SiNtx Technologies Inc (SINT)

[boston745]

We performed our annual goodwill impairment test in the fourth quarter of 2017. In our annual impairment test, we determined our Spine reporting unit’s carrying value was in excess of its estimated fair value. As discussed in Note 2, we elected to early adopt ASU 2017-04 in the third quarter of 2017. This resulted in an impairment charge of $272.0 million, representing the amount by which the reporting unit’s carrying value exceeded its estimated fair value. This reporting unit includes goodwill from Zimmer as well as additional goodwill from both the Biomet and LDR mergers. The forecasts used to recognize the goodwill related to the spine product categories of Biomet and LDR assumed cross sale opportunities of the combined businesses, including the proprietary Mobi-C Cervical Disc acquired with LDR, would enable the reporting unit to grow faster than the overall spine market. The primary drivers of impairment were lower than expected sales due to sales force integration issues and additional complexities of combining the Zimmer, Biomet and LDR spine product supply chains. As a result, it will take longer than originally anticipated to realize the benefits of the mergers of the Biomet and LDR spine product categories.

As we can see Zimmer does not expect to see growth in their Spine division at the pace they originally anticipated (they overpaid for LDR, common synergistic over-calculation). As such LDR will not grow their spine revenue in the future at the levels they anticipated so they had to impair goodwill. I still contend that they acquired LDR more for its Geo-presence than for Mobi even though Mobi was needed in their portfolio.

This is exactly what CL & I have been saying about LDR and whatever growth that Hanson is touting from new products isn't coming from Biomet/LDR acquisitions.