Alphatec Holdings, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Revenue Growth: Q4 2024 total revenue grew 28%, 4x the market. Full year 2024 revenue was $612 million, 27% growth. Surgical revenue grew 29%, established territories (same-store sales) 25%.
• Profitability: Q4 2024 adjusted EBITDA $21 million, up 1,050 basis points YoY. Full year 2024 adjusted EBITDA $31 million, up $40 million YoY. Free cash flow $9 million in Q4 2024.
• Clinical and Innovation: Surgeon adoption, procedural volume, and revenue per surgery growing strongly. Launched EOS Insight software, record EOS order book. Portfolio includes expandable implants, corpectomy implants, and improving biologics attach rate.
• Operational Discipline: Strategic realignment of organization, evaluation of discretionary spend led to first non-GAAP operating profit since organization remake.

Segment Performance

• Q4 2024 Financials: Total revenue was $177 million, up 28% YoY. Surgical revenue was $157 million (28% growth), EOS revenue was $20 million (32% growth YoY). Q4 adjusted EBITDA was $21 million, up 1,050 basis points YoY.
• Full Year 2024: Total revenue was $612 million, up 27%. Surgical revenue was $545 million (29% growth), EOS revenue was $67 million (13% growth YoY). Full year adjusted EBITDA was $31 million, up $40 million YoY. Free cash flow was $9 million in Q4 2024.
• Growth Metrics: 5-year total revenue CAGR 40%, surgeon adoption CAGR 19%, procedural volume CAGR 25%, revenue per surgery CAGR 10%.

Guidance

• 2025 Outlook: Expect revenue growth of 20% to ~$732 million, including surgical revenue growth 21% to ~$657 million (mid-teens volume growth, mid-single-digit revenue per surgery growth) and EOS revenue ~$75 million.
• Adjusted EBITDA: Expect adjusted EBITDA of $75 million in 2025, with 37% drop-through of incremental revenue dollars.
• Cash Flow: Expect positive cash flow in Q2-Q4 2025, with cash use of $15-$20 million in Q1 2025.

Risks

• Uncertainties: Forward-looking statements subject to uncertainties in SEC filings.
• Competition: Competitors like Stryker exiting or repositioning could impact market share.
• International Expansion: Risks in establishing sustainable growth and profitability in markets like Japan.

Question and Answer

Q: Assurance on not elevating spending in 2025 to take advantage of disruption?

A: Pat Miles states the plan is already in place, with investments made and no unique outsized expense dynamics expected to undermine the financial thesis.

Q: Benefit from competitor's U.S. spinal implants business sale?

A: Pat Miles believes disruption creates opportunities, and ATEC's informatics platform makes them well-positioned to attract talent from competitors.

Q: International plans for 2025, especially Japan?

A: Pat Miles mentions Japan is a key market with disciplined entry, led by Chris Lyons, focusing on long-term growth sustainability.

Q: Efficiencies in SG&A and their impact on 2025 bottom line?

A: Todd Koning states disciplined approach to reducing organization size and evaluating discretionary spend, with ongoing improvements in operational efficiency to enhance bottom line.

Q: Robot and navigation technology plans?

A: Pat Miles mentions navigation and robotics in the back half of 2025, with EOS providing predictive analytics to mitigate systemic variables in surgery.