Alphatec Holdings, Inc. (ATEC)

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Alphatec Spine, Inc. (ATEC)

Q3 2008 Earnings Call Transcript

November 3, 2008, 4:30 pm ET


Peter Wulff – CFO

Dirk Kuyper – President and CEO


Vivian Cervantes – Rodman & Renshaw

Seth Waugh – Deutsche Bank

William Plovanic – Canaccord Adams

Bud Leedom – California Equity Research



Good day, everyone, and welcome to the Alphatec Spine, Inc. third quarter fiscal 2008 results conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to the CFO, Mr. Peter Wulff. Please go ahead, sir.

Peter Wulff

Thank you very much, and good afternoon, everyone. Welcome to Alphatec Spine's conference call to discuss our third quarter fiscal year 2008 financial and operating results.

With me today is Dirk Kuyper, President and CEO; Ebun Garner, General Counsel; and Cheryl Monblatt, Director of Investor Relations. If you do not have a copy of today's press release, you can find it in the Investor Relations section on our Web site, at

Before we start, there are a couple of items we'd like to cover. I'd like to remind you that this call is being webcast live and recorded. A replay of the event will be available later today, on our Web site and will remain available for at least 30 days following the call.

We would like to remind you that our discussions today include forward-looking statements. These statements are based on certain assumptions made by us based on historical trends, current conditions, expected future developments, including business prospects, product development objectives and future financial performance and other factors we believe to be appropriate in the circumstances. Risks and uncertainties may cause our actual results to differ materially from these projected and these forward-looking statements.

You can find a discussion of these factors and more information about in our filings with the SEC, including the “Risk Factor” section on our Form 10-K for 2007, as amended and subsequently, quarterly reports on our Form 10-Q and periodic filings on Form 8-K. These forward-looking statements are made as of the date of this call and we assume no obligation to update these statements publicly even if new information becomes available in the future. This broadcast is covered by U.S. copyright laws and any use or rebroadcast of all or any portion of this conference call may only be done with our expressed written permission.

And now, I'll hand the call over to Dirk Kuyper, Alphatec Spine's President and CEO

Dirk Kuyper

Thank you, Peter, and good afternoon, everyone. Thank you for joining us today. As you know, we previously announced our third quarter 2008 revenue performance on Monday, October 13th of 2008. At that time, we announced continued record growth, the status of the OsseoFix system, both in the United States and Europe, as well as the launch of numerous new products at the North American Spine Society Meeting.

This afternoon, we'll provide additional highlights on our – of our operating performance for the third quarter and a description of some of our newly launched products. Then I'll turn the call back over to Peter Wulff, who'll provide a more detailed review of our financial performance. Following Peter, I'll come back and discuss the status of some of our key development projects in our product pipeline and introduce a couple of key additions to the Alphatec Spine team before opening the call for questions.

First, I'd like to start off by congratulating the Alphatec Spine team, as this is our fifth consecutive quarter of achieving record revenues. Our revenues were $25.8 million for the third quarter of 2008, representing a 27% increase of our revenues from the same period last year. In the U.S., we grew third quarter 2008 revenues by approximately 28% over last year's quarterly results, resulting in a sequential acceleration of our core business growth rate. Third quarter U.S. revenue grew over the second quarter by almost 11%.

For the nine months ended September 2008, revenues were $72.9 million, an increase of approximately 24% over revenue from the prior year nine months. Year-to-date 2008 revenue for the U.S. of $59.5 million grew 20% over prior year-to-date 2007 U.S. revenues. As evidenced by this performance, we continue to grow our revenues that are derived from our core spinal product portfolio at a rate that is greater than the growth rate of the spine market.

I'm also pleased to announce that as we grow the top line, we are close to achieving a operating performance metric, adjusted EBITDA, by reporting negative 91,000 in adjusted EBITDA for the third quarter 2008, which excludes stock-based compensation and in-process R&D expenses.

We continue to focus on expanding our core business product portfolio, while developing and commercializing innovative products for the – for treating conditions related to the ageing spine. As previously announced, we introduced nine new products last month at the North American Spine Society Meeting in Toronto, Canada.

The nine new products included the OsseoFix Spinal Fracture Reduction System, which is being launched in Europe; and eight other products, which are being launched in the U.S., which include the Novel Cervical Interbody system and our ProFUSE demineralized bone scaffold.

The Novel Cervical Interbody system is used when performing an anterior cervical discectomy and fusion procedure. The total interbody market in the U.S. is estimated to be valued at more than 930 million, and cervical interbody procedures are estimated to account for approximately 49% of that total.

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