Going, going, gone: Surgalign sells off digital health, hardware assets for $5.9M in bankruptcy auction

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来源: FierceBiotech

Surgalign’s bankruptcy filing last month came after a drawn-out period of financial frailty for the company, which took in just under $82 million in revenues for all of 2022—about 9% lower than the previous year—and calculated a net loss of more than $54 million.

Surgalign, which was founded more than two decades ago and once boasted annual revenues of more than a quarter of a billion dollars, is now set to be sold for parts for a total of less than $6 million.

The surgical devicemaker’s saga drew to a close in an auction held Friday, a little over a month after it voluntarily filed for Chapter 11 bankruptcy. Surgalign’s hardware and biologics assets went to Xtant Medical Holdings, while Augmedics won the bid for the company’s digital health assets, Surgalign reported.

“We are pleased to have concluded the sale process and believe with Xtant and Augmedics, our technology and its potential will live on,” CEO Terry Rich said in the company’s announcement. “I cannot thank our customers and partners enough for their support through this process. Further, I want to acknowledge the entire Surgalign team for their unwavering commitment throughout the years and for their ongoing passion to develop the best solutions to help drive better patient outcomes.”

Xtant’s $5 million bid for the bulk of Surgalign’s assets dates back to just before the mid-June bankruptcy filing, Surgalign said at the time. Upon deciding to begin Chapter 11 proceedings, Surgalign put their agreement on hold; Xtant was then labeled the “stalking horse bidder” in the bankruptcy sale process, making its bid the minimum for the auction.

Since no other companies topped that original bid, Xtant is once again set to take over Surgalign’s domestic and international biologics and spinal fixation businesses, including both assets and liabilities associated with those offerings. In a statement Friday, Xtant CEO Sean Browne said, “We are pleased to add these attractive assets that we anticipate will contribute to our growth.”

Earlier this year, Xtant picked up two of Surgalign’s spinal implant product lines for $17 million.

Meanwhile, Augmedics successfully bid $900,000 in the auction to acquire all of the assets and certain debts linked to Surgalign’s digital health business. That work centers around the Holo Portal platform, which uses augmented reality and artificial intelligence technologies to improve surgical planning and guidance for spine procedures.

In a statement of Augmedics’ own on Monday, CEO Kevin Hykes said the company would use the new tech additions to bolster its own AR-powered Xvision Spine System for surgical guidance.

Xtant and Augmedics’ purchases are slated for official bankruptcy court approval on Aug. 8, barring any objections to their bids.

Surgalign’s bankruptcy filing last month came after a drawn-out period of financial frailty for the company, which took in just under $82 million in revenues for all of 2022—about 9% lower than the previous year—and calculated a net loss of more than $54 million.

Last fall, as its operating expenses remained untenably high and cash stores shrank, Surgalign began looking for strategic alternatives while also embarking on a restructuring plan—complete with layoffs and a shift in its operational priorities, as evidenced by this spring’s asset sale to Xtant—that was supposed to save between $30 million and $35 million in 2023.

Even with those savings, however, by the time Surgalign released its annual report (PDF) in March, the company seemed to know the end was near, noting at the time that without further funding, “we do not expect to have adequate capital resources to meet our anticipated cash needs and our current obligations as they become due into the fourth quarter of 2023.”

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