Alphatec Spine Announces Fourth Quarter and Full Year 2011 Revenue and Financial Results
Under a separate release today,
Fourth Quarter and Full Year 2011 Highlights
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Fourth quarter revenue grew 7.6% to
$49.5 million , compared to the fourth quarter of 2010, or 7.0% on a constant currency basis.
- U.S. revenue grew 2.0% to
$32.8 million in the fourth quarter 2011, compared to the fourth quarter 2010.- International revenue grew 20.6% to
$16.8 million in the fourth quarter 2011, compared to the fourth quarter 2010, and 18.8% on a constant currency basis.
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Full year 2011 revenue of
$197.7 million grew 8.1% on a pro forma basis, or 5.8% on a constant currency basis, compared to the full year 2010. Full year 2011 revenue on a GAAP basis grew 15.2%, or 12.5% on a constant currency basis. -
Generated non-GAAP cash from business operations of
$2.0 million in the fourth quarter 2011 and was cash flow positive for the full year 2011, before the effects of certain one-time charges noted below. -
Introduced three new products in the fourth quarter 2011 at the
North American Spine Society (NASS) meeting inChicago, IL.
- Trestle LuxeTM Anterior Cervical Plate System, AvalonTM Occipito-Cervico Plating System, and the Epicage® MIS Lumbar Interbody Spacer.
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Reached a global settlement agreement with
Cross Medical Products in connection with two pending legal matters.
"We are pleased with our revenue growth in the fourth quarter and full year," said
"For 2012, we expect the global spine market to remain challenging, but longer-term, we continue to believe the spine market fundamentals remain strong as our global population ages and the prevalence of disease states such as obesity, diabetes and osteoporosis increases. We will continue to address the current environment by controlling what we can; focusing on innovation to maintain a continuous flow of new products; expanding our global footprint; and, reducing our manufacturing costs and operating expense structure to drive improving profitability and cash flow.
"We are also focused on streamlining and strengthening
"In order to expedite our success in this area we have enlisted the support of a corporate performance improvement consulting firm specializing in operational efficiency. The consulting firm will help us quickly define and strengthen our essential business processes such as raw material acquisition, manufacturing processing, and field inventory management. Over time, we expect our cost reduction programs to achieve annualized cost savings of approximately
"In the U.S., we are presently validating machinery to begin manufacturing certain implants that we currently outsource, beginning with our next generation anterior cervical plate, Trestle Luxe. We have also begun to in-source certain finishing steps in the manufacturing process such as anodizing. We have many other initiatives underway in the U.S. and
"We remain focused on full market releases for certain new products including Alphatec Solus and Epicage to complement Avalon and Trestle Luxe. We will also continue to develop the next generation of new products to keep the pipeline flowing in 2013 and beyond with differentiated technologies to gain market share globally.
"For 2012, our global focus on new markets, especially emerging markets in
Fourth Quarter 2011 Financial Results
Consolidated revenues for the fourth quarter 2011 were
Gross profit for the fourth quarter of 2011 was
Gross profit and gross margin in the fourth quarter of 2011 were impacted by approximately
Total operating expenses for the fourth quarter of 2011 were
Excluding the litigation settlement charge, total operating expenses for the fourth quarter of 2011 would have been
On
Net loss for the fourth quarter 2011, including the legal settlement, was
Non-GAAP net loss for the fourth quarter of 2011 was
Adjusted EBITDA in the fourth quarter of 2011 was
Cash and cash equivalents were
2012 Financial Guidance
The Company is providing its full year 2012 revenue guidance to a range of
Conference Call Information
About
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 and transaction-related 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.
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| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (in thousands - unaudited) | ||
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December 31, 2011 |
December 31, 2010 |
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| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 20,666 | $ 23,168 |
| Accounts receivable, net | 41,711 | 39,777 |
| Inventories, net | 45,916 | 51,635 |
| Prepaid expenses and other current assets | 6,888 | 6,652 |
| Deferred income tax assets | 1,248 | 1,592 |
| Total current assets | 116,429 | 122,824 |
| Property and equipment, net | 31,476 | 38,440 |
| Goodwill | 168,609 | 170,194 |
| Intangibles, net | 47,144 | 43,148 |
| Other assets | 3,034 | 2,410 |
| Total assets | $ 366,692 | $ 377,016 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 17,390 | $ 15,957 |
| Accrued expenses | 32,583 | 22,530 |
| Deferred revenue | 2,768 | 3,396 |
| Current portion of long-term debt | 4,396 | 1,708 |
| Total current liabilities | 57,137 | 43,591 |
| Total long term liabilities | 40,624 | 43,388 |
| Redeemable preferred stock | 23,603 | 23,603 |
| Stockholders' equity | 245,328 | 266,434 |
| Total liabilities and stockholders' equity | $ 366,692 | $ 377,016 |
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| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (in thousands, except per share amounts - unaudited) | ||||
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Three Months Ended |
Year Ended December 31, |
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| 2011 | 2010 | 2011 | 2010 | |
| Revenues | $ 49,510 | $ 46,018 | $ 197,711 | $ 171,610 |
| Cost of revenues | 24,209 | 14,141 | 79,168 | 57,657 |
| Amortization of acquired intangible assets | 390 | 394 | 1,613 | 1,136 |
| Total cost of revenues | 24,599 | 14,535 | 80,781 | 58,793 |
| Gross profit | 24,911 | 31,483 | 116,930 | 112,817 |
| Operating expenses: | ||||
| Research and development | 3,235 | 4,084 | 16,888 | 16,431 |
| In-process research and development | -- | -- | -- | 2,967 |
| Sales and marketing | 18,124 | 18,971 | 75,189 | 66,542 |
| General and administrative | 9,660 | 9,578 | 36,367 | 31,078 |
| Amortization of acquired intangible assets | 523 | 533 | 2,152 | 1,535 |
| Transaction related expenses | -- | 20 | -- | 3,671 |
| Restructuring expenses | 57 | (7) | 1,050 | 2,382 |
| Litigation settlement | 9,800 | -- | 9,800 | -- |
| Total operating expenses | 41,399 | 33,179 | 141,446 | 124,606 |
| Operating loss | (16,488) | (1,696) | (24,516) | (11,789) |
| Interest and other income (expense), net | (941) | (2,335) | (2,172) | (4,698) |
| Loss from continuing operations before taxes | (17,429) | (4,031) | (26,688) | (16,487) |
| Income tax benefit | (1,463) | (1,155) | (4,507) | (2,054) |
| Loss from continuing operations | (15,966) | (2,876) | (22,181) | (14,433) |
| Income from discontinued operations, net of tax | -- | -- | -- | 78 |
| Net loss | $ (15,966) | $ (2,876) | $ (22,181) | $ (14,355) |
| Net loss per common share: | ||||
| Basic and diluted net loss from continuing operations | $ (0.18) | $ (0.03) | $ (0.25) | $ (0.18) |
| Basic and diluted net income from discontinued operations | -- | -- | -- | -- |
| Basic and diluted net loss per share | $ (0.18) | $ (0.03) | $ (0.25) | $ (0.18) |
| Weighted-average shares - basic and diluted | 88,918 | 88,078 | 88,798 | 78,590 |
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| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||
| (in thousands, except per share amounts - unaudited) | ||||
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Three Months Ended |
Year Ended December 31, |
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| 2011 | 2010 | 2011 | 2010 | |
| Operating loss, as reported | $ (16,488) | $ (1,696) | $ (24,516) | $ (11,789) |
| Add back: | ||||
| Depreciation | 3,684 | 3,664 | 14,789 | 13,126 |
| Amortization of intangible assets | 340 | 204 | 1,322 | 1,449 |
| Amortization of acquired intangible assets | 913 | 927 | 3,765 | 2,671 |
| Total EBITDA | (11,551) | 3,099 | (4,640) | 5,457 |
| Add back significant items: | ||||
| Stock-based compensation | 497 | 851 | 2,425 | 3,177 |
| In-process research and development | -- | -- | -- | 2,967 |
| Acquisition-related inventory step-up | -- | 449 | 751 | 1,281 |
| Transaction related expenses | -- | 20 | -- | 3,671 |
| Restructuring expenses | 57 | (7) | 1,050 | 2,382 |
| Litigation settlement | 9,800 | -- | 9,800 | -- |
| EBITDA, as adjusted for significant items | $ (1,197) | $ 4,412 | $ 9,386 | $ 18,935 |
| Net loss, as reported | $ (15,966) | $ (2,876) | $ (22,181) | $ (14,355) |
| Add back: | ||||
| In-process research and development | -- | -- | -- | 2,967 |
| Acquisition-related inventory step-up | -- | 449 | 751 | 1,281 |
| Amortization of acquired intangible assets | 913 | 927 | 3,765 | 2,671 |
| Transaction related expenses | -- | 20 | -- | 3,671 |
| Restructuring expenses | 57 | (7) | 1,050 | 2,382 |
| Litigation settlement | 9,800 | -- | 9,800 | -- |
| Net loss, as adjusted for significant items | $ (5,196) | $ (1,487) | $ (6,815) | $ (1,383) |
| Net loss per common share - basic and diluted | $ (0.18) | $ (0.03) | $ (0.25) | $ (0.18) |
| Add back: | ||||
| In-process research and development | -- | 0.00 | -- | 0.04 |
| Acquisition-related inventory step-up | -- | 0.01 | 0.01 | 0.01 |
| Amortization of acquired intangible assets | 0.01 | 0.01 | 0.04 | 0.03 |
| Transaction related expenses | -- | 0.00 | -- | 0.05 |
| Restructuring expenses | -- | (0.00) | 0.01 | 0.03 |
| Litigation settlement | 0.11 | -- | 0.11 | -- |
| Net loss per common share - basic and diluted, as adjusted for significant items | $ (0.06) | $ (0.02) | $ (0.08) | $ (0.02) |
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| RECONCILIATION OF GEOGRAPHIC SEGMENT REVENUES AND GROSS PROFIT | ||||
| (in thousands, except percentages - unaudited) | ||||
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Three Months Ended |
Impact from Foreign |
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| 2011 | 2010 | % Change | Currency | |
| Revenues by geographic segment | ||||
| U.S. | $ 32,752 | $ 32,117 | 2.0% | 0.0% |
| International | 16,758 | 13,901 | 20.6% | 1.5% |
| Total revenues | $ 49,510 | $ 46,018 | 7.6% | 0.5% |
| Gross profit by geographic segment | ||||
| U.S. | $ 18,728 | $ 25,082 | ||
| International | 6,183 | 6,401 | ||
| Total gross profit | $ 24,911 | $ 31,483 | ||
| Gross profit margin by geographic segment | ||||
| U.S. | 57.2% | 78.1% | ||
| International | 36.9% | 46.0% | ||
| Total gross profit margin | 50.3% | 68.4% | ||
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Year Ended December 31, |
Impact from Foreign |
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| 2011 | 2010 | % Change | Currency | |
| Revenues by geographic segment | ||||
| U.S. | $ 133,824 | $ 119,880 | 11.6% | 0.0% |
| International | 63,887 | 51,730 | 23.5% | 7.2% |
| Total revenues | $ 197,711 | $ 171,610 | 15.2% | 2.3% |
| Gross profit by geographic segment | ||||
| U.S. | $ 87,085 | $ 89,226 | ||
| International | 29,845 | 23,591 | ||
| Total gross profit | $ 116,930 | $ 112,817 | ||
| Gross profit margin by geographic segment | ||||
| U.S. | 65.1% | 74.4% | ||
| International | 46.7% | 45.6% | ||
| Total gross profit margin | 59.1% | 65.7% | ||
| 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. | ||||
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| PRO FORMA REVENUES BY GEOGRAPHIC SEGMENT | ||||
| (in thousands, except percentages - unaudited) | ||||
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Three Months Ended |
Impact from Foreign |
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| 2011 | 2010 | % Change | Currency | |
| Pro Forma Revenues by geographic segment | ||||
| U.S. | $ 32,752 | $ 32,117 | 2.0% | 0.0% |
| International | 16,758 | 13,901 | 20.6% | 1.5% |
| Total revenues | $ 49,510 | $ 46,018 | 7.6% | 0.5% |
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Year Ended |
Impact from Foreign |
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| 2011 | 2010 | % Change | Currency | |
| Pro Forma Revenues by geographic segment | ||||
| U.S. | $ 133,824 | $ 122,855 | 8.9% | 0.0% |
| International | 63,887 | 60,090 | 6.3% | 6.5% |
| Total revenues | $ 197,711 | $ 182,945 | 8.1% | 2.1% |
| Footnotes: | ||||
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1) Pro Forma revenues for the periods presented include the results of Scient'x as if the Scient'x acquisition had occurred on |
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| 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: Investor/Media Contact:
Mark Francois
Senior Director, Investor Relations
Alphatec Spine, Inc.
(760) 494-6610
mfrancois@alphatecspine.com
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