Alphatec Holdings Inc
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
ATEC$7.44-4.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0000950170-24-054691
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0000950170-24-088670
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 82 previous paragraphs and 83 current paragraphs.
64 unchanged; 17 reworded; 2 added; 1 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
Transaction-related expenses. Transaction-related expense decreased $1.9 million, or 100%, and $2.0 million, or 106%, during the three and six months ended June 30, 2024, respectively, compared to the same period in 2023. The decrease in transaction-related expenses is due to the Valence acquisition in April 2023.
Current report
Other income, net, decreased $2.2 million, or 93%, and $2.8 million, or 91%, during the three and six months ended June 30, 2024, respectively, compared to the same period in 2023. The change in other income, net, was primarily due to an employee retention credit received during the three months ended June 30, 2023.
Removed paragraphs (1)
Previous report
Transaction-related expenses. The decrease in transaction-related expenses for the three months ended March 31, 2024, is primarily due to the release of certain accruals for third-party professional service costs associated with the Valence acquisition.
Reworded paragraphs (17)
Previous wording
Revenue from products and services increased $29.4 million, or 27%, during the three months ended March 31, 2024, compared to the same period in 2023. The increase was primarily due to an increase in product volume that was due to the increase in our surgeon user base, continued expansion of our new product portfolio, and increasing adoption of our technology.
Current wording
Revenue from products and services increased $28.6 million, or 25%, and $58.0 million, or 26%, during the three and six months ended June 30, 2024, respectively, compared to the same period in 2023. The increase was primarily due to an increase in product volume that was due to the increase in our surgeon user base, continued expansion of our new product portfolio, and increasing adoption of our technology.
Previous wording
Cost of sales increased $2.4 million, or 6%, for the three months ended March 31, 2024, compared to the same period in 2023. The increase was primarily due to an increase in product volume offset by a decrease in stock-based compensation. We have entered into Development Service Agreements for the development of a wide variety of potential products and intellectual property. Under these agreements, future royalty payments for product and/or intellectual property rights may be paid in either cash or restricted shares of our common stock at the election of the developer, depending on the terms of the agreement. Certain of these agreements were amended to remove the cash royalty option and require settlement in restricted shares of our common stock. During the three months ended March 31, 2023, the vesting conditions of certain of these amended awards were deemed probable. There were no such vesting conditions met during the three months ended March 31, 2024 resulting in a decrease in stock-based compensation for the period.
Current wording
Cost of sales decreased $9.4 million, or 18%, and $7.0 million, or 8%, for the three and six months ended June 30, 2024, respectively, compared to the same period in 2023. The decrease was primarily due to a decrease in stock-based compensation offset by an increase in product volume. We have entered into Development Service Agreements for the development of a wide variety of potential products and intellectual property. Under these agreements, future royalty payments for product and/or intellectual property rights may be paid in either cash or restricted shares of our common stock at the election of the developer, depending on the terms of the agreement. Certain of these agreements were amended to remove the cash royalty option and require settlement in restricted shares of our common stock. During the three and six months ended June 30, 2023, the vesting conditions of certain of these amended awards were deemed probable. There were no such vesting conditions met during the three and six months ended June 30, 2024 resulting in a decrease in stock-based compensation for the period.
Previous wording
Research and development expenses. Research and development expenses increased $4.8 million, or 36%, for the three months ended March 31, 2024, compared to the same period in 2023. The increase was primarily due to an increase in personnel to support the expansion of our new product portfolio and an increase in stock-based compensation associated with Development Service Agreements described above.
Current wording
Research and development expenses. Research and development expenses increased $4.5 million, or 31%, and $9.3 million, or 33%, for the three and six months ended June 30, 2024, respectively, compared to the same period in 2023. The increase was primarily due to an increase in personnel to support the expansion of our new product portfolio.
Previous wording
Sales, general and administrative expenses. Sales, general and administrative expenses increased $22.5 million, or 25%, during the three months ended March 31, 2024, compared to the same period in 2023. The increase was primarily due to higher compensation-related costs and variable selling expenses associated with the increase in revenue, and our continued investment in building our strategic distribution channel. Additionally, we continued to increase our investment in our sales and marketing functions by increasing headcount to support the growth of our business, as well as necessary administrative support.
Current wording
Sales, general and administrative expenses. Sales, general and administrative expenses increased $25.4 million, or 29%, and $47.9 million, or 27%, during the three and six months ended June 30, 2024, respectively, compared to the same period in 2023. The increase was primarily due to higher compensation-related costs and variable selling expenses associated with the increase in revenue, and our continued investment in building our strategic distribution channel. Additionally, we continued to increase our investment in our sales and marketing functions by increasing headcount to support the growth of our business, as well as necessary administrative support.
Previous wording
Litigation-related expenses. Litigation expenses increased $1.2 million, or 39%, for the three months ended March 31, 2024, compared to the same period in 2023. The increase was primarily related to legal fees associated with ongoing litigation matters.
Current wording
Litigation-related expenses. Litigation expenses decreased $4.8 million, or 70%, and $3.6 million, or 35%, for the three and six months ended June 30, 2024, respectively, compared to the same period in 2023. The decrease was primarily related to settled litigation matters.
Previous wording
Amortization of acquired intangible assets. The increase in amortization of acquired intangible assets is primarily due to amortization of intangible assets acquired in the acquisition of the navigation-enabled robotics platform ("Valence") in April 2023.
Current wording
Amortization of acquired intangible assets. Amortization expense increased $1.1 million, or 17%, during the six months ended June 30, 2024, compared to the same period in 2023. The increase in amortization of acquired intangible assets is primarily due to amortization of intangible assets acquired in the acquisition of the navigation-enabled robotics platform ("Valence") in April 2023.
Previous wording
Restructuring expenses. The increase in restructuring expenses for the three months ended March 31, 2024 is primarily due to costs associated with the relocation of office facilities in Paris, France.
Current wording
Restructuring expenses. The increase in restructuring expenses for the three and six months ended June 30, 2024 is primarily due to costs associated with the relocation of office facilities in Paris, France.
Previous wording
The increase in interest expense, net for the three months ended March 31, 2024, compared to the same period in 2023, was primarily due to higher interest rates related to our Revolving Credit Facility and Braidwell Term Loan. The change in other income, net, compared to the same period in 2023, was primarily due to an employee retention credit received during the three months ended March 31, 2023.
Current wording
Interest expense, net, increased $1.9 million, or 49%, and $3.4 million, or 44%, during the three and six months ended June 30, 2024, respectively, compared to the same period in 2023. The increase in interest expense, net, was primarily due to drawing an additional $50.0 million on the Braidwell Term Loan in September 2023 and higher interest rates related to our Revolving Credit Facility and Braidwell Term Loan.
Previous wording
The change in the income tax provision for the three months ended March 31, 2024, compared to the same period in 2023, was primarily related to the recognition of income taxes in several jurisdictions.
Current wording
The change in the income tax provision for the three and six months ended June 30, 2024, respectively, compared to the same period in 2023, was primarily related to the recognition of income tax benefits in several jurisdictions.
Previous wording
Cash and cash equivalents were $144.1 million and $221.0 million at March 31, 2024, and December 31, 2023, respectively. We believe that our existing funds, cash generated from our operations and our existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure and debt service requirements, and other business initiatives we plan to strategically pursue.
Current wording
Cash and cash equivalents were $99.8 million and $221.0 million at June 30, 2024, and December 31, 2023, respectively. We believe that our existing funds, cash generated from our operations and our existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure and debt service requirements, and other business initiatives we plan to strategically pursue.
Previous wording
We used cash of $38.4 million from operating activities for the three months ended March 31, 2024, which is primarily related to inventory purchases to support the commercial launch of new products and the growth of our business, offset by the timing of cash payments and receipts.
Current wording
We used cash of $49.8 million from operating activities for the six months ended June 30, 2024, which is primarily related to inventory purchases to support the growth of our business and commercial launch of new products, offset by the timing of cash payments and receipts.
Previous wording
We used cash of $33.6 million in investing activities for the three months ended March 31, 2024, which is primarily related to the purchase of surgical instruments to support the commercial launch of new products and the growth of our business.
Current wording
We used cash of $69.5 million in investing activities for the six months ended June 30, 2024, which is primarily related to the purchase of surgical instruments to support the growth of our business and commercial launch of new products.
Previous wording
We used cash of $4.4 million in financing activities for the three months ended March 31, 2024, which is primarily related to cash paid for net tax withholdings associated with common stock exercises.
Current wording
We used cash of $1.1 million in financing activities for the six months ended June 30, 2024, which is primarily related to cash paid for net tax withholdings associated with employee stock awards offset by net draws on our revolving line of credit.
Previous wording
As of March 31, 2024, we had $50.0 million outstanding under the Revolving Credit Facility. The outstanding loans under the Revolving Credit Facility bear interest at the sum of Term SOFR plus 3.5% per annum. The Revolving Credit Facility matures on the earlier of September 29, 2027, or 90 days prior to the final maturity date of any of our 2026 Notes.
Current wording
As of June 30, 2024, we had $54.9 million outstanding under the Revolving Credit Facility. The outstanding loans under the Revolving Credit Facility bear interest at the sum of Term SOFR plus 3.5% per annum. The Revolving Credit Facility matures on the earlier of September 29, 2027, or 90 days prior to the final maturity date of any of our 2026 Notes.
Previous wording
As of March 31, 2024, we had $4.2 million in other debts that are due in monthly and quarterly installments through maturity in 2027.
Current wording
As of June 30, 2024, we had $4.0 million in other debts that are due in monthly and quarterly installments through maturity in 2027.
Previous wording
We have an inventory purchase commitment agreement with a third-party supplier, where we are obligated to meet certain minimum purchase commitment requirements through December 2026. As of March 31, 2024, the remaining minimum purchase commitment under the agreement was $12.5 million.
Current wording
We have an inventory purchase commitment agreement with a third-party supplier, where we are obligated to meet certain minimum purchase commitment requirements through December 2026. As of June 30, 2024, the remaining minimum purchase commitment under the agreement was $9.8 million.
Previous wording
Aside from the changes disclosed in Note 1 to the Notes to Condensed Consolidated Financial Statements (Unaudited) under the heading “Recently Issued Accounting Pronouncements,” if any, there have been no new accounting pronouncements or changes to accounting pronouncements during the three months ended March 31, 2024, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2023, that was filed with the SEC.
Current wording
Aside from the changes disclosed in Note 1 to the Notes to Condensed Consolidated Financial Statements (Unaudited) under the heading “Recently Issued Accounting Pronouncements,” if any, there have been no new accounting pronouncements or changes to accounting pronouncements during the six months ended June 30, 2024, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2023, that was filed with the SEC.