8-K
Alphatec Holdings, Inc. (ATEC)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 12, 2021
ALPHATEC HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 000-52024 | 20-2463898 |
|---|---|---|
| (State or Other Jurisdiction<br><br><br>of Incorporation) | (Commission<br><br><br>File Number) | (I.R.S. Employer<br><br><br>Identification No.) |
5818 El Camino Real
Carlsbad, California 92008
(Address of Principal Executive Offices)
(760) 431-9286
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
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:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14.a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $.0001 per share | ATEC | The NASDAQ Global Select Market |
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 |
|---|
On January 12, 2021, Alphatec Holdings, Inc. (the “Company”) issued a press release announcing selected preliminary unaudited financial information for the quarter and full year ended December 31, 2020 (the “Press Release”). The Company has not finalized its financial statement closing process for the fourth quarter or full year ended December 31, 2020. As a result, the information in the Press Release is preliminary and based upon information available to the Company as of the date of the Press Release. During the course of the Company’s closing process, items may be identified that would require the Company to make adjustments, which may be material, and as a result, the estimates included in the Press Release are subject to risks and uncertainties, including possible adjustments to preliminary operating results.
A copy of the Press Release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
| Item 7.01 | Regulation FD Disclosure |
|---|
On January 12, 2021, the Company posted an investor presentation to its website at https://investors.alphatecspine.com/news-events/events-presentations. A copy of the presentation is attached as Exhibit 99.2 to this Current Report on Form 8-K.
The information furnished under Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to this Current Report on Form 8-K.
| Item 9.01. | Financial Statements and Exhibits |
|---|
(d) Exhibits.
| 99.1 | Press Release, dated January 12, 2021. |
|---|---|
| 99.2 | ATEC Investor Presentation. |
| 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 hereunto duly authorized.
| Date: January 12, 2021 | ALPHATEC HOLDINGS, INC. | |
|---|---|---|
| By: | /s/ Jeffrey G. Black | |
| Name: Jeffrey G. Black | ||
| Its: Chief Financial Officer |
atec-ex991_6.htm
Exhibit 99.1
ATEC Announces Preliminary 2020 Revenue Results
| • | Full-year 2020 U.S. revenue growth exceeded 30% |
|---|---|
| • | Fourth quarter 2020 U.S. revenue grew over 38% compared to last year |
| --- | --- |
CARLSBAD, Calif., January 12, 2021 – Alphatec Holdings, Inc. (“ATEC” or the “Company”) (Nasdaq: ATEC), a medical device company dedicated to revolutionizing the approach to spine surgery, announced today preliminary revenue results for the fourth quarter and full year ended December 31, 2020.
Preliminary, Unaudited 2020 Revenue
| Fourth Quarter Ended<br><br><br>December 31, 2020 | Year Ended<br><br><br>December 31, 2020 | |
|---|---|---|
| U.S. Revenue | $43.0 million to $43.3 million | $141.0 million to $141.3 million |
| Total Revenue | $43.8 million to $44.1 million | $144.8 million to $145.1 million |
Preliminary, unaudited fourth quarter 2020 U.S. revenue grew 38% to 39% year-over-year and 7% to 8% sequentially despite the impact of the recent surge of COVID-19 cases, which pressured surgery volume growth in several key geographies. Growth was driven primarily by the continuing rapid adoption of recently released ATEC technologies and strong pull-through from the SafeOp Neural InformatiX System. New product sales represented approximately 75% of estimated U.S. revenue for the quarter. Preliminary, unaudited full-year 2020 U.S. revenue reflects growth of 30% to 31% compared to 2019.
"Our 2020 performance gives me great confidence in our ability to continue to earn market share," said Pat Miles, Chairman and Chief Executive Officer. "While we expect pandemic-related volume variability to persist into 2021, we will continue to drive adoption of novel procedures like PTP while we work to close the EOS transaction. The clinical prowess of the team we have assembled and the unparalleled output of the organic innovation machine tell me that ATEC's best is yet to come."
The preliminary results announced today are unaudited and are therefore subject to change. The Company expects to announce its fourth quarter and full-year 2020 financial and operating results on March 4, 2021.
Exhibit 99.1
2021 Revenue Guidance
The Company expects total revenue for the fiscal year ended December 31, 2021, to approximate $178 million, which includes U.S. revenue of approximately $176 million. Revenue guidance reflects expected U.S. revenue growth of approximately 25% compared to 2020, driven by continued launches of novel procedures and products and growing traction of the procedures and products released in 2020. Total revenue guidance contemplates the anticipated wind-down of the Company’s international supply agreement by August 2021. The Company expects to update guidance to reflect the positive impact of EOS imaging when that transaction closes, which is anticipated in Q2 2021.
The Company remains subject to the potential and uncertain impact of the ongoing COVID-19 pandemic. If hospitals continue to experience a surge in COVID-19 cases and defer elective procedures to preserve capacity, the Company’s ability to achieve these financial objectives may be adversely affected
About Alphatec Holdings, Inc.
Alphatec Holdings, Inc. (ATEC), through its wholly-owned subsidiaries, Alphatec Spine, Inc. 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 SafeOp Neural InformatiX System to safely and reproducibly treat spine’s various pathologies and achieve the goals of spine surgery. Alphatec’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 therein. Forward-looking statements include references to the impact of the COVID-19 pandemic on the Company's business and financial results; the Company’s ability to create clinical distinction, compel surgeon adoption and earn market share; the Company’s planned commercial launches, product introductions and product integration; when and whether the anticipated acquisition of EOS imaging, S.A. ultimately will close and the potential benefits and synergies thereof; and the Company’s expectations with respect to future revenue and growth. The 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 in the Company’s pipeline; failure to achieve acceptance of the Company’s products by the surgeon community; failure to obtain FDA or other regulatory clearance or approval for new products, or unexpected or prolonged delays in the process; continuation of favorable third party reimbursement for procedures performed using the Company’s products; the Company’s ability to compete with other products and emerging new technologies; product liability exposure; patent infringement claims; changes to our financial results for the quarter and year ended December 31, 2020 due to the completion of financial closing procedures; and the impact of the COVID-19 on our business and the economy. The words “believe,” “will,” “should,” “expect,” “intend,” “estimate,” “look forward” and “anticipate,” variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. 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
Exhibit 99.1
any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.
Investor/Media Contact:
Tina Jacobsen
Investor Relations
(760) 494-6790
investorrelations@atecspine.com
Company Contact:
Jeff Black
Chief Financial Officer
Alphatec Holdings, Inc.
investorrelations@atecspine.com
REVOLUTIONIZING THE APPROACH TO SPINE SURGERY January 2021 Exhibit 99.2
This presentation 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 therein. Forward-looking statements include references to the impact of the COVID-19 pandemic on the Company's business and financial results; the Company’s ability to create clinical distinction, compel surgeon adoption and earn market share; the Company’s planned commercial launches, product introductions and product integration; when and whether the anticipated acquisition of EOS imaging, S.A. ultimately will close and the potential benefits and synergies thereof; and the Company’s expectations with respect to future revenue and growth. The 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 in the Company’s pipeline; failure to achieve acceptance of the Company’s products by the surgeon community; failure to obtain FDA or other regulatory clearance or approval for new products, or unexpected or prolonged delays in the process; continuation of favorable third party reimbursement for procedures performed using the Company’s products; the Company’s ability to compete with other products and emerging new technologies; product liability exposure; patent infringement claims; changes to our financial results for the quarter and year ended December 31, 2020 due to the completion of financial closing procedures; and the impact of the COVID-19 on our business and the economy. The words “believe,” “will,” “should,” “expect,” “intend,” “estimate,” “look forward” and “anticipate,” variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. 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.
Preliminary Financial Results This presentation includes financial results that are preliminary. The Company reports its financial results in accordance with U.S. generally accepted accounting principles. The expected financial results discussed in this presentation are preliminary and represent the most current information available to the Company's management, as financial closing procedures for the quarter ended December 31, 2020 are not yet complete. These estimates are not a comprehensive statement of the Company's financial results for the quarter and year ended December 31, 2020 and actual results may differ materially from these estimates as a result of the completion of normal quarter-end accounting procedures and adjustments, including the execution of the Company's internal control over financial reporting, the completion of the preparation and review of the Company's financial statements for the quarter ended December 31, 2020 and the subsequent occurrence or identification of events prior to the formal issuance of the fourth quarter and full year financial results. FORWARD LOOKING STATEMENTS 2
3 THE NEW Transformed organization to create clinical distinction Launching innovation that compels surgeon adoption and revitalizes the salesforce Delivering industry leading U.S. organic revenue growth* * Source: Spine-market.com, company reports
4 Q4 2020 SCORECARD* The momentum we are building is STRONG Consecutive quarter of double-digit YoY growth YoY growth in average revenue per case; 36% vs. Q4 of 2018 YoY U.S. revenue growth New product revenue contribution vs 48% in Q4 2019 and <10% in FY2018 Average product categories sold per case YoY growth in revenue per surgeon 38% 9th 75% 1.9 13% 14% * Q4 2020 revenue and metrics are preliminary, unaudited, and subject to adjustment. See Disclaimer – Preliminary Financial Results.
The spine-focused, share-taking opportunity is clear… $8B* U.S. SPINE MARKET *Source: Spine-Market.com. U.S. 2019 market share 5 share* 66% Comprehensive portfolios, strategic sales teams, strong hospital access GLOBAL CONSOLIDATORS 33% share* SMALL, MOSTLY PRIVATE PLAYERS Incented to innovate share, growing rapidly 1% …For a Team that Knows How to Build a Spine Powerhouse
OUR VISION FOR THE NEW ATEC HAS BEGUN TO MATERIALIZE 6 A decade of results has shown… Spine focus and organic innovation drive double-digit growth Consecutive quarters of double-digit YoY growth 9 Legacy * Management estimates. Illustrative only. K2M acquired by SYK in November 2018. Our focus on distinction-fueled share taking is steadfast.
7 ACCELERATES REVENUE GROWTH & REDUCES COST TO SERVE Monetizes information by creating more pull-through opportunities Provides immediate access to U.S. installed base with minimal overlap Facilitates global expansion via established infrastructure Improves inventory efficiency IMPROVED DEAL ECONOMICS Reduction in level of implied dilution Better positioned from valuation and balance sheet perspective Expands on the information-based core competency established with SafeOp Distinguishes ATEC clinical performance from diagnosis through follow up ADVANCES ALPHAINFORMATIX PLATFORM Acquisition agreement announced December 17, 2020 JUST ANNOUNCED!
SafeOp founded our conduit for delivering unprecedented information into the O.R. WITH EOS, WE CAN BETTER INFORM THE CLINICAL EXPERIENCE FROM END TO END SURGEONS YEARN FOR INFORMATION THAT DRIVES BETTER OUTCOMES 8 EMG ACTIVITY EMG ACTIVITY
EOS IMAGING TECHNOLOGY RAPID, CALIBRATED, STANDING FULL-BODY SCAN BIPLANAR SPINE IMAGING & ANATOMICAL MODELING Academic influence units installed globally 380 Customized care Technological foundation Advances our Core Information-Based Competency 9
HOW WE MONETIZE INFORMATION 10 AVERAGE PRODUCT CATEGORIES/ CASE AlphaInformatiX (SafeOp) has driven adoption across our portfolio *Q4 2020 preliminary, subject to revision *
SURGICAL CASE PLANNING EOS reduces the cost to serve & drives incremental pull-through EOS EXPANDS THE OPPORTUNITY 11 OPERATIONS Pre-surgical implant planning - sends only required inventory into surgery $ ALIGNMENT Predictive analytics & rod bending technologies BONE DENSITY Customized implants specific to patient’s bone quality $ $
BETTER INFORMED FROM END TO END PRE-OP PLANNING SURGERY POST-OP ASSESSMENT FOLLOW-UP FULL-BODY BIPLANAR IMAGES More accurate understanding of patient alignment Elevates likelihood of surgical goal fulfillment by integrating fully informed plans into surgery Correlates post-operative image against original surgical plan Rapid, calibrated, low-dose image capture of patient in standing (weight-bearing) position Reconciles pre-operative plan to intraoperative achievement Consistent, calibrated images allow application of predictive analytics 12
TOP U.S. HOSPITAL PENETRATION Expands ATEC’s reach into academic institutions 90% of the top 10* 80% of the top 25* * US News & World Report Best Orthopedic Hospitals list (2019-2020) 5 * US News & World Report Best Orthopedic Hospitals list (2019-2020) 13 4 3 2 1 1 1 1 3
PRESTIGIOUS OUS FOOTPRINT 40% of installed base N America 44% 16% A foundation to support future global expansion of installed base EMEA of installed base AsiaPac 14
OUR COMMITMENTS COMPEL SURGEON ADOPTION CREATE CLINICAL DISTINCTION Advance toward exclusive U.S. distribution Build an organic product development machine & advance our information-based core competence Accelerate growth by prioritizing key initiatives 2 Increase revenue and products sold per case through innovation 15 1
16 CREATING CLINICAL DISTINCTION Assembled the Organic Innovation Machine, creating powerful in-house capabilities for increased knowhow & speed to market 2018 Strategic Pivot to Found Meaningful, Differentiated Spine Innovation 1
17 Released SafeOp technology, the initial reflection of the AlphaInformatiX platform and spine’s first system capable of automating both monitoring objectives in surgery (EMG & SSEP) Introduced a full suite of approach-based titanium implants, which incorporate proprietary material and manufacturing processes designed to better meet the requirements of fusion constructs 2019 Introduced Core Fundamentals of Approach-Based Technology 1 CREATING CLINICAL DISTINCTION
The Delivery of Integrated, Approach-Based Procedures 2020 Enhancing platform capabilities and procedural applications with navigation, comprehensive alignment and targeting Acquired rapid, calibrated, standing, full-body scanning technology to complement AIX with biplanar spine imaging & anatomical modeling TM Elegant TLIF access system integrates with InVictus MIS Mod 18 TLIF Approach 1 CREATING CLINICAL DISTINCTION
Strong ROI from investment areas – sizable opportunity ahead 19 Q3 2020 U.S. Sales PHASE 1 INVESTMENT: Information, lateral, posterior fixation +145% Growth Q3 2017 vs Q3 2020 1 ~$40M CREATING CLINICAL DISTINCTION
20 >80% the “currency” of spine surgery HOW INDUSTRY MAKES DECISIONS. HOW SURGEONS SERVE PATIENTS. * Management estimate of procedural revenue * We invest where others won’t to improve surgical outcomes 2 CUSTOMIZED ACCESS COMPELLING ADOPTION
21 CONFIDENCE Convoyed sales = more products per procedure COMPELLING ADOPTION 2 Increasing surgeon confidence = more complex procedural surgeries PROCEDURALIZATION
VAST opportunity to increase our strategic sales footprint EXPANDING TO EXCLUSIVITY 22 Most geographies are significantly under or even unrepresented 103% Growth in U.S. revenue / distributor since 2018* 3 ~in line with peer averages 2019 90% Revenue contribution from strategic sales network, with ~30% of walk toward exclusivity complete * Q3 2020 revenue and metrics are preliminary, unaudited, and subject to adjustment. See Disclaimer – Preliminary Financial Results. 2020E ~$2.0M
FINANCIALS
PRELIMINARY REVENUE RESULTS Growth driven by surgeon adoption & expanding strategic distribution Revenue per case expanding on strength of new products Numbers may not add and percentages may not foot due to rounding. * Q4 2020 and full-year 2020 revenue results are preliminary, unaudited, and subject to adjustment. Recent surge in COVID-19 pandemic cases pressured surgery volume growth in several key geographies International supply agreement winding down as anticipated
24
EOS P&L IMPACT 25 *From Oct 1, 2019 to Sept 30, 2020.
EOS PRO FORMA REVENUE PROFILE 26 ATEC STAND-ALONE FY2019 ATEC + EOS PRO FORMA FY2019 $113M *For illustrative purposes only. ^ This is not intended to be guidance. | 2019 Pro Forma = $22.1M EOS imaging (Rx = 1.1) + $113.4M for ATEC. 20E First Call Consensus = $28.4M (Rx = 1.22) for EOS imaging + $144.7M for ATEC. | 21E First Call Consensus = $43.6M for EOS imaging (Rx = 1.22) + $178.7 for ATEC. $136M $173M * ATEC + EOS FY2020E CONSENSUS ^ ATEC + EOS FY2021E CONSENSUS ^ $222M +27% +28%
Immediate capital access to fund purchase & runway for combined business CASH + EOS FINANCING 27 Credit available upon ATEC request $30M credit-to-equity conversion reduces existing debt, post-deal, from $75M to $45M Reduces annualized cash interest by ~$3.5M Extends debt maturity from May ‘25 → June ’26 No maintenance covenants or pre-payment penalties
MULTI-FACETED GROWTH LEGACY HEADWINDS DISSIPATING A Sustainable Strategy Building Momentum 28 CONTINUED MARKET SHARE TAKING Legacy reputation Legacy salesforce Final year of legacy international supply agreement Reverberating OUR PATH TO
29 Our transformation required strong execution against commitments to accelerate growth.
We remain committed to advancing the clinical experience in spine. WE ARE JUST GETTING STARTED!