Business Context and Reporting Period
This Form 8-K filing by Alphatec Holdings, Inc. is dated August 29, 2017, with a signature date of September 5, 2017. The report primarily addresses Item 4.01, detailing a change in the Company's independent registered public accounting firm for the fiscal year ending December 31, 2017.
Key Financial Metrics
This filing does not contain specific financial performance data such as revenue, profit, cash flow, margins, debt levels, or liquidity metrics. The document focuses exclusively on governance and audit matters.
Material Changes
- Accountant Change: The Audit Committee dismissed Ernst & Young LLP as the independent registered public accounting firm effective August 29, 2017.
- New Engagement: Mayer Hoffman McCann P.C. (MHM) was engaged as the new independent registered public accounting firm for the fiscal year ending December 31, 2017, effective September 1, 2017.
- Audit History: The reports issued by Ernst & Young for fiscal years 2016 and 2015 did not contain adverse opinions or disclaimers. The 2015 report included an explanatory paragraph regarding the uncertainty of the Company's ability to continue as a going concern.
Guidance, Risks, and Contingencies
Disagreements and Reportable Events: The Company reported no disagreements with Ernst & Young regarding accounting principles, financial statement disclosure, or auditing scope during the fiscal years ended December 31, 2016 and 2015, or the subsequent interim period.
Internal Control Remediation: The filing references historical material weaknesses in internal controls over financial reporting identified in 2015:
- Fixed Charge Coverage Ratio: A weakness regarding compliance with the Amended Credit Facility covenant was remediated in Q1 2016 through new controls.
- Inventory Cost Release: A weakness at a significant wholly-owned subsidiary was remediated in Q1 2016. The subsidiary was subsequently sold to Globus in Q3 2016.
Consultations: The Company has not consulted with the new auditor, MHM, regarding accounting principles or audit opinions during the two most recent fiscal years and the subsequent interim period.
Investor Verification Checklist
- Verify the rationale for the change in auditors from Ernst & Young to Mayer Hoffman McCann P.C.
- Review the attached Exhibit 16.1 (Letter from Ernst & Young) to confirm their agreement with the Company's disclosures regarding the dismissal.
- Confirm that the historical material weaknesses in internal controls have been fully remediated and are not recurring.
- Check subsequent filings for the first financial statements audited by MHM to assess any changes in accounting treatment or disclosure.