- Total revenue grew 43% to $90 million, including surgical
revenue growth of 53%
- EOS revenue of $11 million
- Adjusted EBITDA improved significantly, both year-over-year and
sequentially
Alphatec Holdings, Inc. (Nasdaq: ATEC), a provider of innovative
solutions dedicated to revolutionizing the approach to spine
surgery, today announced financial results for the quarter ended
September 30, 2022, and recent corporate highlights.
Third-Quarter and Full-Year 2022 Financial
Results
Quarter Ended September 30,
2022
Total revenue
$90 million
GAAP gross margin
66%
Non-GAAP gross margin
71%
Operating expenses
$94 million
Non-GAAP operating expenses
$78 million
GAAP operating loss
($35) million
Non-GAAP adjusted EBITDA
($6) million
Ending cash balance
$106 million
Recent Highlights
- Enhanced lateral sophistication from L3 to S1, applying
learnings from the prone transpoas (PTP™) approach to evolve the
lateral transpsoas (LTP™) procedure and develop a Midline ALIF™
approach;
- Launched ATEC’s first expandable interbody and Sigma Medialized
access technology to advance the minimally-invasive (MIS) posterior
approach, which can integrate with PTP to address L5-S1;
- Drove a 32% increase in surgical volume and a 22% increase in
users compared to prior year, and hosted approximately 150 surgeons
at training events;
- Achieved operating cost leverage with adjusted EBITDA margin
increasing approximately 870 basis points compared to prior year
and approximately 290 basis points sequentially;
- Closed $50 million revolving credit facility with $25 million
accordion feature.
“We are executing on our innovation and financial commitments
and I am confident we can continue to do so in the years ahead,”
said Pat Miles, Chairman and Chief Executive Officer. “During the
third quarter, ATEC’s Organic Innovation Machine introduced
multiple outcome-improving approaches and technologies, which were
enthusiastically received. It is increasingly clear: surgeons are
buying in to our clinical thesis which will go well beyond
lateral.”
Financial Outlook for the Full-Year 2022
The Company expects total revenue of $340 million for the fiscal
year ended December 31, 2022, in line with the 40% full-year growth
rate previewed in conjunction with the release of preliminary third
quarter financial results. This includes surgical revenue growth of
approximately 39% and $46 million of EOS revenue.
Financial Results Webcast
ATEC will present these results via a live webcast today at 1:30
p.m. PT / 4:30 p.m. ET. The live webcast can be accessed by
visiting the Investor Relations Section of ATEC’s Corporate
Website.
To dial in to the webcast, please register via this link.
A replay of the webcast will remain available through the
Investor Relations Section of ATEC’s Corporate Website for twelve
months. In addition, a dial-in replay will be available beginning
two hours after the webcast’s completion through November 10, 2022.
Access the replay by dialing (800) 770-2030 and referencing
conference ID number 97241.
Non-GAAP Financial Information
To supplement the Company’s financial statements presented in
accordance with generally accepted accounting principles in the
United States of America (GAAP), the Company reports certain
non-GAAP financial measures, including non-GAAP gross margin,
non-GAAP operating expenses, non-GAAP operating loss, and non-GAAP
adjusted EBITDA. The Company believes that these non-GAAP financial
measures provide investors with an additional tool for evaluating
the Company's core performance, which management uses in its own
evaluation of continuing operating performance, and a baseline for
assessing the future earnings potential of the Company. The
Company’s non-GAAP financial measures may not provide information
that is directly comparable to that provided by other companies in
the Company’s industry, as other companies in the industry may
calculate non-GAAP financial results differently, particularly
related to non-recurring, unusual items. Non-GAAP financial results
should be considered in addition to, and not as a substitute for,
or superior to, financial measures calculated in accordance with
GAAP. Included below are reconciliations of the non-GAAP financial
measures to the comparable GAAP financial measures.
About Alphatec Holdings, Inc.
ATEC, through its wholly owned subsidiaries, Alphatec Spine,
Inc., EOS imaging S.A. and SafeOp Surgical, Inc., is a medical
device company dedicated to revolutionizing the approach to spine
surgery through clinical distinction. ATEC’s Organic Innovation
Machine™ is focused on developing new approaches that integrate
seamlessly with the Company’s expanding AlphaInformatiX Platform to
better inform surgery and more safely and reproducibly achieve the
goals of spine surgery. ATEC’s vision is to become the Standard
Bearer in Spine. For more information, visit us at
www.atecspine.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainty. Such statements are based on
management's current expectations and are subject to a number of
risks and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements.
The Company cautions investors that there can be no assurance that
actual results will not differ materially from those projected or
suggested in such forward-looking statements as a result of various
factors. Forward-looking statements include, but are not limited
to: references to the Company’s revenue, balance sheet, growth and
financial outlook; planned product launches, introductions,
regulatory submissions or clearances; efforts to transform sales
and distribution channels; the Company’s ability to compel surgeon
adoption; and the Company’s future ability to finance its
operations and sufficiency of its cash runway. Important factors
that could cause actual operating results to differ significantly
from those expressed or implied by such forward-looking statements
include, but are not limited to: the uncertainty of success in
developing new products or products currently in the pipeline; the
uncertainties in the Company’s ability to execute upon its
strategic operating plan; the uncertainties regarding the ability
to successfully license or acquire new products, and the commercial
success of such products; failure to achieve acceptance of the
Company’s products by the surgeon community; failure to obtain FDA
or other regulatory clearance or approval or unexpected or
prolonged delays in the process; continuation of favorable
third-party reimbursement; unanticipated expenses or liabilities or
other adverse events affecting cash flow or the Company’s ability
to achieve profitability; uncertainty of additional funding; the
Company’s ability to compete with other products or with emerging
technologies; product liability exposure; an unsuccessful outcome
in any litigation; patent infringement claims; claims related to
the Company’s intellectual property; and the Company’s ability to
meet its financial obligations. A further list and description of
these and other factors, risks and uncertainties can be found in
the Company's most recent annual report, and any subsequent
quarterly and current reports, filed with the Securities and
Exchange Commission. ATEC disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise, unless
required by law.
ALPHATEC HOLDINGS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share amounts)
Three Months Ended Nine Months Ended September
30, September 30,
2022
2021
2022
2021
(unaudited) Revenue: Revenue from products and services
$
89,839
$
62,735
$
244,908
$
168,336
Revenue from international supply agreement
—
145
15
914
Total revenue
89,839
62,880
244,923
169,250
Cost of sales
30,323
23,266
80,715
56,713
Gross profit
59,516
39,614
164,208
112,537
Operating expenses: Research and development
12,111
9,391
32,429
23,031
Sales, general and administrative
75,954
61,494
218,093
162,578
Litigation-related expenses
3,602
1,209
16,629
5,711
Amortization of acquired intangible assets
2,774
2,012
7,181
3,392
Transaction-related expenses
—
373
120
6,156
Restructuring expenses
45
256
1,704
1,587
Total operating expenses
94,486
74,735
276,156
202,455
Operating loss
(34,970
)
(35,121
)
(111,948
)
(89,918
)
Interest and other expense, net: Interest expense, net
(1,285
)
(1,272
)
(4,176
)
(5,604
)
Loss on debt extinguishment, net
—
(7,434
)
—
(7,434
)
Other (expense) income, net
(615
)
886
(578
)
(1,020
)
Total interest and other expense, net
(1,900
)
(7,820
)
(4,754
)
(14,058
)
Net loss before taxes
(36,870
)
(42,941
)
(116,702
)
(103,976
)
Income tax provision
129
90
461
163
Net loss
$
(36,999
)
$
(43,031
)
$
(117,163
)
$
(104,139
)
Net loss per share, basic and diluted
$
(0.35
)
$
(0.43
)
$
(1.14
)
$
(1.09
)
Weighted average shares outstanding, basic and diluted
104,804
99,571
102,561
95,204
Stock-based compensation included in: Cost of sales
$
735
$
310
$
1,440
$
489
Research and development
1,653
1,440
3,987
2,602
Sales, general and administrative
8,689
9,004
25,037
23,633
$
11,077
$
10,754
$
30,464
$
26,724
ALPHATEC HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) September 30,2022
December 31,2021 (unaudited)
ASSETS Current assets:
Cash and cash equivalents
$
106,112
$
187,248
Accounts receivable, net
50,723
41,893
Inventories
102,159
91,703
Prepaid expenses and other current assets
9,718
10,313
Total current assets
268,712
331,157
Property and equipment, net
98,908
87,401
Right-of-use assets
28,451
25,283
Goodwill
37,593
39,689
Intangible assets, net
79,738
85,274
Other assets
2,881
3,249
Total assets
$
516,283
$
572,053
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable
$
33,374
$
25,737
Accrued expenses and other current liabilities
59,877
55,549
Contract liabilities
12,293
15,255
Short-term debt
13,550
342
Current portion of operating lease liabilities
4,529
4,212
Total current liabilities
123,623
101,095
Total long-term liabilities
389,762
367,933
Redeemable preferred stock
23,603
23,603
Stockholders' (deficit) equity
(20,705
)
79,422
Total liabilities and stockholders' (deficit) equity
$
516,283
$
572,053
ALPHATEC HOLDINGS,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in thousands)
Three Months Ended Nine Months Ended September
30, September 30,
2022
2021
2022
2021
(unaudited) Gross profit, GAAP
$
59,516
$
39,614
$
164,208
$
112,537
Add: amortization of intangible assets
28
270
37
806
Add: stock-based compensation
735
310
1,440
489
Add: purchase accounting adjustments on acquisitions
347
2,577
784
4,340
Add: excess and obsolete write-down
2,923
2,525
7,023
6,842
Non-GAAP gross profit
$
63,549
$
45,296
$
173,492
$
125,014
Gross margin, GAAP
66.2
%
63.0
%
67.0
%
66.5
%
Add: amortization of intangible assets
0.0
%
0.4
%
0.0
%
0.5
%
Add: stock-based compensation
0.8
%
0.5
%
0.6
%
0.3
%
Add: purchase accounting adjustments on acquisitions
0.4
%
4.1
%
0.3
%
2.6
%
Add: excess and obsolete write-down
3.3
%
4.0
%
2.9
%
4.0
%
Non-GAAP gross margin
70.7
%
72.0
%
70.8
%
73.9
%
Three Months Ended Nine Months Ended
September 30, September 30,
2022
2021
2022
2021
(unaudited) Operating expenses, GAAP
$
94,486
$
74,735
$
276,156
$
202,455
Adjustments: Stock-based compensation
(10,342
)
(10,444
)
(29,024
)
(26,235
)
Litigation-related expenses
(3,602
)
(1,209
)
(16,629
)
(5,711
)
Amortization of intangible assets
(2,774
)
(2,012
)
(7,181
)
(3,392
)
Transaction-related expenses
—
(373
)
(120
)
(6,156
)
Restructuring expenses
(45
)
(256
)
(1,704
)
(1,587
)
Non-GAAP operating expenses
$
77,723
$
60,441
$
221,498
$
159,374
Three Months Ended Nine Months Ended
September 30, September 30,
2022
2021
2022
2021
(unaudited) Operating loss, GAAP
$
(34,970
)
$
(35,121
)
$
(111,948
)
$
(89,918
)
Depreciation
8,010
5,311
22,601
13,788
Amortization of intangible assets
2,802
2,281
7,218
4,198
EBITDA
(24,158
)
(27,529
)
(82,129
)
(71,932
)
Add back significant items: Stock-based compensation
11,077
10,754
30,464
26,724
Purchase accounting adjustments on acquisitions
347
2,577
784
4,340
Excess & obsolete write-down
2,923
2,525
7,023
6,842
Litigation-related expenses
3,602
1,209
16,629
5,711
Transaction-related expenses
—
373
120
6,156
Restructuring expenses
45
256
1,704
1,587
Adjusted EBITDA
$
(6,164
)
$
(9,835
)
$
(25,405
)
$
(20,572
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221103006210/en/
Investor/Media Contact: Tina Jacobsen, CFA Investor
Relations (760) 494-6790 investorrelations@atecspine.com
Company Contact: J. Todd Koning Chief Financial Officer
investorrelations@atecspine.com
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