Alphatec (ATEC) Wells Fargo 21st Annual Healthcare Conference summary

Market trends and business performance

• Procedural volumes grew over 20% in the first half, with high teens growth expected in the second half, driven by strong surgeon adoption in the low 20% range.

• Exposure to ACA subsidy expirations is minimal, with no significant impact observed in the field.

• Current surgeon adoption is estimated at 25–35%, leaving significant room for future growth at a 15–20% annual rate.

• Revenue per procedure declined 2.7% year-over-year in Q2 due to mix and a stable but sub-50% biologics attachment rate.

• Biologics attachment rate is expected to remain stable through year-end, with potential for improvement and tailwinds in 2027.

Financial outlook and guidance

• 2024 revenue guidance is $882 million, supported by strong procedural volumes and EOS business seasonality.

• EOS order book quality and process improvements provide confidence in achieving the $77 million target for the year.

• EBITDA margin was 16.8% of sales in Q2, with a full-year goal of $140 million and disciplined OpEx growth of 10–11%.

• Free cash flow is guided to $20 million, with major factors being instrument/inventory investment and cash interest.

• 2027 targets include $1 billion in revenue, 18% growth, and $65 million in free cash flow, with gross margin improvements expected beyond the current 71%.

Product innovation and pipeline

• Valence platform limited launch targets 20–25 units, with positive feedback on clinical integration, efficiency, and reduced radiation.

• Valence is easier to adopt than competitors, with full commercial launch expected to ramp linearly after this year.

• Deformity segment sees incremental growth, with a full launch of small stature products and neuromonitoring innovation planned.

• EOS Insight software platform drives workflow efficiency, automated planning, and 30% increased surgical pull-through at six months post-launch.

• Theradaptive acquisition positions the company as a likely second BMP provider, with favorable handling and safety profile; next milestone is a two-year follow-up, with FDA approval targeted for late 2029/early 2030.