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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-2463898
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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o
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Accelerated filer
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x
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Non-accelerated filer
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o
(Do not check if a small reporting company)
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Smaller reporting company
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o
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Page
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Item 1.
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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Item 1.
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Financial Statements
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September 30,
2015 |
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December 31,
2014 |
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Assets
|
|
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|
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Current assets:
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|
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|
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Cash
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$
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10,502
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|
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$
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19,735
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Restricted cash
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3,450
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|
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4,400
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Accounts receivable, net
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36,252
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|
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40,440
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Inventories, net
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42,328
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|
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41,747
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Prepaid expenses and other current assets
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5,225
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|
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5,466
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Deferred income tax assets
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2,518
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1,324
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Total current assets
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100,275
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|
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113,112
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Property and equipment, net
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23,720
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26,040
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Goodwill
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—
|
|
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171,333
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|
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Intangibles, net
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22,943
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|
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30,259
|
|
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Other assets
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1,446
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|
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4,179
|
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Total assets
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$
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148,384
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$
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344,923
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Liabilities and Stockholders’ (Deficit) Equity
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Current liabilities:
|
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|
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Accounts payable
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$
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10,827
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$
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10,130
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Accrued expenses
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27,216
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|
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35,393
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Deferred revenue
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831
|
|
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1,300
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Common stock warrant liabilities
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687
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|
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8,702
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Current portion of long-term debt
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59,018
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8,076
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Total current liabilities
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98,579
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63,601
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Long-term debt, less current portion
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20,919
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74,597
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Other long-term liabilities
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29,814
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32,220
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Deferred income tax liabilities
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1,623
|
|
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1,948
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|
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Redeemable preferred stock, $0.0001 par value; 20,000 authorized at September 30, 2015 and December 31, 2014; 3,319 shares issued and outstanding at both September 30, 2015 and December 31, 2014
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23,603
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|
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23,603
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Stockholders’ (deficit) equity:
|
|
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|
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Common stock, $0.0001 par value; 200,000 authorized at September 30, 2015 and December 31, 2014; 100,144 and 99,856 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively
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10
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10
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Treasury stock, at cost, 19 shares, at both September 30, 2015 and December 31, 2014
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(97
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)
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(97
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)
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Additional paid-in capital
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416,620
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|
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413,921
|
|
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Shareholder note receivable
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(5,000
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)
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(5,000
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)
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Accumulated other comprehensive loss
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(20,350
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)
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(11,316
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)
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Accumulated deficit
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(417,337
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)
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(248,564
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)
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Total stockholders’ (deficit) equity
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(26,154
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)
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148,954
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Total liabilities and stockholders’ (deficit) equity
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$
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148,384
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$
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344,923
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Three Months Ended
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Nine Months Ended
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||||||||||||
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September 30,
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September 30,
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||||||||||||
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2015
|
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2014
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2015
|
|
2014
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||||||||
Revenues
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$
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42,996
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|
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$
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51,013
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$
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138,276
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$
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153,353
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Cost of revenues
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14,154
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14,272
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|
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48,234
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|
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46,305
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|
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Amortization of acquired intangible assets
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363
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435
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1,093
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1,328
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Gross profit
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28,479
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36,306
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88,949
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105,720
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Operating expenses:
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Research and development
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1,898
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4,423
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9,661
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13,138
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In-process research and development
|
274
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527
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274
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527
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Sales and marketing
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17,134
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18,649
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51,973
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|
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56,545
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General and administrative
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8,094
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10,213
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26,473
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|
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33,676
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|
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Amortization of acquired intangible assets
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521
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742
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1,867
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2,257
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|
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Goodwill and intangible impairment
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165,171
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—
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165,171
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—
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Restructuring expenses
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335
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20
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163
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|
706
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Total operating expenses
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193,427
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34,574
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255,582
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106,849
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Operating income (loss)
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(164,948
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)
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1,732
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(166,633
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)
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(1,129
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)
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Other income (expense):
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Interest income
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18
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2
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37
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|
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8
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|
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Interest expense
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(3,110
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)
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(3,875
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)
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(9,521
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)
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(9,310
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)
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Other income (expense), net
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6,058
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(928
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)
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6,782
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(1,230
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)
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Total other income (expense)
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2,966
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(4,801
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)
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(2,702
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)
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(10,532
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)
|
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Pretax net loss
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(161,982
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)
|
|
(3,069
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)
|
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(169,335
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)
|
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(11,661
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)
|
||||
Income tax (benefit) provision
|
(1,717
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)
|
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(28
|
)
|
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(562
|
)
|
|
948
|
|
||||
Net loss
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$
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(160,265
|
)
|
|
$
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(3,041
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)
|
|
$
|
(168,773
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)
|
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$
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(12,609
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)
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|
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||||||||
Net loss per basic share
|
$
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(1.61
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)
|
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$
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(0.03
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)
|
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$
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(1.70
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)
|
|
$
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(0.13
|
)
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Net loss per diluted share
|
$
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(1.61
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)
|
|
$
|
(0.04
|
)
|
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$
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(1.70
|
)
|
|
$
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(0.13
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)
|
|
|
|
|
|
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||||||||
Shares used in calculating basic net loss per share
|
99,376
|
|
|
97,391
|
|
|
99,258
|
|
|
97,040
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|
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Shares used in calculating diluted net loss per share
|
99,376
|
|
|
98,329
|
|
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99,258
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|
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97,258
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Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net loss
|
$
|
(160,265
|
)
|
|
$
|
(3,041
|
)
|
|
$
|
(168,773
|
)
|
|
$
|
(12,609
|
)
|
Foreign currency translation adjustments
|
624
|
|
|
(9,093
|
)
|
|
(9,034
|
)
|
|
(9,815
|
)
|
||||
Comprehensive loss
|
$
|
(159,641
|
)
|
|
$
|
(12,134
|
)
|
|
$
|
(177,807
|
)
|
|
$
|
(22,424
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2015
|
|
2014
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(168,773
|
)
|
|
$
|
(12,609
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
14,099
|
|
|
14,006
|
|
||
Stock-based compensation
|
2,440
|
|
|
3,641
|
|
||
Interest expense related to amortization of debt discount and debt issuance costs
|
3,630
|
|
|
4,354
|
|
||
Goodwill and intangible impairment
|
165,171
|
|
|
—
|
|
||
Provision for doubtful accounts
|
465
|
|
|
443
|
|
||
Provision for excess and obsolete inventory
|
1,529
|
|
|
2,553
|
|
||
Deferred income tax expense
|
(1,320
|
)
|
|
338
|
|
||
Non-cash in-process research and development expenses
|
98
|
|
|
102
|
|
||
Other non-cash items
|
(4,983
|
)
|
|
2,655
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Restricted cash
|
3,300
|
|
|
(2,001
|
)
|
||
Accounts receivable
|
3,475
|
|
|
373
|
|
||
Inventories
|
(2,202
|
)
|
|
(3,134
|
)
|
||
Prepaid expenses and other current assets
|
1,871
|
|
|
4,143
|
|
||
Other assets
|
15
|
|
|
(202
|
)
|
||
Accounts payable
|
(277
|
)
|
|
(261
|
)
|
||
Accrued expenses and other
|
(12,644
|
)
|
|
(34,684
|
)
|
||
Deferred revenues
|
(328
|
)
|
|
(1
|
)
|
||
Net cash provided by (used in) operating activities
|
5,566
|
|
|
(20,284
|
)
|
||
Investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(8,738
|
)
|
|
(7,751
|
)
|
||
Cash received from sale of assets
|
—
|
|
|
300
|
|
||
Net cash used in investing activities
|
(8,738
|
)
|
|
(7,451
|
)
|
||
Financing activities:
|
|
|
|
||||
Borrowings under lines of credit
|
105,523
|
|
|
122,066
|
|
||
Repayments under lines of credit
|
(110,354
|
)
|
|
(115,068
|
)
|
||
Principal payments on capital lease obligations
|
(555
|
)
|
|
(605
|
)
|
||
Proceeds from notes payable
|
5,000
|
|
|
24,500
|
|
||
Principal payments on notes payable
|
(6,163
|
)
|
|
(3,836
|
)
|
||
Net cash (used in) provided by financing activities
|
(6,549
|
)
|
|
27,057
|
|
||
Effect of exchange rate changes on cash
|
488
|
|
|
(498
|
)
|
||
Net decrease in cash
|
(9,233
|
)
|
|
(1,176
|
)
|
||
Cash at beginning of period
|
19,735
|
|
|
21,345
|
|
||
Cash at end of period
|
$
|
10,502
|
|
|
$
|
20,169
|
|
|
Nine Months Ended September 30,
|
||||||
|
2015
|
|
2014
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
5,677
|
|
|
$
|
4,074
|
|
Cash paid for income taxes
|
$
|
580
|
|
|
$
|
487
|
|
Purchases of property and equipment in accounts payable
|
$
|
2,458
|
|
|
$
|
2,217
|
|
Non-cash debt discount
|
$
|
—
|
|
|
$
|
500
|
|
Initial fair value of warrant liability
|
$
|
—
|
|
|
$
|
10,368
|
|
Purchase of property and equipment through capital lease
|
$
|
243
|
|
|
$
|
759
|
|
Level 1:
|
Observable inputs such as quoted prices in active markets;
|
Level 2:
|
Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
Level 3:
|
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
|
Common Stock Warrant Liabilities
|
||
Balance at December 31, 2014
|
$
|
8,702
|
|
Changes in fair value
|
(8,015
|
)
|
|
Balance at September 30, 2015
|
$
|
687
|
|
|
September 30, 2015
|
|
December 31, 2014
|
||||
Accounts receivable
|
$
|
37,298
|
|
|
$
|
41,233
|
|
Allowance for doubtful accounts
|
(1,046
|
)
|
|
(793
|
)
|
||
Accounts receivable, net
|
$
|
36,252
|
|
|
$
|
40,440
|
|
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
Gross
|
|
Reserve for
excess and
obsolete
|
|
Net
|
|
Gross
|
|
Reserve for
excess and
obsolete
|
|
Net
|
||||||||||||
Raw materials
|
$
|
6,449
|
|
|
$
|
—
|
|
|
$
|
6,449
|
|
|
$
|
5,020
|
|
|
$
|
—
|
|
|
$
|
5,020
|
|
Work-in-process
|
1,898
|
|
|
—
|
|
|
1,898
|
|
|
1,032
|
|
|
—
|
|
|
1,032
|
|
||||||
Finished goods
|
53,930
|
|
|
(19,949
|
)
|
|
33,981
|
|
|
57,020
|
|
|
(21,325
|
)
|
|
35,695
|
|
||||||
Inventories
|
$
|
62,277
|
|
|
$
|
(19,949
|
)
|
|
$
|
42,328
|
|
|
$
|
63,072
|
|
|
$
|
(21,325
|
)
|
|
$
|
41,747
|
|
|
Useful lives
(in years)
|
|
September 30, 2015
|
|
December 31, 2014
|
||||
Surgical instruments
|
4
|
|
$
|
64,838
|
|
|
$
|
62,872
|
|
Machinery and equipment
|
7
|
|
15,585
|
|
|
15,382
|
|
||
Computer equipment
|
3
|
|
3,700
|
|
|
3,180
|
|
||
Office furniture and equipment
|
5
|
|
3,752
|
|
|
3,789
|
|
||
Leasehold improvements
|
various
|
|
3,854
|
|
|
3,841
|
|
||
Building
|
39
|
|
66
|
|
|
65
|
|
||
Land
|
n/a
|
|
9
|
|
|
9
|
|
||
Construction in progress
|
n/a
|
|
468
|
|
|
1,320
|
|
||
|
|
|
92,272
|
|
|
90,458
|
|
||
Less accumulated depreciation and amortization
|
|
|
(68,552
|
)
|
|
(64,418
|
)
|
||
Property and equipment, net
|
|
|
$
|
23,720
|
|
|
$
|
26,040
|
|
|
Useful lives
(in years)
|
|
September 30, 2015
|
|
December 31, 2014
|
||||
Developed product technology
|
3-8
|
|
$
|
21,825
|
|
|
$
|
22,526
|
|
Distribution rights
|
3
|
|
2,100
|
|
|
2,095
|
|
||
Intellectual property
|
5
|
|
1,004
|
|
|
1,004
|
|
||
License agreements
|
1-7
|
|
16,716
|
|
|
16,716
|
|
||
Core technology
|
10
|
|
4,187
|
|
|
4,554
|
|
||
Trademarks and trade names
|
3-9
|
|
3,307
|
|
|
3,559
|
|
||
Customer-related
|
12-15
|
|
19,458
|
|
|
20,493
|
|
||
Distribution network
|
10-12
|
|
4,027
|
|
|
4,027
|
|
||
Physician education programs
|
10
|
|
2,575
|
|
|
2,802
|
|
||
Supply agreement
|
10
|
|
225
|
|
|
225
|
|
||
|
|
|
75,424
|
|
|
78,001
|
|
||
Less accumulated amortization
|
|
|
(52,481
|
)
|
|
(47,742
|
)
|
||
Intangible assets, net
|
|
|
$
|
22,943
|
|
|
$
|
30,259
|
|
|
September 30, 2015
|
|
December 31, 2014
|
||||
Legal
|
$
|
554
|
|
|
$
|
967
|
|
Accounting
|
1,017
|
|
|
1,262
|
|
||
Severance
|
322
|
|
|
318
|
|
||
Restructuring
|
137
|
|
|
531
|
|
||
Sales milestones
|
133
|
|
|
107
|
|
||
Accrued taxes
|
729
|
|
|
1,344
|
|
||
Deferred rent
|
462
|
|
|
785
|
|
||
Royalties
|
1,712
|
|
|
2,129
|
|
||
Commissions
|
5,189
|
|
|
6,152
|
|
||
Payroll and related
|
5,359
|
|
|
8,291
|
|
||
Litigation settlements
|
4,400
|
|
|
7,393
|
|
||
Accrued interest
|
1,017
|
|
|
946
|
|
||
Other
|
6,185
|
|
|
5,168
|
|
||
Total accrued expenses
|
$
|
27,216
|
|
|
$
|
35,393
|
|
|
|
||
Balance at December 31, 2014
|
$
|
171,333
|
|
Goodwill impairment
|
(164,266
|
)
|
|
Effect of foreign exchange rate on goodwill
|
(7,067
|
)
|
|
Balance at September 30, 2015
|
$
|
—
|
|
|
September 30, 2015
|
|
Risk-free interest rate
|
1.3
|
%
|
Dividend yield
|
—
|
%
|
Expected volatility
|
63
|
%
|
Expected life (years)
|
4.5
|
|
|
|
||
Year Ending December 31,
|
|
||
Remainder of 2015
|
$
|
2,058
|
|
2016
|
56,173
|
|
|
2017
|
8,667
|
|
|
2018
|
8,667
|
|
|
2019
|
8,666
|
|
|
Thereafter
|
—
|
|
|
Total
|
84,231
|
|
|
Add: capital lease principal payments
|
1,471
|
|
|
Less: debt discount
|
(5,765
|
)
|
|
Total
|
79,937
|
|
|
Less: current portion of long-term debt
|
(59,018
|
)
|
|
Long-term debt, net of current portion
|
$
|
20,919
|
|
Year Ending December 31,
|
Operating
|
|
Capital
|
||||
Remainder of 2015
|
$
|
899
|
|
|
$
|
224
|
|
2016
|
2,318
|
|
|
877
|
|
||
2017
|
846
|
|
|
437
|
|
||
2018
|
272
|
|
|
68
|
|
||
2019
|
137
|
|
|
—
|
|
||
|
$
|
4,472
|
|
|
1,606
|
|
|
Less: amount representing interest
|
|
|
(135
|
)
|
|||
Present value of minimum lease payments
|
|
|
1,471
|
|
|||
Current portion of capital leases
|
|
|
(799
|
)
|
|||
Capital leases, less current portion
|
|
|
$
|
672
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss for basic earnings per share
|
$
|
(160,265
|
)
|
|
$
|
(3,041
|
)
|
|
$
|
(168,773
|
)
|
|
$
|
(12,609
|
)
|
Decrease in fair value of warrants
|
—
|
|
|
(513
|
)
|
|
—
|
|
|
(520
|
)
|
||||
Diluted net loss applicable to common stockholders
|
$
|
(160,265
|
)
|
|
$
|
(3,554
|
)
|
|
$
|
(168,773
|
)
|
|
$
|
(13,129
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
100,144
|
|
|
98,126
|
|
|
100,092
|
|
|
97,864
|
|
||||
Weighted average unvested common shares subject to repurchase
|
(768
|
)
|
|
(735
|
)
|
|
(834
|
)
|
|
(824
|
)
|
||||
Weighted average common shares outstanding—basic
|
99,376
|
|
|
97,391
|
|
|
99,258
|
|
|
97,040
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Conversion of preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Warrants
|
—
|
|
|
938
|
|
|
—
|
|
|
218
|
|
||||
Weighted average common shares outstanding—diluted
|
99,376
|
|
|
98,329
|
|
|
99,258
|
|
|
97,258
|
|
||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(1.61
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(1.70
|
)
|
|
$
|
(0.13
|
)
|
Diluted
|
$
|
(1.61
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(1.70
|
)
|
|
$
|
(0.13
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
United States
|
$
|
27,385
|
|
|
$
|
34,808
|
|
|
$
|
85,099
|
|
|
$
|
101,376
|
|
International
|
15,611
|
|
|
16,205
|
|
|
53,177
|
|
|
51,977
|
|
||||
Total consolidated revenues
|
$
|
42,996
|
|
|
$
|
51,013
|
|
|
$
|
138,276
|
|
|
$
|
153,353
|
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
United States
|
$
|
99,710
|
|
|
$
|
200,978
|
|
International
|
48,674
|
|
|
143,945
|
|
||
Total consolidated assets
|
$
|
148,384
|
|
|
$
|
344,923
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenues
|
$
|
42,996
|
|
|
$
|
51,013
|
|
|
$
|
138,276
|
|
|
$
|
153,353
|
|
Cost of revenues
|
14,154
|
|
|
14,272
|
|
|
48,234
|
|
|
46,305
|
|
||||
Amortization of acquired intangible assets
|
363
|
|
|
435
|
|
|
1,093
|
|
|
1,328
|
|
||||
Gross profit
|
28,479
|
|
|
36,306
|
|
|
88,949
|
|
|
105,720
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
1,898
|
|
|
4,423
|
|
|
9,661
|
|
|
13,138
|
|
||||
In-process research and development
|
274
|
|
|
527
|
|
|
274
|
|
|
527
|
|
||||
Sales and marketing
|
17,134
|
|
|
18,649
|
|
|
51,973
|
|
|
56,545
|
|
||||
General and administrative
|
8,094
|
|
|
10,213
|
|
|
26,473
|
|
|
33,676
|
|
||||
Amortization of acquired intangible assets
|
521
|
|
|
742
|
|
|
1,867
|
|
|
2,257
|
|
||||
Goodwill and intangible impairment
|
165,171
|
|
|
—
|
|
|
165,171
|
|
|
—
|
|
||||
Restructuring expense
|
335
|
|
|
20
|
|
|
163
|
|
|
706
|
|
||||
Total operating expenses
|
193,427
|
|
|
34,574
|
|
|
255,582
|
|
|
106,849
|
|
||||
Operating income (loss)
|
(164,948
|
)
|
|
1,732
|
|
|
(166,633
|
)
|
|
(1,129
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
18
|
|
|
2
|
|
|
37
|
|
|
8
|
|
||||
Interest expense
|
(3,110
|
)
|
|
(3,875
|
)
|
|
(9,521
|
)
|
|
(9,310
|
)
|
||||
Other income (expense), net
|
6,058
|
|
|
(928
|
)
|
|
6,782
|
|
|
(1,230
|
)
|
||||
Total other income (expense)
|
2,966
|
|
|
(4,801
|
)
|
|
(2,702
|
)
|
|
(10,532
|
)
|
||||
Pretax net loss
|
(161,982
|
)
|
|
(3,069
|
)
|
|
(169,335
|
)
|
|
(11,661
|
)
|
||||
Income tax (benefit) provision
|
(1,717
|
)
|
|
(28
|
)
|
|
(562
|
)
|
|
948
|
|
||||
Net loss
|
$
|
(160,265
|
)
|
|
$
|
(3,041
|
)
|
|
$
|
(168,773
|
)
|
|
$
|
(12,609
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net loss
|
$
|
(160,265
|
)
|
|
$
|
(3,041
|
)
|
|
$
|
(168,773
|
)
|
|
$
|
(12,609
|
)
|
Stock-based compensation
|
(78
|
)
|
|
1,502
|
|
|
2,440
|
|
|
3,641
|
|
||||
Depreciation
|
3,440
|
|
|
2,895
|
|
|
9,067
|
|
|
9,247
|
|
||||
Amortization of intangible assets
|
188
|
|
|
379
|
|
|
2,072
|
|
|
1,174
|
|
||||
Amortization of acquired intangible assets
|
884
|
|
|
1,177
|
|
|
2,960
|
|
|
3,585
|
|
||||
In-process research and development
|
274
|
|
|
527
|
|
|
274
|
|
|
527
|
|
||||
Interest expense, net
|
3,092
|
|
|
3,873
|
|
|
9,484
|
|
|
9,302
|
|
||||
Income tax (benefit) provision
|
(1,717
|
)
|
|
(28
|
)
|
|
(562
|
)
|
|
948
|
|
||||
Other (income) expense, net
|
(6,058
|
)
|
|
928
|
|
|
(6,782
|
)
|
|
1,230
|
|
||||
Goodwill and intangible impairment
|
165,171
|
|
|
—
|
|
|
165,171
|
|
|
—
|
|
||||
Restructuring and other expense
|
335
|
|
|
20
|
|
|
163
|
|
|
742
|
|
||||
Litigation expenses and trial costs
|
—
|
|
|
—
|
|
|
—
|
|
|
4,779
|
|
||||
Adjusted EBITDA
|
$
|
5,266
|
|
|
$
|
8,232
|
|
|
$
|
15,514
|
|
|
$
|
22,566
|
|
|
Payment Due by Year
|
||||||||||||||||||||||||||
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Total
|
|
(3 months)
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
Thereafter
|
||||||||||||||
Amended Credit Facility with MidCap
|
$
|
56,353
|
|
|
$
|
1,402
|
|
|
$
|
54,951
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Credit Facility with Deerfield
|
26,000
|
|
|
—
|
|
|
—
|
|
|
8,667
|
|
|
8,667
|
|
|
8,666
|
|
|
—
|
|
|||||||
Interest expense
|
9,514
|
|
|
1,659
|
|
|
5,011
|
|
|
1,706
|
|
|
948
|
|
|
190
|
|
|
—
|
|
|||||||
Notes payable for software licenses
|
264
|
|
|
122
|
|
|
142
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Note payable for insurance premiums
|
1,614
|
|
|
534
|
|
|
1,080
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Capital lease obligations
|
1,606
|
|
|
224
|
|
|
877
|
|
|
437
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|||||||
Operating lease obligations
|
4,472
|
|
|
899
|
|
|
2,318
|
|
|
846
|
|
|
272
|
|
|
137
|
|
|
—
|
|
|||||||
Litigation settlement obligations
|
35,933
|
|
|
1,100
|
|
|
4,400
|
|
|
4,400
|
|
|
4,400
|
|
|
4,400
|
|
|
17,233
|
|
|||||||
Guaranteed minimum royalty obligations
|
8,943
|
|
|
852
|
|
|
2,286
|
|
|
1,950
|
|
|
1,868
|
|
|
1,118
|
|
|
869
|
|
|||||||
New product development milestones (1)
|
400
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|
—
|
|
|
200
|
|
|
—
|
|
|||||||
Total
|
$
|
145,099
|
|
|
$
|
6,792
|
|
|
$
|
71,065
|
|
|
$
|
18,206
|
|
|
$
|
16,223
|
|
|
$
|
14,711
|
|
|
$
|
18,102
|
|
(1)
|
This commitment represents payments in cash, and is subject to attaining certain sales milestones, development milestones such as U.S. Food and Drug Administration approval, product design and functionality testing requirements, which we believe are reasonably likely to be achieved during the period from
2015
through 2019.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of revenues
|
$
|
26
|
|
|
$
|
94
|
|
|
$
|
79
|
|
|
$
|
240
|
|
Research and development
|
(804
|
)
|
|
699
|
|
|
223
|
|
|
1,809
|
|
||||
Sales and marketing
|
132
|
|
|
141
|
|
|
385
|
|
|
351
|
|
||||
General and administrative
|
568
|
|
|
568
|
|
|
1,753
|
|
|
1,241
|
|
||||
Total
|
$
|
(78
|
)
|
|
$
|
1,502
|
|
|
$
|
2,440
|
|
|
$
|
3,641
|
|
Effect on basic and diluted net loss per share
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
•
|
our estimates regarding anticipated operating losses, future revenue, expenses, capital requirements, uses and sources of cash and liquidity, including our anticipated revenue growth and cost savings;
|
•
|
our ability to market, improve, grow, commercialize and achieve market acceptance of any of our products or any product candidates that we are developing or may develop in the future;
|
•
|
our beliefs about the features, strengths and benefits of our products;
|
•
|
the effect of our strategy to streamline our organization and lower our costs;
|
•
|
our expectations about the timing, costs and benefits of the restructuring and outsourcing of our manufacturing operations;
|
•
|
our ability to successfully integrate, and realize benefits from licenses and acquisitions;
|
•
|
our ability to successfully achieve and maintain regulatory clearance or approval for our products in applicable jurisdictions and in a timely manner;
|
•
|
the effect of any existing or future federal, state or international regulations on our ability to effectively conduct our business;
|
•
|
our estimates of market sizes and anticipated uses of our products;
|
•
|
our business strategy and our underlying assumptions about market data, demographic trends, reimbursement trends, pricing trends;
|
•
|
our ability to achieve profitability, and the potential need to raise additional funding;
|
•
|
our ability to maintain an adequate sales network for our products;
|
•
|
our ability to increase the use and promotion of our products by training and educating surgeons and our sales network;
|
•
|
our ability to attract and retain a qualified management team, as well as other qualified personnel and advisors;
|
•
|
our ability to enter into licensing and business combination agreements with third parties;
|
•
|
our ability to protect our intellectual property, and to not infringe upon the intellectual property of third parties;
|
•
|
our ability to regain and maintain compliance with the quality requirements of the FDA and similar regulatory authorities outside of the U.S.;
|
•
|
the effects of the escalating cost of medical products and services and the effects of market demand, government regulation, third-party reimbursement policies and societal pressures on the worldwide healthcare industry and our business;
|
•
|
our ability to meet the financial covenants under our credit facilities and to refinance our existing debt prior to the maturity of our credit facilities with our current or new lenders;
|
•
|
our ability to regain and maintain compliance with the continued listing requirements of The NASDAQ Global Select Market;
|
•
|
our ability to resolve the deficiencies cited in the warning letter that we received from the FDA in July 2015 following the FDA's inspection of our manufacturing facilities;
|
•
|
our ability to conclude that we have effective disclosure controls and procedures;
|
•
|
our ability to meet or exceed the industry standard in clinical and legal compliance and corporate governance programs;
|
•
|
potential liability resulting from litigation;
|
•
|
potential liability resulting from a governmental review of our business practices;
|
•
|
our beliefs about the usefulness of the non-GAAP financial measures included in this Quarterly Report on Form 10-Q;
|
•
|
our ability to meet and potential liability from not meeting the payment obligations under the Orthotec settlement agreement;
|
•
|
our beliefs with respect to our critical accounting policies and the reasonableness of our estimates and assumptions; and
|
•
|
other factors discussed elsewhere in this Quarterly Report on Form 10-Q or any document incorporated by reference herein or therein.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid per
Share
|
|
Total Number of
Shares Purchased
as part of Publicly
Announced Plans
or Programs
|
|
Maximum Number
of Shares That May
Yet Be Purchased
Under the Plans or
Programs
|
|||||
July 1, 2015 through July 31, 2015
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
August 1, 2015 through August 31, 2015
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
September 1, 2015 through September 30, 2015
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Not included in the table above are 547 shares of common stock forfeited and retired in connection with the payment of minimum statutory withholding taxes due upon the vesting of certain stock awards or the exercise of certain stock options. In lieu of making a cash payment with respect to such withholding taxes, the holders of such stock forfeited a number of shares at the then current fair market value of the shares to pay such taxes.
|
Item 6.
|
Exhibits
|
Exhibit Number
|
Exhibit Description
|
|
|
10.1†
|
Second Amendment to the Amended and Restated Credit, Security and Guaranty Agreement, dated July 10, 2015, with MidCap Funding IV Trust, as a lender and other lenders from time to time a party thereto.
|
|
|
10.2
|
First Amendment to the Facility Agreement, dated July 10, 2015, by and among Alphatec Holdings, Inc., Deerfield Private Design Fund II, L.P., Deerfield Private Design International II, L.P., and Deerfield Special Situations Fund, L.P..
|
|
|
10.3
|
Amended and Restated Term Loan Note, dated July 10, 2015, with MidCap Funding IV Trust.
|
|
|
31.1
|
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101
|
The following materials from the Alphatec Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as (Unaudited) of September 30, 2015 and December 31, 2014, (ii) Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2015 and 2014, (iii) Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the three and nine months ended September 30, 2015 and 2014, (iv) Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2015 and 2014, and (v) Notes to Condensed Consolidated Financial Statements (Unaudited).
|
†
|
Confidential treatment has been requested from the Securities and Exchange Commission as to certain portions of this document.
|
ALPHATEC HOLDINGS, INC.
|
|
|
|
By:
|
/s/ James M. Corbett
|
|
James M. Corbett
President and Chief Executive Officer
(principal executive officer)
|
|
|
By:
|
/s/ Michael O’Neill
|
|
Michael O’Neill
Chief Financial Officer, Vice President and Treasurer
(principal financial officer and principal accounting officer)
|
Exhibit Number
|
Exhibit Description
|
|
|
|
|
10.1†
|
Second Amendment to the Amended and Restated Credit, Security and Guaranty Agreement, dated July 10, 2015, with MidCap Funding IV Trust, as a lender and other lenders from time to time a party thereto.
|
|
|
10.2
|
First Amendment to the Facility Agreement, dated July 10, 2015, by and among Alphatec Holdings, Inc., Deerfield Private Design Fund II, L.P., Deerfield Private Design International II, L.P., and Deerfield Special Situations Fund, L.P..
|
|
|
10.3
|
Amended and Restated Term Loan Note, dated July 10, 2015, with MidCap Funding IV Trust.
|
|
|
31.1
|
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101
|
The following materials from the Alphatec Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as (Unaudited) of September 30, 2015 and December 31, 2014, (ii) Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2015 and 2014, (iii) Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the three and nine months ended September 30, 2015 and 2014, (iv) Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2015 and 2014, and (v) Notes to Condensed Consolidated Financial Statements (Unaudited).
|
†
|
Confidential treatment has been requested from the Securities and Exchange Commission as to certain portions of this document.
|
(1)
|
Term Loan Amounts
. On the terms and subject to the conditions set forth herein, the Lenders severally hereby agree to make to Borrowers a term loan in an aggregate original principal amount equal to the Term Loan Commitment (“
Term Loan
”). Each Lender’s obligation to
|
AGENT:
|
MIDCAP FUNDING IV TRUST,
a Delaware statutory trust
By: Apollo Capital Management, L.P.,
its investment manager
By:Apollo Capital Management GP, LLC,
its general partner
By:
/s/ Mauriced Amsellem
Name: Maurice Amsellem
Title: Authorized Signatory
|
LENDERS
|
MIDCAP FUNDING IV TRUST,
a Delaware statutory trust
By: Apollo Capital Management, L.P.,
its investment manager
By:Apollo Capital Management GP, LLC,
its general partner
By:
/s/ Mauriced Amsellem
Name: Maurice Amsellem
Title: Authorized Signatory
|
BORROWERS:
|
|
ALPHATEC HOLDINGS, INC.,
a Delaware corporation
By:
/s/ Michael O’Neill
Name: Michael O’Neill
Title: Chief Financial Officer
|
|
|
ALPHATEC SPINE, INC.,
a California corporation
By:
/s/ Michael O’Neill
Name: Michael O’Neill
Title: Chief Financial Officer
|
|
|
ALPHATEC INTERNATIONAL LLC
,
a Delaware limited liability company
By:
/s/ Ebun S. Garner,Esq.
Name: Ebun S. Garner, Esq.
Title: General Counsel and SVP, Alphatec Holdings, Inc., General Partner of Alphatec Holdings, International C.V., Sole Member
|
|
|
ALPHATEC PACIFIC, INC.,
a Japanese company
By:
/s/ Ebun S. Garner,Esq.
Name: Ebun S. Garner, Esq.
Title: Director
|
Lender
|
Revolving Loan Commitment Amount
|
Revolving Loan Commitment Percentage
|
Term Loan Commitment Amount
|
Term Loan Commitment Percentage
|
MidCap Funding IV Trust
|
$40,000,000
|
100%
|
$30,793,478.30
|
100%
|
TOTALS
|
$40,000,000
|
100%
|
$30,793,478.30
|
100%
|
|
|
|
$38,000,000.00
|
Bethesda, Maryland
July 10, 2015
|
BORROWERS:
|
|
ALPHATEC HOLDINGS, INC.,
a Delaware corporation
By:
/s/ Michael O’Neill
Name: Michael O’Neill
Title: Chief Financial Officer
|
|
|
ALPHATEC SPINE, INC.,
a California corporation
By:
/s/ Michael O’Neill
Name: Michael O’Neill
Title: Chief Financial Officer
|
|
|
ALPHATEC INTERNATIONAL LLC
,
a Delaware limited liability company
By:
/s/ Ebun S. Garner,Esq.
Name: Ebun S. Garner, Esq.
Title: General Counsel and SVP, Alphatec Holdings, Inc., General Partner of Alphatec Holdings, International C.V., Sole Member
|
|
|
ALPHATEC PACIFIC, INC.,
a Japanese company
By:
/s/ Ebun S. Garner,Esq.
Name: Ebun S. Garner, Esq.
Title: Director
|
By:
|
/s/ James M. Corbett
|
|
James M. Corbett
President and Chief Executive Officer (principal executive officer)
|
|
November 3, 2015
|
By:
|
/s/ Michael O’Neill
|
|
Michael O’Neill
Chief Financial Officer, Vice President and Treasurer
(principal financial officer and principal accounting officer of the Company)
|
|
November 3, 2015
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated:
|
November 3, 2015
|
/s/ James M. Corbett
|
|
|
James M. Corbett
President and Chief Executive Officer
(principal executive officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated:
|
November 3, 2015
|
/s/ Michael O’Neill
|
|
|
Michael O’Neill
Chief Financial Officer, Vice President and Treasurer
(principal financial officer and principal accounting officer of the Company)
|