Alphatec Holdings, Inc. · NASDAQ:ATEC
Alphatec — Merger or Acquisition (December 2020)
27 slides from Alphatec's merger presentation, Dec 17, 2020
Slide 1: Enhancing ATEC Clinical Performance with the Acquisition of EOS imaging
INFORMING BETTER SPINE SURGERY Pat Miles, Chairman and CEO Enhancing ATEC Clinical Performance with the Acquisition of EOS imaging Exhibit 99.2
Slide 2: Forward-looking statements
This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of1995 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
Slide 3: What distinguishes ATEC?
L R Our core competence is delivering clinically valuable information. EOS’ imaging technology expands on that prowess. WHAT DISTINGUISHES ATEC? u The success of our surgeon customers depends on clinical performance. Our sole focus is on equipping them with technology that improves outcomes.
Slide 4: We invest where others won't
>80% the “currency” of spine surgery Delivering procedural requirements that improve surgical outcomes HOW INDUSTRY MAKES DECISIONS. HOW SURGEONS SERVE PATIENTS. * Management estimate unique, integrated technologies that drive adoption, loyalty, and predictability L R NEUROMONITORING PATIENT POSITIO
Slide 5: Those investments are driving growth
EARLY STAGE INVESTMENT: Cervical, biologics +21% PHASE 1 INVESTMENT: Information, lateral, posterior fixation +149% +72% PHASE 2 INVESTMENT: ALIF, PLIF, TLIF $40M Growth Q3 2017 vs Q3 2020 THOSE INVESTMENTS ARE DRIVING GROWTH Q3 2020 U.S. Sales
Slide 6: SafeOp: conduit for delivering information into the O.R.
SafeOp founded our conduit for delivering unprecedented information into the O.R. L R WITH EOS, WE CAN BETTER INFORM THE CLINICAL EXPERIENCE FROM END TO END SURGEONS YEARN FOR INFORMATION THAT DRIVES BETTER OUTCOMES EMG ACTIVITY EMG ACTIVITY
Slide 7: Core tenets of spine surgery
CORE TENETS OF SPINE SURGERY Alignment is most correlated to long-term successful outcomes* Surgeons require an imaging platform capable of addressing all three DECOMPRESSION ADDRESS SPINE’S UNMET NEED WITH ALIGNMENT VERIFICATION INFORMATION OUR OPPORTUNITY: ALIGNMENT X *Yeh, Kuang-Ting MD, PhD; Lee
Slide 8: EOS imaging technology
EOS IMAGING TECHNOLOGY RAPID, CALIBRATED, STANDING FULL-BODY SCAN BIPLANAR SPINE IMAGING & ANATOMICAL MODELING Academic influence units installed globally 380 Customized care Technological foundation Advances our Core Information-Based Competency
Slide 9: Strategic rationale
STRATEGIC RATIONALE Clinical distinction AlphaInformatiX (AIX) platform World-class advanced imaging knowhow + = 1 2 3 Improved long-term surgical outcomes through alignment restoration & verification Patient-specific treatments via bone quality measurement Inventory savings through pre-case plannin
Slide 10: How we monetize information
HOW WE MONETIZE INFORMATION AVERAGE PRODUCT CATEGORIES/ CASE 2017 1.8 2020 AlphaInformatiX Lateral TLIF PLIF ALIF ATEC Blended Cervical 1.8 CATALYST FOR CONVOYED SALES AlphaInformatiX (SafeOp) has driven adoption across our portfolio *Q3 2020 *
Slide 11: Surgical case planning
SURGICAL CASE PLANNING EOS reduces the cost to serve & drives incremental pull-through EOS EXPANDS THE OPPORTUNITY OPERATIONS Pre-surgical implant planning - sends only required inventory into surgery $ ALIGNMENT Predictive analytics & rod bending technologies BONE DENSITY Customized implants specif
Slide 12: Information improves efficiency
Precise pre-case planning = less inventory required to support surgeries INFORMATION IMPROVES EFFICIENCY Patient-specific surgical planning will enable refined implant & instrument configurations $$$$ INVENTORY $$ INVENTORY
Slide 13: Bone quality measurement and patient-specific implants
Bone quality measurement = expanded stabilization optionality PATIENT-SPECIFIC IMPLANTS NORMAL SUSPECT OSTEOPENIA SUSPECT OSTEOPOROSIS INCREASED OPTIONALITY: OSSEOSCREWTM & INVICTUSTM POLYSCREW PREVIOUS SOLE MODALITY FOR POSTERIOR FIXATION Level-specific bone quality information Permits utilization
Slide 14: Surgical plans that inform and integrate into the O.R.
Surgical plans that inform & integrate into the O.R. ALIGNMENT RESTORATION Scientific, objective, data-driven approach to restore alignment, the greatest correlative to long-term successful outcomes* Pre-operative surgical plans open door to leverage in-house rod-bending expertise *Yeh, Kuang-Ting M
Slide 15: Better informed from end to end
BETTER INFORMED FROM END TO END PRE-OP PLANNING SURGERY POST-OP ASSESSMENT FOLLOW-UP FULL-BODY BIPLANAR IMAGES DIAGNOSIS More accurate understanding of patient alignment Elevates likelihood of surgical goal fulfillment by integrating fully informed plans into surgery Correlates post-operative image
Slide 16: Top U.S. hospital penetration
TOP U.S. HOSPITAL PENETRATION Expands ATEC’s reach into academic institutions 90% of the top 10* 80% of the top 25* * US News & World Report Best Orthopedic Hospitals list (2019-2020) 5 2 2 15 1 3 2 15 6 1 6 1 6 3 1 1 1 1 11 1 3 5 3 1 1 6 2 7 1 11 1 * US News & World Report Best Orthopedic Hospitals
Slide 17: Prestigious OUS footprint
PRESTIGIOUS OUS FOOTPRINT 40% of installed base N America 44% 16% A foundation to support future global expansion of installed base EMEA of installed base AsiaPac
Slide 18: Financial Impact – Jeff Black, EVP & CFO
INFORMING BETTER SPINE SURGERY Financial Impact – Jeff Black, EVP & CFO
Slide 19: P&L impact
P&L IMPACT Expected to be accretive to adjusted EBITDA and free cash flow following the first full year of operations FURTHER DETAIL WHEN TRANSACTION CLOSES (EXPECTED ~Q2 2021) REVENUE ADJUSTED EBITDA/ FCF Expands revenue base and accelerates growth LTM revenue ~$28M* Includes annual recurring maint
Slide 20: Pro forma revenue profile
PRO FORMA REVENUE PROFILE ATEC STAND-ALONE FY2019 ATEC + EOS PRO FORMA FY2019 $113M * *For illustrative purposes only. ^ This is not intended to be guidance. | 2019 Pro Forma = $22.1M EOS imaging (Rx = 1.1) + $113.4M for ATEC. 20E First Call Consensus = $28.4M (Rx = 1.22) for EOS imaging + $144.7M f
Slide 21: Financing
Immediate capital access to fund purchase & runway for combined business FINANCING 1 Credit available upon ATEC request $30M credit-to-equity conversion reduces existing debt, post-deal, from $75M to $45M Reduces annualized cash interest by ~$3.5M Extends debt maturity from May ‘25 → June ’26 No mai
Slide 22: Comparison to previous offer
COMPARISON TO PREVIOUS OFFER 22 ORIGINAL OFFER (Feb 2020) UPDATED OFFER (Dec 2020) CHANGE Enterprise value (€EUR) €110.8M €86.8M (22%) Exchange rate 1.10 1.22 +11% Enterprise value ($US) $121.9M $105.9M (13%) Pro forma dilution ~44% ~19% Offer EOS EV/ LTM Revenues 5.5x 1 3.6x 2 TRANSACTION METRICS ~
Slide 23: Deal terms
DEAL TERMS $116.9M PURCHASE PRICE, INCLUDING RETIREMENT OF DEBT $106M enterprise value (including assumption of cash) €2.45 (~$2.99) / share cash, or $79.7M ~€7.01 (~$8.55) per convertible bond, or $37.2M ATEC TO FILE PUBLIC TENDER OFFER FOR EOS SHARES Filing & clearance by French regulatory authori
Slide 24: Informing Better Spine Surgery – Pat Miles
INFORMING BETTER SPINE SURGERY Pat Miles
Slide 25: Accelerates revenue growth and reduces cost to serve
ACCELERATES REVENUE GROWTH & REDUCES COST TO SERVE Monetizes information by creating more pull-through opportunities Provides immediate access to U.S. installed base with minimal overlap Facilitates global expansion via established infrastructure Improves inventory efficiency IMPROVED DEAL ECONOMICS
Slide 26: EOS will further advance ATEC clinical prowess
With SafeOp, we created value through actionable information. EOS WILL FURTHER ADVANCE ATEC CLINICAL PROWESS
Slide 27: Upgrading the ATEC Clinical Experience with the Acquisition of EOS imaging
INFORMING BETTER SPINE SURGERY Upgrading the ATEC Clinical Experience with the Acquisition of EOS imaging
Alphatec Holdings — Merger or Acquisition (December 2020) on 6ix