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ATEC Reports Record Fourth Quarter and Full-Year 2022 Financial Results and Recent Corporate Highlights

  • Full-year revenue grows 44% to $351 million, including EOS revenue of $48 million
  • Fourth quarter revenue grows 43% to $106 million
  • Adjusted fourth quarter EBITDA margin improves 750 basis points year-over-year

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, 2022, and recent corporate highlights.

Fourth Quarter and Full Year 2022 Financial Results

 

 

Quarter Ended

December 31, 2022

 

Year Ended

December 31, 2022

Total revenue

 

$106 million

 

$351 million

GAAP gross margin

 

65%

 

66%

Non-GAAP gross margin

 

69%

 

70%

Operating expenses

 

$104 million

 

$380 million

Non-GAAP operating expenses

 

$85 million

 

$306 million

GAAP operating loss

 

($35) million

 

($147) million

Non-GAAP adjusted EBITDA

 

($3) million

 

($28) million

Ending cash balance

 

$85 million

Recent Highlights

  • Expanded lateral procedural sophistication with PTP and LTP the strongest contributors to Q4 and full year revenue growth;
  • Drove a 26% increase in surgical volume and an 18% increase in average revenue per procedure in Q4;
  • Trained over 500 surgeons in 2022, contributing to a 22% increase in surgeon users compared to prior year;
  • Secured non-dilutive capital creating access to cash and liquidity of up to $275 million.

"I applaud the entire ATEC Family for delivering another record-breaking year," said Pat Miles, Chairman and Chief Executive Officer. "Our success endures because our priorities do not change: we focus exclusively on spine, pursue the unmet clinical needs of surgery, and we create innovative, integrated procedures to address those needs faster than others in the industry. Many of the leading minds in spine are attracted to ATEC because their passion, like ours, is to obsessively rethink surgical procedures from the ground up. At ATEC, our business is in the operating room. With the know-how we have assembled, I could not be more enthusiastic about the opportunities ahead."

Financial Outlook for the Full Year 2023

The Company continues to expect total revenue for the fiscal year ended December 31, 2023, to approximate $438 million, reflecting growth of approximately 25% compared to 2022. This includes surgical revenue of $383 million and approximately $55 million of EOS revenue. The Company expects to achieve non-GAAP adjusted EBITDA break-even for the full-year 2023.

Financial Results Webcast

The Company will host a live webcast today at 1:30 p.m. PT / 4:30 p.m. ET. To access the live webcast, please visit the Investor Relations Section of ATEC’s Corporate Website.

To dial into the live webcast, please register at this link. Access details will be shared via email.

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 March 7, 2023. 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.

Inducement Awards Granted

As an inducement material to accepting employment with the Company, and in accordance with Nasdaq Listing Rule 5635(c)(4), ATEC today announced that the independent Compensation Committee of the Board of Directors has approved aggregate grants to twenty new employees (who are not executive officers) of, collectively, 22,349 restricted stock units (“RSUs”) under the Company’s 2016 Employment Inducement Award Plan. The RSUs will vest in equal annual installments on each of the first four anniversaries of the grant date, provided that the recipient remains continuously employed by ATEC as of such vesting date. In addition, the RSUs will vest fully upon a change of control of ATEC.

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, balance sheet, growth and financial 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 Year Ended
December 31, December 31,

2022

2021

2022

2021

(unaudited)
Revenue:
Revenue from products and services

$

105,944

 

$

73,922

 

$

350,852

 

$

242,258

 

Revenue from international supply agreement

 

 

 

40

 

 

15

 

 

954

 

Total revenue

 

105,944

 

 

73,962

 

 

350,867

 

 

243,212

 

Cost of sales

 

37,093

 

 

28,737

 

 

117,808

 

 

85,450

 

Gross profit

 

68,851

 

 

45,225

 

 

233,059

 

 

157,762

 

Operating expenses:
Research and development

 

11,604

 

 

8,984

 

 

44,033

 

 

32,015

 

Sales, general and administrative

 

81,920

 

 

66,692

 

 

300,013

 

 

229,271

 

Litigation-related expenses

 

7,314

 

 

5,412

 

 

23,943

 

 

11,123

 

Amortization of acquired intangible assets

 

2,934

 

 

1,956

 

 

10,115

 

 

5,348

 

Transaction-related expenses

 

 

 

209

 

 

120

 

 

6,365

 

Restructuring expenses

 

106

 

 

110

 

 

1,810

 

 

1,697

 

Total operating expenses

 

103,878

 

 

83,363

 

 

380,034

 

 

285,819

 

Operating loss

 

(35,027

)

 

(38,138

)

 

(146,975

)

 

(128,057

)

Interest and other expense, net:
Interest expense, net

 

(1,329

)

 

(1,504

)

 

(5,505

)

 

(7,108

)

Loss on debt extinguishment, net

 

 

 

 

 

 

 

(7,434

)

Other (expense) income, net

 

1,049

 

 

(544

)

 

471

 

 

(1,563

)

Total interest and other expense, net

 

(280

)

 

(2,048

)

 

(5,034

)

 

(16,105

)

Net loss before taxes

 

(35,307

)

 

(40,186

)

 

(152,009

)

 

(144,162

)

Income tax (benefit) provision

 

(321

)

 

1

 

 

140

 

 

164

 

Net loss

$

(34,986

)

$

(40,187

)

$

(152,149

)

$

(144,326

)

Net loss per share, basic and diluted

$

(0.33

)

$

(0.40

)

$

(1.47

)

$

(1.50

)

Weighted average shares outstanding, basic and diluted

 

105,858

 

 

99,300

 

 

103,373

 

 

96,197

 

Stock-based compensation included in:
Cost of sales

$

1,157

 

$

248

 

$

2,597

 

$

737

 

Research and development

 

1,029

 

 

1,454

 

 

5,016

 

 

4,056

 

Sales, general and administrative

 

7,906

 

 

8,024

 

 

32,943

 

 

31,657

 

$

10,092

 

$

9,726

 

$

40,556

 

$

36,450

 

ALPHATEC HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
December 31,

2022
December 31,

2021
 
ASSETS
Current assets:
Cash and cash equivalents

$

84,696

 

$

187,248

Accounts receivable, net

 

60,060

 

 

41,893

Inventories

 

101,521

 

 

91,703

Prepaid expenses and other current assets

 

9,357

 

 

10,313

Total current assets

 

255,634

 

 

331,157

Property and equipment, net

 

101,952

 

 

87,401

Right-of-use assets

 

28,360

 

 

25,283

Goodwill

 

39,775

 

 

39,689

Intangible assets, net

 

82,781

 

 

85,274

Other assets

 

4,874

 

 

3,249

Total assets

$

513,376

 

$

572,053

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

34,742

 

$

25,737

Accrued expenses and other current liabilities

 

72,382

 

 

55,549

Contract liabilities

 

11,956

 

 

15,255

Short-term debt

 

14,948

 

 

342

Current portion of operating lease liabilities

 

4,842

 

 

4,212

Total current liabilities

 

138,870

 

 

101,095

Total long-term liabilities

 

387,616

 

 

367,933

Redeemable preferred stock

 

23,603

 

 

23,603

Stockholders' (deficit) equity

 

(36,713

)

 

79,422

Total liabilities and stockholders' (deficit) equity

$

513,376

 

$

572,053

ALPHATEC HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands)
 
Three Months Ended Year Ended
December 31, December 31,

2022

2021

2022

2021

(unaudited)
Gross profit, GAAP

$

68,851

 

$

45,225

 

$

233,059

 

$

157,762

 

Add: amortization of intangible assets

 

27

 

 

268

 

 

64

 

 

1,075

 

Add: stock-based compensation

 

1,157

 

 

248

 

 

2,597

 

 

737

 

Add: purchase accounting adjustments on acquisitions

 

565

 

 

2,083

 

 

1,349

 

 

6,423

 

Add: excess and obsolete write-down

 

2,769

 

 

4,305

 

 

9,792

 

 

11,147

 

Non-GAAP gross profit

$

73,369

 

$

52,129

 

$

246,861

 

$

177,144

 

Gross margin, GAAP

 

65.0

%

 

61.1

%

 

66.4

%

 

64.9

%

Add: amortization of intangible assets

 

0.0

%

 

0.4

%

 

0.0

%

 

0.4

%

Add: stock-based compensation

 

1.1

%

 

0.3

%

 

0.7

%

 

0.3

%

Add: purchase accounting adjustments on acquisitions

 

0.5

%

 

2.8

%

 

0.4

%

 

2.6

%

Add: excess and obsolete write-down

 

2.6

%

 

5.8

%

 

2.8

%

 

4.6

%

Non-GAAP gross margin

 

69.2

%

 

70.5

%

 

70.3

%

 

72.8

%

 
Three Months Ended Year Ended
December 31, December 31,

2022

2021

2022

2021

(unaudited)
Operating expenses, GAAP

$

103,878

 

$

83,363

 

$

380,034

 

$

285,819

 

Adjustments:
Stock-based compensation

 

(8,935

)

 

(9,478

)

 

(37,959

)

 

(35,713

)

Litigation-related expenses

 

(7,314

)

 

(5,412

)

 

(23,943

)

 

(11,123

)

Amortization of intangible assets

 

(2,934

)

 

(1,956

)

 

(10,115

)

 

(5,348

)

Transaction-related expenses

 

-

 

 

(209

)

 

(120

)

 

(6,365

)

Restructuring expenses

 

(106

)

 

(110

)

 

(1,810

)

 

(1,697

)

Non-GAAP operating expenses

$

84,589

 

$

66,198

 

$

306,087

 

$

225,573

 

 
Three Months Ended Year Ended
December 31, December 31,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(unaudited)
Operating loss, GAAP

$

(35,027

)

$

(38,138

)

$

(146,975

)

$

(128,057

)

Depreciation

 

8,388

 

 

6,544

 

 

30,989

 

 

20,332

 

Amortization of intangible assets

 

2,961

 

 

2,226

 

 

10,179

 

 

6,424

 

EBITDA

 

(23,678

)

 

(29,368

)

 

(105,807

)

 

(101,301

)

Add back significant items:
Stock-based compensation

 

10,092

 

 

9,726

 

 

40,556

 

 

36,450

 

Purchase accounting adjustments on acquisitions

 

565

 

 

2,083

 

 

1,349

 

 

6,423

 

Excess & obsolete write-down

 

2,769

 

 

4,305

 

 

9,792

 

 

11,147

 

Litigation-related expenses

 

7,314

 

 

5,412

 

 

23,943

 

 

11,123

 

Transaction-related expenses

 

-

 

 

209

 

 

120

 

 

6,365

 

Restructuring expenses

 

106

 

 

110

 

 

1,810

 

 

1,697

 

Adjusted EBITDA

$

(2,832

)

$

(7,523

)

$

(28,237

)

$

(28,096

)

 

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