Alphatec (US:ATEC)2024-02-28 04:01Financial Data and Key Metrics Changes - Total revenue for 2023 was $482 million, reflecting a 37% growth compared to 2022 [3][23] - Adjusted EBITDA expanded by 890 basis points year-over-year, with a loss of $9 million for the full year 2023, an improvement of $29 million compared to 2022 [32][27] - Fourth quarter total revenue was $138 million, a 30% increase year-over-year and a 17% increase compared to the prior quarter [22][23] - Non-GAAP gross margin for the fourth quarter was 70%, up 310 basis points year-over-year [28] Business Line Data and Key Metrics Changes - Surgical revenue for 2023 was $423 million, a 40% increase compared to the previous year, with procedural volume growing by 31% [23][24] - Fourth quarter surgical revenue was $123 million, a 34% increase year-over-year, with procedural volume growth of 29% [22][23] - EOS revenue for 2023 was $59 million, a 24% increase compared to 2022, with fourth quarter EOS revenue at $15 million, up 5% year-over-year [24][22] Market Data and Key Metrics Changes - The company has increased its market share from approximately 1% to over 5% in the spine market, with some regions achieving up to 25% market share [4][12] - The market is characterized as 35% disrupted and 60% apathetic, presenting opportunities for growth [12] Company Strategy and Development Direction - The company aims to create clinical distinction to drive surgeon adoption and expand its product portfolio, with a commitment to launch 8 to 10 products per year [5][8] - Focus on expanding the lateral franchise, which addresses a $3 billion market opportunity, and integrating advanced technologies like SafeOp and robotic systems [7][14] - Plans to enhance the cervical portfolio and introduce 3D printed implants, along with the integration of navigated robotic elements [62][63] Management's Comments on Operating Environment and Future Outlook - Management expressed enthusiasm about the current market dynamics and the company's growth trajectory, emphasizing the importance of long-term strategies [12][39] - The company expects continued revenue growth of 23% in 2024, with surgical revenue projected to grow by approximately 25% [34][35] - Confidence in achieving cash flow breakeven by 2025, supported by a well-funded balance sheet and ongoing investments in revenue-generating assets [33][38] Other Important Information - The company raised $150 million in capital to support growth initiatives [4] - Adjusted EBITDA guidance for 2024 is approximately $22 million, including an $18 million provision for excess and obsolete inventory [35][36] Q&A Session Summary Question: Update on rep hiring cadence and market disruption - Management indicated that 94% of the market remains disruptive, and the hiring process is methodical, focusing on areas of greatest need [44] Question: Guidance on revenue cadence throughout the year - Revenue is considered a lag indicator, with expectations for a typical seasonal pattern in revenue growth throughout the year [49] Question: Insights on training and demand for ATEC products - There is a mix of new and returning surgeons, with significant interest in lateral surgeries and expanded applications [52][53] Question: Expectations for international contributions to revenue - International markets like Australia and New Zealand are starting to contribute, with Japan expected to show early revenue reflections [68][70] Question: Launch metrics for the updated EOS platform - Everything is on track for the EOS platform rollout in Q2 2024, with enthusiasm for the technology and its integration into workflows [71][73] Question: Achieving market share in key markets - The company highlighted that achieving higher market share often depends on establishing a strong lateral business and building relationships with surgeons [76]