Financial Performance - Total revenue reached $71 million, representing a 61% year-over-year growth[5] - Organic revenue was $61 million, a 39% year-over-year increase but a 1% decrease quarter-over-quarter[48] - EOS-related revenue contributed $10 million, showing a 20% decrease quarter-over-quarter[48] - Gross margin was 72%, a decrease of 560 basis points year-over-year[52] - Adjusted EBITDA was -$11 million[54] Strategic Initiatives and Growth Drivers - ATEC lateral (PTP+LTP) drove approximately 40% of Q1 revenue growth[18] - Pioneering PTPTM saw significant revenue growth, with over 100 surgeons trained[5] - There was an 11% year-over-year growth in average revenue per case[8] - Strategic distribution saw 43% organic revenue growth in Q1[43] - Revenue growth of top 20 PTP distributors in 2021 was 77%[43] Future Outlook - The company updated its FY2022 revenue guidance, projecting $269 million in organic revenue (27% YoY) and $47 million in EOS-related revenue, totaling $316 million (30% YoY)[61]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and detailed notes for the quarter ended March 31, 2022 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $548.7 million, driven by lower cash, while total liabilities increased and stockholders' equity significantly declined | Metric (in thousands) | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Cash and cash equivalents | $151,812 | $187,248 | | Total current assets | $303,378 | $331,157 | | Total assets | $548,689 | $572,053 | | Total current liabilities | $115,904 | $101,095 | | Long-term debt | $326,639 | $326,489 | | Total stockholders' equity | $41,984 | $79,422 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue grew 61% year-over-year to $70.9 million, but higher costs and operating expenses led to a wider operating and net loss | Metric (in thousands, except per share) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Total revenue | $70,933 | $44,121 | | Cost of sales | $21,717 | $12,263 | | Gross profit | $49,216 | $31,858 | | Total operating expenses | $90,445 | $50,904 | | Operating loss | $(41,229) | $(19,046) | | Net loss | $(42,844) | $(22,903) | | Net loss per share, basic and diluted | $(0.43) | $(0.26) | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss increased to $(44.0) million from $(26.0) million in the prior-year period, driven by a higher net loss | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(42,844) | $(22,903) | | Foreign currency translation adjustments | $(1,180) | $(3,052) | | Comprehensive loss | $(44,024) | $(25,955) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased to $42.0 million from $79.4 million, primarily due to the net loss incurred during the period | Metric (in thousands) | Balance at Dec 31, 2021 | Balance at Mar 31, 2022 | | :-------------------------------- | :---------------------- | :---------------------- | | Additional paid-in capital | $892,828 | $899,414 | | Accumulated other comprehensive deficit | $(5,994) | $(7,174) | | Accumulated deficit | $(782,325) | $(825,169) | | Total stockholders' equity | $79,422 | $41,984 | - Stock-based compensation contributed **$7.730 million** to additional paid-in capital for the three months ended March 31, 2022[27](index=27&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash and cash equivalents decreased by $35.4 million, driven by cash used in operating and investing activities | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(24,712) | $(18,604) | | Net cash used in investing activities | $(13,407) | $(25,994) | | Net cash provided by financing activities | $2,697 | $130,776 | | Net (decrease) increase in cash and cash equivalents | $(35,436) | $83,372 | | Cash and cash equivalents at end of period | $151,812 | $191,137 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed notes covering the company's business, accounting policies, acquisitions, fair value, debt, commitments, and other key financial disclosures [1. The Company and Basis of Presentation](index=8&type=section&id=1.%20The%20Company%20and%20Basis%20of%20Presentation) Alphatec Holdings, Inc, a medical technology company specializing in spinal disorder treatments, presents its condensed, unaudited financial statements in accordance with U.S. GAAP - Alphatec Holdings, Inc designs, develops, and markets technology for spinal disorders through its subsidiaries Alphatec Spine, SafeOp Surgical, and EOS imaging S.A[33](index=33&type=chunk) - The company markets its products in the United States and internationally via independent distributors and direct sales representatives[33](index=33&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines key accounting policies, including the use of estimates, fair value hierarchy, revenue recognition, and recent accounting pronouncements - Significant estimates and assumptions are made for useful lives of assets, goodwill, intangible assets, allowances, valuation of share-based liabilities, deferred tax assets, inventory, stock-based compensation, revenues, restructuring liabilities, income tax uncertainties, and other contingencies[37](index=37&type=chunk) - The company uses a **three-tier fair value hierarchy (Level 1, 2, 3)** for financial instruments, with Level 1 for quoted prices in active markets, Level 2 for observable inputs other than Level 1, and Level 3 for unobservable inputs[38](index=38&type=chunk)[39](index=39&type=chunk) - Revenue is recognized when customers obtain control of promised goods or services, primarily from spinal implant sales and medical imaging equipment/services[44](index=44&type=chunk)[45](index=45&type=chunk) - The company records a contract liability (deferred revenue) when payment is received in advance of performance obligations, such as undelivered equipment, services, or maintenance agreements[47](index=47&type=chunk) - ASU No 2021-08 (Business Combinations) requires applying ASC 606 to contract assets and liabilities acquired in a business combination, effective for fiscal years beginning after December 15, 2022[48](index=48&type=chunk) [3. Business Combination (EOS Acquisition)](index=11&type=section&id=3.%20Business%20Combination) The company completed its acquisition of EOS imaging S.A. in May 2021 for $100.0 million, with a subsequent goodwill adjustment and pro forma results reflecting the combination - Alphatec Holdings, Inc acquired **100% of EOS Shares and 57% of OCEANEs for $100.0 million** in cash by June 2, 2021[51](index=51&type=chunk) - EOS imaging S.A is a global medical device company specializing in low-dose 2D/3D full-body imaging and surgical planning for orthopedic surgery[52](index=52&type=chunk) - During the three months ended March 31, 2022, a purchase accounting adjustment, primarily related to deferred tax assets, resulted in a **$1.6 million increase to goodwill**[53](index=53&type=chunk) EOS Acquisition Purchase Price Allocation (in thousands) | Item | Amount | | :---------------------------------------------------------------- | :---------- | | Total cash paid to acquire 100% of EOS Shares and 57% of OCEANEs | $100,008 | | Goodwill | $29,469 | | Developed technology | $56,000 | | Customer relationships | $9,500 | | Trade names | $6,000 | Unaudited Pro Forma Results (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Total revenue | $70,933 | $50,986 | | Net loss | $(42,844) | $(26,707) | | Net loss per share, basic and diluted | $(0.43) | $(0.31) | [4. Fair Value Measurements](index=12&type=section&id=4.%20Fair%20Value%20Measurements) Fair value measurements consist primarily of Level 1 money market funds and a Level 3 liability classified equity award for an executive officer Fair Value Measurements (in thousands) | Item | Level 1 (Mar 31, 2022) | Level 3 (Mar 31, 2022) | Total (Mar 31, 2022) | | :-------------------- | :--------------------- | :--------------------- | :------------------- | | Money market funds | $120,023 | — | $120,023 | | Liability classified equity award | — | $2,328 | $2,328 | | | Level 1 (Dec 31, 2021) | Level 3 (Dec 31, 2021) | Total (Dec 31, 2021) | | Money market funds | $140,010 | — | $140,010 | | Liability classified equity award | — | $2,052 | $2,052 | - The liability classified equity award, valued at **$2.328 million** as of March 31, 2022, is a Level 3 liability for an executive officer, settled in cash, and recognized ratably over the service period[61](index=61&type=chunk)[62](index=62&type=chunk) - The fair value of the 2026 Senior Convertible Notes was approximately **$308.2 million** at March 31, 2022, and OCEANE convertible bonds were approximately **$13.9 million**[63](index=63&type=chunk) [5. Inventories](index=13&type=section&id=5.%20Inventories) Total inventories increased to $99.0 million, with finished goods as the largest component, to support product placement needs Inventories (in thousands) | Inventory Type | March 31, 2022 | December 31, 2021 | | :-------------- | :------------- | :---------------- | | Raw materials | $15,792 | $14,671 | | Work-in-process | $6,220 | $5,712 | | Finished goods | $77,031 | $71,320 | | Total Inventories | $99,043 | $91,703 | [6. Property and Equipment, net](index=13&type=section&id=6.%20Property%20and%20Equipment,%20net) Net property and equipment increased to $96.2 million, driven by investments in surgical instruments and construction in progress Property and Equipment, net (in thousands) | Asset Type | March 31, 2022 | December 31, 2021 | | :-------------------------- | :------------- | :---------------- | | Surgical instruments | $140,585 | $130,432 | | Construction in progress | $12,063 | $7,292 | | Less: accumulated depreciation and amortization | $(79,022) | $(72,724) | | Property and equipment, net | $96,185 | $87,401 | - Total depreciation expense was **$7.1 million** for the three months ended March 31, 2022, compared to $3.4 million for the same period in 2021[67](index=67&type=chunk) [7. Goodwill and Intangible Assets](index=14&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets) Goodwill increased to $40.8 million due to a purchase price adjustment, while net intangible assets decreased to $82.1 million Goodwill Carrying Amount (in thousands) | Item | Amount | | :--------------------------------- | :------- | | December 31, 2021 | $39,689 | | Purchase price allocation adjustment | $1,628 | | Foreign currency fluctuation | $(486) | | March 31, 2022 | $40,831 | Intangible Assets, net (in thousands) | Asset Type | March 31, 2022 (Net) | December 31, 2021 (Net) | | :------------------------ | :------------------- | :---------------------- | | Developed product technology | $66,362 | $68,775 | | Trademarks and trade names | $5,029 | $5,255 | | Customer relationships | $8,898 | $9,468 | | Distribution network | $523 | $573 | | In-process research and development | $1,278 | $1,203 | | Total | $82,090 | $85,274 | - Total amortization expense attributed to intangible assets was **$2.2 million** for the three months ended March 31, 2022, a significant increase from $0.4 million in the prior-year period[72](index=72&type=chunk) Future Amortization Expense (in thousands) | Year Ending December 31, | Amount | | :----------------------- | :------- | | Remainder of 2022 | $6,734 | | 2023 | $8,957 | | 2024 | $8,854 | | 2025 | $8,269 | | 2026 | $8,269 | | Thereafter | $41,007 | | Total | $82,090 | [8. Contract Liability](index=15&type=section&id=8.%20Contract%20Liability) Contract liability, or deferred revenue, decreased slightly to $17.4 million, with $4.3 million recognized as revenue during the quarter Contract Liability (in thousands) | Item | March 31, 2022 | December 31, 2021 | | :---------------------------------------- | :------------- | :---------------- | | Contract liability | $17,427 | $18,151 | | Less: Non-current portion of contract liability | $(2,534) | $(2,896) | | Current portion of contract liability | $14,893 | $15,255 | - The company recognized **$4.316 million** of revenue from its contract liabilities during the three months ended March 31, 2022[78](index=78&type=chunk) [9. Debt](index=15&type=section&id=9.%20Debt) Total debt primarily consists of $316.3 million in Senior Convertible Notes, with additional convertible bonds and loans assumed from EOS - The company issued **$316.3 million in 0.75% Senior Convertible Notes** due August 1, 2026, with an annual effective interest rate of 1.4%[79](index=79&type=chunk)[84](index=84&type=chunk) - As of March 31, 2022, **none of the conditions permitting conversion** of the 2026 Notes have been met[81](index=81&type=chunk) - The company holds Capped Call Transactions to reduce potential dilution from the 2026 Notes, with an initial cap price of **$27.68 per share**, costing $39.9 million[87](index=87&type=chunk)[88](index=88&type=chunk) - Outstanding OCEANE convertible bonds, assumed from EOS, totaled **$13.9 million (€12.5 million)** as of March 31, 2022, bearing 6% interest and maturing May 31, 2023[89](index=89&type=chunk)[92](index=92&type=chunk) - Other debt agreements, assumed from EOS (French government-sponsored COVID-19 relief loans), totaled **$5.2 million (€4.8 million)** as of March 31, 2022, with maturities extended to 2027[93](index=93&type=chunk)[94](index=94&type=chunk) Principal Payments Remaining on Debt (in thousands) | Year Ending December 31, | Amount | | :----------------------- | :------- | | Remainder of 2022 | $1,781 | | 2023 | $14,585 | | 2024 | $1,331 | | 2025 | $1,314 | | 2026 | $317,564 | | Thereafter | $629 | | Total | $337,204 | [10. Commitments and Contingencies](index=18&type=section&id=10.%20Commitments%20and%20Contingencies) The company has significant operating lease and inventory purchase commitments and is involved in ongoing litigation with NuVasive, Inc - The company has operating leases for its Carlsbad, CA headquarters (10-year term), Memphis, TN distribution center (7-year term), and EOS's Paris, France office (10-year term)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - As of March 31, 2022, the company has a remaining minimum inventory purchase commitment of **$32.4 million** through December 2026, assumed with the EOS acquisition[107](index=107&type=chunk) - The company is involved in ongoing litigation with NuVasive, Inc regarding patent infringement, with a trial completed in March 2022 and parties engaged in settlement discussions[109](index=109&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) Future Minimum Annual Lease Payments (in thousands) | Year Ending December 31, | Amount | | :----------------------- | :------- | | Remainder of 2022 | $3,245 | | 2023 | $4,471 | | 2024 | $4,547 | | 2025 | $4,580 | | 2026 | $4,684 | | Thereafter | $17,830 | | Total undiscounted lease payments | $39,357 | [11. Orthotec Settlement](index=21&type=section&id=11.%20Orthotec%20Settlement) The company has a remaining outstanding settlement balance of $7.7 million, including imputed interest, as of March 31, 2022 - The company has made aggregate installment payments of **$50.1 million** towards the Orthotec settlement[122](index=122&type=chunk) Orthotec Settlement Obligation (in thousands) | Item | March 31, 2022 | December 31, 2021 | | :---------------------------------------- | :------------- | :---------------- | | Litigation settlement obligation - short-term portion | $4,400 | $4,400 | | Litigation settlement obligation - long-term portion | $2,965 | $3,587 | | Total | $7,365 | $7,987 | | Future imputed interest | $358 | $478 | | Total settlement obligation, net | $7,723 | $8,465 | [12. Stock-Benefit Plans and Equity Transactions](index=21&type=section&id=12.%20Stock-Benefit%20Plans%20and%20Equity%20Transactions) Stock-based compensation expense totaled $10.2 million for the quarter, and the company had 19.7 million warrants outstanding Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------ | :-------------------------------- | :-------------------------------- | | Cost of sales | $256 | $95 | | Research and development | $972 | $498 | | Sales, general and administrative | $8,956 | $3,881 | | Total | $10,184 | $4,474 | - As of March 31, 2022, there was **$57.9 million of unamortized compensation expense** for RSUs and PRSUs to be recognized over a weighted average period of 1.81 years[127](index=127&type=chunk) - Approximately **1,225,000 shares of common stock** were issued upon vesting of RSUs and PRSUs during the three months ended March 31, 2022[128](index=128&type=chunk) Outstanding Warrants for Common Stock (as of March 31, 2022, in thousands, except strike price) | Warrant Type | Number of Warrants | Strike Price | Expiration | | :---------------------------- | :----------------- | :----------- | :---------------- | | 2017 PIPE Warrants | 1,887 | $2.00 | June 2022 | | 2018 PIPE Warrants | 8,354 | $3.50 | May 2023 | | SafeOp Surgical Merger Warrants | 1,195 | $3.50 | May 2023 | | 2018 Squadron Medical Warrants | 845 | $3.15 | May 2027 | | 2019 Squadron Medical Warrants | 4,839 | $2.17 | May 2027 | | 2020 Squadron Medical Warrants | 1,076 | $4.88 | May 2027 | | Executive Warrants | 1,327 | $5.00 | December 2022 | | Other | 131 | $5.74 | Various through Feb 2026 | | Total | 19,654 | | | [13. Business Segment and Geographic Information](index=24&type=section&id=13.%20Business%20Segment%20and%20Geographic%20Information) The company operates as a single business segment, with U.S. revenue accounting for $67.0 million of the $70.9 million total - The company operates in **one business segment**, with overall operating performance and resource allocation assessed on a consolidated basis[139](index=139&type=chunk) Net Revenue and Property, Plant and Equipment, net, by Geographic Region (in thousands) | Geographic Region | Revenue (3 Months Ended Mar 31, 2022) | Revenue (3 Months Ended Mar 31, 2021) | Property and Equipment, net (Mar 31, 2022) | Property and Equipment, net (Dec 31, 2021) | | :---------------- | :------------------------------------ | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | | United States | $67,034 | $43,716 | $91,967 | $85,320 | | International | $3,899 | $405 | $4,218 | $2,081 | | Total | $70,933 | $44,121 | $96,185 | $87,401 | [14. Net Loss Per Share](index=24&type=section&id=14.%20Net%20Loss%20Per%20Share) Basic and diluted net loss per share was $(0.43), with 50.1 million potentially dilutive shares excluded as their effect was anti-dilutive Net Loss Per Share Computation (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(42,844) | $(22,903) | | Weighted average common shares outstanding | 99,978 | 87,223 | | Net loss per share, basic and diluted | $(0.43) | $(0.26) | - Potentially dilutive shares totaling **50,145 thousand** (including options, RSUs, warrants, and convertible notes) were excluded from diluted EPS calculation for the three months ended March 31, 2022, as they were anti-dilutive[143](index=143&type=chunk) [15. Income Taxes](index=24&type=section&id=15.%20Income%20Taxes) The effective tax rate was (0.30%), differing significantly from the 21% federal statutory rate due to the company's net loss position and valuation allowance - The effective tax rate was **(0.30%)** for the three months ended March 31, 2022, compared to (0.22%) for the same period in 2021[145](index=145&type=chunk) - The deviation from the **21% federal statutory rate** is primarily due to the company's net loss position and valuation allowance[145](index=145&type=chunk) [16. Related Party Transactions](index=25&type=section&id=16.%20Related%20Party%20Transactions) The company purchased $2.4 million in inventory from Squadron Supplier Affiliate, with $1.7 million due as of March 31, 2022 - The company purchased **$2.4 million** in inventory from Squadron Supplier Affiliate for the three months ended March 31, 2022[146](index=146&type=chunk) - As of March 31, 2022, **$1.7 million** was due to the Squadron Supplier Affiliate for inventory purchases[146](index=146&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue growth driven by new products and sales expansion, alongside increased operating expenses, net loss, and liquidity status [Overview](index=26&type=section&id=Overview) Alphatec Holdings, Inc is a medical technology company focused on advancing spinal disorder treatments through innovation and an expanded sales network - The company is a medical technology firm focused on designing, developing, and advancing technology for spinal disorder treatments, aiming to revolutionize spine surgery through clinical distinction and the Alpha InformatiX™ product platform[149](index=149&type=chunk) - Growth is driven by investing in research and development to differentiate solutions and improve spine surgery, with a focus on introducing market-shifting innovation[150](index=150&type=chunk) - The company markets products through independent distributors and direct sales representatives, aiming to expand its dedicated sales channel to reach new surgeons, hospitals, and national accounts[151](index=151&type=chunk) [Revenue and Expense Components](index=26&type=section&id=Revenue%20and%20Expense%20Components) Revenue is primarily from spinal implants and imaging equipment, while expenses include cost of sales, R&D, SG&A, and other operating costs - Revenue is primarily generated from the sale of spinal surgery implants and medical imaging equipment (EOS full-body and weight-bearing x-ray imaging devices and related services)[152](index=152&type=chunk) - Cost of sales includes direct product costs (raw materials, components, labor, overhead), royalties for licensed technologies, and costs for procuring/processing human tissue for biologics[153](index=153&type=chunk) - Research and development expenses cover design, development, testing, and enhancement of products, including salaries, employee benefits, and fees to external service providers[153](index=153&type=chunk) - Sales, general and administrative expenses include salaries, sales commissions, depreciation of surgical instruments, regulatory affairs, quality assurance, professional service fees, travel, medical education, trade show, marketing, and insurance costs[154](index=154&type=chunk) - Litigation-related expenses are costs incurred for ongoing litigation, primarily with NuVasive, Inc[155](index=155&type=chunk) - Amortization of acquired intangible assets relates to assets obtained through business combinations and asset purchases[155](index=155&type=chunk) - Transaction-related expenses are costs primarily associated with the acquisition and integration of EOS[155](index=155&type=chunk) - Restructuring expenses include severance, social plan benefits, related taxes for cost rationalization, and costs for office/warehouse facility changes[155](index=155&type=chunk) - Total interest and other expense, net, includes interest income/expense, foreign currency gains/losses, and other non-operating gains/losses[155](index=155&type=chunk) - Income tax provision consists of estimated federal, state, and foreign income taxes, adjusted for credits, deductions, uncertain tax positions, and changes in deferred tax assets/liabilities and tax laws[156](index=156&type=chunk) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No material changes have been made to the critical accounting policies and estimates disclosed in the 2021 Annual Report on Form 10-K - No material changes to critical accounting policies and estimates during the three months ended March 31, 2022, as compared to the Annual Report on Form 10-K for the year ended December 31, 2021[158](index=158&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Significant revenue growth from the EOS acquisition and product expansion was offset by substantially higher cost of sales and operating expenses, widening losses [Total Revenue](index=27&type=section&id=Total%20revenue) Total revenue increased 61% to $70.9 million, with the EOS acquisition contributing 38% of the growth and organic expansion driving the remaining 62% Total Revenue (in thousands, except %) | Revenue Category | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Revenue from products and services | $70,918 | $43,716 | $27,202 | 62% | | Revenue from international supply agreement | $15 | $405 | $(390) | (96)% | | Total revenue | $70,933 | $44,121 | $26,812 | 61% | - Revenue from EOS acquisition accounted for approximately **$10.3 million, or 38%**, of the increase in revenue from products and services[159](index=159&type=chunk) - Excluding EOS, revenue from products and services increased by **$16.9 million (62%)**, driven by new product portfolio expansion, increased surgeon user base, and sales network transformation[159](index=159&type=chunk) [Cost of Sales](index=28&type=section&id=Cost%20of%20sales) Cost of sales increased 77% to $21.7 million, with EOS operations contributing 55% of the increase and higher product volume the remainder Cost of Sales (in thousands, except %) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :------------ | :------ | :------ | :--------- | :--------- | | Cost of sales | $21,717 | $12,263 | $9,454 | 77% | - Cost of sales associated with EOS operations accounted for approximately **$5.2 million, or 55%**, of the increase[162](index=162&type=chunk) - Excluding EOS, cost of sales increased by **$4.3 million (45%)**, primarily due to product volume[162](index=162&type=chunk) [Operating Expenses](index=28&type=section&id=Operating%20expenses) Total operating expenses rose 78% to $90.4 million, driven by increases in R&D, SG&A, litigation, and amortization of acquired intangibles Operating Expenses (in thousands, except %) | Expense Category | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Research and development | $9,722 | $5,801 | $3,921 | 68% | | Sales, general and administrative | $69,471 | $40,426 | $29,045 | 72% | | Litigation-related expenses | $7,532 | $3,335 | $4,197 | 126% | | Amortization of acquired intangible assets | $2,230 | $172 | $2,058 | 1,197% | | Transaction-related expenses | $120 | $1,012 | $(892) | (88)% | | Restructuring expenses | $1,370 | $158 | $1,212 | 767% | | Total operating expenses | $90,445 | $50,904 | $39,541 | 78% | - R&D expense increase: **$1.1 million (28%) from EOS**, $2.8 million (72%) from increased personnel for new product portfolio expansion[163](index=163&type=chunk) - SG&A expense increase: **$2.9 million (10%) from EOS**, $26.1 million (90%) from higher compensation, variable selling expenses, and investment in strategic distribution channel and headcount[164](index=164&type=chunk) - **Amortization of acquired intangible assets increased significantly** due to the EOS acquisition[165](index=165&type=chunk) - Restructuring expenses increased due to severance, social plan benefits, and related taxes from cost rationalization efforts[165](index=165&type=chunk) [Total Interest and Other Expense, net](index=29&type=section&id=Total%20interest%20and%20other%20expense,%20net) Total interest and other expense, net, decreased 61% to $(1.5) million due to lower interest rates and non-recurring prior-year expenses Total Interest and Other Expense, net (in thousands, except %) | Expense Category | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | :--------- | | Interest expense, net | $(1,456) | $(1,938) | $482 | (25)% | | Other expense, net | $(30) | $(1,889) | $1,859 | (98)% | | Total interest and other expense, net | $(1,486) | $(3,827) | $2,341 | (61)% | - The decrease in other expense, net, was primarily due to **non-recurring foreign currency losses and debt extinguishment costs** in the prior-year period[167](index=167&type=chunk) - The decrease in interest expense, net, was primarily due to **lower interest rates on the 2026 Notes** compared to the Term Loan repaid in 2021[167](index=167&type=chunk) [Income Tax Provision](index=29&type=section&id=Income%20tax%20provision) The income tax provision increased 330% to $129 thousand, primarily due to the recognition of uncertain tax positions Income Tax Provision (in thousands, except %) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :----------------- | :---- | :--- | :--------- | :--------- | | Income tax provision | $129 | $30 | $99 | 330% | - The increase in income tax provision was primarily related to the recognition of **uncertain tax positions**[168](index=168&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents decreased to $151.8 million, with cash used in operating and investing activities partially offset by financing activities - Cash and cash equivalents were **$151.8 million** at March 31, 2022, down from $187.2 million at December 31, 2021[170](index=170&type=chunk) - Cash used in operating activities (**$24.7 million**) was primarily related to business expansion costs and inventory purchases[172](index=172&type=chunk) - Cash used in investing activities (**$13.4 million**) was primarily for the purchase of surgical instruments to support new product launches and business growth[173](index=173&type=chunk) - Cash provided by financing activities (**$2.7 million**) was from proceeds from financed insurance and warrant exercises[174](index=174&type=chunk) - As of March 31, 2022, the company had **$316.3 million outstanding under the 2026 Notes**, $13.9 million in OCEANE convertible bonds, and $5.2 million in other debts assumed from EOS[175](index=175&type=chunk)[176](index=176&type=chunk) - A remaining outstanding balance of **$7.7 million** in Orthotec settlement payments is due[176](index=176&type=chunk) - The company has a **$32.4 million inventory purchase commitment** through December 2026, assumed from EOS[176](index=176&type=chunk) Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Operating activities | $(24,712) | $(18,604) | | Investing activities | $(13,407) | $(25,994) | | Financing activities | $2,697 | $130,776 | | Net (decrease) increase in cash and cash equivalents | $(35,436) | $83,372 | [Off-Balance Sheet Arrangements](index=30&type=section&id=Off-Balance%20Sheet%20Arrangements) The company does not have any off-balance sheet arrangements - The company does not have any off-balance sheet arrangements[179](index=179&type=chunk) [Recent Accounting Pronouncements](index=31&type=section&id=Recent%20Accounting%20Pronouncements) No new material accounting pronouncements or changes occurred during the quarter beyond those disclosed in Note 2 - No new material accounting pronouncements or changes during the three months ended March 31, 2022, other than those disclosed in Note 2[180](index=180&type=chunk) [Forward Looking Statements](index=31&type=section&id=Forward%20Looking%20Statements) This section provides a cautionary statement regarding forward-looking statements, which involve risks that could cause actual results to differ materially - Forward-looking statements cover estimates regarding operating losses, future revenue, expenses, capital requirements, liquidity, profitability, and the potential need for additional funding[181](index=181&type=chunk) - Other topics include the ability to maintain effective disclosure controls, meet commitments, comply with regulatory requirements, market and commercialize products, enhance product offerings, maintain a global sales network, attract and retain personnel, enter into and integrate business combinations, and the impact of global economic/political conditions[181](index=181&type=chunk) - Actual future results may vary materially from expected results due to inaccurate assumptions and known or unknown risks and uncertainties, as detailed in the company's Annual Report on Form 10-K[182](index=182&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No significant changes to market risk disclosures have occurred since the 2021 Annual Report on Form 10-K - No significant changes to market risk disclosures from the Annual Report on Form 10-K for the year ended December 31, 2021[185](index=185&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting during the quarter [Disclosure Controls and Procedures](index=32&type=section&id=Disclosure%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022 - As of March 31, 2022, the company's disclosure controls and procedures were deemed **effective** by management[186](index=186&type=chunk) [Changes in Internal Control over Financial Reporting](index=32&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes to internal controls occurred, though the acquired EOS entity was excluded from the Q1 2022 evaluation - The company is implementing a new ERP system to improve financial and business transaction processes[187](index=187&type=chunk) - **No material changes** to internal control over financial reporting occurred during the three months ended March 31, 2022[187](index=187&type=chunk) - Internal control over financial reporting for the acquired EOS and its subsidiaries was **excluded from the evaluation of effectiveness** for the period, in accordance with SEC guidance for recent business combinations[188](index=188&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings whose outcomes are unpredictable and could materially affect future financial results - Litigation is inherently unpredictable, and an unfavorable resolution could **materially affect** the company's future consolidated results of operations, cash flows, or financial position[192](index=192&type=chunk) - Further information regarding legal proceedings, including the NuVasive, Inc litigation, is detailed in Note 10 to the Condensed Consolidated Financial Statements[193](index=193&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) High inflation and workforce shortages are noted as new risk factors that may increase operating costs and adversely impact the business - No material changes to risk factors from the Annual Report on Form 10-K, except for the impact of **historically high inflation and an acute workforce shortage**[193](index=193&type=chunk) - Increased inflation and a hyper-competitive wage environment due to workforce shortages are likely to affect expenses and may **adversely impact** the company's business, financial condition, or results of operations[193](index=193&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued unregistered restricted shares to a consultant and independent distributors for services, relying on the Section 4(a)(2) exemption - On February 1, 2022, **50,000 restricted shares** (fair value $10.33/share) were issued to a consultant for services[194](index=194&type=chunk) - On January 20, February 22, and March 17, 2022, **10,000 restricted shares each** (fair values $10.61, $9.59, $10.94 respectively) were issued to an independent distributor[194](index=194&type=chunk) - On January 5 and March 23, 2022, **10,000 restricted shares each** (fair values $11.65, $10.45 respectively) were issued to another independent distributor[195](index=195&type=chunk) - These issuances were made in reliance on the exemption from registration provided by **Section 4(a)(2)** of the Securities Act of 1933[195](index=195&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) There is no other information to report in this section [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including officer certifications and XBRL formatted financial statements - Exhibits include certifications of principal executive and financial officers (31.1, 31.2, 32) and financial statements formatted in iXBRL (101, 104)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) [SIGNATURES](index=35&type=section&id=SIGNATURES) The report is duly signed by the Chairman/CEO and EVP/CFO on behalf of Alphatec Holdings, Inc as of May 5, 2022 - The report is signed by **Patrick S. Miles**, Chairman and Chief Executive Officer, and **J. Todd Koning**, Executive Vice President and Chief Financial Officer[202](index=202&type=chunk) - The signing date for the report is **May 5, 2022**[202](index=202&type=chunk)

INFORMED BY EOS Q4 & FY 2021 FINANCIAL RESULTS PAT MILES, CHAIRMAN & CEO | TODD KONING, EVP & CFO MARCH 1, 2021 ITM FORWARD LOOKING STATEMENTS This deck 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-loo ...

Alphatec Holdings, Inc. (NASDAQ:ATEC) Q4 2021 Results Conference Call March 1, 2022 4:30 PM ET Company Participants Pat Mile - CEO & President Todd Koning - CFO Conference Call Participants Brooks O'Neil - Lake Street Capital Matthew O'Brien - Piper Sandler Joshua Jennings - Cowen Mathew Blackman - Stifel Kyle Rose - Canaccord David Saxon - Needham Phil Coover - Goldman Sachs Jason Wittes - Loop Capital Sean Lee - H.C. Wainwright Operator Good afternoon, everyone, and welcome to the webcast of ATEC's Fourth ...

Alphatec Holdings, Inc. (NASDAQ:ATEC) Q3 2021 Earnings Conference Call November 4, 2021 4:30 PM ET Company Participants Patrick Miles - Executive Chairman, CEO & President Todd Koning - CFO Conference Call Participants Brooks O'Neil - Lake Street Capital Markets Mathew Blackman - Stifel, Nicolaus & Company David Saxon - Needham & Company Matthew O'Brien - Piper Sandler & Co. Joshua Jennings - Cowen and Company Jason Wittes - Loop Capital Markets Kyle Rose - Canaccord Genuity Operator Good afternoon, everyon ...

Alphatec Holdings, Inc. (NASDAQ:ATEC) Q2 2021 Earnings Conference Call August 3, 2021 4:30 PM ET Company Participants Patrick Miles - Executive Chairman, CEO & President Todd Koning - CFO Conference Call Participants Brooks O'Neil - Lake Street Capital Markets Kyle Rose - Canaccord Genuity Joshua Jennings - Cowen and Company Matthew O'Brien - Piper Sandler & Co. Jason Wittes - Northland Capital Markets Sean Lee - H.C. Wainwright & Co. Operator Good afternoon, everyone, and welcome to the webcast of ATEC's S ...

PART I – FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Alphatec Holdings, Inc. as of June 30, 2021, and for the three and six-month periods then ended [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a significant increase in total assets to $441.0 million as of June 30, 2021, from $261.2 million at December 31, 2020 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $76,581 | $107,765 | | Inventories, net | $86,715 | $46,001 | | Total current assets | $206,359 | $184,160 | | Goodwill | $45,189 | $13,897 | | Intangible assets, net | $92,981 | $24,720 | | **Total assets** | **$441,027** | **$261,223** | | **Liabilities & Equity** | | | | Total current liabilities | $107,565 | $58,312 | | Long-term debt | $55,789 | $37,999 | | **Total liabilities** | **$203,910** | **$107,740** | | **Total stockholders' equity** | **$213,514** | **$129,880** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the second quarter of 2021, total revenue more than doubled to $62.2 million from $29.6 million in Q2 2020 Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $62,249 | $29,629 | $106,370 | $59,744 | | Gross profit | $41,065 | $20,842 | $72,923 | $41,873 | | Operating loss | ($35,752) | ($11,158) | ($54,798) | ($28,966) | | Net loss | ($38,205) | ($15,805) | ($61,108) | ($36,527) | | Net loss per share | ($0.39) | ($0.25) | ($0.66) | ($0.58) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash used in operating activities was $35.1 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($35,110) | ($30,145) | | Net cash used in investing activities | ($124,847) | ($6,978) | | Net cash provided by financing activities | $128,769 | $21,098 | | **Net decrease in cash** | **($31,184)** | **($15,950)** | | Cash at beginning of period | $107,765 | $47,113 | | **Cash at end of period** | **$76,581** | **$31,163** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information supporting the financial statements, including the EOS acquisition, revenue recognition, debt structure, and legal proceedings - The company is a medical technology firm focused on designing, developing, and marketing technology for treating spinal disorders[35](index=35&type=chunk) - On May 13, 2021, the company acquired a controlling interest in EOS imaging S.A. ("EOS"), a global medical device company specializing in low dose 2D/3D imaging and surgical planning, which now operates as a wholly owned subsidiary[37](index=37&type=chunk) - The company early adopted ASU 2020-06 on January 1, 2021, which simplifies accounting for convertible instruments, with no material impact on the financial statements[57](index=57&type=chunk) - In July 2021, subsequent to the reporting period, the company received confirmation from the SBA that its entire **$4.3 million PPP Loan was forgiven**[157](index=157&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a 110% revenue increase in Q2 2021 driven by the EOS acquisition and organic growth from new products and an expanded sales network [Overview](index=28&type=section&id=Overview) The company is a medical technology firm focused on advancing technology for the surgical treatment of spinal disorders - The company's vision is to revolutionize spine surgery through clinical distinction and become the standard bearer in the field[160](index=160&type=chunk) - Growth is driven by introducing market-shifting innovation and expanding the sales network with high-quality exclusive and dedicated distributors[161](index=161&type=chunk)[162](index=162&type=chunk) [Recent Developments](index=28&type=section&id=Recent%20Developments) Key recent developments include the acquisition of EOS imaging S.A. on May 13, 2021, and the ongoing navigation of COVID-19 pandemic impacts on sales - Acquired EOS imaging S.A. on May 13, 2021, to integrate its low dose 2D/3D imaging and surgical planning technology into the company's procedural approach to spine surgery[163](index=163&type=chunk) - The COVID-19 pandemic has caused volatility in sales trends due to its impact on elective surgeries, with demand recovering as local conditions improve[164](index=164&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) For Q2 2021, total revenue grew 110% year-over-year to $62.2 million, with the EOS acquisition contributing 21% and organic product volume growth contributing 89% Comparison of Operating Results (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | % Change | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total revenue | $62,249 | $29,629 | 110% | $106,370 | $59,744 | 78% | | Gross profit | $41,065 | $20,842 | 97% | $72,923 | $41,873 | 74% | | Total operating expenses | $76,817 | $32,000 | 140% | $127,721 | $70,839 | 80% | | Operating loss | ($35,752) | ($11,158) | 220% | ($54,798) | ($28,966) | 89% | | Net loss | ($38,205) | ($15,805) | 142% | ($61,108) | ($36,527) | 67% | - Revenue growth was primarily driven by the expansion of the new product portfolio, an increased surgeon user base, and the transformation of the sales network, supplemented by revenue from the EOS acquisition[176](index=176&type=chunk) - The increase in Sales, General and Administrative expenses was primarily due to higher compensation-related costs, variable selling expenses tied to revenue growth, and continued investment in the strategic distribution channel and sales and marketing functions[181](index=181&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash position decreased by $31.2 million to $76.6 million as of June 30, 2021, primarily due to cash used for the EOS acquisition, partially offset by $131.8 million in net proceeds from a private placement - Cash decreased from **$107.8 million** at year-end 2020 to **$76.6 million** at June 30, 2021[185](index=185&type=chunk) - The primary use of cash was the acquisition of EOS, offset by **$131.8 million** in net proceeds from a private placement in March 2021[185](index=185&type=chunk) - The company has an **$85.0 million** Term Loan with Squadron Medical, with **$45.0 million** outstanding and **$40.0 million** available as of June 30, 2021[186](index=186&type=chunk)[187](index=187&type=chunk) - The **$4.3 million PPP Loan** was fully forgiven by the SBA in July 2021[188](index=188&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk from its $49.3 million in floating-rate debt, where a 100-basis point increase would decrease pre-tax income by approximately $0.5 million annually - The company has **$49.3 million** in outstanding floating-rate debt. A **100-basis point increase** in interest rates would decrease pre-tax income and cash flow by about **$0.5 million annually**[206](index=206&type=chunk) - The company is exposed to commodity price risk for materials like titanium and stainless steel, but a **10% price change** is not expected to have a material impact on operations[207](index=207&type=chunk) - The planned discontinuation of LIBOR after 2021 poses a risk, as it could lead to interest rate increases on the company's funding arrangements[214](index=214&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[208](index=208&type=chunk) - There were no material changes to internal control over financial reporting in the second quarter of 2021[209](index=209&type=chunk) - Due to the timing of the acquisition, the internal controls of EOS were excluded from the evaluation of effectiveness for this reporting period[209](index=209&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, most notably ongoing litigation with NuVasive, Inc., with no material accruals recorded as a loss is not considered probable - The company is involved in various legal proceedings arising from its business activities, with litigation being inherently unpredictable[210](index=210&type=chunk) - The company has not recorded a contingent liability for the ongoing litigation with NuVasive, Inc., as a loss is considered possible but not probable, and a range of potential charges cannot be reasonably estimated[118](index=118&type=chunk)[211](index=211&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) The company highlights new material risks following the EOS acquisition, including integration challenges, global operational risks, and potential interest rate increases due to LIBOR discontinuation - Significant management attention and resources will be required to integrate the business practices and operations of EOS, with transaction and restructuring costs potentially reducing near-term synergies[212](index=212&type=chunk) - Global operations are subject to risks including currency fluctuations, political or economic instability, trade restrictions, and compliance with regulations like the U.S. Foreign Corrupt Practices Act[213](index=213&type=chunk) - The planned discontinuation of the LIBOR benchmark rate after 2021 could result in interest rate increases on the company's funding arrangements, adversely affecting cash flows[214](index=214&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer and financial statements in iXBRL format - Lists filed exhibits, including certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) - Includes the financial statements and notes formatted in iXBRL (Inline eXtensible Business Reporting Language)[221](index=221&type=chunk)