- Total revenue growth of 53% including organic revenue growth of
29%
- Advancing adoption of PTP Technique drove 50% lateral
contribution to revenue growth
- Revenue related to EOS imaging exceeded $11 million
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, 2021, and recent corporate highlights.
Third Quarter 2021 Financial
Results
Quarter Ended September 30,
2021
Total revenue
$62.9 million
GAAP gross margin
63.0%
Non-GAAP gross margin
72.0%
Operating expenses
$74.7 million
Non-GAAP operating expenses
$60.4 million
GAAP operating loss
($35.1) million
Non-GAAP adjusted EBITDA
($9.8) million
Ending cash balance
$223.9 million
Recent Highlights
- Advanced the adoption of the Prone Trans-Psoas (PTP) Technique,
with ATEC lateral delivering over 50% of Q3 revenue growth;
- Expanded surgeon users by 20% compared to Q3 2020;
- Generated over $11 million in EOS-related revenue and continued
to build demand with a 25% increase in the pipeline of interest
since the transaction closed;
- Enhanced the versatility of the InVictus Posterior Fixation
Platform with the release of Osseoscrew, the only expandable screw
commercially available in the U.S.;
- Released the ALIF Standalone Interbody System, which improves
intra-operative optionality and restores alignment at L4/L5 and
L5/S1 where the majority of alignment is derived;
- Closed a convertible debt offering, reducing debt service and
raising net proceeds of $188M for continued investment in
growth.
“In the third quarter, ATEC continued to earn market share by
delivering on our promise to create procedures that improve patient
care,” said Pat Miles, Chairman and Chief Executive Officer.
“Despite ongoing market impacts, our surgeon customer base
increased significantly. The accelerating uptake of PTP is
testament to the reflected know-how and ATEC's ability to design
technology for specific approach requirements. This is expanding
adoption of the lateral approach by surgeons who have historically
relied on posterior techniques. We are also making progress
integrating EOS imaging, and are confident that system placements
are laying the foundation for an improved clinical experience that
will set the standard for surgical planning, intra-operative
information and predictive analytics. I am incredibly bullish that
ATEC’s organic innovation machine will continue to drive long-term,
multi-faceted growth. Despite our many successes to date, we know
we are still only getting started.”
Financial Outlook for the Full Year 2021
The Company now expects total revenue for the fiscal year ended
December 31, 2021, to approximate $235 million, reflecting growth
of approximately 62% compared to the prior full year. This includes
an organic revenue contribution of approximately $208 million, or
47% growth compared to the prior full year, which has been updated
to reflect the impact of the COVID pandemic in the third quarter
2021. The Company now anticipates about $26 million of revenue
related to EOS imaging, which accounts for slightly stronger than
expected EOS-related revenue in the third quarter 2021. Total
revenue guidance for the full year also includes an approximate $1
million contribution from the Company’s international supply
agreement, which terminated on August 31, 2021.
Investor Conference Call
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
at investors.alphatecspine.com/quarterly-results. Participants
should go to the website at least 15 minutes before the event to
register, and download and install any necessary software.
To dial-in to the webcast, registration may be completed by
visiting the following registration link:
http://www.directeventreg.com/registration/event/6548679. Once
registered, each dial-in participant will be provided access
details and a registrant ID.
A replay of the webcast will remain available through the
Investor Relations section of ATEC’s Corporate Website at
investors.alphatecspine.com/quarterly-results for twelve months. In
addition, a replay of the audiocast will be available beginning two
hours after the call’s completion until November 11, 2021. The
replay dial-in numbers are (800)585-8367 for domestic callers and
(416)621-4642 for international callers. Please use the replay
conference ID number 6548679.
Non-GAAP Financial Information
To supplement the Company’s financial statements presented in
accordance with U.S. generally accepted accounting principles
(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
MachineTM 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 and growth outlook; planned
product launches, introductions, regulatory submissions or
clearances; efforts to transform sales and distribution channels;
the Company’s ability to compel surgeon adoption; the Company’s
future ability to finance its operations and sufficiency of its
cash runway; and statements about the potential benefits and
synergies of the acquisition of EOS imaging, S.A. 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; the Company’s ability to meet
its financial obligations; the impact of the COVID-19 pandemic on
the Company and economy; and uncertainties and risks related to the
integration of EOS imaging, S.A. 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,
2021
2020
2021
2020
unaudited Revenue: Revenue from products and services
$
62,735
$
40,052
$
168,336
$
97,956
Revenue from international supply agreement
145
1,111
914
2,951
Total revenue
62,880
41,163
169,250
100,907
Cost of revenue
23,266
11,926
56,713
29,797
Gross profit
39,614
29,237
112,537
71,110
Operating expenses: Research and development
9,391
4,984
23,031
13,390
Sales, general and administrative
61,494
35,380
162,578
89,431
Litigation-related expenses
1,209
1,560
5,711
5,507
Amortization of acquired intangible assets
2,012
172
3,392
516
Transaction-related expenses
373
2
6,156
4,093
Restructuring expenses
256
—
1,587
—
Total operating expenses
74,735
42,098
202,455
112,937
Operating loss
(35,121
)
(12,861
)
(89,918
)
(41,827
)
Interest and other expense, net: Interest expense, net
(1,272
)
(2,762
)
(5,604
)
(8,668
)
Loss on debt extinguishment, net
(7,434
)
—
(7,434
)
(1,555
)
Other income (expense), net
886
(6
)
(1,020
)
(6
)
Total interest and other expenses, net
(7,820
)
(2,768
)
(14,058
)
(10,229
)
Net loss before taxes
(42,941
)
(15,629
)
(103,976
)
(52,056
)
Income tax provision
90
40
163
140
Net loss
$
(43,031
)
$
(15,669
)
$
(104,139
)
$
(52,196
)
Net loss per share, basic and diluted
$
(0.43
)
$
(0.24
)
$
(1.09
)
$
(0.82
)
Weighted average shares outstanding, basic and diluted
99,571
64,761
95,204
63,669
Stock-based compensation included in: Cost of revenue
$
310
$
139
$
489
$
374
Research and development
1,440
528
2,602
1,482
Sales, general and administrative
9,004
3,877
23,633
10,831
$
10,754
$
4,544
$
26,724
$
12,687
ALPHATEC HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) September 30, 2021
December 31, 2020 (unaudited)
ASSETS Current assets:
Cash
$
223,868
$
107,765
Accounts receivable, net
33,676
23,527
Inventories
92,509
46,001
Prepaid expenses and other current assets
7,109
5,439
Withholding tax receivable from Officer
—
1,076
Current assets of discontinued operations
—
352
Total current assets
357,162
184,160
Property and equipment, net
77,214
36,670
Right-of-use asset
26,647
1,177
Goodwill
44,335
13,897
Intangible assets, net
88,840
24,720
Other assets
3,910
541
Noncurrent assets of discontinued operations
—
58
Total assets
$
598,108
$
261,223
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable
$
29,438
$
17,599
Accrued expenses and other current liabilities
43,985
35,264
Contract liability
16,670
—
Short-term debt
6,119
4,167
Current portion of operating lease liability
3,859
885
Current liabilities of discontinued operations
—
397
Total current liabilities
100,071
58,312
Total long-term liabilities
362,677
49,428
Redeemable preferred stock
23,603
23,603
Stockholders' equity
111,757
129,880
Total liabilities and stockholders' equity
$
598,108
$
261,223
ALPHATEC HOLDINGS,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2021
2020
2021
2020
unaudited Gross profit, GAAP
$
39,614
$
29,237
$
112,537
$
71,110
Add: amortization of intangible assets
270
269
806
806
Add: stock-based compensation
310
139
489
374
Add: purchase accounting adjustments on acquisitions
2,577
—
4,340
—
Add: non-cash excess and obsolete charges
2,525
1,995
6,842
5,429
Non-GAAP gross profit
$
45,296
$
31,640
$
125,014
$
77,719
Gross margin, GAAP
63.0
%
71.0
%
66.5
%
70.5
%
Add: amortization of intangible assets
0.4
%
0.7
%
0.5
%
0.8
%
Add: stock-based compensation
0.5
%
0.3
%
0.3
%
0.4
%
Add: purchase accounting adjustments on acquisitions
4.1
%
0
%
2.6
%
0.0
%
Add: non-cash excess and obsolete charges
4.0
%
4.8
%
4.0
%
5.4
%
Non-GAAP gross margin
72.0
%
76.9
%
73.9
%
77.0
%
Three Months Ended Nine Months Ended
September 30, September 30,
2021
2020
2021
2020
unaudited Operating expenses, GAAP
$
74,735
$
42,098
$
202,455
$
112,937
Adjustments: Stock-based compensation
(10,444
)
(4,405
)
(26,235
)
(12,313
)
Litigation-related expenses
(1,209
)
(1,560
)
(5,711
)
(5,507
)
Amortization of intangible assets
(2,012
)
(172
)
(3,392
)
(516
)
Transaction-related expenses
(373
)
(2
)
(6,156
)
(4,093
)
Restructuring expenses
(256
)
—
(1,587
)
—
Non-GAAP operating expenses
$
60,441
$
35,959
$
159,374
$
90,508
Three Months Ended Nine Months Ended
September 30, September 30,
2021
2020
2021
2020
unaudited Operating loss, GAAP
$
(35,121
)
$
(12,861
)
$
(89,918
)
$
(41,827
)
Depreciation
5,311
2,307
13,788
6,482
Amortization of intangible assets
2,281
441
4,198
1,322
EBITDA
(27,529
)
(10,113
)
(71,932
)
(34,023
)
Add back significant items: Stock-based compensation
10,754
4,544
26,724
12,687
Purchase accounting adjustments on acquisitions
2,577
—
4,340
—
Excess & obsolete charges
2,525
1,995
6,842
5,429
Litigation-related expenses
1,209
1,560
5,711
5,507
Transaction-related expenses
373
2
6,156
4,093
Restructuring expenses
256
—
1,587
—
Adjusted EBITDA
$
(9,835
)
$
(2,012
)
$
(20,572
)
$
(6,307
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211104006178/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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