ATEC Reports Second Quarter 2022 Financial Results and Increases Full-Year Revenue Guidance
08/04/2022 - 04:05 PM
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
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 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
)
View source version on businesswire.com : https://www.businesswire.com/news/home/20220804005436/en/
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.