Full Press Release Details
ATEC Continues to Advance Clinical Prowess
with Renewed Agreement to Acquire EOS Imaging
CARLSBAD, Calif., December 16, 2020 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 $79.7 million, plus the retirement debt of $37.2 million, in an all-cash transaction.
SafeOp has substantiated the value of clinically actionable information by accelerating
product adoption across our portfolio, said Pat Miles, Chairman and Chief Executive Officer. Our original investment thesis for EOS as a solution to better inform surgery never changed. With this transaction, we take another major
step toward distinguishing ATEC clinical performance with improved information from diagnosis through follow-up.
EOS imaging is globally recognized for its rapid, low dose, biplanar full-body imaging and 3D modeling capabilities. 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, characterizes bone quality, elevates the likelihood of surgical goal fulfillment by integrating a fully informed plan into surgery, and supports a post-operative assessment against the original surgical plan.
Growth through the monetization of improved outcomes
Uniting ATEC s AlphaInformatiX platform with EOS technology will create a platform distinctively equipped to address the requirements of spine
EOS is a game-changing technology that has
unquestionably improved the treatment of children, adolescents and adults with spinal deformity, commented Dr. Chris Shaffrey of Duke Spine Center in North Carolina.
ATEC Spine and EOS both believe in the power of information to improve surgical outcomes, said Mike Lobinsky, Chief Executive Officer of EOS
imaging. We are pleased to revisit this transaction and eager to combine the strengths and know-how of our organizations. I am confident that we will quickly create a highly differentiated, end-to-end informational offering that will accelerate growth in the U.S. and pave the way for the future global growth of our combined entity.
Once closed, the transaction is
expected to immediately expand ATEC s revenue base through the addition of EOS s revenue run rate and the monetization of information through incremental pull-through and cross-selling opportunities. 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.
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 cash tender offer for all of the issued and outstanding shares and
convertible notes of EOS imaging for a total purchase price of $116.9 million (the Offer ).
Under the terms of the Offer, EOS
shareholders would receive EUR 2.45 (or approximately USD $2.99) per EOS share, representing a premium of 41% to the closing price of EOS shares on December 16, 2020.
Holders of approximately 23% of EOS outstanding common shares have entered into agreements to tender
into the Offer for cash, representing approximately EUR 15.1 million (or approximately USD $18.4 million) of the total purchase price.
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 $8.55) per EOS OCEANE (including interest due through May 31, 2021).
The Company expects to file the Offer
with the French Financial Markets Authority (Autorit des marches financiers) ( AMF ) in February 2021. The transaction is expected to close in the second quarter of 2021, subject to customary closing conditions, including
obtaining French regulatory clearance regarding foreign investments and a favorable opinion of the EOS board of directors based on the fairness opinion issued by the independent expert appointed by EOS.
In connection with the proposed
combination, ATEC has arranged a strategic financing with over $178 million in financing commitments, including a definitive securities purchase agreement to raise $138 million in a private placement of common stock at a price of $11.11
per share. The private placement is being led by Squadron Capital LLC and supported by a group of new and existing investors in ATEC, including Perceptive Advisors, Avidity Partners and First Light Asset Management. The private placement is expected
to close within five business days prior to the filing of the Offer with the AMF, which is expected to occur in February 2021, subject to the satisfaction of customary closing conditions.
ATEC also entered into a debt exchange agreement and an amendment to its existing credit agreement with Squadron, which provide for a reduction to
$45 million of the existing $75 million of outstanding term debt by a conversion of $30 million of debt into shares of ATEC common stock at a price of $11.11 per share, and an increase of $15 million in the amount of available
revolving financing to $40 million. Under the terms of the amended credit agreement, the maturity date on the entire term loan was extended to June 2026, and the minimum and maximum interest rates were reduced by 1% per annum from the levels in
the existing credit agreement. The other material terms of the amended credit agreement remain the same as the existing term loan.
regarding the Tender Offer Agreement and financing commitments can be found in ATEC s Current Report on Form 8-K to be filed with the SEC.
Cowen is acting as financial and capital
markets advisor to ATEC and Latham & Watkins LLP is serving as legal counsel for the acquisition transaction and private placement. Piper Sandler is acting as financial advisor to EOS imaging and Gide Loyrette Nouel is serving as legal
counsel. Stifel is acting as financial advisor to Squadron and Reed Smith LLP is serving as legal counsel.
The Company will host a webcast on December 17, 2020, at 6:00A.M. PT to discuss this transaction. The webcast can be accessed at
https://edge.media-server.com/mmc/p/mij52bgk. An audio version of the webcast will also be available domestically at (877) 556-5251 and internationally at (720)
545-0036. The conference ID number is 6397277.
An archived edition of the webcast and the presentation materials will be available in the Investor Relations
section of ATEC s corporate website at www.atecspine.com. In addition, an audio replay of the webcast will be available until December 24, 2020. The replay dial-in numbers are (877) 556-5251 for domestic callers and (720)
545-0036 for international callers. Please use the replay conference ID number 6397277.
Based in Paris, EOS imaging developed and commercialized 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
EOS installed base of over 380 imaging systems encompasses 20 of the top 25 U.S. hospitals3. EOS
has imaging systems installed in more than 40 countries generating more than 1 million patient exams annually. Listed on the Euronext Paris Exchange, the company 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.
Capital LLC and Squadron Medical Finance Solutions, LLC
Squadron Capital seeks to acquire and invest in operating companies located both in the
US and abroad. Squadron s mission is long-term investment (multi-generational) and assistance to the portfolio companies leadership teams in the execution of their business plans. Squadron Medical Finance Solutions, a subsidiary of
Squadron Capital, assists orthopedic OEMs in achieving their business objectives by offering financing of surgical instruments and implant sets, or by providing debt financing to support the broader capital requirements of growing companies.
Squadron Capital is a strategic investor in a broad range of companies in the orthopedic space, both public and private.
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.
Forward Looking Statements
This press release contains
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of1995 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 or business conditions will
not differ materially from those projected or suggested in such forward-looking statements. Forward-looking statements include statements about the timing of the anticipated acquisition, plans to commence the
Offer, when and whether the anticipated acquisition ultimately will close, the expected
consideration to be paid in connection with the 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 expectations on the completion, timing and size of the private placement and the debt exchange, and the anticipated use of proceeds therefrom. The forward-looking statements contained herein are
based on the current expectations and assumptions of the Company and not on historical facts. 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: uncertainties as to the timing of the Offer and the closing of the acquisition; uncertainties as to the percentage of EOS securityholders
tendering their shares in the Offer; the possibility that competing offers will be made and accepted; risks related to French regulatory review of the Offer; the Company s and EOS ability to satisfy the conditions to the closing of the
Offer on the anticipated timeline or at all; the satisfaction of conditions to closing the Offer and completing the acquisition, including applicable regulatory clearances; 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 the required threshold in the Offer which would result in EOS shares 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 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, risks and uncertainties associated with market conditions and the satisfaction of customary closing conditions related to the financing; 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; the risk that benefits and synergies from the acquisition may not be fully
realized or may take longer to realize than expected; and the impact of the COVID-19 pandemic on the Company s and EOS business and the economy. 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 Matters
This press release 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.
this presentation 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 presentation 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 in this presentation will be structured to comply with French and U.S. securities laws and regulations applicable to transactions of this type.
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