Alphatec at Wells Fargo Healthcare Conference: Strategic Growth and Innovation

On Wednesday, 03 September 2025, Alphatec Spine (NASDAQ:ATEC) presented at the Wells Fargo 20th Annual Healthcare Conference 2025, showcasing its strategic focus on growth and innovation. The company highlighted its robust revenue growth and upcoming product launches while addressing cash flow management and international expansion. Despite challenges, Alphatec remains optimistic about achieving profitability and sustaining innovation in the competitive spine market.

Key Takeaways

• Alphatec Spine raised its top-line growth guidance for the year to 21%.
• The company plans to achieve free cash flow profitability by 2025.
• The launch of the Valence robot is scheduled for late Q4, targeting improvements in surgical outcomes.
• Strategic international expansion focuses on Australia, New Zealand, and Japan.
• Alphatec emphasizes innovation in lateral procedures and integrated technology solutions.

Financial Results

• Q2 Performance:

- Sustained revenue growth was a highlight.

- The company is meeting cash flow commitments and driving expanded profitability.

• Cash Flow:

- Q2 cash usage was at the high end of guidance, between $0 to $5 million.

- Alphatec expects to be slightly positively free cash flow for the year.

- Projected Q3 free cash flow is between $1 million to $5 million.

- Q4 free cash flow is expected in the high single digits (in millions).

• Revenue Growth:

- The company is guiding to approximately 21% top-line growth for the year.

- Consistent revenue growth with $130 million total revenue growth in 2023, projected to continue in 2024 and 2025.

• Investments and Profitability:

- Investment strategy involves spending $0.75 on sets and inventory for every dollar of year-over-year growth.

- Profitability expansion is expected, with adjusted EBITDA projected to cover investments by 2026.

Operational Updates

• Sales and Recruitment:

- Focus on compelling surgeons with unique clinical solutions.

- A 21% increase in new surgeon additions in Q2.

- Existing territories grew by 29% in Q2.

• Robot Launch (Valence):

- Scheduled for late Q4, integrated with PTP procedure.

- Aims to solve clinical issues in surgery and improve retractor placement.

- Target cost is under $500,000.

• International Plans:

- Focused on Australia, New Zealand, and Japan with a target of $30 million in surgical revenue by 2027.

Future Outlook

• Growth Drivers:

- Continued growth from the lateral portfolio and expansion into complex surgery.

- Targeting the $2 billion traditional posterior approach market.

• Surgeon Adoption:

- Lateral procedures serve as a beachhead for new surgeon users.

• Priorities:

- Durable sales growth and meeting long-range financial commitments.

- Continued innovation to improve patient outcomes.

Q&A Highlights

• Investor Focus: Durability of top-line revenue growth remains a key concern.
• Robot Competition: Alphatec’s robotic platform is differentiated by integration, ease of use, and cost-effectiveness.
• International Expansion: Significant opportunities in existing markets like Australia, New Zealand, and Japan.
• PTP Corpectomy and EOS Insight: Expected to contribute to revenue growth through increased procedural volume and revenue per procedure.

For more details, readers are encouraged to refer to the full transcript.

Full transcript - Wells Fargo 20th Annual Healthcare Conference 2025:

Vic Chopra, Medical Device Equity Research, Wells Fargo: Good afternoon, everyone. My name is Vic Chopra, part of the Medical Device Equity Research team here at Wells Fargo. I am pleased to introduce management from Alphatec Spine for this session. Joining us for the company are Todd Koning, EVP and CFO and Robert Judd, VP of Finance and Investor Relations. Thank you both for being here.

Todd Koning, EVP and CFO, Alphatec Spine: Thanks, Rob. Yes. Thanks for having us.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Let’s get into it. So congrats on a great quarter. Q2 was I think you guys did a pretty nice job on it. I’m just curious what investor feedback you’ve received and what investors have been focused on since you reported results in Q2?

Todd Koning, EVP and CFO, Alphatec Spine: Yes. Thanks, Peg. I think clearly, the sustained revenue growth has been a highlight. I mean, we continue to deliver on our cash flow commitments and the expanded profitability that we’re seeing and have been driving now for quite some time, what I think investors are focused on more and more is the durability the top line as we continue to grow. Because, you know, I think as you look at us, there’s not a lot of companies that are are of our size and scale growing at the rate we’re growing with the kind of profitability that we have.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. I want to focus on the most important metric, which is obviously your cash usage and your path to cash flow profitability. So Q2 cash usage came in at the high end of your guidance range of 0 to $5,000,000 You continue to expect to be slightly positively free cash flow for this year. What gives you confidence in being able to achieve free cash flow profitability in 2025?

Todd Koning, EVP and CFO, Alphatec Spine: Yes. Well, I think partly, we’re halfway through the year, and I think we’ve done better than what we kind of laid out through the first half. So I feel like we’re a little bit ahead of the game there. So I think that’s good. The cash flow has really kind of come in the way we expected it.

And so I think as you look at the measures, if you just kind of take our adjusted EBITDA profitability, bit ahead of the game there, you look at our working capital. In fact, we’re probably a little bit of a working capital headwind through the first half of the year. So kind of the fact that we’ve been able to achieve the level of cash flow that we have in the first half and still absorb some of the working capital headwinds that we have, mainly on AR, I think has been good. And I think that gives us confidence that as we go through the second half of the year, again, I think confidence level in our profitability profile combined with the investments we know we’ve made in terms of our sets and inventory. For the full year, we thought we’d spend about $50,000,000 there.

We’d spend about half of that through the first half. So we know what’s coming in the second half because we put the orders in. We know when they’re gonna show up. And consequently, we know when we’ll be paying them. So really, think the plan has come together nicely through the first half, and that gives us confidence in the second half.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Yes. It’s definitely nice to see. Talk about how you see the rest of the year playing out from a cash flow perspective for Q3 and Q4.

Todd Koning, EVP and CFO, Alphatec Spine: Yes. So you look at Q3, and I think we’ve talked about a plus $1,000,000 to a plus $5,000,000 of free cash flow generation in the third quarter. I think notably, if we do plus $1,000,000 we’ll be free cash flow positive on a trailing twelve month basis through the third quarter. So that would be great for us to achieve. And then I think kind of the high single digits in the fourth quarter, all that kind of rounds out to a nicely positive full year.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay, great. You also raised your guidance. I think you’re guiding to about 21% top line growth this year. Just highlight some of the puts and takes to consider heading into the back half of the year, maybe from a seasonality perspective or anything else you think that’s important?

Todd Koning, EVP and CFO, Alphatec Spine: Yes. The seasonality, I think what we see is a little bit of a step down just from a market standpoint, Q2 to Q3 and then a step back up Q3 to Q4. I think as you look at the full year, clearly, in Q2, we saw some very good growth. I think the comp was a little bit easier in the second quarter. I think conversely, the comp in the fourth quarter is a little bit more difficult.

So I think you look at some of those year over year growth rates in the second half, and you kind of want to normalize the full year. So what we did was we looked at the two year stack growth. And in Q1, that stack growth rate on a two year basis is about $31,000,000 a year. In Q2, it’s about 33 or 34. Or excuse me, it’s 34.

Yeah. And then in the second half, it’s basically $33,000,000 each quarter on a two year stack basis. And so from that seasonality standpoint, it really felt appropriate. And then if you look on the full year, 2023, we grew a $130,000,000 in total revenue. 2024, we grew a 130,000,000 in total revenue.

And our guide implies ’25 will also grow a 130,000,000 in total revenue. So just felt like that was the right place to land. And our philosophy hasn’t changed. We put numbers out there that we believe we can achieve and have a reasonable opportunity to exceed.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. Great. Let’s talk about the overall spine market and your recruitment efforts. Can you talk about how you’re benefiting from the disruption in spine? And are you onboarding reps at the pace that you expected?

Yeah.

Unidentified speaker: So if you look at the environment, we view it as very good. And our philosophy, Vic, as you know, is we want to compel surgeons with unique clinical solutions that drive the surgeon interest, and then you find the reps to support that. And I think if you look at our metrics, you’ll see the 21% new surgeon adds in Q2. And if you look back even the past eight quarters or so, you’ll see that new surgeon metric has hovered around 20%, give or take. And I think what you can safely assume behind that is we’re adding reps to support those surgeon adds.

And when we look at

Vic Chopra, Medical Device Equity Research, Wells Fargo: the

Unidentified speaker: environment, there’s we can go company by company, we won’t, but there’s either something disruptive or distracting going on in almost every case. And we love being, one, totally focused on spine, and two, having a long term view of making spine better. And if you think about surgeons and reps who have dedicated their career and their, you know, their livelihood to spine, they want to partner with someone who’s got a long view and is dedicated to making spine better as the top priority. And I think that unwavering stance on our part has created a destination where people want to come. And so there’s a lot of demand from a surgeon standpoint.

And fortunate for us, there’s a lot of reps that are willing to come and help support that growth.

Vic Chopra, Medical Device Equity Research, Wells Fargo: And are there, you know, specific geographies that you’re targeting that you think you’re lacking in when it comes to rep recruitment? There’s there’s certainly still open territories or some greenfield areas.

Unidentified speaker: I mean, you’ve heard Pat and Todd talk about areas we’ve made big investment in New York a couple of years ago. There’s still spots like in Miami where maybe we don’t have as much coverage. I think if you look at the metrics from the last couple of quarters, you also noticed that we’re getting quite a bit of growth from our existing territories. I mean, existing territories grew at 29% in Q2. I think what that tells you is there’s a lot of surgeon interest in territories.

You have a surgeon that really is competing another surgeon into doing business with us or the surgeon just sees the solution as attracted to it. And so we’re doing a lot of hiring just in our existing geographies because that’s where the demand is. It happens to be a little more capital efficient because you have assets in the territory already. And so we like that. And at the same time, we’re still looking at the handful of white spaces that we need to fill out and looking for the right match there from a surgeon and sales rep perspective.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. Great. And what are the key performance metrics that you track that demonstrate the productivity ramp of these recruited sales reps, especially in light of the investment required and the time it takes for new territories to gain momentum?

Unidentified speaker: I think that has largely we we have spent a little while since we’ve spent a lot of time talking about that, but, you know, most of these competitive reps come over, and they have some kind of noncompete period of time. So the first year is is about ramp up. You know, from a cost profile perspective, it’s probably a little bit higher just because you’re guaranteeing some comp, typically. And then we’ve said that after two years, they kind of get back to what maybe what they were doing prior to the switch. And then I think the real opportunity for a lot of these reps and why they wanna wanna come to ATEC is they see an opportunity to take their business past where it was maybe with whatever the incumbent was.

And so by year three, they’re they’re typically growing past wherever they were when they when they left the prior place. And so that’s in of course, there’s people that ramp faster than that, and there’s people that maybe take a little bit longer, and you have some, you know, situational dynamics, whether it’s access at the hospitals or or different things. But as a kind of a law of averages, that’s what we see.

Todd Koning, EVP and CFO, Alphatec Spine: Okay. And Vic, I think that plays out from a procedural share standpoint. But one of the things we know is our revenue per procedure is reasonably good and probably 30% better than the average out there. And so if you think about it from a sales rep standpoint, you don’t need to bring all your business just to keep your income and your revenue at the same spot. So once you bring all of your procedural business, you naturally get a higher total revenue from that.

So frankly, you’ve got multiple ways to grow your revenue share as a rep coming over.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. Yes. I’d love to understand how you balance attracting new sales talent while continuing your progress towards achieving cash flow positivity, especially given the required investment in instrument sets or new sales agencies.

Todd Koning, EVP and CFO, Alphatec Spine: Yes. So I guess there’s there’s two questions there. One is the investment that we make in the sets of the inventory, so the revenue generating assets, balance sheet concept that that new revenue requires. And so we’ve laid out a construct that says we spend $0.75 for every dollar of year over year growth. If you look over the last two years, 2024 and 2025, I think we spent about $140,000,000 last year in sets of inventory, and we’ll do about $50,000,000 this year.

That $0.75 ratio yields a number that’s essentially greater than what our 2024 revenue growth is and what our guidance would suggest. And so I think we’ve still a little bit of a forward investment benefit here through 2025. Then if you think about 2026 and what the level of investment will be to continue to grow, that’s why the profitability expansion has been so important for the story and for the company is because as we expand our profitability, we now generate enough adjusted EBITDA in 2026 to more than pay for the investment required in sets and inventory. And so just to put some numbers around that, if we grow $120,000,000 of surgical revenue next year, it would require about $90,000,000 of investment in sets and inventory. Let’s say we do 85,000,000 of adjusted EBITDA this year, and let’s say you get a third of the drop through from your revenue growth, that puts you at about a $125,000,000 of adjusted EBITDA next year.

That’s more than enough to cover your investment sets in inventory and and interest that that you’ll have next year. And so we feel like we’re inflecting to a a self funding entity through 2025 and into 2026, and and that’s how we think about our investment in sets and inventory. From a investment in the sales channel, I mean, clearly, think over the course of ’21, ’22, and ’23, we invested in the infrastructure of the business. And really, ’24 and ’25 and onwards has been have been years of, I’ll call them, profitable sales growth where we’re seeing more profitability drop through. In the first half of this year, we saw about 45¢ of every dollar growth drop to the bottom line.

Our guide for the year implies $0.40 of drop through on the full year. And as you exit this year and get to our long range plan commitments in 2027, it implies mid-thirty percent drop through. And so I think that is, I think, a very fair place to land from a profitability drop through that allows us to continue to invest in R and D, which is going to drive the sustainable growth opportunities and continue to invest in the sales channel while meeting our financial commitments.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. And then just staying on 2026, any sort of puts and takes, potential headwinds, tailwinds to consider as you work through your planning process for next year?

Todd Koning, EVP and CFO, Alphatec Spine: Yeah. I think we’re excited about the second half of this year. I think we had a strong Q2. Obviously, we feel like we’re set up for success this year. I think the strong surgeon adoption that we’ve seen so again, if I go back to my long range plan assumptions, we assume 10% surgeon adoption growth, and and we’ve seen high teens 20s.

And so feel like we’ve got a good strong surgeon adoption as a tailwind to our back. We know that those surgeons use more procedural volume every year. And so even with the existing surgeons we have, there is a bit of a flywheel of procedural volume growth. And so I think our confidence next year in terms of tailwinds is the procedural volume growth that we see, and and that is really a sustained phenomenon driven by the increased adoption in number of surgeons as well as the penetration of an existing surgeons business.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. You’re in the process of launching a new robot. Talk about your kind of where you are with your robot launch plans, any update? And will we see it at the NAS meeting in November?

Unidentified speaker: Yeah. We’re excited about the Valence robot. As we’ve talked about, the launch is upcoming. Everything is on track there for end of year launch, so call late Q4 launch. And so the way we think about the robot and Valence specifically is we think about how are we solving for the clinical issues in surgery.

And so our approach is that solution, when we launch it, will be integrated with our most notably, our PTP procedure. And we’re trying to solve clinical problems in our PTP procedure. I mean, there’s a huge opportunity to take traditional posterior approach users in lumbar surgery. And we talk about there being $3,000,000,000 of business, two of which is traditional business and $1,000,000,000 of which is lateral today. But we’re interested in moving that $2,000,000,000 into the $1,000,000,000 if you will, and make it a $3,000,000,000 addressable market.

And so we view the robot as an opportunity if you think about solving clinical problems, what prevents someone from doing lateral today may be something like replacing the retractor and creating the surgical corridor. And so having a near field camera that has a wide angle, has the ability to be moved around without reregistering, allows you now to track instrumentation that’s outside of the traditional navigation robotics line of sight with the bigger format solutions today. And so now we have something that can help a surgeon place a retractor, which is one of the most it is the single most time consuming element of any procedure, let alone for lateral where it’s probably even more so that way. And so having a solution where we can remove that hurdle from adoption and create a solution that drives people towards a procedure where we kind of feel like we own the space is something that we’re really excited about. And that’s kind of how we think about that solution is we’re solving a problem.

How do we solve the problem? And we want to drive people ultimately to our procedure.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay.

Todd Koning, EVP and CFO, Alphatec Spine: And I think just to add to that, I think the the predictability, the efficiency, the the accuracy of your retractor placement clearly is a hurdle to adoption, plus it requires a lot less fluoroscopy. And so it just allows the the people who may be dabblers in lateral to to adopt it with more confidence. And for those folks who don’t like all the radiation that a lateral procedure requires, I think it also addresses that hurdle. And so, you know, Robert talked about the $2,000,000,000 of traditional posterior approach surgery that should be addressed through a lateral approach. Those are some of the hurdles, and so we think it’s really an enabler to penetrating that untapped lateral market.

Okay.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Maybe just talk about how you think this robot will compare to other robotic platforms. You know, like how is it differentiated? What do you bring to the table that others have not yet or cannot, you know, bring to the table? And what would success look like with the launch of the robot?

Unidentified speaker: Well, yeah, just to maybe drill on some of those things we just talked about. One, I think, there’s integration with our procedure. And you look around at some of the other solutions out there, are they really integrated with a procedure? I think that’s a differentiation point that we want to drive pull through that’s clinical with our hardware, with our implants. And so that’s what we believe we can do with the solution.

It’s I think the ease of use, it’s smaller footprint, both from just a physical footprint in the OR, you can bring it into the hospital in a Pelican case versus a semi truck. I think the the other element is the cost. I mean, the cost is gonna be sub 500 k. And so if you think about where does surgery happen today, well, there’s, you know, on one end, there’s ASCs, on the other end, there’s, you know, maybe a big, large academic institution and and everything in between. We believe there’s probably at least half of that spectrum that’s not even really a candidate for a robotic or navigation solution just because of the cost and or the footprint or or both.

So I think our our view is we we can address a much broader spectrum of of places where you you maybe can’t afford to you don’t have the volume to pull through enough to pay off a a very expensive large robot or or you don’t have the space, so, like, the small footprint is advantageous. And again, somewhere both of that’s the case. And so I think I think that’s a competitive element. And I think just it’s it’s it’s for spine surgery and only spine surgery. And so I think it’s there it’s it’s a simpler interface, easier to use.

I mean, of the commentary we get from the surgeons that have been using it is this is easier to use than maybe some of the bigger formats, just easier to learn, and therefore, much easier for them to adopt. And so I think we we like that setup as far as it’s it’s the the alternative.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. Great. Will we see it in November at NASS?

Unidentified speaker: That’s we we had it at NASS last year. So my my expectation is we’ll we’ll be talking about it, and and

Todd Koning, EVP and CFO, Alphatec Spine: it’ll be out there.

Vic Chopra, Medical Device Equity Research, Wells Fargo: And how are we thinking about competition? You know, we’ve had a couple of large orthopedic players launch spine robots in the last year or so. Do you expect that to have any impact on your ability to sell or develop the spine robot that you’re working on?

Todd Koning, EVP and CFO, Alphatec Spine: I think they’re just two different products at the end of the day, Vic. I think our view, as Robert has clearly said, is to integrate a robot into a procedural approach. Our company is built on procedures. That’s how we view the spine market is how do we help surgeons do better surgery. And ultimately, we think that we’re solving some of the more challenging procedural issues through the use of technology, just like we did with SafeOp and lateral.

So we’re trying to do with valence and and PPP. And so I think that’s fundamentally different. I think the other thing is is the price point. My hunch is that there’s just not that many institutions out there that have enough procedural volume to earn out a million and a half dollar piece of equipment. And and Globus and Medtronic have been doing that now for a decade.

And so my guess is that they’ve probably penetrated a good chunk of that opportunity. And so as we think about where we’ll be able to have meaningful impact is clearly smaller community hospitals, the ASC setting. And to Robert’s point, because of its overall, well, physical footprint and and price, I think we’re also gonna be able to make a play in those institutions where there are large format robots. Because at the end of the day, it’s a relatively small piece of capital as compared to the other options, and there’s meaningful differentiation in it.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay.

Todd Koning, EVP and CFO, Alphatec Spine: And and maybe just one other point, which is the fact that it’s both freehand navigation as well as robotic application. And and I think that’s all or not. Think it is all with the same set of instrumentation. And I think that’s also a differentiator differentiator to, say, the Medtronic solution where you’ve got one platform through Stealth, it’s got its own set of instrumentation. You got another platform through Maser, which also has its own set of instrumentation.

So it’s kind of a one in all solution.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. Where do you see the market for robotics and spine going over the next five years? You know, we you look at what’s happened in the orthopedic market. Spine, I think, is definitely a few years behind that. Just love to get your thoughts on the trajectory of the robotic spine market over the next few years.

Todd Koning, EVP and CFO, Alphatec Spine: Well, I think it all kind of comes down to what the clinical value is. And I think we’re optimistic that we’re solving some clinical challenges. And I think, as a consequence, we’re optimistic that the adoption of our solution will reflect the clinical value that we’re delivering. And that will be reflected in the I think the uptake and the utilization rates.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. Can you talk about your international plans in 2025 and what’s in store for 2026? What can we expect?

Unidentified speaker: So we’ve been in three markets. We’ve been in Australia and New Zealand for a couple of years, and we just did our first surgeries in ’24 in Japan. So really just getting started there. Our strategy from an OUS perspective is to be narrow and deep. And we want to be narrow and deep because we want to have places we can be profitable, where we can scale, own relationship with the surgeon, where the surgeon can make a decision based on the procedure and where there’s a reasonably good margin.

And so when we look at things that way, those were the three markets that stood out to us. So I think you’ll see us remain narrow and deep there, but I think you’re going to see us have growth and scale there. Our business in Australia and New Zealand that we started a few years ago is profitable. And I think from a Japan perspective, we’ve made all the investment we need there, and now the revenue growth is starting. And so I think there’s not incremental headwind from that going forward.

So we like the setup there. Our long range plan has OUS surgical revenue being $30,000,000 in 2027, and so it’s still a relatively small piece of the business. I think the exciting thing is, as you look beyond ’27, you look at growth drivers for ’28 and beyond, the OUS business is is certainly one of those.

Vic Chopra, Medical Device Equity Research, Wells Fargo: So in ’27 and ’28 and beyond, like you said, is the focus still on those three geographies, or are you considering new new countries beyond those?

Unidentified speaker: Right now, that that’s where we’re focused. I mean, when we feel like there there’s just a ton of opportunity. You look at Japan as the second biggest spine market in the world. Australia is a couple $100,000,000. So there’s there’s plenty of opportunity just in those three geographies.

And I think our view is let’s be successful there, have scalable, fast growing, profitable businesses. And maybe we’ll look around and see if there’s another opportunity. But at the moment, you look at some of the hurdles and profitability concerns in some of the other geographies in Europe and other places, and I think we’re going to be measured about our approach and thought process.

Todd Koning, EVP and CFO, Alphatec Spine: And 30,000,000 on the size of market those are is still pretty small, and so I think there’s plenty of growth to be had.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Right. You recently launched PTP Corpectomy. Can you talk about how this fits into the broader PTP ecosystem? And what steps are you taking to drive adoption?

Todd Koning, EVP and CFO, Alphatec Spine: Yeah. So I think what we’ve seen and have communicated is PTP is really a platform approach that allows you to address a multitude of different pathologies. And so typically, adoption starts with a straightforward pathology. And as the surgeon gets more comfortable with the approach, he or she will apply that approach to different pathologies of increasing complexity, anywhere from kind of maybe they start at a at a three, four spondylolisthesis, and then, you know, they expand that down to the four, five lumbar region. They may apply that to some deformity cases.

And and I think the the natural iteration of optionality, if you will, in terms of bringing more options to the PTP approach was corpectomy. And corpectomy, while there isn’t a ton of volume, it is a very difficult approach. And it’s also an opportunity for us to add some clinical value through the PTP procedure. And so it was, I think, a natural evolution for us to provide the corpectomy option there. In addition to that, an ASP perspective, I think it’s very beneficial to the company as well.

And so the way we’ve really driven, excuse me, adoption there is clearly launch it, but then train around it and provide support for surgeons to to use it.

Vic Chopra, Medical Device Equity Research, Wells Fargo: And how should we think about revenue contribution in 2025 and 2026 from corpectomy?

Todd Koning, EVP and CFO, Alphatec Spine: Well, we haven’t broken it out specifically. Think as we continue to see corpectomy being adopted, you’ll see that come through in clearly procedural volume because that would have been procedural volume we otherwise would not have had, and an increase in revenue per procedure because the ASP of the interbody is so favorable.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay.

Unidentified speaker: There’s an indirect benefit as well. You know, as Todd talked about, like, corpectomy is something that’s real a real nice solution for a for a for a lateral approach. And so if you’re if you’re a lateral surgeon who believes in in that approach and anterior calm guy, doing doing corpectomy through through lateral is is a big deal. And so if we’re gonna try and appeal to a lateral community, you need to have that solution. And so part of the benefit doesn’t even show up in the corpectomy revenue, but it’s being able to go capture that practice because you have, you know, holistic lateral, solution.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. Your lateral franchise has been a core growth engine for the company. But you’ve also expanded or in the process of expanding into areas like complex and deformity surgery, and you’ve talked about opportunities in areas like cervical, biological, expandable, as well as the ASC setting. So which of these other specific surgical areas or categories do you believe will be the most significant drivers of surgical revenue growth?

Todd Koning, EVP and CFO, Alphatec Spine: So we are going to continue to see growth driven by our most differentiated platform and procedures, and that’s going to be our lateral portfolio. We’re going to continue to see the benefit of that. We’re, what, 15%, 16% penetrated into that market today, and we believe that we can get greater share of the existing $1,000,000,000 plus penetrated into that $2,000,000,000 of traditional posterior approach surgery. So I think that is clearly a driver. What we know about lateral surgery and certainly our sales territories that sell lateral, who have a meaningful share of their business with lateral, are the ones that grow the fastest for the longest periods of time.

And so that that that is because Lateral, in particular, how we think about the neural monitoring and SafeOp, it puts a great moat around your business, which means that the share you take is incredibly sticky. So I think that’s gonna continue to be the story for the company. As you think about cervical, and we’ve we’ve definitely made some improvements there and have launched some products, biologic the same. We’re gonna continue to see shared take there as part of the the the halo approach or the halo effect, if you will, which is where people just give you a broader share of their overall business when you’ve gained their trust. But that’s not where we’re going to compete.

We’re going to compete where we’re most differentiated and where there’s most clinical value, and we believe that’s in lateral. Then I think you take our opportunity with EOS, EOS Insight, and how that’s given us an entree into this adult and pediatric deformity space. And so we’re just at the very early edges of that opportunity. But I see much like SafeOp has been to lateral, EOS and EOS Insight is going to be to the deformity space and the opportunity we have there. And for that to be another leg of growth for years to come along with Lateral.

Vic Chopra, Medical Device Equity Research, Wells Fargo: You know, you’ve talked about surgeon adoption a couple of times. Can you talk about how you track the progression of new surgeon users from their initial training engagement and the first procedures through their increasing utilization of the full portfolio over time?

Unidentified speaker: Yeah. Yeah. Let me talk a little bit about what we do internally. Clearly, as we talked about, the beachhead for us is often lateral. And so getting someone trained on lateral, they do their first cases.

Typically, if it’s their first cases in lateral, it will be a simple pathology, and they’ll want to see how that goes. So there’s some training upfront, the first case or two, and some monitoring on the surgeon side. And then you’re going to do more and more lateral likely. And then you expand the halo effect Todd talked about. Then you start getting part of the cervical business, and you start getting some of their other indications that they’re solving for because we have a portfolio to address largely all of those things.

And so that’s how you track it. I think we also, from a sales execution standpoint, are looking at our information every week. I have a surgeon here. I have all of his or her business in these areas, but I see opportunity here. So from a sales execution standpoint, monitoring that stuff and making sure if we don’t have all of the surgeons’ share, why not?

And if not, what are we going to do to penetrate that business? And so that’s really sales ops, sales execution, and so that’s part of the story as well.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. Maybe a question on EOS. You launched EOS Insight, I think, slightly over a year ago in July 2024. How should we think about the contribution from the launch this year? And what’s your approach to market?

And what’s sort of the feedback you’ve received so far?

Todd Koning, EVP and CFO, Alphatec Spine: I think the EOS Insight launch has gone well. And I think it’s been a deliberate launch and a measured launch as we kind of get that out, get it into the hands of friends and family, we begin to learn about it. And ultimately, I think, we’re very pleased with where we’re at. I think we’ve got so much more opportunity in front of us though, Vic, to really, I think, see the benefit of it. And and ultimately, you look at how EOS Insight will be able to or does allow you to do your automated measurements for alignment, creates an automated plan for you, and then allows you to get patient specific pre bent rods, and then to be able to reconcile your, I guess, the alignment that you’re getting intraoperatively with your plan.

Like, that’s very unique. And and I think all of that has been very, very nicely accepted, if you will. I think we’ve got areas where we can improve, and we’re working through that. We’re working on intraoperative rod bending, so you don’t have to pre op, but you can actually do it intraoperatively as a for instance there. And I think the view here is that as you get to follow a patient, so you take that image, you get the planning, and you do your intervention, and then you follow that patient over time, because there’s no magnification error within the EOS image, you can measure the correction that you got, and you can measure the changes over time.

And that’ll ultimately allow us to better understand, hey, based on this pathology, these demographics of the patient, what is my highest likelihood for a good outcome based on on my practice. And I think that will better inform surgery as we go, and and ultimately, I think, really create a moat around a surgeon’s practice as they adopt it.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. So we’ve got just about a minute left. I’d love to get your top three priorities for Alphatic over the next three years.

Todd Koning, EVP and CFO, Alphatec Spine: Yeah, Alain. It’s durable sales growth. We’re going to continue to invest in the sales chain or the sales the sales team. Continue to, I think, meet the commitments that we’ve made from a financial standpoint in our long range plan. So we’re totally dialed into that, and I think you’ve seen the reflection of that over the last couple of quarters.

And then continue to innovate. Like, spine needs ATEC. We say that. We really believe it. The revision rates in spine are are just you know, they’re very high relative to other joint revision rates.

And we know that the literature will tell you that alignment’s the greatest correlative to a durable outcome. And so our belief is that we can really do really, I’d say, advance the field of spine surgery to get more durable outcomes. And and that’s really where we’re we’re placing our bets.

Vic Chopra, Medical Device Equity Research, Wells Fargo: Okay. Great. Thank you so much.

Todd Koning, EVP and CFO, Alphatec Spine: Thank you. Thank you.

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