Alphatec (US:ATEC)2025-05-01 20:30Financial Data and Key Metrics Changes - The company reported a revenue of $169 million for Q1 2025, representing a 22% increase compared to the prior year [8][12] - Adjusted EBITDA for the quarter was $11 million, equating to a 6% margin, which is an improvement of over 800 basis points year over year [12][20] - Non-GAAP gross margin was 70%, down 50 basis points year over year but up 70 basis points sequentially [10][11] - Free cash use was $15 million, reflecting a $55 million improvement compared to Q1 2024 [14][15] Business Line Data and Key Metrics Changes - Surgical revenue was $152 million, growing 24% year over year, while EOS revenue was $17 million, up 8% [8][10] - Procedural volume growth was 17%, driven by an 18% increase in the number of surgeons utilizing ATEC procedures [9][10] - Average revenue per procedure grew by 6%, indicating effective capture of procedural revenue opportunities [9] Market Data and Key Metrics Changes - Same store sales grew 23% year over year, demonstrating significant growth in established markets [10][11] - The company experienced record order growth for EOS, with a 28% year over year increase in the order book [10] Company Strategy and Development Direction - The company is focused on creating clinical distinction through innovative procedural solutions that improve patient outcomes [22][24] - ATEC aims to minimize surgical variables through technology, expanding its sales force and enhancing field operations [24][26] - The strategy includes a strong commitment to informatics and automated alignment planning to improve surgical predictability [26][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving cash flow positivity for the full year 2025, with expectations of continued strong revenue growth [15][18] - The company anticipates revenue growth of 20% for the full year 2025, with surgical revenue growth of 21% [18][20] - Management noted that the current economic environment has not negatively impacted demand, with a robust backlog of procedures [100][101] Other Important Information - The company successfully refinanced its 2026 convertible note, extending maturity and maintaining a low coupon rate [15] - The company is committed to maintaining disciplined cost management while investing in growth drivers [11][12] Q&A Session Summary Question: Market size and competitive dynamics for the new Corpectomy system - Management indicated that they are the only company offering this procedure in the prone position, which provides unique advantages [39][40] Question: Tariff exposure in 2025 - The company expects low single-digit million impacts on cost of goods sold due to tariffs, primarily affecting EOS equipment [50][51] Question: Update on robot launch plan - The robot is in the alpha phase, with plans for an end-of-year launch, and integration with navigation systems is ongoing [55][92] Question: Trends in cash outlay and cash use - The company achieved cash use at the low end of the expected range and anticipates positive cash flow in the latter half of 2025 [61][63] Question: Competitive dynamics in the spine market - Management noted that the company is positioned as the largest pure play spine company, with a strong focus on improving the ecosystem for spine surgery [66][69] Question: Salesforce productivity and performance - The company reported a 23% growth in same store sales, indicating effective performance from newly recruited sales representatives [78][79] Question: EOS placements and portfolio pull-through - Most EOS placements are in new accounts, with significant growth expected in complex procedures [84][86] Question: Overall market volumes and ASC growth - The market is healthy, with good volume trends, and the company sees potential for growth in Ambulatory Surgery Centers (ASCs) over time [88][90] Question: International market expansion - The company remains bullish on international markets like Australia and Japan, focusing on profitable growth without a large infrastructure [105][107]