U.S. Revenue Grows 43%- Eighth Consecutive Quarter of Double-Digit Revenue Growth
Third Quarter 2020 Financial Results
- Total revenue of $41.2 million, including
U.S. revenue of $40.1 million, up 43% year-over-year; U.S. gross margin of 72.9%;- Cash and cash equivalents of $15.7 million as of September 30, 2020; and
- Pro forma cash of
$123.4 million including net proceeds fromOctober 2020 follow-on offering.
Recent Corporate Highlights
- Expanded contribution of
U.S. revenue from new products to over 70% of Q3U.S. revenue, up from 42% in Q3 2019; - Increased
U.S. revenue per case by 13% year-over-year, driven by strong performance in the lateral interbody fusion and AlphaInformatiX product categories; - Continued sales network transformation, resulting in 47% year-over-year revenue growth from strategic distribution;
- Increased revenue per surgeon by 20% year-over-year;
- Closed a follow-on equity offering that generated net proceeds of
$107.7 million to support continued growth-related investments and expand the institutional shareholder base; - Successfully completed over 550 Prone Transpsoas, or PTP, surgeries in preparation to launch the approach in the fourth quarter 2020;
- Launched the Sigma TLIF Access System and the InVictus MIS Modular Pedicle Screw System that fully integrate with SafeOp Neural InformatiX, the SingleStep system and IdentiTi TLIF implants to enable a comprehensive MIS TLIF approach; and
- Launched the InVictus MIS Tower Fixation System, allowing for less disruptive treatment of more complex pathologies.
“We have built the foundation for long-term success,” said
Comparison of Selected GAAP and Non-GAAP Financial Results
for the Third Quarter 2020 to Third Quarter 2019
Revenue from
Gross profit and gross margin from
Total operating expenses for the third quarter 2020 were
Non-GAAP adjusted operating loss, which excludes stock-based compensation, litigation-related expenses, transaction-related expenses and excess and obsolescence charges, was
Non-GAAP adjusted EBITDA, which excludes stock-based compensation, litigation-related expenses, transaction-related expenses and excess and obsolescence charges in the third quarter 2020 was a loss of
For more detailed information on non-GAAP operating expenses, non-GAAP adjusted operating loss and non-GAAP adjusted EBITDA, please refer to the table, “Alphatec Holdings, Inc. Reconciliation of Non-GAAP Financial Measures,” that follows.
Cash and cash equivalents at
Current and long-term debt at face value as of
Financial Outlook for the Full Years 2020 and 2021
ATEC anticipates full year 2020 revenue will range between
The Company remains subject to the potential and uncertain impact of the ongoing COVID-19 pandemic. If hospitals experience a surge in cases and need to defer elective procedures to preserve capacity for COVID-19 patients, the Company’s ability to achieve these financial objectives could be adversely affected.
Investor Conference Call
ATEC will present these via a live webcast today at 1:30 p.m. PT / 4:30 p.m. ET. The live webcast will be accessible via this link. An audiocast of the presentation will also be available domestically at (877) 556-5251 and internationally at (720) 545-0036. The conference ID number is 5178028.
A replay of the webcast will remain available on ATEC’s corporate website at www.atecspine.com until the Company releases fourth quarter financial results. In addition, a replay of the audiocast will be available until November 15, 2020. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use the replay conference ID number 5178028.
Non-GAAP Financial Information
To supplement the Company’s financial statements presented in accordance with
About
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 or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Forward-looking statements include references to the impact of the COVID-19 pandemic on the Company's business and financial results, references to the Company’s revenue and growth outlook, planned commercial launches, product introduction and surgeon adoption, salesforce revitalization and growth of strategic distribution network, the Company’s strategy in significantly repositioning the ATEC brand, turning the Company into a growth organization, creating future market disruption, and the Company’s future ability to finance its operations. The 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 impact of COVID-19 pandemic on the Company's business and the economy; the uncertainty of success in developing new products or products currently in the Company’s 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 for new products, or unexpected or prolonged delays in the process; continuation of favorable third party reimbursement for Company’s products; unanticipated expenses or liabilities or other adverse events affecting cash flow or the Company’s ability to successfully control its costs or achieve profitability; uncertainty of additional funding; the Company’s ability to compete with other products and with emerging new technologies; product liability exposure; an unsuccessful outcome in any litigation asserted against the Company. The words “believe,” “will,” “should,” “expect,” “intend,” “estimate,” “look forward” and “anticipate,” variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. 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.
Investor/Media Contact:
Tina Jacobsen
Investor Relations
(760) 494-6790
ir@atecspine.com
Company Contact:
Chief Financial Officer
ir@atecspine.com
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Revenues: | ||||||||||||||||
Revenue from | $ | 40,052 | $ | 28,051 | $ | 97,956 | $ | 77,099 | ||||||||
Revenue from international supply agreement | 1,111 | 1,150 | 2,951 | 3,976 | ||||||||||||
Total revenues | 41,163 | 29,201 | 100,907 | 81,075 | ||||||||||||
Cost of revenues | 11,926 | 9,268 | 29,797 | 25,688 | ||||||||||||
Gross profit | 29,237 | 19,933 | 71,110 | 55,387 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 4,379 | 3,800 | 11,800 | 10,413 | ||||||||||||
Sales, general and administrative | 35,985 | 26,954 | 91,021 | 72,738 | ||||||||||||
Litigation-related | 1,560 | 604 | 5,507 | 4,427 | ||||||||||||
Amortization of acquired intangible assets | 172 | 172 | 516 | 526 | ||||||||||||
Transaction-related | 2 | — | 4,093 | — | ||||||||||||
Restructuring | — | — | — | 60.00 | ||||||||||||
Total operating expenses | 42,098 | 31,530 | 112,937 | 88,164 | ||||||||||||
Operating loss | (12,861 | ) | (11,597 | ) | (41,827 | ) | (32,777 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest and other expense, net | (2,768 | ) | (2,926 | ) | (8,674 | ) | (6,966 | ) | ||||||||
Loss on debt extinguishment | — | — | (1,555 | ) | — | |||||||||||
Total other expenses, net | (2,768 | ) | (2,926 | ) | (10,229 | ) | (6,966 | ) | ||||||||
Loss from continuing operations before taxes | (15,629 | ) | (14,523 | ) | (52,056 | ) | (39,743 | ) | ||||||||
Income tax provision | 40 | 20 | 140 | 122 | ||||||||||||
Loss from continuing operations | (15,669 | ) | (14,543 | ) | (52,196 | ) | (39,865 | ) | ||||||||
Loss from discontinued operations | — | (24 | ) | — | (106 | ) | ||||||||||
Net loss | $ | (15,669 | ) | $ | (14,567 | ) | $ | (52,196 | ) | $ | (39,971 | ) | ||||
Net loss per share, basic and diluted: | ||||||||||||||||
Continuing operations | $ | (0.24 | ) | $ | (0.26 | ) | $ | (0.82 | ) | $ | (0.81 | ) | ||||
Discontinued operations | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | ||||||||
Net loss per share, basic and diluted | $ | (0.24 | ) | $ | (0.26 | ) | $ | (0.82 | ) | $ | (0.81 | ) | ||||
Shares used in calculating basic and diluted net loss per share | 64,761 | 55,736 | 63,669 | 49,252 | ||||||||||||
Stock-based compensation included in: | ||||||||||||||||
Cost of revenue | $ | 139 | $ | 57 | $ | 374 | $ | 113 | ||||||||
Research and development | 379 | 227 | 1,066 | 543 | ||||||||||||
Sales, general and administrative | 4,026 | 3,319 | 11,247 | 6,910 | ||||||||||||
$ | 4,544 | $ | 3,603 | $ | 12,687 | $ | 7,566 | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(in thousands) | |||||
2020 | 2019 | ||||
(unaudited) | |||||
ASSETS | |||||
Current assets: | |||||
Cash | $ | 15,678 | $ | 47,113 | |
Accounts receivable, net | 24,270 | 16,150 | |||
Inventories, net | 42,144 | 34,854 | |||
Prepaid expenses and other current assets | 3,321 | 9,880 | |||
Withholding tax receivable from Officer | 934 | — | |||
Current assets of discontinued operations | 335 | 321 | |||
Total current assets | 86,682 | 108,318 | |||
Property and equipment, net | 27,681 | 19,722 | |||
Right-of-use asset | 1,530 | 1,860 | |||
13,897 | 13,897 | ||||
Intangibles, net | 24,283 | 25,605 | |||
Other assets | 549 | 493 | |||
Noncurrent assets of discontinued operations | 55 | 53 | |||
Total assets | $ | 154,677 | $ | 169,948 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $ | 13,910 | $ | 7,772 | |
Accrued expenses | 30,980 | 26,416 | |||
Current portion of long-term debt | 1,672 | 489 | |||
Current portion of lease liability | 1,208 | 1,314 | |||
Current liabilities of discontinued operations | 395 | 399 | |||
Total current liabilities | 48,165 | 36,390 | |||
Total long term liabilities | 74,858 | 66,324 | |||
Redeemable preferred stock | 23,603 | 23,603 | |||
Stockholders' equity | 8,051 | 43,631 | |||
Total liabilities and stockholders' equity | $ | 154,677 | $ | 169,948 | |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Operating expenses | 42,098 | 31,530 | 112,937 | 88,164 | ||||||||||||
Adjustments: | ||||||||||||||||
Stock-based compensation | (4,405 | ) | (3,546 | ) | (12,313 | ) | (7,453 | ) | ||||||||
Contingent consideration fair value adjustment | — | — | — | (289 | ) | |||||||||||
Litigation-related expenses | (1,560 | ) | (604 | ) | (5,507 | ) | (4,427 | ) | ||||||||
Restructuring | — | — | — | (60 | ) | |||||||||||
Transaction-related expenses | (2 | ) | — | (4,093 | ) | — | ||||||||||
Non-GAAP operating expenses | $ | 36,131 | $ | 27,380 | $ | 91,024 | $ | 75,935 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Operating loss, as reported | $ | (12,861 | ) | $ | (11,597 | ) | $ | (41,827 | ) | $ | (32,777 | ) | ||||
Add back significant items: | ||||||||||||||||
Stock-based compensation | 4,544 | 3,603 | 12,687 | 7,566 | ||||||||||||
Contingent consideration fair value adjustment | — | — | — | (289 | ) | |||||||||||
Litigation-related expenses | 1,560 | 604 | 5,507 | 4,427 | ||||||||||||
Restructuring | — | — | — | 60 | ||||||||||||
Transaction-related expenses | 2 | — | 4,093 | — | ||||||||||||
Excess & obsolete charges | 1,995 | 2,276 | 5,429 | 6,451 | ||||||||||||
Adjusted operating loss | (4,760 | ) | (5,114 | ) | (14,111 | ) | (14,562 | ) | ||||||||
Operating loss, as reported | $ | (12,861 | ) | $ | (11,597 | ) | $ | (41,827 | ) | $ | (32,777 | ) | ||||
Depreciation | 2,307 | 1,752 | 6,482 | 4,828 | ||||||||||||
Amortization of intangible assets | 441 | 172 | 1,322 | 526 | ||||||||||||
EBITDA | (10,113 | ) | (9,673 | ) | (34,023 | ) | (27,423 | ) | ||||||||
Add back significant items: | ||||||||||||||||
Stock-based compensation | 4,544 | 3,603 | 12,687 | 7,566 | ||||||||||||
Contingent consideration fair value adjustment | — | — | — | (289 | ) | |||||||||||
Litigation-related expenses | 1,560 | 604 | 5,507 | 4,427 | ||||||||||||
Restructuring | — | — | — | 60 | ||||||||||||
Transaction-related expenses | 2 | — | 4,093 | — | ||||||||||||
Excess & obsolete charges | 1,995 | 2,276 | 5,429 | 6,451 | ||||||||||||
Adjusted EBITDA | $ | (2,012 | ) | $ | (3,190 | ) | $ | (6,307 | ) | $ | (9,208 | ) | ||||
RECONCILIATION OF GEOGRAPHIC SEGMENT REVENUES AND GROSS PROFIT | ||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues by source | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
Revenue from | $ | 40,052 | $ | 28,051 | $ | 97,956 | $ | 77,099 | ||||||||
Revenue from international supply agreement | 1,111 | 1,150 | 2,951 | $ | 3,976 | |||||||||||
Total revenues | $ | 41,163 | $ | 29,201 | $ | 100,907 | $ | 81,075 | ||||||||
Gross profit by source | ||||||||||||||||
Revenue from | $ | 29,178 | $ | 19,853 | $ | 70,966 | $ | 55,087 | ||||||||
Revenue from international supply agreement | 59 | 80 | 144 | 300 | ||||||||||||
Total gross profit | $ | 29,237 | $ | 19,933 | $ | 71,110 | $ | 55,387 | ||||||||
Gross profit margin by source | ||||||||||||||||
Revenue from | 72.9 | % | 70.8 | % | 72.4 | % | 71.4 | % | ||||||||
Revenue from international supply agreement | 5.3 | % | 7.0 | % | 4.9 | % | 7.5 | % | ||||||||
Total gross profit margin | 71.0 | % | 68.3 | % | 70.5 | % | 68.3 | % | ||||||||
RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT AND GROSS MARGIN FROM | ||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
GAAP-based gross profit from | $ | 29,178 | $ | 19,853 | $ | 70,966 | $ | 55,087 | ||||||||
Add: non-cash excess and obsolete charges | 1,995 | 2,276 | 5,429 | 6,451 | ||||||||||||
Non-GAAP gross profit from | $ | 31,173 | $ | 22,129 | $ | 76,395 | $ | 61,538 | ||||||||
GAAP-based gross margin from | 72.9 | % | 70.8 | % | 72.4 | % | 71.4 | % | ||||||||
Add: non-cash excess and obsolete charges | 5.0 | % | 8.1 | % | 5.5 | % | 8.4 | % | ||||||||
Non-GAAP gross margin from | 77.8 | % | 78.9 | % | 78.0 | % | 79.8 | % | ||||||||
Source:
2020 GlobeNewswire, Inc., source