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ATEC Reports Fourth Quarter and Full Year 2021 Financial Results and Recent Corporate Highlights

March 1, 2022
  • Revenue growth of 68% for full year 2021, including organic revenue growth of 50%
  • U.S. organic revenue 3-year CAGR of 36%
  • Fourth quarter EOS imaging-related revenue of $12.8 million

CARLSBAD, Calif.--(BUSINESS WIRE)-- 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 and full year ended December 31, 2021, and recent corporate highlights.

Fourth Quarter and Full Year 2021 Financial Results

 

Quarter Ended
December 31, 2021

Year Ended
December 31, 2021

Total revenue

$74.0 million

$243.2 million

GAAP gross margin

61.1%

64.9%

Non-GAAP gross margin

70.5%

72.8%

Operating expenses

$83.4 million

$285.8 million

Non-GAAP operating expenses

$66.2 million

$225.6 million

GAAP operating loss

($38.1) million

($128.1) million

Non-GAAP adjusted EBITDA

($7.5) million

($28.1) million

Ending cash balance

$187.2 million

Recent Highlights

  • Accelerated adoption of Prone Trans-Psoas (PTP) Technique, with ATEC lateral procedures delivering over 40% of Q4 revenue growth;
  • Expanded momentum of the recently launched ALIF System advancing anterior column prowess;
  • Trained over 400 surgeons in 2021, contributing to a 23% increase in surgeon users in Q4 compared to prior year;
  • Generated $12.8 million in EOS-related revenue, with significant momentum in sales, product development and data management since close of transaction.

“2021 marks the highest revenue on record for ATEC and another year of sector-leading growth,” remarked Pat Miles, Chairman and Chief Executive Officer. “The magnitude and consistency of our growth is a direct reflection of our ability to earn surgeon trust. That trust is a result of our relentless commitment to creating clinically distinct technology that improves the predictability and reproducibility of spine surgery. In 2022, we will continue to expand the lateral market with PTP, advance our distribution network, and place EOS imaging systems while driving portfolio-wide adoption. ATEC is becoming a force in the spine industry.”

Financial Outlook for the Full Year 2022

The Company continues to expect total revenue for the fiscal year ended December 31, 2022, to approximate $305 million, reflecting growth of approximately 25% compared to the full year 2021. This includes organic revenue growth of 23% and approximately $45 million of revenue related to EOS imaging.

Investor 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 at investors.alphatecspine.com for twelve months. In addition, a dial-in replay will be available beginning two hours after the webcast’s completion until March 8, 2022. The replay dial-in numbers are (800) 585-8367 for domestic callers and (416) 621-4642 for international callers. Please use the replay conference ID number 6548679.

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. 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 become 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 and growth outlook; planned product launches, introductions, regulatory submissions or clearances; efforts to transform sales and distribution channels; the Company’s ability to compel surgeon adoption; the Company’s future ability to finance its operations and sufficiency of its cash runway; and statements about the potential benefits and synergies of the acquisition of EOS imaging, S.A. 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 third-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; the Company’s ability to compete with other products or with emerging technologies; product liability exposure; an unsuccessful outcome in any litigation; patent infringement claims; claims related to the Company’s intellectual property; the Company’s ability to meet its financial obligations; the impact of the COVID-19 pandemic on the Company and economy; and uncertainties and risks related to the integration of EOS imaging, S.A. 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

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

unaudited

 

 

 

 

Revenue:
Revenue from products and services

$

73,922

 

$

43,123

 

$

242,258

 

$

141,079

 

Revenue from international supply agreement

 

40

 

 

831

 

 

954

 

 

3,782

 

Total revenue

 

73,962

 

 

43,954

 

 

243,212

 

 

144,861

 

Cost of sales

 

28,737

 

 

12,563

 

 

85,450

 

 

42,360

 

Gross profit

 

45,225

 

 

31,391

 

 

157,762

 

 

102,501

 

Operating expenses:
Research and development

 

8,984

 

 

5,355

 

 

32,015

 

 

18,745

 

Sales, general and administrative

 

66,692

 

 

39,725

 

 

229,271

 

 

129,156

 

Litigation-related expenses

 

5,412

 

 

3,045

 

 

11,123

 

 

8,552

 

Amortization of acquired intangible assets

 

1,956

 

 

172

 

 

5,348

 

 

688

 

Transaction-related expenses

 

209

 

 

130

 

 

6,365

 

 

4,223

 

Restructuring expenses

 

110

 

 

 

 

1,697

 

 

 

Total operating expenses

 

83,363

 

 

48,427

 

 

285,819

 

 

161,364

 

Operating loss

 

(38,138

)

 

(17,036

)

 

(128,057

)

 

(58,863

)

Interest and other expense, net:
Interest expense, net

 

(1,504

)

 

(3,700

)

 

(7,108

)

 

(12,374

)

Loss on debt extinguishment, net

 

 

 

(6,057

)

 

(7,434

)

 

(7,612

)

Other expenses, net

 

(544

)

 

 

 

(1,563

)

 

 

Total interest and other expenses, net

 

(2,048

)

 

(9,757

)

 

(16,105

)

 

(19,986

)

Net loss before taxes

 

(40,186

)

 

(26,793

)

 

(144,162

)

 

(78,849

)

Income tax provision

 

1

 

 

5

 

 

164

 

 

145

 

Net loss

$

(40,187

)

$

(26,798

)

$

(144,326

)

$

(78,994

)

Net loss per share, basic and diluted

$

(0.40

)

$

(0.35

)

$

(1.50

)

$

(1.18

)

Weighted average shares outstanding, basic and diluted

 

99,300

 

 

77,098

 

 

96,197

 

 

67,020

 

Stock-based compensation included in:
Cost of revenue

$

248

 

$

138

 

$

737

 

$

512

 

Research and development

 

1,454

 

 

632

 

 

4,056

 

 

2,114

 

Sales, general and administrative

 

8,024

 

 

4,202

 

 

31,657

 

 

15,033

 

$

9,726

 

$

4,972

 

$

36,450

 

$

17,659

 

 

ALPHATEC HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

 

 

 

 

December 31, 2021

 

December 31, 2020

 

 

 

 

 

ASSETS

Current assets:
Cash and cash equivalents

$

187,248

$

107,765

Accounts receivable, net

 

41,893

 

23,527

Inventories

 

91,703

 

46,001

Prepaid expenses and other current assets

 

10,313

 

5,439

Withholding tax receivable from Officer

 

 

1,076

Current assets of discontinued operations

 

 

352

Total current assets

 

331,157

 

184,160

Property and equipment, net

 

87,401

 

36,670

Right-of-use asset

 

25,283

 

1,177

Goodwill

 

39,689

 

13,897

Intangible assets, net

 

85,274

 

24,720

Other assets

 

3,249

 

541

Noncurrent assets of discontinued operations

 

 

58

Total assets

$

572,053

$

261,223

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable

$

25,737

$

17,599

Accrued expenses and other current liabilities

 

55,549

 

35,264

Contract liability

 

15,255

 

Short-term debt

 

342

 

4,167

Current portion of operating lease liability

 

4,212

 

885

Current liabilities of discontinued operations

 

 

397

Total current liabilities

 

101,095

 

58,312

Total long-term liabilities

 

367,933

 

49,428

Redeemable preferred stock

 

23,603

 

23,603

Stockholders' equity

 

79,422

 

129,880

Total liabilities and stockholders' equity

$

572,053

$

261,223

 

ALPHATEC HOLDINGS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands)

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 30,

 

December 30,

 

 

2021

 

2020

 

2021

 

2020

unaudited        
Gross profit, GAAP  

$

45,225

 

 

$

31,391

 

 

$

157,762

 

 

$

102,501

 

Add: amortization of intangible assets  

 

268

 

 

 

269

 

 

 

1,075

 

 

 

1,075

 

Add: stock-based compensation  

 

248

 

 

 

138

 

 

 

737

 

 

 

512

 

Add: purchase accounting adjustments on acquisitions  

 

2,083

 

 

 

 

 

 

6,423

 

 

 

 

Add: excess and obsolete write-down  

 

4,305

 

 

 

1,615

 

 

 

11,147

 

 

 

7,044

 

Non-GAAP gross profit  

$

52,129

 

 

$

33,413

 

 

$

177,144

 

 

$

111,132

 

Gross margin, GAAP  

 

61.1

%

 

 

71.4

%

 

 

64.9

%

 

 

70.8

%

Add: amortization of intangible assets  

 

0.4

%

 

 

0.6

%

 

 

0.4

%

 

 

0.7

%

Add: stock-based compensation  

 

0.3

%

 

 

0.3

%

 

 

0.3

%

 

 

0.4

%

Add: purchase accounting adjustments on acquisitions  

 

2.8

%

 

 

0

%

 

 

2.6

%

 

 

0.0

%

Add: excess and obsolete write-down  

 

5.8

%

 

 

3.7

%

 

 

4.6

%

 

 

4.9

%

Non-GAAP gross margin  

 

70.5

%

 

 

76.0

%

 

 

72.8

%

 

 

76.7

%

         
 

Three Months Ended

 

Year Ended

 

December 30,

 

December 30,

 

2021

 

2020

 

2021

 

2020

unaudited        
Operating expenses, GAAP  

$

83,363

 

 

$

48,427

 

 

$

285,819

 

 

$

161,364

 

Adjustments:        
Stock-based compensation  

 

(9,478

)

 

 

(4,834

)

 

 

(35,713

)

 

 

(17,147

)

Litigation-related expenses  

 

(5,412

)

 

 

(3,045

)

 

 

(11,123

)

 

 

(8,552

)

Amortization of intangible assets  

 

(1,956

)

 

 

(172

)

 

 

(5,348

)

 

 

(688

)

Transaction-related expenses  

 

(209

)

 

 

(130

)

 

 

(6,365

)

 

 

(4,223

)

Restructuring expenses  

 

(110

)

 

 

 

 

 

(1,697

)

 

 

 

Non-GAAP operating expenses  

$

66,198

 

 

$

40,246

 

 

$

225,573

 

 

$

130,754

 

         
 

Three Months Ended

 

Year Ended

 

December 30,

 

December 30,

 

2021

 

2020

 

2021

 

2020

unaudited        
Operating loss, GAAP  

$

(38,138

)

 

$

(17,036

)

 

$

(128,057

)

 

$

(58,863

)

Depreciation  

 

6,544

 

 

 

2,704

 

 

 

20,332

 

 

 

9,186

 

Amortization of intangible assets  

 

2,226

 

 

 

441

 

 

 

6,424

 

 

 

1,763

 

EBITDA  

 

(29,368

)

 

 

(13,891

)

 

 

(101,301

)

 

 

(47,914

)

Add back significant items:        
Stock-based compensation  

 

9,726

 

 

 

4,972

 

 

 

36,450

 

 

 

17,659

 

Purchase accounting adjustments on acquisitions  

 

2,083

 

 

 

 

 

 

6,423

 

 

 

 

Excess & obsolete write-down  

 

4,305

 

 

 

1,615

 

 

 

11,147

 

 

 

7,044

 

Litigation-related expenses  

 

5,412

 

 

 

3,045

 

 

 

11,123

 

 

 

8,552

 

Transaction-related expenses  

 

209

 

 

 

130

 

 

 

6,365

 

 

 

4,223

 

Restructuring expenses  

 

110

 

 

 

 

 

 

1,697

 

 

 

 

Adjusted EBITDA  

$

(7,523

)

 

$

(4,129

)

 

$

(28,096

)

 

$

(10,436

)

 

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

Source: Alphatec Holdings, Inc.

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