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	7
	Notes to the Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
SIGNATURES		29

2

Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts, and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “intends,” “predicts,” “potential,” or “continue” or other comparable terminology. Forward-looking statements include, but are not limited to, statements about:

•our intentions, beliefs, and expectations regarding our operations, sales, expenses, and future financial performance;

•our operating results;

•our plans for future products and enhancements of existing products;

•anticipated growth and trends in our business;

•the timing of and our ability to maintain and obtain regulatory clearances or approvals;

•our belief that our cash and cash equivalents, investments, and access to our revolving line of credit will be sufficient to satisfy our anticipated cash requirements;

•our expectations regarding our revenues, customers, and distributors;

•our expectations regarding our costs, suppliers, and manufacturing abilities;

•our beliefs and expectations regarding our market penetration and expansion efforts;

•our expectations regarding the benefits and integration of acquired businesses and/or products and our ability to make future acquisitions and successfully integrate any such future-acquired businesses;

•our anticipated trends and challenges in the markets in which we operate; and

•our expectations and beliefs regarding and the impact of investigations, claims, and litigation.

These forward-looking statements are not guarantees of future performance and involve risks, uncertainties, estimates, and assumptions that are difficult to predict. Any or all forward-looking statements that we make may turn out to be wrong (due to inaccurate assumptions that we make or otherwise), and our actual outcomes and results may differ materially from those expressed in these forward-looking statements. Potential risks and uncertainties that could cause actual results to differ materially include, but are not limited to, those set forth in Part I, Item 1A under the heading Risk Factors; Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations; and elsewhere throughout the Annual Report on Form 10-K for the year ended December 31, 2021, and in any other documents incorporated by reference. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to update, and expressly disclaim any duty to update, our forward-looking statements, whether as a result of circumstances or events that arise after the date hereof, new information, or otherwise.

Trademarks

Solely for convenience, our trademarks and trade names in this report are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that we will not assert, to the fullest extent under applicable law, our rights thereto.

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ORTHOFIX MEDICAL INC.

Condensed Consolidated Balance Sheets

(U.S. Dollars, in thousands, except par value data)	June 30, 2022			December 31, 2021
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	59,536		$	87,847
Accounts receivable, net of allowances of $5,589 and $4,944, respectively		77,069			78,560
Inventories		97,171			82,974
Prepaid expenses and other current assets		21,416			20,141
Total current assets		255,192			269,522
Property, plant, and equipment, net		58,676			59,252
Intangible assets, net		50,634			52,666
Goodwill		71,317			71,317
Deferred income taxes		1,454			1,771
Other long-term assets		24,383			22,095
Total assets	$	461,656		$	476,623
Liabilities and shareholders’ equity
Current liabilities
Accounts payable	$	32,322		$	26,459
Current portion of finance lease liability		624			2,590
Other current liabilities		48,151			76,781
Total current liabilities		81,097			105,830
Long-term portion of finance lease liability		19,571			19,890
Other long-term liabilities		19,042			13,969
Total liabilities		119,710			139,689
Contingencies (Note 7)
Shareholders’ equity
Common shares $0.10 par value; 50,000 shares authorized;     20,000 and 19,837 issued and outstanding as of June 30,     2022 and December 31, 2021, respectively		2,000			1,983
Additional paid-in capital		323,738			313,951
Retained earnings		19,029			21,000
Accumulated other comprehensive loss		(2,821	)		—
Total shareholders’ equity		341,946			336,934
Total liabilities and shareholders’ equity	$	461,656		$	476,623

The accompanying notes form an integral part of these condensed consolidated financial statements

4

ORTHOFIX MEDICAL INC.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

	Three Months Ended June 30,						Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands, except per share data)	2022			2021			2022			2021
Net sales	$	118,070		$	121,394		$	224,488		$	226,987
Cost of sales		31,600			27,439			59,918			53,353
Gross profit		86,470			93,955			164,570			173,634
Sales and marketing		59,888			57,338			114,025			108,123
General and administrative		15,846			18,335			35,174			34,779
Research and development		12,758			13,121			23,970			24,018
Acquisition-related amortization and remeasurement (Note 11)		(8,663	)		894			(12,162	)		5,363
Operating income		6,641			4,267			3,563			1,351
Interest expense, net		(407	)		(550	)		(782	)		(967	)
Other income (expense), net		(3,192	)		951			(4,128	)		(1,739	)
Income (loss) before income taxes		3,042			4,668			(1,347	)		(1,355	)
Income tax expense		(553	)		(2,248	)		(624	)		(2,041	)
Net income (loss)	$	2,489		$	2,420		$	(1,971	)	$	(3,396	)
Net income (loss) per common share:
Basic	$	0.12		$	0.12		$	(0.10	)	$	(0.17	)
Diluted		0.12			0.12			(0.10	)		(0.17	)
Weighted average number of common shares:
Basic		20,031			19,651			19,965			19,575
Diluted		20,113			19,938			19,965			19,575
Other comprehensive loss, before tax
Unrealized gain (loss) on debt securities		161			98			(513	)		(628	)
Currency translation adjustment		(1,820	)		(155	)		(2,308	)		(1,182	)
Other comprehensive loss, before tax		(1,659	)		(57	)		(2,821	)		(1,810	)
Income tax benefit (expense) related to other comprehensive loss		—			(24	)		—			156
Other comprehensive loss, net of tax		(1,659	)		(81	)		(2,821	)		(1,654	)
Comprehensive income (loss)	$	830		$	2,339		$	(4,792	)	$	(5,050	)

The accompanying notes form an integral part of these condensed consolidated financial statements

5

ORTHOFIX MEDICAL INC.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited, U.S. Dollars, in thousands)	Number of Common Shares Outstanding		Common Shares		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
At December 31, 2021		19,837	$	1,983	$	313,951		$	21,000		$	—		$	336,934
Net loss		—		—		—			(4,460	)		—			(4,460	)
Other comprehensive loss, net of tax		—		—		—			—			(1,162	)		(1,162	)
Share-based compensation expense		—		—		4,332			—			—			4,332
Common shares issued, net		5		1		(70	)		—			—			(69	)
At March 31, 2022		19,842	$	1,984	$	318,213		$	16,540		$	(1,162	)	$	335,575
Net income		—		—		—			2,489			—			2,489
Other comprehensive loss, net of tax		—		—		—			—			(1,659	)		(1,659	)
Share-based compensation expense		—		—		4,460			—			—			4,460
Common shares issued, net		158		16		1,065			—			—			1,081
At June 30, 2022		20,000	$	2,000	$	323,738		$	19,029		$	(2,821	)	$	341,946

(Unaudited, U.S. Dollars, in thousands)	Number of Common Shares Outstanding		Common Shares		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
At December 31, 2020		19,424	$	1,942	$	292,291	$	59,379		$	3,252		$	356,864
Net loss		—		—		—		(5,816	)		—			(5,816	)
Other comprehensive loss, net of tax		—		—		—		—			(1,573	)		(1,573	)
Share-based compensation expense		—		—		3,721		—			—			3,721
Common shares issued, net		51		5		1,617		—			—			1,622
At March 31, 2021		19,475	$	1,947	$	297,629	$	53,563		$	1,679		$	354,818
Net income		—		—		—		2,420			—			2,420
Other comprehensive loss, net of tax		—		—		—		—			(81	)		(81	)
Share-based compensation expense		—		—		3,907		—			—			3,907
Common shares issued, net		194		20		1,200		—			—			1,220
At June 30, 2021		19,669	$	1,967	$	302,736	$	55,983		$	1,598		$	362,284

The accompanying notes form an integral part of these condensed consolidated financial statements

6

ORTHOFIX MEDICAL INC.

Condensed Consolidated Statements of Cash Flows

	Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)	2022			2021
Cash flows from operating activities
Net loss	$	(1,971	)	$	(3,396	)
Adjustments to reconcile net loss to net cash from operating activities
Depreciation and amortization		14,028			15,002
Amortization of operating lease assets, debt costs, and other assets		1,567			1,779
Provision for expected credit losses		1,139			(214	)
Deferred income taxes		236			3,936
Share-based compensation expense		8,792			7,628
Interest and (gain) loss on valuation of investment securities		188			(198	)
Change in fair value of contingent consideration		(16,214	)		(75	)
Other		1,149			(105	)
Changes in operating assets and liabilities, net of effects of acquisitions
Accounts receivable		(208	)		(986	)
Inventories		(15,589	)		2,655
Prepaid expenses and other current assets		(1,769	)		(6,507	)
Accounts payable		7,176			(2,662	)
Other current liabilities		(7,495	)		(6,905	)
Contract liability (Note 9)		(4,791	)		(2,880	)
Payment of contingent consideration		—			(6,595	)
Other long-term assets and liabilities		1,140			(213	)
Net cash from operating activities		(12,622	)		264
Cash flows from investing activities
Capital expenditures for property, plant, and equipment		(11,032	)		(9,035	)
Capital expenditures for intangible assets		(671	)		(757	)
Contingent consideration payments related to asset acquisitions		(1,500	)		—
Other investing activities		42			—
Net cash from investing activities		(13,161	)		(9,792	)
Cash flows from financing activities
Proceeds from issuance of common shares		2,400			4,685
Payments related to withholdings for share-based compensation		(1,388	)		(1,843	)
Payments related to finance lease obligation		(2,291	)		(260	)
Payment of contingent consideration		—			(8,405	)
Other financing activities		(45	)		(705	)
Net cash from financing activities		(1,324	)		(6,528	)
Effect of exchange rate changes on cash		(1,204	)		(243	)
Net change in cash, cash equivalents, and restricted cash		(28,311	)		(16,299	)
Cash, cash equivalents, and restricted cash at the beginning of period		87,847			96,821
Cash, cash equivalents, and restricted cash at the end of period	$	59,536		$	80,522
Components of cash, cash equivalents, and restricted cash at the end of period
Cash and cash equivalents	$	59,536		$	79,968
Restricted cash					554
Cash, cash equivalents, and restricted cash at the end of period	$	59,536		$	80,522
Noncash investing activities - Purchase of intangible assets	$	2,000		$	—

The accompanying notes form an integral part of these condensed consolidated financial statements

7

ORTHOFIX MEDICAL INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

1. Business and basis of presentation

Description of the Business

Orthofix Medical Inc. and its subsidiaries (the “Company”) is a global medical device company with a spine and orthopedics focus. The Company’s mission is to deliver innovative, quality-driven solutions while partnering with health care professionals to improve patient mobility. Headquartered in Lewisville, Texas, Orthofix’s spine and orthopedic products are distributed in more than 60 countries via the Company's sales representatives and distributors.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair statement have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Form 10-K for the year ended December 31, 2021. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, 2022.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition; contractual allowances; allowances for expected credit losses; inventories; valuation of intangible assets; goodwill; fair value measurements, including contingent consideration; litigation and contingent liabilities; tax matters; and share-based compensation. Actual results could differ from these estimates.

2. Recently issued accounting pronouncements

The Company considers the applicability and impact of all accounting standards updates ("ASUs"). Recently issued ASU's that are determined to potentially affect the Company's condensed consolidated financial statements are summarized below:

Topic	Description of Guidance	Effective Date	Status of Company's Evaluation
Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (ASU 2022-03)	Clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions. Certain of the provisions are to be applied retrospectively with other provisions applied prospectively.	January 1, 2024	The Company is currently evaluating the impact this ASU may have on its consolidated financial statements.

Other recently issued ASUs, excluding those ASUs which have already been disclosed as adopted or described above, were assessed and determined not applicable, or are expected to have minimal impact on the Company's condensed consolidated financial statements. Furthermore, there have been no material changes during the six months ended June 30, 2022, to the Company's application of significant accounting policies and estimates as described in the Company’s Form 10-K for the year ended December 31, 2021.

8

3. Inventories

Inventories were as follows:

(U.S. Dollars, in thousands)	June 30, 2022		December 31, 2021
Raw materials	$	16,901	$	9,589
Work-in-process		14,879		15,096
Finished products		26,278		15,149
Field/consignment		39,113		43,140
Inventories	$	97,171	$	82,974

4. Leases

A summary of the Company’s lease portfolio as of June 30, 2022, and December 31, 2021, is presented in the table below:

(U.S. Dollars, in thousands)	Classification	June 30, 2022		December 31, 2021
Right-of-use assets ("ROU assets")
Operating leases	Other long-term assets	$	6,591	$	3,155
Finance leases	Property, plant and equipment, net		17,866		18,600
Total ROU assets		$	24,457	$	21,755
Lease Liabilities
Current
Operating leases	Other current liabilities	$	1,375	$	1,834
Finance leases	Current portion of finance lease liability		624		2,590
Long-term
Operating leases	Other long-term liabilities		5,329		1,443
Finance leases	Long-term portion of finance lease liability		19,571		19,890
Total lease liabilities		$	26,899	$	25,757

Supplemental cash flow information related to leases was as follows:

(U.S. Dollars, in thousands)	Six Months Ended June 30, 2022		Six Months Ended June 30, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,071	$	2,327
Operating cash flows from finance leases		443		452
Financing cash flows from finance leases		2,291		260
ROU assets obtained in exchange for lease obligations
Operating leases		4,592		415
Finance leases		—		149

5. Long-term debt

As of June 30, 2022, the Company had no borrowings outstanding under the secured revolving credit facility and was in compliance with all required financial covenants.

In addition, the Company had no borrowings on its available lines of credit in Italy, which provide up to an aggregate amount of €5.5 million ($5.8 million) as of June 30, 2022.

9

6. Fair value measurements and investments

The fair value measurements of the Company’s financial assets and liabilities measured on a recurring basis were as follows:

	June 30, 2022											December 31, 2021
(U.S. Dollars, in thousands)	Level 1		Level 2			Level 3			Total			Total
Assets
Neo Medical convertible loan agreements	$	—	$	—		$	5,820		$	5,820		$	7,148
Neo Medical preferred equity securities		—		6,084			—			6,084			5,413
Bone Biologics equity securities		80		—			—			80			309
Other investments		—		—			1,666			1,666			1,505
Total	$	80	$	6,084		$	7,486		$	13,650		$	14,375
Liabilities
Spinal Kinetics contingent consideration	$	—	$	—		$	(986	)	$	(986	)	$	(17,200	)
Deferred compensation plan		—		(1,245	)		—			(1,245	)		(1,314	)
Total	$	—	$	(1,245	)	$	(986	)	$	(2,231	)	$	(18,514	)

Neo Medical Convertible Loan Agreements and Equity Investment

In October 2020, the Company purchased preferred equity securities of Neo Medical SA, a privately held Swiss-based company developing a new generation of products for spinal surgery ("Neo Medical"), for consideration of $5.0 million. The Company also entered into a Convertible Loan Agreement pursuant to which Orthofix loaned Neo Medical CHF 4.6 million, or $5.0 million at the date of issuance (the “Convertible Loan”). In October 2021, the Company entered into an additional Convertible Loan Agreement (the “Additional Convertible Loan”), pursuant to which the Company loaned Neo Medical an additional CHF 0.6 million, or $0.7 million as of the date of issuance.

The equity securities are recorded in other long-term assets and are considered an investment that does not have a readily determinable fair value. As such, the Company measures this investment at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

The table below presents a reconciliation of the beginning and ending balances of the Company’s investment in Neo Medical preferred equity securities:

(U.S. Dollars, in thousands)	2022		2021
Fair value of Neo Medical preferred equity securities at January 1	$	5,413	$	5,000
Conversion of loan into preferred equity securities		671		—
Fair value of Neo Medical preferred equity securities at June 30		6,084		5,000
Cumulative unrealized gain on Neo Medical preferred equity securities		413		—

The Company made an election to convert the Additional Convertible Loan into shares of Neo Medical’s preferred equity securities in January 2022. The remaining Convertible Loan is recorded in other long-term assets as an available for sale debt security as of June 30, 2022. The Convertible Loan is recorded at fair value, with applicable interest recorded in interest income. The fair value of the Convertible Loan is based upon significant unobservable inputs, including the use of option-pricing models, Monte Carlo simulations for certain periods, and a probability-weighted discounted cash flow model, requiring the Company to develop its own assumptions. Therefore, the Company categorized these investments as Level 3 financial assets.

Some of the more significant unobservable inputs used in the fair value measurement of the Convertible Loan include applicable discount rates, implied volatility, the likelihood and projected timing of repayment or conversion, and projected cash flows in support of the estimated enterprise value of Neo Medical. Holding other inputs constant, changes in these assumptions could result in a significant change in the fair value of the Convertible Loan. If the amortized cost of the Convertible Loan exceeds its estimated fair value, the security is deemed to be impaired, and must be evaluated for the recognition of a credit loss. As of June 30, 2022, the Company has not recognized any credit loss related to the Convertible Loan.

The following table provides a reconciliation of the beginning and ending balances of the Convertible Loans, measured at fair value using significant unobservable inputs (Level 3):

10

(U.S. Dollars, in thousands)	2022			2021
Fair value of Neo Medical Convertible Loans at January 1	$	7,148		$	7,160
Interest recognized in interest income, net		217			198
Foreign currency remeasurement recognized in other expense, net		(257	)		(230	)
Unrealized loss recognized in other comprehensive loss		(615	)		(628	)
Conversion of loan into preferred equity securities		(671	)		—
Fair value of Neo Medical Convertible Loans at June 30		5,820			6,500
Amortized cost basis of Neo Medical Convertible Loans at June 30		5,496			5,247

The following table provides quantitative information related to certain key assumptions utilized within the valuation as of June 30, 2022:

(U.S. Dollars, in thousands)	Fair Value as of  June 30, 2022		Unobservable inputs	Estimate
Neo Medical Convertible Loan	$	5,820	Cost of equity discount rate		17.0	%
			Implied volatility		73.4	%

Bone Biologics Equity Securities

The Company holds an investment in common stock of Bone Biologics Inc. (“Bone Biologics”, NASDAQ: BBLG), a developer of orthobiologic products. Changes in the fair value of the investment recorded during the six months ended June 30, 2022 and 2021, are shown in the table below:

(U.S. Dollars, in thousands)	2022			2021
Bone Biologics equity securities at January 1	$	309		$	—
Fair value adjustments recognized in other expense, net		(186	)		—
Proceeds from the disposition of equity securities		(42	)		—
Bone Biologics equity securities at June 30	$	80		$	—

Other investments

Other investments represent assets and investments recorded at fair value that are not deemed to be material for disclosure on an individual basis. The fair value of these assets are based upon significant unobservable inputs, such as probability-weighted discounted cash flow models, requiring the Company to develop its own assumptions. Therefore, the Company has categorized these assets as Level 3 financial assets. As of June 30, 2022, this balance was classified within other long-term assets.

Spinal Kinetics Contingent Consideration

The Company recognized a contingent consideration obligation in connection with the acquisition of Spinal Kinetics in 2018. The Spinal Kinetics contingent consideration consists of potential milestone payments of up to $60.0 million in cash. The milestone payments included (i) $15.0 million upon U.S. Food and Drug Administration (“FDA”) approval of the M6-C artificial cervical disc (the “FDA Milestone”) and (ii) revenue-based milestone payments of up to $45.0 million in connection with sales of the acquired artificial discs. To trigger the applicable payments, milestones must be achieved within five years of April 30, 2018. The FDA Milestone was achieved and paid in 2019 and a revenue-based milestone payment, totaling $15.0 million, was achieved and paid in 2021 upon meeting certain net sales targets.

The following table provides a reconciliation of the beginning and ending balances for the Spinal Kinetics contingent consideration measured at estimated fair value using significant unobservable inputs (Level 3). The $16.2 million decrease in fair value of the contingent consideration liability in 2022 reflects the lower likelihood of the Company achieving the revenue-based milestone prior to April 30, 2023.

(U.S. Dollars, in thousands)	2022			2021
Spinal Kinetics contingent consideration estimated fair value at January 1	$	17,200		$	35,400
Increase (decrease) in fair value recognized in acquisition-related amortization and remeasurement		(16,214	)		300
Payment made		—			(15,000	)
Spinal Kinetics contingent consideration estimated fair value at June 30	$	986		$	20,700

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The estimated fair value of the remaining Spinal Kinetics contingent consideration, attributable to a revenue-based milestone, was $1.0 million as of June 30, 2022. The estimated fair value reflects assumptions made by management as of June 30, 2022, such as the expected timing and volume of elective procedures and the impact of these procedures on future revenues. However, the actual amount ultimately paid, if achieved, could be higher or lower than the fair value of the remaining contingent consideration (ultimate payment will either be $30.0 million or the liability will be fully reversed if the milestone is not met within the required timeline). As of June 30, 2022, the Company has classified the $1.0 million liability within other current liabilities, as milestones must be achieved prior to April 30, 2023, to trigger payment. Any changes in fair value are recorded as an operating expense within acquisition-related amortization and remeasurement.

The Company estimated the fair value of the remaining potential revenue-based milestone payment using a Monte Carlo simulation and a discounted cash flow model. This fair value measurement is based on significant inputs that are unobservable in the market and thus represents a Level 3 measurement. The key assumptions in applying the valuation model include the Company’s forecasted future revenues for the Motion Preservation product line (which is derived from the acquired Spinal Kinetics business), the expected timing of payment, applicable discount rates applied, and assumptions for potential volatility of the Company’s forecasted revenue. Significant changes in these assumptions could result in a significantly higher or lower fair value.

The following table provides a range of key assumptions used within the valuation as of June 30, 2022:

(U.S. Dollars, in thousands)	Fair Value as of June 30, 2022		Valuation Technique	Unobservable inputs	Range
Spinal Kinetics contingent consideration	$	986	Discounted cash flow	Revenue discount rate	5.9% - 7.3%
				Payment discount rate	7.6% - 8.9%

7. Contingencies

In addition to the matters described below, in the normal course of its business, the Company is involved in various lawsuits from time to time and may be subject to certain other contingencies. The Company believes any losses related to these matters are individually and collectively immaterial as to a possible loss and range of loss.

Italian Medical Device Payback (“IMDP”)

In 2015, the Italian Parliament introduced rules for entities that supply goods and services to the Italian National Healthcare System. A key provision of the law is a ‘payback’ measure, requiring medical device companies in Italy to make payments to the Italian government if medical device expenditures exceed regional maximum ceilings. Companies are required to make payments equal to a percentage of expenditures exceeding maximum regional caps. There is considerable uncertainty about how the law will operate and what the exact timeline is for finalization. The Company’s current assessment of the IMDP involves significant judgment regarding the expected scope and actual implementation terms of the measure as the latter have not been clarified to date by Italian authorities. The Company accounts for the estimated cost of the IMDP as sales and marketing expense and periodically reassesses this liability based upon current facts and circumstances. As a result, the Company recorded expense of $0.3 million and $0.6 million for the three and six months ended June 30, 2022, and expense of $0.1 million and $0.5 million for the three and six months ended June 30, 2021, respectively. As of June 30, 2022, the Company has accrued $5.4 million related to the IMDP, which it has classified within other long-term liabilities; however, the actual liability could be higher or lower than the amount accrued once the law has been clarified by the Italian authorities.

8. Accumulated other comprehensive loss

The components of and changes in accumulated other comprehensive loss were as follows:

(U.S. Dollars, in thousands)	Currency Translation Adjustments			Neo Medical Convertible Loans			Other Investments		Accumulated Other Comprehensive Loss
Balance at December 31, 2021	$	(711	)	$	711		$	—	$	—
Other comprehensive loss		(2,308	)		(615	)		102		(2,821	)
Income taxes		—			—			—		—
Balance at June 30, 2022	$	(3,019	)	$	96		$	102	$	(2,821	)

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9. Revenue recognition and accounts receivable

Revenue Recognition

The Company has two reporting segments, which consist of Global Spine and Global Orthopedics. Within the Global Spine reporting segment there are three product categories: Bone Growth Therapies, Spinal Implants, and Biologics.

The table below presents net sales by major product category by reporting segment:

	Three Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		Change
Bone Growth Therapies	$	47,765	$	49,706		-3.9	%
Spinal Implants		28,222		30,092		-6.2	%
Biologics		14,795		14,852		-0.4	%
Global Spine		90,782		94,650		-4.1	%
Global Orthopedics		27,288		26,744		2.0	%
Net sales	$	118,070	$	121,394		-2.7	%

	Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		Change
Bone Growth Therapies	$	89,713	$	92,653		-3.2	%
Spinal Implants		54,837		55,793		-1.7	%
Biologics		28,887		28,544		1.2	%
Global Spine		173,437		176,990		-2.0	%
Global Orthopedics		51,051		49,997		2.1	%
Net sales	$	224,488	$	226,987		-1.1	%

Product Sales and Marketing Service Fees

The table below presents product sales and marketing service fees, which are both components of net sales:

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Product sales	$	103,559	$	106,947	$	196,167	$	199,210
Marketing service fees		14,511		14,447		28,321		27,777
Net sales	$	118,070	$	121,394	$	224,488	$	226,987

Product sales primarily consist of the sale of bone growth therapies devices, spinal implants products, and orthopedics products. Marketing service fees are received from MTF Biologics based on total sales of biologics tissues and relate solely to the Global Spine reporting segment.

Accounts receivable and related allowances

The following table provides a detail of changes in the Company’s allowance for expected credit losses for the three and six months ended June 30, 2022 and 2021:

(U.S. Dollars, in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Allowance for expected credit losses beginning balance	$	5,389		$	4,506		$	4,944		$	4,848
Current period provision (recovery) for expected credit losses		539			(32	)		1,139			(214	)
Write-offs charged against the allowance and other		(142	)		(34	)		(246	)		(80	)
Effect of changes in foreign exchange rates		(197	)		31			(248	)		(83	)
Allowance for expected credit losses ending balance	$	5,589		$	4,471		$	5,589		$	4,471

Contract Liabilities

The Company’s contract liabilities largely related to a prepayment of $13.9 million received in April 2020 from the Centers for Medicare and Medicaid Service ("CMS") as part of the Accelerated and Advance Payment Program of the Coronavirus Aid, Relief, and Economic Security Act. The remaining balance of the contract liability was recouped by CMS during the second quarter of 2022.

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The following table provides a detail of changes in the Company’s contract liability associated with the Accelerated and Advanced Payment Program for the three and six months ended June 30, 2022 and 2021:

(U.S. Dollars, in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Contract liability beginning balance	$	1,396		$	13,851		$	4,791		$	13,851
Recoupment recognized in net sales		(1,396	)		(2,880	)		(4,791	)		(2,880	)
Contract liability ending balance	$	—		$	10,971		$	—		$	10,971

Other Contract Assets

The Company’s contract assets, excluding accounts receivable (“Other Contract Assets”), largely consist of payments made to certain distributors to obtain contracts, gain access to customers in certain territories, and to provide the benefit of the exclusive distribution of the Company's products. Other Contract Assets are included in other long-term assets or other current assets, dependent upon the original term of the related agreement, and totaled $1.0 million and $1.4 million as of June 30, 2022, and December 31, 2021, respectively.

10. Business segment information

The Company has two reporting segments: Global Spine and Global Orthopedics. The primary metric used in managing the Company is earnings before interest, tax, depreciation, and amortization (“EBITDA”). Corporate activities comprise operating expenses and activities not directly identifiable within the two reporting segments, such as human resources, finance, legal, and information technology functions. The table below presents EBITDA by reporting segment:

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			2022			2021
Global Spine	$	20,766		$	19,032		$	36,659		$	30,927
Global Orthopedics		(2,422	)		1,775			(5,518	)		(454	)
Corporate		(8,383	)		(8,030	)		(17,678	)		(15,859	)
Total EBITDA	$	9,961		$	12,777		$	13,463		$	14,614
Depreciation and amortization		(6,512	)		(7,559	)		(14,028	)		(15,002	)
Interest expense, net		(407	)		(550	)		(782	)		(967	)
Income (loss) before income taxes	$	3,042		$	4,668		$	(1,347	)	$	(1,355	)

Geographical information

The table below presents net sales by geographic destination for each reporting segment and for the consolidated Company:

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Global Spine
U.S.	$	85,899	$	89,077	$	162,965	$	166,832
International		4,883		5,573	$	10,472		10,158
Total Global Spine		90,782		94,650		173,437		176,990
Global Orthopedics
U.S.		6,903		6,156		12,230		11,747
International		20,385		20,588		38,821		38,250
Total Global Orthopedics		27,288		26,744		51,051		49,997
Consolidated
U.S.		92,802		95,233		175,195		178,579
International		25,268		26,161		49,293		48,408
Net sales	$	118,070	$	121,394	$	224,488	$	226,987

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11. Acquisition-related amortization and remeasurement

Acquisition-related amortization and remeasurement consists of (i) amortization related to intangible assets acquired through business combinations or asset acquisitions, (ii) remeasurement of any related contingent consideration arrangements, and (iii) recognized costs associated with acquired in-process research and development (“IPR&D”) assets, which are recognized immediately upon acquisition. Components of acquisition-related amortization and remeasurement are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			2022			2021
Amortization of acquired intangibles	$	2,051		$	1,969		$	4,052		$	3,938
Changes in fair value of contingent consideration		(10,714	)		(1,575	)		(16,214	)		(75	)
Acquired IPR&D		—			500			—			1,500
Total	$	(8,663	)	$	894		$	(12,162	)	$	5,363

12. Share-based compensation

Components of share-based compensation expense are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Cost of sales	$	205	$	209	$	416	$	387
Sales and marketing		1,000		957		1,981		1,674
General and administrative		2,958		2,607		6,176		5,136
Research and development		297		134		219		431
Total	$	4,460	$	3,907	$	8,792	$	7,628

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Stock options	$	205	$	398	$	564	$	1,059
Time-based restricted stock awards and units		2,410		2,019		4,580		3,746
Market-based / performance-based restricted stock units		1,497		1,053		2,941		1,950
Stock purchase plan		348		437		707		873
Total	$	4,460	$	3,907	$	8,792	$	7,628

During the three months ended June 30, 2022 and 2021, the Company issued 157,979 and 194,745 shares, respectively, of common stock related to stock purchase plan issuances, stock option exercises, and the vesting of restricted stock awards and units. During the six months ended June 30, 2022 and 2021, the Company issued 162,864 and 245,255 shares, respectively, of common stock related to stock purchase plan issuances, stock option exercises, and the vesting of restricted stock awards and units.

13. Income taxes

Generally, income tax provisions for interim periods are based on an estimated annual income tax rate, adjusted for discrete tax items, with any changes affecting the estimated annual effective tax rate recorded in the interim period in which the change occurs. Due to the impact of losses not benefitted by the Company’s U.S. and Italian operations, the Company determined the estimated annual effective tax rate method would not provide a reliable estimate of the Company’s overall annual effective tax rate. As such, the Company has calculated the tax provision using the actual effective rate for the three and six months ended June 30, 2022. Due to the impact of temporary differences on the U.S. current tax liability without any deferred tax benefit, the actual effective rate may vary in future quarters.

For the three months ended June 30, 2022 and 2021, the effective tax rate was 18.2% and 48.2%, respectively. For the six months ended June 30, 2022 and 2021, the effective tax rate was (46.3%) and (150.6%), respectively. The primary factors affecting the Company’s effective tax rate for the three and six months ended June 30, 2022, were the changes in fair value of the Spinal Kinetics contingent consideration, which is not deductible for tax purposes, and losses not benefited in the U.S. and Italy.

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14. Earnings per share (“EPS”)

The Company uses the two-class method of computing basic EPS due to the existence of non-vested restricted stock awards with nonforfeitable rights to dividends or dividend equivalents (referred to as participating securities). For the three and six months ended June 30, 2022, no significant adjustments were made to net income for purposes of calculating basic and diluted EPS.

The following is a reconciliation of the weighted average shares used in diluted EPS computations.

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2022		2021		2022		2021
Weighted average common shares-basic		20,031		19,651		19,965		19,575
Effect of dilutive securities
Unexercised stock options and stock purchase plan		23		171		—		—
Unvested restricted stock units		59		116		—		—
Weighted average common shares-diluted		20,113		19,938		19,965		19,575

There were 1.6 million and 0.8 million weighted average outstanding stock options and restricted stock units not included in the diluted EPS computation for the three months ended June 30, 2022 and 2021, respectively, and 1.6 million and 1.4 million weighted average outstanding stock options and restricted stock units not included in the diluted EPS computation for the six months ended June 30, 2022 and 2021, respectively, because inclusion of these awards was anti-dilutive or, for performance-based and market-based restricted stock units, all necessary conditions had not been satisfied by the end of the respective period.

15. Subsequent Events

On July 30, 2022, the Company entered into a long-term strategic License and Distribution Agreement (the “Agreement”) with CGBio Co., Ltd. (“CGBio”), a developer of innovative, synthetic bone grafts. The Agreement grants Orthofix the exclusive right to conduct pre-clinical and clinical studies, commercialize, promote, market, and sell the Novosis™ recombinant human bone morphogenetic protein-2 (rhBMP-2) bone growth materials and other future tissue regenerative solutions in the U.S. and Canada. As consideration, the Company will pay CGBio an upfront payment of $1.4 million with additional payments contingent upon the achievement of specified development milestones.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of Orthofix Medical Inc.’s (sometimes referred to as “we,” “us” or “our”) financial condition and results of our operations should be read in conjunction with the “Forward-Looking Statements” and our condensed consolidated financial statements and related notes thereto appearing elsewhere in this Form 10-Q.

Executive Summary

We are a global medical device company with a spine and orthopedics focus. Our mission is to deliver innovative, quality-driven solutions as we partner with health care professionals to improve patient mobility. Headquartered in Lewisville, Texas, our spine and orthopedic products are distributed in more than 60 countries via our sales representatives and distributors. For more information, please visit www.Orthofix.com.

Notable financial metrics in the second quarter of 2022 and recent achievements include the following:

•Net sales of $118.1 million, a decrease of 2.7% on a reported basis and flat on a constant currency basis over prior year

•Global Orthopedics net sales growth of 11% on a constant currency basis driven by new products and channel investments

•Executed partnership with CGBio to commercialize Novosis rhBMP-2 growth factor in the U.S. and Canada

•Limited launch of Virtuos Lyograft, a first of its kind, shelf-stable and complete autograft substitute

•Entered into a licensing partnership with LimaCorporate S.p.A. to provide a novel solution for patients with chronic high dislocation of the hip
 

Results of Operations

The following table provides certain items in our condensed consolidated statements of operations as a percent of net sales:

	Three Months Ended June 30,					Six Months Ended June 30,
	2022 (%)			2021 (%)		2022 (%)			2021 (%)
Net sales		100.0			100.0		100.0			100.0
Cost of sales		26.8			22.6		26.7			23.5
Gross profit		73.2			77.4		73.3			76.5
Sales and marketing		50.7			47.2		50.8			47.6
General and administrative		13.4			15.1		15.7			15.3
Research and development		10.8			10.8		10.7			10.6
Acquisition-related amortization and remeasurement		(7.3	)		0.8		(5.5	)		2.4
Operating income		5.6			3.5		1.6			0.6
Net income (loss)		2.1			2.0		(0.9	)		(1.5	)

Net Sales by Product Category and Reporting Segment

The following tables provide net sales by major product category by reporting segment:

	Three Months Ended June 30,				Percentage Change
(U.S. Dollars, in thousands)	2022		2021		Reported			Constant Currency
Bone Growth Therapies	$	47,765	$	49,706		-3.9	%		-3.9	%
Spinal Implants		28,222		30,092		-6.2	%		-5.4	%
Biologics		14,795		14,852		-0.4	%		-0.4	%
Global Spine		90,782		94,650		-4.1	%		-3.8	%
Global Orthopedics		27,288		26,744		2.0	%		11.4	%
Net sales	$	118,070	$	121,394		-2.7	%		-0.5	%

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	Six Months Ended June 30,				Percentage Change
(U.S. Dollars, in thousands)	2022		2021		Reported			Constant Currency
Bone Growth Therapies	$	89,713	$	92,653		-3.2	%		-3.2	%
Spinal Implants		54,837		55,793		-1.7	%		-1.0	%
Biologics		28,887		28,544		1.2	%		1.2	%
Global Spine		173,437		176,990		-2.0	%		-1.8	%
Global Orthopedics		51,051		49,997		2.1	%		9.4	%
Net sales	$	224,488	$	226,987		-1.1	%		0.7	%

Global Spine

Global Spine offers the following products categories:

-Bone Growth Therapies, which manufactures, distributes, sells, and provides support services for market leading devices that enhance bone fusion. Bone Growth Therapies uses distributors and sales representatives to sell its devices and provide associated services to hospitals, healthcare providers, and patients.

-Spinal Implants, which designs, develops and markets a broad portfolio of motion preservation and spine fixation implant products used in surgical procedures of the spine. Spinal Implants distributes its products globally through a network of distributors and sales representatives to sell spine products to hospitals and healthcare providers.

-Biologics, which provides a portfolio of regenerative products and tissue forms that allow physicians to successfully treat a variety of spinal and orthopedic conditions. Biologics markets its tissues to hospitals and healthcare providers, primarily in the U.S., through a network of employed and independent sales representatives.

Three months ended June 30, 2022 compared to 2021

Net sales decreased $3.9 million or 4.1%

•Bone Growth Therapies net sales decreased $1.9 million or 3.9%, largely as a result of the continued staffing issues and patient caution to seek elective surgery, including complex procedures

•Spinal Implants net sales decreased $1.9 million or 6.2%, primarily due to lower-than-expected complex procedure case volumes in the U.S. for spine fixation and increasing global competitive headwinds in motion preservation

•Biologics net sales were relatively flat as we saw positive trends from recent product introductions, such as FiberFuse, and from new distributors added in the last 12 months, which offset some of the macro headwinds impacting complex elective procedures

Six months ended June 30, 2022 compared to 2021

Net sales decreased $3.6 million or 2.0%

•Bone Growth Therapies net sales decreased $2.9 million or 3.2%, primarily driven by a continued slowdown in complex procedure volumes due to hospital restrictions at the beginning of the year and continued staffing issues, which impacted complex spine procedures

•Spinal Implants net sales decreased $1.0 million or 1.7%, primarily due to lower-than-expected complex procedure case volumes in the U.S. for spine fixation and increasing global competitive headwinds in motion preservation, with these movements partially offset by growth from certain international distributors at the beginning of the year

•Biologics net sales increased $0.3 million or 1.2%, primarily attributable to sales from our new biologics offerings, such as FiberFuse, as we continue to broaden our Biologics portfolio

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Global Orthopedics

Global Orthopedics offers products and solutions that allow physicians to successfully treat a variety of orthopedic conditions specifically related to limb reconstruction and deformity correction unrelated to the spine. Global Orthopedics distributes its products globally through a network of distributors and sales representatives to sell orthopedic products to hospitals and healthcare providers.

Three months ended June 30, 2022 compared to 2021

Net sales increased $0.5 million or 2.0%

•Growth in international geographies on a constant currency basis driven by the positive impacts of recent sales force investments and increased orders from international distributors

•In the U.S., we have started to see the positive benefits of the new sales leadership team put in place over the last 12 months

•Partially offset by a decrease of $2.5 million due to changes in foreign currency exchange rates, which had a negative impact on net sales in 2022

Six months ended June 30, 2022 compared to 2021

Net sales increased $1.1 million or 2.1%

•Growth in international geographies on a constant currency basis driven by the positive impacts of recent sales force investments and increased orders from international distributors

•In the U.S., we have started to see the positive benefits of the new sales leadership team put in place over the last 12 months

•Partially offset by a decrease of $3.7 million due to changes in foreign currency exchange rates, which had a negative impact on net sales in 2022

Gross Profit

	Three Months Ended June 30,									Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			% Change			2022			2021			% Change
Net sales	$	118,070		$	121,394			(2.7	%)	$	224,488		$	226,987			(1.1	%)
Cost of sales		31,600			27,439			15.2	%		59,918			53,353			12.3	%
Gross profit	$	86,470		$	93,955			(8.0	%)	$	164,570		$	173,634			(5.2	%)
Gross margin		73.2	%		77.4	%		(4.2	%)		73.3	%		76.5	%		-3.2	%

Three months ended June 30, 2022 compared to 2021

Gross profit decreased $7.5 million

•Decrease in gross profit primarily driven by changes in our sales mix as well as increased inventory reserves related to set builds for an expanding sales force and increased safety stock requirements driven by the risk of global supply chain disruption

•Also unfavorably impacted by changes in foreign currency exchange rates, which had a negative impact on gross profit

Six months ended June 30, 2022 compared to 2021

Gross profit decreased $9.1 million

•Decrease in gross profit primarily driven by changes in our sales mix as well as increased inventory reserves related to set builds for an expanding sales force and increased safety stock requirements

•Increased component costs resulting from global supply chain disruptions within our Bone Growth Therapies product category

•Also unfavorably impacted by changes in foreign currency exchange rates, which had a negative impact on gross profit

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Sales and Marketing Expense

	Three Months Ended June 30,									Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			% Change			2022			2021			% Change
Sales and marketing	$	59,888		$	57,338			4.4	%	$	114,025		$	108,123			5.5	%
As a percentage of net sales		50.7	%		47.2	%		3.5	%		50.8	%		47.6	%		3.2	%

Three months ended June 30, 2022 compared to 2021

Sales and marketing expense increased $2.6 million

•Increase of $2.2 million largely the result of significant increases in travel, sales events, and surgeon and sales education trainings as in-person events have largely resumed in 2022

•Increase of $0.4 million due to an investment in direct reps and sales management

Six months ended June 30, 2022 compared to 2021

Sales and marketing expense increased $5.9 million

•Increase of $4.2 million largely the result of significant increases in travel, sales events, and surgeon and sales education trainings as in-person events have largely resumed in 2022

•Increase also attributable to the hiring of additional sales and marketing headcount to support growth and initiatives across all product lines

General and Administrative Expense

	Three Months Ended June 30,									Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			% Change			2022			2021			% Change
General and administrative	$	15,846		$	18,335			(13.6	%)	$	35,174		$	34,779			1.1	%
As a percentage of net sales		13.4	%		15.1	%		(1.7	%)		15.7	%		15.3	%		0.4	%

Three months ended June 30, 2022 compared to 2021

General and administrative expense decreased $2.5 million

•Decrease of $0.9 million in professional fees as we reallocate capital into product innovation and differentiation as well as commercial sales expansion

•Decrease of $0.9 million in certain compensation costs, partly stemming from the departure of certain former executives and from macroeconomic pressures on certain variable compensation expenses

•Decrease of $0.3 million in depreciation and amortization

Six months ended June 30, 2022 compared to 2021

General and administrative expense increased $0.4 million

•Increase of $1.0 million in share-based compensation expenses as the tenure of our new management team increases

•Partially offset by a decrease of $0.5 million associated with succession and transition costs related to former executives in 2021 that did not recur in 2022

Research and Development Expense

	Three Months Ended June 30,									Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			% Change			2022			2021			% Change
Research and development	$	12,758		$	13,121			(2.8	%)	$	23,970		$	24,018			(0.2	%)
As a percentage of net sales		10.8	%		10.8	%		0.0	%		10.7	%		10.6	%		0.1	%

Three months ended June 30, 2022 compared to 2021

Research and development expense decreased $0.4 million

•Decrease of $0.8 million related to the attainment of a development milestone with MTF Biologics achieved in 2021 that did not recur in the second quarter of 2022

•Partially offset by an increase related to costs to comply with the European Union Medical Device Regulations and increases in new product development expenses

20

•Further offset by an increase in costs associated with our ongoing 2-level M6-C artificial cervical disc clinical study

Six months ended June 30, 2022 compared to 2021

Research and development expense remained relatively flat

•Decrease of $0.8 million related to the attainment of a development milestone with MTF Biologics achieved in 2021 that did not recur in 2022

•Partially offset by an increase in expense of $0.5 million related to costs to comply with the European Union Medical Device Regulations

•Further offset by an increase in costs associated with our ongoing 2-level M6-C artificial cervical disc clinical study

Acquisition-related Amortization and Remeasurement

	Three Months Ended June 30,									Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			% Change			2022			2021			% Change
Acquisition-related amortization and remeasurement	$	(8,663	)	$	894			(1069.0	%)	$	(12,162	)	$	5,363			(326.8	%)
As a percentage of net sales		(7.3	%)		0.8	%		(8.1	%)		(5.4	%)		2.4	%		(7.8	%)

Acquisition-related amortization and remeasurement consists of (i) amortization related to intangible assets acquired through business combinations or asset acquisitions, (ii) remeasurement of any related contingent consideration arrangement, and (iii) recognized costs associated with acquired in-process research and development assets, which are recognized immediately upon acquisition.

Three months ended June 30, 2022 compared to 2021

Acquisition-related amortization and remeasurement decreased $9.6 million

•Decrease of $9.5 million related to the remeasurement of potential revenue-based milestone payments associated with the Spinal Kinetics acquisition reflects the lower likelihood of the Company achieving the remaining revenue-based milestone prior to April 30, 2023 based on current net sales trends

•Decrease of $0.5 million in costs associated with acquired in-process research and development assets, which were recognized immediately upon acquisition in the prior year period

•Partially offset by an increase of $0.4 million associated with the reassessment of contingent consideration associated with the acquisition of a former distributor

Six months ended June 30, 2022 compared to 2021

Acquisition-related amortization and remeasurement decreased $17.5 million

•Decrease of $16.5 million related to the remeasurement of potential revenue-based milestone payments associated with the Spinal Kinetics acquisition reflects the lower likelihood of the Company achieving the remaining revenue-based milestone prior to April 30, 2023

•Decrease of $1.5 million in costs associated with acquired in-process research and development assets, which were recognized immediately upon acquisition in the prior year period

•Partially offset by an increase of $0.4 million associated with the reassessment of contingent consideration associated with the acquisition of a former distributor

Non-operating Income and Expense

	Three Months Ended June 30,									Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			% Change			2022			2021			% Change
Interest expense, net	$	(407	)	$	(550	)		(26.0	%)	$	(782	)	$	(967	)		(19.1	%)
Other expense, net		(3,192	)		951			(435.6	%)		(4,128	)		(1,739	)		137.4	%

Three months ended June 30, 2022 compared to 2021

Other expense, net decreased $4.1 million

21

•Decrease primarily associated with changes in foreign currency exchange rates and the resulting gains and/or losses recorded in each period, with the change primarily attributable to the strengthening of the U.S. Dollar against the Euro in 2022

Six months ended June 30, 2022 compared to 2021

Other expense, net decreased $2.4 million

•Decrease primarily associated with changes in foreign currency exchange rates and the resulting gains and/or losses recorded in each period, with the change primarily attributable to the strengthening of the U.S. Dollar against the Euro in 2022

Income Taxes

	Three Months Ended June 30,									Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			% Change			2022			2021			% Change
Income tax expense	$	553		$	2,248			(75.4	%)	$	624		$	2,041			(69.4	%)
Effective tax rate		18.2	%		48.2	%		(30.0	%)		(46.3	%)		(150.6	%)		104.3	%

Three months ended June 30, 2022 compared to 2021

•Decrease in tax expense compared to the prior year period was primarily a result of changes in valuation allowances in the U.S. and Italy, as well as changes in the fair value of the Spinal Kinetics contingent consideration liability

Six months ended June 30, 2022 compared to 2021

•Decrease in tax expense compared to the prior year period was primarily a result of changes in valuation allowances in the U.S. and Italy, as well as changes in the fair value of the Spinal Kinetics contingent consideration liability

Segment Review

Our business is managed through two reporting segments: Global Spine and Global Orthopedics. The primary metric used in managing the business by segment is EBITDA (which is described further in Note 10 to the Notes to the Unaudited Condensed Consolidated Financial Statements contained herein). The following table presents EBITDA by segment and reconciles consolidated EBITDA to income (loss) before income taxes:

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			2022			2021
Global Spine	$	20,766		$	19,032		$	36,659		$	30,927
Global Orthopedics		(2,422	)		1,775			(5,518	)		(454	)
Corporate		(8,383	)		(8,030	)		(17,678	)		(15,859	)
Total EBITDA	$	9,961		$	12,777		$	13,463		$	14,614
Depreciation and amortization		(6,512	)		(7,559	)		(14,028	)		(15,002	)
Interest expense, net		(407	)		(550	)		(782	)		(967	)
Income (loss) before income taxes	$	3,042		$	4,668		$	(1,347	)	$	(1,355	)

Liquidity and Capital Resources

Cash and cash equivalents at June 30, 2022, totaled $59.5 million compared to $87.8 million at December 31, 2021.

	Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			Change
Net cash from operating activities	$	(12,622	)	$	264		$	(12,886	)
Net cash from investing activities		(13,161	)		(9,792	)		(3,369	)
Net cash from financing activities		(1,324	)		(6,528	)		5,204
Effect of exchange rate changes on cash		(1,204	)		(243	)		(961	)
Net change in cash and cash equivalents	$	(28,311	)	$	(16,299	)	$	(12,012	)

22

The following table presents free cash flow, a non-GAAP financial measure, which is calculated by subtracting capital expenditures from net cash from operating activities:

	Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			Change
Net cash from operating activities	$	(12,622	)	$	264		$	(12,886	)
Capital expenditures		(11,703	)		(9,792	)		(1,911	)
Free cash flow	$	(24,325	)	$	(9,528	)	$	(14,797	)

Operating Activities

Cash flows from operating activities decreased $12.9 million

•Increase in net income of $1.4 million

•Net decrease of $16.9 million for non-cash gains and losses, largely related to changes in fair value of contingent consideration

•Net increase of $2.6 million relating to changes in working capital accounts, primarily attributable to changes in inventories, accounts payable, prepaid expenses and other current assets, and the payment of a contingent consideration milestone in the prior year
 

Two of our primary working capital accounts are accounts receivable and inventory. Days sales in receivables were 59 days at June 30, 2022, compared to 55 days at June 30, 2021. Inventory turns remained consistent at 1.3 times as of June 30, 2022 and June 30, 2021.

Investing Activities

Cash flows from investing activities decreased $3.4 million

•Decrease of $1.8 million associated with capital expenditures compared to the prior year period

•Decrease of $1.5 million associated with the payment of a contingent consideration milestone associated related to an asset acquisition in 2022

Financing Activities

Cash flows from financing activities increased $5.2 million

•Increase of $8.4 million associated with cash paid in 2021 for the achievement of a revenue-based milestone associated with the Spinal Kinetics acquisition; the milestone payment totaled $15.0 million with a portion of the payment reflected in both operating and financing activities.

•Decrease of $2.0 million related to the conclusion of the FITBONE Contract Manufacturing and Supply Agreement with Wittenstein

•Decrease in net proceeds of $1.7 million from the issuance of common shares, primarily related to the exercise of stock options in the prior year period

•Partially offset by an increase of $0.7 million attributable to other financing activities

Credit Facilities

As of June 30, 2022, we had no borrowings outstanding under our secured revolving credit facility. In addition, we had no borrowings outstanding under our available lines of credit in Italy, which provide up to an aggregate amount of €5.5 million ($5.8 million). We were in compliance with all required financial covenants as of June 30, 2022.

Other

For information regarding contingencies, see Note 7 to the Notes to the Unaudited Condensed Consolidated Financial Statements contained herein.

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The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)

In April 2020, we received $13.9 million in funds from the Centers for Medicare and Medicaid Service ("CMS") Accelerated and Advance Payment Program under the CARES Act. Recoupment of amounts received under the CMS Accelerated and Advance Payment Program was completed in the second quarter of 2022.

Spinal Kinetics Contingent Consideration

As part of the consideration for the Spinal Kinetics acquisition, we agreed to make contingent milestone payments of up to $60.0 million. One milestone payment, which was for $15.0 million, became due upon FDA approval of Spinal Kinetics’ M6-C artificial cervical disc (the “FDA Milestone”). The FDA Milestone was achieved and paid in 2019. A revenue-based milestone payment, totaling $15.0 million, was achieved and paid in 2021 upon meeting certain net sales targets.

The remaining milestone payment is a revenue-based milestone payment of $30.0 million in connection with future sales of the acquired artificial discs. The fair value of the contingent consideration arrangement as of June 30, 2022, was $1.0 million; however, the actual amount ultimately paid, if achieved, could be higher or lower than the fair value of the contingent consideration (ultimate payment will either be $30.0 million or the liability will be fully reversed if the milestone is not met within the required timeline). For additional discussion of this matter, see Note 6 of the Notes to the Unaudited Condensed Consolidated Financial Statements.

Neo Medical Convertible Loan

In October 2020, we entered into a Convertible Loan Agreement (the “Convertible Loan”) with Neo Medical SA, a privately held Swiss-based Medtech company (“Neo Medical”), whereby we loaned CHF 4.6 million ($5.0 million as of the issuance date) to Neo Medical. The loan bears interest at 8.0%, with interest due semi-annually. The Convertible Loan matures in October 2024; however, if a change in control of Neo Medical occurs prior to maturity, the Convertible Loan shall become immediately due upon such event.

Related Party Transaction

In February 2021, we entered into a technology assignment and royalty agreement with a medical device technology company partially owned and controlled by the wife of President and Chief Executive Officer, Jon Serbousek, whereby we acquired the intellectual property rights to certain assets for consideration of up to $10.0 million. Consideration was comprised of $1.0 million due at signing and $9.0 million in contingent consideration, dependent upon multiple milestones, such as receipt of 510(k) clearance or the attainment of certain net sales targets. None of the contingent consideration has been achieved as of June 30, 2022.

IGEA S.p.A Exclusive License and Distribution Agreement

In April 2021, we entered into an Exclusive License and Distribution Agreement (the “License Agreement”) with IGEA S.p.A (“IGEA”), an Italian manufacturer and distributor of bone and cartilage stimulation systems. Per the terms of the License Agreement, we have the exclusive right to sell IGEA products in the U.S. and Canada. As consideration for the License Agreement, we agreed to pay up to $4.0 million, of which $0.5 million was paid in the second quarter of 2021, with certain payments contingent upon achieving an FDA milestone. We received FDA approval for the AccelStim device in May 2022, triggering an obligation to pay the remaining $3.5 million of consideration, of which $1.5 million was paid as of June 30, 2022. Of the remaining $2.0 million obligation, $1.0 million, which is due to be paid on the first anniversary of FDA approval, is classified within other current liabilities. The remaining $1.0 million, which is due to be paid on the second anniversary of FDA approval, is classified within other long-term liabilities. The License Agreement also includes certain minimum purchase requirements.

CGBio Co., Ltd. Exclusive License and Distribution Agreement

On July 30, 2022, we entered into a long-term strategic License and Distribution Agreement (the “Agreement”) with CGBio Co., Ltd. (“CGBio”), a developer of innovative, synthetic bone grafts. The Agreement grants us the exclusive right to conduct pre-clinical and clinical studies, commercialize, promote, market, and sell the Novosis™ recombinant human bone morphogenetic protein-2 (rhBMP-2) bone growth materials and other future tissue regenerative solutions in the U.S. and Canada. As consideration, we will pay CGBio an upfront payment of $1.4 million with additional payments contingent upon the achievement of specified development milestones.

Off-balance Sheet Arrangements

As of June 30, 2022, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, cash flows, liquidity, capital expenditures or capital resources that are material to investors.

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Contractual Obligations

There have been no material changes in any of our material contractual obligations as disclosed in our Form 10-K for the year ended December 31, 2021.

Critical Accounting Estimates

Our discussion of operating results is based upon the condensed consolidated financial statements and accompanying notes. The preparation of these statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our critical accounting estimates are detailed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes to our critical accounting estimates.

Recently Issued Accounting Pronouncements

See Note 2 of the Notes to the Unaudited Condensed Consolidated Financial Statements for detailed information regarding the status of recently issued or adopted accounting pronouncements. As of June 30, 2022, we do not expect any of the issued Accounting Standards Updates to materially affect our condensed consolidated financial statements upon adoption.

Non-GAAP Financial Measures

We believe that providing non-GAAP financial measures that exclude certain items provides investors with greater transparency to the information used by senior management in its financial and operational decision-making. We believe it is important to provide investors with the same non-GAAP metrics used to supplement information regarding the performance and underlying trends of our business operations to facilitate comparisons to historical operating results and internally evaluate the effectiveness of our operating strategies. Disclosure of these non-GAAP financial measures also facilitates comparisons of our underlying operating performance with other companies in the industry that also supplement their GAAP results with non-GAAP financial measures.

The non-GAAP financial measures used in this filing may have limitations as analytical tools, and should not be considered in isolation or as a replacement for GAAP financial measures. Some of the limitations associated with the use of these non-GAAP financial measures are that they exclude items that reflect an economic cost that can have a material effect on cash flows.

Constant Currency

Constant currency is calculated by using foreign currency rates from the comparable, prior-year period, to present net sales at comparable rates. Constant currency can be presented for numerous GAAP measures, but is most commonly used by management to analyze net sales without the impact of changes in foreign currency rates.

EBITDA

EBITDA is a non-GAAP metric defined as earnings before interest income (expense), income taxes, depreciation, and amortization. EBITDA is the primary metric used by our Chief Operating Decision Maker in managing the business.

Free Cash Flow

Free cash flow is calculated by subtracting capital expenditures from net cash from operating activities. Management uses free cash flow as an important indicator of how much cash is generated or used by our normal business operations, including capital expenditures. Management uses free cash flow as a measure of progress on its capital efficiency and cash flow initiatives.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our market risks as disclosed in our Form 10-K for the year ended December 31, 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) designed to provide reasonable assurance that the information required to be disclosed in reports filed or submitted under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. These include controls and procedures designed to ensure that this information is accumulated and communicated to management, including our President

25

and Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management, with the participation of the President and Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2022. Based on this evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2022.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting, known to the President and Chief Executive Officer or the Chief Financial Officer that occurred for the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

26

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding legal proceedings, see Note 7 to the Notes to the Unaudited Condensed Consolidated Financial Statements contained herein, which is incorporated by reference into this Part II, Item 1.

Item 1A. Risk Factors

The following risk factors supplement and should be read in conjunction with those contained in the risk factors disclosed in the “Risk Factors” section of our Form 10-K for the year ended December 31, 2021, except as follows.

The conflict between Russia and Ukraine may continue to cause global economic instability and potentially disrupt supply chains.
 

In February 2022, Russia unlawfully invaded Ukraine, creating an ongoing humanitarian and global security crisis. In response, the U.S. and many other countries have imposed robust sanctions on Russia and may impose additional sanctions in the future. The ongoing invasion has caused significant damage and disruption to various aspects of the global economy. We have never conducted any meaningful business within Russia, and do not believe that the invasion will have material direct effects on our business or operations. However, we cannot predict the broader and longer-term consequences of this conflict or the sanctions imposed in response, and such consequences could include, among other things, general disruptions to global finance markets, exchange rates, and worldwide supply chains. Geopolitical instability and uncertainty resulting from the invasion could potentially have a negative impact on our ability to sell to, ship products to, collect payments from, and support customers in certain regions based on trade restrictions, embargoes and export control law restrictions, and logistics restrictions. These considerations could adversely affect our costs, risks, and efficiencies related to our supply chain and logistics. The potential effects of the conflict between Russia and Ukraine also could affect many of the other risk factors described in Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We have not made any repurchases of our common stock during the second quarter of 2022.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

There are no matters to be reported under this heading.

27

Item 6. Exhibits

31.1*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1*	Section 1350 Certifications of each of the Chief Executive Officer and Chief Financial Officer.
101.INS*	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* Filed herewith.

28

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ORTHOFIX MEDICAL INC.
Date: August 5, 2022	By:	/s/ JON SERBOUSEK
	Name:	Jon Serbousek
	Title:	President and Chief Executive Officer, Director
Date: August 5, 2022	By:	/s/ DOUG RICE
	Name:	Doug Rice
	Title:	Chief Financial Officer

29

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jon Serbousek, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2022, of Orthofix Medical Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has material affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 5, 2022	By:	/s/ JON SERBOUSEK
	Name:	Jon Serbousek
	Title:	President and Chief Executive Officer, Director

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Doug Rice, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2022, of Orthofix Medical Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has material affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 5, 2022	By:	/s/ DOUG RICE
	Name:	Doug Rice
	Title:	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Orthofix Medical Inc. (“Orthofix”) on Form 10-Q for the quarterly period ended June 30, 2022, (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, Jon Serbousek, Chief Executive Officer and President of Orthofix, and Doug Rice, Chief Financial Officer, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Orthofix.

Dated: August 5, 2022	/s/ JON SERBOUSEK
	Name:	Jon Serbousek
	Title:	President and Chief Executive Officer
Dated: August 5, 2022	/s/ DOUG RICE
	Name:	Doug Rice
	Title:	Chief Financial Officer

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Document Fiscal Year Focus	2022
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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 59,536	$ 87,847
Accounts receivable, net of allowances of $5,589 and $4,944, respectively	77,069	78,560
Inventories	97,171	82,974
Prepaid expenses and other current assets	21,416	20,141
Total current assets	255,192	269,522
Property, plant, and equipment, net	58,676	59,252
Intangible assets, net	50,634	52,666
Goodwill	71,317	71,317
Deferred income taxes	1,454	1,771
Other long-term assets	24,383	22,095
Total assets	461,656	476,623
Current liabilities
Accounts payable	32,322	26,459
Current portion of finance lease liability	624	2,590
Other current liabilities	48,151	76,781
Total current liabilities	81,097	105,830
Long-term portion of finance lease liability	19,571	19,890
Other long-term liabilities	19,042	13,969
Total liabilities	119,710	139,689
Contingencies (Note 7)
Shareholders’ equity
Common shares $0.10 par value; 50,000,000 shares authorized; 19,999,801 and 19,836,937 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	2,000	1,983
Additional paid-in capital	323,738	313,951
Retained earnings	19,029	21,000
Accumulated other comprehensive loss	(2,821)
Total shareholders’ equity	341,946	336,934
Total liabilities and shareholders’ equity	$ 461,656	$ 476,623

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Trade accounts receivable, allowance for doubtful accounts	$ 5,589	$ 4,944
Common shares, par value	$ 0.10	$ 0.10
Common shares, authorized	50,000,000	50,000,000
Common shares, issued	20,000,000	19,837,000
Common shares, outstanding	20,000,000	19,837,000

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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Net sales	$ 118,070	$ 121,394	$ 224,488	$ 226,987
Cost of sales	31,600	27,439	59,918	53,353
Gross profit	86,470	93,955	164,570	173,634
Sales and marketing	59,888	57,338	114,025	108,123
General and administrative	15,846	18,335	35,174	34,779
Research and development	12,758	13,121	23,970	24,018
Acquisition-related amortization and remeasurement (Note 11)	(8,663)	894	(12,162)	5,363
Operating income	6,641	4,267	3,563	1,351
Interest expense, net	(407)	(550)	(782)	(967)
Other income (expense), net	(3,192)	951	(4,128)	(1,739)
Income (loss) before income taxes	3,042	4,668	(1,347)	(1,355)
Income tax expense	(553)	(2,248)	(624)	(2,041)
Net income (loss)	$ 2,489	$ 2,420	$ (1,971)	$ (3,396)
Net income (loss) per common share:
Basic	$ 0.12	$ 0.12	$ (0.10)	$ (0.17)
Diluted	$ 0.12	$ 0.12	$ (0.10)	$ (0.17)
Weighted average number of common shares:
Basic	20,031	19,651	19,965	19,575
Diluted	20,113	19,938	19,965	19,575
Other comprehensive loss, before tax
Unrealized gain (loss) on debt securities	$ 161	$ 98	$ (513)	$ (628)
Currency translation adjustment	(1,820)	(155)	(2,308)	(1,182)
Other comprehensive loss, before tax	(1,659)	(57)	(2,821)	(1,810)
Income tax benefit (expense) related to other comprehensive loss		(24)		156
Other comprehensive loss, net of tax	(1,659)	(81)	(2,821)	(1,654)
Comprehensive income (loss)	$ 830	$ 2,339	$ (4,792)	$ (5,050)

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Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Shares [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Dec. 31, 2020	$ 356,864	$ 1,942	$ 292,291	$ 59,379	$ 3,252
Balance, Shares at Dec. 31, 2020		19,424
Net income (loss)	(5,816)			(5,816)
Other comprehensive loss, net of tax	(1,573)				(1,573)
Share-based compensation expense	3,721		3,721
Common shares issued, net	1,622	$ 5	1,617
Common shares issued, net, Shares		51
Ending Balance at Mar. 31, 2021	354,818	$ 1,947	297,629	53,563	1,679
Balance, Shares at Mar. 31, 2021		19,475
Beginning Balance at Dec. 31, 2020	356,864	$ 1,942	292,291	59,379	3,252
Balance, Shares at Dec. 31, 2020		19,424
Net income (loss)	(3,396)
Other comprehensive loss, net of tax	(1,654)
Ending Balance at Jun. 30, 2021	362,284	$ 1,967	302,736	55,983	1,598
Balance, Shares at Jun. 30, 2021		19,669
Beginning Balance at Mar. 31, 2021	354,818	$ 1,947	297,629	53,563	1,679
Balance, Shares at Mar. 31, 2021		19,475
Net income (loss)	2,420			2,420
Other comprehensive loss, net of tax	(81)				(81)
Share-based compensation expense	3,907		3,907
Common shares issued, net	1,220	$ 20	1,200
Common shares issued, net, Shares		194
Ending Balance at Jun. 30, 2021	362,284	$ 1,967	302,736	55,983	1,598
Balance, Shares at Jun. 30, 2021		19,669
Beginning Balance at Dec. 31, 2021	$ 336,934	$ 1,983	313,951	21,000
Balance, Shares at Dec. 31, 2021	19,837	19,837
Net income (loss)	$ (4,460)			(4,460)
Other comprehensive loss, net of tax	(1,162)				(1,162)
Share-based compensation expense	4,332		4,332
Common shares issued, net	(69)	$ 1	(70)
Common shares issued, net, Shares		5
Ending Balance at Mar. 31, 2022	335,575	$ 1,984	318,213	16,540	(1,162)
Balance, Shares at Mar. 31, 2022		19,842
Beginning Balance at Dec. 31, 2021	$ 336,934	$ 1,983	313,951	21,000
Balance, Shares at Dec. 31, 2021	19,837	19,837
Net income (loss)	$ (1,971)
Other comprehensive loss, net of tax	(2,821)
Ending Balance at Jun. 30, 2022	$ 341,946	$ 2,000	323,738	19,029	(2,821)
Balance, Shares at Jun. 30, 2022	20,000	20,000
Beginning Balance at Mar. 31, 2022	$ 335,575	$ 1,984	318,213	16,540	(1,162)
Balance, Shares at Mar. 31, 2022		19,842
Net income (loss)	2,489			2,489
Other comprehensive loss, net of tax	(1,659)				(1,659)
Share-based compensation expense	4,460		4,460
Common shares issued, net	1,081	$ 16	1,065
Common shares issued, net, Shares		158
Ending Balance at Jun. 30, 2022	$ 341,946	$ 2,000	$ 323,738	$ 19,029	$ (2,821)
Balance, Shares at Jun. 30, 2022	20,000	20,000

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities
Net loss	$ (1,971)	$ (3,396)
Adjustments to reconcile net loss to net cash from operating activities
Depreciation and amortization	14,028	15,002
Amortization of operating lease assets, debt costs, and other assets	1,567	1,779
Provision for expected credit losses	1,139	(214)
Deferred income taxes	236	3,936
Share-based compensation expense	8,792	7,628
Interest and (gain) loss on valuation of investment securities	188	(198)
Change in fair value of contingent consideration	(16,214)	(75)
Other	1,149	(105)
Changes in operating assets and liabilities, net of effects of acquisitions
Accounts receivable	(208)	(986)
Inventories	(15,589)	2,655
Prepaid expenses and other current assets	(1,769)	(6,507)
Accounts payable	7,176	(2,662)
Other current liabilities	(7,495)	(6,905)
Contract liability (Note 9)	(4,791)	(2,880)
Payment of contingent consideration		6,595
Other long-term assets and liabilities	1,140	(213)
Net cash from operating activities	(12,622)	264
Cash flows from investing activities
Capital expenditures for property, plant and equipment	(11,032)	(9,035)
Capital expenditures for intangible assets	(671)	(757)
Contingent consideration payments related to asset acquisitions	(1,500)
Other investing activities	42
Net cash from investing activities	(13,161)	(9,792)
Cash flows from financing activities
Proceeds from issuance of common shares	2,400	4,685
Payments related to withholdings for share-based compensation	(1,388)	(1,843)
Payments related to finance lease obligation	(2,291)	(260)
Payment of contingent consideration		(8,405)
Other financing activities	(45)	(705)
Net cash from financing activities	(1,324)	(6,528)
Effect of exchange rate changes on cash	(1,204)	(243)
Net change in cash, cash equivalents, and restricted cash	(28,311)	(16,299)
Cash, cash equivalents, and restricted cash at the beginning of period	87,847	96,821
Cash, cash equivalents, and restricted cash at the end of period	59,536	80,522
Components of cash, cash equivalents, and restricted cash at the end of period
Cash and cash equivalents	59,536	79,968
Restricted cash		554
Cash, cash equivalents, and restricted cash at the end of period	59,536	$ 80,522
Noncash investing activities - Purchase of intangible assets	$ 2,000

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Business and basis of presentation

6 Months Ended

Jun. 30, 2022

Organization Consolidation And Presentation Of Financial Statements And Unusual Or Infrequent Items Disclosure [Abstract]

Business and basis of presentation

1. Business and basis of presentation

Description of the Business

Orthofix Medical Inc. and its subsidiaries (the “Company”) is a global medical device company with a spine and orthopedics focus. The Company’s mission is to deliver innovative, quality-driven solutions while partnering with health care professionals to improve patient mobility. Headquartered in Lewisville, Texas, Orthofix’s spine and orthopedic products are distributed in more than 60 countries via the Company's sales representatives and distributors.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair statement have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Form 10-K for the year ended December 31, 2021. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, 2022.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition; contractual allowances; allowances for expected credit losses; inventories; valuation of intangible assets; goodwill; fair value measurements, including contingent consideration; litigation and contingent liabilities; tax matters; and share-based compensation. Actual results could differ from these estimates.

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Recently issued accounting pronouncements

6 Months Ended

Jun. 30, 2022

Accounting Changes and Error Corrections [Abstract]

Recently issued accounting pronouncements

2. Recently issued accounting pronouncements

The Company considers the applicability and impact of all accounting standards updates ("ASUs"). Recently issued ASU's that are determined to potentially affect the Company's condensed consolidated financial statements are summarized below:

Topic	Description of Guidance	Effective Date	Status of Company's Evaluation
Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (ASU 2022-03)	Clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions. Certain of the provisions are to be applied retrospectively with other provisions applied prospectively.	January 1, 2024	The Company is currently evaluating the impact this ASU may have on its consolidated financial statements.

Other recently issued ASUs, excluding those ASUs which have already been disclosed as adopted or described above, were assessed and determined not applicable, or are expected to have minimal impact on the Company's condensed consolidated financial statements. Furthermore, there have been no material changes during the six months ended June 30, 2022, to the Company's application of significant accounting policies and estimates as described in the Company’s Form 10-K for the year ended December 31, 2021.

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Inventories

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Inventories

3. Inventories

Inventories were as follows:

(U.S. Dollars, in thousands)	June 30, 2022		December 31, 2021
Raw materials	$	16,901	$	9,589
Work-in-process		14,879		15,096
Finished products		26,278		15,149
Field/consignment		39,113		43,140
Inventories	$	97,171	$	82,974

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Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

4. Leases

A summary of the Company’s lease portfolio as of June 30, 2022, and December 31, 2021, is presented in the table below:

(U.S. Dollars, in thousands)	Classification	June 30, 2022		December 31, 2021
Right-of-use assets ("ROU assets")
Operating leases	Other long-term assets	$	6,591	$	3,155
Finance leases	Property, plant and equipment, net		17,866		18,600
Total ROU assets		$	24,457	$	21,755
Lease Liabilities
Current
Operating leases	Other current liabilities	$	1,375	$	1,834
Finance leases	Current portion of finance lease liability		624		2,590
Long-term
Operating leases	Other long-term liabilities		5,329		1,443
Finance leases	Long-term portion of finance lease liability		19,571		19,890
Total lease liabilities		$	26,899	$	25,757

Supplemental cash flow information related to leases was as follows:

(U.S. Dollars, in thousands)	Six Months Ended June 30, 2022		Six Months Ended June 30, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,071	$	2,327
Operating cash flows from finance leases		443		452
Financing cash flows from finance leases		2,291		260
ROU assets obtained in exchange for lease obligations
Operating leases		4,592		415
Finance leases		—		149

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Long-term debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Long-term debt

5. Long-term debt

As of June 30, 2022, the Company had no borrowings outstanding under the secured revolving credit facility and was in compliance with all required financial covenants.

In addition, the Company had no borrowings on its available lines of credit in Italy, which provide up to an aggregate amount of €5.5 million ($5.8 million) as of June 30, 2022.

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Fair value measurements and investments

6 Months Ended

Jun. 30, 2022

Fair Value Measurements And Investment Disclosure [Abstract]

Fair value measurements and investments

6. Fair value measurements and investments

The fair value measurements of the Company’s financial assets and liabilities measured on a recurring basis were as follows:

	June 30, 2022											December 31, 2021
(U.S. Dollars, in thousands)	Level 1		Level 2			Level 3			Total			Total
Assets
Neo Medical convertible loan agreements	$	—	$	—		$	5,820		$	5,820		$	7,148
Neo Medical preferred equity securities		—		6,084			—			6,084			5,413
Bone Biologics equity securities		80		—			—			80			309
Other investments		—		—			1,666			1,666			1,505
Total	$	80	$	6,084		$	7,486		$	13,650		$	14,375
Liabilities
Spinal Kinetics contingent consideration	$	—	$	—		$	(986	)	$	(986	)	$	(17,200	)
Deferred compensation plan		—		(1,245	)		—			(1,245	)		(1,314	)
Total	$	—	$	(1,245	)	$	(986	)	$	(2,231	)	$	(18,514	)

Neo Medical Convertible Loan Agreements and Equity Investment

In October 2020, the Company purchased preferred equity securities of Neo Medical SA, a privately held Swiss-based company developing a new generation of products for spinal surgery ("Neo Medical"), for consideration of $5.0 million. The Company also entered into a Convertible Loan Agreement pursuant to which Orthofix loaned Neo Medical CHF 4.6 million, or $5.0 million at the date of issuance (the “Convertible Loan”). In October 2021, the Company entered into an additional Convertible Loan Agreement (the “Additional Convertible Loan”), pursuant to which the Company loaned Neo Medical an additional CHF 0.6 million, or $0.7 million as of the date of issuance.

The equity securities are recorded in other long-term assets and are considered an investment that does not have a readily determinable fair value. As such, the Company measures this investment at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

The table below presents a reconciliation of the beginning and ending balances of the Company’s investment in Neo Medical preferred equity securities:

(U.S. Dollars, in thousands)	2022		2021
Fair value of Neo Medical preferred equity securities at January 1	$	5,413	$	5,000
Conversion of loan into preferred equity securities		671		—
Fair value of Neo Medical preferred equity securities at June 30		6,084		5,000
Cumulative unrealized gain on Neo Medical preferred equity securities		413		—

The Company made an election to convert the Additional Convertible Loan into shares of Neo Medical’s preferred equity securities in January 2022. The remaining Convertible Loan is recorded in other long-term assets as an available for sale debt security as of June 30, 2022. The Convertible Loan is recorded at fair value, with applicable interest recorded in interest income. The fair value of the Convertible Loan is based upon significant unobservable inputs, including the use of option-pricing models, Monte Carlo simulations for certain periods, and a probability-weighted discounted cash flow model, requiring the Company to develop its own assumptions. Therefore, the Company categorized these investments as Level 3 financial assets.

Some of the more significant unobservable inputs used in the fair value measurement of the Convertible Loan include applicable discount rates, implied volatility, the likelihood and projected timing of repayment or conversion, and projected cash flows in support of the estimated enterprise value of Neo Medical. Holding other inputs constant, changes in these assumptions could result in a significant change in the fair value of the Convertible Loan. If the amortized cost of the Convertible Loan exceeds its estimated fair value, the security is deemed to be impaired, and must be evaluated for the recognition of a credit loss. As of June 30, 2022, the Company has not recognized any credit loss related to the Convertible Loan.

The following table provides a reconciliation of the beginning and ending balances of the Convertible Loans, measured at fair value using significant unobservable inputs (Level 3):

(U.S. Dollars, in thousands)	2022			2021
Fair value of Neo Medical Convertible Loans at January 1	$	7,148		$	7,160
Interest recognized in interest income, net		217			198
Foreign currency remeasurement recognized in other expense, net		(257	)		(230	)
Unrealized loss recognized in other comprehensive loss		(615	)		(628	)
Conversion of loan into preferred equity securities		(671	)		—
Fair value of Neo Medical Convertible Loans at June 30		5,820			6,500
Amortized cost basis of Neo Medical Convertible Loans at June 30		5,496			5,247

The following table provides quantitative information related to certain key assumptions utilized within the valuation as of June 30, 2022:

(U.S. Dollars, in thousands)	Fair Value as of  June 30, 2022		Unobservable inputs	Estimate
Neo Medical Convertible Loan	$	5,820	Cost of equity discount rate		17.0	%
			Implied volatility		73.4	%

Bone Biologics Equity Securities

The Company holds an investment in common stock of Bone Biologics Inc. (“Bone Biologics”, NASDAQ: BBLG), a developer of orthobiologic products. Changes in the fair value of the investment recorded during the six months ended June 30, 2022 and 2021, are shown in the table below:

(U.S. Dollars, in thousands)	2022			2021
Bone Biologics equity securities at January 1	$	309		$	—
Fair value adjustments recognized in other expense, net		(186	)		—
Proceeds from the disposition of equity securities		(42	)		—
Bone Biologics equity securities at June 30	$	80		$	—

Other investments

Other investments represent assets and investments recorded at fair value that are not deemed to be material for disclosure on an individual basis. The fair value of these assets are based upon significant unobservable inputs, such as probability-weighted discounted cash flow models, requiring the Company to develop its own assumptions. Therefore, the Company has categorized these assets as Level 3 financial assets. As of June 30, 2022, this balance was classified within other long-term assets.

Spinal Kinetics Contingent Consideration

The Company recognized a contingent consideration obligation in connection with the acquisition of Spinal Kinetics in 2018. The Spinal Kinetics contingent consideration consists of potential milestone payments of up to $60.0 million in cash. The milestone payments included (i) $15.0 million upon U.S. Food and Drug Administration (“FDA”) approval of the M6-C artificial cervical disc (the “FDA Milestone”) and (ii) revenue-based milestone payments of up to $45.0 million in connection with sales of the acquired artificial discs. To trigger the applicable payments, milestones must be achieved within five years of April 30, 2018. The FDA Milestone was achieved and paid in 2019 and a revenue-based milestone payment, totaling $15.0 million, was achieved and paid in 2021 upon meeting certain net sales targets.

The following table provides a reconciliation of the beginning and ending balances for the Spinal Kinetics contingent consideration measured at estimated fair value using significant unobservable inputs (Level 3). The $16.2 million decrease in fair value of the contingent consideration liability in 2022 reflects the lower likelihood of the Company achieving the revenue-based milestone prior to April 30, 2023.

(U.S. Dollars, in thousands)	2022			2021
Spinal Kinetics contingent consideration estimated fair value at January 1	$	17,200		$	35,400
Increase (decrease) in fair value recognized in acquisition-related amortization and remeasurement		(16,214	)		300
Payment made		—			(15,000	)
Spinal Kinetics contingent consideration estimated fair value at June 30	$	986		$	20,700

The estimated fair value of the remaining Spinal Kinetics contingent consideration, attributable to a revenue-based milestone, was $1.0 million as of June 30, 2022. The estimated fair value reflects assumptions made by management as of June 30, 2022, such as the expected timing and volume of elective procedures and the impact of these procedures on future revenues. However, the actual amount ultimately paid, if achieved, could be higher or lower than the fair value of the remaining contingent consideration (ultimate payment will either be $30.0 million or the liability will be fully reversed if the milestone is not met within the required timeline). As of June 30, 2022, the Company has classified the $1.0 million liability within other current liabilities, as milestones must be achieved prior to April 30, 2023, to trigger payment. Any changes in fair value are recorded as an operating expense within acquisition-related amortization and remeasurement.

The Company estimated the fair value of the remaining potential revenue-based milestone payment using a Monte Carlo simulation and a discounted cash flow model. This fair value measurement is based on significant inputs that are unobservable in the market and thus represents a Level 3 measurement. The key assumptions in applying the valuation model include the Company’s forecasted future revenues for the Motion Preservation product line (which is derived from the acquired Spinal Kinetics business), the expected timing of payment, applicable discount rates applied, and assumptions for potential volatility of the Company’s forecasted revenue. Significant changes in these assumptions could result in a significantly higher or lower fair value.

The following table provides a range of key assumptions used within the valuation as of June 30, 2022:

(U.S. Dollars, in thousands)	Fair Value as of June 30, 2022		Valuation Technique	Unobservable inputs	Range
Spinal Kinetics contingent consideration	$	986	Discounted cash flow	Revenue discount rate	5.9% - 7.3%
				Payment discount rate	7.6% - 8.9%

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Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Contingencies

7. Contingencies

In addition to the matters described below, in the normal course of its business, the Company is involved in various lawsuits from time to time and may be subject to certain other contingencies. The Company believes any losses related to these matters are individually and collectively immaterial as to a possible loss and range of loss.

Italian Medical Device Payback (“IMDP”)

In 2015, the Italian Parliament introduced rules for entities that supply goods and services to the Italian National Healthcare System. A key provision of the law is a ‘payback’ measure, requiring medical device companies in Italy to make payments to the Italian government if medical device expenditures exceed regional maximum ceilings. Companies are required to make payments equal to a percentage of expenditures exceeding maximum regional caps. There is considerable uncertainty about how the law will operate and what the exact timeline is for finalization. The Company’s current assessment of the IMDP involves significant judgment regarding the expected scope and actual implementation terms of the measure as the latter have not been clarified to date by Italian authorities. The Company accounts for the estimated cost of the IMDP as sales and marketing expense and periodically reassesses this liability based upon current facts and circumstances. As a result, the Company recorded expense of $0.3 million and $0.6 million for the three and six months ended June 30, 2022, and expense of $0.1 million and $0.5 million for the three and six months ended June 30, 2021, respectively. As of June 30, 2022, the Company has accrued $5.4 million related to the IMDP, which it has classified within other long-term liabilities; however, the actual liability could be higher or lower than the amount accrued once the law has been clarified by the Italian authorities.

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Accumulated other comprehensive loss

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Accumulated other comprehensive loss

8. Accumulated other comprehensive loss

The components of and changes in accumulated other comprehensive loss were as follows:

(U.S. Dollars, in thousands)	Currency Translation Adjustments			Neo Medical Convertible Loans			Other Investments		Accumulated Other Comprehensive Loss
Balance at December 31, 2021	$	(711	)	$	711		$	—	$	—
Other comprehensive loss		(2,308	)		(615	)		102		(2,821	)
Income taxes		—			—			—		—
Balance at June 30, 2022	$	(3,019	)	$	96		$	102	$	(2,821	)

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Revenue recognition and accounts receivable

6 Months Ended

Jun. 30, 2022

Revenue Recognition And Accounts Receivable [Abstract]

Revenue recognition and accounts receivable

9. Revenue recognition and accounts receivable

Revenue Recognition

The Company has two reporting segments, which consist of Global Spine and Global Orthopedics. Within the Global Spine reporting segment there are three product categories: Bone Growth Therapies, Spinal Implants, and Biologics.

The table below presents net sales by major product category by reporting segment:

	Three Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		Change
Bone Growth Therapies	$	47,765	$	49,706		-3.9	%
Spinal Implants		28,222		30,092		-6.2	%
Biologics		14,795		14,852		-0.4	%
Global Spine		90,782		94,650		-4.1	%
Global Orthopedics		27,288		26,744		2.0	%
Net sales	$	118,070	$	121,394		-2.7	%

	Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		Change
Bone Growth Therapies	$	89,713	$	92,653		-3.2	%
Spinal Implants		54,837		55,793		-1.7	%
Biologics		28,887		28,544		1.2	%
Global Spine		173,437		176,990		-2.0	%
Global Orthopedics		51,051		49,997		2.1	%
Net sales	$	224,488	$	226,987		-1.1	%

Product Sales and Marketing Service Fees

The table below presents product sales and marketing service fees, which are both components of net sales:

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Product sales	$	103,559	$	106,947	$	196,167	$	199,210
Marketing service fees		14,511		14,447		28,321		27,777
Net sales	$	118,070	$	121,394	$	224,488	$	226,987

Product sales primarily consist of the sale of bone growth therapies devices, spinal implants products, and orthopedics products. Marketing service fees are received from MTF Biologics based on total sales of biologics tissues and relate solely to the Global Spine reporting segment.

Accounts receivable and related allowances

The following table provides a detail of changes in the Company’s allowance for expected credit losses for the three and six months ended June 30, 2022 and 2021:

(U.S. Dollars, in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Allowance for expected credit losses beginning balance	$	5,389		$	4,506		$	4,944		$	4,848
Current period provision (recovery) for expected credit losses		539			(32	)		1,139			(214	)
Write-offs charged against the allowance and other		(142	)		(34	)		(246	)		(80	)
Effect of changes in foreign exchange rates		(197	)		31			(248	)		(83	)
Allowance for expected credit losses ending balance	$	5,589		$	4,471		$	5,589		$	4,471

Contract Liabilities

The Company’s contract liabilities largely related to a prepayment of $13.9 million received in April 2020 from the Centers for Medicare and Medicaid Service ("CMS") as part of the Accelerated and Advance Payment Program of the Coronavirus Aid, Relief, and Economic Security Act. The remaining balance of the contract liability was recouped by CMS during the second quarter of 2022.

The following table provides a detail of changes in the Company’s contract liability associated with the Accelerated and Advanced Payment Program for the three and six months ended June 30, 2022 and 2021:

(U.S. Dollars, in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Contract liability beginning balance	$	1,396		$	13,851		$	4,791		$	13,851
Recoupment recognized in net sales		(1,396	)		(2,880	)		(4,791	)		(2,880	)
Contract liability ending balance	$	—		$	10,971		$	—		$	10,971

Other Contract Assets

The Company’s contract assets, excluding accounts receivable (“Other Contract Assets”), largely consist of payments made to certain distributors to obtain contracts, gain access to customers in certain territories, and to provide the benefit of the exclusive distribution of the Company's products. Other Contract Assets are included in other long-term assets or other current assets, dependent upon the original term of the related agreement, and totaled $1.0 million and $1.4 million as of June 30, 2022, and December 31, 2021, respectively.

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Business segment information

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Business segment information

10. Business segment information

The Company has two reporting segments: Global Spine and Global Orthopedics. The primary metric used in managing the Company is earnings before interest, tax, depreciation, and amortization (“EBITDA”). Corporate activities comprise operating expenses and activities not directly identifiable within the two reporting segments, such as human resources, finance, legal, and information technology functions. The table below presents EBITDA by reporting segment:

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			2022			2021
Global Spine	$	20,766		$	19,032		$	36,659		$	30,927
Global Orthopedics		(2,422	)		1,775			(5,518	)		(454	)
Corporate		(8,383	)		(8,030	)		(17,678	)		(15,859	)
Total EBITDA	$	9,961		$	12,777		$	13,463		$	14,614
Depreciation and amortization		(6,512	)		(7,559	)		(14,028	)		(15,002	)
Interest expense, net		(407	)		(550	)		(782	)		(967	)
Income (loss) before income taxes	$	3,042		$	4,668		$	(1,347	)	$	(1,355	)

Geographical information

The table below presents net sales by geographic destination for each reporting segment and for the consolidated Company:

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Global Spine
U.S.	$	85,899	$	89,077	$	162,965	$	166,832
International		4,883		5,573	$	10,472		10,158
Total Global Spine		90,782		94,650		173,437		176,990
Global Orthopedics
U.S.		6,903		6,156		12,230		11,747
International		20,385		20,588		38,821		38,250
Total Global Orthopedics		27,288		26,744		51,051		49,997
Consolidated
U.S.		92,802		95,233		175,195		178,579
International		25,268		26,161		49,293		48,408
Net sales	$	118,070	$	121,394	$	224,488	$	226,987

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Acquisition-Related Amortization and Remeasurement

6 Months Ended

Jun. 30, 2022

Acquisition Related Amortization And Remeasurement [Abstract]

Acquisition-Related Amortization and Remeasurement

11. Acquisition-related amortization and remeasurement

Acquisition-related amortization and remeasurement consists of (i) amortization related to intangible assets acquired through business combinations or asset acquisitions, (ii) remeasurement of any related contingent consideration arrangements, and (iii) recognized costs associated with acquired in-process research and development (“IPR&D”) assets, which are recognized immediately upon acquisition. Components of acquisition-related amortization and remeasurement are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			2022			2021
Amortization of acquired intangibles	$	2,051		$	1,969		$	4,052		$	3,938
Changes in fair value of contingent consideration		(10,714	)		(1,575	)		(16,214	)		(75	)
Acquired IPR&D		—			500			—			1,500
Total	$	(8,663	)	$	894		$	(12,162	)	$	5,363

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Share-based compensation

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Share-based compensation

12. Share-based compensation

Components of share-based compensation expense are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Cost of sales	$	205	$	209	$	416	$	387
Sales and marketing		1,000		957		1,981		1,674
General and administrative		2,958		2,607		6,176		5,136
Research and development		297		134		219		431
Total	$	4,460	$	3,907	$	8,792	$	7,628

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Stock options	$	205	$	398	$	564	$	1,059
Time-based restricted stock awards and units		2,410		2,019		4,580		3,746
Market-based / performance-based restricted stock units		1,497		1,053		2,941		1,950
Stock purchase plan		348		437		707		873
Total	$	4,460	$	3,907	$	8,792	$	7,628

During the three months ended June 30, 2022 and 2021, the Company issued 157,979 and 194,745 shares, respectively, of common stock related to stock purchase plan issuances, stock option exercises, and the vesting of restricted stock awards and units. During the six months ended June 30, 2022 and 2021, the Company issued 162,864 and 245,255 shares, respectively, of common stock related to stock purchase plan issuances, stock option exercises, and the vesting of restricted stock awards and units.

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Income taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income taxes

13. Income taxes

Generally, income tax provisions for interim periods are based on an estimated annual income tax rate, adjusted for discrete tax items, with any changes affecting the estimated annual effective tax rate recorded in the interim period in which the change occurs. Due to the impact of losses not benefitted by the Company’s U.S. and Italian operations, the Company determined the estimated annual effective tax rate method would not provide a reliable estimate of the Company’s overall annual effective tax rate. As such, the Company has calculated the tax provision using the actual effective rate for the three and six months ended June 30, 2022. Due to the impact of temporary differences on the U.S. current tax liability without any deferred tax benefit, the actual effective rate may vary in future quarters.

For the three months ended June 30, 2022 and 2021, the effective tax rate was 18.2% and 48.2%, respectively. For the six months ended June 30, 2022 and 2021, the effective tax rate was (46.3%) and (150.6%), respectively. The primary factors affecting the Company’s effective tax rate for the three and six months ended June 30, 2022, were the changes in fair value of the Spinal Kinetics contingent consideration, which is not deductible for tax purposes, and losses not benefited in the U.S. and Italy.

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Earnings per share ("EPS")

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Earnings per share ("EPS")

14. Earnings per share (“EPS”)

The Company uses the two-class method of computing basic EPS due to the existence of non-vested restricted stock awards with nonforfeitable rights to dividends or dividend equivalents (referred to as participating securities). For the three and six months ended June 30, 2022, no significant adjustments were made to net income for purposes of calculating basic and diluted EPS.

The following is a reconciliation of the weighted average shares used in diluted EPS computations.

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2022		2021		2022		2021
Weighted average common shares-basic		20,031		19,651		19,965		19,575
Effect of dilutive securities
Unexercised stock options and stock purchase plan		23		171		—		—
Unvested restricted stock units		59		116		—		—
Weighted average common shares-diluted		20,113		19,938		19,965		19,575

There were 1.6 million and 0.8 million weighted average outstanding stock options and restricted stock units not included in the diluted EPS computation for the three months ended June 30, 2022 and 2021, respectively, and 1.6 million and 1.4 million weighted average outstanding stock options and restricted stock units not included in the diluted EPS computation for the six months ended June 30, 2022 and 2021, respectively, because inclusion of these awards was anti-dilutive or, for performance-based and market-based restricted stock units, all necessary conditions had not been satisfied by the end of the respective period.

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Subsequent Events

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

15. Subsequent Events

On July 30, 2022, the Company entered into a long-term strategic License and Distribution Agreement (the “Agreement”) with CGBio Co., Ltd. (“CGBio”), a developer of innovative, synthetic bone grafts. The Agreement grants Orthofix the exclusive right to conduct pre-clinical and clinical studies, commercialize, promote, market, and sell the Novosis™ recombinant human bone morphogenetic protein-2 (rhBMP-2) bone growth materials and other future tissue regenerative solutions in the U.S. and Canada. As consideration, the Company will pay CGBio an upfront payment of $1.4 million with additional payments contingent upon the achievement of specified development milestones.

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Inventories (Tables)

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories were as follows:

(U.S. Dollars, in thousands)	June 30, 2022		December 31, 2021
Raw materials	$	16,901	$	9,589
Work-in-process		14,879		15,096
Finished products		26,278		15,149
Field/consignment		39,113		43,140
Inventories	$	97,171	$	82,974

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Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Summary of Lease Portfolio

A summary of the Company’s lease portfolio as of June 30, 2022, and December 31, 2021, is presented in the table below:

(U.S. Dollars, in thousands)	Classification	June 30, 2022		December 31, 2021
Right-of-use assets ("ROU assets")
Operating leases	Other long-term assets	$	6,591	$	3,155
Finance leases	Property, plant and equipment, net		17,866		18,600
Total ROU assets		$	24,457	$	21,755
Lease Liabilities
Current
Operating leases	Other current liabilities	$	1,375	$	1,834
Finance leases	Current portion of finance lease liability		624		2,590
Long-term
Operating leases	Other long-term liabilities		5,329		1,443
Finance leases	Long-term portion of finance lease liability		19,571		19,890
Total lease liabilities		$	26,899	$	25,757

Summary of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases was as follows:

(U.S. Dollars, in thousands)	Six Months Ended June 30, 2022		Six Months Ended June 30, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,071	$	2,327
Operating cash flows from finance leases		443		452
Financing cash flows from finance leases		2,291		260
ROU assets obtained in exchange for lease obligations
Operating leases		4,592		415
Finance leases		—		149

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Fair value measurements and investments (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Schedule of Financial Assets and Liabilities Recorded at Fair Value on Recurring Basis

The fair value measurements of the Company’s financial assets and liabilities measured on a recurring basis were as follows:

	June 30, 2022											December 31, 2021
(U.S. Dollars, in thousands)	Level 1		Level 2			Level 3			Total			Total
Assets
Neo Medical convertible loan agreements	$	—	$	—		$	5,820		$	5,820		$	7,148
Neo Medical preferred equity securities		—		6,084			—			6,084			5,413
Bone Biologics equity securities		80		—			—			80			309
Other investments		—		—			1,666			1,666			1,505
Total	$	80	$	6,084		$	7,486		$	13,650		$	14,375
Liabilities
Spinal Kinetics contingent consideration	$	—	$	—		$	(986	)	$	(986	)	$	(17,200	)
Deferred compensation plan		—		(1,245	)		—			(1,245	)		(1,314	)
Total	$	—	$	(1,245	)	$	(986	)	$	(2,231	)	$	(18,514	)

Schedule of Reconciliation of Investments in Equity Securities

The table below presents a reconciliation of the beginning and ending balances of the Company’s investment in Neo Medical preferred equity securities:

(U.S. Dollars, in thousands)	2022		2021
Fair value of Neo Medical preferred equity securities at January 1	$	5,413	$	5,000
Conversion of loan into preferred equity securities		671		—
Fair value of Neo Medical preferred equity securities at June 30		6,084		5,000
Cumulative unrealized gain on Neo Medical preferred equity securities		413		—

Schedule of Changes in Valuation of Securities

Changes in the fair value of the investment recorded during the six months ended June 30, 2022 and 2021, are shown in the table below:

(U.S. Dollars, in thousands)	2022			2021
Bone Biologics equity securities at January 1	$	309		$	—
Fair value adjustments recognized in other expense, net		(186	)		—
Proceeds from the disposition of equity securities		(42	)		—
Bone Biologics equity securities at June 30	$	80		$	—

Schedule of Reconciliation For Contingent Consideration Measured At Fair Value Using Significant Unobservable Inputs

The following table provides a reconciliation of the beginning and ending balances for the Spinal Kinetics contingent consideration measured at estimated fair value using significant unobservable inputs (Level 3).

(U.S. Dollars, in thousands)	2022			2021
Spinal Kinetics contingent consideration estimated fair value at January 1	$	17,200		$	35,400
Increase (decrease) in fair value recognized in acquisition-related amortization and remeasurement		(16,214	)		300
Payment made		—			(15,000	)
Spinal Kinetics contingent consideration estimated fair value at June 30	$	986		$	20,700

Fair Value, Inputs, Level 3 [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Schedule of Reconciliation For Convertible Loans Measured At Fair Value Using Significant Unobservable Inputs

The following table provides a reconciliation of the beginning and ending balances of the Convertible Loans, measured at fair value using significant unobservable inputs (Level 3):

(U.S. Dollars, in thousands)	2022			2021
Fair value of Neo Medical Convertible Loans at January 1	$	7,148		$	7,160
Interest recognized in interest income, net		217			198
Foreign currency remeasurement recognized in other expense, net		(257	)		(230	)
Unrealized loss recognized in other comprehensive loss		(615	)		(628	)
Conversion of loan into preferred equity securities		(671	)		—
Fair value of Neo Medical Convertible Loans at June 30		5,820			6,500
Amortized cost basis of Neo Medical Convertible Loans at June 30		5,496			5,247

Schedule of Changes in Valuation of Securities

The following table provides quantitative information related to certain key assumptions utilized within the valuation as of June 30, 2022:

(U.S. Dollars, in thousands)	Fair Value as of  June 30, 2022		Unobservable inputs	Estimate
Neo Medical Convertible Loan	$	5,820	Cost of equity discount rate		17.0	%
			Implied volatility		73.4	%

The following table provides a range of key assumptions used within the valuation as of June 30, 2022:

(U.S. Dollars, in thousands)	Fair Value as of June 30, 2022		Valuation Technique	Unobservable inputs	Range
Spinal Kinetics contingent consideration	$	986	Discounted cash flow	Revenue discount rate	5.9% - 7.3%
				Payment discount rate	7.6% - 8.9%

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Accumulated other comprehensive loss (Tables)

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Components of Changes in Accumulated Other Comprehensive Loss

The components of and changes in accumulated other comprehensive loss were as follows:

(U.S. Dollars, in thousands)	Currency Translation Adjustments			Neo Medical Convertible Loans			Other Investments		Accumulated Other Comprehensive Loss
Balance at December 31, 2021	$	(711	)	$	711		$	—	$	—
Other comprehensive loss		(2,308	)		(615	)		102		(2,821	)
Income taxes		—			—			—		—
Balance at June 30, 2022	$	(3,019	)	$	96		$	102	$	(2,821	)

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Revenue recognition and accounts receivable (Tables)

6 Months Ended

Jun. 30, 2022

Revenue Recognition And Accounts Receivable [Abstract]

Schedule of Net Sales by Major Product Category by Reporting Segment

The table below presents net sales by major product category by reporting segment:

	Three Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		Change
Bone Growth Therapies	$	47,765	$	49,706		-3.9	%
Spinal Implants		28,222		30,092		-6.2	%
Biologics		14,795		14,852		-0.4	%
Global Spine		90,782		94,650		-4.1	%
Global Orthopedics		27,288		26,744		2.0	%
Net sales	$	118,070	$	121,394		-2.7	%

	Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		Change
Bone Growth Therapies	$	89,713	$	92,653		-3.2	%
Spinal Implants		54,837		55,793		-1.7	%
Biologics		28,887		28,544		1.2	%
Global Spine		173,437		176,990		-2.0	%
Global Orthopedics		51,051		49,997		2.1	%
Net sales	$	224,488	$	226,987		-1.1	%

Schedule of Components Net Sales

The table below presents product sales and marketing service fees, which are both components of net sales:

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Product sales	$	103,559	$	106,947	$	196,167	$	199,210
Marketing service fees		14,511		14,447		28,321		27,777
Net sales	$	118,070	$	121,394	$	224,488	$	226,987

Allowances for Expected Credit Losses

The following table provides a detail of changes in the Company’s allowance for expected credit losses for the three and six months ended June 30, 2022 and 2021:

(U.S. Dollars, in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Allowance for expected credit losses beginning balance	$	5,389		$	4,506		$	4,944		$	4,848
Current period provision (recovery) for expected credit losses		539			(32	)		1,139			(214	)
Write-offs charged against the allowance and other		(142	)		(34	)		(246	)		(80	)
Effect of changes in foreign exchange rates		(197	)		31			(248	)		(83	)
Allowance for expected credit losses ending balance	$	5,589		$	4,471		$	5,589		$	4,471

Schedule of Changes in Contract Liability

The following table provides a detail of changes in the Company’s contract liability associated with the Accelerated and Advanced Payment Program for the three and six months ended June 30, 2022 and 2021:

(U.S. Dollars, in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Contract liability beginning balance	$	1,396		$	13,851		$	4,791		$	13,851
Recoupment recognized in net sales		(1,396	)		(2,880	)		(4,791	)		(2,880	)
Contract liability ending balance	$	—		$	10,971		$	—		$	10,971

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Business segment information (Tables)

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Summary of EBITDA by Reporting Segment

The table below presents EBITDA by reporting segment:

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			2022			2021
Global Spine	$	20,766		$	19,032		$	36,659		$	30,927
Global Orthopedics		(2,422	)		1,775			(5,518	)		(454	)
Corporate		(8,383	)		(8,030	)		(17,678	)		(15,859	)
Total EBITDA	$	9,961		$	12,777		$	13,463		$	14,614
Depreciation and amortization		(6,512	)		(7,559	)		(14,028	)		(15,002	)
Interest expense, net		(407	)		(550	)		(782	)		(967	)
Income (loss) before income taxes	$	3,042		$	4,668		$	(1,347	)	$	(1,355	)

Summary of Net Sales by Geographic Destination for each Reporting Segment

The table below presents net sales by geographic destination for each reporting segment and for the consolidated Company:

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Global Spine
U.S.	$	85,899	$	89,077	$	162,965	$	166,832
International		4,883		5,573	$	10,472		10,158
Total Global Spine		90,782		94,650		173,437		176,990
Global Orthopedics
U.S.		6,903		6,156		12,230		11,747
International		20,385		20,588		38,821		38,250
Total Global Orthopedics		27,288		26,744		51,051		49,997
Consolidated
U.S.		92,802		95,233		175,195		178,579
International		25,268		26,161		49,293		48,408
Net sales	$	118,070	$	121,394	$	224,488	$	226,987

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Acquisition-Related Amortization and Remeasurement (Tables)

6 Months Ended

Jun. 30, 2022

Acquisition Related Amortization And Remeasurement [Abstract]

Schedule of Acquisition-Related Amortization and Remeasurement

Components of acquisition-related amortization and remeasurement are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022			2021			2022			2021
Amortization of acquired intangibles	$	2,051		$	1,969		$	4,052		$	3,938
Changes in fair value of contingent consideration		(10,714	)		(1,575	)		(16,214	)		(75	)
Acquired IPR&D		—			500			—			1,500
Total	$	(8,663	)	$	894		$	(12,162	)	$	5,363

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Share-based compensation (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Components of Share-Based Compensation Expense

Components of share-based compensation expense are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Cost of sales	$	205	$	209	$	416	$	387
Sales and marketing		1,000		957		1,981		1,674
General and administrative		2,958		2,607		6,176		5,136
Research and development		297		134		219		431
Total	$	4,460	$	3,907	$	8,792	$	7,628

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. Dollars, in thousands)	2022		2021		2022		2021
Stock options	$	205	$	398	$	564	$	1,059
Time-based restricted stock awards and units		2,410		2,019		4,580		3,746
Market-based / performance-based restricted stock units		1,497		1,053		2,941		1,950
Stock purchase plan		348		437		707		873
Total	$	4,460	$	3,907	$	8,792	$	7,628

XML

Earnings per share ("EPS") (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of Reconciliation of Weighted Average Shares Used in Diluted EPS

The following is a reconciliation of the weighted average shares used in diluted EPS computations.

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2022		2021		2022		2021
Weighted average common shares-basic		20,031		19,651		19,965		19,575
Effect of dilutive securities
Unexercised stock options and stock purchase plan		23		171		—		—
Unvested restricted stock units		59		116		—		—
Weighted average common shares-diluted		20,113		19,938		19,965		19,575

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Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 16,901	$ 9,589
Work-in-process	14,879	15,096
Finished products	26,278	15,149
Field/consignment	39,113	43,140
Inventories	$ 97,171	$ 82,974

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Leases - Summary of Lease Portfolio (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Right-of-use assets ("ROU assets")
Operating leases	$ 6,591	$ 3,155
Operating lease, right-of-use asset, statement of financial position [Extensible List]	Other long-term assets	Other long-term assets
Finance leases	$ 17,866	$ 18,600
Finance lease, right-of-use asset, statement of financial position [Extensible List]	Property, plant, and equipment, net	Property, plant, and equipment, net
Total ROU assets	$ 24,457	$ 21,755
Current
Operating leases	$ 1,375	$ 1,834
Operating lease, liability, current, statement of financial position [Extensible List]	Other current liabilities	Other current liabilities
Finance leases	$ 624	$ 2,590
Long-term
Operating leases	$ 5,329	$ 1,443
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other long-term liabilities	Other long-term liabilities
Finance leases	$ 19,571	$ 19,890
Total lease liabilities	$ 26,899	$ 25,757

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Leases - Summary of Supplemental Cash Flow Information Related to Leases (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$ 2,071	$ 2,327
Operating cash flows from finance leases	443	452
Financing cash flows from finance leases	2,291	260
ROU assets obtained in exchange for lease obligations
Operating leases	$ 4,592	415
Finance leases		$ 149

XML

Long-Term Debt - Additional Information (Detail) - Jun. 30, 2022 - Italy [Member]	USD ($)	EUR (€)
Debt Instrument [Line Items]
Amount outstanding under lines of credit	$ 0
Maximum borrowing capacity	$ 5,800,000	€ 5,500,000

XML

Fair Value Measurements and Investments - Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	$ 13,650	$ 14,375
Deferred compensation plan, Liabilities	(1,245)	(1,314)
Liabilities fair value, Total	(2,231)	(18,514)
Spinal Kinetics [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent consideration	(986)	(17,200)
Convertible Loan Agreement | Neo Medical [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	5,820	7,148
Preferred Equity Securities [Member] | Neo Medical [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	6,084	5,413
Equity Securities [Member] | Bone Biologics Inc
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	80	309
Other Investments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	1,666	$ 1,505
Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	80
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member] | Bone Biologics Inc
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	80
Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	6,084
Deferred compensation plan, Liabilities	(1,245)
Liabilities fair value, Total	(1,245)
Fair Value, Inputs, Level 2 [Member] | Preferred Equity Securities [Member] | Neo Medical [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	6,084
Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	7,486
Liabilities fair value, Total	(986)
Fair Value, Inputs, Level 3 [Member] | Spinal Kinetics [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent consideration	(986)
Fair Value, Inputs, Level 3 [Member] | Convertible Loan Agreement | Neo Medical [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	5,820
Fair Value, Inputs, Level 3 [Member] | Other Investments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	$ 1,666

XML

Fair Value Measurements and Investments - Additional Information (Detail) SFr in Millions, $ in Millions		1 Months Ended	6 Months Ended
	Apr. 30, 2018 USD ($)	Oct. 31, 2020 USD ($)	Jun. 30, 2022 USD ($)	Oct. 31, 2021 USD ($)	Oct. 31, 2021 CHF (SFr)	Oct. 31, 2020 CHF (SFr)
Spinal Kinetics [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Milestone achievement period	5 years
Payment for contingent consideration liability			$ 30.0
Spinal Kinetics [Member] | Other Current Liabilities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Consideration transferred			1.0
Maximum [Member] | Spinal Kinetics [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Milestone payments	$ 60.0
US Food And Drug Administration [Member] | Spinal Kinetics [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Milestone payments	15.0
Revenue Milestone [Member] | Spinal Kinetics [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Milestone payments	$ 45.0
Consideration transferred			1.0
Fair Value, Inputs, Level 3 [Member] | Spinal Kinetics [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Decrease in fair value of the contingent consideration liability			$ (16.2)
Neo Medical [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Convertible loans		$ 5.0		$ 0.7	SFr 0.6	SFr 4.6
Preferred Stock | Neo Medical [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Amount of Preferred stock consideration		$ 5.0

XML

Fair Value Measurements and Investments - Schedule of Reconciliation of Investments in Equity Securities (Detail) - Preferred Stock [Member] - Neo Medical [Member] - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of equity securities beginning balance	$ 5,413	$ 5,000
Conversion of loan into preferred equity securities	671
Fair value of equity securities Ending balance	6,084	5,000
Cumulative unrealized gain on Neo Medical preferred equity securities	$ 413	$ 0

XML

Fair Value Measurements and Investments - Schedule of Reconciliation For Contingent Consideration Measured At Fair Value Using Significant Unobservable Inputs (Level 3) (Detail) - Neo Medical [Member] - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value of convertible loans beginning balance	$ 7,148	$ 7,160
Interest recognized in interest income, net	217	198
Foreign currency remeasurement recognized in other expense, net	(257)	(230)
Unrealized loss recognized in other comprehensive loss	(615)	(628)
Conversion of loan into preferred equity securities	(671)
Fair value of convertible loans ending balance	5,820	6,500
Amortized cost basis of Neo Medical Convertible Loans at June 30	$ 5,496	$ 5,247

XML

Fair Value Measurements and Investments - Schedule of Valuation Methodology and Unobservable Inputs for Level 3 Assets and Liabilities Measured at Fair Value (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)
Spinal Kinetics [Member] | Revenue Discount Rate
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Consideration transferred	$ 986
Spinal Kinetics [Member] | Revenue Discount Rate | Minimum [Member]
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Business combination contingent consideration liability measurement input	5.9
Spinal Kinetics [Member] | Revenue Discount Rate | Maximum [Member]
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Business combination contingent consideration liability measurement input	7.3
Spinal Kinetics [Member] | Payment Discount Rate | Minimum [Member]
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Business combination contingent consideration liability measurement input	7.6
Spinal Kinetics [Member] | Payment Discount Rate | Maximum [Member]
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Business combination contingent consideration liability measurement input	8.9
Spinal Kinetics [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Spinal Kinetics contingent consideration estimated fair value at January 1	$ 17,200	$ 35,400
Increase (decrease) in fair value recognized in acquisition-related amortization and remeasurement	(16,214)	300
Payment made		(15,000)
Spinal Kinetics contingent consideration estimated fair value at June 30	986	$ 20,700
Neo Medical [Member]
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Neo Medical Convertible Loan	$ 5,820
Fair value implied volatility	73.40%
Fair value discount rate	17.00%

XML

Fair Value Measurements and Investments - Schedule of Change in Valuation of Securities (Detail) - Bone Biologics Inc [Member] $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Equity securities beginning balance	$ 309
Fair value adjustments recognized in other expense, net	(186)
Proceeds from the disposition of equity securities	42
Equity securities ending balance	$ 80

XML

Contingencies - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Commitments and Contingencies Disclosure [Abstract]
Estimated sales and marketing expense (benefit)	$ 0.3	$ 0.1	$ 0.6	$ 0.5
Accrued other long-term liabilities	$ 5.4		$ 5.4

XML

Accumulated other comprehensive loss - Components of Changes in Accumulated Other Comprehensive Loss (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	$ 336,934
Ending Balance	341,946
Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(711)
Other comprehensive loss	(2,308)
Ending Balance	(3,019)
Neo Medical [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	711
Other comprehensive loss	(615)
Ending Balance	96
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive loss	(2,821)
Ending Balance	(2,821)
Other Investments [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive loss	102
Ending Balance	$ 102

XML

Revenue Recognition and Accounts Receivable - Schedule of Net Sales by Major Product Category by Reporting Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenue Recognition And Accounts Receivable [Line Items]
Net sales	$ 118,070	$ 121,394	$ 224,488	$ 226,987
Change	2.70%		(1.10%)
Bone Growth Therapies [Member]
Revenue Recognition And Accounts Receivable [Line Items]
Net sales	$ 47,765	49,706	$ 89,713	92,653
Change	(3.90%)		(3.20%)
Spinal Implants [Member]
Revenue Recognition And Accounts Receivable [Line Items]
Net sales	$ 28,222	30,092	$ 54,837	55,793
Change	(6.20%)		(1.70%)
Biologics [Member]
Revenue Recognition And Accounts Receivable [Line Items]
Net sales	$ 14,795	14,852	$ 28,887	28,544
Change	(0.40%)		1.20%
Global Spine [Member]
Revenue Recognition And Accounts Receivable [Line Items]
Net sales	$ 90,782	94,650	$ 173,437	176,990
Change	4.10%		(2.00%)
Global Orthopedics [Member]
Revenue Recognition And Accounts Receivable [Line Items]
Net sales	$ 27,288	$ 26,744	$ 51,051	$ 49,997
Change	2.00%		2.10%

XML

Revenue Recognition and Accounts Receivable - Schedule of Components of Net Sales (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenue Recognition [Abstract]
Product sales	$ 103,559	$ 106,947	$ 196,167	$ 199,210
Marketing service fees	14,511	14,447	28,321	27,777
Net sales	$ 118,070	$ 121,394	$ 224,488	$ 226,987

XML

Revenue Recognition and Accounts Receivable - Schedule of Allowance for Expected Credit Losses (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenue Recognition [Abstract]
Allowance for expected credit losses beginning balance	$ 5,389	$ 4,506	$ 4,944	$ 4,848
Current period provision (recovery) for expected credit losses	539	(32)	1,139	(214)
Write-offs charged against the allowance and other	(142)	(34)	(246)	(80)
Effect of changes in foreign exchange rates	(197)	(31)	(248)	(83)
Allowance for expected credit losses ending balance	$ 5,589	$ 4,471	$ 5,589	$ 4,471

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Revenue Recognition and Accounts Receivable - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Apr. 30, 2020	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Revenue Recognition And Accounts Receivable [Line Items]
CARES Act of 2020 funds received	$ 13,900	$ (4,791)	$ (2,880)
Other Long-Term Assets or Other Current Assets [Member]
Revenue Recognition And Accounts Receivable [Line Items]
Other contract assets		$ 1,000		$ 1,400

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Revenue Recognition and Accounts Receivable - Schedule of Changes In Contract Liability (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenue Recognition [Abstract]
Contract liability beginning balance	$ 1,396	$ 13,851	$ 4,791	$ 13,851
Recoupment recognized in net sales	$ (1,396)	(2,880)	$ (4,791)	(2,880)
Contract liability ending balance		$ 10,971		$ 10,971

XML

Business Segment Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2022 Segment
Segment Reporting [Abstract]
Number of reporting segments	2

XML

Business Segment Information - Summary of EBIDTA by Reporting Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Segment Reporting Information [Line Items]
Total EBITDA	$ 9,961	$ 12,777	$ 13,463	$ 14,614
Depreciation and amortization	(6,512)	(7,559)	(14,028)	(15,002)
Interest expense, net	(407)	(550)	(782)	(967)
Income (loss) before income taxes	3,042	4,668	(1,347)	(1,355)
Operating Segments [Member] | Global Spine [Member]
Segment Reporting Information [Line Items]
Total EBITDA	20,766	19,032	36,659	30,927
Operating Segments [Member] | Global Orthopedics [Member]
Segment Reporting Information [Line Items]
Total EBITDA	(2,422)	1,775	(5,518)	(454)
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Total EBITDA	$ (8,383)	$ (8,030)	$ (17,678)	$ (15,859)

XML

Business Segment Information - Summary of Net Sales by Geographic Destination for Each Reporting Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 118,070	$ 121,394	$ 224,488	$ 226,987
Global Spine [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	90,782	94,650	173,437	176,990
Global Orthopedics [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	27,288	26,744	51,051	49,997
U.S. [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	92,802	95,233	175,195	178,579
U.S. [Member] | Global Spine [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	85,899	89,077	162,965	166,832
U.S. [Member] | Global Orthopedics [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	6,903	6,156	12,230	11,747
International [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	25,268	26,161	49,293	48,408
International [Member] | Global Spine [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	4,883	5,573	10,472	10,158
International [Member] | Global Orthopedics [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 20,385	$ 20,588	$ 38,821	$ 38,250

XML

Acquisition-Related Amortization and Remeasurement - Components of Acquisition-Related Amortization and Remeasurement (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Acquisition Related Amortization And Remeasurement [Abstract]
Amortization of acquired intangibles	$ 2,051	$ 1,969	$ 4,052	$ 3,938
Changes in fair value of contingent consideration	(10,714)	(1,575)	(16,214)	(75)
Acquired IPR&D		500		1,500
Total	$ (8,663)	$ 894	$ (12,162)	$ 5,363

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Share-based Compensation - Schedule of Components of Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 4,460	$ 3,907	$ 8,792	$ 7,628
Stock options [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	205	398	564	1,059
Time-based Restricted Stock Awards and Units [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	2,410	2,019	4,580	3,746
Market-based / Performance-based Restricted Stock Units [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	1,497	1,053	2,941	1,950
Stock purchase plan [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	348	437	707	873
Cost of sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	205	209	416	387
Sales and marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	1,000	957	1,981	1,674
General and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	2,958	2,607	6,176	5,136
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 297	$ 134	$ 219	$ 431

XML

Share-based Compensation - Additional Information (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-Based Payment Arrangement [Abstract]
Shares issued under stock purchase plan, stock option exercises and restricted stock awards and units	157,979	194,745	162,864	245,255

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Income Taxes - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Components Of Income Tax Expense Benefit [Line Items]
Income tax effective rate	18.20%	48.20%	(46.30%)	(150.60%)

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Earnings Per Share ("EPS") - Schedule of Reconciliation of Weighted Average Shares Used in Diluted EPS (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Earnings Per Share [Line Items]
Weighted average common shares-basic	20,031	19,651	19,965	19,575
Effect of dilutive securities
Weighted average common shares-diluted	20,113	19,938	19,965	19,575
Stock Options And Stock Purchase Plan [Member]
Effect of dilutive securities
Effect of dilutive securities	23	171
Restricted Stock Units [Member]
Effect of dilutive securities
Effect of dilutive securities	59	116

XML

Earnings Per Share ("EPS") - Additional Information (Detail) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Restricted Stock Units [Member] | Outstanding Stock Options [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Weighted average outstanding options, awards and units not included in diluted earnings per share	1.6	0.8	1.6	1.4

XML

Subsequent Events - Additional Information (Detail) $ in Millions	Jul. 30, 2022 USD ($)
Subsequent Event [Member]
Subsequent Event [Line Items]
Upfront payment	$ 1.4