ATEC - Earnings call transcript Q3 2024

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Operator

Good afternoon, everyone, and welcome to the webcast of ATEC's Third Quarter Financial Results. We would like to remind everyone that participants on the call will make forward-looking statements. These statements are based on current expectations and are subject to uncertainties that could cause actual results to differ materially. These uncertainties are detailed in documents filed regularly with the SEC.

During this call, you may hear the company refer to non-GAAP or adjusted measures. Reconciliations of non-GAAP measures to U.S. why in which financial excluded Pat will identify provide will view call found today's included items the be be useful turn Todd management's release, is Koning. And CEO, Miles. press and of and ATEC's can Chairman the today's to Pat tables supplemental in and to and GAAP investors. Leading information Miles; call CFO, this over quantify I all now

Patrick Miles

you, Thank Kathleen.

really So great a QX.

everyone going more. what's spine on is about in excited outgrown least expecting the again We've I'm on super And at by So growth. business here. focus perpetuating Xx. profitable our

excited a just that. lot a volume. which so perspective, XX% It $XXX from in of couple And growth, a is QX XX% highlight about of stats growth, -- means revenue, total XX% million revenue surgical

revenue volume, XX% new users. surgical So growth surgeon X% procedure, in XX% per in

and that's orders than at XXX EOS in greater training XX% engagements. over back -- a adjusted burn. in $X.X So sequential number did launched, have up or is cash we EBITDA, good surgeon The we profitability record is good. Insight million Increase reduction and year-to-date. of

term generate we're we our So QX $XX loan million. 'XX, capacity to in increased by and on cash track

helpful. that's So

of cash is and creation value Our doing. really what the generation focus we're

So is clearly spine-focused as a company, our intention. creating value

X nobody for accomplishing our it capacity multiple so one this in years, means. that we've revenue through I really this lead done think questions And is, to we're And which the and generation. first because is do straight

in in will leading and it reflect And profitability, flow. revenue increasing generation so clearly, cash by

this we you are to want I walk. And so what provide is why so in confident do

$XXX multiples it's industry, I than to revenue, growth growth years And of the spine X so as in anybody of as greater been organic said, million. of X years relates it at

surgical XX% is strategy right high surgeon the industry volume, growth. new procedural ASPs, driving and absolutely one, it's XX% Our

So accepted. that's being well

continues expand rapidly. force to sales Our

foundation the is And for EOS what orders lay We that year-to-date. have future record does growth.

and be with can't growth that. in I XX% year-to-date. excited more about XX% guidance QX 'XX So in growth XX%

tell perpetuating revenue growth years. no last would feels over I have better the you one X So that leadership we on taken that about the

I think profitability important. is hugely increasing the focus on

flat positive than people quarter big business. second Third expectation, improving margin consecutive pull XX% EBITDA operating greater and start about you This expenses, asset QX implied is 'XX. When adjusted to a a EBITDA what profitability, of instrument can adjusted of inventory and is quarter impact consecutive to think and a efficiency of levers you one. sets for

look approach, very we so in the at you the effort people -- are on kind we're we are of when a And taking side, investment. people focal taking

with sales development terms a in or to effort guy, keeping of you're like a your regard We're very you're guy if focused joining we hiring. chances a family. the So product

organizational narrowed As of structure. our strategically late, we've

have be that lean we and We organization. and sure to we're the what mean, streamline making doing is

We in user we are All closer ultimately cash way. been, to we it flow. ever things these that now aiming to are end and as reflect keep have the

scale ultimately in that have all from beginning. business, this of was the to we our an infrastructure intention with facilities the So place and

positioned with are We expansive growth. to inventory sets and fuel

lot into. inventory grow We have sets a of to in

beginning will inflection to our cash continue. contribute in positive to 'XX continue 'XX EBITDA adjusted and flow will Our QX sustained QX in

existing that we it. we that Pharmakon So in Braidwell love have expansion term and the has partners $XX the flexibility be more great we love us, and it our provided million thrilled loan we can't in about and

EBITDA 'XX million. have are on would aligned and of we long-term an We'd in $X commitments. said $XXX I focused say achieving would We adjusted our do financial we back in in that So 'XX, billion revenue.

our be $XX margin million. with to has our Nothing of ability regard flow Our cash changed LRP. would have free we'd to XX% and fulfill

way. our on are We

to over you it some financial turn Todd me detail. to provide Let

J. Koning

Thank begin I'll with afternoon, Pat, revenue. good appreciate you, today. We us everyone. joining you and

the $XXX up million compared EOS quarter revenue million, XX% up in year prior and was $XXX and of million comprised was X% of total surgical million revenue. sequentially. revenue $XX Third to in The revenue $XXX

surgical revenue XX% $XXX of million, and Third strong which our increased the contributed a revenue X% utilization. XX%, growth in Procedural growth quarter volume particularly the year. the lateral strong reflection contributions over million, to technologies, across implant expandable per $XX portfolio, of procedure. adoption growth and surgeon average was in saw prior We

grew for sequentially was compared EOS QX new quarter seen, which availability Notably, as million has X% encouraging and and the $XX increased to is year-to-date results product we up last $X benefited year. volume from strongest we've XXXX. been million, in additions. EOS quarter third our Third territory the the revenue order ever

turn remainder the for I'll of to results P&L. Next, the

Third quarter to non-GAAP basis was margin compared down impact due product the mix. XX%, XX year of gross to points the prior

was in the R&D non-GAAP and to $XX million of of XX% sales quarter year. Third prior X% sales million $XX and approximately compared

growth approximately of XX% $XX innovation improvement growth points future top the XXX to of sales in period, the $XXX invest quarter XX% third basis Non-GAAP prior and continue and line million in of points. million leverage. year of while XXX the was We in basis and SG&A an sales drove of business, to compared

depreciation SG&A purchase period's [ the a instrument Now included step-up to of in in related this sets. is ]

of increased percent year-over-year. points about basis depreciation sales, As XXX a

impact, SG&A by a a drivers consecutive we and in basis $X EBITDA followed of of sales and margin. $XX X% in a a of $XXX,XXX X,XXX chart million, adjusted slide that our EBITDA, dollars next loss million selling $X.X R&D EBITDA in year-over-year. $XXX basis the $XX in basis of points basis positive quarter was million we operating to has by non-GAAP SG&A and the depicts of the sales and XX% prior through of second improvement beginning to That EBITDA we of XX XXX leverage. Total progress primarily quarter, the third of X% year driven basis quarter that contribution leverage have points driven year-over-year was deliberate and the of approximately expected a prior was SG&A the third in basis XX%. and the improvement to Drop third period, X% The infrastructure improved of of Adjusted gross to by XXXX, points, point of and infrastructure leverage that since points million So of sales million and XX% And growth by the of profitability amounted compared year, excluding leverage demonstrating demonstrated expense XX% from compares revenue which contributed improvement. R&D offset rate adjusted sales sales increased quarter, substantial execution have on operating slightly XXX XXX XXXX. in basis points to Adjusted margin here a improvement. achieved the the of by of loss leverage. points with leverage XXX driven impact. The variable as of XXX

into flat commitments million our have produced on the EBITDA been and sales. for X resulting in fact, confidence XX% or expenses cash growth The non-GAAP last operating to our implies In quarters, QX great considerable EBITDA of guidance translate adjusted adjusted sequentially revenue deliver gives has financial business ability in margin the that our of us $XX and that growth generation. expansion

million cash. quarter ended with Turning carrying million. third $XX value to Debt balance the the in sheet. $XXX was We

partially $XX the intense investment, approximately at quarter product to from expansion with third that new improving by cash That use chart an As third we growth quarter in by to we launches. The instruments the linear and in reduced we the free progression support the begin was improvement cash cash toward phase primarily inflection bottom offset by the in to the was million working adjusted to instrument leading towards XX% quarter. and XXXX, quarter fourth depicts the from fourth of is generation net move cash QX cash generation The directed trend increase an $XX use the sequentially capital. spend exit slide and and million. as over past in of inventory distribution of inventory driven reduced in the to EBITDA,

cash this conjunction million released million, the continue an we full share transaction, we its maturity liquidity use our we million between close with We expect to have term results $XXX financial the expect flow the to convertible range in mature another our cash we expect which into to payments increase and in the $XX $XXX facility, pay of today, of revolver loan are bearing same $XXX to X.XX% year terms going The XXXX. and breakeven. I total an close million. Pharmakon. the balance. used original key the XXXX. also capital, SOFR this the Exiting interest to cash for like is of proceeds rate and cash of for would term down August XXXX. In interest-only bringing to loan to us we $XXX our added loan the be notes believe in $XXX XXXX, announced partner incremental Through with have million. Upon our we lending year, provides ample until million, $XXX access as thoughts With pro-forma plus strong that to in the million liquidity transaction, at where of

over the rule at improvement a EBITDA out won't the if refinance doing next years we without price, us to is we in dilution. right few allow While material to the expect convert equity the

of cash company have when EBITDA progress $X towards will expect the to financing access As adjusted level billion a XX% XXXX targets in financial plan range we alternatives. we with long and different our revenue margins flowing,

Turning surgeon full for large surgeon and the the a great to of increased year clinical revenue distinction. of of to adoption growth The training strong and are ATEC volume testament our durable outlook XXXX. indicators are

of which $XXX fuel full implies third grows year. of XX% of high million. of and And per growth growth EBITDA $XX XXXX. to outperformance, revenue We to approximately leverage. and are XX% million, surgical equates a year to the approximately of grows revenue a EOS XX% that a at million, margin EBITDA year-over-year total expect full powering single-digit for revenue drop That Sales approximately the to through acceleration a surgery compared in to is $XXX volume adjusted includes points growth through guidance we rate XXX surgical in revenue at XX% growth $XX with material That approximately expansion. drop raising rate quarter basis million the dollars, implies high-teens to revenue adjusted that

the expect to XXXX. $XXX to range and for million use continue $XXX We year between million full cash

remain XXXX cash unchanged. for in expectations breakeven flow Our

use positioned cadence include cash today is in to When We in through EBITDA this we adjusted XXXX year are seasonal close breakeven. you quarters quarter, cash translates free expect by the followed why our cash well reinforcing the first year, that with growth positive flow how million. at be to X. I'll next look expected for flow X in to $XX and

we that in of will have a and and capital. million and in million assumption. CapEx XXXX, We investment growth, expectation an long-range sets invested year $XXX working inventory interest come with $XX other we consistent will is from million investment that the In EBITDA, Because [indiscernible] have adjusted our is million. the our the XXXX in plan and will required inventory into XXXX XXXX with asset revenue in support $XX base

other to and to on rebuilding That a execution $XX cash breakeven adds expect generation interest a see value. shareholder recognize flow We working in also capital cash will crucial that to to We step-up up million. year. all is

are As are on strengthen resources. focused generation. directing progress has complete position internal to are which expanding investments of such, growing profitability the informed cash and as we and revenue Those we generate efforts and our towards we realignment how cash,

be a lot organization of excited and Our lot to to about. has do a work

value, shareholder team As that, and confidently know that to We underway. With we over aligned. be to rebuild prioritized I'll Pat. work to needs this the back is call the seek know what is leadership turn

Patrick Miles

Todd. Thanks,

yet to come. is best Our

our ATEC are absolutely We on objectives And so means creating informatics. That distinguishing are environment, procedures this clinical value long-term and focused bettering distinction. objectives. creating through

surgery. we're to adoption, our lot well compelling enhancing do we're And earning and thrilled front. business, about in sales teams do think improving force, and then strengthening users There's by the way on sales spine it. our to our I Also expand that and engaging surgeon operations. on a surgeon elevate

others we know something clearly, that So don't.

This Spine American years It's ago, time, So Clemente not exactly our the North PTP transpsoas was X ] this Dr. to year, an about picture. love this room. even approach, only. prone demonstration about, his most meeting. standing At [ I presented Society PTP, room empty from recent --

spine apply the We our early continue the our in So we with and to a reconstructive early lot into opportunity surgery surgeries learnings. a of in of the phase are are of -- we thousands are still journey know lateral forward. of experience heck

following So in to appreciating by this looking it our and our a performance, lateral at would surgery. picture historical realize approach great not be mistake

do, in to in are continue distancing approach, we improving we into indicative Valence. ATEC we're lateral. work really investing I always, that how way ourselves The as precision who So is of informatics but to means in that of case plenty the think to further distance this further is integrate the and like

for further with and will EOS. the also as well expanded as applications predictability neuro minimize We complications the SafeOp increasing potential feature and of with alignment set

So utility utilize. informatic that with we're reasons expanding more our attracting new and means and more and platform to users board, the across applications users

thoracolumbar segment, could think see the I the in with every I in be corpectomy, growth growth our on and it the to there's And of is increase you spine most opportunity profile. side, reason in It multilevel lateral. coveted confident perpetuating lot the business. with deformity. like think right-hand complexity a things regard piece There's the to to going is profoundly

about SRS in think deformity in remotely. most influential Insight. is spine ball. of treatment AI-informed influence of scanning the our business palpable was belle with SRS it prospective also was the enthusiasm for would when you like And tell was the growing lateral, society EOS There deformity. you, NASS, a much the so I

tool an to gets our decision-making is talk adjunct EOS Insight to So that tool is the absolutely in incessantly, about and implants. AI-informed this also foundational and We mitigation only decision-making. The by variable ATEC has that. informed is reflected automated clinical

And it's be implant decision-making on these ultimately so more utility and lost us excited that. that get about tools through driven not can't

opportunity sites coveted are turns the the surgery image ability enthusiastic that reflected to what data XD surgical is, Insight, improved of drives another So sequence. create valuable plan post-op very effort provides information. the and experience that early with the in screams from into about the pre-op objective of in reconcile to auto happens interoperative alignment The to real it the to launch tool unique planning a patient-specific implants information technology Everything spine virtual to time the EOS that the in the most to literally surgery.

future The spine automated. it consistently that we surgery love things care. It's Everything our wasn't enhances in excited be so Insight not outcomes because outcomes. track automated. And today. and our to cannot ability are this Like is he Lockey these have workflow more Dr. ultimately said, captured is growth. tool. of where reflection We are been All patient as And reason automated. it improves we EOS about says, streamlines the

So totally excited about what's going on there.

with surgeon in compel Clearly, XX% We in XXX people continue a the over come to users surgeons want trained. growth adoption surgeon into reflected to company.

is One of improving the focusing we're things on yield. that we're doing on

in, create that the by the business more impact will So come the so. yield can surgeons more users better the and doing have, more we can

training. committed So to predictability through drive we to improved clinical continuing are

growth at when power has preparing clinical look is of So again, for our hallmark education application you growth, them. to and will training terms this leadership. for of distinction, And believe continue of a what continued one a been our in which we of proxy surgeons

confident who of source there another It's force. based are are sales leadership people significant people in but the only confidence. upon growth who not the forthcoming. to the on the Moving today, We're completely

clearly And start to who our as start mix That start protectable want there say, technology the U.S. are demographics top upon so to you the of lateral XX of our head XX% have. to business with agencies you share of to is I'll look for of that a we lateral mix. best. It's at our XX%. a compares suite based tell percentage you, a that the people is you when performing sales,

call territories. territories, then a us we markets, X% forward XX% who nothing growth while. And little momentum X rate have people that been in market to for of share, lot for certain does in It Again, benchmark a a completely what compares have been have established have suggests XX% most We profile, we we a with with but reek places. of that again, a years. a growth on but consistent in

and investments the in bringing contribute, in major territories lateral, new U.S. whole major new they're And bought established We in and robust that efficiency in sets so growth said, of in by or it, to XXXX is to our and of, We set with on, people to inventory leading perpetuated we putting intended of new starting confidence territories, it's being and ton inventory work. people this business, know and improving XXXX. put work way utility. I inventory. as the It's a set inventory ramping it's

we've had You got sales sets and think an I to don't doing that more ever be efficient to your been and our operational sprint requirements. We with forward. meeting. inventory, recently aligned aligning we're with regard with incentive and agent

strong about and then excited And expansion completely elevation. further alignment. footprint so And U.S. talent to funnel our

lot good prospective that the to profile of out attract to we can't So and and lot there's profile about a ATEC. a excited want people this of business people we more business, and there of growth be

be When going truth an to people we're spine creating. the double-digit low our rates to what any in is and needs be a look relates We're to years revision undeniable in aggressive business surgery start going way, at the improved, after because it shareholder an more field, bullish needs and So this make that. we're at to you that and ATEC. spine this We're that business. to needs it the as coming in difference don't this associated increment going just aggressive a be cannot doing go in X% way to market from with

take will I that, it questions. over with so and turn And

Operator

from [Operator first Capital line comes And Street question your the Lake from Brooks O'Neil Instructions] of Markets.

Brooks O'Neil

you can you, I seem appreciate resources. appreciate you're is have record. to still guys. going believe track enthusiasm. that quarter, a your us to I that and on happen? for not But convince outspend your How Congratulations going to investors one question I your terrific that is,

Patrick Miles

Yes.

I'll in. Todd jump Let let me and then start,

We're is start operating when build we're -- to expectations, above the internal tell of consecutive kind And to And self-funding. to we about one when quarters taking the to building profile people. committed we're to to monstrosity. And organization. narrowing we demonstrate we're thing are sure people moves spend streamlining have that sets a But inventory a EBITDA made moves. ton we've and we be assets, I make taking to getting the so got the made business. And I the and progress start adjusted we're to are the flat next efficient kind monstrosity, you that you We've the year. in internally. relates with to a start of that when challenging you, closer we will as talk tell internal associated companies, the of not profile that these expenses, utility the of, spend about to it done of If necessary breakeven also talk We've of realm.

start to leverage, I see areas those significant provides I it that confidence. when about, happening think and I this me so And stuff real the think are time, in and about

J. Koning

that. to add would I Brooks, And

I the ultimately in this And to That is overall EBITDA. profitability well. organization, think growth we dive our really root that the think to adjusted incremental reduce and business operation a significant clearly, we actions done growth. narrow the also through recently ultimately is we've as a area taken in deep to as have discretionary of spending generating about spend really out

about being very overall resources where very And reducing thoughtful think so placing resource today. I we're our and diligent consumption that we're and

to margins. profit As in confidence think about that is continue next -- you to expand you and ability think our gives our year, I

us adjusted period. think path I the to that and seen a X.X has we've EBITDA think It's expanding second we've XXXX can walk gives margins we of way I time out that happened piece. been the EBITDA result one And expand was last into deliberate those of that over X that laid the years, the probably over beyond. component, years. margins ultimately the of I that profit reasons a the so profitability continue that that's Then And confidence built that as company. the

in required today and in will The think the level growth. investments inventory we've exist of the the to And and that sets call, million. inventory XXXX's there amount as I laid in investment of described on we is sets go inventory sets as contribute of $XX out second therefore, inventory. XXXX. of our component in a the of sets are that in a investment in magnitude is, XXXX and where we it, And significant and made order And

I and of sets flow, when so And the think balance about comes going cash step-up gets inventory breakeven. more sheet, our enhanced you a we think really that of million is year outlined. additional spending of about that $XX with about EBITDA, and on about adjusted play then next and gives million investment confidence ultimately you further also then capital that you think interest, can we've into just to you from. And about million $XX and in that that And where run more confidence -- a $XX working

Operator

the Your next Mathew Stifel. comes from of question at Blackman line

Mathew Blackman

me Can you hear okay?

J. Koning

We got you.

Mathew Blackman

a housekeeping Todd, And questions. if to of Maybe, with couple start I everybody Okay. just could you, asking quarter. this this we're

not institutions for notable IV but you, to due terms of also anecdotes So solution we've some been in hearing it shortages. procedures the exposure, of elective anything specifically delaying saving and hurricane

So as impact from transient, XQ I've just field, headwind? any follow-up. guidance the you but if into you I one is the then anything? hearing a And anything implied be appreciate or baked would there And both got are from are what --

J. Koning

Yes.

to little in see quarter. first the while seeing And hurricanes, half the As a now. no the relates really month, it third we in of recover that impact we're bit did

that, and we feel a case. very going So catch really, that about up our to assumes of all good guidance as we're that base

that's you really a we're so and less Pat, surgery that's And maybe from maybe, than perspective think probably impact surgeries your give IV And people think. on I and seeing think side. the and how elective elective on no can I spine hurricane standpoint

Patrick Miles

needsâ€¦ impact. Yes, no People

Mathew Blackman

Great. myâ€¦ and that. Maybe then appreciate it No, I

J. Koning

here. works I everybody's also in also think the deductible favor phenomenon

Patrick Miles

Amazing.

Mathew Blackman

You in my there the But full in gave a broadest finer it of they're And frame new what just on guess is inning And bit a of of relative put new other to that the it but you to fighting stuff ramping? range way sure where question also their of is today? make of terms a in, we're in maybe want implants. I to sounds follow-up, ability sort great at could access weight sort little the are then us sets, Yes. of hoping rep, lot new slides. to point like productivity how I the terms is, folks distributor

Patrick Miles

Yes.

wasn't business, Let what to scale the business me you available good group. that you you wasn't a then, the walk It's business bit away and objectivity, into comes give are a them. little it it's has happens intend of new all as you Todd's X. and And add. very We jump fascinating. been have And all can inventory group on he like enter is always going who new from that so subjectivity absolutely the ramps. to and These away from not walk one and Day then you that there

And very believe we we And company. And And geographies be force, have sales the I so are that still of sales mature, then of are it the in putting that that pockets. a what reflective getting just the going. together profile growth others to is force we're seeing have intend. we effective that effective we're are

the areas same-store account taken we it or build. ramp keeps we ramp. the starting bullish intend. group very that very, And the then is into to start It's to ultimately right? to grow you hasn't new you had like sales distributor the so at the continue are previous mushy, group And even ramp if previous little is me And there. the revenue a the the way lose that what And on

one such get that to to to people you to hear business, is You the always And I for investments get of things the to these they this XX XX don't people and a months. hate this, XX the is in make XX-month know but reflected which said, access hospital. is reality I've and XX

reality see seeing same-store, guys. we're the the continued of of perpetuation starting and the engagement so And new to is many of we're

J. Koning

long been X Matt, would last like We've And however been years having doing continuously we've that. for to I these. coverage add

And contribute. seeing we've so are last made to XX begin over we months the to XX the investments

that I think to major $X of one is ramp to those of But investments in good Clearly, was the was also that sequential of QX of that some a some contribution. QX. reflection example step-up beginning way. the million product just

that's And investment point so think the good I proof those in the of for territories. effectiveness

Patrick Miles

to have out relevant somebody will Matt, will a it something Yes, a just it territory. is to they that and or come non-compete, sit they they something either different do just think will operate I on will add in is whereby

a coming off So somebody from then And everything different it's into entering months a we a having coming first XX geography non-compete, and non-compete. on, serving that. boost see a that little a non-compete, of after the always bit

to different it's evolve it's many these outs business. so we ins things Like of as one and lot provide And to things. takes there's so continue tough you these the of because, to where puts the exact and again, there's a

Mathew Blackman

I appreciate guess that still have productivity up go. But to we're we that curve, point ramping that. I and the is No. ways

Patrick Miles

still to have ways go. We

J. Koning

Yes. Literally.

Patrick Miles

you, X% Yes. We're we're the market It's to go. the we're a tell in But business. XX% And got clearly, aggressively. growing this of player a There's ball. nominal belle to -- we're I shareholder.

to at EOS. regard to And procedurally evolving look on not we're it's with to with want lateral, with. care to what You be doing with people here regard there's what's the regard a going going and a associated on industry lot secret to that

Operator

Your next line from question Barclays. the Miksic comes Matt of from

Matthew Miksic

is and how your robot a about then of at continued the have One of And and to talk Maybe that robots, pipeline of turning sort robot look the XX-month part imaging terms get the and XX, what's with to robot follow-up. isn't that cash on in a growth really competing the question, could XX, wanted with ask, quarter. today look today of I often, one corner your in kind Pat, the more why drivers it's ask Congrats you folks a is Alphatec use think growth. one great of the of as I question I here kind you at and you story if see happening challenge? where I period? as into sometimes dovetails that with Nice get

Patrick Miles

top. this enough helps this to Matt. again, will question the intention placing and our spine Thanks, the $XX not that you it's love would were fantastic if place for just prioritize have ultimately which at a help at a I spend screws, do influence be and tool us robot Yes. think -- variables And because challenges influence the on that point, fantastic spine the is profound do million care, to care. on I screws that to is and that. And

so I what that a from this this able is get pathology, for think be that surgeons. and hey, valuable drive better is intervention information the And by to patient piece of decision-making create type an and likelihood is correlatives behavior to hugely highest said,

And And the I top behind that the that, the that's ecosystem that the and of better EOS. foundation of list, becomes so an rationale is what was the think at decision-making. ultimately drives happens it

intervention comes where the the intervention. that's of navigation to context in. that's like is opportunity comes variables a where the the robot And and Within improve in, within the

to strategy. That step-by-step we architect our reflective provide has so of that's drive procedure a can how execution we is interoperative our And where been outcomes. information all work predictable do of a

you technologies in coveted to And ecosystem. those is And which ecosystem better so that an image foundation that when the and create EOS. assemble I spine you you, tell of of is all the foundation got ecosystem, to you love care, most start the of

experience image into the that surgical the translating plan through so is magic. throughout experience operative the the And

tool. it, we in about our the is love care so that's masses. it evolution needs love like, with it. we all reality hands is where the navigation. enthusiasm ultimately again, spine integrating to answer it's We're robotic is tools the a of in assembly not literally the it's the monumental And of just our robotics, of that But of It's in And doing it today We're single cases process the because tool. these.

So intended. and the didn't diatribe that my I would question be you answer probably

Matthew Miksic

and deployment of of the Yes. or that and the cash have and that you're comments that And for is the guess, curve the capital of helpful. way that Maybe way how guiding, titrating and you're deployment in thinking QX you've one that differently that maybe EBITDA what you're I No, bell you're a feel of us? forward? feel planning the QX, where -- follow-up. way you're and in about about some you I sort made doing in the had you in And the about you in level way inefficiencies on going communicating the guiding how terms you're the little earlier -- year,

J. Koning

Yes, the inventory at challenges the a our thanks look quarter described you more call, had When or in how really Matt, we challenge mixed question. less. second we for

we is out way remember, its was needed we and have we works need. that necessarily where stuff, and and if way had or the it had of we one -- needed we didn't we so did, that you timing really we didn't And stuff point at stuff

a when of grow ultimately, the is level so ultimately have into you revenue, we And that inventory that today. supported by

supports ultimately don't needs So be. some to a my support efficient point we of and being quarter buy portion a in of second had certain meaning to it next the we number amount you year, to inventory sets is today That growth. inventory growth next than have that year's is and have that revenue less the

base And the at you in expected so base our look base for to million base need. will and think asset revenue understand or is you asset about support. of conclusion come what ultimately have, that the math I you what internally you do that rate with $XX sets what And what inventory next year, and is asset you investment you growth what

in resolution knowing over our assets next to expect the come cycle, consequently, confidence think the level are and we high we and made is months. and given I what where we've that what revenue XX so planning the we today have investments And of where in reasonably

I the and we million the with on in is, which question so maybe that's, in of at asset level into that of what And favorable confidence go think, front. third came to QX next And you more cash expected specifically quarter. to was you $XX use, year the the

expense we ourselves million room million. $XXX Ultimately, in helped saw as flow, of in And landing we're ultimately, is Your to third here is quarter, expense range, from cash pretty standpoint up maybe back still cash some to some cash first we $XX the to also QX operating million plane incremental of creep quarter, that to quarter. we in have And a it us. expectation in bit associated giving DSOs the think little good. DSOs the we've in some $XXX flow in as for relates about an actions improvement taken which third with the the which

out And so that the play quarter. in will itself fourth also

million we stick the was the take in So and let's hit million things a into those give that our things the good that all that with doing way. use can when to of all on should $XXX full $XXX us you cash view confidence year we're context,

Operator

from Your the Matthew question comes Sandler. from next of line Piper O'Brien

Matthew O'Brien

one, for a question. one question Thanks supposed sticking I it be we're with. long think is taking to It's but the

maybe it's So spent so But couple CapEx at with for is million $XX a Todd. in as long Todd, on me. spending question, of and the bear question your CapEx. again, I this about last you in look 'XX years,

it grow like as line year? here to so productivity in just to capital, that modeling some be why than able this curve only that million year to call higher to Because productivity of stuff. much all 'XX, than on $XXX the all these line should investments that. year-over-year. you're time this top you're And and that and all up you've be and up takes things on the it, get 'XX million based revenue in $XXX I level But top made investments, going X.X million streak, you've something that's $XXX of $XXX look that's based seems of You're about you're wouldn't greater it get similar of seen like what the adding this incremental about know just million-ish, at your I the if year it

J. Koning

if Matt, has this historically, our dollar growth. course we 'XX, 'XX So that think you plan, in $X.XX invested of look and I rate we've of the at over where long-range on shared been the and

-- at sets combined, inventory of And in is about $X.XX about sets and the and $X and in million. look Clearly, inventory $XXX investment you drive level to our so if here or XXXX, excuse investment takes me, it growth. inventory

support ramp. ahead And a potential the revenue so ultimately to we higher for bought

so that. rates for growing at Clearly, prepared we significant we're And to today. wanted be

we the that expect that's And if to XX, course so plus I invest the ultimately, that is where when ], XXXX XXX is what think the at. you you over actually X.XX in investment at streak assume XXXX, look of and a [

$X.XX you dollar. at If that, growth look that's on about the

what's we'll we for to point, million to base higher have Ultimately, we allow -- invested asset at call I year are, continue our about, rate. revenue a asset think in and look meaningful rates. the will have grow support assets implied. talk that growth that where we've And $XXX of to but does base think clearly, I so. level the observation last we'll Like is it, guidance or continue than And years So X about significant us your at to and that XXXX. to a grown that over we we've at the your grow got

Operator

Cowen. Jennings of Your next Josh question of TD comes from the line

Unknown Analyst

strong on surgeon for on training quarter. momentum with plus. Really XXX in the This is the Josh. Eric Congrats strong front

surgeons improve that can to be then of you be to your have they're to there at is that added is ATEC the once what assuming your think vast majority base rate? And training the are we conversion about done exposure on those secondly, surgeon technology? trainings. going to those center curious Just and conversion the be possibly rate that Should anything

Patrick Miles

kind Every a of it's to it we're of of think what doing. than in It's especially interest people learn Pimenta. you, we Lateral I reflective surgery created how guy that greater an one the when and do think And I really got clearly who that And lateral? I ask it's it, to be perpetuation place great is I'm one I evolution, think of ATEC the them customer. lateral. that, learn the question, kind people going every I of and that find can are at tell the day. at kidding. evolution And I Luiz look XXX, you is different of places in their hey, from the

we is to in they And so an come unbelievable to want have want surgeons. what group of they do and such here,

is here experience peer-to-peer unbelievable. the So

surgeons high level a terms we makes comfortable a see of of what technique. engagement come. Everybody in engage as algorithm them so And different has to in the

in they'll some will it so they'll Then And at do that online. watch a come peer-to-peer a here, watch won't or go They'll to facility. anything. either facility, a do they they'll guys surgeon

that they be We a ultimately patient. surgeon have to every technique to online in different a applying require some tools. But comfortable has things of algorithm the

different it's for each oftentimes, so surgeon. And

specific with sure aligned one with people level to is someone comfort going in ultimately are we place it's I the the the that And continue count in. doing we of of ways who's Do if that can that this not And that question, the is Do each business. And aligning the But the XX-some-odd everyone So the structure is on the have elevate wish so associated hospital? people come or there have There the ultimately dealt the years in side, just to the on yield it's with there? last use serious think have applying the geography? in we is interest. in that I've going in associated years are I'm to the over making the a where what the such are things but things who's the But algorithm something to to business disclose evade access we're not. that exactly experiences. effort there I technique of XX isn't. in different you coming those and the those are not predictable different. And sales rate. invited other Part it's right that being is we and people to technique? Do engaging about tailoring

Operator

Your next of line Canaccord. question comes from Caitlin the Cronin of

Caitlin Cronin

turn quarter. I to to EOS. on a want just great Congrats

are software translating users? to really guys You EOS volumes QX? Or there to those to users isn't why same the noted keep they new for Are in some upgrades legacy a record order the And orders. that newer these EOS specifically? for order EOS Insight also lead the time these use strength volumes? Is just the given the in system

Patrick Miles

I'll take and X, take X. he'll me, telling is Todd Okay.

who. that take technology. it's understand order I there's you -- translation And people the ago it's I it's couldn't great both. that I'm makes EOS with And buying EOS. like little just years Insight. for ATEC the a that is you, me buy And meeting. of tell excited Let The And can that QX, regard kidding. to think book saw who's the enthusiasm into X the spine now if is in And surgery a thing here's outstanding. this themselves me who who's most

our getting implants. ubiquitous data to ultimately And our as well that vision from so And wait player we're proliferating those institutions are that. as the and taking field the doing access in we those for that can't what we're is the so a I day care. speaks is, is this to with then tools just all and improving And our institutions these

significant SafeOp volume influence And so to see And EOS than is the engagement highly to comforting SafeOp. enthusiasm much bit say, I associated with And tool. spine candidly, of a it's me, in a like to more of love a little is. care

deformity and a start I think you the on influence on the to is But MEPs, that think and when neurophysiology to profoundly SafeOp SSEPs automated lateral had that and surgery. that beyond. have bigger. lateral is has is surgery, lateral tell will about gateway EOS I especially the automated SafeOp you, surgery gateway now Without can to automated influence

enthusiasm. And I step-by-step-by-step what But this think, is creates that, all the exercise. a of is so

we're these They're into step-by-step be is think can recognition inspiring. conservative perpetually we upgrades. a it's phenomenon. upgrade such which the placing look Todd to we're the not And and regard units, go And But to to -- revenue, units. are why we at with going that continue I units, exactly of so places you if new placing

J. Koning

million last probably point revenue it I is X the we've EOS or think, or so. And of Caitlin, about $XX for the in quarters is. X that been Yes,

$XX our revenue is in And so QX guidance million number. the this an QX actually, implied EOS

to a is it so And from going step-up QX QX.

And that book. comfort so by our of the backed is number up I seeing think order interest we're with the in level

Operator

Needham. line question David of comes the from next Saxon of Your

David Saxon

this friends point. ask Valence. stage know of that's quick at a one I in launch I'll kind just and on one family

broader should and a talk into getting and about from So we maybe been going you've from in kind friends just of early the launch think family XXXX. about cadence how a feedback

Patrick Miles

that operating there's an Yes, the tell would to that, This thing the a meaningfully to way Valence. favorite to It's my you don't don't said, screws. of to It's tool real as OR in bring time. you a room. thanks. your have have to is I bus we cases in continue want refine And Yes. into I that's back like where to ultimately with And small when ones. I footprint that up love do a to of workflow. one guides our we're doing today. the in And We we're a its elegance most operative integration spending that

of frame, the is to if then year discern And let's to so middle and our it continue kind we're ready thing if launch I and time look of refine let's excitement. excitement the that's our through our expectation, then. over the That's next

experience putting but footprint guys from capability people of a together, and are perspective, perspective, meaningful technological having I in-house perspective, a software slew Brad so type tell into would that have software in-house from business. years these this who experience you, in from of Colorado this Clayton, this have guys There's Kevin Ackford, a a whole the that here are in field. And

the on comparatively opportunity goods see confidence not footprint And huge thing, gives not making it so of day it the that is speaking, a the what I that cost improvement big me because is we're a comparatively presents speaking. I see every and

we And just hospitals. of in into us provides how these things get terms it so flexibility

not I know today. of your question, to a where kind we response so specific are but And

Operator

comes next Sean Your Wainwright. of the line from of question Lee H.C.

Xun Lee

strong question top is kind on one. My Congrats quarter. of level a a

And Looking the you your you of outperform that were XX% to see now revenues been last beginning the you we than back what consistently from have more to able are achieve beginning of guidance. can able year. at expected latest higher than year, previous the

specific and this this next that surprises expect trend can whether was has is a wondering going year? we coming tailwind been whether a by upward driven from into I So to continue

J. Koning

Ultimately, terms the at Sean, come I guidance of beginning look was we're today surgical and from the you of in think the all and really our guidance improvement looking that at was million. $XXX year, out the put the It's in at that where we revenue. it. when increase

consistent EOS our the guide throughout been So has year.

yourself, we done ask on, has and the you surgical volume why assumptions. revenue better early than anticipated through come our what So really it's

by addition reps. our our ultimately, of of I reflection procedures is surgeons interest, and a adoption coverage aided sales so technology And sales of advanced and through and the the the think this and

be not the thing, it. ultimately, And this outset to than been a it's super just at experience volume and guided I has about of we so hate But year. to simple the greater one

think to you something. we're And gives on so that confidence I that

Operator

Stanley. Your next line of question from Morgan comes Andrew the from Ranieri

Andrew Ranieri

sneak Pat, in X. pretty But maybe quick. This EOS. should I'll on Just be

of like So for think margin from of kind Are your that about Insights. product share. part were you I embedding the for talk weaker upgrade or against the a like to the but orders laying know Todd, slide just in the it highlighted gross bit saw continue whether maybe it's there, than quarter, on foundation for we just it we a expecting. talking volume-based to you're maybe more future means And that. every order little the EOS record just you're you little context EOS, commitments about growth. new And us came little with deck, lateral take implant a then, I kind that replacement? put what mix, in especially an of bit bit seeing with more

bit about what thinking So our it And expectations? about quarter? more us softer bit a for talk little versus of maybe fourth was to why just kind a little you're the

Patrick Miles

question. experience. worry Andrew, terms the start, of I for integration implants not thanks into doing our And the that of describing a in just and great job I'll about

assessment. the to by And those is the all post-op way through so create implants. of that intervention, and see ton And of that automating the of all these surgical opportunity we beauty radiographs ton the plans plans. measures is way our the of through the And it get a informed a are beauty we

to the spine indicator has that and the start the a care future change understand the issue. like of adjacent it's valuable start of what reflection to to ability ultimately, been the on Our spine see level is in alignment like profoundly because

our so the surgical the informed part is with And planning great implants. ultimately is element

of, of you type to hey, rod need. rod the Our the implants tune -- here's patient-specific

will We will with bend our rod, that rod go that implant.

And the ultimately going the fulfill plan with findings really you that so radiographically, the identifies surgeon what is his patient requisite and understand of integrate sees the early intervention and on engagement have obligation our are ability implants he's our our it implants when he how to kind and outstanding. the and apply, to

to it then All we plan an against implants to reconcile so really ties tool the intraoperatively have is plan. proprietary. and And integrated that that the

access by garnering And AI hospitals, alignment upon about garner selling so the opportunity think drives preoperative of units when to these and to plan we utility start is this to access fundamentally our that based the the measures outstanding. that's driven

effort. presumptive very this in a exercise implants our And is so tying

think I important to a perspective the so give to you of And measure. information garnering of like, a predictive volume like creating so is just the ultimately type and -- automation predictive

our alpha in I XX in evaluation. think we images XXX,XXX the over had sites we're that

we to that think And awesome. spine tools so when of information of inform these the through volume about surgery, it's you integration start get predictable that ultimately the

like droning, creates so really get a anyway, unlike kind anybody And why you that's enthusiasm, the what it's I'm tool that has. of is all I'm but that's sure else

J. Koning

were anything product at kind That's margin international of margins a are a more driving the And many distributor mix, those bit bit of a just EOS on there. being than really little lower, lower of our a Andrew, with just the mix sales. headwind geographic because markets

saw of the in little healthy a And in provides biologic revenue also good just portfolio, in performance we our as margin lower has of margin that got the quarter. well. quarter So bit we profile as that drag biologic a a kind a strong

fourth those second both the gross headwind we about end quarter and quarter. the about of we the -- XX.X% And in non-GAAP about year XX% to that things to or think me, range, little So the think margin of the bit margin. expect excuse saw that a contributed gross in

Operator

back Q&A Pat now closing concludes That the session. Miles to turn I over conference our remarks. for will

Patrick Miles

about and Yes. just share you want enthusiasm for attention, to I I what we're your building. thank their hope everybody

thanks So very much.

Operator

everyone, for you, joining. Thank

may now disconnect. You

Alphatec (ATEC) 30 Oct 242024 Q3 Earnings call transcript