Alphatec Holdings, Inc. (Nasdaq:ATEC), the parent company of
Alphatec Spine, Inc., a medical device company that designs,
develops, manufactures and markets products for the surgical
treatment of spine disorders, with a focus on treating conditions
affecting the aging spine, announced today financial results for
the second quarter ended June 30, 2009.
Second Quarter 2009 Highlights:
- Record consolidated revenue of
$32.3 million reported in the second quarter 2009, which represents
35% growth over the second quarter 2008 and 5% sequential growth
over the first quarter of 2009.
- US revenue growth of 36% over
prior year was more than three times greater than US spine market
growth and 11% sequential growth over first quarter 2009
- Adjusted EBITDA reached $2.8
million in the second quarter 2009, reflecting strong operating
leverage.
- 100% increase over first quarter
2009 adjusted EBITDA of $1.4 million
- Raising 2009 revenue guidance to
a range of $128 million to $130 million from previous guidance of
$125 million to $128 million. Reiterating 2009 adjusted EBITDA
guidance range of $12.5 million to $14.5 million. Re-affirming EPS
guidance of EPS positive by the third quarter of 2009.
- Completed $10.0 million private
placement of common stock
- Strengthens balance sheet with
an at-market sale of common stock
- Submitted 510(k) application to
the FDA for the OsseoScrew™ Expandable Pedicle Screw System
- Successfully completed product
development milestone
- Obtained conditional FDA
approval to initiate OsseoFix™ Spinal Fracture Reduction System US
510(k) clinical study
- Planned enrollment of 100
patients at 15 clinical study sites
- Initiated controlled Beta launch
of GLIF/ARC Portal Access System for far lateral lumbar fusion
procedures
- Secured intellectual property
position to develop stand-alone ALIF interbody fusion device
- Expanded European adoption of
OsseoFix
- Over 200 patients were treated
in Europe during the first half of 2009
- Sales shipments of approximately
$0.9 million during the 2Q of 2009
“I am pleased to announce that our revenue continues to grow at
a record pace, with growth that was three times greater than that
of the overall US spine market. With eight consecutive quarters of
increased revenue growth, we continue to gain market share through
our strengthening US and international distribution network,
expanded core product offering and aging spine product portfolio,”
stated Dirk Kuyper, Alphatec Spine’s President and Chief Executive
Officer. Mr. Kuyper continued, “We also continue to improve our
operating leverage with increased adjusted EBITDA performance while
investing in our product development pipeline. In addition, our
aging spine strategy continues to progress. This quarter we
increased market adoption in Europe, as well as obtained
conditional FDA approval to initiate our US 510(k) clinical study
for the OsseoFix Fracture Reduction System. Lastly, in June the
OsseoScrew expandable pedicle screw system was submitted to the FDA
for 510(k) clearance.”
Second Quarter 2009 Financial Results
Consolidated revenues for the second quarter 2009 were $32.3
million, an increase of 35.3% from the $23.9 million reported for
the second quarter 2008 and an increase of 5.4% over first quarter
2009. US revenues for the second quarter 2009 were $26.4 million,
an increase of 36.3% from the $19.4 million reported for the second
quarter of 2008 and an increase of 10.8% over first quarter 2009.
Asia revenues for the second quarter 2009 were $5.5 million, an
increase of 21.8% from the $4.5 million reported for the second
quarter 2008. Recorded European revenues for the second quarter
2009 of $0.4 million. There were no European revenues recorded for
the second quarter 2008.
Consolidated gross profit for the second quarter 2009 was $20.9
million, an increase of $5.1 million over second quarter 2008 of
$15.8 million. Second quarter 2009 gross margin of 64.6% was lower
than second quarter 2008 gross margin of 66.4%. The decrease in
gross margin was primarily due to effect of certain royalty
expenses that we did not have for the full second quarter of 2008
and higher depreciation expenses on our growing installed surgical
instrument base, partially offset by improved manufacturing
efficiencies.
Total operating expenses for the second quarter 2009 were $26.3
million, an increase of $7.1 million compared to second quarter
2008 of $19.2 million. The increase in second quarter 2009 was
primarily due to $4.5 million in In-Process R&D expense
primarily related to the milestone payments for the OsseoScrew
Expandable Pedicle Screw System and the stand-alone ALIF interbody
fusion device. There was no In-Process R&D expense reported for
the second quarter 2008. Excluding the second quarter 2009
In-Process R&D expense, operating expenses would have increased
$2.6 million, or 13.8%, over prior year second quarter.
Research and development expenses for the second quarter 2009
were $3.4 million representing no change from the second quarter
2008 of $3.4 million.
Sales and marketing expenses for the second quarter 2009 were
$12.8 million, an increase of $2.7 million compared to the second
quarter 2008 of $10.1 million. The increase was primarily due to an
increase in sales commission expenses related to increased US sales
volume and increased sales expenses in Asia.
General and administrative expenses for the second quarter 2009
were $5.6 million, a decrease of $0.1 million, compared to the
second quarter 2008 of $5.7 million.
Net loss for the second quarter 2009 was $6.3 million, or
($0.13) per share (basic and diluted), compared with a net loss of
$3.6 million, or ($0.08) per share (basic and diluted) for the
second quarter 2008. Excluding the second quarter 2009 In-Process
R&D expense of $4.5 million, net loss would have been $1.8
million for the second quarter 2009.
Adjusted EBITDA of $2.8 million was reported for the second
quarter 2009 compared to negative ($1.0) million for the second
quarter 2008. Adjusted EBITDA of $2.8 million represents a 100%
increase over first quarter 2009 of $1.4 million.
Conference Call
Alphatec Spine will host a conference call today at 1:30 p.m. PT
/ 4:30 p.m. ET to discuss the financial and operating results. To
participate in the conference call, please visit the investor
relations section of the Alphatec Spine website at
www.alphatecspine.com. The dial-in numbers are (800) 967-7187 for
domestic callers and (719) 325-2339 for international callers. A
live webcast of the conference call will be available online from
the investor relations section of the Alphatec website at
www.alphatecspine.com. The webcast will be recorded and will remain
available on the investor relations section of Alphatec Spine's
website, for at least 30 days.
About Alphatec Spine
Alphatec Spine, Inc. is a wholly owned subsidiary of Alphatec
Holdings, Inc. (Nasdaq:ATEC). Alphatec Spine is a medical device
company that designs, develops, manufactures and markets products
for the surgical treatment of spine disorders, primarily focused on
the aging spine. The Company's mission is to combine world-class
customer service with innovative, surgeon-driven design that will
help improve the aging patient's quality of life. The Company is
poised to achieve its goal through new solutions for patients with
osteoporosis, stenosis and other aging spine deformities, improved
minimally invasive products and techniques and integrated biologics
solutions. In addition to its US operations, the Company also
markets its spine products in Europe. In Asia, the Company markets
a broad line of spine and orthopedic products through its
subsidiary, Alphatec Pacific, Inc. For more information, please
visit www.alphatecspine.com.
Also visit the Aging Spine Center, www.agingspinecenter.com, a
web-based information portal for healthcare providers and patients
regarding aging spine disorders and their treatment. The Company is
working with the National Osteoporosis Foundation as well as other
clinical portals that provide peer-reviewed content, to populate
the Aging Spine Center. The interactive website enables patients to
review pertinent information about disorders that affect the aging
spine in an easy-to-understand format that includes videos,
graphics and questions that should be asked of caregivers. Medical
information on the website includes published abstracts regarding
the aging spine.
Non-GAAP Information for Adjusted EBITDA
Adjusted EBITDA included in this press release is a non-GAAP
(generally accepted accounting principles) financial measure that
represents net income (loss) excluding the effects of interest,
taxes, depreciation, amortization, stock-based compensation costs,
and other non-recurring income of expense items, such as in-process
research and development expenses. Adjusted EBITDA, as defined
above, may not be similar to adjusted EBITDA measures used by other
companies and is not a measurement under GAAP.
Though management finds EBITDA useful for evaluating aspects of
the Company's business, its reliance on this measure is limited
because excluded items often have a material effect on the
Company's earnings and earnings per common share calculated in
accordance with GAAP. Therefore, management uses adjusted EBITDA in
conjunction with GAAP earnings and earnings per common share
measures. The Company believes that adjusted EBITDA provides
investors with an additional tool for evaluating the Company's core
performance, which management uses in its own evaluation of
performance, and a base line for assessing the future earnings
potential of the Company. While the GAAP results are more complete,
the Company prefers to allow investors to have this supplemental
metric since, with reconciliation to GAAP, it may provide greater
insight into the Company's financial results.
Forward Looking Statements
This press release may contain "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. These forward-looking statements include, but are not
limited to: Alphatec Spine's ability to accelerate new product
momentum, bring to market differentiated products and commercialize
its product pipeline. Alphatec Spine cautions investors that there
can be no assurance that actual results or business conditions will
not differ materially from those projected or suggested in such
forward-looking statements as a result of various factors,
including, but not limited to, the following: Alphatec Spine’s
ability to meet its 2009 revenue and earnings projections, the
growth rate of the spine market related to aging and elderly
patients, uncertainty of success in developing new products or
products currently in Alphatec Spine's pipeline, including the
successful global launch of those products that are intended to
treat disorders prevalent in aging patients, failure to achieve
acceptance of Alphatec Spine's products by the surgeon community,
failure to obtain FDA clearance or approval for new products
including OsseoFix and the OsseoScrew, or unexpected or prolonged
delays in the process, Alphatec Spine's ability to develop and
expand its business in the United States, Asia and Europe,
continuation of favorable third party payor reimbursement and
acceptable collections from hospitals for procedures performed
using Alphatec Spine's products, unanticipated expenses or
liabilities or other adverse events affecting cash flow or Alphatec
Spine's ability to successfully control its costs or achieve
profitability, uncertainty of additional funding, Alphatec Spine's
ability to compete with other competing products and with emerging
new technologies, product liability exposure, patent infringement
claims and claims related to Alphatec Spine's intellectual
property. Please refer to the risks detailed from time to time in
Alphatec Spine's SEC reports, including quarterly reports on Form
10-Q, reports on Form 8-K and annual reports on Form 10-K. Alphatec
Spine 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 - unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2009
2008 2009 2008 Revenues $ 32,263 $ 23,853 $ 62,873 $
47,050 Cost of revenues 11,412 8,016
22,242 15,903 Gross
profit 20,851 15,837 40,631 31,147 Operating expenses:
Research and development 3,436 3,354 6,303 6,558 In-process
research and development 4,493 - 5,783 1,300 Sales and marketing
12,810 10,062 25,594 20,165 General and administrative 5,563 5,740
11,526 11,304 Litigation settlement - -
- 11,000 Total operating
expenses 26,302 19,156
49,206 50,327 Operating loss (5,451 )
(3,319 ) (8,575 ) (19,180 ) Interest and other income (expense),
net (736 ) (203 ) (1,879 )
(29 ) Loss before tax provision (6,187 ) (3,522 ) (10,454 )
(19,209 ) Income taxes 116 69
232 161 Net loss $ (6,303
) $ (3,591 ) $ (10,686 ) $ (19,370 )
Net loss per common share - basic and diluted $ (0.13 ) $ (0.08 ) $
(0.23 ) $ (0.42 ) Weighted-average shares - basic and
diluted 47,157 46,274 46,832 46,138
ALPHATEC HOLDINGS,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands - unaudited) June 30, December
31, 2009 2008
ASSETS Current assets: Cash and cash
equivalents $ 19,731 $ 18,315 Accounts receivable, net 23,824
18,759 Inventories, net 27,749 24,170 Prepaid expenses and other
current assets 4,038 3,847 Deferred income tax assets 413
418 Total current assets 75,755 65,509 Property and
equipment, net 28,862 23,093 Goodwill 60,087 60,124 Intangibles,
net 2,705 4,280 Other assets 1,706 2,542 Total assets
$ 169,115 $ 155,548
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 13,809 $ 10,504
Accrued expenses 22,167 16,739 Deferred revenue 2,865 1,858 Current
portion of long-term debt 4,439 2,109 Total current
liabilities 43,280 31,210 Total other long term liabilities
29,288 29,264 Redeemable preferred stock 23,605 23,605 Total
stockholders' equity 72,942 71,469 Total liabilities
and stockholders' equity $ 169,115 $ 155,548
ALPHATEC HOLDINGS, INC. RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES (in thousands - unaudited)
Three Months Ended Six Months Ended June 30, June 30,
2009 2008 2009 2008 Operating loss, as
reported $ (5,451 ) $ (3,319 ) $ (8,575 ) $ (19,180 ) Add back:
Depreciation 2,120 1,089 3,942 2,109 Amortization of intangibles
777 550 1,556
1,565 Total EBITDA (2,554 ) (1,680 ) (3,077 )
(15,506 ) Add back significant items: Stock-based
compensation 831 671 1,465 1,440 In-process research and
development 4,493 - 5,783 1,300 Litigation Settlement -
- - 11,000
EBITDA, as adjusted for significant items $ 2,770
$ (1,009 ) $ 4,171 $ (1,766 )
ALPHATEC HOLDINGS, INC. RECONCILIATION OF SEGMENT
REVENUES AND GROSS PROFIT (in thousands, except gross profit
margin percentages - unaudited)
Three Months Ended Six Months Ended June 30, June 30,
2009 2008 2009 2008 Revenues by geographic
segment U.S. $ 26,378 $ 19,359 $ 50,191 $ 38,006 Asia 5,473 4,494
11,303 9,044 Europe 412 -
1,379 - Total revenues $ 32,263
$ 23,853 $ 62,873 $ 47,050
Gross profit by geographic segment U.S. $ 18,275 $ 13,882 $
35,138 $ 27,535 Asia 2,390 1,955 4,915 3,612 Europe 186
- 578 -
Total gross profit $ 20,851 $ 15,837 $
40,631 $ 31,147 Gross profit margin by
geographic segment U.S. 69.3 % 71.7 % 70.0 % 72.4 % Asia 43.7 %
43.5 % 43.5 % 39.9 % Europe 45.1 % -
41.9 % - Total gross profit margin
64.6 % 66.4 % 64.6 % 66.2
%
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