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ATEC Reports Second Quarter 2022 Financial Results and Increases Full-Year Revenue Guidance

August 4, 2022
  • Total revenue grows 35% to $84 million, including organic revenue growth of 30%
  • EOS imaging generates revenue of $12 million
  • Company increases full-year revenue guidance to $325 million, reflecting 34% growth

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, 2022, and recent corporate highlights.

Second-Quarter and Full-Year 2022 Financial Results

 

Quarter Ended June 30, 2022

Total revenue

$84 million

GAAP gross margin

66%

Non-GAAP gross margin

70%

Operating expenses

$91 million

Non-GAAP operating expenses

$75 million

GAAP operating loss

($36) million

Non-GAAP adjusted EBITDA

($8) million

Ending cash balance

$107 million

Recent Highlights

  • Hosted over 150 surgeons at training events, contributing to a 23% increase in surgeon users compared to prior year;
  • Strong surgeon adoption fueled average revenue per surgery growth of 10%;
  • Generated $12 million in EOS-related revenue, reflecting 49% growth on a pro-forma basis;
  • Drove operating cost leverage, with a $3 million sequential improvement in adjusted EBITDA;
  • Signed term sheet for a $50 million revolver with $25 million accordion feature.

“By focusing on the entire surgical procedure and investing to obviate clinical variability, we are bringing increased predictability and reproducibility to spine surgery and fueling sector-leading growth,” said Pat Miles, Chairman and Chief Executive Officer. “That growth has enabled us to begin to lever sales channel investments while expanding our geographic footprint. At our Investor Day in May, we shared a long-term financial outlook that included a 23% revenue CAGR toward $555 million in 2025 and positive adjusted EBITDA in 2023. We are executing against those commitments and I am confident that years of sustainable growth and scale lie ahead.”

Financial Outlook for the Full-Year 2022

The Company now expects total revenue of $325 million for the fiscal year ended December 31, 2022, reflecting growth of approximately 34% compared to the full year 2021. This includes organic revenue growth of approximately 31% and $48 million of revenue related to EOS imaging.

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 two hours after the webcast’s completion through August 11, 2022. Access the replay by dialing (800) 770-2030 and referencing conference ID number 97241.

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 MachineTM 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; and the Company’s future ability to finance its operations and sufficiency of its cash runway. 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; 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,

2022

2021

2022

2021

(unaudited)
Revenue:
Revenue from products and services

 $

                  84,151

 

 $

              61,885

 

 $

                155,069

 

 $

             105,601

 

Revenue from international supply agreement

 

                            -

 

 

                      364

 

 

                            15

 

 

                       769

 

Total revenue

 

                     84,151

 

 

                 62,249

 

 

                   155,084

 

 

                106,370

 

Cost of sales

 

                     28,675

 

 

                 21,184

 

 

                     50,392

 

 

                  33,447

 

Gross profit

 

55,476

 

 

41,065

 

 

104,692

 

 

72,923

 

Operating expenses:
Research and development

 

                     10,596

 

 

                   7,839

 

 

                     20,318

 

 

                  13,640

 

Sales, general and administrative

 

                     72,668

 

 

                 60,659

 

 

                   142,139

 

 

                101,085

 

Litigation-related expenses

 

                       5,495

 

 

                   1,167

 

 

                     13,027

 

 

                    4,502

 

Amortization of acquired intangible assets

 

                       2,177

 

 

                   1,208

 

 

                       4,407

 

 

                    1,380

 

Transaction-related expenses

 

                            -

 

 

                   4,771

 

 

                          120

 

 

                    5,783

 

Restructuring expenses

 

                          289

 

 

                   1,173

 

 

                       1,659

 

 

                    1,331

 

Total operating expenses

 

91,225

 

 

76,817

 

 

181,670

 

 

127,721

 

Operating loss

 

(35,749

)

 

(35,752

)

 

(76,978

)

 

(54,798

)

Interest and other expense, net:
Interest expense, net

 

                     (1,435

)

 

                 (2,394

)

 

                     (2,891

)

 

                   (4,332

)

Other expenses, net

 

                            67

 

 

                      (16

)

 

                            37

 

 

                   (1,905

)

Total interest and other expenses, net

 

                     (1,368

)

 

                 (2,410

)

 

                     (2,854

)

 

                   (6,237

)

Net loss before taxes

 

                   (37,117

)

 

               (38,162

)

 

                   (79,832

)

 

                 (61,035

)

Income tax provision

 

                          203

 

 

                        43

 

 

                          332

 

 

                         73

 

Net loss

 $

                (37,320

)

 $

            (38,205

)

 $

                (80,164

)

 $

              (61,108

)

Net loss per share, basic and diluted 

 $

                    (0.36

)

 $

                (0.39

)

 $

                    (0.79

)

 $

                  (0.66

)

Weighted average shares outstanding, basic and diluted

 

102,849

 

 

98,541

 

 

101,422

 

 

92,912

 

Stock-based compensation included in:
Cost of revenue

 $

                       449

 

 $

                   235

 

 $

                       705

 

 $

                    330

 

Research and development

 

                       1,362

 

 

                      664

 

 

                       2,334

 

 

                    1,162

 

Sales, general and administrative

 

                       7,392

 

 

                 10,597

 

 

                     16,348

 

 

                  14,478

 

 $

                    9,203

 

 $

              11,496

 

 $

                  19,387

 

 $

               15,970

 

ALPHATEC HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) 
 
June 30,
2022
December 31, 
2021
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents 

 $

                  107,470

 $

                  187,248

Accounts receivable, net 

 

43,928

 

41,893

Inventories 

 

102,796

 

91,703

Prepaid expenses and other current assets 

 

                       11,045

 

                       10,313

Total current assets

 

265,239

 

331,157

Property and equipment, net

 

99,183

 

87,401

Right-of-use asset

 

28,116

 

25,283

Goodwill

 

39,170

 

39,689

Intangible assets, net

 

78,611

 

85,274

Other assets

 

1,616

 

3,249

Total assets

 $

                  511,935

 $

                  572,053

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 

 $

                    33,157

 $

                    25,737

Accrued expenses and other current liabilities 

 

55,874

 

55,549

Contract liabilities 

 

13,850

 

                       15,255

Short-term debt 

 

14,266

 

342

Current portion of operating lease liabilities 

 

                         4,164

 

                         4,212

Total current liabilities

 

121,311

 

101,095

Total long-term liabilities 

 

                     356,482

 

                     367,933

Redeemable preferred stock 

 

                       23,603

 

                       23,603

Stockholders' equity 

 

                       10,539

 

                       79,422

Total liabilities and stockholders' equity

 $

                  511,935

 $

                  572,053

ALPHATEC HOLDINGS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands)

 
Three Months Ended Six Months Ended
June 30, June 30,

2022

2021

2022

2021

(unaudited)
Gross profit, GAAP

 $

                   55,476

 

 $

                   41,065

 

 $

                 104,692

 

 $

                   72,923

 

Add: amortization of intangible assets

 

                              9

 

 

                          268

 

 

                              9

 

 

                          536

 

Add: stock-based compensation

 

                          449

 

 

                          235

 

 

                          705

 

 

                          330

 

Add: purchase accounting adjustments on acquisitions

 

                          437

 

 

                       1,763

 

 

                          437

 

 

                       1,763

 

Add: excess and obsolete write-down

 

                       2,394

 

 

                       2,221

 

 

                       4,100

 

 

                       4,317

 

Non-GAAP gross profit

 $

                   58,765

 

 $

                   45,552

 

 $

                 109,943

 

 $

                   79,869

 

Gross margin, GAAP

 

65.9

%

 

66.0

%

 

67.5

%

 

68.6

%

Add: amortization of intangible assets

 

0.0

%

 

0.4

%

 

0.0

%

 

0.5

%

Add: stock-based compensation

 

0.5

%

 

0.4

%

 

0.5

%

 

0.3

%

Add: purchase accounting adjustments on acquisitions

 

0.5

%

 

2.8

%

 

0.3

%

 

1.7

%

Add: excess and obsolete write-down

 

2.8

%

 

3.6

%

 

2.6

%

 

4.1

%

Non-GAAP gross margin

 

69.7

%

 

73.2

%

 

70.9

%

 

75.2

%

 
Three Months Ended Six Months Ended
June 30, June 30,

2022

2021

2022

2021

(unaudited)
Operating expenses, GAAP

 $

                   91,225

 

 $

                   76,817

 

 $

                 181,670

 

 $

                 127,721

 

Adjustments:
Stock-based compensation

 

                      (8,754

)

 

                    (11,261

)

 

                    (18,682

)

 

                    (15,640

)

Litigation-related expenses

 

                      (5,495

)

 

                      (1,167

)

 

                    (13,027

)

 

                      (4,502

)

Amortization of intangible assets

 

                      (2,177

)

 

                      (1,208

)

 

                      (4,407

)

 

                      (1,380

)

Transaction-related expenses

 

                              -

 

 

                      (4,771

)

 

                         (120

)

 

                      (5,783

)

Restructuring expenses

 

                         (289

)

 

                      (1,173

)

 

                      (1,659

)

 

                      (1,331

)

Non-GAAP operating expenses

 $

                   74,510

 

 $

                   57,237

 

 $

                 143,775

 

 $

                   99,085

 

 
Three Months Ended Six Months Ended
June 30, June 30,

2022

2021

2022

2021

(unaudited)
Operating loss, GAAP

 $

                 (35,749

)

 $

                 (35,752

)

 $

                 (76,978

)

 $

                 (54,798

)

Depreciation

 

                       7,506

 

 

                       5,068

 

 

                      14,591

 

 

                       8,477

 

Amortization of intangible assets

 

2,186

 

 

1,476

 

 

4,416

 

 

1,917

 

EBITDA

 

(26,057

)

 

(29,208

)

 

(57,971

)

 

(44,404

)

Add back significant items:
Stock-based compensation

 

                       9,203

 

 

                      11,496

 

 

                      19,387

 

 

                      15,970

 

Purchase accounting adjustments on acquisitions

 

                          437

 

 

                       1,763

 

 

                          437

 

 

                       1,763

 

Excess & obsolete write-down

 

                       2,394

 

 

                       2,221

 

 

                       4,100

 

 

                       4,317

 

Litigation-related expenses

 

                       5,495

 

 

                       1,167

 

 

                      13,027

 

 

                       4,502

 

Transaction-related expenses

 

                              -

 

 

                       4,771

 

 

                          120

 

 

                       5,783

 

Restructuring expenses

 

                          289

 

 

                       1,173

 

 

                       1,659

 

 

                       1,331

 

Adjusted EBITDA

 $

                   (8,239

)

 $

                   (6,617

)

 $

                 (19,241

)

 $

                 (10,738

)

 

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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