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Alphatec Holdings Blames Accounting Errors On Two Year Old Acquisition
New language in latest filing also details significant judgment involved in the medical device firm’s revenue recognition policy.
May 11, 2023
Two months after issuing its full year 2022 results Alphatec Holdings (ATEC), a developer of surgical treatments for spinal disorders, revealed its financial statements in the report are ot accurate. In its latest quarterly report, Alphatec disclosed it failed to include a deferred tax liability and goodwill related to the acquisition of medical device maker EOS Imaging:
—Alphatec understated goodwill $7.5 million, or 15.8%
—Alphatec overstated Income tax provision (benefit) $228k, or 2,767%
—Alphatec overstated Comprehensive loss $204k, or 0.46%
The disclosure did not address the significant time lag between the acquisition— EOS was acquired more than two years ago— and the identification of the accounting errors.
Separately, Alphatec included new language in its latest filing about its revenue recognition policy. The company includes a portion of variable considerations like discounts, rebates, and customer payment penalties are included in sales. The new language, included below, offers management’s rationale for recording variable considerations as revenue:
“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.”
Shares are up 31.9% ytd and 92.7% in the last year.
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