ATEC Reports Strong Q2 Growth, Aiming for $1 Billion Target by 2027

Alphatec Holdings, Inc. (NASDAQ: ATEC) reported impressive results for the second quarter of 2024, with total revenue reaching $146 million, reflecting a 25% increase compared to the previous year. The company experienced a 27% growth in surgical revenue, alongside a notable 20% increase in new user acquisition. Notably, ATEC reached profitability, achieving an adjusted EBITDA of $5.6 million.

A major highlight of the quarter was the launch of EOS Insight, an advanced informatics tool designed to enhance surgical precision and patient outcomes. ATEC is committed to procedural architecture and talent acquisition, and the company is optimistic about meeting its long-term financial objectives, which include a revenue target of $1 billion and an 18% adjusted EBITDA margin by 2027.

### Key Highlights
– Total revenue for Q2 2024 increased by 25% year-over-year to $146 million.
– Surgical revenue grew by 27%, driven primarily by strong demand for lateral and expandable implants.
– Achieved adjusted EBITDA of $5.6 million, indicating profitability.
– Launch of EOS Insight brings innovative capabilities for improving surgical alignment.
– Positive outlook maintained, with a projected 25% revenue growth for the full year.

### Company Outlook
ATEC anticipates total revenue growth of 25% for 2024, targeting approximately $602 million in revenue. The company’s adjusted EBITDA target for the year is set at $25.5 million, with plans to achieve cash flow breakeven by 2025, supported by revenue growth and profitability expansion.

### Challenges
Despite the positive results, ATEC faced some challenges:
– The company recorded a higher-than-expected cash burn for 2024, with an estimated range of $125-135 million.
– Sales territory disruptions may hinder volume growth through the remainder of the year.
– Notable supply constraints in biologics and expandable implants were reported, although specific figures were not disclosed.
– Improvements in days sales outstanding (DSO) and inventory efficiency fell short of expectations.

### Opportunities
On a positive note, ATEC showcased significant improvement in profitability and cash generation, with an adjusted EBITDA increase of 2,000 basis points. The company is also expanding its sales presence through strategic recruitment of experienced professionals. Notably, ATEC is making progress in the Japanese market, with plans for its first surgery there in Q4 2024.

In the Q&A segment, ATEC addressed concerns regarding cash burn, confirmed its liquidity position, and discussed hiring trends with a focus on attracting top talent. The company emphasized expectations of high-teens volume growth in the second half of the year, despite prevailing market challenges.

Overall, ATEC’s leadership expressed confidence in the company’s strategic direction, demonstrating commitment to innovation and market expansion, especially with the launch of EOS Insight and its pursuit of enhanced surgical care.