CARLSBAD, Calif., Aug. 6, 2013 (GLOBE NEWSWIRE) — Alphatec Holdings, Inc. (Nasdaq:ATEC), the parent company of Alphatec Spine, Inc., announced today financial results for the second quarter of fiscal year 2013, ended June 30, 2013.
“Our second quarter 2013 results reflect another strong revenue quarter for Alphatec Spine. With the first six months of 2013 completed and revenue of approximately $101.5 million, we are on track to achieve our 2013 revenue guidance,” said Les Cross, Chairman and CEO of Alphatec Spine.
“Our international business was particularly strong with solid growth in each of Europe, Asia/Pacific, Latin America, the Middle East/Africa and Japan, despite significant currency headwinds from the Japanese Yen. Excluding the impact of foreign currency conversion, international revenue was a new
record for the Company. We look forward to receiving key product registration approvals for Alphatec-branded products in Brazil, China and certain Asia Pacific geographies in the second half of this year. Our international business represented over 36% of total revenues in the second quarter.
“Essentially flat year-over-year growth in our U.S. business reflects the full-quarter loss of our biologic product, PureGen, ongoing pricing pressures, which remain a mid-single digit headwind in the U.S., and a planned reduction in business with certain physician-owned stocking distributors. Combined, these three impacts offset strong implant unit sales growth in our core U.S. hospital channel for Alphatec products. As we look to the second half of 2013, we anticipate full-market launches of two new interbody devices, Alphatec Solus, which is used in anterior lumbar fusion procedures, and Pegasus, which is used in anterior cervical fusion procedures. We are also pleased with the performance of our minimally invasive surgery products, including our ILLICO Multi-Level System, which is designed to be used in longer lumbar constructs.
“On the operations side of our business, we continue to progress with our lean-practice implementation to streamline processes that should drive further cost reductions in our manufacturing, supply chain and inventory syste ms.
“Finally, I would like to thank all Alphatec Spine employees who continue to work hard to make Alphatec Spine a world class company.”
Second Quarter 2013 Financial Results
Consolidated net revenues for the second quarter of 2013 were $51.0 million, representing growth of approximately 5.8 percent compared to $48.2 million reported for the second quarter of 2012. Excluding the effect of foreign currency conversion, net revenues increased 8.8 percent during the quarter.U.S. net revenues for the second quarter of 2013 were $32.5 million, a reduction of 1.2 percent, compared to $32.9 million reported for U.S. net revenues in the second quarter of 2012.
International net revenues for the second quarter of 2013 were $18.5 million, representing growth of 20.7 percent compared to $15.3 million reported for the second quarter of 2012. Excluding the effect of foreign currency conversion, international net revenues increased 30.2 percent.
Gross profit and gross margin for the second quarter of 2013 were $32.1 million and 62.9 percent, respectively, compared to $30.2 million and 62.6 percent, respectively, for the second quarter of 2012. Gross margin in the second quarter of 2013 was negatively impacted by regional revenue mix of a larger percentage of sales from lower-margin international revenues and from ongoing pricing pressures in the U.S. spine market. Additionally, gross margin in the second quarter of 2013 was impacted by the Cross Medical settlement, which continues to reduce quarterly gross profit by approximately $1.0 million per quarter for the amortization of a licensed intangible asset. This represents approximately 200 basis points of margin in each of the first and second quarters of 2013.
Total operating expenses for the second quarter of 2013 were $35.0 million, or 68.6 percent of revenues, reflecting an increase of approximately $1.0 million, compared to the second quarter of 2012. Operating expenses for the second quarter of 2013 included higher R&D expenses, legal expenses associated with current litigation matters, and higher amortization and non-recurring expenses related to the Phygen acquisition.
GAAP Net loss for the second quarter of 2013 was $4.7 million or ($0.05) per share (basic and diluted), compared to a net loss of $6.4 million, or ($0.07) per share (basic and diluted) for the second quarter of 2012.
Adjusted EBITDA in the second quarter of 2013 was $4.9 million, or 9.6 percent of revenues, compared to $2.7 million, or 5.7 percent of revenues reported for the second quarter of 2012. Adjusted EBITDA represents net income or loss excluding the effects of interest, taxes, depreciation, amortization, stock-based compensation, and other non-recurring items, such as restructuring expenses, IPR&D and transaction-related expenses.
Cash and cash equivalents were $12.9 million at June 30, 2013, compared to $22.2 million reported at December 31, 2012 and has been driven by cash payments for the Phygen acquisition and ongoing quarterly payments to Cross Medical.
2013 Financial Guidance
The Company continues to expect revenue for 2013 to be in a range between $204 million and $210 million on a constant currency basis, or approximately 4% to 7% growth over 2012. The significant devaluation of the Japanese Yen impacted Alphatec Spine’s second quarter revenue by over $1.6 million, and with the expectation that the Japanese Yen’s exchange rate will not substantially improve in 2013, the aggregate revenue impact to the second half of 2013 could potentially be as high as $3 million. The Company expects adjusted EBITDA for 2013 to be in a range of $24 million to $27 million, or approximately 21% to 36% growth over 2012, representing approximately 12% and 13% of expected revenue. As previously stated, this guidance assumes only modest contributions for PureGen, all of which were realized in the first quarter of 2013.
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