- Revenue of $50.9 million – 12.0% growth over Q2 2010; 7.6%
growth on a constant currency basis
- US revenue of $34.5 million; 17.8% growth over Q2 2010
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 fiscal quarter ended June 30, 2011.
Second Quarter 2011 Performance Highlights
- Achieved revenue of $50.9 million in the second quarter 2011,
which represented growth of 12.0% versus the second quarter 2010,
and 2.2% sequential revenue growth over the first quarter
2011.
- US revenue of $34.5 million reported for the second quarter
2011 represented 17.8% growth over second quarter 2010, driven by
strength of our core products and increase in purchase orders from
hospitals for Alphatec Spine products.
- International revenue of $16.3 million reported in the second
quarter 2011 up 1.3% versus the $16.1 million reported for the
second quarter 2010.
- Cash flow was break-even in the second quarter 2011, reflecting
strong revenue growth, working capital management and operating
expense control.
- Received PMDA regulatory approval of Illico® in Japan, a market
that has strong demand for minimally invasive surgical
approaches.
- We believe Alphatec Spine now holds the fourth largest market
share position in Japan.
- Continued Aging Spine market penetration of OsseoFix® and
OsseoScrew® in Europe.
- OsseoFix revenue growth was 32% in the second quarter, with
over 2,600 cases having been completed since product launch.
- OsseoScrew continues to gain momentum and is driving
pull-through of other key Alphatec Spine
products. – Resubmitted the 510k application for
OsseoScrew to the FDA in the second quarter, as planned.
- Continued uptake and demand for PureGenTM, the Company's
Osteoprogenitor Cell Allograft, with over 500 cases completed since
product launch, with no reported adverse events, complications or
complaints.
- Implemented a 10% US workforce reduction in order to align US
staffing levels with margin and profit goals.
"We are pleased with our 12% global revenue growth, which was
driven in large part by our nearly 18% US revenue growth in the
second quarter. Each of those growth rates significantly outpaces
our competitors, globally and in the US, respectively. The strength
of our broad product portfolio continues to convert business, most
notably in the US hospital market. Internationally, OsseoFix and
OsseoScrew continue to see strong market adoption and product
pull-through, and we are particularly pleased with the strength of
our results in Japan," stated Dirk Kuyper, Alphatec Spine's
President and Chief Executive Officer.
Mr. Kuyper continued, "While we are pleased to have reported
record revenue results and break-even cash flow in the quarter, we
have turned our focus to our US gross margin, which we expect to
meaningfully improve throughout the remainder of 2011 and 2012. We
have initiatives underway that aim to reduce costs, better utilize
our in-house manufacturing capacity and improve manufacturing
efficiencies. We continue to be laser-focused on driving our
differentiated technologies in Aging Spine, MIS and Biologics to
gain market share globally."
Second Quarter 2011 Financial Results
Consolidated revenues for the second quarter 2011 were $50.9
million, an increase of 12.0% from the $45.4 million reported for
the second quarter 2010. US revenues for the second quarter
2011 were $34.5 million, an increase of 17.8% from the $29.3
million reported for the second quarter 2010. International
revenues were $16.3 million for the second quarter 2011, up 1.3%
versus the $16.1 million reported in the second quarter 2010.
Gross profit for the second quarter 2011 was $29.9 million, an
increase of $1.1 million over the second quarter 2010 gross profit
of $28.8 million. Second quarter 2011 gross margin of 58.7% was
below the second quarter 2010 gross margin of 63.5%. Second quarter
2011 cost of goods sold includes $2.7 million in inventory
write-downs. Excluding these write-downs, gross profit was $32.6
million and gross margin was 64.0% for the second quarter 2011.
International gross margin increased modestly to 50.1% versus the
49.0% international gross margin reported in second quarter 2010.
Total operating expenses for the second quarter 2011 were $33.2
million, an increase of $1.3 million compared to the second quarter
2010 total operating expenses of $31.9 million.
Adjusted EBITDA was $2.7 million in the second quarter 2011, a
decrease of $1.1 million compared to the $3.8 million reported for
the second quarter 2010. The decline in Adjusted EBITDA is
primarily attributable to the negative gross margin contribution
from the $2.7 million in inventory write-downs taken in the
quarter. Excluding these write-downs, Adjusted EBITDA was $5.4
million in second quarter 2011.
Net loss for the second quarter 2011 was $3.0 million, or
($0.03) per share (basic and diluted), compared with a net loss of
$3.0 million, or ($0.04) per share (basic and diluted) for the
second quarter 2010.
Non-GAAP EPS for the second quarter 2011 was ($0.02) per share
(basic and diluted), compared to $0.00 per share (basic and
diluted) reported for the second quarter 2010. Non-GAAP net
earnings or (loss) excludes in-process research and development
expenses, acquisition-related inventory step-up, amortization of
intangible assets and transaction and restructuring expenses.
Cash and cash equivalents were $21.8 million at June 30, 2011
which is an increase of $0.3 million as compared to the $21.5
million cash position as of March 31, 2011.
2011 Financial Guidance
The Company is updating its full year 2011 financial guidance
with revenues of $195.0 million to $205.0 million, and $22.0
million to $25.0 million in annual Adjusted EBITDA; approximately
11% to 12% of revenue.
Conference Call
Alphatec Spine will host a conference call today at 2:00 p.m. PT
/ 5:00 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 US operations, the Company also markets its products in over 50
international markets through its subsidiary, Scient'x S.A.S., via
a direct sales force in France, Italy and the United Kingdom and
via independent distributors in the rest of Europe, the Middle East
and Africa, South America and Latin America. In Asia, the
Company markets its products through its subsidiary, Alphatec
Pacific, Inc. and through distributors in the rest of the Asia
Pacific region.
The Alphatec Holdings, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=3520
Non-GAAP Information
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 expenses, 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 non-GAAP-based earnings or loss and
EBITDA useful for evaluating aspects of the Company's business, its
reliance on these measures 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 non-GAAP adjusted EBITDA in conjunction with GAAP
earnings and earnings per common share measures. The Company
believes that non-GAAP 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 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. 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 2011 revenue, adjusted EBITDA, free cash flow
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, the successful global launch of the Company's new
products and the products in its development pipeline including
OsseoFix, OsseoScrew, Illico, and PureGen, 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 US and/or global revenues,
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
BALANCE SHEETS |
| (in thousands -
unaudited) |
| |
|
|
| |
|
|
| |
June 30, |
December 31, |
| |
2011 |
2010 |
| ASSETS |
|
|
| Current assets: |
|
|
| Cash and cash
equivalents |
$ 21,761 |
$ 23,168 |
| Accounts receivable, net |
41,711 |
39,777 |
| Inventories, net |
47,974 |
51,635 |
| Prepaid expenses and other current
assets |
8,831 |
6,652 |
| Deferred income tax
assets |
1,588 |
1,592 |
| Total current assets |
121,865 |
122,824 |
| |
|
|
| Property and equipment, net |
34,691 |
38,440 |
| Goodwill |
178,905 |
170,194 |
| Intangibles, net |
44,821 |
43,148 |
| Other assets |
4,164 |
2,410 |
| Total assets |
$ 384,446 |
$ 377,016 |
| |
|
|
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
| Current liabilities: |
|
|
| Accounts payable |
$ 14,919 |
$ 15,957 |
| Accrued expenses |
23,356 |
22,530 |
| Deferred revenue |
3,291 |
3,396 |
| Current portion of long-term
debt |
963 |
1,708 |
| Total current liabilities |
42,529 |
43,591 |
| |
|
|
| Total long term
liabilities |
42,990 |
43,388 |
| Redeemable preferred
stock |
23,603 |
23,603 |
| Stockholders' equity |
275,324 |
266,434 |
| Total liabilities and stockholders'
equity |
$ 384,446 |
$ 377,016 |
| |
| |
| 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, |
| |
2011 |
2010 |
2011 |
2010 |
| |
|
|
|
|
| Revenues |
$ 50,862 |
$ 45,424 |
$ 100,582 |
$ 80,746 |
| Cost of revenues |
20,585 |
16,222 |
37,958 |
27,970 |
| Amortization of acquired intangible
assets |
416 |
369 |
812 |
369 |
| Total cost of revenues |
21,001 |
16,591 |
38,770 |
28,339 |
| Gross profit |
29,861 |
28,833 |
61,812 |
52,407 |
| |
|
|
|
|
| Operating expenses: |
|
|
|
|
| Research and development |
4,382 |
4,909 |
9,795 |
8,596 |
| In-process research and
development |
-- |
92 |
-- |
542 |
| Sales and marketing |
19,291 |
17,115 |
37,920 |
30,519 |
| General and administrative |
8,938 |
8,007 |
18,080 |
13,567 |
| Amortization of acquired intangible
assets |
554 |
469 |
1,084 |
469 |
| Transaction related expenses |
-- |
493 |
-- |
3,645 |
| Restructuring expenses |
-- |
805 |
599 |
1,687 |
| Total operating expenses |
33,165 |
31,890 |
67,478 |
59,025 |
| Operating loss |
(3,304) |
(3,057) |
(5,666) |
(6,618) |
| Interest and other income
(expense), net |
(502) |
(309) |
(756) |
(1,278) |
| Loss from continuing operations before
taxes |
(3,806) |
(3,366) |
(6,422) |
(7,896) |
| Income tax benefit |
(762) |
(265) |
(1,511) |
(129) |
| Loss from continuing operations |
(3,044) |
(3,101) |
(4,911) |
(7,767) |
| Loss from discontinued operations, net of
tax |
-- |
122 |
-- |
78 |
| |
|
|
|
|
| Net loss |
$ (3,044) |
$ (2,979) |
$ (4,911) |
$ (7,689) |
| |
|
|
|
|
| |
|
|
|
|
| Net loss per common share: |
|
|
|
|
| Basic and diluted net loss from
continuing operations |
$ (0.03) |
$ (0.04) |
$ (0.06) |
$ (0.11) |
| Basic and diluted net income from
discontinued operations |
-- |
0.00 |
-- |
0.00 |
| Basic and diluted net loss per
share |
$ (0.03) |
$ (0.04) |
$ (0.06) |
$ (0.11) |
| |
|
|
|
|
| Weighted-average shares - basic and
diluted |
88,740 |
84,675 |
88,720 |
69,500 |
| |
| ALPHATEC HOLDINGS,
INC. |
| RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES |
| (in thousands, except
per share amounts - unaudited) |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Three Months Ended |
Six Months Ended |
| |
June 30, |
June 30, |
| |
2011 |
2010 |
2011 |
2010 |
| |
|
|
|
|
| Operating loss, as reported |
$ (3,304) |
$ (3,057) |
$ (5,666) |
$ (6,618) |
| Add back: |
|
|
|
|
| Depreciation |
3,662 |
3,234 |
7,434 |
5,876 |
| Amortization of intangible
assets |
347 |
203 |
652 |
1,123 |
| Amortization of acquired intangible
assets |
970 |
838 |
1,896 |
838 |
| Total EBITDA |
1,675 |
1,218 |
4,316 |
1,219 |
| |
|
|
|
|
| Add back significant items: |
|
|
|
|
| Stock-based compensation |
734 |
772 |
1,448 |
1,753 |
| In-process research and
development |
-- |
92 |
-- |
542 |
| Acquisition-related inventory
step-up |
321 |
413 |
751 |
413 |
| Transaction related expenses |
-- |
493 |
-- |
3,645 |
| Restructuring expenses |
-- |
805 |
599 |
1,687 |
| |
|
|
|
|
| EBITDA, as adjusted for significant
items |
$ 2,730 |
$ 3,793 |
$ 7,114 |
$ 9,259 |
| |
|
|
|
|
| |
|
|
|
|
| Net loss, as reported |
$ (3,044) |
$ (2,979) |
$ (4,911) |
$ (7,689) |
| Add back: |
|
|
|
|
| In-process research and
development |
-- |
92 |
-- |
542 |
| Acquisition-related inventory
step-up |
321 |
413 |
751 |
413 |
| Amortization of acquired intangible
assets |
970 |
838 |
1,896 |
838 |
| Transaction related expenses |
-- |
493 |
-- |
3,645 |
| Restructuring expenses |
-- |
805 |
599 |
1,687 |
| |
|
|
|
|
| Net loss, as adjusted for significant
items |
$ (1,753) |
$ (338) |
$ (1,665) |
$ (564) |
| |
|
|
|
|
| |
|
|
|
|
| Net loss per common share - basic and
diluted |
$ (0.03) |
$ (0.04) |
$ (0.06) |
$ (0.11) |
| Add back: |
|
|
|
|
| In-process research and
development |
-- |
0.00 |
-- |
0.01 |
| Acquisition-related inventory
step-up |
0.00 |
0.01 |
0.01 |
0.01 |
| Amortization of acquired intangible
assets |
0.01 |
0.01 |
0.02 |
0.01 |
| Transaction related expenses |
-- |
0.01 |
-- |
0.05 |
| Restructuring expenses |
-- |
0.01 |
0.01 |
0.02 |
| |
|
|
|
|
| Net loss per common share - basic
and |
|
|
|
|
| diluted, as adjusted for significant
items |
$ (0.02) |
$ 0.00 |
$ (0.02) |
$ (0.01) |
| |
| |
| ALPHATEC HOLDINGS,
INC. |
| RECONCILIATION OF
GEOGRAPHIC SEGMENT REVENUES AND GROSS PROFIT |
| (in thousands, except
percentages - unaudited) |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Three Months Ended |
|
Impact from |
| |
June 30, |
|
Foreign |
| |
2011 |
2010 |
% Change |
Currency |
| |
|
|
|
|
| Revenues by geographic segment |
|
|
|
|
| U.S. |
$ 34,539 |
$ 29,317 |
17.8% |
0.0% |
| International |
16,323 |
16,107 |
1.3% |
13.7% |
| Total revenues |
$ 50,862 |
$ 45,424 |
12.0% |
4.0% |
| |
|
|
|
|
| Gross profit by geographic segment |
|
|
|
|
| U.S. |
$ 21,688 |
$ 20,933 |
|
|
| International |
8,173 |
7,900 |
|
|
| Total gross profit |
$ 29,861 |
$ 28,833 |
|
|
| |
|
|
|
|
| Gross profit margin by geographic
segment |
|
|
|
|
| U.S. |
62.8% |
71.4% |
|
|
| International |
50.1% |
49.0% |
|
|
| Total gross profit margin |
58.7% |
63.5% |
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Six Months Ended |
|
Impact from |
| |
June 30, |
|
Foreign |
| |
2011 |
2010 |
% Change |
Currency |
| |
|
|
|
|
| Revenues by geographic segment |
|
|
|
|
| U.S. |
$ 68,399 |
$ 57,753 |
18.4% |
0.0% |
| International |
32,183 |
22,993 |
40.0% |
10.9% |
| Total revenues |
$ 100,582 |
$ 80,746 |
24.6% |
3.2% |
| |
|
|
|
|
| Gross profit by geographic segment |
|
|
|
|
| U.S. |
$ 46,109 |
$ 40,799 |
|
|
| International |
15,703 |
11,608 |
|
|
| Total gross profit |
$ 61,812 |
$ 52,407 |
|
|
| |
|
|
|
|
| Gross profit margin by geographic
segment |
|
|
|
|
| U.S. |
67.4% |
70.6% |
|
|
| International |
48.8% |
50.5% |
|
|
| Total gross profit margin |
61.5% |
64.9% |
|
|
| |
|
|
|
|
| |
|
|
|
|
| Footnotes: |
|
|
|
|
| 1) The impact from foreign
currency represents the percentage change in 2011 revenues due to
the change in foreign exchange rates for the periods
presented. |
| |
|
|
|
|
| |
| ALPHATEC HOLDINGS,
INC. |
| PRO FORMA REVENUES BY
GEOGRAPHIC SEGMENT |
| (in thousands, except
percentages - unaudited) |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Three Months Ended |
|
Impact from |
| |
June 30, |
|
Foreign |
| |
2011 |
2010 |
% Change |
Currency |
| |
|
|
|
|
| Pro Forma Revenues by geographic segment |
|
|
|
|
| U.S. |
$ 34,539 |
$ 29,317 |
17.8% |
0.0% |
| International |
16,323 |
16,107 |
1.3% |
13.7% |
| Total revenues |
$ 50,862 |
$ 45,424 |
12.0% |
4.0% |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Six Months Ended |
|
Impact from |
| |
June 30, |
|
Foreign |
| |
2011 |
2010 |
% Change |
Currency |
| |
|
|
|
|
| Pro Forma Revenues by geographic segment |
|
|
|
|
| U.S. |
$ 68,399 |
$ 60,728 |
12.6% |
0.0% |
| International |
32,183 |
31,353 |
2.6% |
9.2% |
| Total revenues |
$ 100,582 |
$ 92,081 |
9.2% |
2.8% |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| Footnotes: |
|
|
|
|
| 1) Pro Forma revenues for
the periods presented include the results of Scient'x as if the
Scient'x acquisition had occurred on |
| January 1, 2010. |
|
|
|
|
| |
|
|
|
|
| 2) The impact from foreign
currency represents the percentage change in 2011 revenues due to
the change in foreign |
| exchange rates for the periods
presented. |
|
|
|
|
CONTACT: Michael O'Neill
Chief Financial Officer
Alphatec Spine, Inc.
(760) 494-6746
investorrelations@alphatecspine.com
Westwicke Partners
Lynn C. Pieper
(415) 202-5678
lynn.pieper@westwicke.com
Alphatec (NASDAQ:ATEC)
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Alphatec (NASDAQ:ATEC)
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