For Fiscal 2014, LDR Grows Revenue, Cuts Losses

LDR Holding Corp., which makes surgical implants to treat spine disorders, posted significant sales gains for the fiscal year ended Dec. 31, 2014. The company also shrank losses for the year.

Total revenue in the fourth quarter of 2014 increased 23 percent to $39.5 million for the Austin, Texas-based firm, compared to $32 million in the fourth quarter of 2013. Revenue in the fourth quarter from exclusive technology products grew 30.6 percent to $35.8 million, compared to $27.4 million in the fourth quarter of 2013. Revenue in the United States increased 28.8 percent to $32.0 million in the fourth quarter of 2014, compared to $24.8 million in the fourth quarter of 2013, and represented 81 percent of total revenue.

International revenue increased 5.5 percent during the fourth quarter of 2014 to $7.5 million compared to $7.1 million in the fourth quarter of 2013, and represented 19.0 percent of total revenue.

Revenue from sales of the company’s exclusive cervical products grew 47.1 percent in the fourth quarter of 2014 to $25.5 million, compared with $17.3 million in the fourth quarter of 2013, due principally to the growth from the Mobi-C cervical disc. Additionally, revenue from LDR’s exclusive lumbar products in the fourth quarter increased 2.4 percent to $10.3 million, compared with $10.1 million in the fourth quarter of 2013.

Gross profit for the fourth quarter of 2014 was $32.7 million and gross margin was 82.7 percent, compared to gross profit of $26.6 million and gross margin of 83.2 percent for the fourth quarter of 2013. This gross margin percentage decrease is primarily due to increased inventory reserves associated with the build-up of inventory related to product launches and enhancements.

Net loss for the fourth quarter of 2014 was $3.1 million, or 12 cents per share, compared to a net loss of $15.1 million, or 69 cents per share, for the same quarter a year ago.

For the year, LDR’s total revenue was $141.3 million, an increase of 26.6 percent, compared to $111.6 million for 2013. For fiscal year 2014, revenue from LDR’s exclusive technology products grew 35.2 percent to $125 million compared to $92.5 million in fiscal year 2013. Revenue from traditional fusion products decreased 15.1 percent to $16.2 million in fiscal year 2014 compared to $19.1 million in fiscal year 2013.

Gross profit for the year was $116.8 million and gross margin was 82.7 percent, compared to a gross profit of $93.6 million and a gross margin of 83.9 percent for 2013. LDR’s revenue in the United States increased 33.2 percent to $109.6 million, compared to $82.3 million. International revenue increased 8.1 percent to $31.7 million, compared to $29.3 million.

For the 2014 fiscal year,  net loss totaled $11 million, or 43 cents per diluted share, compared to a net loss of $27.9 million, or $3.09 per diluted share, for fiscal year 2013, (which included $7.4 million in non-cash expense related to the beneficial conversion of promissory notes, $6.9 million in non-cash accretion related to warrants and discounts on long-term debt and $5.6 million in non-cash expenses associated with the revaluation of warrants leading up to LDR’s initial public offering). The company went public in October 2013.

“We reported another quarter of strong growth in our exclusive technology products, including both our cervical and lumbar product lines. We want to thank surgeons for their support and our employees and distributors for their tremendous effort in making 2014 another very successful year for LDR, growing our year-over-year quarterly revenues by 20 percent or more in each quarter this year,” said Christophe Lavigne, president and CEO of LDR. “To date, there have been more than 80,000 VerteBRIDGE and 30,000 Mobi-C implantations worldwide.”

A specific Category I CPT reimbursement code for two-level cervical disc procedures in the United States went into effect on Jan. 1, and a DRG reimbursement code for cervical disc replacement procedures became effective October 1, 2014, according to Lavigne. This gives spine surgeons and hospitals reimbursement payment codes related to two-level Mobi-C procedures.

“We believe these developments will facilitate further surgeon adoption of Mobi-C,” he added. “Consistent with our Horizon 2016 plan, we continued to make investments in sales and marketing, physician education and reimbursement in the fourth quarter, as well as substantial investments in inventory and capital, including instrumentation sets, to take advantage of our ‘first mover’ position with Mobi-C being the only FDA-approved two-level cervical disc replacement solution.”

Lavigne said he was pleased with the five-year data from the premarket approval (PMA) trial on Mobi-C versus fusion for one- and two-level disc disease presented during the North American Spine Society annual meeting in November.

“Spine surgeons often regard five-year data as an important milestone to evaluate an implant’s demonstrable long-term clinical benefit and reliability,” he said “We believe that the presentation and upcoming publication of the five-year PMA trial data, combined with the publication of a study of the cost effectiveness of cervical total disc replacement with Mobi-C versus fusion for the treatment of two-level degenerative disc disease in the prestigious journal JAMA Surgery, will be very important to payors in making Mobi-C coverage and reimbursement decisions.”

Based on fiscal 2014 results, LDR expects revenue growth for the full year 2015 to be in the range of 15.5 percent to 17 percent, before any foreign exchange impact. This implies revenues, before any foreign exchange impact, in the range of approximately $163 million to $165 million. Based on current exchange rates, changes in foreign currency rates are expected to negatively impact 2015 revenue by 3.5 percent to 4.5 percent.