Note 3 - Revenue by Product Group, by Significant Customer and by Geographic Location; Geographic Information

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

3.

Revenue by Product Group, by Significant Customer and by Geographic Location; Geographic Information

Product revenue by product group is as follows:

	Years Ended December 31,
	2018					2017					2016
	Revenue		Percentage of Product Revenue			Revenue		Percentage of Product Revenue			Revenue		Percentage of Product Revenue
Orthobiologics	$	93,556		89	%	$	93,816		87	%	$	89,695		87	%
Dermal		396		0	%		2,755		3	%		2,759		3	%
Surgical		5,514		5	%		5,262		5	%		5,427		5	%
Other		6,065		6	%		5,950		5	%		5,051		5	%
	$	105,531		100	%	$	107,783		100	%	$	102,932		100	%

Product revenue from the Company’s sole significant customer, Mitek, as a percentage of the Company’s total product revenue was

73%,

73%,

and

75%

for the years ended

December 31, 2018,

2017,

and

2016,

respectively.

ORTHOVISC became available for sale in the United States on

March 

1,

2004,

and it is marketed exclusively by Mitek under the terms of an initial

ten

-year licensing, distribution, supply, and marketing agreement entered into in

December 2003.

The agreement was extended by Mitek for additional

five

-year terms in

2012

and in

2017,

with the current agreement to expire on

December 20, 2023.

In

December 2011,

the Company entered into a

fifteen

-year licensing agreement with Mitek to exclusively market MONOVISC in the United States. The agreement provides certain

milestone payments to the Company when rolling end-user sales of U.S. MONOVISC exceed certain target sales goals. For the years ended

December 31, 2018,

2017,

and

2016,

the Company recognized milestone revenue of

$0.0

million,

$5.0

million, and

$0.0

million, respectively. The milestone revenue of

$5.0

million in

2017

was as a result of MONOVISC achieving end-user sales in

2017

of

$100

million within a consecutive

12

-month period in the United States.

Total revenue by geographic location based on the location of the customer in total and as a percentage of total revenue are as follows:

	Years Ended December 31,
	2018					2017					2016
	Total Revenue		Percentage of Revenue			Total Revenue		Percentage of Revenue			Total Revenue		Percentage of Revenue
Geographic Location:
United States	$	85,351		81	%	$	92,905		82	%	$	83,972		81	%
Europe		11,730		11	%		12,435		11	%		10,953		11	%
Other		8,474		8	%		8,080		7	%		8,454		8	%
Total	$	105,555		100	%	$	113,420		100	%	$	103,379		100	%

On

May 2, 2018,

the Company publicly disclosed a voluntary recall of certain production lots of its HYAFF-based products, HYALOFAST, HYALOGRAFT C, and HYALOMATRIX. The Company initiated the voluntary recall after internal quality testing, which indicated that the products were at risk of

not

maintaining certain measures throughout their entire shelf life. While there was

no

indication of any safety or efficacy issue related to the products at the time, the Company removed the products from the field as a precautionary measure. During the

three

-month period ended

March 31, 2018

the Company recorded a revenue reserve for this voluntary recall of

$1.1

million of which

$0.9

million was related to revenue recorded in prior periods. The adjustments related to the initial revenue reserve subsequent to

March 31, 2018

were immaterial. The revenue reserves impacted Dermal and Orthobiologics product groups and all geographic locations.

Net long-lived assets, consisting of net property and equipment, are subject to geographic risks because they are generally difficult to move and to effectively utilize in another geographic area in a reasonable time period and because they are relatively illiquid. Net tangible long-lived assets by principal geographic areas are as follows:

	Years Ended December 31,
	2018		2017
United States	$	51,385	$	52,828
Italy		2,726		3,355
Total	$	54,111	$	56,183