Alphatec Spine Announces Fourth Quarter and Full Year 2010 Revenue and Financial Results
-
Annual GAAP revenue of
$171.6 million ; 42.3% growth over 2009; pro forma revenue of$182.9 million ; 7.1% growth over 2009 and 8.3% growth on a constant-currency basis -
Adjusted EBITDA of
$18.9 million ; 32.2% growth over 2009
2010 Performance Highlights
-
Positioned
Alphatec as a global leader within the spine market.
- Completed acquisition of
Scient 'x S.A.- Acquisition created global scale with sales in over 50 countries in all major markets.
- Combined entity is the third-largest global pure-play spinal implant company.
- Alphatec Spine products launched in all major European markets and several other major international markets.
- Achieved significant revenue growth in key markets.
- Achieved annual U.S. revenue of
$119.9 million , representing 14.7% year-over-year growth on a GAAP basis, and 6.1% year-over-year growth on a pro forma basis.- With expanded European product distribution, achieved annual
Europe revenue of$24.2 million , representing more than 490% year-over-year growth on a GAAP basis, and 16.9% year-over-year growth on a pro forma basis.- Achieved annual
Asia revenue of$20.0 million , representing 66.8% year-over-year growth on a GAAP basis, and 16.8% year-over-year growth on a pro forma basis.
- Enhanced product offerings in the Biologics market.
- Launched PureGenTM Osteoprogenitor Cell Allograft in
September 2010 .- Established Biologics Division with dedicated sales specialists and biologics experts to drive biologics product adoption and provide support for the surgeon community with respect to the Company's biologics products.
- Enhanced product offerings in the Aging Spine and MIS markets.
- All proprietary aging spine products, including Osseofix®, OsseoScrew®, and HelifixTM have been launched in
Europe .- OsseoFix has been used in approximately 1,900 patients and OsseoScrew has been used in approximately 200 patients in
Europe .- Illico SE® Percutaneous MIS Screw System, as well as SolusTM Locking ALIF System, have been launched in
Europe .- MIS revenues for full year 2010 increased more than 480% from full year 2009.
Fourth Quarter 2010 Financial Results
Consolidated revenues for the fourth quarter 2010 were
Gross profit for the fourth quarter 2010 was
Total operating expenses for the fourth quarter 2010 were
Net loss for the fourth quarter 2010 was
Adjusted EBITDA for the fourth quarter 2010 was
Full Year 2010 Financial Results
Consolidated revenues for full year 2010 were
Pro forma revenues for full year 2010 were
Gross profit for full year 2010 was
Total operating expenses for full year 2010 were
Net loss for full year 2010 was
Adjusted EBITDA for full year 2010 was
2011 Financial Guidance
The Company anticipates annual 2011 revenues of
Conference Call
Alphatec Spine will host a conference call today at
About Alphatec Spine
The
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 evaluation 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 non-GAAP-based earnings or loss and 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 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 ability to successfully integrate
| ALPHATEC HOLDINGS, INC. | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (in thousands - unaudited) | ||
| December 31, | December 31, | |
| 2010 | 2009 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 23,168 | $ 10,085 |
| Accounts receivable, net | 39,777 | 24,766 |
| Inventories, net | 51,635 | 29,515 |
| Prepaid expenses and other current assets | 6,652 | 3,128 |
| Deferred income tax assets | 1,592 | 128 |
| Total current assets | 122,824 | 67,622 |
| Property and equipment, net | 38,440 | 30,356 |
| Goodwill | 170,194 | 60,113 |
| Intangibles, net | 43,148 | 2,296 |
| Other assets | 2,410 | 1,501 |
| Total assets | $ 377,016 | $ 161,888 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 15,957 | $ 12,781 |
| Accrued expenses | 22,530 | 16,439 |
| Deferred revenue | 3,396 | 2,135 |
| Current portion of long-term debt | 1,708 | 6,724 |
| Total current liabilities | 43,591 | 38,079 |
| Total long term liabilities | 43,388 | 25,377 |
| Redeemable preferred stock | 23,603 | 23,603 |
| Stockholders' equity | 266,434 | 74,829 |
| Total liabilities and stockholders' equity | $ 377,016 | $ 161,888 |
| ALPHATEC HOLDINGS, INC. | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (in thousands, except per share amounts - unaudited) | ||||
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2010 | 2009 | 2010 | 2009 | |
| Revenues | $ 46,018 | $ 33,260 | $ 171,610 | $ 120,618 |
| Cost of revenues | 14,141 | 11,295 | 57,657 | 39,606 |
| Amortization of acquired intangible assets | 394 | -- | 1,136 | -- |
| Total cost of revenues | 14,535 | 11,295 | 58,793 | 39,606 |
| Gross profit | 31,483 | 21,965 | 112,817 | 81,012 |
| Operating expenses: | ||||
| Research and development | 4,084 | 3,554 | 16,431 | 13,487 |
| In-process research and development | -- | 550 | 2,967 | 6,383 |
| Sales and marketing | 18,971 | 12,778 | 66,542 | 49,396 |
| General and administrative | 9,578 | 4,117 | 31,078 | 19,333 |
| Amortization of acquired intangible assets | 533 | -- | 1,535 | -- |
| Transaction related expenses | 20 | 1,358 | 3,671 | 2,598 |
| Restructuring expenses | (7) | -- | 2,382 | -- |
| Total operating expenses | 33,179 | 22,357 | 124,606 | 91,197 |
| Operating loss | (1,696) | (392) | (11,789) | (10,185) |
| Interest and other income (expense), net | (2,335) | (685) | (4,698) | (3,193) |
| Loss from continuing operations before taxes | (4,031) | (1,077) | (16,487) | (13,378) |
| Income tax benefit | (1,155) | (70) | (2,054) | (138) |
| Loss from continuing operations | (2,876) | (1,007) | (14,433) | (13,240) |
| Income (loss) from discontinued operations, net of tax | -- | (313) | 78 | (49) |
| Net loss | $ (2,876) | $ (1,320) | $ (14,355) | $ (13,289) |
| Net loss per common share: | ||||
| Basic and diluted net loss from continuing operations | $ (0.03) | $ (0.02) | $ (0.18) | $ (0.27) |
| Basic and diluted net income (loss) from discontinued operations | -- | (0.01) | 0.00 | (0.00) |
| Basic and diluted net loss per share | $ (0.03) | $ (0.03) | $ (0.18) | $ (0.27) |
| Weighted-average shares - basic and diluted | 88,078 | 51,908 | 78,590 | 49,292 |
| ALPHATEC HOLDINGS, INC. | ||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||
| (in thousands, except per share amounts - unaudited) | ||||
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2010 | 2009 | 2010 | 2009 | |
| Operating loss, as reported | $ (1,696) | $ (392) | $ (11,789) | $ (10,185) |
| Add back: | ||||
| Depreciation | 3,664 | 2,393 | 13,126 | 8,627 |
| Amortization of intangible assets | 204 | 919 | 1,449 | 3,329 |
| Amortization of acquired intangible assets | 927 | -- | 2,671 | -- |
| Total EBITDA | 3,099 | 2,920 | 5,457 | 1,771 |
| Add back significant items: | ||||
| Stock-based compensation | 851 | 1,008 | 3,177 | 3,571 |
| In-process research and development | -- | 550 | 2,967 | 6,383 |
| Acquisition-related inventory step-up | 449 | -- | 1,281 | -- |
| Transaction related expenses | 20 | 1,358 | 3,671 | 2,598 |
| Restructuring expenses | (7) | -- | 2,382 | -- |
| EBITDA, as adjusted for significant items | $ 4,412 | $ 5,836 | $ 18,935 | $ 14,323 |
| Net loss, as reported | $ (2,876) | $ (1,320) | $ (14,355) | $ (13,289) |
| Add back: | ||||
| In-process research and development | -- | 550 | 2,967 | 6,383 |
| Acquisition-related inventory step-up | 449 | -- | 1,281 | -- |
| Amortization of acquired intangible assets | 927 | -- | 2,671 | -- |
| Transaction related expenses | 20 | 1,358 | 3,671 | 2,598 |
| Restructuring expenses | (7) | -- | 2,382 | -- |
| Net income (loss), as adjusted for significant items | $ (1,487) | $ 588 | $ (1,383) | $ (4,308) |
| Net loss per common share - basic and diluted | $ (0.03) | $ (0.03) | $ (0.18) | $ (0.27) |
| Add back: | ||||
| In-process research and development | -- | 0.01 | 0.04 | 0.13 |
| Acquisition-related inventory step-up | 0.00 | -- | 0.01 | -- |
| Amortization of acquired intangible assets | 0.01 | -- | 0.03 | -- |
| Transaction related expenses | 0.00 | 0.03 | 0.05 | 0.05 |
| Restructuring expenses | (0.00) | -- | 0.03 | -- |
| Net loss per common share - basic and diluted, as adjusted for significant items | $ (0.02) | $ 0.01 | $ (0.02) | $ (0.09) |
| ALPHATEC HOLDINGS, INC. | ||||
| RECONCILIATION OF GEOGRAPHIC SEGMENT REVENUES AND GROSS PROFIT | ||||
| (in thousands, except percentages - unaudited) | ||||
| Three Months Ended | Impact from | |||
| December 31, | Foreign | |||
| 2010 | 2009 | % Change | Currency | |
| Revenues by geographic segment | ||||
| U.S. | $ 32,117 | $ 28,288 | 13.5% | 0.0% |
| Europe | 5,699 | 1,686 | 238.0% | -7.2% |
| Asia | 5,733 | 3,286 | 74.5% | -1.6% |
| Rest of world | 2,469 | -- | 100.0% | -7.2% |
| Total revenues | $ 46,018 | $ 33,260 | 38.4% | -1.6% |
| Gross profit by geographic segment | ||||
| U.S. | $ 25,082 | $ 19,301 | ||
| Europe | 2,337 | 777 | ||
| Asia | 3,267 | 1,887 | ||
| Rest of world | 797 | -- | ||
| Total gross profit | $ 31,483 | $ 21,965 | ||
| Gross profit margin by geographic segment | ||||
| U.S. | 78.1% | 68.2% | ||
| Europe | 41.0% | 46.1% | ||
| Asia | 57.0% | 57.4% | ||
| Rest of world | 32.3% | 0.0% | ||
| Total gross profit margin | 68.4% | 66.0% | ||
| Year Ended | Impact from | |||
| December 31, | Foreign | |||
| 2010 | 2009 | % Change | Currency | |
| Revenues by geographic segment | ||||
| U.S. | $ 119,880 | $ 104,531 | 14.7% | 0.0% |
| Europe | 24,242 | 4,101 | 491.1% | -7.3% |
| Asia | 19,998 | 11,986 | 66.8% | 2.6% |
| Rest of world | 7,490 | -- | 100.0% | -7.3% |
| Total revenues | $ 171,610 | $ 120,618 | 42.3% | -1.2% |
| Gross profit by geographic segment | ||||
| U.S. | $ 89,226 | $ 72,401 | ||
| Europe | 9,616 | 1,742 | ||
| Asia | 11,173 | 6,869 | ||
| Rest of world | 2,802 | -- | ||
| Total gross profit | $ 112,817 | $ 81,012 | ||
| Gross profit margin by geographic segment | ||||
| U.S. | 74.4% | 69.3% | ||
| Europe | 39.7% | 42.5% | ||
| Asia | 55.9% | 57.3% | ||
| Rest of world | 37.4% | 0.0% | ||
| Total gross profit margin | 65.7% | 67.2% | ||
| Footnotes: | ||||
| 1) IMC operating results have been removed from Asia revenues and gross profit for the periods presented. | ||||
| 2) The impact from foreign currency represents the percentage change in 2010 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 | % Change | |||
| December 31, | Constant | |||
| 2010 | 2009 | Reported | Currency | |
| Pro Forma Revenues by geographic segment | ||||
| U.S. | $ 32,117 | $ 31,219 | 2.9% | 2.9% |
| Europe | 5,699 | 7,366 | -22.6% | -16.6% |
| Asia | 5,733 | 4,878 | 17.5% | 19.4% |
| Rest of world | 2,469 | 3,167 | -22.0% | -16.0% |
| Total revenues | $ 46,018 | $ 46,630 | -1.3% | 0.2% |
| Year Ended | % Change | |||
| December 31, | Constant | |||
| 2010 | 2009 | Reported | Currency | |
| Pro Forma Revenues by geographic segment | ||||
| U.S. | $ 122,855 | $ 115,826 | 6.1% | 6.1% |
| Europe | 29,097 | 24,887 | 16.9% | 24.6% |
| Asia | 21,657 | 18,548 | 16.8% | 14.0% |
| Rest of world | 9,336 | 11,582 | -19.4% | -14.3% |
| Total revenues | $ 182,945 | $ 170,843 | 7.1% | 8.3% |
| Footnotes: | ||||
| 1) IMC operating results have been removed from Asia pro forma revenues for the periods presented. | ||||
| 2) Pro Forma revenues for the perods presented include the results of Scient'x as if the Scient'x acquisition had occurred on | ||||
| January 1, 2009. | ||||
| 3) % Change - Constant Currency represents the change in 2010 pro forma revenue had the 2010 foreign exchange | ||||
| rates remained constant with 2009 foreign exchange rates. | ||||
CONTACT:Michael O'Neill Chief Financial OfficerAlphatec Spine, Inc. (760) 494-6746 investorrelations@alphatecspine.comWestwicke Partners Lynn C. Pieper (415) 202-5678 lynn.pieper@westwicke.com
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