Alphatec Holdings, Inc. (“ATEC” or the “Company”) (Nasdaq: ATEC), a
medical device company dedicated to revolutionizing the approach to
spine surgery, announced today that it has entered into an
agreement to acquire EOS imaging, SA, for a purchase price of up to
$88 million, plus debt retirement of $33.9 million, in a
combination of cash and equity.
EOS imaging is a leader in outcome-improving
orthopedic medical imaging and software solutions, and is globally
recognized for its rapid, low dose, biplanar full-body imaging and
3D modeling capabilities. The EOS technology informs the
entire surgical process by capturing a calibrated, full-body image
in a standing (weight-bearing) position, enabling precise
measurement of anatomical angles and dimensions. The
resulting imaging drives a more accurate understanding of patient
alignment during diagnosis, elevates the likelihood of surgical
goal fulfillment by integrating a fully informed plan into surgery,
and enables a post-operative assessment against the original
surgical plan.
“This is a monumental transaction for ATEC,”
said Pat Miles, Chairman and Chief Executive Officer. “While
spine’s large players are investing in enabling technologies, we
are thinking differently. We created a conduit to deliver
information into the operating room with AlphaInformatiX. This
transaction will integrate spine imaging and anatomical modeling
onto the platform to actually inform the operative experience. By
pairing ATEC’s approach-based solutions with imaging founded on
Nobel Prize-winning technology, we expect to significantly increase
demand for ATEC hardware and EOS systems and create a formidable
competitive advantage.”
“EOS is a fabulous, game-changing technology
that has unquestionably improved the treatment of children,
adolescents and adults with spinal deformity,” said Dr. Christopher
Shaffrey, MD, Chief of Spinal Surgery and Spine Care at Duke
University Medical Center.
Once closed, the transaction is expected to
immediately expand ATEC’s revenue base through the addition of
EOS’s revenue run rate, and create significant pull-through and
cross-selling opportunities via an expanded sales network and
combined customer base. The addition of EOS imaging will advance
ATEC’s AlphaInformatiX platform providing capabilities in surgical
planning, patient-specific implants, intraoperative alignment
reconciliation, and other intraoperative functionalities resulting
in a platform distinctively equipped to address the requirements of
spine surgery.
The Company expects the acquisition to be
accretive to revenue, revenue growth, adjusted EBITDA and free cash
flow in the first full year of operations following the transaction
close.
With more than 500 scientific articles published
in leading journals, EOS’s technology has achieved widespread
support and endorsement from the academic community and thought
leaders worldwide. EOS’s installed base of over 350 imaging
systems encompasses 9 of the top 10 U.S. hospitals, and 20 of the
top 251. Additionally, EOS’s well-established international
footprint will expedite ATEC’s future ability to enter and
penetrate key markets outside of the United States.
“We are very enthusiastic about the opportunity
to join the complementary strengths and know-how of EOS imaging and
ATEC,” said Mike Lobinsky, Chief Executive Officer of EOS imaging.
“I have no doubt that our organizations will be able to quickly
create a highly differentiated end-to-end offering that will
accelerate growth in the U.S. in the short term, while we continue
to expand internationally, paving the way for the future global
growth of the combined entity.”
The Boards of Directors of both ATEC and EOS
have approved the execution of a tender offer agreement
(the "Tender Offer Agreement"), through which ATEC will launch
a tender offer for all of the issued and outstanding shares and
convertible notes of EOS imaging for a total purchase price of up
to $122 million (the “Offer”). The Offer will consist of a cash
tender offer for a price of EUR 2.80 per EOS share (the "Cash
Offer"), or at the option of each EOS shareholder, an exchange
tender offer whereby each EOS shareholder will receive 0.50 ATEC
common shares per EOS share (the "Exchange Offer").
About EOS imaging
Based in Paris, EOS imaging develops and
commercializes imaging systems (EOS and EOSedge systems) that
provide a full-body evaluation of the patient in a standing
position, resulting in a comprehensive understanding of how the
patient is compensating in the hips, knees and ankles to maintain
an upright posture. The measurements factor into a holistic
approach to the development of customized surgical plans, which can
then be integrated seamlessly into the operating room.
Utilizing advanced predictive analytics, EOS
technology is uniquely capable of correlating preoperative and
postoperative imaging to assure, from the operating room, the
achievement of alignment, the most prognostic factor of long-term
successful surgical outcomes. Compared to the conventional
spine-imaging modalities, X-Ray and CT, the EOS systems
significantly reduce radiation doses and exam times, producing
unstitched, full-body, biplanar, high-quality images at lower
cost.
Key Features of the EOS imaging
Portfolio
- Standing full-body assessment. Head
to toe biplanar exams in the weight-bearing position for accurate
assessment of factors causing pain and disability to better guide
treatment and surgical decisions. Surgical planning from a
standing position enables alignment parameters that more closely
match functional posture.
- Reduced radiation exposure. Driven
by the ALARA* principle, the EOS or EOSedge exam delivers a minimal
dose of radiation to reduce the long term impact of repeated
imaging.
- Precise 3D measurements.
Patient-specific measurements, dimensions and angles to make
informed clinical decisions at all stages of care.
- EOSapps and EOSlink for surgical
planning and OR integration. Pre-operative planning software to
anticipate surgical results and select components for spine
surgery; pairs with surgical technologies for precise execution
with EOSlink
EOS has imaging systems installed in more than
30 countries generating more than 1 million patient exams annually.
Listed on the Euronext Paris Exchange, EOS has corporate locations
in the U.S., France, Canada, Germany and Singapore, and engages
more than 175 employees. For additional information, please visit
www.EOS-imaging.com.
Key Terms of the
Transaction
Under the terms of the Offer, EOS's shareholders
would receive either EUR €2.80 (or approximately USD $3.08) per EOS
share under the Cash Offer or 0.50 ATEC common shares per EOS share
under the Exchange Offer.
The Cash Offer price represents a premium of 64%
based on the closing price of EOS shares on February 27, 2020 and
of 43%, 26%, and 58% over the volume-weighted average share price
of EOS over the last one, three and six month(s), respectively,
preceding this date.
The Exchange Offer ratio reflects a premium of
67% on EOS' closing share price on February 27th, 2020 calculated
using ATEC’s share price and the EUR to USD exchange rate as of
market close on February 27th, 2020.
The Exchange Offer reflects a premium of 53%,
41%, and 64% calculated using the volume-weighted average share
prices of EOS and ATEC over the last one, three and six month(s),
respectively and the EUR to USD exchange rate as of market close on
February 27th, 2020.
Each EOS shareholder will be entitled to elect
between the Cash Offer and the Exchange Offer, subject to
adjustments that will ensure that, in the aggregate, the number of
common shares issued by ATEC shall not exceed 20% of ATEC's current
outstanding shares of common stock (or approximately 12.5 million
shares based upon the current number of shares of common stock
outstanding).
Holders of approximately 23% of EOS’s
outstanding common shares have entered into agreements to tender
for ATEC shares under the Exchange Offer, representing
approximately EUR €17.4 million (or approximately USD $19.1
million) of the total purchase price, subject to certain
conditions.
The Offer will also target all outstanding EOS
convertible notes (“EOS OCEANE”, or the “Notes”). The holders of
the Notes would receive either EUR €7.01 (or approximately USD
$7.71) per EOS OCEANE as part of the Cash Offer.
It is expected that the Offer will be filed with
the French Financial Markets Authority (Autorité des marchés
financiers) (“AMF”) in late April 2020. The transaction is
expected to close in the third quarter of 2020, subject to
customary closing conditions, including obtaining regulatory
clearance from the AMF, French foreign investment clearances and a
favorable opinion of the EOS board of directors based on the
fairness opinion issued by the independent expert appointed by
EOS.
Financing Commitment
ATEC has entered into a commitment letter with
Perceptive Advisors (“Perceptive”) which provides debt financing of
up to $160 million from affiliates of Perceptive. The financing
consists of: 1) a committed facility up to $60 million to retire
certain existing debt facilities of ATEC; and 2) a facility of up
to $100 million ($70 million of which is fully committed) to fully
fund the Cash Offer.
"We are pleased to be partnering with ATEC on
this transformative transaction," said Sam Chawla, Portfolio
Manager, Perceptive Advisors. "We have witnessed a tremendous
repositioning of ATEC over the past two years, and are happy to
support the company's continued evolution. We believe that
the combination will drive true clinical distinction and enhance
ATEC's already growing market position."
ATEC paid Perceptive a fee of $1.3 million in
connection with Perceptive’s commitments.
Borrowings under the Perceptive facility are
subject to customary conditions for committed facilities,
including, among others, the consummation of the EOS acquisition
without material changes, payment of fees and expenses, issuance of
applicable fees upon draws, entry into definitive documentation
reflecting the terms of the Perceptive commitment letter, and no
material adverse effect with respect to EOS.
Additional details regarding the Tender Offer
Agreement and Perceptive commitment can be found in ATEC’s Current
Report on Form 8-K to be filed with the SEC.
Advisors
Cowen is acting as financial advisor to ATEC,
and Latham & Watkins LLP is serving as legal counsel. Piper
Sandler is acting as financial advisor to EOS imaging, and Gide
Loyrette Nouel is serving as legal counsel.
Conference Call
The Company will host conference call on Friday,
February 28 at 6:00 a.m. PT / 9:00 a.m. ET to discuss
this transaction. The conference call will be available
domestically at (877) 556-5251 and internationally at (720)
545-0036. The conference ID number is 6599245. Presentation
materials for the conference call are available here
https://alphatecholdingsinc.gcs-web.com/news-events/events-presentations.
About Alphatec Holdings,
Inc.
Alphatec Holdings, Inc. (ATEC), through its
wholly-owned subsidiaries, Alphatec Spine, Inc. and SafeOp
Surgical, Inc., is a medical device company dedicated to
revolutionizing the approach to spine surgery through clinical
distinction. ATEC architects and commercializes approach-based
technology that integrates seamlessly with the SafeOp Neural
InformatiX System to provide real-time, objective nerve information
that can enhance the safety and reproducibility of spine surgery.
Additional information can be found at www.atecspine.com.
About Perceptive Advisors
Founded in 1999 and based in New York, NY,
Perceptive Advisors is an investment management firm with over $5
billion in assets whose activities are focused on supporting the
progress of the life sciences industry by identifying opportunities
and directing financial resources to the most promising
technologies in healthcare. For more information about Perceptive,
visit www.perceptivelife.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,
statements about the timing of the anticipated acquisition, when
and whether the anticipated acquisition ultimately will close, the
expectation that certain existing EOS shareholders will tender in
the Exchange Offer, the potential benefits and synergies of the
anticipated acquisition, including the expected impact on future
financial and operating results, post-acquisition plans and
intentions, and plans to obtain financing pursuant to the
Perceptive commitment and the uses therefrom. The forward-looking
statements contained herein are based on the current expectations
and assumptions of the Company and not on historical facts. The
following important factors, among others, could cause actual
results to differ materially from those set forth in the
forward-looking statements: uncertainties as to the timing of the
Offer and the closing of the acquisition; uncertainties as to the
percentage of EOS’s securityholders tendering their shares in the
Offer; the possibility that competing offers will be made; risks
related to the AMF‘S review of the Offer; the satisfaction of
conditions to closing the Offer and completing the acquisition; the
satisfaction of conditions, including applicable regulatory
clearances, set forth in the EOS shareholder agreements to tender
for ATEC shares, which if not met, could increase the Cash Offer
price; the occurrence of any event, change or other circumstance
that could give rise to the termination of the Tender Offer
Agreement; the effect of the announcement of the Offer and related
transactions on the ability of the parties to retain and hire key
personnel, maintain relationships with their customers and
suppliers, and maintain their operating results and business
generally; the inability to reach a 90% threshold in the Offer
which would result in EOS continuing to be traded on Euronext and
related regulatory requirements in connection therewith; the
inability of the Company to secure the financing contemplated to be
obtained pursuant to the Perceptive commitment on the expected
terms or timing, or at all, whether as a result of failure to meet
certain conditions or otherwise; risks related to potential
litigation in connection with the Offer or the closing that may
result in significant costs of defense, indemnification and
liability; the risk that the businesses will not be integrated
successfully; unexpected variations in market growth and demand for
the combined company’s products and technologies; and the risk that
benefits and synergies from the acquisition may not be fully
realized or may take longer to realize than expected. The words
“believe,” “will,” “should,” “expect,” “intend,” “estimate,” “look
forward” 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. 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.Certain
Legal MattersThis communication is not intended to, and
does not, constitute, represent or form part of any offer,
invitation or solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any
securities whether pursuant to this press release or otherwise.The
distribution of this communication in jurisdictions outside the
United States or France may be restricted by law or regulation and
therefore any person who comes into possession of this
communication should inform themselves about, and comply with, such
restrictions. Any failure to comply with such restrictions may
constitute a violation of the securities laws or regulations of any
such relevant jurisdiction.EOS is incorporated in France and listed
on Euronext and any offer for its securities will be subject to
French disclosure and procedural requirements, which differ from
those that are applicable to offers conducted solely in the United
States, including with respect to withdrawal rights, offer
timetable, settlement procedures and timing of payments. The
transactions described above will be structured to comply with
French and U.S. securities laws and regulations applicable to
transactions of this type. Investor/Media
Contact:
Josh BergInvestor Relations (760)
494-6790ir@atecspine.com
Company Contact:
Jeff BlackChief Financial OfficerAlphatec Holdings, Inc.
ir@atecspine.com
__________________
1 US News & World Report Best Orthopedic Hospitals list
(2019-2020)
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