ATEC Reports Second Quarter 2023 Financial Results and Raises Full Year 2023 Revenue and Adjusted EBITDA Guidance

About this update from Alphatec Holdings, Inc.

Total revenue grew 39% to $117 million Surgical revenue grew 41% to $102 million and EOS revenue grew 24% to $15 million Delivered positive adjusted EBITDA of over $1 million CARLSBAD, Calif. --(BUSINESS WIRE)-- Alphatec Holdings, Inc. (Nasdaq: ATEC), a provider of innovative solutions dedicated to revolutionizing the approach to spine surgery, today announced financial results for the quarter ended June 30, 2023 , and recent corporate highlights. Second Quarter 2023 Financial Results Quarter Ended June 30, 2023 Total revenue $117 million GAAP gross margin 55% Non-GAAP gross margin 73% GAAP operating expenses $114 million Non-GAAP operating expenses $94 million GAAP operating loss ($50) million Adjusted EBITDA $1 million Ending cash balance $101 million Recent Highlights Continued to advance the clinical procedural experience through PTP™ (Prone TransPsoas) and launch of LTP™ (Lateral TransPsoas), the strongest contributors to Q2 revenue growth; Launched ALIF access system to further LTP with midline ALIF approach for L3 to S1; Acquired navigation-enabled robotics platform, which will integrate into ATEC’s procedural workflow, improving precision, clinical predictability and efficiency, while minimizing radiation; Drove 32% increase in surgical volume and 7% increase in average revenue per procedure; Expanded adjusted EBITDA margin by 1,110 basis points. “ATEC’s 100% spine focus gives us a unique ability to create comprehensive, ground-up procedures that directly improve spine care,” said Pat Miles , Chairman and Chief Executive Officer. “Our long-held thesis - that good surgery is good business - is proving out. We are delivering unmatched clinical distinction, which is compelling strong surgeon adoption, attracting some of spine’s most talented sales professionals, and fueling industry-leading procedural volume growth. But we're still just getting started. We are focused on developing the most actionable informatics ecosystem in spine, which will use EOS and navigation-enabled robotics to address spine surgery’s biggest challenges. With the knowhow we have assembled at ATEC, I love our chances." Financial Outlook for the Full Year 2023 The Company now expects total revenue to grow 32% to $462 million for the fiscal year ended December 31, 2023 . This includes surgical revenue growth of approximately 33% and $58 million of EOS revenue. The Company also now expects non-GAAP adjusted EBITDA of approximately $2 million for the full year 2023. Financial Results Webcast ATEC will present these results via a live webcast today at 1:30 p.m. PT / 4:30 p.m. ET . The live webcast can be accessed by visiting the Investor Relations Section of ATEC’s Corporate Website. To dial in to the webcast, please register via this link . A replay of the webcast will remain available through the Investor Relations Section of ATEC’s Corporate Website for twelve months. In addition, a dial-in replay will be available beginning about two hours after the webcast’s completion through August 10, 2023 . Access the replay by dialing (800) 770-2030 and referencing conference ID number 97241. Inducement Awards Granted As an inducement material to accepting employment with the Company, and in accordance with Nasdaq Listing Rule 5635(c)(4), ATEC today announced that the independent Compensation Committee of the Board of Directors has approved aggregate grants to seventeen new employees (who are not executive officers) of, collectively, 12,772 restricted stock units (“RSUs”) under the Company’s 2016 Employment Inducement Award Plan. The RSUs will vest in equal annual installments on each of the first four anniversaries of the grant date, provided that the recipient remains continuously employed by ATEC as of such vesting date. In addition, the RSUs will vest fully upon a change of control of ATEC. Non-GAAP Financial Information To supplement the Company’s financial statements presented in accordance with generally accepted accounting principles in the United States of America (GAAP), the Company reports certain non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating loss, and non-GAAP adjusted EBITDA. The Company believes that these non-GAAP financial measures provide investors with an additional tool for evaluating the Company's core performance, which management uses in its own evaluation of continuing operating performance, and a baseline for assessing the future earnings potential of the Company. The Company’s non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies in the industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. Non-GAAP financial results should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Included below are reconciliations of the non-GAAP financial measures to the comparable GAAP financial measures. About Alphatec Holdings, Inc. ATEC, through its wholly owned subsidiaries, Alphatec Spine, Inc. , EOS imaging S.A.S. and SafeOp Surgical, Inc. , is a medical device company dedicated to revolutionizing the approach to spine surgery through clinical distinction. ATEC’s Organic Innovation Machine™ is focused on developing new approaches that integrate seamlessly with the Company’s expanding AlphaInformatiX Platform to better inform surgery and more safely and reproducibly achieve the goals of spine surgery. ATEC’s vision is to be the Standard Bearer in Spine. For more information, visit us 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 will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Forward-looking statements include, but are not limited to: references to the Company’s revenue, balance sheet, growth and financial outlook; planned product launches and introductions; and the Company’s ability to compel surgeon adoption. 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 uncertainty of success in developing new products or products currently in the pipeline; the uncertainties in the Company’s ability to execute upon its strategic operating plan; the uncertainties regarding the ability to successfully license or acquire 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 or unexpected or prolonged delays in the process; continuation of favorable Second-party reimbursement; unanticipated expenses or liabilities or other adverse events affecting cash flow or the Company’s ability to achieve profitability; uncertainty of additional funding; product liability exposure; an unsuccessful outcome in any litigation; patent infringement claims; claims related to the Company’s intellectual property; and the Company’s ability to meet its financial obligations. 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 intention 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. Alphatec Holdings, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share amounts) Three Months Ended Six Months Ended June 30 , June 30 , 2023 2022 2023 2022 (unaudited) Revenue: Revenue from products and services $ 116,920 $ 84,151 $ 226,030 $ 155,069 Revenue from international supply agreement — — — 15 Total revenue 116,920 84,151 226,030 155,084 Cost of sales 52,379 28,675 91,064 50,392 Gross profit 64,541 55,476 134,966 104,692 Operating expenses: Research and development 14,571 10,596 27,831 20,318 Sales, general and administrative 87,287 72,668 178,549 142,139 Litigation-related expenses 6,908 5,495 10,100 13,027 Amortization of acquired intangible assets 3,705 2,177 6,588 4,407 Transaction-related expenses 1,900 — 1,900 120 Restructuring expenses 29 289 204 1,659 Total operating expenses 114,400 91,225 225,172 181,670 Operating loss (49,859 ) (35,749 ) (90,206 ) (76,978 ) Interest expense and other income, net: Interest expense, net (3,892 ) (1,435 ) (7,766 ) (2,891 ) Other income, net 2,324 67 3,030 37 Total interest expense and other income, net (1,568 ) (1,368 ) (4,736 ) (2,854 ) Net loss before taxes (51,427 ) (37,117 ) (94,942 ) (79,832 ) Income tax benefit (50 ) (16 ) (36 ) (115 ) Net loss $ (51,377 ) $ (37,101 ) $ (94,906 ) $ (79,717 ) Net loss per share, basic and diluted $ (0.43 ) $ (0.36 ) $ (0.83 ) $ (0.79 ) Weighted average shares outstanding, basic and diluted 118,719 102,849 114,260 101,422 Stock-based compensation included in: Cost of sales $ 16,226 $ 449 $ 22,232 $ 705 Research and development 1,480 1,362 2,797 2,334 Sales, general and administrative 6,488 7,392 15,627 16,348 $ 24,194 $ 9,203 $ 40,656 $ 19,387 Alphatec Holdings, Inc. Condensed Consolidated Balance Sheets (in thousands) June 30 ,2023 December 31 ,2022 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 101,020 $ 84,696 Accounts receivable, net 59,932 60,060 Inventories 119,957 101,521 Prepaid expenses and other current assets 18,758 9,357 Total current assets 299,667 255,634 Property and equipment, net 119,372 101,952 Right-of-use assets 27,421 28,360 Goodwill 72,527 47,367 Intangible assets, net 105,508 82,781 Other assets 3,739 4,874 Total assets $ 628,234 $ 520,968 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 43,698 $ 34,742 Accrued expenses and other current liabilities 74,123 72,382 Contract liabilities 13,895 11,956 Short-term debt 2,207 14,948 Current portion of operating lease liabilities 4,824 4,842 Total current liabilities 138,747 138,870 Total long-term liabilities 494,037 393,162 Redeemable preferred stock 23,603 23,603 Stockholders' deficit (28,153 ) (34,667 ) Total liabilities and stockholders' deficit $ 628,234 $ 520,968 Alphatec Holdings, Inc. Reconciliation of Non-GAAP Financial Measures (in thousands) Three Months Ended Six Months Ended June 30 , June 30 , 2023 2022 2023 2022 (unaudited) Gross profit, GAAP $ 64,541 $ 55,476 $ 134,966 $ 104,692 Add: amortization of intangible assets 220 9 440 9 Add: stock-based compensation 16,226 449 22,232 705 Add: purchase accounting adjustments on acquisitions — 437 195 437 Add: excess and obsolete write-down 4,636 2,394 6,734 4,100 Non-GAAP gross profit $ 85,623 $ 58,765 $ 164,567 $ 109,943 Gross margin, GAAP 55.2 % 65.9 % 59.7 % 67.5 % Add: amortization of intangible assets 0.2 % 0.0 % 0.2 % 0.0 % Add: stock-based compensation 13.9 % 0.5 % 9.8 % 0.5 % Add: purchase accounting adjustments on acquisitions 0.0 % 0.5 % 0.1 % 0.3 % Add: excess and obsolete write-down 4.0 % 2.8 % 3.0 % 2.6 % Non-GAAP gross margin 73.2 % 69.8 % 72.8 % 70.9 % Three Months Ended Six Months Ended June 30 , June 30 , 2023 2022 2023 2022 (unaudited) Operating expenses, GAAP $ 114,400 $ 91,225 $ 225,172 $ 181,670 Adjustments: Stock-based compensation (7,968 ) (8,754 ) (18,424 ) (18,682 ) Litigation-related expenses (6,908 ) (5,495 ) (10,100 ) (13,027 ) Amortization of intangible assets (3,705 ) (2,177 ) (6,588 ) (4,407 ) Transaction-related expenses (1,900 ) — (1,900 ) (120 ) Restructuring expenses (29 ) (289 ) (204 ) (1,659 ) Other non-recurring expenses1 — — (1,349 ) — Non-GAAP operating expenses $ 93,890 $ 74,510 $ 186,607 $ 143,775 Three Months Ended Six Months Ended June 30 , June 30 , 2023 2022 2023 2022 (unaudited) Operating loss, GAAP $ (49,859 ) $ (35,749 ) $ (90,206 ) $ (76,978 ) Depreciation 9,758 7,506 18,347 14,591 Amortization of intangible assets 3,925 2,186 7,028 4,416 EBITDA (36,176 ) (26,057 ) (64,831 ) (57,971 ) Add back significant items: Stock-based compensation 24,194 9,203 40,656 19,387 Purchase accounting adjustments on acquisitions — 437 195 437 Excess & obsolete write-down 4,636 2,394 6,734 4,100 Litigation-related expenses 6,908 5,495 10,100 13,027 Transaction-related expenses 1,900 — 1,900 120 Restructuring expenses 29 289 204 1,659 Other non-recurring expenses1 — — 1,349 — Adjusted EBITDA $ 1,491 $ (8,239 ) $ (3,693 ) $ (19,241 ) 1. Non-recurring consulting fees associated with the implementation of our state tax-planning strategy View source version on businesswire.com : https://www.businesswire.com/news/home/20230803895265/en/ Investor/Media Contact: Tina Jacobsen , CFA Investor Relations (760) 494-6790 [email protected] Company Contact: J. Todd Koning Chief Financial Officer [email protected] Source: Alphatec Holdings, Inc.

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