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Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-52024

 

ALPHATEC HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

20-2463898

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

1950 Camino Vida Roble, Carlsbad, CA

92008

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (760) 431-9286

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $.0001 per share

ATEC

The NASDAQ Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes No

 

As of October 27, 2022, there were 105,058,324 shares of the registrant’s common stock outstanding.

 

 


Table of Contents

 

ALPHATEC HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

September 30, 2022

Table of Contents

 

 

 

 

 

Page

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)

 

8

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

9

 

 

 

 

 

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

28

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

35

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

35

 

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

36

 

 

 

 

 

Item 1A.

 

Risk Factors

 

36

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

36

 

 

 

 

 

Item 5.

 

Other Information

 

37

 

 

 

 

 

Item 6.

 

Exhibits

 

38

 

 

 

 

 

SIGNATURES

 

39

 

2


Table of Contents

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ALPHATEC HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for par value data)

 

 

 

September 30, 2022

 

 

December 31, 2021

 

Assets

 

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

106,112

 

 

$

187,248

 

Accounts receivable, net of allowances of $591 and $2,307, respectively

 

 

50,723

 

 

 

41,893

 

Inventories

 

 

102,159

 

 

 

91,703

 

Prepaid expenses and other current assets

 

 

9,718

 

 

 

10,313

 

Total current assets

 

 

268,712

 

 

 

331,157

 

Property and equipment, net

 

 

98,908

 

 

 

87,401

 

Right-of-use assets

 

 

28,451

 

 

 

25,283

 

Goodwill

 

 

37,593

 

 

 

39,689

 

Intangible assets, net

 

 

79,738

 

 

 

85,274

 

Other assets

 

 

2,881

 

 

 

3,249

 

Total assets

 

$

516,283

 

 

$

572,053

 

Liabilities and Stockholders’ (Deficit) Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

33,374

 

 

$

25,737

 

Accrued expenses and other current liabilities

 

 

61,741

 

 

 

55,549

 

Contract liabilities

 

 

12,293

 

 

 

15,255

 

Short-term debt

 

 

13,550

 

 

 

342

 

Current portion of operating lease liabilities

 

 

4,529

 

 

 

4,212

 

Total current liabilities

 

 

125,487

 

 

 

101,095

 

Long-term debt

 

 

348,324

 

 

 

326,489

 

Operating lease liabilities, less current portion

 

 

26,952

 

 

 

24,383

 

Other long-term liabilities

 

 

14,486

 

 

 

17,061

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

Redeemable preferred stock, $0.0001 par value; 20,000 shares authorized at
   September 30, 2022 and December 31, 2021;
3,319 shares issued and outstanding
   at September 30, 2022 and December 31, 2021

 

 

23,603

 

 

 

23,603

 

Stockholders' (deficit) equity:

 

 

 

 

 

 

Series A convertible preferred stock, $0.0001 par value; 15 shares authorized, and 0 shares
   issued and outstanding at September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000 authorized; 105,042 shares issued and 104,984 shares outstanding at September 30, 2022; and 99,627 shares issued and 99,537 shares outstanding at December 31, 2021

 

 

11

 

 

 

10

 

Treasury stock, 1,808 shares, at cost

 

 

(25,097

)

 

 

(25,097

)

Additional paid-in capital

 

 

919,319

 

 

 

892,828

 

Accumulated other comprehensive deficit

 

 

(17,314

)

 

 

(5,994

)

Accumulated deficit

 

 

(899,488

)

 

 

(782,325

)

Total stockholders’ (deficit) equity

 

 

(22,569

)

 

 

79,422

 

Total liabilities and stockholders’ (deficit) equity

 

$

516,283

 

 

$

572,053

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

3


Table of Contents

 

ALPHATEC HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands, except per share amounts)

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from products and services

 

$

89,839

 

 

$

62,735

 

 

$

244,908

 

 

$

168,336

 

Revenue from international supply agreement

 

 

 

 

 

145

 

 

 

15

 

 

 

914

 

Total revenue

 

 

89,839

 

 

 

62,880

 

 

 

244,923

 

 

 

169,250

 

Cost of sales

 

 

30,323

 

 

 

23,266

 

 

 

80,715

 

 

 

56,713

 

Gross profit

 

 

59,516

 

 

 

39,614

 

 

 

164,208

 

 

 

112,537

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

12,111

 

 

 

9,391

 

 

 

32,429

 

 

 

23,031

 

Sales, general and administrative

 

 

75,954

 

 

 

61,494

 

 

 

218,093

 

 

 

162,578

 

Litigation-related expenses

 

 

3,602

 

 

 

1,209

 

 

 

16,629

 

 

 

5,711

 

Amortization of acquired intangible assets

 

 

2,774

 

 

 

2,012

 

 

 

7,181

 

 

 

3,392

 

Transaction-related expenses

 

 

 

 

 

373

 

 

 

120

 

 

 

6,156

 

Restructuring expenses

 

 

45

 

 

 

256

 

 

 

1,704

 

 

 

1,587

 

Total operating expenses

 

 

94,486

 

 

 

74,735

 

 

 

276,156

 

 

 

202,455

 

Operating loss

 

 

(34,970

)

 

 

(35,121

)

 

 

(111,948

)

 

 

(89,918

)

Interest and other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(1,285

)

 

 

(1,272

)

 

 

(4,176

)

 

 

(5,604

)

Loss on debt extinguishment, net

 

 

 

 

 

(7,434

)

 

 

 

 

 

(7,434

)

Other (expense) income, net

 

 

(615

)

 

 

886

 

 

 

(578

)

 

 

(1,020

)

Total interest and other expense, net

 

 

(1,900

)

 

 

(7,820

)

 

 

(4,754

)

 

 

(14,058

)

Net loss before taxes

 

 

(36,870

)

 

 

(42,941

)

 

 

(116,702

)

 

 

(103,976

)

Income tax provision

 

 

129

 

 

 

90

 

 

 

461

 

 

 

163

 

Net loss

 

$

(36,999

)

 

$

(43,031

)

 

$

(117,163

)

 

$

(104,139

)

Net loss per share, basic and diluted

 

$

(0.35

)

 

$

(0.43

)

 

$

(1.14

)

 

$

(1.09

)

Weighted average shares outstanding, basic and diluted

 

 

104,804

 

 

 

99,571

 

 

 

102,561

 

 

 

95,204

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


Table of Contents

 

ALPHATEC HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(In thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(36,999

)

 

$

(43,031

)

 

$

(117,163

)

 

$

(104,139

)

Foreign currency translation adjustments

 

 

(4,851

)

 

 

(3,463

)

 

 

(11,320

)

 

 

(4,818

)

Comprehensive loss

 

$

(41,850

)

 

$

(46,494

)

 

$

(128,483

)

 

$

(108,957

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

5


Table of Contents

 

ALPHATEC HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(UNAUDITED)

(In thousands)

 

 

 

Common stock

 

 

Additional
paid-in

 

 

Treasury

 

 

Accumulated other
comprehensive

 

 

Accumulated

 

 

Total
stockholders’

 

 

 

Shares

 

 

Par Value

 

 

capital

 

 

stock

 

 

loss

 

 

deficit

 

 

(deficit) equity

 

Balance at December 31, 2021

 

 

99,537

 

 

$

10

 

 

$

892,828

 

 

$

(25,097

)

 

$

(5,994

)

 

$

(782,325

)

 

$

79,422

 

Stock-based compensation

 

 

 

 

 

 

 

 

7,730

 

 

 

 

 

 

 

 

 

 

 

 

7,730

 

Sales agent equity incentives

 

 

199

 

 

 

 

 

 

2,178

 

 

 

 

 

 

 

 

 

 

 

 

2,178

 

Common stock issued for warrant exercises

 

 

551

 

 

 

 

 

 

1,289

 

 

 

 

 

 

 

 

 

 

 

 

1,289

 

Common stock issued for stock option exercises

 

 

39

 

 

 

 

 

 

140

 

 

 

 

 

 

 

 

 

 

 

 

140

 

Common stock issued for vesting of restricted stock
   units, net of shares withheld for tax liability

 

 

852

 

 

 

 

 

 

(4,751

)

 

 

 

 

 

 

 

 

 

 

 

(4,751

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,180

)

 

 

 

 

 

(1,180

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(42,844

)

 

 

(42,844

)

Balance at March 31, 2022

 

 

101,178

 

 

$

10

 

 

$

899,414

 

 

$

(25,097

)

 

$

(7,174

)

 

$

(825,169

)

 

$

41,984

 

Stock-based compensation

 

 

 

 

 

 

 

 

10,109

 

 

 

 

 

 

 

 

 

 

 

 

10,109

 

Sales agent equity incentives

 

 

20

 

 

 

 

 

 

361

 

 

 

 

 

 

 

 

 

 

 

 

361

 

Common stock issued for conversion of Series A preferred stock

 

 

29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for warrant exercises

 

 

1,914

 

 

 

1

 

 

 

2,674

 

 

 

 

 

 

 

 

 

 

 

 

2,675

 

Common stock issued for employee stock purchase plan and stock option exercises

 

 

535

 

 

 

 

 

 

2,331

 

 

 

 

 

 

 

 

 

 

 

 

2,331

 

Common stock issued for vesting of restricted stock
   units, net of shares withheld for tax liability

 

 

819

 

 

 

 

 

 

(4,562

)

 

 

 

 

 

 

 

 

 

 

 

(4,562

)

Common stock issued for asset acquisition

 

 

23

 

 

 

 

 

 

250

 

 

 

 

 

 

 

 

 

 

 

 

250

 

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,289

)

 

 

 

 

 

(5,289

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37,320

)

 

 

(37,320

)

Balance at June 30, 2022

 

 

104,518

 

 

$

11

 

 

$

910,577

 

 

$

(25,097

)

 

$

(12,463

)