- Total revenue grew 39% to $117 million
- Surgical revenue grew 41% to $102 million and EOS revenue grew
24% to $15 million
- Delivered positive adjusted EBITDA of over $1 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
June 30, 2023, and recent corporate highlights.
Second Quarter 2023 Financial Results
Quarter Ended June 30, 2023
Total revenue
$117 million
GAAP gross margin
55%
Non-GAAP gross margin
73%
GAAP operating expenses
$114 million
Non-GAAP operating expenses
$94 million
GAAP operating loss
($50) million
Adjusted EBITDA
$1 million
Ending cash balance
$101 million
Recent Highlights
- Continued to advance the clinical procedural experience through
PTP™ (Prone TransPsoas) and launch of LTP™ (Lateral TransPsoas),
the strongest contributors to Q2 revenue growth;
- Launched ALIF access system to further LTP with midline ALIF
approach for L3 to S1;
- Acquired navigation-enabled robotics platform, which will
integrate into ATEC’s procedural workflow, improving precision,
clinical predictability and efficiency, while minimizing
radiation;
- Drove 32% increase in surgical volume and 7% increase in
average revenue per procedure;
- Expanded adjusted EBITDA margin by 1,110 basis points.
“ATEC’s 100% spine focus gives us a unique ability to create
comprehensive, ground-up procedures that directly improve spine
care,” said Pat Miles, Chairman and Chief Executive Officer. “Our
long-held thesis - that good surgery is good business - is proving
out. We are delivering unmatched clinical distinction, which is
compelling strong surgeon adoption, attracting some of spine’s most
talented sales professionals, and fueling industry-leading
procedural volume growth. But we're still just getting started. We
are focused on developing the most actionable informatics ecosystem
in spine, which will use EOS and navigation-enabled robotics to
address spine surgery’s biggest challenges. With the knowhow we
have assembled at ATEC, I love our chances."
Financial Outlook for the Full Year 2023
The Company now expects total revenue to grow 32% to $462
million for the fiscal year ended December 31, 2023. This includes
surgical revenue growth of approximately 33% and $58 million of EOS
revenue. The Company also now expects non-GAAP adjusted EBITDA of
approximately $2 million for the full year 2023.
Financial Results Webcast
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. To dial in to the webcast, please register via this
link.
A replay of the webcast will remain available through the
Investor Relations Section of ATEC’s Corporate Website for twelve
months. In addition, a dial-in replay will be available beginning
about two hours after the webcast’s completion through August 10,
2023. Access the replay by dialing (800) 770-2030 and referencing
conference ID number 97241.
Inducement Awards Granted
As an inducement material to accepting employment with the
Company, and in accordance with Nasdaq Listing Rule 5635(c)(4),
ATEC today announced that the independent Compensation Committee of
the Board of Directors has approved aggregate grants to seventeen
new employees (who are not executive officers) of, collectively,
12,772 restricted stock units (“RSUs”) under the Company’s 2016
Employment Inducement Award Plan. The RSUs will vest in equal
annual installments on each of the first four anniversaries of the
grant date, provided that the recipient remains continuously
employed by ATEC as of such vesting date. In addition, the RSUs
will vest fully upon a change of control of ATEC.
Non-GAAP Financial Information
To supplement the Company’s financial statements presented in
accordance with generally accepted accounting principles in the
United States of America (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.S. 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 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 be 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, balance sheet, growth and
financial outlook; planned product launches and introductions; and
the Company’s ability to compel surgeon adoption. 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
Second-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; product liability exposure; an unsuccessful outcome in any
litigation; patent infringement claims; claims related to the
Company’s intellectual property; and the Company’s ability to meet
its financial obligations. 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
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(unaudited) Revenue: Revenue from products and services
$
116,920
$
84,151
$
226,030
$
155,069
Revenue from international supply agreement
—
—
—
15
Total revenue
116,920
84,151
226,030
155,084
Cost of sales
52,379
28,675
91,064
50,392
Gross profit
64,541
55,476
134,966
104,692
Operating expenses: Research and development
14,571
10,596
27,831
20,318
Sales, general and administrative
87,287
72,668
178,549
142,139
Litigation-related expenses
6,908
5,495
10,100
13,027
Amortization of acquired intangible assets
3,705
2,177
6,588
4,407
Transaction-related expenses
1,900
—
1,900
120
Restructuring expenses
29
289
204
1,659
Total operating expenses
114,400
91,225
225,172
181,670
Operating loss
(49,859
)
(35,749
)
(90,206
)
(76,978
)
Interest expense and other income, net: Interest expense, net
(3,892
)
(1,435
)
(7,766
)
(2,891
)
Other income, net
2,324
67
3,030
37
Total interest expense and other income, net
(1,568
)
(1,368
)
(4,736
)
(2,854
)
Net loss before taxes
(51,427
)
(37,117
)
(94,942
)
(79,832
)
Income tax benefit
(50
)
(16
)
(36
)
(115
)
Net loss
$
(51,377
)
$
(37,101
)
$
(94,906
)
$
(79,717
)
Net loss per share, basic and diluted
$
(0.43
)
$
(0.36
)
$
(0.83
)
$
(0.79
)
Weighted average shares outstanding, basic and diluted
118,719
102,849
114,260
101,422
Stock-based compensation included in: Cost of sales
$
16,226
$
449
$
22,232
$
705
Research and development
1,480
1,362
2,797
2,334
Sales, general and administrative
6,488
7,392
15,627
16,348
$
24,194
$
9,203
$
40,656
$
19,387
Alphatec Holdings,
Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
June 30,2023 December 31,2022 (unaudited)
ASSETS Current assets: Cash and cash equivalents
$
101,020
$
84,696
Accounts receivable, net
59,932
60,060
Inventories
119,957
101,521
Prepaid expenses and other current assets
18,758
9,357
Total current assets
299,667
255,634
Property and equipment, net
119,372
101,952
Right-of-use assets
27,421
28,360
Goodwill
72,527
47,367
Intangible assets, net
105,508
82,781
Other assets
3,739
4,874
Total assets
$
628,234
$
520,968
LIABILITIES AND STOCKHOLDERS' DEFICIT Current
liabilities: Accounts payable
$
43,698
$
34,742
Accrued expenses and other current liabilities
74,123
72,382
Contract liabilities
13,895
11,956
Short-term debt
2,207
14,948
Current portion of operating lease liabilities
4,824
4,842
Total current liabilities
138,747
138,870
Total long-term liabilities
494,037
393,162
Redeemable preferred stock
23,603
23,603
Stockholders' deficit
(28,153
)
(34,667
)
Total liabilities and stockholders' deficit
$
628,234
$
520,968
Alphatec Holdings,
Inc.
Reconciliation of Non-GAAP
Financial Measures
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(unaudited) Gross profit, GAAP
$
64,541
$
55,476
$
134,966
$
104,692
Add: amortization of intangible assets
220
9
440
9
Add: stock-based compensation
16,226
449
22,232
705
Add: purchase accounting adjustments on acquisitions
—
437
195
437
Add: excess and obsolete write-down
4,636
2,394
6,734
4,100
Non-GAAP gross profit
$
85,623
$
58,765
$
164,567
$
109,943
Gross margin, GAAP
55.2
%
65.9
%
59.7
%
67.5
%
Add: amortization of intangible assets
0.2
%
0.0
%
0.2
%
0.0
%
Add: stock-based compensation
13.9
%
0.5
%
9.8
%
0.5
%
Add: purchase accounting adjustments on acquisitions
0.0
%
0.5
%
0.1
%
0.3
%
Add: excess and obsolete write-down
4.0
%
2.8
%
3.0
%
2.6
%
Non-GAAP gross margin
73.2
%
69.8
%
72.8
%
70.9
%
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(unaudited) Operating expenses, GAAP
$
114,400
$
91,225
$
225,172
$
181,670
Adjustments: Stock-based compensation
(7,968
)
(8,754
)
(18,424
)
(18,682
)
Litigation-related expenses
(6,908
)
(5,495
)
(10,100
)
(13,027
)
Amortization of intangible assets
(3,705
)
(2,177
)
(6,588
)
(4,407
)
Transaction-related expenses
(1,900
)
—
(1,900
)
(120
)
Restructuring expenses
(29
)
(289
)
(204
)
(1,659
)
Other non-recurring expenses1
—
—
(1,349
)
—
Non-GAAP operating expenses
$
93,890
$
74,510
$
186,607
$
143,775
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(unaudited) Operating loss, GAAP
$
(49,859
)
$
(35,749
)
$
(90,206
)
$
(76,978
)
Depreciation
9,758
7,506
18,347
14,591
Amortization of intangible assets
3,925
2,186
7,028
4,416
EBITDA
(36,176
)
(26,057
)
(64,831
)
(57,971
)
Add back significant items: Stock-based compensation
24,194
9,203
40,656
19,387
Purchase accounting adjustments on acquisitions
—
437
195
437
Excess & obsolete write-down
4,636
2,394
6,734
4,100
Litigation-related expenses
6,908
5,495
10,100
13,027
Transaction-related expenses
1,900
—
1,900
120
Restructuring expenses
29
289
204
1,659
Other non-recurring expenses1
—
—
1,349
—
Adjusted EBITDA
$
1,491
$
(8,239
)
$
(3,693
)
$
(19,241
)
1. Non-recurring consulting fees associated with the
implementation of our state tax-planning strategy
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803895265/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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