Globus Medical Announces the Acquisition of Alphatec’s International Business
July 26 2016 - 4:30PM
Globus Medical, Inc. (NYSE:GMED), a leading musculoskeletal implant
manufacturer, today announced that it has entered into an agreement
to acquire the international operations and distribution channels
of Alphatec Holdings, Inc., a publicly traded medical devices
company (Nasdaq:ATEC) for $80.0 million in cash, subject to certain
closing adjustments. Globus Medical also agreed to extend a 5-year
senior secured credit facility of up to $30.0 million to Alphatec
to support their working capital needs. The parties expect the
closing of the acquisition to occur by October 2016 following
satisfaction of the applicable closing conditions.
As a result of the acquisition, Globus Medical
will assume Alphatec’s existing international direct and
distributor sales channels, which generated sales of approximately
$71 million in 2015 and $15.6 million in the first quarter of
2016. Globus Medical intends to offer its own products
through these sales channels, but during the transition, Globus
Medical will continue to sell Alphatec products. The timing of the
transition in each country will depend upon regulatory requirements
and contractual or tender commitments. The transaction includes a
supply agreement through which Alphatec will supply its products to
Globus Medical for up to five years.
David Paul, Chairman and CEO said,
“Strategically, this acquisition gives us immediate access to Japan
and increased presence and penetration in other key geographies,
and significant scale, roughly doubling our international
sales. In addition, we will be acquiring a talent pool of
international sales professionals as well as an extensive network
of international distributors. We expect the impact to be
marginally accretive in 2017 as we work through our transition and
integration plans and to provide up to 8 cents per share in
incremental non-GAAP diluted earnings per share (EPS) in 2018 and
beyond.”
For the fourth quarter of 2016, Globus Medical
expects this acquisition to add roughly $10 million of additional
sales and to be earnings neutral, excluding acquisition related
costs, adjusted for tax, which are expected to be roughly $0.02 per
share. Globus Medical anticipates incurring significant
expenses associated with integrating and optimizing this business
in 2017. For 2017, Globus Medical expects the acquisition to add
roughly $40 million of sales and contribute non-GAAP EPS of
approximately $0.03-$0.05.
Globus Medical will discuss this transaction
during its previously announced quarterly earnings conference call
scheduled to be held today at 5:30 p.m. ET.
About Globus Medical,
Inc.Globus Medical, Inc. is a leading musculoskeletal
implant company based in Audubon, PA. The company was founded in
2003 by an experienced team of professionals with a shared vision
to create products that enable surgeons to promote healing in
patients with musculoskeletal disorders.
Non-GAAP Financial MeasuresTo
supplement our financial statements prepared in accordance with
U.S. generally accepted accounting principles (“U.S. GAAP”),
management uses certain non-GAAP financial measures. For example,
non-GAAP Diluted Earnings Per Share represents diluted earnings per
share excluding the provision for litigation, acquisition related
items, and adjusted for the tax effects of such adjustments. We
believe this non-GAAP measure is a useful indicator of our
operating performance, and particularly as an additional measure of
comparative operating performance from period to period as it
removes the effects of litigation and acquisition related items,
which we believe are not reflective of underlying business
trends.
Non-GAAP Diluted Earnings Per Share is not
calculated in conformity with U.S. GAAP. Non-GAAP financial
measures have limitations as analytical tools and should not be
considered in isolation or as a substitute for financial measures
prepared in accordance with U.S. GAAP. These measures do not
include certain expenses that may be necessary to evaluate our
liquidity or operating results. Our definition of non-GAAP Diluted
Earnings Per Share may differ from that of other companies and
therefore may not be comparable.
Safe Harbor StatementsAll
statements included in this press release other than statements of
historical fact are forward-looking statements and may be
identified by their use of words such as “believe,” “may,” “might,”
“could,” “will,” “aim,” “estimate,” “continue,” “anticipate,”
“intend,” “expect,” “plan” and other similar terms. These
forward-looking statements are based on our current assumptions,
expectations and estimates of future events and trends.
Forward-looking statements are only predictions and are subject to
many risks, uncertainties and other factors that may affect our
businesses and operations and could cause actual results to differ
materially from those predicted. These risks and
uncertainties include, but are not limited to, factors affecting
our quarterly results, our ability to manage our growth, our
ability to sustain our profitability, demand for our products, our
ability to compete successfully (including without limitation our
ability to convince surgeons to use our products and our ability to
attract and retain sales and other personnel), our ability to
rapidly develop and introduce new products, our ability to develop
and execute on successful business strategies, our ability to
successfully integrate the international operations acquired from
Alphatec, both in general and on our anticipated timeline, our
ability to transition Alphatec’s international customers to Globus
Medical products, our ability to realize the expected benefits to
our results from the Alphatec acquisition, our ability to comply
with laws and regulations that are or may become applicable to our
businesses, our ability to safeguard our intellectual property, our
success in defending legal proceedings brought against us, trends
in the medical device industry, general economic conditions, and
other risks. For a discussion of these and other risks,
uncertainties and other factors that could affect our results, you
should refer to the disclosure contained in our most recent annual
report on Form 10-K filed with the Securities and Exchange
Commission, including the sections labeled “Risk Factors” and
“Cautionary Note Concerning Forward-Looking Statements,” and in our
Forms 10-Q, Forms 8-K and other filings with the Securities and
Exchange Commission. These documents are available at
www.sec.gov. Moreover, we operate in an evolving
environment. New risk factors and uncertainties emerge from
time to time and it is not possible for us to predict all risk
factors and uncertainties, nor can we assess the impact of all
factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking
statements. Given these risks and uncertainties, readers are
cautioned not to place undue reliance on any forward-looking
statements. Forward-looking statements contained in this
press release speak only as of the date of this press
release. We undertake no obligation to update any
forward-looking statements as a result of new information, events
or circumstances or other factors arising or coming to our
attention after the date hereof.
Contact:
Daniel Scavilla
Senior Vice President, Chief Financial Officer
Phone: (610) 930-1800
Email: investors@globusmedical.com
www.globusmedical.com
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