Alphatec Holdings, Inc. (ATEC)

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Alphatec Holdings, Inc. (ATEC)

Q3 2009 Earnings Call

November 9, 2009 8:00 am ET


Peter Wulff - Chief Financial Officer, Vice President & Treasurer

Dirk Kuyper - President and Chief Executive Officer


Bill Plovanic - Canaccord Adams

Matt Dolan - Roth Capital

Glenn Novarro - RBC Capital Markets

Bud Leedom - Global Hunter Securities



(Operator Instructions) Welcome to the Alphatec Holdings Third Quarter Fiscal 2009 Results Conference Call. At this time, I would like to turn the conference over to the Peter Wulff, Chief Financial Officer, Vice President & Treasurer.

Peter Wulff

Welcome to Alphatec Spine's conference call to discuss our third quarter ended September 30, 2009 financial and operating results. With me today is Dirk Kuyper our President and Chief Executive Officer.

By now you should have seen the copy of today’s press release announcing third quarter 2009 financial and operating results. If you do not have a copy of today's press release, you can find it in the Investor Relations section on our website at Before we start, there are a couple of items we would like to cover. I would 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 website 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, 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 those projected in these forward looking statements.

You can find a discussion of these factors and more information about us in our filings with the SEC, including the risk factor section on our annual report on Form 10-K and subsequent quarterly reports on 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 US copyright laws and any use or rebroadcast of all or any part of this conference call may only be done with our expressed written permission.

Now I'd like to hand the call over to Dirk Kuyper, Alphatec Spine's President and Chief Executive Officer.

Dirk Kuyper

We're pleased to report that revenues for the third quarter of 2009 were a record $32.7 million representing a 27% increase over revenues from the same period last year. This represents the ninth consecutive quarter of record revenues. Year to date revenue of $95.6 million reflects a 31% growth over the same period 2008. In the US we grew the third quarter 2009 revenues by approximately 21% over the prior year. Year to date revenue growth was 28% as compared to 2008 for the same time period.

International revenues reached $6.6 million in the third quarter reflecting a 52% growth over the third quarter of 2009. This performance reflects the ongoing strength of our core business. We're proud to report adjusted EBITDA of $3.6 million for the third quarter which is a 31% sequential increase over the second quarter 2009 adjusted EBITDA of $2.8 million.

Year to date EBITDA reached $7.8 million reflecting strengthening operating leverage while we continue to drive strong top line growth, investing in our robust product pipeline and controlling costs. We continue to grow revenues at rates significantly higher then the growth rate of the spine market through the introduction of innovative new products, the strengthening of our US sales force and expansion of our international operations.

This morning we will provide additional highlights on our operating performance for the third quarter 2009 as well as an overview of new product introductions and accomplishments in the quarter. Consistent with our comments from previous calls I will focus my remarks on updating you on our four primary growth drivers at Alphatec.

1) Continued expansion of our core product portfolio especially in the area of minimally invasive surgery.

2) Product development initiatives addressing the aging spine.

3) US sales force expansion.

4) International expansion

Then I'll turn the call back over to our CFO, Peter Wulff, who will provide a more detailed review of our financial performance. Following Peter I will discuss growth initiatives and review our 2009 financial guidance before opening the call for questions.

We set out this year to launch a number of new products, addressing our core fusion product portfolio and we are pleased to report that we're on track to meet that objective. We continue to expand our fusion product line by introducing both new products and line extensions as well as securing additional intellectual property and distribution rights. I'll take a minute to highlight a few of these products.

[Solas], a stand alone anterior lumbar interfusion or ALIF device. ILLICO SE posterior fixation system which is our percutaneous screw system. Amino Shield a biologic wound barrier. Profuse demineralized bone matrix, and our new licensing agreement we signed with ETEX corporation. We believe these products will allow us to cotninue to drive strong US revenue growth in the quarters ahead.

As we announced in our last quarterly call, we are developing a zero profile self locking inner body device initially for ALIF and in the future for cervical procedures based on intellectual property that we acquired earlier this year. We have fast tracked the development efforts of this product and I am pleased to report that we submitted [Solas] stand alone ALIF device to the FDA for 510 clearance as of last Friday, November 6. We anticipate launching the [Solas] stand alone ALIF product in the first quarter 2010.

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