Alphatec Holdings Announces Fourth Quarter and Full Year 2013 Revenue and Financial Results

Alphatec Holdings Announces Fourth Quarter and Full Year 2013 Revenue and Financial Results  Company Posts Record Sales and Adjusted EBITDA for Both Fourth Quarter and Full Year 2013  CARLSBAD, Calif., March 17, 2014 (GLOBE NEWSWIRE) -- Alphatec Holdings, Inc. (Nasdaq:ATEC), the parent company of Alphatec Spine, Inc., a medical device company that provides physician-inspired solutions for patients with spinal disorders, announced today financial results for the fourth quarter and full year ended December 31, 2013.  -- Fourth quarter revenue of $53.1 million; approximately 1% growth over 2012. 3.4% growth on a constant currency basis.  -- Fourth quarter adjusted EBITDA of $7.5 million, 14.1% of revenue; 51% growth over 2012.  -- Annual total revenue of $204.7 million; 4.3% growth over 2012. 7.3% growth on a constant currency basis.  -- Full year adjusted EBITDA of $25.2 million, 12.3% of revenue; 26.5% growth over 2012.  Highlights of Alphatec's Fourth Quarter and Fiscal Year 2013  -- Delivered significant revenue growth across key global markets    *U.S. annual revenue of $135 million in 2013, which represented 3.4% growth     over 2012; excluding the revenue contributions of PureGen realized in     2012, U.S. revenue was up over 8%.   *Well-established international business accounted for 34% of full year     revenue with growth of 15% over 2012, as adjusted for constant currency.   *Japanese revenue of $28.4 million in 2013, which represented impressive     19.4% year-over-year growth on a constant currency basis.  -- Expanded global product portfolio with focus on minimally invasive and biologics products    *Over 27% of 2013 global revenues were achieved through the targeted     marketing and sales of innovative technologies.   *Illico MIS global revenue increased over 19% from 2012 with surgeon     adoption of Illico Multi-level, which was launched in early 2013.   *Alphatec Solus ALIF launched in mid-2013 and is demonstrating strong     uptake with surgeons who value the simplicity of the system and decreased     operative time for their patients.   *Zodiac Direct Vertebral Rotation (DVR) launched in early 2013 and     supported strong double-digit growth in U.S. deformity unit volumes over     2012.   *Approximately 30% of biologics revenue in 2013 came from newly launched     innovative biologics products such as NeXoss and Profuse Bioscaffold     Allograft strips and chips.  -- Strengthened foundation for future profitability    *French government and Works Council approval of proposed Scient'x     restructuring in France, which is anticipated to increase EBITDA by $6 to     $7 million on an annualized basis in 2H2014. Transition well underway and     is progressing towards full completion.   *Realized significant reductions in global inventories, reduced back orders     by over 90% and decreased overall lead-times by over 85% and work in     process by over $1 million.   *Adjusted EBITDA fourth quarter growth of 51% over the same period in 2012     and 11.5% sequential growth.  "2013 was a very successful, transformational year for Alphatec Spine, with record sales, solid, repeatable execution and strategic operational improvements. We generated global sales growth across our portfolio while continuing to focus on operational effectiveness that we believe will add to our strong foundation for future value creation," said Les Cross, Chairman and CEO of Alphatec. "I am proud of the performance and strong results delivered by our employees and partners  across the world in 2013. Our strong execution, along with resolution of the OrthoTec, LLC vs. Surgiview S.A.S. legal matter announced today, has removed an uncertainty in our business and positioned us to enter 2014 with an extraordinary opportunity to maximize long-term shareholder value," added Mr. Cross.  Quarter Ended December 31, 2013  Consolidated net revenues for the fourth quarter of 2013 were $53.1 million, representing growth of approximately 1% compared to $52.7 million reported for the fourth quarter of 2012, or 3.4% on a constant currency basis.  U.S. net revenues for the fourth quarter of 2013 were $35.7 million, representing growth of approximately 5%, compared to $34.0 million reported for the fourth quarter of 2012. Excluding revenue contributions from PureGen in 2012, U.S. net revenues grew 10.5% over the same period in 2012.  International net revenues for the fourth quarter of 2013 were $17.4 million, down 7% compared to $18.7 million for the fourth quarter of 2012, or up approximately 1% on a constant currency basis. International sales were impacted by an anticipated decline in French revenue after our decision to discontinue commercial operations in France was announced in the third quarter. Excluding revenues from the end of commercial operations in France, international revenues grew over 4% over the same period in 2012 on a constant currency basis.  Gross profit and gross margin for the fourth quarter of 2013 were $35.3 million and 66.4%, respectively, compared to $32.1 million and 60.9%, respectively, for the fourth quarter of 2012. When gross profit and gross margin in the fourth quarter of 2013 are adjusted for COGS-related expenses incurred as a result of the restructuring of the Company's French operations, gross profit and gross margin would be $36.4 million and 68.6%, respectively, reflecting continued performance at managing costs and streamlining operations.  Total operating expenses for the fourth quarter of 2013 were $91.3 million, reflecting an increase of approximately $55.1 million compared to the fourth quarter of 2012. This variance is driven primarily by expenses related to the OrthoTec vs. Surgiview legal matter and $5.6 million of expenses associated with the restructuring of the Company's French operations. When operating expenses are adjusted for these and other non-GAAP adjustments, total operating expense would be $36.4 million, or 68.7% of revenue, which is an increase of $0.3 million over 2012.  As announced earlier today, the Company has reached a settlement with OrthoTec, LLC regarding the OrthoTec, LLC vs. Surgiview S.A.S. legal matter. As a result of this settlement, the Company recorded the following expenses in the fourth quarter of 2013: a non-recurring expense of $46 million associated with the settlement and $3.7 million of trial-related litigation expenses incurred during the fourth quarter.  GAAP net loss for the fourth quarter of 2013 was $60.4 million or ($0.62) per share (basic and diluted), compared to a net loss of $5.4 million, or ($0.06) per share (basic and diluted) for the fourth quarter of 2012. Non-GAAP EPS, when adjusted for the expense items related to the OrthoTec vs. Surgiview legal matter discussed previously, as well as expenses associated with the ongoing restructuring of the Company's French operations, is ($0.02) per share (basic and diluted), compared to ($0.01) per share (basic and diluted) for the fourth quarter of 2012.  Adjusted EBITDA in the fourth quarter of 2013 was $7.5 million, or 14.1% of revenues, compared to $5.0 million, or 9.4% of revenues reported in the fourth quarter of 2012. Fourth quarter 2013 adjusted EBITDA represents net income excluding effects of interest, taxes, depreciation, amortization, stock-based compensation and the following items: a non-recurring expense of $46.0 million associated with the settlement of the OrthoTec vs. Surgiview litigation, $3.7 million in trial-related litigation expenses and $6.3 million of expenses related to restructuring of the Company's French operations. Please refer to the table, "Alphatec Holdings, Inc. Reconciliation of Non-GAAP Financial Measures" that follows for more detailed information.  Cash and cash equivalents were $21.3 million at December 31, 2013, compared to $22.2 million reported at December 31, 2012.  Year Ended December 31, 2013  Consolidated net revenues for full year 2013 were $204.7 million, representing growth of 4.3%, compared to $196.3 million reported for full year 2012, or up 7.3% on a constant currency basis.  U.S. net revenues for full year 2013 were $135.0 million, representing growth of 3.4%, compared to $130.5 million reported for full year 2012. Excluding revenue contributions from PureGen, U.S. net revenues grew 8.3% over 2012.The increase in U.S. net revenues was driven by continued growth in unit volumes with our core hospital business as well as growing adoption of products across our portfolio.  International net revenues full year 2013 were $69.8 million, representing growth of 6% compared to $65.8 million for full year 2012, or 15% on a constant currency basis.International sales growth continues to be driven by strong sales in Japan as well as expansion within Latin America and China offset by continued currency conversion impact.  Gross profit and gross margin for full year 2013 were $124.3 million and 60.7%, respectively, compared to $123.8 million and 63.1%, respectively, for full year 2012.When gross profit and gross margin for the full year 2013 are adjusted for non-recurring COGS adjustments related to PureGen, as well as COGS-related expenses incurred as a result of the restructuring of the Company's French operations, gross profit and gross margin would be $133.5 million and 65.2%, respectively.  Total operating expenses for full year 2013 were $197.8 million, reflecting an increase of approximately $64.2 million compared to full year 2012.This variance is primarily driven by the non-recurring expenses related to the OrthoTec vs. Surgiview legal matter outlined previously, as well as approximately $9.7 million of expenses related to the French restructuring.When operating expenses are adjusted for these expenses and other non-GAAP adjustments, total operating expense would be $137.8 million, or 67.3% of revenue.  GAAP net loss for full year 2013 was $82.2 million or ($0.85) per share (basic and diluted), compared to a net loss of $15.5 million, or ($0.17) per share (basic and diluted) for full year 2012.Non-GAAP EPS, when adjusted for the expense items related to the OrthoTec vs. Surgiview legal matter discussed previously, as well as expenses associated with the ongoing restructuring of the Company's French operations, is ($0.02) per share (basic and diluted), compared to ($0.01) per share (basic and diluted) for full year 2012.  Adjusted EBITDA for full year 2013 was $25.2 million, or 12.3% of revenues, compared to $19.9 million, or 10.1% of revenues reported for full year 2012.Full year 2013 adjusted EBITDA represents net income excluding effects of interest, taxes, depreciation, amortization, stock-based compensation and the following items:a non-recurring expense of $46.0 million associated with the settlement of the OrthoTec vs. Surgiview litigation, $3.7 million in trial-related litigation expenses and $15.3 million of expenses related to restructuring of the Company's French operations.Please refer to the table, "Alphatec Holdings, Inc. Reconciliation of Non-GAAP Financial Measures" that follows for more detailed information.  2014 Financial Guidance  The Company anticipates annual 2014 revenues of $208 million to $215 million, representing approximately 1.6% to 5% growth over 2013, or 4.5% to 8.0% when adjusted for prior year contributions associated with sales in France.Additionally, the Company expects annual adjusted EBITDA of $30 million to $33 million in 2014, representing 19% to 31% growth over 2013, and representing approximately 14.4% to 15.3% of annual revenue.Adjusted EBITDA guidance assumes that there are no further ongoing litigation expenses associated with the OrthoTec vs. Surgiview legal matter.  Conference Call  Alphatec Spine will webcast its Quarterly Update Call today at 5:00 p.m. EDT / 2:00 p.m. PDT.Les Cross, Alphatec's Chairman and CEO will lead the call.During the call the Company plans to provide further details underlying itsfourth quarter 2013 financial results.  To access the webcast, please log on to www.alphatecspine.com approximately fifteen minutes prior to the call to register, download and install any necessary audio software.For those without access to the internet, the live call may be accessed by phone by calling toll-free (877) 556-5251 (U.S. / Canada) or (720) 545-0036 (international), participant passcode number 59336789.A replay of the call will also be available on the investor relations section of Alphatec Spine's website for at least 30 days.  Alphatec expects to file a Form 12b-25 (Notification of Late Filing) with the United States Securities and Exchange Commission today, as it is anticipating filing its report on Form 10-K for the year ended December 31, 2013 no later than April 1, 2014, which is after the required filing date of March 17, 2014.  Non-GAAP Information  Alphatec Spine reports certain non-GAAP financial measures such as non-GAAP earnings and earnings per share, adjusted for effects of amortization and other non-recurring or expense items, such as loss on extinguishment of debt, restructuring expenses and transaction-related expenses.Adjusted EBITDA 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 expenses, and other non-recurring income or expense items, such as severance expense, litigation expenses, damages associated with ongoing litigation and transaction-related expenses. The Company believes that non-GAAP 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.For completeness, Management uses non-GAAP adjusted EBITDA in conjunction with GAAP earnings and earnings per common share measures.These non-GAPP financial measures 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 measure.  About Alphatec Spine  Alphatec Spine, Inc., a wholly owned subsidiary of Alphatec Holdings, Inc., is a medical device company that designs, develops, manufactures and markets physician-inspired products and solutions for the treatment of spinal disorders associated with trauma, congenital deformities, disease and degeneration. The Company's mission is to combine innovative surgical solutions with world-class customer service to improve outcomes and patient quality of life. The Company and its affiliates market products in the U.S. and in over 50 countries internationally via a direct sales force and independent distributors.  Additional information can be found at www.alphatecspine.com.  Forward Looking Statements  This press release may contain "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. Alphatec Spine cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Forward looking statements include the references to Alphatec Spine's 2014 revenue, guidance and 2014 adjusted EBITDA guidance; the success of the Company to achieve the gross margin, profitability and adjusted EBITDA improvements of the French restructuring in the anticipated timeframes including an increase in EBITDA of $6 to $7 million on an annualized basis in the second half of 2014; the success of the Company's initiatives to drive global sales growth, increase margins and increase operating efficiencies. The 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 Alphatec Spine's pipeline; the uncertainties regarding the ability to successfully license or acquire new products, and the commercial success of such products; failure to achieve acceptance of Alphatec Spine's products by the surgeon community, including the Alphatec Solus, Zodiac DVR, Profuse, Illico MIS and NeXoss products discussed in this press release; failure to successfully implement streamlining activities to create anticipated savings; failure to obtain FDA clearance or approval or international regulatory approvals for new products, including the products discussed in this press release, or unexpected or prolonged delays in the process; 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; uncertainty of additional funding; the Company's ability to compete with other competing products and with emerging new technologies; product liability exposure; an unsuccessful outcome in any material litigation in which the Company is a defendant; patent infringement claims and claims related to the Company's intellectual property. The words "believe," "will," "should," "expect," "intend," "estimate" and "anticipate," variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. Please refer to the risks detailed from time to time in Alphatec Spine's SEC reports, including its Annual Report Form 10-K for the year ended December 31, 2012, filed on March 4, 2013 with the Securities and Exchange Commission, as well as other filings on Form 10-Q and periodic filings on Form 8-K. Alphatec Spine 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 - unaudited)                                                                                                Three Months Ended     Year Ended                                 December 31,           December 31,                                2013        2012       2013        2012                                                                 Revenues                        $53,065   $52,743  $204,724  $196,278 Cost of revenues                17,366     19,988    78,669     70,761 Amortization of acquired        444        635       1,733      1,749 intangible assets Total cost of revenues          17,810      20,623     80,402      72,510 Gross profit                    35,255      32,120     124,322     123,768                                                                 Operating expenses:                                              Research and development        3,814      3,883     14,190     14,886 In-process research and         --         341       --         341 development Sales and marketing             21,156     19,334    76,960     75,177 General and administrative      13,931      11,226     47,949     39,939 Amortization of acquired        754         605        3,009      2,180 intangible assets Transaction related costs       --        719        --        1,082 Litigation settlement           45,982     --       45,982     -- Restructuring expenses          5,620      --       9,665      -- Total operating expenses        91,257      36,108     197,755     133,605 Operating loss                  (56,002)    (3,988)    (73,433)    (9,837) Interest and other income       (2,109)     (1,767)    (5,615)     (6,781) (expense), net Loss from continuing operations (58,111)    (5,755)    (79,047)    (16,618) before taxes Income tax provision (benefit)  2,296      (400)     3,179      (1,159) Net loss                        $(60,407) $(5,355) $(82,227) $(15,459)                                                                                                                                 Net loss per common share:                                       Basic and diluted net loss per  $(0.62)   $(0.06)  $(0.85)   $(0.17) share                                                                 Weighted-average shares - basic 96,793      93,209     96,235      90,218 and diluted   ALPHATEC HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands - unaudited)                                                                                                  December 31, December 31,                                            2013         2012 ASSETS                                                  Current assets:                                         Cash and cash equivalents                 $21,345    $22,241 Accounts receivable, net                  41,395       41,012 Inventories, net                          41,939       49,855 Prepaid expenses and other current assets 7,694        5,953 Deferred income tax assets                1,372       2,991 Total current assets                       113,745      122,052                                                        Property and equipment, net                28,030       30,403 Goodwill                                   183,004      180,838 Intangibles, net                           39,064       46,856 Other assets                               1,787        1,978 Total assets                               $365,630   $382,127                                                        LIABILITIES AND STOCKHOLDERS' EQUITY                    Current liabilities:                                    Accounts payable                          $10,790    $15,237 Accrued expenses                          62,996       38,490 Deferred revenue                          1,009        1,361 Current portion of long-term debt         4,924        1,700 Total current liabilities                  79,719       56,788                                                        Total long term liabilities               90,632      55,920 Redeemable preferred stock                23,603      23,603 Stockholders' equity                      171,676     245,816 Total liabilities and stockholders' equity $365,630   $382,127   ALPHATEC HOLDINGS, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts - unaudited)                                                                                                Three Months Ended     Year Ended                                 December 31,           December 31,                                2013        2012       2013        2012                                                                 Operating loss, as reported     $(56,002) $(3,988) $(73,433) $(9,837) Add back:                                                        Depreciation                    3,786      3,647     14,638     14,184 Amortization of intangible      1,330      1,481     6,898      5,679 assets Amortization of acquired        1,197      1,241     4,741      3,929 intangible assets Total EBITDA                    (49,689)    2,381      (47,156)    13,955                                                                 Add back significant items:                                      Stock-based compensation        1,246      1,330     4,078      3,540 In-process research and         --         341       --         341 development Acquisition-related inventory   --         191       --         191 step-up Transaction related expenses    --         718       --         1,082 Litigation settlement and trial 49,657     --        49,657     -- costs Restructuring and other charges 6,282      --        18,603     794                                                                 EBITDA, as adjusted for         $7,496    $4,961   $25,182   $19,903 significant items                                                                                                                                 Net loss, as reported           $(60,407) $(5,355) $(82,227) $(15,459) Add back:                                                        In-process research and         --        341       --        341 development Amortization of acquired        1,197      1,241     4,741      3,929 intangible assets Amortization of intangible      1,330      1,481     6,898      5,679 assets Loss on extinguishment of debt  --        --       --        2,910 Acquisition-related inventory   --        191       --        191 step-up Transaction related expenses    --        718       --        1,082 Litigation settlement and trial 49,657     --       49,657     -- costs Restructuring and other charges 6,282      --       18,603     794                                                                 Net loss, as adjusted for       $(1,941)  $(1,383) $(2,328)  $(533) significant items                                                                                                                                 Net loss per common share -     $(0.62)   $(0.06)  $(0.85)   $(0.17) basic and diluted Add back:                                                        In-process research and         --        0.00      --        0.00 development Amortization of acquired        0.01       0.01      0.05       0.04 intangible assets Amortization of intangible      0.01       0.02      0.07       0.06 assets Loss on extinguishment of debt  --        --       --        0.03 Acquisition-related inventory   --        0.00      --        0.00 step-up Transaction related expense     --        0.01      --        0.01 Litigation settlement and trial 0.51       --       0.52       -- costs Restructuring and other charges 0.06       --       0.19       0.01                                                                 Net loss per common share - basic anddiluted, as adjusted  $(0.02)   $(0.01)  $(0.02)   $(0.01) for significant items                                                                                                                                 Weighted-average shares - basic 96,793      93,209     96,235      90,218 and diluted   ALPHATEC HOLDINGS, INC. RECONCILIATION OF GEOGRAPHIC SEGMENT REVENUES AND GROSS PROFIT (in thousands, except percentages - unaudited)                                                                                    Three Months Ended                              % Change                     December 31,              % Change  % Change    Foreign                    2013         2012         As        Operations  Currency                                               Reported                                                                 Revenues by                                                      geographic segment U.S.                $35,702    $34,046    4.9%      4.9%        0.0% International       17,363       18,697       -7.1%     0.8%        -7.9% Total revenues      $53,065    $52,743    0.6%      3.4%        -2.8%                                                                 Gross profit by                                                  geographic segment U.S.                $26,563    $22,575                         International       8,692        9,545                             Total gross profit  $35,255    $32,120                                                                                         Gross profit margin by geographic                                                    segment U.S.                74.4%        66.3%                             International       50.1%        51.1%                             Total gross profit  66.4%        60.9%                             margin                                                                                                                                                    Year Ended                                      % Change                     December 31,             % Change  % Change    Foreign                    2013         2012         As        Operations  Currency                                               Reported                                                                 Revenues by                                                      geographic segment U.S.                $134,951   $130,476   3.4%      3.4%        0.0% International       69,773       65,802       6.0%      15.0%       -9.0% Total revenues      $204,724   $196,278   4.3%      7.3%        -3.0%                                                                 Gross profit by                                                  geographic segment U.S.                $91,341    $89,360                         International       32,981       34,408                            Total gross profit  $124,322   $123,768                                                                                        Gross profit margin by geographic                                                    segment U.S.                67.7%        68.5%                             International       47.3%        52.3%                             Total gross profit  60.7%        63.1%                             margin                                                                                                                                 Footnotes:                                                       1)The impact from foreign currency represents the percentage change in 2013 revenues due to the change in foreign exchange rates for the periods presented.   ALPHATEC HOLDINGS, INC. NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts - unaudited)                                                                                                                                         Three Months Ended December 31, 2013                                     Non-GAAP                             GAAP          Adjustments            Non-GAAP                                                          Revenues               $53,065     $--                $53,065 Cost of revenues       17,366       (1,131)     (a)       16,235 Amortization of acquired intangible    444          --                  444 assets Total cost of revenues 17,810        (1,131)              16,679 Gross profit           35,255        1,131                36,386                       66.4%                              68.6% Operating expenses:                                       Research and           3,814        --                   3,814 development Sales and marketing    21,156       --                   21,156 General and            13,931        (3,206)      (b)      10,725 administrative Amortization of acquired intangible    754           0                     754 assets Litigation settlement  45,982       (45,982)     (c)     -- Restructuring expenses 5,620        (5,620)     (d)     -- Total operating        91,257        (54,808)             36,449 expenses Operating loss         (56,002)      55,939               (63) Interest and other     (2,109)       0                     (2,109) income (expense), net Loss from continuing operations before      (58,111)      55,939               (2,171) taxes Income tax provision   2,296        --                  2,296 Net loss               $(60,407)   $55,939             $(4,468)                                                                                                                                         Year Ended December 31, 2013                                     Non-GAAP                             GAAP          Adjustments            Non-GAAP                                                          Revenues               $204,724    $--                $204,724 Cost of revenues       78,669       (9,176)     (a) (e)   69,493 Amortization of acquired intangible    1,733        --                  1,733 assets Total cost of revenues 80,402        (9,176)              71,226 Gross profit           124,322       9,176                133,498                       60.7%                              65.2% Operating expenses:                                       Research and           14,190       (162)       (f)     14,028 development Sales and marketing    76,960       --                   76,960 General and            47,949       (4,168)      (b) (g)  43,781 administrative Amortization of acquired intangible    3,009        --                  3,009 assets Litigation settlement  45,982       (45,982)     (c)     -- Restructuring expenses 9,665        (9,665)     (d)     -- Total operating        197,755       (59,977)             137,778 expenses Operating loss         (73,433)      69,153               (4,280) Interest and other     (5,615)       --                  (5,615) income (expense), net Loss from continuing operations before      (79,047)      69,153               (9,894) taxes Income tax provision   3,179        --                  3,179 Net loss               $(82,227)   $69,153             $(13,074)                                                          Notes:                                                    (a) Record inventory and instrument net book value adjustment and other costs of $1.1 million and $5.6 million for the three months and year ended December 31, 2013, respectively,related to the restructuring of the Company's French operations. (b) Amount consists of Orthotec litigation trial related costs of $3.7 million, partially offset by Phygen related escrow claim. (c) Litigation settlement related to the Orthotec litigation.               (d) Employee severance and facility closing costs accrued for the restructuring of the Company's French operations. (e) Includes write-off of inventory and intangibles of $3.5 million related to the Company's Puregen product. (f)Expense related to research and development technology.                 (g) Amount includes Phygen related acquisition costs of $0.4 million.       CONTACT: Investor/Media Contact:                   Christine Zedelmayer          Investor Relations          Alphatec Spine, Inc.          (760) 494-6610          czedelmayer@alphatecspine.com  Alphatec Spine