Alphatec (ATEC) Q2 2024 earnings summary

Executive summary

• Achieved Q2 2024 total revenue of $146 million, up 25% year-over-year, with 27% growth in surgical revenue and 6% growth in EOS revenue, driven by increased product volume and expanding surgeon user base.

• Adjusted EBITDA turned positive at $5.6 million, reflecting a 3.8% margin and a 650 basis point improvement year-over-year.

• Net loss narrowed to $40.7 million from $51.4 million in Q2 2023, reflecting improved gross profit and lower litigation expenses.

• Launched EOS Insight, an AI-driven, automated informatics platform for spine surgery, marking a major clinical and technological milestone.

• Record 244 surgeon training engagements and 20% growth in new surgeon users, supporting long-term growth.

Financial highlights

• Q2 2024 surgical revenue was $130 million, up 27% year-over-year and 6% sequentially; EOS revenue was $16 million, up 6% year-over-year.

• Non-GAAP gross margin improved to 71.2%, up 190 basis points year-over-year, with GAAP gross margin at 70.5%.

• Adjusted EBITDA margin rose to 4%, up 650 basis points year-over-year.

• Operating margin improved by 400 basis points year-over-year to -7%.

• Free cash use was $45 million in Q2, with $100 million in cash and $531 million in debt at quarter-end.

Outlook and guidance

• 2024 revenue guidance raised to $602 million (25% growth), with surgical revenue expected at $537 million (27% growth) and EOS revenue at $65 million.

• Full-year Adjusted EBITDA expected at $25.5 million, representing 610 basis points of margin expansion.

• Free cash use for 2024 now expected at $125–$135 million, up from prior guidance due to higher working capital needs.

• Q3 cash use projected at $25–$30 million, with Q4 expected to generate $5–$15 million in cash.

• Confident in achieving free cash flow breakeven in 2025, supported by projected Adjusted EBITDA growth and existing liquidity.