XML 20 R11.htm IDEA: XBRL DOCUMENT
v3.23.3

Organization and Significant Accounting Policies | 9 Months Ended
--- | ---
Sep. 30, 2023
Accounting Policies [Abstract] |
Organization and Significant Accounting Policies | 1. Organization and Significant Accounting Policies The Company Alphatec Holdings, Inc. (the “Company”), through its wholly owned subsidiaries, Alphatec Spine, Inc. (“Alphatec Spine”), SafeOp Surgical, Inc. (“SafeOp”), and EOS imaging S.A.S. (“EOS”), is a medical technology company that designs, develops, and markets technology for the treatment of spinal disorders associated with disease and degeneration, congenital deformities, and trauma. The Company markets its products in the United States of America and internationally via a network of independent sales agents and direct sales representatives. Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. All intercompany balances and transactions have been eliminated during consolidation. The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnotes it normally includes in its annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The unaudited interim condensed consolidated financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the financial position and results of operations for the periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2022, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any other future periods. Prior-period Adjustment Subsequent to the issuance of the Company’s consolidated financial statements as of and for the year ended December 31, 2022, the Company identified that a deferred tax liability and additional goodwill related to the acquisition of EOS should have been recorded at the time of the acquisition. The Company corrected the errors in the accompanying condensed consolidated financial statements as of the earliest period presented and has concluded that the correction of these errors is not material to the previously issued financial statements. The correction to the accompanying unaudited condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statements of comprehensive loss, condensed consolidated statements of stockholders' equity, and condensed consolidated statements of cash flows are as follows (in thousands):
|  |  |  |  |  |  |  |  |  | At December 31, 2021 |
Condensed Consolidated Statements of Stockholders' Equity |  |  |  |  |  |  |  |  |  | As Reported |  | Adjustment |  | As Corrected |
Accumulated other comprehensive loss |  |  |  |  |  |  |  |  |  | $ | (5,994 | ) |  | (42 | ) | $ | (6,036 | )
Accumulated deficit |  |  |  |  |  |  |  |  |  | $ | (782,325 | ) |  | 1,294 |  | $ | (781,031 | )
Total stockholders' equity |  |  |  |  |  |  |  |  |  | $ | 79,422 |  |  | 1,252 |  | $ | 80,674 |
|  |  |  |  |  |  |  |  |  | At December 31, 2022 |
Condensed Consolidated Balance Sheets |  |  |  |  |  |  |  |  |  | As Reported |  | Adjustment |  | As Corrected |
Goodwill |  |  |  |  |  |  |  |  |  | $ | 39,775 |  |  | 7,592 |  | $ | 47,367 |
Total assets |  |  |  |  |  |  |  |  |  | $ | 513,376 |  |  | 7,592 |  | $ | 520,968 |
Other long-term liabilities |  |  |  |  |  |  |  |  |  | $ | 11,543 |  |  | 5,546 |  | $ | 17,089 |
Accumulated other comprehensive loss |  |  |  |  |  |  |  |  |  | $ | (10,690 | ) |  | (104 | ) | $ | (10,794 | )
Accumulated deficit |  |  |  |  |  |  |  |  |  | $ | (934,474 | ) |  | 2,150 |  | $ | (932,324 | )
Total stockholders' deficit |  |  |  |  |  |  |  |  |  | $ | (36,713 | ) |  | 2,046 |  | $ | (34,667 | )
Total liabilities and stockholders' deficit |  |  |  |  |  |  |  |  |  | $ | 513,376 |  |  | 7,592 |  | $ | 520,968 |
|  |  |  |  |  |  |  |  | Three Months Ended September 30, 2022 |  |  | Nine Months Ended September 30, 2022 |
Condensed Consolidated Statements of Operations |  |  |  |  |  |  |  |  | As Reported |  | Adjustment |  | As Corrected |  |  | As Reported |  | Adjustment |  | As Corrected |
Income tax provision (benefit) |  |  |  |  |  |  |  |  | $ | 129 |  |  | (206 | ) | $ | (77 | ) |  | $ | 461 |  |  | (653 | ) | $ | (192 | )
Net loss |  |  |  |  |  |  |  |  | $ | (36,999 | ) |  | 206 |  | $ | (36,793 | ) |  | $ | (117,163 | ) |  | 653 |  | $ | (116,510 | )
|  |  |  |  |  |  |  |  | Three Months Ended September 30, 2022 |  |  | Nine Months Ended September 30, 2022 |
Condensed Consolidated Statements of Comprehensive Loss |  |  |  |  |  |  |  |  | As Reported |  | Adjustment |  | As Corrected |  |  | As Reported |  | Adjustment |  | As Corrected |
Net loss |  |  |  |  |  |  |  |  | $ | (36,999 | ) |  | 206 |  | $ | (36,793 | ) |  | $ | (117,163 | ) |  | 653 |  | $ | (116,510 | )
Foreign currency translation adjustments |  |  |  |  |  |  |  |  | $ | (4,851 | ) |  | (107 | ) | $ | (4,958 | ) |  | $ | (11,320 | ) |  | (230 | ) | $ | (11,550 | )
Comprehensive loss |  |  |  |  |  |  |  |  | $ | (41,850 | ) |  | 99 |  | $ | (41,751 | ) |  | $ | (128,483 | ) |  | 423 |  | $ | (128,060 | )
|  | Three Months Ended March 31, 2022 |  |  | Three Months Ended June 30, 2022 |  |  | Three Months Ended September 30, 2022 |
Condensed Consolidated Statements of Stockholders' Equity (Deficit) |  | As Reported |  | Adjustment |  | As Corrected |  |  | As Reported |  | Adjustment |  | As Corrected |  |  | As Reported |  | Adjustment |  | As Corrected |
Foreign currency translation adjustments |  | $ | (1,180 | ) |  | (24 | ) | $ | (1,204 | ) |  | $ | (5,289 | ) |  | (99 | ) | $ | (5,388 | ) |  | $ | (4,851 | ) |  | (107 | ) | $ | (4,958 | )
Net loss |  | $ | (42,844 | ) |  | 228 |  | $ | (42,616 | ) |  | $ | (37,320 | ) |  | 219 |  | $ | (37,101 | ) |  | $ | (36,999 | ) |  | 206 |  | $ | (36,793 | )
Accumulated other comprehensive loss |  | $ | (7,174 | ) |  | (66 | ) | $ | (7,240 | ) |  | $ | (12,463 | ) |  | (165 | ) | $ | (12,628 | ) |  | $ | (17,314 | ) |  | (272 | ) | $ | (17,586 | )
Accumulated deficit |  | $ | (825,169 | ) |  | 1,522 |  | $ | (823,647 | ) |  | $ | (862,489 | ) |  | 1,741 |  | $ | (860,748 | ) |  | $ | (899,488 | ) |  | 1,947 |  | $ | (897,541 | )
Total stockholders' equity (deficit) |  | $ | 41,984 |  |  | 1,456 |  | $ | 43,440 |  |  | $ | 10,539 |  |  | 1,576 |  | $ | 12,115 |  |  | $ | (22,569 | ) |  | 1,675 |  | $ | (20,894 | )
|  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, 2022 |
Condensed Consolidated Statements of Cash Flows |  |  |  |  |  |  |  |  |  | As Reported |  | Adjustment |  | As Corrected |
Net loss |  |  |  |  |  |  |  |  |  | $ | (117,163 | ) |  | 653 |  | $ | (116,510 | )
Other long-term liabilities |  |  |  |  |  |  |  |  |  | $ | (50 | ) |  | (644 | ) | $ | (694 | )
Net cash used for operating activities |  |  |  |  |  |  |  |  |  | $ | (66,740 | ) |  | 9 |  | $ | (66,731 | )
Effect of exchange rate changes on cash |  |  |  |  |  |  |  |  |  | $ | (1,166 | ) |  | (9 | ) | $ | (1,175 | )
Reclassification Certain financial statement line items in the condensed consolidated financial statements for the nine months ended September 30, 2022 have been aggregated to conform to the current year’s presentation. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property and equipment, goodwill, intangible assets, allowances for doubtful accounts, deferred tax assets, inventory, stock-based compensation, revenues, income tax uncertainties, and other contingencies. Fair Value Measurements The carrying amount of financial instruments consisting of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, and short-term debt included in the Company’s condensed consolidated financial statements are reasonable estimates of fair value due to their short maturities. Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Excess and Obsolete Inventory Most of the Company’s inventory is comprised of finished goods, which is primarily produced by third-party suppliers. Specialized implants, fixation products, biologics, and disposables are determined by utilizing a standard cost method that includes capitalized variances which approximates the weighted average cost. Imaging equipment and related parts are valued at weighted average cost. Inventories are stated at the lower of cost or net realizable value. The Company reviews the components of its inventory on a periodic basis for excess and obsolescence and adjusts inventory to its net realizable value as necessary. The Company records a lower of cost or net realizable value (“LCNRV”) inventory reserve for estimated excess and obsolete inventory based upon its expected use of inventory on hand. The Company’s inventory, which consists primarily of specialized implants, fixation products, biologics, and disposables is at risk of obsolescence due to the need to maintain substantial levels of inventory. In order to market its products effectively and meet the demands of interoperative product placement, the Company maintains and provides surgeons and hospitals with a variety of inventory products and sizes. For each surgery, fewer than all components will be consumed. The need to maintain and provide a wide variety of inventory causes inventory to be held that is not likely to be used. The Company’s estimates and assumptions for excess and obsolete inventory are reviewed and updated on a quarterly basis. The estimates and assumptions are determined primarily based on current usage of inventory and the age of inventory quantities on hand. Additionally, the Company considers recent sales experience to develop assumptions about future demand for its products, while considering product life cycles and new product launches. Increases in the LCNRV reserve for excess and obsolete inventory result in a corresponding charge to cost of sales. Revenue Recognition The Company recognizes revenue from product sales in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Revenue from Contracts with Customers (“Topic 606”). This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements, and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Sales are derived primarily from the sale of spinal implant products, imaging equipment, and related services to hospitals and medical centers through direct sales representatives and independent sales agents. Revenue is recognized when obligations under the terms of a contract with customers are satisfied, which occurs with the transfer of control of products to customers, either upon shipment of the product or delivery of the product to the customer depending on the shipping terms, or when the products are used in a surgical procedure (implanted in a patient). Revenue from the sale of imaging equipment is recognized as each distinct performance obligation is fulfilled and control transfers to the customer, beginning with shipment or delivery, depending on the terms. Revenue from other distinct performance obligations, such as maintenance on imaging equipment and other imaging-related services, is recognized in the period the service is performed, and makes up less than 10% of the Company’s total revenue. Revenue is measured based on the amount of consideration expected to be received in exchange for the transfer of the goods or services specified in the contract with each customer. In certain cases, the Company does offer the ability for customers to lease its imaging equipment primarily on a non-sales type basis, but such arrangements are immaterial to total revenue in the periods presented. The Company generally does not allow returns of products that have been delivered. Costs incurred by the Company associated with sales contracts with customers are deferred over the performance obligation period and recognized in the same period as the related revenue, except for contracts that complete within one year or less, in which case the associated costs are expensed as incurred. Payment terms for sales to customers may vary but are commensurate with the general business practices in the country of sale. To the extent that the transaction price includes variable consideration, such as discounts, rebates, and customer payment penalties, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company's judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information that is reasonably available, including historical, current, and forecasted information. The Company records a contract asset when one or more performance obligations have been completed by the Company and revenue has been recognized, but the customer's payment is contingent on the satisfaction of additional performance obligations. The Company records a contract liability, or deferred revenue, when it has an obligation to provide a product or service to the customer and payment is received in advance of its performance. When the Company sells a product or service with a future performance obligation, revenue is deferred on the unfulfilled performance obligation and recognized over the related performance period. Generally, the Company does not have observable evidence of the standalone selling price related to its future service obligations; therefore, the Company estimates the selling price using an expected cost plus a margin approach. The transaction price is allocated using the relative standalone selling price method. The use of alternative estimates could result in a different amount of revenue deferral. Recently Adopted and Issued Accounting Pronouncements In August 2021, the FASB issued Accounting Standards Update ("ASU") No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The guidance requires application of Topic 606, Revenue from Contracts with Customers to recognize and measure contract assets and contract liabilities acquired in a business combination. ASU No. 2021-08 adds an exception to the general recognition and measurement principle in Topic 805 where assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from contracts with customers, are measured at fair value on the acquisition date. Under the new guidance, the acquirer will recognize acquired contract assets and contract liabilities as if the acquirer had originated the contract. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU No. 2021-08 as of January 1, 2023, on a prospective basis. The adoption of ASU No. 2021-08 did not have a material impact on the Company's condensed consolidated financial statements and related disclosures. In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The guidance amends the ASC to incorporate certain disclosure requirements from SEC Release No. 33-10532 Disclosure Update and Simplification issued in 2018. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. ASU No. 2023-06 is not expected to have a material impact on the Company's financial statements.

X
- References No definition available. + Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 235 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//235/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 275 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//275/tableOfContent Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 810 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//810/tableOfContent Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205/tableOfContent + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureAndSignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration