Alphatec closes $80M sale of international operations to Globus, focuses on future growth: 7 key notes

Spinal Tech

Alphatec completed the sale of its international operations and distribution channel to Globus Medical.

Here are five things to know:


1. Alphatec is now solely focused on the United States market, which the company believes constitutes around 65 percent of the global spinal fusion market. As part of the closing, the company:


• Drew down $25 million of the $30 million credit facility from Globus
• Paid off the existing Deerfield credit facility balance; the credit facility is now retired
• Reduced the MidCap Financial term loan to $5 million balance
• Reduced the MidCap Financial revolver commitment to $22.5 million


The company expects to have paid down approximately $66 million of existing debt and debt-related expenses.


2. Alphatec has focused on research and development in the past few years, developing the Arsenal Degenerative, Arsenal Deformity and Battalion Universal Interbody. The company also has FDA clearance for the XYcor Expandable Spinal Spacer System.


3. The company outsources manufacturing operations to reduce capital investment in equipment and already has partnerships with suppliers for flexible capacity. Alphatec now believes it’s better positioned to compete in the marketplace and accelerate growth while improving profitability.


4. Globus acquired Alphatec’s international operations and distribution channel for $80 million in cash. Globus will also provide a five-year senior secured credit facility of up to $30 million.


5. Under the agreement, Alphatec will supply products to Globus Medical for up to five years.


6. Alphatec believes its strong financial foundation and product portfolio will support fusion investments in its capital instrument base each year. The company will use these investments to drive the commercial expansion of its new product lines.


7. The company is making substantial strides to reduce its operating expenses by $20 million. Alphatec plans to continue on this trajectory for the rest of the year and into next year, translating to positive cash flow and profitability for the second half of 2017.


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