Alphatec (ATEC) - 2025 Q2 - Quarterly Results

Executive Summary / Q2 2025 Financial Highlights Q2 2025 Key Financial Results Alphatec Holdings, Inc. reported strong financial performance for Q2 2025, with significant growth in total revenue and surgical revenue, alongside improved profitability metrics such as Adjusted EBITDA margin and non-GAAP net income | Metric | Quarter Ended June 30, 2025 | | :---------------------- | :-------------------------- | | Total revenue | $186 million | | GAAP gross margin | 70% | | Non-GAAP gross margin | 70% | | GAAP operating expenses | $142 million | | Non-GAAP operating expenses | $122 million | | GAAP net income / (loss) | ($41) million | | Non-GAAP net income / (loss) | $3 million | | Adjusted EBITDA | $23 million | | Adjusted EBITDA margin | 13% | | Ending cash balance | $157 million | Recent Corporate Highlights The company achieved industry-leading growth, driven by strong surgical revenue, increased surgeon adoption, and disciplined execution leading to significant margin expansion and positive free cash flow - Surgical revenue grew by 29% to $168 million, driven by continued momentum of PTP™ and LTP™[4] - Achieved 21% growth in new surgeon adoption, indicating future growth potential[4] - Delivered adjusted EBITDA margin of 13%, expanding by 880 bps Year-over-Year[4] - Inflected to non-GAAP net income profitability and generated $5 million of free cash flow[4] Full-Year 2025 Financial Outlook Alphatec Holdings, Inc. raised its full-year 2025 guidance for both total revenue and non-GAAP adjusted EBITDA, reflecting confidence in continued growth and profitability Full-Year 2025 Financial Guidance Update | Metric | Previous Expectation | New Expectation | | :-------------------- | :------------------- | :-------------- | | Total Revenue Growth | - | 21% | | Total Revenue | $734 million | $742 million | | Surgical Revenue | - | $666 million | | EOS Revenue | - | $76 million | | Non-GAAP Adjusted EBITDA | $78 million | $83 million | Non-GAAP Financial Information Definition of Non-GAAP Measures The company utilizes non-GAAP financial measures to offer investors a supplementary tool for assessing core performance and future earnings potential, emphasizing that these measures should be considered in addition to, not as a substitute for, GAAP financial statements - Non-GAAP financial measures provide investors with an additional tool for evaluating the Company's core performance and future earnings potential, used by management in its own evaluation[7] - Key non-GAAP measures defined include Free Cash Flow, Non-GAAP Gross Profit and Gross Margin, Non-GAAP Operating Expenses, Non-GAAP Net Income (Loss) and Non-GAAP EPS, and EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin[8][9][10][11][12] - Non-GAAP measures may not be directly comparable to those of other companies and should not be considered superior to GAAP measures[7] Non-GAAP Adjustments Alphatec's non-GAAP financial measures exclude specific items such as amortization of acquired intangibles, litigation-related expenses, stock-based compensation, and other non-recurring or non-cash charges to provide a clearer view of the company's ongoing operational performance Amortization of acquired intangible assets - Excludes amortization expense from intangible assets acquired in business combinations and asset acquisitions to focus on core operational performance[13] Litigation-related expenses - Excludes litigation fees and settlement expenses deemed not normal and recurring to core business operations, primarily related to the 2018 business transformation[14] Purchase accounting adjustments on acquisitions - Excludes non-cash expenses from fair value step-ups associated with tangible assets acquired in business combinations or asset acquisitions[15] Restructuring expenses - Excludes one-time severance, personnel costs, or facility-related costs incurred during operational realignments or acquisition synergies, as these are not part of ongoing operations[16] Stock-based compensation - Excludes non-cash stock-based compensation expense to provide meaningful supplemental information regarding operational performance, given its variability and subjective assumptions[17][18] Transaction-related expenses - Excludes one-time costs related to business combinations, asset acquisitions, or debt financing activities, as they are not indicative of underlying core business trends[19] Foreign currency exchange impact - Excludes non-cash and non-operating gains and losses from foreign currency transactions when evaluating operating results[20] Loss on debt extinguishment - Excludes non-recurring charges from early debt repayment, refinancing, or settlement, as they are not indicative of ongoing operating performance[21] Loss (gain) on derivative liability - Excludes non-cash fair value adjustments on embedded derivative features related to convertible debt, as these are volatile and unrelated to core business operations[22] Non-cash interest expense - Excludes non-cash interest expense, primarily from amortization of debt discounts and deferred financing costs, as it does not reflect core operating performance or current cash expenditures[23] Long-term income tax rate adjustment - Applies a structural long-term projected non-GAAP income tax rate of 26% for greater consistency across reporting periods, reevaluated as necessary for significant changes[24] Other non-recurring expenses - Excludes unusual or infrequent items not indicative of ongoing operating performance, such as discrete costs for tax strategy implementation or customer restructuring[25][26] Company Information About Alphatec Holdings, Inc. Alphatec Holdings, Inc. is a medical device company focused on revolutionizing spine surgery through clinical distinction and innovative procedural solutions, aiming to be the Standard Bearer in Spine - ATEC is a spine-focused medical device company dedicated to revolutionizing spine surgery through clinical distinction[27] - The company's Organic Innovation Machine™ develops new approaches integrated with its InformatiX™ platform to improve surgical outcomes[27] - ATEC's vision is to be the Standard Bearer in Spine[27] Forward-Looking Statements This section provides a standard disclaimer regarding forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ materially from projections, and disclaims any obligation to update these statements - The press release contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[28] - Factors influencing actual results include product development success, strategic plan execution, regulatory approvals, reimbursement, and litigation outcomes[28] - ATEC disclaims any intention or obligation to update or revise forward-looking statements unless required by law[28] Investor/Media Contact Contact information for investor and media inquiries is provided, including specific personnel and email addresses - Investor/Media Contact: Robert Judd, Investor Relations, (760) 494-6790, investorrelations@atecspine.com[29] - Company Contact: J. Todd Koning, Chief Financial Officer, investorrelations@atecspine.com[29][30] Condensed Consolidated Financial Statements (GAAP) Statements of Operations The GAAP Condensed Consolidated Statements of Operations show significant revenue growth for both the three and six months ended June 30, 2025, compared to the prior year, though the company reported a net loss in both periods Revenue and Gross Profit (GAAP) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenue from products and services | $185,544 | $145,573 | $354,724 | $284,050 | | Cost of sales | $56,443 | $42,979 | $109,627 | $84,105 | | Gross profit | $129,101 | $102,594 | $245,097 | $199,945 | Operating and Net Loss (GAAP) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total operating expenses | $142,186 | $137,901 | $302,473 | $278,593 | | Operating loss | ($13,085) | ($35,307) | ($57,376) | ($78,648) | | Net loss | ($41,144) | ($40,680) | ($93,051) | ($89,175) | | Net loss per share, basic and diluted | ($0.27) | ($0.29) | ($0.63) | ($0.63) | Balance Sheets The Condensed Consolidated Balance Sheets show an increase in cash and total assets from December 31, 2024, to June 30, 2025, with a notable shift from a stockholders' deficit to positive equity Key Balance Sheet Items (GAAP) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $157,063 | $138,840 | | Total current assets | $443,326 | $417,399 | | Total assets | $790,293 | $775,710 | | Total current liabilities | $154,184 | $153,026 | | Total long-term liabilities | $588,735 | $613,250 | | Stockholders' equity (deficit) | $23,771 | ($14,169) | Reconciliation of Non-GAAP Financial Measures Non-GAAP Gross Profit and Margin Reconciliation The reconciliation shows that non-GAAP gross profit and margin are slightly higher than GAAP figures, primarily due to the exclusion of amortization of acquired intangible assets, stock-based compensation, and purchase accounting adjustments Non-GAAP Gross Profit and Margin | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Gross profit, GAAP | $129,101 | $102,594 | $245,097 | $199,945 | | Non-GAAP gross profit | $129,718 | $103,652 | $248,807 | $201,793 | | Gross margin, GAAP | 69.6% | 70.5% | 69.1% | 70.4% | | Non-GAAP gross margin | 69.9% | 71.2% | 70.1% | 71.0% | Non-GAAP Operating Expenses Reconciliation Non-GAAP operating expenses are notably lower than GAAP figures, reflecting adjustments for non-cash and non-recurring items such as stock-based compensation, litigation-related expenses, and amortization of acquired intangibles Non-GAAP Operating Expenses | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Operating expenses, GAAP | $142,186 | $137,901 | $302,473 | $278,593 | | Stock-based compensation adjustment | ($15,071) | ($16,406) | ($34,346) | ($33,245) | | Litigation-related expenses adjustment | ($1,593) | ($2,090) | ($13,807) | ($6,518) | | Amortization of acquired intangible assets adjustment | ($3,803) | ($3,836) | ($7,456) | ($7,690) | | Non-GAAP operating expenses | $121,712 | $113,822 | $246,486 | $228,722 | Adjusted EBITDA Reconciliation Adjusted EBITDA demonstrates a significant positive trend and margin expansion, indicating improved operational profitability when excluding various non-cash and non-recurring items from GAAP net loss Adjusted EBITDA and Margin | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net loss, GAAP | ($41,144) | ($40,680) | ($93,051) | ($89,175) | | EBITDA | $6,243 | ($15,429) | ($18,141) | ($40,885) | | Adjusted EBITDA | $23,467 | $5,565 | $33,986 | $2,530 | | Adjusted EBITDA margin | 12.6% | 3.8% | 9.6% | 0.9% | | Adjusted EBITDA margin expansion | 880 bps | - | 870 bps | - | Non-GAAP Net Income (Loss) Reconciliation The non-GAAP net income reconciliation shows an inflection to positive non-GAAP net income in Q2 2025, highlighting improved underlying profitability after adjusting for various non-cash and non-recurring items Non-GAAP Net Income (Loss) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net loss, GAAP | ($41,144) | ($40,680) | ($93,051) | ($89,175) | | Non-GAAP net income (loss) | $2,591 | ($11,725) | ($5,432) | ($27,251) | | Non-GAAP net income (loss) per share | $0.02 | ($0.08) | ($0.04) | ($0.19) | | Weighted average shares outstanding | 149,907 | 142,687 | 148,337 | 141,845 |