atec-8k_20180802.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 2, 2018

 

 

ALPHATEC HOLDINGS, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

 

 

 

 

 

Delaware

 

000-52024

 

20-2463898

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

5818 El Camino Real

Carlsbad, California 92008

(Address of Principal Executive Offices)

 

 

(760) 431-9286

(Registrant’s telephone number, including area code)

 

 

Not applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14.a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933


(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 

 

 


Item 2.02.

Results of Operations and Financial Condition

 

The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition,” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

 

On August 2, 2018, Alphatec Holdings, Inc. (the “Company”) issued a press release announcing its financial results for its quarter ended June 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1.

The information contained in this Current Report, including the exhibit, shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

 

 

Item 9.01.

Financial Statements and Exhibits

 

 

(d)

Exhibits.

 

99.1

  

Press Release, dated August 2, 2018.

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

 

Date: August 2, 2018

 

 

 

ALPHATEC HOLDINGS, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Jeffrey Black

 

 

 

 

Name:  Jeffrey Black

 

 

 

 

Its:       Chief Financial Officer

 

atec-ex991_6.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

Alphatec Reports Second Quarter 2018 Financial Results

 

CARLSBAD, Calif., August 2, 2018 – Alphatec Holdings, Inc.  (“ATEC” or the “Company”) (Nasdaq: ATEC), a provider of innovative spine surgery solutions with a mission to improve patient lives through the relentless pursuit of superior outcomes, today reported financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 Financial Highlights

Total net revenue of $22.0 million; U.S. commercial revenue of $20.4 million, up 6% compared to the first quarter of 2018

U.S. commercial gross margin of 69.5%

Cash and cash equivalents of $44.9 million at June 30, 2018

Operating cash burn (excluding debt service and transaction-related costs) of $3.0 million

Second Quarter Organizational, Commercial, and Product Highlights

 

Continued transition of sales organization and increased contribution from dedicated distribution partners and agents to 57% of U.S. commercial revenue

 

Increased revenue attributable to newly converted surgeons, which more than doubled sequentially

 

Obtained FDA 510(k) clearance for IdentiTi porous titanium interbody implants; successfully completed first surgery in conjunction with alpha launch

 

Obtained two significant, favorable rulings in the patent litigation brought by NuVasive, Inc.

 

Made three key additions to ATEC leadership team: David Sponsel, Area Vice President, South Central United States; Emory Rooney, Vice President, Sales Channel Development; and Robert Judd, Vice President, Finance & Controller, who collectively bring decades of  additional spine industry experience to ATEC

 

“Our second quarter results, and numerous leading indicators, drive our growing confidence in the bright future for ATEC,” said Pat Miles, Chairman and Chief Executive Officer.  “While we continue to anticipate some short-term variability, we expect that our organic product development machine will accelerate growth. The spine market needs surgeon-driven, outcome-focused innovation, and we are absolutely committed to providing it. We are confident that we are building an organization that will create significant, long-term value.”


1


Comparison of Financial Results for the Second Quarter 2018 to First Quarter 2018

 

The following table compares key second quarter 2018 results to first quarter 2018 results.

  

 

Three Months Ended

 

 

Change

 

 

June 30, 2018

 

 

March 31, 2018

 

 

$

 

 

%

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. commercial revenue

$

20,409

 

 

$

19,201

 

 

$

1,208

 

 

 

6

%

U.S. gross profit

 

              14,178

 

 

 

              13,432

 

 

 

746

 

 

 

6

%

U.S. gross margin

 

69.5

%

 

 

70.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Research and development

$

2,009

 

 

$

1,786

 

 

$

223

 

 

 

12

%

   Sales and marketing

 

10,673

 

 

 

10,060

 

 

 

613

 

 

 

6

%

   General and administrative

 

7,815

 

 

 

6,442

 

 

 

1,373

 

 

 

21

%

   Amortization of intangible assets

 

187

 

 

 

177

 

 

 

10

 

 

 

6

%

   Transaction-related expenses

 

(62

)

 

 

1,542

 

 

 

(1,604

)

 

 

(104

%)

   Gain on settlement

 

-

 

 

 

(6,168

)

 

 

6,168

 

 

 

(100

%)

   Restructuring

 

193

 

 

 

398

 

 

 

(205

)

 

 

(52

%)

     Total operating expenses

$

20,815

 

 

$

14,237

 

 

$

6,578

 

 

 

46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

$

(6,545

)

 

$

(667

)

 

$

(5,878

)

 

 

881

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other expense

$

(1,784

)

 

$

(1,645

)

 

$

(139

)

 

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

$

(7,064

)

 

$

(1,854

)

 

$

(5,210

)

 

 

281

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjusted EBITDA

$

(3,677

)

 

$

(2,390

)

 

$

(1,287

)

 

 

54

%

 

U.S. commercial revenue for the second quarter of 2018 was $20.4 million, compared to $19.2 million in the first quarter of 2018.  Results reflect the continued transition of the Company’s distribution channel to more dedicated, scalable partners. Revenue growth generated by the expansion of the dedicated sales channel, coupled with new surgeon adoption, offset the revenue losses associated with the intentional reduction of non-strategic distributor relationships.

 

U.S. gross profit and gross margin for the second quarter of 2018 were $14.2 million and 69.5%, respectively, compared to $13.4 million and 70.0%, respectively, for the first quarter of 2018. U.S. gross margin stabilized as the Company continued to reduce product costs and optimize its supply chain.

 

Total operating expenses for the second quarter of 2018 were $20.8 million, compared to $14.2 million in the first quarter of 2018.  The increase is primarily the result of a $6.2 million contract settlement gain recorded in the first quarter of 2018.  On a non-GAAP basis (excluding restructuring charges, stock-based compensation, transaction-related expenses, and the contract settlement gain), total operating expenses in the second quarter increased to $19.5 million, compared to $17.9 million in the first quarter of 2018.  The increase primarily reflects increased sales expenses, litigation support costs, and investments in product development.  

 

Operating loss for the second quarter of 2018 was $6.5 million, compared to a loss of $0.7 million for the first quarter of 2018. The increase is primarily the result of the $6.2 million contract settlement gain recorded in the first quarter of 2018.  

 

2


Non-GAAP Adjusted EBITDA for the second quarter of 2018 was $(3.7) million, compared to $(2.4) million in the first quarter of 2018.  For more detailed information, please refer to the table, “Alphatec Holdings, Inc. Reconciliation of Non-GAAP Financial Measures,” that follows.

 

Current and long-term debt includes $30.6 million in term debt and $8.2 million outstanding under the Company’s revolving credit facility at June 30, 2018. This compares to $31.5 million in term debt and $8.4 million outstanding under the Company’s revolving credit facility at March 31, 2018.

 

Cash and cash equivalents were $44.9 million at June 30, 2018, compared to $47.6 million reported at March 31, 2018.  

 

Comparison of Financial Results for the Three and Six Months Ended June 30, 2018 and 2017

Revenue decreased on a year-over-year basis as a result of the continued transition of the Company’s distribution channel to more dedicated, scalable partners and the discontinuation of non-strategic distributor relationships. The year-over-year increase in operating expenses was attributable to litigation support costs, transaction-related expenses associated with the Company’s acquisition of SafeOp Surgical, Inc., and increased investment in product development initiatives as the Company expands its product pipeline. For additional information, please reference the following financial statement tables and the Company’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on or before August 3, 2018.

 

2018 Financial Outlook

 

ATEC continues to anticipate total revenue in 2018 to approximate $95.0 million, with revenue growth expected to accelerate in the second half of the year.  

 

Favorable Patent Litigation Rulings

 

ATEC obtained two significant, favorable rulings in the patent litigation brought by NuVasive, Inc.: the first dismissed NuVasive’s design patent counts, covering the implant and sequential dilators used in lateral surgery; the second denied NuVasive’s Motion for Preliminary Injunction, finding that NuVasive had not met its burden of proving either likelihood of success or irreparable harm.  The latter ruling allows ATEC to continue to sell its lateral surgery offering while the lawsuit is pending.

 

Key Executive Additions

 

Mr. Sponsel has nearly 20 years’ sales experience, including 13 years in the spine industry.  He spent a decade with Stryker Spine, before leaving to lead Medacta USA’s Spine Division. Mr. Rooney has accumulated over a decade of leadership in spine sales. He joins ATEC from Stryker Spine, where he most recently served as Vice President, Sales, Southeast.  Mr. Judd brings nearly 15 years of accounting and strategic finance experience to ATEC. He joins ATEC following three years with NuVasive, Inc., where he served most recently as Vice President, Finance – Global Process Transformation, after holding finance and accounting leadership positions with Thermo Fisher Scientific, Life Technologies, Allergan, and KPMG.

 

 


3


Non-GAAP 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 such as Adjusted EBITDA.  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 sale of assets, settlement gains, impairments, restructuring expenses, severance expenses and transaction-related expenses.  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 baseline for assessing the future earnings potential of the Company.  For completeness, management uses non-GAAP Adjusted EBITDA in conjunction with GAAP earnings and earnings per common share measures.  The Company’s Adjusted EBITDA measure 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. Adjusted EBITDA 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 measure.

 

Investor Conference Call

 

ATEC will hold a conference call today at 1:30 p.m. PT / 4:30 p.m. ET to discuss second quarter 2018 results. The dial-in numbers are (877) 556-5251 for domestic callers and (720) 545-0036 for international callers. The conference ID number is 1956197. A live webcast of the conference call will also be available online from the investor relations page of the Company's corporate website at www.atecspine.com.

 

A replay of the webcast will remain available on the Company’s website, www.atecspine.com, until the Company releases its third quarter 2018 financial results. In addition, a telephonic replay of the call will be available until November 2, 2018. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use the replay conference ID number 1956197.

 

Inducement Awards Granted

 

As an inducement to accepting employment with the Company, and in accordance with applicable Nasdaq listing requirements, the Compensation Committee of the Board of Directors approved grants of inducement stock options to purchase, collectively, an aggregate of 115,000 shares of the Company’s common stock (“Options”) and approved the grants of, collectively, 115,000 restricted stock units (RSUs) to the three new employees noted above.  The grants are dated as of May 29, June 18, and July 16, 2018 — the respective dates of employment of each new employee.

 

The RSUs will vest in equal annual installments on each of the first four anniversaries of the respective dates of employment set forth above.  The Options, which have exercise prices of $3.86, $3.01 and $2.84 per share (based on the closing prices of the Company’s common stock on the respective effective dates of the grants), will vest 25 percent on the first anniversary of the grants and in equal monthly installments of 1/36th of the balance of the Options, provided the recipient remains continuously employed by ATEC as of such vesting date. In addition, the RSUs and Options will fully vest upon a change in control of ATEC.

 

ATEC is providing this information in accordance with Nasdaq Listing Rule 5635(c)(4).

4


About Alphatec Holdings, Inc.

Alphatec Holdings, Inc., through its wholly owned subsidiaries, Alphatec Spine, Inc. and SafeOp Surgical, Inc., is a medical device company that designs, develops, and markets technology for the treatment of spinal disorders associated with disease and degeneration, congenital deformities, and trauma. The Company's mission is to improve lives by providing innovative spine surgery solutions through the relentless pursuit of superior outcomes. The Company markets its products in the U.S. via independent sales agents and a direct sales force.

Additional information can be found 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 or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Forward-looking statements include the references to the Company’s strategy in significantly repositioning the ATEC brand and turning the Company into a growth organization.  The 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 Company’s 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, including Battalion and Arsenal Deformity; failure to obtain FDA or other regulatory clearance or approval for new products, or unexpected or prolonged delays in the process; continuation of favorable third party reimbursement for procedures performed using the Company’s products; unanticipated expenses or liabilities or other adverse events affecting cash flow or the Company’s ability to successfully control its costs or achieve profitability; uncertainty of additional funding; the Company’s ability to compete with other competing products and with emerging new technologies; product liability exposure; an unsuccessful outcome in any litigation in which the Company is a defendant; patent infringement claims; claims related to the Company’s intellectual property and the Company’s ability to meet its financial obligations under its credit agreements and the Orthotec settlement agreement. The words “believe,” “will,” “should,” “expect,” “intend,” “estimate” and “anticipate,” variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement.  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.

Investor/Media Contact:

Tina Jacobsen

Investor Relations

tjacobsen@moreeffectiveir.com

Company Contact:

5


Jeff Black

Executive Vice President and Chief Financial Officer

Alphatec Holdings, Inc.

ir@atecspine.com


6


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,

 

 

 

2018

 

 

 

 

2017

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

22,042

 

 

 

 

$

24,379

 

 

 

$

43,349

 

 

$

52,357

 

 

Cost of revenues

 

7,772

 

 

 

 

 

8,631

 

 

 

 

15,509

 

 

 

19,830

 

 

Gross profit

 

14,270

 

 

 

 

 

15,748

 

 

 

 

27,840

 

 

 

32,527

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

2,009

 

 

 

 

 

990

 

 

 

 

3,795

 

 

 

2,439

 

 

Sales and marketing

 

10,673

 

 

 

 

 

10,298

 

 

 

 

20,733

 

 

 

21,401

 

 

General and administrative

 

7,815

 

 

 

 

 

5,351

 

 

 

 

14,257

 

 

 

11,574

 

 

Amortization of intangible assets

 

187

 

 

 

 

 

172

 

 

 

 

364

 

 

 

344

 

 

Transaction-related expenses

 

(62

)

 

 

 

 

-

 

 

 

 

1,480

 

 

 

-

 

 

Gain on settlement

 

-

 

 

 

 

 

-

 

 

 

 

(6,168

)

 

 

-

 

 

Gain on sale of assets

 

-

 

 

 

 

 

(856

)

 

 

 

-

 

 

 

(856

)

 

Restructuring expenses

 

193

 

 

 

 

 

528

 

 

 

 

591

 

 

 

1,759

 

 

Total operating expenses

 

20,815

 

 

 

 

 

16,483

 

 

 

 

35,052

 

 

 

36,661

 

 

Operating loss

 

(6,545

)

 

 

 

 

(735

)

 

 

 

(7,212

)

 

 

(4,134

)

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(1,709

)

 

 

 

 

(1,881

)

 

 

 

(3,416

)

 

 

(3,862

)

 

Other income, net

 

(75

)

 

 

 

 

2

 

 

 

 

(13

)

 

 

7

 

 

Total other expense, net

 

(1,784

)

 

 

 

 

(1,879

)

 

 

 

(3,429

)

 

 

(3,855

)

 

Loss from continuing operations before taxes

 

(8,329

)

 

 

 

 

(2,614

)

 

 

 

(10,641

)

 

 

(7,989

)

 

Income tax (benefit) provision

 

(1,265

)

 

 

 

 

15

 

 

 

 

(1,723

)

 

 

64

 

 

Loss from continuing operations

 

(7,064

)

 

 

 

 

(2,629

)

 

 

 

(8,918

)

 

 

(8,053

)

 

Loss from discontinued operations

 

(12

)

 

 

 

 

(68

)

 

 

 

(74

)

 

 

(159

)

 

Net loss

$

(7,076

)

 

 

 

$

(2,697

)

 

 

$

(8,992

)

 

$

(8,212

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

(0.21

)

 

 

 

$

(0.24

)

 

 

$

(0.32

)

 

$

(0.80

)

 

Discontinued operations

 

(0.00

)

 

 

 

 

(0.01

)

 

 

 

(0.00

)

 

 

(0.02

)

 

Net loss per share, basic and diluted

$

(0.21

)

 

 

 

$

(0.24

)

 

 

$

(0.33

)

 

$

(0.82

)

 

Shares used in calculating basic and diluted net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in calculating basic and diluted net loss per share

 

34,030

 

 

 

 

 

11,047

 

 

 

 

27,656

 

 

 

10,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation included in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

11

 

 

 

 

 

11

 

 

 

 

33

 

 

 

14

 

 

Research and development

 

129

 

 

 

 

 

(20

)

 

 

 

13

 

 

 

291

 

 

Sales and marketing

 

193

 

 

 

 

 

151

 

 

 

 

304

 

 

 

224

 

 

General and administrative

 

815

 

 

 

 

 

269

 

 

 

 

1,417

 

 

 

690

 

 

 

$

1,148

 

 

 

 

$

411

 

 

 

$

1,767

 

 

$

1,219

 

 

 

 

7


ALPHATEC HOLDINGS, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

2018

 

 

2017

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

44,912

 

 

$

22,466

 

Accounts receivable, net

 

11,405

 

 

 

14,822

 

Inventories, net

 

28,177

 

 

 

27,292

 

Prepaid expenses and other current assets

 

1,778

 

 

 

1,767

 

Current assets of discontinued operations

 

251

 

 

 

131

 

Total current assets

 

86,523

 

 

 

66,478

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

12,060

 

 

 

12,670

 

Goodwill

 

14,250

 

 

 

-

 

Intangibles, net

 

26,382

 

 

 

5,248

 

Other assets

 

225

 

 

 

208

 

Noncurrent assets of discontinued operations

 

55

 

 

 

56

 

Total assets

$

139,495

 

 

$

84,660

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

3,354

 

 

$

3,878

 

Accrued expenses

 

24,607

 

 

 

22,246

 

Current portion of long-term debt

 

6,682

 

 

 

3,306

 

Current liabilities of discontinued operations

 

385

 

 

 

312

 

Total current liabilities

 

35,028

 

 

 

29,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total long term liabilities

 

50,644

 

 

 

57,973

 

Redeemable preferred stock

 

23,603

 

 

 

23,603

 

Stockholders' equity

 

30,220

 

 

 

(26,658

)

Total liabilities and stockholders' deficit

$

139,495

 

 

$

84,660

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8


ALPHATEC HOLDINGS, INC.

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

 

(in thousands - unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

 

March 31,

 

 

June 30,

 

 

June 30,

 

 

 

 

2018

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

14,237

 

 

 

20,815

 

 

 

16,483

 

 

 

35,052

 

 

 

36,661

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(597

)

 

 

(1,137

)

 

 

(400

)

 

 

(1,734

)

 

 

(1,205

)

 

Restructuring

 

 

(398

)

 

 

(193

)

 

 

(528

)

 

 

(591

)

 

 

(1,759

)

 

Transaction-related expenses

 

 

(1,542

)

 

 

62

 

 

 

-

 

 

 

(1,480

)

 

 

-

 

 

Gain on settlement

 

 

6,168

 

 

 

-

 

 

 

-

 

 

 

6,168

 

 

 

-

 

 

Gain on sale of assets

 

 

-

 

 

 

-

 

 

 

856

 

 

 

-

 

 

 

856

 

 

Non-GAAP operating expenses

 

$

17,868

 

 

$

19,547

 

 

$

16,411

 

 

$

37,415

 

 

$

34,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

 

March 31,

 

 

June 30,

 

 

June 30,

 

 

 

 

2018

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss, as reported

 

$

(667

)

 

$

(6,545

)

 

$

(735

)

 

$

(7,212

)

 

$

(4,134

)

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Depreciation

 

 

1,592

 

 

 

1,457

 

 

 

1,636

 

 

 

3,049

 

 

 

3,270

 

 

  Amortization of intangible assets

 

 

294

 

 

 

132

 

 

 

234

 

 

 

426

 

 

 

468

 

 

Total EBITDA

 

 

1,219

 

 

 

(4,956

)

 

 

1,135

 

 

 

(3,737

)

 

 

(396

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add back significant items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

619

 

 

 

1,148

 

 

 

411

 

 

 

1,767

 

 

 

1,219

 

 

Restructuring

 

 

398

 

 

 

193

 

 

 

528

 

 

 

591

 

 

 

1,759

 

 

Transaction-related expenses

 

 

1,542

 

 

 

(62

)

 

 

-

 

 

 

1,480

 

 

 

-

 

 

Gain on settlement

 

 

(6,168

)

 

 

-

 

 

 

(856

)

 

 

(6,168

)

 

 

(856

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

(2,390

)

 

$

(3,677

)

 

$

1,218

 

 

$

(6,067

)

 

$

1,726

 

 


9


ALPHATEC HOLDINGS, INC.

 

RECONCILIATION OF GEOGRAPHIC SEGMENT REVENUES AND GROSS PROFIT

 

(in thousands, except percentages - unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

Revenues by source

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. commercial revenue

$

20,409

 

 

$

21,877

 

 

$

39,610

 

 

$

45,314

 

 

Other

 

1,633

 

 

 

2,502

 

 

 

3,739

 

 

 

7,043

 

 

Total revenues

$

22,042

 

 

$

24,379

 

 

$

43,349

 

 

$

52,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit by source

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

$

14,178

 

 

$

15,521

 

 

$

27,610

 

 

$

31,789

 

 

Other

 

92

 

 

 

227

 

 

 

230

 

 

 

738

 

 

Total gross profit

$

14,270

 

 

$

15,748

 

 

$

27,840

 

 

$

32,527

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit margin by source