ATEC 8-K
Alphatec Holdings, Inc. (ATEC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition,” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
On November 6, 2023, Alphatec Holdings, Inc. (the “Company”) issued a press release announcing its financial results for its period ended September 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1.
The information contained in this Current Report, including the exhibit, shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 |
Press Release of Alphatec Holdings, Inc., dated November 6, 2023 |
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Alphatec Holdings, Inc. |
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Date: |
November 6, 2023 |
By: |
/s/ J. Todd Koning |
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J. Todd Koning |
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Exhibit 99.1 |
ATEC Reports Third Quarter 2023 Financial Results and Raises Full Year 2023 Adjusted EBITDA Guidance
Total revenue grew 32% to $118 million
Surgical revenue grew 32% to $104 million and EOS revenue grew 30% to $14 million
Delivered positive adjusted EBITDA of over $2 million
CARLSBAD, Calif., November 6, 2023 – 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, 2023, and recent corporate highlights.
Third Quarter 2023 Financial Results
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Quarter Ended September 30, 2023 |
Total revenue |
$118 million |
GAAP gross margin |
68% |
Non-GAAP gross margin |
72% |
GAAP operating expenses |
$118 million |
Non-GAAP operating expenses |
$94 million |
GAAP operating loss |
($38) million |
Adjusted EBITDA |
$2 million |
Ending cash balance |
$123 million |
Recent Highlights
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“We’re pleased with our achievements in the third quarter, and even more excited about what’s ahead for ATEC,” said Pat Miles, Chairman and Chief Executive Officer. “The field’s most discerning talent recognizes that only ATEC has the procedural sophistication, spine focus and spine knowhow to create and continually elevate an end-to-end ecosystem of technologies that will set the standards in spine care. Our recent capital raise positions us exceptionally well to exploit the momentum that unprecedented industry disruption is unleashing. We are boldly leaning into the opportunity ahead, accelerating investment to equip our new teams of tenured sales professionals to serve surgeries with the operational excellence that ATEC is renowned for. Our best is yet to come.”
Financial Outlook for the Full Year 2023
The Company continues to expect total revenue to grow 35% to $472 million for the fiscal year ended December 31, 2023, in line with the expectations previewed in conjunction with the release of preliminary third quarter financial results. This includes surgical revenue of $414 million and EOS revenue of $58 million. The Company now expects non-GAAP adjusted EBITDA of approximately $3 million for the full year 2023.
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 about two hours after the webcast’s completion through November 13, 2023. Access the replay by dialing (800) 770-2030 and referencing conference ID number 97241.
Inducement Awards Granted
As an inducement material to accepting employment with the Company, and in accordance with Nasdaq Listing Rule 5635(c)(4), ATEC today announced that the independent Compensation Committee of the Board of Directors has approved aggregate grants to thirteen new employees (who are not executive officers) of, collectively, 24,296 restricted stock units (“RSUs”) under the Company’s 2016 Employment Inducement Award Plan. The RSUs will vest in equal annual installments on each of the first four anniversaries of the grant date, provided that the recipient remains continuously employed by ATEC as of such vesting date. In addition, the RSUs will vest fully upon a change of control of ATEC.
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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.S. 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 be the Standard Bearer in Spine. For more information, visit us at www.atecspine.com.
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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 and commitments; planned product launches and introductions; and the Company's ability to compel surgeon adoption and transform the sales channel. 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; 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.
Investor/Media Contact:
Tina Jacobsen, CFA
Investor Relations
(760) 494-6790
Company Contact:
J. Todd Koning
Chief Financial Officer
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ALPHATEC HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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(unaudited) |
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Revenue: |
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Revenue from products and services |
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$ |
118,262 |
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$ |
89,839 |
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$ |
344,292 |
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$ |
244,908 |
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Revenue from international supply agreement |
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— |
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— |
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— |
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15 |
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Total revenue |
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118,262 |
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89,839 |
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344,292 |
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244,923 |
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Cost of sales |
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38,215 |
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30,323 |
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129,279 |
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80,715 |
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Gross profit |
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80,047 |
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59,516 |
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215,013 |
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164,208 |
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Operating expenses: |
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Research and development |
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20,000 |
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12,111 |
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47,831 |
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32,429 |
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Sales, general and administrative |
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91,411 |
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75,954 |
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269,960 |
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218,093 |
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Litigation-related expenses |
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2,715 |
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3,602 |
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12,815 |
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16,629 |
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Amortization of acquired intangible assets |
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3,873 |
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2,774 |
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10,461 |
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7,181 |
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Transaction-related expenses |
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278 |
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— |
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2,178 |
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120 |
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Restructuring expenses |
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129 |
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45 |
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333 |
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1,704 |
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Total operating expenses |
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118,406 |
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94,486 |
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343,578 |
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276,156 |
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Operating loss |
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(38,359 |
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(34,970 |
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(128,565 |
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(111,948 |
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Interest expense and other expense, net: |
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Interest expense, net |
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(4,459 |
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(1,285 |
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(12,225 |
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(4,176 |
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Other income (expense), net |
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47 |
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(615 |
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3,077 |
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(578 |
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Total interest expense and other expense, net |
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(4,412 |
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(1,900 |
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(9,148 |
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(4,754 |
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Net loss before taxes |
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(42,771 |
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(36,870 |
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(137,713 |
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(116,702 |
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Income tax benefit |
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(117 |
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(77 |
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(153 |
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(192 |
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Net loss |
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$ |
(42,654 |
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$ |
(36,793 |
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$ |
(137,560 |
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$ |
(116,510 |
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Net loss per share, basic and diluted |
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$ |
(0.35 |
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$ |
(0.35 |
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$ |
(1.18 |
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$ |
(1.14 |
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Weighted average shares outstanding, basic and diluted |
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122,468 |
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104,804 |
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117,026 |
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102,561 |
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Stock-based compensation included in: |
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Cost of sales |
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$ |
2,369 |
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$ |
735 |
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$ |
24,601 |
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$ |
1,440 |
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Research and development |
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6,790 |
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1,653 |
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9,587 |
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3,987 |
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Sales, general and administrative |
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10,914 |
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8,689 |
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26,541 |
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25,037 |
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$ |
20,073 |
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$ |
11,077 |
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$ |
60,729 |
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$ |
30,464 |
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ALPHATEC HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
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September 30, |
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December 31, |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
122,526 |
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$ |
84,696 |
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Accounts receivable, net |
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64,519 |
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60,060 |
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Inventories |
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130,672 |
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101,521 |
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Prepaid expenses and other current assets |
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15,841 |
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9,357 |
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Total current assets |
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333,558 |
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255,634 |
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Property and equipment, net |
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133,785 |
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101,952 |
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Right-of-use assets |
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27,086 |
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28,360 |
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Goodwill |
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71,555 |
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47,367 |
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Intangible assets, net |
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102,196 |
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82,781 |
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Other assets |
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2,041 |
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|
4,874 |
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Total assets |
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$ |
670,221 |
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$ |
520,968 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current liabilities: |
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Accounts payable |
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$ |
50,104 |
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$ |
34,742 |
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Accrued expenses and other current liabilities |
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77,251 |
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72,382 |
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Contract liabilities |
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13,833 |
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11,956 |
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Short-term debt |
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1,766 |
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14,948 |
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Current portion of operating lease liabilities |
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5,090 |
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4,842 |
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Total current liabilities |
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148,044 |
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138,870 |
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Total long-term liabilities |
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542,735 |
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393,162 |
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Redeemable preferred stock |
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23,603 |
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23,603 |
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Stockholders' deficit |
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(44,161 |
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(34,667 |
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Total liabilities and stockholders' deficit |
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$ |
670,221 |
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$ |
520,968 |
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ALPHATEC HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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(unaudited) |
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Gross profit, GAAP |
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$ |
80,047 |
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$ |
59,516 |
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$ |
215,013 |
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$ |
164,208 |
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Add: amortization of intangible assets |
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221 |
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28 |
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661 |
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37 |
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Add: stock-based compensation |
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2,369 |
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|
735 |
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24,601 |
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1,440 |
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Add: purchase accounting adjustments on acquisitions |
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— |
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347 |
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195 |
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|
784 |
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Add: excess and obsolete write-down |
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2,454 |
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2,923 |
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9,188 |
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7,023 |
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Non-GAAP gross profit |
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$ |
85,091 |
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$ |
63,549 |
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$ |
249,658 |
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$ |
173,492 |
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Gross margin, GAAP |
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67.7 |
% |
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66.2 |
% |
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62.5 |
% |
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67.0 |
% |
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Add: amortization of intangible assets |
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0.2 |
% |
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|
0.0 |
% |
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0.2 |
% |
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0.0 |
% |
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Add: stock-based compensation |
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2.0 |
% |
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0.8 |
% |
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|
7.1 |
% |
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|
0.6 |
% |
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Add: purchase accounting adjustments on acquisitions |
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|
0.0 |
% |
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|
0.4 |
% |
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0.1 |
% |
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0.3 |
% |
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Add: excess and obsolete write-down |
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2.1 |
% |
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3.3 |
% |
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|
2.7 |
% |
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2.9 |
% |
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Non-GAAP gross margin |
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|
72.0 |
% |
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|
70.7 |
% |
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72.5 |
% |
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|
70.8 |
% |
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Three Months Ended |
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Nine Months Ended |
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|
September 30, |
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September 30, |
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|
2023 |
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2022 |
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2023 |
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2022 |
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(unaudited) |
|
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|
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Operating expenses, GAAP |
|
$ |
118,406 |
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$ |
94,486 |
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$ |
343,578 |
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$ |
276,156 |
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Adjustments: |
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Stock-based compensation |
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(17,704 |
) |
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|
(10,342 |
) |
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(36,128 |
) |
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|
(29,024 |
) |
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Litigation-related expenses |
|
|
(2,715 |
) |
|
|
(3,602 |
) |
|
|
(12,815 |
) |
|
|
(16,629 |
) |
|
Amortization of intangible assets |
|
|
(3,873 |
) |
|
|
(2,774 |
) |
|
|
(10,461 |
) |
|
|
(7,181 |
) |
|
Transaction-related expenses |
|
|
(278 |
) |
|
|
— |
|
|
|
(2,178 |
) |
|
|
(120 |
) |
|
Restructuring expenses |
|
|
(129 |
) |
|
|
(45 |
) |
|
|
(333 |
) |
|
|
(1,704 |
) |
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Other non-recurring expenses1 |
|
|
— |
|
|
|
— |
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|
|
(1,349 |
) |
|
|
— |
|
|
Non-GAAP operating expenses |
|
$ |
93,707 |
|
|
$ |
77,723 |
|
|
$ |
280,314 |
|
|
$ |
221,498 |
|
|
|
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|
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Three Months Ended |
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Nine Months Ended |
|
||||||||||
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|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
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|
2022 |
|
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(unaudited) |
|
|
|
|
|
|
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Operating loss, GAAP |
|
$ |
(38,359 |
) |
|
$ |
(34,970 |
) |
|
$ |
(128,565 |
) |
|
$ |
(111,948 |
) |
|
Depreciation |
|
|
10,651 |
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|
|
8,010 |
|
|
|
28,998 |
|
|
|
22,601 |
|
|
Amortization of intangible assets |
|
|
4,094 |
|
|
|
2,802 |
|
|
|
11,122 |
|
|
|
7,218 |
|
|
EBITDA |
|
|
(23,614 |
) |
|
|
(24,158 |
) |
|
|
(88,445 |
) |
|
|
(82,129 |
) |
|
Add back significant items: |
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|
|
|
|
|
|
|
|
|
|
||||
|
Stock-based compensation |
|
|
20,073 |
|
|
|
11,077 |
|
|
|
60,729 |
|
|
|
30,464 |
|
|
Purchase accounting adjustments on acquisitions |
|
|
— |
|
|
|
347 |
|
|
|
195 |
|
|
|
784 |
|
|
Excess & obsolete write-down |
|
|
2,454 |
|
|
|
2,923 |
|
|
|
9,188 |
|
|
|
7,023 |
|
|
Litigation-related expenses |
|
|
2,715 |
|
|
|
3,602 |
|
|
|
12,815 |
|
|
|
16,629 |
|
|
Transaction-related expenses |
|
|
278 |
|
|
|
— |
|
|
|
2,178 |
|
|
|
120 |
|
|
Restructuring expenses |
|
|
129 |
|
|
|
45 |
|
|
|
333 |
|
|
|
1,704 |
|
|
Other non-recurring expenses1 |
|
|
— |
|
|
|
— |
|
|
|
1,349 |
|
|
|
— |
|
|
Adjusted EBITDA |
|
$ |
2,035 |
|
|
$ |
(6,164 |
) |
|
$ |
(1,658 |
) |
|
$ |
(25,405 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
1 |
Non-recurring consulting fees associated with the implementation of our state tax-planning strategy |
|
|||||||||||||||