Alphatec Spine Completes Acquisition of Scient’x Groupe SAS

CARLSBAD, Calif., March 29, 2010 (GLOBE NEWSWIRE) — Alphatec Holdings, Inc. (Nasdaq:ATEC), the parent company of Alphatec Spine, Inc., a medical device company that designs, develops, manufactures and markets products for the surgical treatment of spine disorders, with a focus on treating conditions affecting the aging spine, announced today the closing of its previously announced acquisition of Scient’x Groupe SAS, a spinal implant company headquartered in France.

The combined company will be the third-largest independent spinal company with a global span of product distribution. Scient’x is the largest privately held independent spine company outside of the United States with distribution in over 50 countries.

As previously announced, the Company anticipates pro forma revenues for 2010 to be in a range of $220 million to $225 million, and pro forma full-year 2010 adjusted EBITDA to be in a range of $32 million to $35 million. The Company reiterates this guidance to reflect the 2010 pro forma affect on a 12-month basis, as if the acquisition closed on January 1, 2010. The acquisition is expected to be positive to the Company’s 2010 EPS and accretive to the Company’s 2011 EPS, excluding amortization of acquired intangible assets, transaction expenses and related restructuring charges.

In conjunction with the closing of the acquisition, the Company also amended and expanded its existing credit facility with Silicon Valley Bank and Oxford Finance Corporation. The amended credit facility expands the working capital line of credit from $15 million to $25 million, based upon eligible U.S. accounts receivable and inventory balances. The existing term debt facility held by both the Company and Scient’x, which is approximately $20 million in principal outstanding in the aggregate, remains in place. The maturity date of the amended credit facility is April 1, 2012. In connection with the amended credit facility the Company agreed to new financial covenants that are based on a fixed-charge coverage ratio. The original agreement contained financial covenants that consisted of both revenue and adjusted EBITDA targets.

About Scient’x

Scient’x is a medical device company based in France that designs, develops and manufactures spinal implants and instrumentation. Scient’x was founded in 1988 and offers today a full range of implants for spinal fusions, posterior semi-rigid stabilization and a cervical total disc replacement device. Its international distribution network consists of a direct sales force in France and the UK, a hybrid of direct sales force and distributors in Italy, as well as exclusive and non-exclusive distributors in more than 50 countries including the United States. The Scient’x surgeon education and training network augments its international distribution capabilities.

Scient’x key products includes the Isobar™ family of rods, a semi-rigid rod technology used in spinal fusion surgeries, as well as cervical and lumbar implants, which are used predominantly in spine fusion surgeries. Outside of the U.S., Scient’x markets a unique and proprietary ceramic-on-ceramic cervical total disc replacement device, DiscoCerv®, which has been implanted in over 3,000 patients since its initial launch.

About Alphatec Spine

Alphatec Spine, Inc. is a wholly owned subsidiary of Alphatec Holdings, Inc. (Nasdaq:ATEC). Alphatec Spine is a medical device company that designs, develops, manufactures and markets products for the surgical treatment of spine disorders, primarily focused on the aging spine. The Company’s mission is to combine world-class customer service with innovative, surgeon-driven design that will help improve the aging patient’s quality of life. The Company is poised to achieve its goal through new solutions for patients with osteoporosis, stenosis and other aging spine deformities, improved minimally invasive products and techniques and integrated biologics solutions. In addition to its U.S. operations, the Company also markets its spine products in Europe. In Asia, the Company markets a broad line of spine and orthopedic products through its subsidiary, Alphatec Pacific, Inc. For more information, please visit www.alphatecspine.com.

Also visit the Aging Spine Center, www.agingspinecenter.com, a web-based information portal for healthcare providers and patients regarding aging spine disorders and their treatment. The Company is working with the National Osteoporosis Foundation as well as other clinical portals that provide peer-reviewed content, to populate the Aging Spine Center. The interactive website enables patients to review pertinent information about disorders that affect the aging spine in an easy-to-understand format that includes videos, graphics and questions that should be asked of caregivers. Medical information on the website includes published abstracts regarding the aging spine.

The Alphatec Holdings, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3520

Use of Non-GAAP Information

Non-GAAP earnings guidance included in this press release is a non-GAAP (generally accepted accounting principles) financial measure that represents net income (loss) excluding the effects of in-process research and development expenses, amortization of acquired intangibles, transaction related expenses, acquisition related restructuring expenses and litigation settlement expenses. Management does not consider these expenses when it makes certain evaluations of the operations of the Company. Non-GAAP earnings, as defined above, may not be similar to non-GAAP earnings measures used by other companies and is not a measurement under GAAP.

Adjusted EBITDA guidance included in this press release is a non-GAAP financial measure that represents net income (loss) excluding the effects of interest, taxes, depreciation, amortization, stock-based compensation costs, and other non-recurring income or expense items, such as in-process research and development expense, transaction related expenses and acquisition related restructuring expenses. Adjusted EBITDA, as defined above, may not be similar to adjusted EBITDA measures used by other companies and is not a measurement under GAAP.

Though management finds GAAP-based earnings or loss and adjusted EBITDA useful for evaluating aspects of the Company’s business, its reliance on these measures are limited because excluded items often have a material effect on the Company’s earnings and earnings per common share calculated in accordance with GAAP. Therefore, management uses non-GAAP earnings and adjusted EBITDA in conjunction with GAAP earnings and earnings per common share measures. The Company believes that non-GAAP earnings and adjusted EBITDA provides 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 base-line for assessing the future earnings potential of the Company. While the GAAP results are more complete, the Company prefers to allow investors to have these supplemental metrics since, with reconciliation to GAAP, they may provide greater insight into the Company’s financial results.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by safe harbors created thereby. Shareholders are cautioned that all forward-looking statements are based largely on Alphatec’s expectations and involve risks and uncertainties, some of which cannot be predicted or are beyond Alphatec’s control. Statements containing a projection of revenue, earnings, EBITDA, cost and revenue synergies, additional market opportunities, future economic performance, product development timelines, the acceptance of products by the surgeon community or whether the acquisition agreement will be consummated are just a few examples of forward-looking statements. Some factors that could realistically cause results to differ materially from those projected in the forward-looking statements include risks that the Scient’x transaction disrupts the Company’s current plans and operations and the potential difficulties in employee retention as a result of the acquisition; the ability to recognize the benefits of the transaction; litigation outcomes, including without limitation product liability litigation and litigation related to the infringement of intellectual property of a third party; the impact of healthcare reform and regulations in the United States and other jurisdictions; the Company’s ability to meet its financial guidance; the growth rate of the spine market related to aging and elderly patients; the ability to achieve regulatory approval for products in the Company’s development pipeline and the successful adoption of such products once approved; the Company’s ability to develop and expand its business in the United States, Asia and Europe; the Company’s ability to compete with other competing products and with emerging new technologies; continuation of favorable third party payor 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 control its costs or achieve profitability; and the uncertainty of additional funding. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the Company’s Annual Report on Form 10-K and in the Company’s other filings with the Securities and Exchange Commission (the “SEC”) available at the SEC’s website at http://www.sec.gov.

The statements in this press release reflect the Company’s expectations and beliefs as of the date of this release. The Company anticipates that subsequent events and developments will cause its expectations and beliefs to change. However, while the Company may elect to update these forward-looking statements publicly at some point in the future, the Company specifically disclaims any obligation to do so, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing the Company’s views as of any date after the date of this release.


Josh Sandberg

Josh Sandberg is the President of Ortho Spine Partners and Partner for The De Angelis Group. He also serves as Co-Founder and Editor of OrthoSpineNews.

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