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
related to the aging spine, announced today financial results for
the fourth quarter and full year December 31, 2009.
2009 Financial Highlights
-
Fourth quarter 2009 revenues of $36.6 million grew 28.7% over
2008 fourth quarter revenues, and grew 12.0% sequentially over
third quarter 2009
-
US revenues for fourth quarter 2009 reached $28.3 million,
reflecting 28.7% growth over prior year fourth quarter
-
Adjusted EBITDA of $5.9 million in the fourth quarter 2009 and
$15.0 million for full year 2009 reflects strengthening operating
leverage
-
Annual 2009 net loss of $13.3 million, reflects an improvement
of $16.0 million from annual net loss of $29.3 million in 2008
-
Non-GAAP net earnings of $0.6 million for the fourth quarter
2009, excluding Scient'x transaction costs of $1.4 million and
in-process research and development (IPR&D) expenses of $0.5
million. Non-GAAP EPS was positive for the first time at $0.01 per
share for fourth quarter 2009 as compared to ($0.11) per share for
the same period 2008
2009 Performance Highlights
-
License agreement with Spine Vision S.A. (Solus™ - Stand-alone
ALIF)
-
License agreement with Helix Point, LLC to treat lumbar spinal
stenosis (Helifix™/Helifuse™)
-
Supply and distribution agreement with ETEX Corporation to
distribute ETEX's EquivaBone® and CarriGen®
products
-
Supply and distribution agreement with AFCell to distribute
AFCell's biologic wound barrier product under our AmnioShield™
private-label
-
Distribution agreement with Parcell Spine, LLC for exclusive
global rights to use Parcell's proprietary osteoprogenitor adult
stem cells for the treatment of spinal disorders
-
CE Mark approval in February 2010 for OsseoScrew™ Spinal
Fixation System and GLIF/ARC™ Portal System
-
Reached milestone of OsseoFix™ Spinal Fracture Reduction System
adoption; over 500 patients in Europe treated with OsseoFix for
vertebral compression fractures
-
Expanded European product distribution, resulting in 2009 annual
revenues of $4.1 million, an increase of 92.9% over 2008
-
Asian revenue for 2009 of $23.5 million, increased 32.7% over
full year 2008
Fourth Quarter 2009 Financial Results
Consolidated revenues for the fourth quarter 2009 were $36.6
million, an increase of 28.7% from the $28.4 million reported for
the fourth quarter 2008. U.S. revenues for the fourth quarter
2009 were $28.3 million, an increase of 28.7% from the $22.0
million reported for the fourth quarter of 2008. Asian
revenues for the fourth quarter 2009 were $6.6 million, an increase
of 37.7% from the $4.8 million reported for the fourth quarter
2008. European revenues for the fourth quarter 2009 were $1.7
million.
Gross profit for the fourth quarter 2009 was $22.7 million, an
increase of $5.8 million over fourth quarter 2008 of $16.9 million.
Fourth quarter 2009 gross margin was 62.0%, an increase over fourth
quarter 2008 gross margin of 59.2%.
Total operating expenses for the fourth quarter 2009 were $23.0
million, an increase of $2.0 million compared to fourth quarter
2008 of $21.0 million. The increase was primarily related to an
increase in research and development and sales and marketing
expenses partially offset by a decrease in general and
administrative expenses.
Research and development expenses for the fourth quarter 2009
were $3.6 million, an increase of $0.6 million compared to the
fourth quarter 2008 of $3.0 million.
Sales and marketing expenses for the fourth quarter 2009 were
$13.4 million, an increase of $1.9 million compared to the fourth
quarter 2008 of $11.5 million.
General and administrative expenses for the fourth quarter 2009
were $5.6 million, a decrease of $0.7 million, compared to the
fourth quarter 2008 of $6.3 million. Fourth quarter 2009 general
and administrative expenses included $1.4 million of expenses
related to the Scient'x transaction.
Net loss for the fourth quarter 2009 was $1.3 million, or
($0.03) per share, compared with a net loss of $5.1 million, or
($0.11) per share for the fourth quarter 2008.
Non-GAAP net earnings for the fourth quarter 2009 was $0.6
million compared to fourth quarter 2008 non-GAAP net loss of $4.9
million. Non-GAAP EPS for fourth quarter 2009 was $0.01 per share
compared to ($0.11) per share for the fourth quarter 2008. Non-GAAP
net earnings/loss excludes IPR&D expenses, Scient'x
transaction-related expenses and litigation settlement costs.
Full Year 2009 Financial Results
Consolidated revenues for full year 2009 were $132.2 million, an
increase of 30.4% from the $101.3 million reported for full year
2008. U.S. revenues for full year 2009 were $104.5 million, an
increase of 28.3% from the $81.5 million reported for full year
2008. Asian revenues for full year 2009 were $23.5 million, an
increase of 32.7% from the $17.7 million reported for full year
2008. European revenues for full year 2009 were $4.1 million,
an increase of 92.9% from the $2.1 million reported for full year
2008.
Gross profit for full year 2009 was $84.1 million, an increase
of $19.4 million over the full year 2008 of $64.7 million. Full
year 2009 gross margin was 63.7%, a decrease of 0.2% from full year
2008 gross margin of 63.9%.
Total operating expenses for full year 2009 were $93.7 million,
an increase of $1.2 million over full year 2008 of $92.5 million.
The increase in 2009 was attributable primarily to increases in
both research and development and sales and marketing expenses,
partially offset by decreased general and administrative expenses
and the 2008 litigation settlement.
Research and development expenses for full year 2009 were $13.5
million, an increase of $0.5 million over full year 2008 of $13.0
million. The increase in 2009 research and development expenses was
primarily due to product development in our core product and Aging
Spine portfolios.
Sales and marketing expenses for full year 2009 were $51.5
million, an increase of $9.1 million over full year 2008 of $42.4
million. The increase in 2009 was primarily due to increased sales
commission expenses related to the increased sales volume in both
the U.S. and Asia.
General and administrative expenses for full year 2009 were
$22.3 million, a decrease of $1.1 million compared to full year
2008 of $23.4 million. The decrease is primarily due to
reductions in litigation and legal expenses partially offset by
expenses related to the Scient'x transaction of $2.6 million.
Net loss for full year 2009 was $13.3 million, or ($0.27) per
share, compared with a net loss of $29.3 million, or ($0.63) per
share for full year 2008.
Non-GAAP net loss was $4.3 million for full year 2009, a
decrease of $11.2 million compared to full year 2008 non-GAAP net
loss of $15.5 million. Non-GAAP EPS for the full year 2009 was
($0.09) per share as compared to ($0.34) per share reported for
full year 2008. Non-GAAP net earnings/loss excludes IPR&D
expenses, Scient'x transaction-related expenses and litigation
settlement costs.
"This past year was a transformational year for Alphatec Spine.
We achieved record revenue and have a sustained growth rate that is
significantly outpacing the overall market. We launched twelve new
products throughout the year, completed technology and product
license agreements which expand our core product portfolio, and
continued to drive increasing adoption of our aging spine products
both in the US and internationally," stated Dirk Kuyper, President
and CEO. "The combined efforts of internal development and external
agreements have allowed us to become one of the most innovative
spine companies in the market. Through these investments, we have
also established a strong biologics foundation to drive future
growth, including agreements with ETEX, AFCell, and most recently
with Parcell relating to adult stem cells for the treatment of
spinal disorders."
Mr. Kuyper continued, "The addition of Scient'x creates global
scale, offers significant revenue and cost synergies, complements
our core product portfolio and enhances our Aging Spine focus. Upon
closing, the combined entity will be third-largest pure-play spinal
implant company in the market, and the only pure-play that is truly
global with opportunities in Europe, Asia, South America and
the Middle East/Africa. We expect our focus on providing solutions
for the aging spine to yield additional product launches addressing
the fastest-growing segment of the spine market which when combined
with our expanding U.S. sales force and international footprint
will continue to drive long-term growth and improve
profitability."
2010 Financial Guidance
The Company announced financial guidance for the first quarter
2010 of revenues of $38.0 million and adjusted EBITDA margin of at
least 15%. The financial guidance for the first quarter 2010
reflects operating results prior to the acquisition of
Scient'x.
Reaffirming full year 2010 financial guidance from December 17,
2009, the Company anticipates annualized pro forma revenues of
$220.0 million to $225.0 million, $32.0 million to $35.0 million in
annualized adjusted EBITDA and positive non-GAAP EPS for the full
year 2010, excluding amortization of intangible assets, transaction
expenses and acquisition-related restructuring charges. The Company
reiterates this guidance to reflect the 2010 pro forma effect of
the pending Scient'x transaction on a full year basis, as if the
acquisition closed January 1, 2010.
As previously announced, the Scient'x transaction is currently
expected to close by the end of the first quarter of 2010 and is
subject to the approval of the Company's shareholders. The Company
has absorbed transaction-related costs that had a negative impact
to GAAP EPS in the third and fourth quarters of 2009. The
Company also expects to absorb additional transaction-related
expenses in the first quarter of 2010.
Conference Call
Alphatec Spine will host a conference call today at 1:30 p.m. PT
/ 4:30 p.m. ET to discuss the 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 (877) 556-5251 for domestic callers and (720) 545-0036
for international. A live webcast of the conference call will be
available online from the investor relations section of the
Alphatec Spine 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 U.S. 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.
On December 17, 2009, the Company announced that it entered into
a definitive agreement to acquire Scient'x Groupe S.A.S., a global
medical device company based in France that designs, develops and
manufacturers surgical implants to treat disorders of the spine.
The transaction is structured as an all stock transaction such that
100% of outstanding Scient'x stock will be exchanged pursuant to a
fixed ratio of 24,000,000 shares of the Company's common
stock. On a pro forma basis, the Company's shareholders will
own approximately 69% of the combined company and approximately 31%
will be held by current Scient'x shareholders.
Also visit the Aging Spine Center, www.agingspine.com, a
web-based information portal for healthcare providers and patients
regarding aging spine disorders and their treatment. Alphatec
Spine 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 will
enable patients to review pertinent information about all the key
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 will include published
abstracts regarding the aging spine.
Non-GAAP Information for non-GAAP earnings and Adjusted
EBITDA
Non-GAAP earnings included in this press release is a non-GAAP
(generally accepted accounting principles) financial measure that
represents net income (loss) excluding the effects of in-process
research and development expenses, transaction related expenses and
litigation settlement expenses. Management does not consider these
expenses when it makes certain evaluations of the operations of the
Company. Non-GAAP earnings, as defined above, may not be similar to
non-GAAP earnings measures used by other companies and is not a
measurement under GAAP.
Adjusted EBITDA included in this press release is a non-GAAP
financial measure that represents net income (loss) excluding the
effects of interest, taxes, depreciation, amortization, stock-based
compensation costs, and other non-recurring income or expense
items, such as in-process research and development expense and
transaction related 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 GAAP-based earnings or loss and adjusted
EBITDA useful for evaluating aspects of the Company's business, its
reliance on these measures are 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 non-GAAP earnings and adjusted EBITDA in
conjunction with GAAP earnings and earnings per common share
measures. The Company believes that non-GAAP earnings and adjusted
EBITDA provides 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 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 these supplemental metrics since, with
reconciliation to GAAP, they 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 2010 revenue, adjusted EBITDA, and earnings
projections, the ability to successfully integrate Scient'x and
Alphatec, 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, the successful
global launch of the Company's new products and the products in its
development pipeline including OsseoFix, OsseoScrew, GLIF/ARC,
HeliFix,/HeliFuse, Solus, EquivaBone, CarriGen and AmnioShield,
failure to achieve acceptance of Alphatec Spine's products by the
surgeon community, failure to obtain FDA clearance or approval for
new products, 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 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
|
|
Year Ended
|
|
December 31,
|
|
December 31,
|
|
2009
|
2008
|
|
2009
|
2008
|
|
|
|
|
|
|
Revenues
|
$ 36,606
|
$ 28,447
|
|
$ 132,156
|
$ 101,313
|
Cost of revenues
|
13,907
|
11,594
|
|
48,015
|
36,605
|
Gross profit
|
22,699
|
16,853
|
|
84,141
|
64,708
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Research and development
|
3,554
|
3,046
|
|
13,487
|
12,965
|
In-process research and development
|
550
|
150
|
|
6,383
|
2,750
|
Sales and marketing
|
13,354
|
11,549
|
|
51,513
|
42,437
|
General and administrative
|
5,566
|
6,279
|
|
22,315
|
23,362
|
Litigation settlement
|
--
|
--
|
|
--
|
11,000
|
Total operating expenses
|
23,024
|
21,024
|
|
93,698
|
92,514
|
Operating loss
|
(325)
|
(4,171)
|
|
(9,557)
|
(27,806)
|
Interest and other income (expense), net
|
(982)
|
(662)
|
|
(3,489)
|
(1,014)
|
Loss before taxes
|
(1,307)
|
(4,833)
|
|
(13,046)
|
(28,820)
|
Income tax provision
|
13
|
225
|
|
243
|
468
|
|
|
|
|
|
|
Net loss
|
$ (1,320)
|
$ (5,058)
|
|
$ (13,289)
|
$ (29,288)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and diluted
|
$ (0.03)
|
$ (0.11)
|
|
$ (0.27)
|
$ (0.63)
|
|
|
|
|
|
|
Weighted-average shares - basic and diluted
|
51,908
|
46,495
|
|
49,292
|
46,290
|
|
ALPHATEC HOLDINGS, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(in thousands - unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
2009
|
|
2008
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$ 10,085
|
|
$ 18,315
|
|
Accounts receivable, net
|
24,766
|
|
18,759
|
|
Inventories, net
|
29,515
|
|
24,170
|
|
Prepaid expenses and other current assets
|
3,128
|
|
3,847
|
|
Deferred income tax assets
|
128
|
|
418
|
|
Total current assets
|
67,622
|
|
65,509
|
|
|
|
|
|
|
Property and equipment, net
|
30,356
|
|
23,093
|
|
Goodwill
|
60,113
|
|
60,124
|
|
Intangibles, net
|
2,296
|
|
4,280
|
|
Other assets
|
1,501
|
|
2,542
|
|
Total assets
|
$ 161,888
|
|
$ 155,548
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
$ 12,781
|
|
$ 10,504
|
|
Accrued expenses
|
16,439
|
|
16,739
|
|
Deferred revenue
|
2,135
|
|
1,858
|
|
Current portion of long-term debt
|
6,724
|
|
2,109
|
|
Total current liabilities
|
38,079
|
|
31,210
|
|
|
|
|
|
|
Total other long term liabilities
|
25,377
|
|
29,264
|
|
Redeemable preferred stock
|
23,603
|
|
23,605
|
|
Total stockholders' equity
|
74,829
|
|
71,469
|
|
Total liabilities and stockholders' equity
|
$ 161,888
|
|
$ 155,548
|
ALPHATEC HOLDINGS, INC.
|
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
|
(in thousands - unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
December 31,
|
|
December 31,
|
|
2009
|
2008
|
|
2009
|
2008
|
|
|
|
|
|
|
Operating loss, as reported
|
$ (325)
|
$ (4,171)
|
|
$ (9,557)
|
$ (27,806)
|
Add back:
|
|
|
|
|
|
Depreciation
|
2,393
|
1,648
|
|
8,627
|
5,107
|
Amortization of intangibles
|
919
|
1,168
|
|
3,329
|
3,624
|
Total EBITDA
|
2,987
|
(1,355)
|
|
2,399
|
(19,075)
|
|
|
|
|
|
|
Add back significant items:
|
|
|
|
|
|
Stock-based compensation
|
1,008
|
672
|
|
3,571
|
2,935
|
In-process research and development
|
550
|
150
|
|
6,383
|
2,750
|
Transaction related expenses
|
1,356
|
--
|
|
2,598
|
--
|
Litigation settlement
|
--
|
--
|
|
--
|
11,000
|
|
|
|
|
|
|
EBITDA, as adjusted for significant items
|
$ 5,901
|
$ (533)
|
|
$ 14,951
|
$ (2,390)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss, as reported
|
$ (1,320)
|
$ (5,058)
|
|
$ (13,289)
|
$ (29,288)
|
Add back:
|
|
|
|
|
|
In-process research and development
|
550
|
150
|
|
6,383
|
2,750
|
Transaction related expenses
|
1,356
|
--
|
|
2,598
|
--
|
Litigation settlement
|
--
|
--
|
|
--
|
11,000
|
|
|
|
|
|
|
Net income/(loss), as adjusted for significant items
|
$ 586
|
$ (4,908)
|
|
$ (4,308)
|
$ (15,538)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and diluted
|
$ (0.03)
|
$ (0.11)
|
|
$ (0.27)
|
$ (0.63)
|
Add back:
|
|
|
|
|
|
In-process research and development
|
0.01
|
--
|
|
0.13
|
0.06
|
Transaction related expenses
|
0.03
|
--
|
|
0.05
|
--
|
Litigation settlement
|
--
|
--
|
|
--
|
0.23
|
Net income/(loss) per common share - basic and diluted,
as adjusted for significant items
|
$ 0.01
|
$ (0.11)
|
|
$ (0.09)
|
$ (0.34)
|
ALPHATEC HOLDINGS, INC.
|
RECONCILIATION OF GEOGRAPHIC SEGMENT REVENUES AND GROSS
PROFIT
|
(in thousands, except gross profit margin percentages -
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Year Ended
|
|
December 31,
|
December 31,
|
|
2009
|
2008
|
2009
|
2008
|
|
|
|
|
|
Revenues by geographic segment
|
|
|
|
|
U.S.
|
$ 28,288
|
$ 21,988
|
$ 104,531
|
$ 81,456
|
Asia
|
6,632
|
4,817
|
23,524
|
17,731
|
Europe
|
1,686
|
1,642
|
4,101
|
2,126
|
Total revenues
|
$ 36,606
|
$ 28,447
|
$ 132,156
|
$ 101,313
|
|
|
|
|
|
Gross profit by geographic segment
|
|
|
|
|
U.S.
|
$ 19,301
|
$ 14,005
|
$ 72,401
|
$ 56,092
|
Asia
|
2,621
|
1,990
|
9,998
|
7,472
|
Europe
|
777
|
858
|
1,742
|
1,144
|
Total gross profit
|
$ 22,699
|
$ 16,853
|
$ 84,141
|
$ 64,708
|
|
|
|
|
|
Gross profit margin by geographic segment
|
|
|
|
|
U.S.
|
68.2%
|
63.7%
|
69.3%
|
68.9%
|
Asia
|
39.5%
|
41.3%
|
42.5%
|
42.1%
|
Europe
|
46.1%
|
52.3%
|
42.5%
|
53.8%
|
Total gross profit margin
|
62.0%
|
59.2%
|
63.7%
|
63.9%
|
CONTACT: Alphatec Spine, Inc.
Peter C. Wulff, Chief Financial Officer
(760) 494-6746
investorrelations@alphatecspine.com
Westwicke Partners
Lynn C. Pieper
(415) 202-5678
lynn.pieper@westwicke.com
![Alphatec Spine](http://media.primezone.com/cache/8408/small/5932.jpg)
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