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Introduction & Market Context
Alphatec Holdings Inc (NASDAQ:ATEC), a spine surgery technology company, presented its Q1 2025 financial results on May 1, 2025, highlighting continued revenue growth significantly outpacing the broader spine market while making substantial progress toward profitability.
The company reported total revenue of $169 million, representing 22% year-over-year growth, with surgical revenue increasing by 24% - approximately four times the estimated market growth rate. This performance follows ATEC’s Q4 2024 results, which saw the company achieve its first quarter of positive cash flow since its strategic transformation.
Quarterly Performance Highlights
ATEC’s Q1 2025 results demonstrated strong momentum across key operational metrics. The company reported 18% growth in surgeon users and 17% growth in surgical volume, complemented by a 6% increase in average revenue per case.
As shown in the following financial highlights slide:
Breaking down the revenue components, surgical revenue reached $152 million (up 24% YoY) while EOS imaging revenue contributed $17 million (up 8% YoY). The company’s established territories showed robust performance with 23% revenue growth.
The detailed profit and loss statement reveals ATEC’s progress in operational efficiency:
CEO Pat Miles emphasized the company’s market position during the recent earnings call, stating, "We are 8% market share holders with 92% to go," highlighting significant room for continued expansion in the spine surgery market.
Profitability Progress
A key focus of ATEC’s presentation was the substantial improvement in profitability metrics. The company reported adjusted EBITDA of $11 million, representing 6% of sales - an 840 basis point improvement year-over-year.
The following chart illustrates ATEC’s consistent progress toward profitability:
Operating margin improved to -3%, representing a 900 basis point improvement from the prior year. Total (EPA:TTEF) operating expenses as a percentage of revenue decreased by 950 basis points, with SG&A expenses declining by 730 basis points and R&D expenses decreasing by 230 basis points.
CFO Todd Koning highlighted this balance in the recent earnings call, noting, "We are demonstrating growth leadership and profit margin expansion while investing in the future growth of the business."
Financial Position & Balance Sheet
ATEC strengthened its financial position during Q1 2025, successfully refinancing its 2026 convertible debt to extend maturity to 2030 while maintaining the same 0.75% coupon rate. The company reported $153 million in cash and $60 million in available borrowing, for a total liquidity position of $213 million.
The company’s balance sheet summary shows:
Notably, ATEC reduced its Q1 free cash use by $55 million year-over-year and confirmed it remains on track to achieve positive free cash flow for the full year 2025, continuing the positive momentum from Q4 2024, when it generated $9 million in free cash flow.
Strategic Initiatives
ATEC’s presentation emphasized three core strategic pillars driving its market performance:
The company highlighted growing validation of its EOS imaging and informatics platform, which provides comprehensive pre-operative, intra-operative, and post-operative capabilities integrated through the EOS Insight Portal.
ATEC is also expanding its procedural approach to address increasingly complex surgical cases, as illustrated in the following progression:
This strategic focus on clinical distinction appears to be yielding results, with the presentation noting the "largest YoY order book growth" for EOS imaging systems.
Forward-Looking Statements
For the full year 2025, ATEC projects total revenue of $734 million, representing 20% year-over-year growth. This outlook includes $658 million in surgical revenue (21% growth) and $76 million in EOS revenue (13% growth).
The company’s revenue guidance is visualized in the following slide:
On the profitability front, ATEC forecasts adjusted EBITDA of $78 million for 2025, with a 39% drop-through rate from incremental revenue to adjusted EBITDA:
This outlook represents a slight upward revision from the guidance provided in the Q4 2024 earnings call, which projected $732 million in revenue and $75 million in adjusted EBITDA.
Conclusion
ATEC’s Q1 2025 presentation portrays a company executing effectively on both revenue growth and profitability improvement. With surgical revenue growing at approximately four times the market rate and significant margin expansion, the company appears well-positioned to continue its market share gains in the spine surgery sector.
The successful refinancing of convertible debt and progress toward positive free cash flow strengthen ATEC’s financial foundation for continued investment in innovation and market expansion. However, investors should note that despite the improving profitability metrics, the company continues to operate at a GAAP net loss, with an EPS of -$0.23 reported in the previous quarter.
As ATEC progresses through 2025, key areas to monitor include the sustainability of above-market growth rates, continued margin expansion, and the company’s ability to deliver on its positive free cash flow projections for the full year.
Full presentation:
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