Orthofix Medical Inc. (OFIX) Earnings Call Transcript & Summary

Good morning, and welcome to today's Orthofix and SeaSpine merger announcement call. [Operator Instructions] I would now like to turn the conference over to our host, Alexa Huerta, Senior Director of Investor Relations at Orthofix. Alexa, please go ahead.

Thank you, operator. Good morning, everyone. Welcome to the Orthofix-SeaSpine Merger Announcement Call. Joining me on today's call are Jon Serbousek, President and Chief Executive Officer of Orthofix; and Keith Valentine, President and Chief Executive Officer of SeaSpine; as well as Doug Rice, Chief Financial Officer, Orthofix; and John Bostjancic, Chief Financial Officer and Chief Operating Officer of SeaSpine. This call is being shared live on the Internet, and there is a presentation available for viewing and download from the website of each company at www.orthofix.com and www.seaspine.com. The companies remind listeners that any forward-looking statements concerning the proposed merger and their respective financial and business impacts that are provided on this call or in related materials are subject to risks and uncertainties. The companies' SEC filings, including the 10-Q and 10-K reports, as well as the presentation itself provide important information on the factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. In addition, in connection with the merger and to be discussed today, Orthofix has filed with the SEC a registration statement, which will include a prospectus of Orthofix and a joint proxy statement of Orthofix and SeaSpine that will contain important information about Orthofix, SeaSpine, the merger and related matters. Before we begin, I would like to highlight that there may be a short delay between the live telephone audio and the presentation being shown on the webcast. For the best experience, please use either the webcast for both the audio and video content; or if you dialed in by phone, download the slides from our website in advance from yourself. Again, to access the webcast and to download a copy of the presentation, please visit the IR section of the Orthofix or SeaSpine website under Events and Presentations. A replay of the event will be available following the call. Both Orthofix and SeaSpine have released preliminary 2022 third quarter net sales this morning in 2 separate press releases that were announced following the initial merger announcement. With that, I am pleased to turn the call over to Jon Serbousek, President and CEO of Orthofix. John?

Thanks, Alexa, and thank you for joining us on such short notice. This is an exciting day for Orthofix and SeaSpine. Together, we are combining 2 innovative and ambitious organizations in a merger of equals to create a leading global spine and orthopedic company. I'll kick off today's call with an overview of the transaction and why we are so excited about the combination. Keith will then discuss the strategic rationale in greater detail as well as the financial benefits. We will then all be available to address questions. What makes this merger so compelling is the highly complementary nature of our respective strengths for our products and product portfolios to our commercial channels and employees and just as importantly, our financial profiles. The result is a unique combination of scale, differentiated product and surgical solution offerings, global commercial reach and a balance sheet strength that we believe positions the new company to be successful in both the near and long term. Turning to Slide 5. The combination of our 2 organizations creates a number of significant strategic and financial benefits as a combined entity, which we believe will ultimately drive sustainable, profitable growth and create significant shareholder value. First, we are delivering an industry-leading suite of spine and orthopedic offerings across a variety of high-growth segments including enabling technology, motion preservation, interbody devices and limb reconstruction, among others. Next, we are creating one of the broadest biologics and regenerative technology portfolios in the industry with a full spectrum of products to meet the needs of surgeons and patients across CBMs, DBMs, synthetics, stimulation and growth factors in the future with the recently announced CGBio partnership. Beyond these innovative products, the combined offering of differentiated technologies, including enabling technologies highlighted by OrthoNext and 7D FLASH will allow us to serve a full continuous surgical care from preoperative planning through surgical navigation. Moving outside of the portfolio, this combination strengthens the commercial reach of both organizations in the U.S. and internationally. Leveraging the broad portfolio and innovative pipeline, a new company will be able to attract larger, more dedicated distribution partners supported by the ability to invest behind a direct sales organization in select markets. As a result of the highly complementary nature of our businesses and the scale at which we expect to operate at, we anticipate that we will be able to realize meaningful revenue and cost synergies. We expect our growth initiatives will be funded through the strength of our combined balance sheet and without the need to raise dilutive capital. Now turning to Slide 6 for an overview of the transaction. The terms of transaction are straightforward and are consistent with a merger of equals structure, with a pro forma ownership at the time of closing of 56.5% to Orthofix and 43.5% to SeaSpine. SeaSpine shareholders will receive approximately 0.4163 shares of Orthofix common stock per each share of SeaSpine that they own. Turning to leadership. The new company's Board will consist of 9 directors, 5 of which will be designated by Orthofix, including the Lead Independent Director, and the remaining 4 will be designated by SeaSpine. I will serve as the Executive Chairman of the Board, and Keith Valentine will serve as the President and Chief Executive Officer and a member of the Board. The remainder of the combined company's leadership team will be named prior to closing and is expected to be inclusive of executives from both Orthofix and SeaSpine. The combined company will be headquartered in Lewisville, Texas. This location will conduct general business, product development, medical education and manufacturing. The company will retain primary offices in Carlsbad, California with a focus on spinal product innovation and surgical education; and in Verona, Italy with an emphasis on product innovation, production and medical education for orthopedics. The current facilities in Irvine, California; Toronto, Canada; Sunnyvale, California; Wayne, Pennsylvania; Olive Branch, Mississippi; Maidenhead in U.K.; Munich, Germany; Paris, France; and Sao Paolo, Brazil will also be retained. We expect this transaction to close during the first half of 2023 and the deal is subject to approval by both companies' shareholders as well as customary closing conditions and regulatory approvals. Now turning to the benefits of this transaction in a little bit more detail on Slide 7. The combined business will have a very attractive financial profile. Based on our attractive growing markets, our strong combined product portfolio and the revenue synergies just mentioned, we expect to drive double-digit top line growth following the integration period, putting us amongst the top tier of our spine and orthopedic peers. After 3 years, revenue is expected to be around $1 billion with a double-digit compound annual growth rate. We expect this deal to be adjusted EBITDA accretive in dollars in the second year post-close and also be adjusted ROIC accretive once all of the synergies have been fully realized. By the end of 2025, gross margins will be greater than 70% and adjusted EBITDA margins will be in the mid-teens. One of Orthofix' differentiating features is a strong profitability profile and proven cash flow generation. Combining that with the anticipated top line growth trajectory of the merger, along with the cost synergies we expect to realize, we will have the ability to self-fund various strategic initiatives we collectively view as core to the long-term success of the business. By leveraging the capital currently available to the company, we can invest in potential organic and inorganic innovation, sales force expansion and working capital without the need for dilutive equity financing. Now to provide an overview of the transaction, I'd like to hand the call over to SeaSpine's President and Chief Executive Officer, Keith Valentine, to provide more detail on the merger. Keith?

Thanks, John. I am happy with excitement and enthusiasm about this merger and what it means for everyone at both organizations. Our goal at SeaSpine has been to deliver transformative solutions at every level, giving surgeons and hospitals and the companies to achieve better outcomes and improve patients' lives. I'm confident that together with Orthofix, we can accelerate our ability to deliver for our customers and their patients. Turning now to Slide 8. As John just outlined, there are a number of product-specific benefits that come as part of this combination, which are due largely to the fact that we have highly complementary portfolios in growth segments across spine and orthopedics. This graphic represents how we will leverage our portfolio during a spine or orthopedic surgery with the use of our enabling technologies and including one or more of our biologics and regenerative technologies. The combined company has strong positions in spinal implants, biologics and regenerative technologies, enabling technologies and orthopedics. In aggregate, the new company would be attacking a large $20 billion total addressable market with over $7 billion of that coming from fast-growing focused growth segments where we each have distinct competitive advantages. The focused growth segments include motion preservation, enabling technologies and computer aided surgeries, long bone stimulation therapies, interbodies, DBNs and pediatrics. Our next few slides will walk through some of the key portfolio advantages that come as a result of this merger. Turning to Slide 9, an area of exciting growth in the spine and orthopedic space is the introduction and adoption of enabling technologies. The new company will have a complementary portfolio of enabling technologies that allows it to service the full continuum of surgical care from preoperative planning through surgical navigation. Flagship enabling technologies include the 7D Surgical FLASH navigation platform, which is the only approved image guidance system that utilizes a novel and proprietary camera-based technology and machine vision algorithms. And the OrthoNext preoperative planning system, the only software tool in the market for deformity analysis and preoperative planning for pediatric orthopedic procedures. Not only do these represent a significant growth opportunity on their own, but they also facilitate the cross-selling of other portfolio of products to be used as part of the procedure. Turning to Slide 10, we have highlighted our leading spinal hardware portfolio. With innovative products across the hardware business, we have strong positions within a number of high-growth segments in spine and address key product gaps for both companies. This merger will create a best-in-class cervical platform with NorthStar posterior cervical fixation systems; 7D enabling technologies; a broad spectrum of biologic offerings, M6-C next-generation artificial cervical disc, [ platings such as ] Admiral anterior cervical plating system, interbodies including WaveForm and constructs, new titanium spacer system with Nanovate technology; and finally, CervicalStim, the only stimulation device on the market with an approved cervical indication. Our thoracolumbar platform will be strong as well with Mariner pedicle screw system packaged in a streamlined offering designed to provide surgeons with strength and versatility. Another strong product in the market is the ForzaXP expandable spacer system, which offers titanium and alloy expandable interbodies for PLIF and TLIF procedures, can be expanded to fit the patient anatomy and has large graft windows. I'm very excited about the expanded breadth of bag the new company will have, which will increase our product offerings per procedure. This merger will create a company that is sized to support large distributor conversions. Turning to Slide 11. The combined company will continue to be a significant player in the deformity and limb reconstruction segment of orthopedics, with a variety of products highlighted by the Fitbone platform, which includes the currently available intramedullary limb-lengthening system and the underdevelopment fixed spine scoliosis solution. This merger will also help us better address the pediatric market. The new company will have a complementary portfolio of specialized hardware and enabling technologies including specialized spine, limb deformity, limb reconstruction and software planning and imaging solutions that enable it to service the full patient continuum of care for pediatric orthopedic surgeons. Currently, an $800 million market, pediatrics is among the fastest growing markets in orthopedics. Turning to Slide 12. The next segment of the business, which we are incredibly excited about is biologics and regenerative technologies. The combined company will offer industry-leading full-spectrum portfolio of biologics and regenerative technologies to meet a variety of healing aides both intraoperatively and postoperatively. Moving from left to right, we will offer a wide variety of high-quality biologics spanning cellular bone matrices or CBMs, which include the industry-leading Trinity Elite allograft; and our most recent launch of the novel Virtuos lyograft; as well as demineralized bone mass or DBMs, which includes SeaSpine's OsteoTorrent and OsteoStrand product families in combination of Orthofix' FiberFuse demineralized cortical fibers. And moving right to synthetics with the Opus family of products, we have the osteoconductive matrix, osteoconductive bioactive graft for spine procedures and magnesium injectable settable synthetic. Growth factors is also an exciting new space for the combined organization to explore as we seek to bring the next evolution of recombinant bone growth factor technology in the market through our strategic partnership with CGBio, a developer of innovative synthetic bone grafts currently used clinically in ASIA for spine, orthopedic, trauma and dental applications. In addition to bringing one of the most comprehensive biologics offerings to the market, we are uniquely positioned as the leading player in the bone stimulation space, which provides surgeons and patients who are postoperative an adjunct in healing solutions. This portfolio includes the industry-leading and only approved cervical indication in the market with CervicalStim fusion therapy device and the recently launched AccelStim bone healing therapy, a low-intensity pulse ultrasound, our LIPUS product for the healing of bones, for both crush fractures and nonunion fractures. Turning to Slide 13. As a combined business, there are clear benefits from the complementary portfolios when it comes to both scale and diversification. The new company based on trailing 12-month revenues through September 30, 2022, has done over $690 million in sales spread across the 4 major segments, making it the sixth largest spine business globally. We also have ambitions to quickly put ourselves among the fastest-growing companies in the industry by focusing on delivering innovation within high-growth verticals. We believe that this combination of scale and growth will make us one of the most compelling investments in medical technology. Turning to Slide 14. Another benefit of the merger is the expansion of our global operational footprint. While SeaSpine has historically been a U.S.-focused organization, Orthofix has built a well-established international infrastructure that combines manufacturing and R&D with distribution. With an approximate 80% U.S. and 20% international revenue split on a pro forma basis, the combined organization now has products distributed in 68 countries across 6 continents, supported by over 1,600 employees globally. Importantly, we expect to create opportunities for those employees, SeaSpine and Orthofix both recognize the valuable contributions that our employees make to our success. We expect the new company reflects the capabilities of talent of both organizations. Over time, we believe the creation of a broader, more diverse company will support even greater career development opportunities. Turning to Slide 15. A key to successfully driving the adoption of products and the growth of the business in this industry is the ability to establish a network of high-quality distribution partners who have critical relationships with surgeons and hospitals. With our broader product and services portfolio, increased resources and deep pipeline, the new company will be able to attract and support larger, dedicated distribution partners. We will also be able to invest in direct sales representatives in select markets to engage even more surgeon users for certain product segments. Turning to Slide 16. From a financial impact, we believe there is an opportunity to drive meaningful revenue and cost synergies with the combined businesses. Starting with revenue, the material expansion of the product portfolio and the increased size and geographic footprint of the company offer a number of potential revenue synergies. We now have the ability to address key product gaps for both companies, such as enabling technologies and motion preservation, more efficiently cross-sell products in the U.S., leverage SeaSpine's portfolio of products within Orthofix' well-established own U.S. commercial infrastructure, facilitate the conversion of larger distributors and increased per procedure revenue as more products are utilized in surgical procedures. We also expect to be able to realize meaningful cost synergies where we will be able to eliminate redundancies and streamline certain aspects of our operations. In total, we believe that we can take at least $40 million of annual operating expenses out of the combined P&L over the next 3 years. As a result of these synergies, we expect this combination to be accretive to Orthofix' stand-alone adjusted EBITDA by year 2, and approximately breakeven to Orthofix' standalone adjusted EPS by year 3. In addition, we will find working capital and CapEx efficiencies through economies of scale in spinal implant sets and inventory asset utilization allowing us to reinvest additional cash back into the business for product innovation. This is significant. And the all-stock nature of this transaction allows shareholders from both companies to participate in the new company's growth and profitability upside. To summarize on Slide 17, we believe this transaction creates one of the most compelling companies in the spine and orthopedics industry and one of the more compelling companies in that tech. The combination of highly complementary portfolios of products and the procedural solutions transforms the new company into one of the largest, most innovative, fastest-growing companies in the space. Supported by a strength in commercial infrastructure, we believe we can drive meaningful synergies and unlock tremendous value. Our strong capital structure further maximize the potential of our value creation initiatives allowing the company to self-fund its growth initiatives without the need for diluted equity financing. That concludes our prepared remarks. I would now like to open up the line for questions.

[Operator Instructions] And our first question today comes from Mathew Blackman of Stifel.

Congratulations. Just a couple for me. Maybe for Keith and Jon, if you want to chime in. Thinking through the strategic benefits which you laid out, there's some very clear portfolio and channel synergies. But maybe you can give us a specific example of what this transaction allows the combined company to do that perhaps the independent entities couldn't do stand-alone, whether it's R&D or something commercial? Just anything tangible you could give us a sense of, and then just a couple of follow-ups.

Yes. I think one that we're most excited about as you look at the investments that have been made over the past couple of years in SeaSpine's cervical portfolio, the ability to bring forward new anterior cervical fusion options, posterior cervical, combined with enabling technology and now add in there motion preservation. So those are the kind of synergies that we think we can really have a very exciting sales opportunity for.

Yes, Matt, this is Jon. Thanks for the question. And also, if you look at OUS, we have a very robust pipeline, commercial channel there. And with the biologics that SeaSpine has and 7D, it's a great opportunity to further accelerate that technology globally and utilize that distribution channel as well. So items like that is what we're looking at as far as really driving the growth.

I appreciate that. And maybe can you give us some sense of -- you do not necessarily need a specific number, but maybe just some qualitative assessment of customer or account overlap between the 2 companies today. Clearly, there are real opportunities for cross-selling. That's number one. And then number two, I just want to confirm that in reading that Slide 7, particularly the footnote, I want to make sure I'm reading it correctly. Did that financial framework of, call it, roughly $1 billion and revenue growth in the double-digit range does not include any revenue synergies? And if that's the case, can you just give us some sense of magnitude of what potential revenue synergies you think could play out over time? I'll get back in queue.

Yes. We really don't have the granularity by territory. But I can tell you this, we feel very comfortable about just both of us being in this marketplace and knowing how our footprint is across the United States. I think there is much more opportunity for synergy and that will be defined over the course of time. There's a distance of time here between obviously announcing the deal and closing the deal and then all of the work that will be necessary in the field. But I feel really good about the sales and management teams and their ability to be able to work together to understand at the appropriate time how we will navigate the field. But I think, you look at those opportunities we talked about before, cervical motion preservation being added to one part of the distribution channel, enabling technologies being added across the entire product range. Those are all exciting things that don't have overlap. And those are the areas that I want to be -- make sure we're most focused on. I'm really excited about how enabling technologies can help on the orthopedic side. I think without a doubt, there's loads of synergistic opportunities with more advanced distributors, larger distributors that we'll be able to recruit over time. Those are all the things that I want to be most focused on and most opportunistic on. And I don't think -- and I think that we have thoughtful folks in management that are going to prevent the overlap from becoming the issue. And instead it's going to be about the expansion and about the collaboration that we really want to firmly see.

Yes. Keith said that great, very concisely. Matt, the other thing too is that at our current scale, and looking at where we look to see our markets, we know our markets pretty well and our channel partners pretty well. We would not be able to share all our granular data as of date. But we feel really good about the 1 and 1 equal more than 2. So we're in a good position on that, we believe.

And Matt, this is Doug. With regards to the revenue disclosure and the path to $1 billion, it really just reflects the natural momentum that SeaSpine has enjoyed for several quarters in terms of double-digit growth and the high single-digit growth that Orthofix is headed to. We know that from a combined basis, like Keith and Jon have both said, that we feel like there's a lot of net revenue synergies out there and that should provide upside to that model and help us on that path to $1 billion.

And the next question goes to Ryan Zimmerman of BTIG.

All right. Jon, Doug, just when I thought I was out, you pulled me back in. So congrats. I want to talk about a couple of questions here.

You can't get away from us Ryan.

No, I can't get away from you guys. So I wanted to ask a couple of questions, though. There is -- obviously, the products are very complementary. But there is some overlap in hardware. And so Jon, Keith, I'd love your thoughts about revenue dis-synergy. What you may expect in terms of maybe phasing out some of the legacy OFIX products for, say, a newer, refreshed and not to -- but more higher growth portfolio from SeaSpine and how you think about those dynamics playing out over the next 12 to 24 months?

Yes. Thanks, Ryan, for the question. This business is very unique in that there are high surgeon preferences. And so people that are naturally using Orthofix are using it for a reason. And as new products come into the market, they will look at those and determine whether to stay with them -- stay with Orthofix or move forward. This gives us a great opportunity to put new products in front of surgeons, but also maintain our product lines so that our existing valued customers are comfortable with what we do. So the beauty of it is we don't have to rationalize anything immediately to hit the numbers we were talking about. And our scale, we are able to run down both those focus products. Over time, it will naturally occur just as well as the portfolios that are coming through. We both have pipelines that are -- product portfolio pipelines that are active right now, and those products will come in and layer over the top of the existing products, and we'll get the value out of that. So the uniqueness of our business allows us to utilize both of our portfolios to our advantage and moving forward.

Got it. Okay. And then, Keith, you've been in spine for many years, as many people know, but I'm curious kind of how you think about now taking over this company as some of the other areas of Orthofix, BoneStim has been kind of a mature market, OFIX has been a little subscale in pediatric orthopedics, obviously, a very attractive area. How do you think about portfolio management for the business outside of spine longer term? And how should investors think about that with the combined company?

Yes. I think it brings a great deal of opportunity, as we talked about some of the synergies with even the product lines that SeaSpine already has particularly the enabling technologies offers, new avenues. I think -- I personally feel strongly that as we able to recruit and retain more exclusive distributors, they're going to be able to cross-sell. They're going to be able to do things that I think we'll be able to take advantage of that broader portfolio. I think that the bone growth therapies area is one that has a number of -- the ability for indications in spine specifically that no one else can talk about. And that's exciting. That's exciting for distribution, that's exciting for expansion and that's exciting for collaboration. And I think that diversity of the division, especially the orthopedics group that has done a phenomenal job OUS, and will continue to have growth opportunities in the U.S., which are very important, I think, to the entire health of the organization. So I'm excited those other areas. I'm really excited, too, that we have the ability to bring technology to them in the enabling side and offer something new in the bag, if you will, and something that I think that, that group in Toronto specifically, has the ability to cater and specifically look at those markets and do unique things then that sales force has an edge on. And so I view it as very complementary and excited to move forward with it.

Okay. And then the last question for me, investors, certainly, this is top of mind. I mean the history in spine in M&A has been a challenging one, I think, to say the least, right? And the risk and the worry that investors have is around distribution and the potential for distribution to potentially leave the combined organizations when they do close. What can you say and what have you done to derisk distribution? And just help investors feel at ease that this will be successful in the combined company.

Yes. I think, again, it goes back to -- you look across the United States, and we're each stronger in different areas largely. And again, the specifics we're going to have to get to over time. But broadly, I think we understand where each other's strengths are, and I think those strengths will continue to be capitalized upon. I think where there are areas of overlap, I think it's about being thoughtful. And I think that the sales management teams from both sides will have the ability to really be thoughtful on how we approach it. I think often what happens when it's a much larger transaction, I think sometimes there's heavy handed items that go on and make people nervous, and that's not our style. I think our style has shown even during the process of diligence, we're very collaborative teams, we're very open-minded teams, and that's what we'll bring to the sales force over time and make sure that those decisions involve people, that there's clear communication and that we're also doing it in -- really the focus on surgeons. And ultimately, we want to make sure we continue to be the best provider for not only surgeons, but the patients that they treat. And I think that needs to be a very common theme all the way down into the sales channel. And I think that, that will build up trust and will genuinely show that there's collaboration at heart, not necessarily anything else from what we've seen in the past with mergers and combinations in the sales field.

Yes, Ryan, one other item, too, is that, as Keith and I talked about this merger, we shared philosophies about commercial channels and other items such as people. And we've been rebuilding our channels just as SeaSpine and has been rebuilding their commercial channels. So that's fresh. And the people that we are adding understand what we're trying to build. And we're building trust with them as well as we go forward. And we want to convey that trust as we go into this next phase because there's room for a large distribution channel here, much more addition to that. So we're looking forward to actually working with each of our channel partners, distribution partners and building a larger overall channel for the combined companies.

And the next question goes to Rich Newitter of Truist.

Congratulations on the transaction. Maybe -- a lot of questions, obviously, have been asked. But specifically, if I look at your Slide 13 in the combined company and the revenue mix that's there, I was just wondering, as you think out to the target date that you've kind of indicated for turning EBITDA profitable and double-digit growth and when revenue synergies will kick in. What -- how do you see the business mix shaping up between bone growth, implants, biologics and orthopedics? Do you think that mix stays largely the same? Are certain divisions in your mind, envisioned to increase as a percentage of pie or potentially decreasing? I'd love to just get your thoughts there. And maybe you can weave into where you think investment will be heaviest between those.

Yes, Rich, thanks for the question. It's Jon. We look to invest in all those areas, we've been under this investment strategy. In BGT, specifically, not only investing in channel and building our physio channel to refresh fracture opportunities since we added a sales stem, which is new products and then also people on the street. In our biologics area, we've done the same. But in our orthopedics area, we've been under an investment in our channel and products outside the U.S. as well as inside the U.S. So those individual entities will continue to grow under the current plan and format until we, call it combined company, deems a different direction, but we see those as great opportunity areas. In the Spine and Biologics area, as the combination of portfolio comes together really creates a powerful combination. And so we look at -- continue to invest in the area, not only from -- we've got most of the gaps filled, but also second-generation as well as expanding that overall portfolio. So we look at it as far as an investment there, we'll do it with discipline, we'll do it with very specificity, but we see opportunity to grow each of those individual channels in the near term. As we go into the longer term, we'll make those decisions as the products and portfolios. We also talk about some of our views towards additional [indiscernible] organically and inorganically. Those are conversations that will come -- or discussions we'll come back to you in the future and share with you. But we see it as a very positive combination of products and also the teams that come together to basically drive investment and also growth in these areas.

Okay. That's helpful. And then just going back to Ryan's question a moment ago, I do think this is probably going to be one of the biggest focus areas. We've seen so many spine transactions over the last several decades, and there's inevitably an integration kind of disruptive period before there's a stabilization and then eventually kind of a 1 plus 1 equals 2 situation. So I'm just curious to how you're thinking about potential for maybe a little bit disruption dis-synergy initially. Do you feel like this is the transaction that just bucks the trend? And if so, why? And how do you think you'll guide to near-term trends when you guys are a combined entity as you'll be having to provide near-term guidance as well in a few months here?

Yes. Rich, it's Jon. Having been through a couple of those transactions, and I can fully appreciate the dynamics that's going -- that went on in those. What I find really different about this is it's a merger of equals. We're bringing 2 teams together, and we're building a company of the best and balance between the companies. And I think that's a very different dynamic when you're looking at how you put together a product portfolio, how you put together our management team, how do you put together a commercial team. And so I think that's going to give us an advantage. And in conversations with Keith, very similar philosophies between these companies as far as go-to-market philosophies, how we deal with -- manage people, how we build businesses. So I think that's the collaboration that you'll see. Often times -- and it's also in the general structure of the management team, assuming an executive chair role, I must still be around and basically be able to help Keith and the team be as successful as possible and -- but not again -- not get in their way. But it comes down to that I see that as a powerful combination of merger of equals versus just an acquisition and then basically -- oftentimes, the previous management team goes away and you're left with assets, but not people and teams.

Yes. And I would agree on all those points, Jon. These are strong points of, I think, how we're going to collaborate and why we feel so confident. But I do feel this is different than some of the transactions that you're probably thinking about and giving reference to. And part of that reason is where our presence is as companies in spine specifically across the United States. And I think there's a much more balanced look of the United States when we get forward over the next 4, 6 months, what have you. And I think what you're going to see is there's really very little overlap to deal with and there's more opportunity to deal with. And I think that's what will be different. But I think also, it comes down to, again, how we're going to communicate and how we're going to be transparent with those distributors and make sure just as we've said from the beginning, they are partners with us and you treat partners in such a way that it brings confidence and clarity.

And the next question goes to Kyle Rose of Canaccord.

Congratulations on the deal here. Sure it's been a busy couple of months. Just -- sorry to belabor the point, but just want to circle back to the integration plans. Nobody obviously plans for challenges or bumps in the roads or extended time lines from an integration perspective. So maybe just help us understand what's going to happen over the course of the next 6 to 12 months to ensure a smooth transition with the teams. And then I just want to be totally clear, when I look at this guidance number over the course of the next 3 years, you're not assuming any revenue dis-synergies, correct? So we should assume year-over-year growth starting day 1 upon the close?

Yes. Thanks, Kyle. On the integration plan, we're right at the stage where -- Keith and I have been announced as far as being leading the company. But it comes down to we still have the full integration plan to go through. We'll name the next leaders. And then basically, we'll set together integration planning teams and we'll basically be executing from there forward. In a very traditional way, we'll have additional assistance on that as well. And so that's going to take place over the next several months. And we'll come back to you as more of that comes together. We are planning on a close in the first quarter of 2023 and we think this will be quite efficient. In the early conversations that Keith and I have had, it seems to be pretty straightforward. We think we have common thinking here and so we're looking forward to a very smooth process. As far as the financial net, I'll let Doug handle that.