UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 31, 2018
ALPHATEC HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
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Delaware |
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000-52024 |
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20-2463898 |
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(State or Other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
5818 El Camino Real
Carlsbad, California 92008
(Address of Principal Executive Offices)
(760) 431-9286
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14.a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
On January 7, 2019, Alphatec Holdings, Inc. (the “Company”) issued a press release announcing selected preliminary unaudited financial information for the quarter and full year ended December 31, 2018 (the “Press Release”). The Company has not finalized its financial statement closing process for the fourth quarter or full year ended December 31, 2018. As a result, the information in the Press Release is preliminary and based upon information available to the Company as of the date of the Press Release. During the course of the Company’s closing process, items may be identified that would require the Company to make adjustments, which may be material, and as a result, the estimates included in the Press Release are subject to risks and uncertainties, including possible adjustments to preliminary operating results.
A copy of the Press Release is attached to this Form 8-K as Exhibit 99.1. The information being furnished in this Item 2.02 and in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
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Item 5.02. |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
In the Press Release, the Company also announced that, on December 31, 2018, Terry Rich entered into a Resignation and Transition Agreement (the “Resignation Agreement”) with the Company and its wholly owned subsidiary Alphatec Spine Inc. (“Spine”) (collectively, the “Companies”), pursuant to which Mr. Rich resigned, effective as of December 31, 2018, as the Companies’ President and Chief Operating Officer. Mr. Rich also resigned, effective December 31, 2018, as a director of the Companies. Mr. Rich’s resignation was not the result of any disagreements with the Companies, their respective Boards of Directors or their management in any matters relating to operations, policies or practices.
Pursuant to the Resignation Agreement, Mr. Rich will provide consulting services to the Companies through June 30, 2019 (the “Consulting Term”). Mr. Rich will receive consulting consideration comprised of seventy-five thousand (75,000) restricted shares of the Company’s common stock, granted within five (5) days of his execution of the Resignation Agreement, and payment of one hundred thousand dollars ( $100,000) within five (5) days after completion of the Consulting Term. The payment of the consulting consideration shall be conditioned on Mr. Rich’s satisfactory completion of the specified consulting services . The Resignation Agreement also contains certain restrictive covenants and confidentiality provisions, including non-solicitation and non-disparagement obligations.
In connection with entrance into the Resignation Agreement, on December 31, 2018, Mr. Rich also entered into a Separation and Release Agreement (the “Separation Agreement”) with the Companies. Pursuant to the Separation Agreement, and in consideration for his execution of a release and waiver agreement in favor of the Companies related to any claims or potential claims, Mr. Rich is entitled to receive a cash payment of three hundred thousand dollars ( $300,000) within five (5) days after the effective date of the Separation Agreement (as defined therein), less applicable withholding amounts. In addition, the Company will pay the cost of COBRA insurance coverage for Mr. Rich and his eligible family members through the earlier of June 30, 2020, or the time at which he obtains alternate insurance coverage, and provide up to ten thousand dollars ($10,000) for e xecutive resume and employment transition services . As additional consideration, Mr. Rich’s granted equity shall continue to vest during the Consulting Term and, following the Consulting Term, his outstanding, vested stock options will be converted into non-qualified stock options and remain exercisable until each such option’s respective expiration date. The Separation Agreement also contains certain restrictive covenants and confidentiality provisions, including non-solicitation and non-disparagement obligations.
The foregoing descriptions of the Resignation Agreement and the Separation Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, a copy of which will be filed with the Company’s Annual Report on Form 10-K for the period ending December 31, 2018.
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Item 9.01. |
Financial Statements and Exhibits |
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(d) |
Exhibits . |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: January 7, 2019 |
ALPHATEC HOLDINGS, INC. |
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By: |
/s/ Jeffrey G. Black |
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Name: |
Jeffrey G. Black |
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Its: |
Chief Financial Officer |
Exhibit 99.1
Alphatec Announces 2018 Preliminary Revenue Results,
2019 Revenue Outlook, and Senior Leadership Changes
CARLSBAD, Calif., (January 7, 2019) – Alphatec Holdings, Inc. (“ATEC” or “the Company”) (Nasdaq: ATEC) today announced preliminary revenue results for the fourth quarter and full year ended December 31, 2018 and provided revenue guidance for the full year 2019. The Company also announced that Terry Rich has resigned as President, Chief Operating Officer, and as a member of the ATEC Board of Directors. Jeff Rydin, a member of the ATEC Board, will assume interim leadership of the Company’s sales organization, while Chief Executive Officer Pat Miles will assume Rich’s operations responsibilities in a combined role as President and CEO.
Preliminary, Unaudited 2018 Revenue
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Quarter Ended December 31, 2018 |
Year Ended December 31, 2018 |
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Total Revenue |
$25.2 million to $25.7 million |
$91.5 million to $92.0 million |
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U.S. Revenue |
$22.9 million to $23.4 million |
$83.5 million to $84.0 million |
Preliminary, unaudited 2018 revenue reflects the following:
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Fourth quarter 2018 U.S. revenue sequential growth of 9% to 11% and fourth quarter year-over-year growth of 10% to 12%; |
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Increase in average daily sales for the third consecutive quarter, with average daily sales in December 2018 up more than 35% compared to average daily sales in January 2018; |
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Negative impact of approximately $9 million compared to 2017, resulting from the continued transition or termination of legacy non-strategic distribution; and |
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Negative impact of approximately $7 million compared to 2017, resulting from decreased sales under the Company’s supply agreement with Globus Medical, Inc. (“Globus”), including lower-than-expected volume in the fourth quarter of 2018. |
2019 Revenue Guidance
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Year Ended December 31, 2019 |
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Total Revenue |
$98 million to $103 million |
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U.S. Revenue |
$94 million to $98 million |
Revenue guidance for 2019 reflects the following:
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U.S. revenue growth between 13% and 17% compared to 2018; |
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Revenue from the planned mid-2019 commercial launches of the Company’s 2018 alpha products and advanced neuromonitoring platform; |
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Negative impact of up to $9 million compared to 2018, resulting from the continued transition or termination of legacy non-strategic distribution relationships; and |
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Negative impact of up to $4 million compared to 2018, resulting from further decreasing sales under the Company’s supply agreement with Globus. |
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“Our preliminary revenue results for the fourth quarter mark an encouraging close to a transformative year,” said Pat Miles, Chairman and Chief Executive Officer of ATEC. “We expect continued investment in 2019 as we create an industry-leading portfolio. Through commercial launch of our 2018 alpha releases, and our exclusive neuromonitoring informatics solution, we are forming a clinically distinct, approach-based spine technology platform. I am as confident as ever that we are building an organic innovation machine and look forward to generating future market disruption.”
Senior Leadership Changes
Terry Rich joined ATEC’s executive team and Board in December 2016, following leadership roles at Wright Medical Group, Inc. (WMGI), Tornier N.V., and NuVasive, Inc. “Terry is a long-time friend and colleague who remains a significant ATEC shareholder with an enthusiastic interest in our continued success,” said Miles. “We appreciate his vital role in initiating the Company’s transformation and assembling a strong foundation of spine talent. On behalf of the Board and the entire ATEC Family, I want to thank Terry for his contributions and wish him the very best in the future.”
In conjunction with Rich’s departure, Rydin, a member of ATEC’s Board of Directors, will assume interim leadership of the ATEC sales organization, furthering its transition and advancing relationships in the distribution channel. Rydin has over 27 years of experience in the medical device and healthcare fields, most recently as Chief Sales Officer of Ellipse Technologies, Inc. and, prior to that, as President of Global Sales at NuVasive, Inc., where he spent over 13 years leading the sales function. In order to ensure a smooth transition, Rich will consult with the Company through June 30, 2019.
About Alphatec Holdings, Inc.
Alphatec Holdings, Inc., through its wholly-owned subsidiaries, Alphatec Spine, Inc. and SafeOp Surgical, Inc., is a medical device company that designs, develops and markets spinal fusion technology products and solutions for the treatment of spinal disorders associated with disease and degeneration, congenital deformities and trauma. The Company's mission is to improve lives by providing innovative spine surgery solutions through the relentless pursuit of superior outcomes. The Company markets its products in the U.S. via independent sales agents and a direct sales force.
Additional information can be found at www.atecspine.com .
Forward-Looking Statements
This press release 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-looking statements. The Company cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Forward-looking statements include the references to the Company’s preliminary 2018 revenue, 2019 revenue, planned commercial launches and product introductions, and creating future market disruption. The important factors that could cause actual operating results to differ significantly from those expressed or implied by such forward-looking statements include, but are not limited to: the
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"> "> ">unc ertainty of success in developing new products or products currently in the Company’s pipeline; the uncertainties in the Company’s ability to execute upon its strategic operating plan; the uncertainties regarding the ability to successfully license or acqu ire new products, and the commercial success of such products; failure to achieve acceptance of the Company’s products by the surgeon community; failure to obtain FDA or other regulatory clearance or approval for new products, or unexpected or prolonged de lays in the process; continuation of favorable third party reimbursement for procedures performed using the Company’s products; unanticipated expenses or liabilities or other adverse events affecting cash flow or the Company’s ability to successfully contr ol its costs or achieve profitability; uncertainty of additional funding; the Company’s ability to compete with other products and with emerging new technologies; product liability exposure; an unsuccessful outcome in any litigation in which the Company is a defendant; patent infringement claims; claims related to the Company’s intellectual property and the Company’s ability to meet its financial obligations under its credit agreements and the OrthoTec LLC settlement agreement. The words “believe,” “will,” “should,” “expect,” “intend,” “estimate,” “look forward” and “anticipate,” variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. A further list and description of these and other factors, risks and uncertainties can be found in the Company's most recent annual report, and any subsequent quarterly and current reports, filed with the Securities and Exchange Commission. ATEC disclaims any intent ion or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.
Investor/Media Contact:
Tina Jacobsen
Investor Relations
(760) 494-6790
ir@atecspine.com
Company Contact:
Jeff Black
Chief Financial Officer
Alphatec Holdings, Inc.
ir@atecspine.com
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