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Alphatec Holdings Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 6, 2011 05:20PM

Alphatec Holdings Inc. (ATEC) filed Quarterly Report for the period ended 2011-03-31. Alphatec Holdings Inc. has a market cap of $262.7 million; its shares were traded at around $2.95 with and P/S ratio of 1.5.



Highlight of Business Operations:

Revenues. Revenues were $49.7 million for the three months ended March 31, 2011 compared to $35.3 million for the three months ended March 31, 2010, representing an increase of $14.4 million, or 40.8%. The increase of $14.4 million is comprised of $10.3 million of sales from the addition of Scient’x products and $3.7 million and $0.4 million in sales of Alphatec products in the U.S. and International regions, respectively.

International revenues were $15.9 million for the three months ended March 31, 2011 compared to $6.9 million for the three months ended March 31, 2010, representing an increase of $9.0 million, or 130.3%. The increase was primarily due to sales of Scient’x products ($8.6 million), sales growth in the Asia region, inclusive of favorable exchange rates ($2.2 million), and offset by a reduction in the European sales ($1.8 million) caused by deferred revenue recognized in 2010 that was not repeated in 2011.

Cost of revenues. Cost of revenues was $17.4 million for the three months ended March 31, 2011 compared to $11.7 million for the three months ended March 31, 2010, representing an increase of $5.7 million, or 48.7%. The increase was primarily due to $6.0 million in product costs associated with the addition of Scient’x products, increased instrument depreciation costs of $0.7 million based on a larger installed surgical instruments asset base, manufacturing absorption variances of $0.2 million, sales milestone accruals of $0.2 million, and inventory step-up expenses of $0.4 million related to the Scient’x acquisition, offset by decreases of $0.5 million in amortization costs due to the full amortization of older intangible assets and decreased royalty expenses of $1.0 million due primarily to the expiration of the certain patents.

Gross profit. Gross profit was $32.0 million for the three months ended March 31, 2011 compared to $23.6 million for the three months ended March 31, 2010, representing an increase of $8.4 million, or 35.5%. The increase of $8.4 million is comprised of $3.9 million of gross profit from the addition of Scient’x products and $3.8 million and $0.7 million in sales of Alphatec products in the U.S. and International regions, respectively.

Sales and marketing expense. Sales and marketing expense was $18.6 million for the three months ended March 31, 2011 compared to $13.4 million for the three months ended March 31, 2010, representing an increase of $5.2 million, or 38.8%. The increase was primarily related to expenses related to increased European sales and marketing activities in support of the new Scient’x products ($2.3 million), increases in expenses in the Alphatec Asian subsidiary ($0.6 million), higher commission expense ($0.7 million) and due to the higher sales volume, increased selling, marketing and medical education expenses ($1.6 million).

General and administrative expense. General and administrative expense was $9.1 million for the three months ended March 31, 2011 compared to $5.6 million for the three months ended March 31, 2010, representing an increase of $3.5 million, or 62.5%. The increase was primarily related to increased European general and administrative activities in support of the new Scient’x products ($2.1 million), increases in expenses in the Alphatec Asian subsidiary ($0.3 million) and increases in U.S. general and administrative expenses ($1.8 million). The $1.8 million increase is primarily related to increased human resources ($0.7 million), legal expenses ($0.5 million) and other administrative costs, including information technology, finance and regulatory ($0.6 million).

Read the The complete Report



Stocks Discussed: ATEC,
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