Company Performance - Alphatec reported a quarterly loss of $0.23 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.12, representing an earnings surprise of -91.67% [1] - The company posted revenues of $169.18 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.23%, and showing an increase from $138.48 million year-over-year [2] - Over the last four quarters, Alphatec has not been able to surpass consensus EPS estimates, although it has topped consensus revenue estimates four times [2] Stock Outlook - Alphatec shares have increased by approximately 19.6% since the beginning of the year, contrasting with the S&P 500's decline of -5.3% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.06 on revenues of $179.11 million, and for the current fiscal year, it is -$0.25 on revenues of $733.31 million [7] Industry Context - The Medical - Instruments industry, to which Alphatec belongs, is currently ranked in the top 23% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Alphatec's stock performance [5]

Financial Data and Key Metrics Changes - The company reported a revenue growth of 22% year-over-year, reaching $169 million, with surgical revenue growing by 24% to $152 million [4][9] - Adjusted EBITDA for the first quarter was $11 million, marking a 6% margin and an improvement of over 800 basis points compared to the previous year [13][14] - Non-GAAP gross margin was 70%, down 50 basis points year-over-year but up 70 basis points sequentially [11] Business Line Data and Key Metrics Changes - Surgical revenue grew by 24% year-over-year, driven by a 17% increase in procedural volume and an 18% increase in the number of surgeons utilizing ATEC procedures [6][10] - EOS revenue increased by 8% year-over-year, with a record order volume leading to a 28% year-over-year increase in the order book [11][12] Market Data and Key Metrics Changes - Established territories saw a revenue growth of 23%, indicating strong surgeon and territory penetration [6] - Same store sales from sales agents in territories for over a year grew by 23% year-over-year, reflecting significant growth in established markets [12][84] Company Strategy and Development Direction - The company is focused on creating clinical distinction through innovative procedural solutions that improve patient outcomes [24][25] - ATEC aims to expand its sales force and enhance operational efficiency to drive growth and profitability [6][23] - The strategy includes leveraging informatics to reduce surgical variables and improve predictability in spine surgery [26][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving cash flow positivity for the full year 2025, with expectations of continued strong revenue growth [19][17] - The company anticipates a revenue outlook of approximately $734 million for 2025, with surgical revenue growth of 21% [19][21] - Management noted that the spine market remains resilient despite economic uncertainties, with high demand for their products [106][107] Other Important Information - The company successfully refinanced its 2026 convertible note, extending maturity and maintaining a low coupon rate [17] - The first quarter cash burn was at the low end of the expected range, indicating improved cash management [15][16] Q&A Session Summary Question: Market size and competitive dynamics for the new Corpectomy system - Management indicated that they are the only company offering this procedure in the prone position, which provides unique advantages [41][42] Question: Tariff exposure in 2025 - The company expects low single-digit million impacts on cost of goods sold due to tariffs, primarily affecting EOS equipment [54][55] Question: Update on robot launch plan - The robot is in the alpha phase, with plans for an end-of-year launch, and integration with navigation systems is underway [60][61] Question: Cash outlay trends - The company achieved a cash use of $15 million in Q1, with expectations for positive cash flow in subsequent quarters [65][66] Question: Salesforce productivity and opportunities - Same store sales grew by 23%, indicating strong performance from established sales agents [83][84] Question: EOS placements and portfolio pull-through - Most EOS placements are in new accounts, with a focus on expanding into complex procedures [88][90] Question: Overall volumes and ASC growth - The market is healthy, with surgical volumes growing significantly, and ASCs are expected to evolve over time [93][94] Question: International market expansion - The company remains bullish on international markets, particularly Australia and New Zealand, while maintaining a focused approach [110]

Revenue and Sales - Revenue from products and services increased by $30.7 million, or 22%, to $169.2 million for the three months ended March 31, 2025, compared to $138.5 million in the same period in 2024[126]. Costs and Expenses - Cost of sales rose by $12.1 million, or 29%, to $53.2 million for the three months ended March 31, 2025, primarily due to increased product volume and stock-based compensation[128]. - Total operating expenses increased by $19.6 million, or 14%, to $160.3 million for the three months ended March 31, 2025, compared to $140.7 million in the same period in 2024[129]. - Research and development expenses decreased by $1.4 million, or 8%, to $16.6 million for the three months ended March 31, 2025, primarily due to a decrease in stock-based compensation[129]. - Litigation-related expenses surged by $7.8 million, or 176%, to $12.2 million for the three months ended March 31, 2025, mainly due to a litigation settlement[131]. Interest and Debt - Interest expense increased by $2.5 million, or 47%, to $7.8 million for the three months ended March 31, 2025, attributed to additional borrowing on the Braidwell Term Loan[135]. - Loss on debt extinguishment increased by $17.6 million, or 100%, during the three months ended March 31, 2025, related to the redemption of 80% of the 2026 Notes[136]. - Gain on derivative liability increased by $17.4 million, or 100%, during the three months ended March 31, 2025, due to changes in the valuation of the derivative liability associated with the 2030 Notes[137]. Other Income and Tax - Other income increased by $0.2 million, or 186%, to $0.3 million for the three months ended March 31, 2025, primarily due to fluctuations in foreign currency rates[138]. - The income tax benefit for the three months ended March 31, 2025, was $64, a slight decrease from $69 in the same period in 2024, related to the recognition of tax benefits in several jurisdictions[139]. Cash Flow and Liquidity - Cash and cash equivalents increased to $153.2 million as of March 31, 2025, from $138.8 million at December 31, 2024, indicating improved liquidity[144]. - Operating activities used cash of $5.0 million for the three months ended March 31, 2025, primarily due to inventory purchases to support business growth[146]. - Investing activities used cash of $11.6 million for the same period, mainly for the purchase of surgical instruments[147]. - Financing activities provided cash of $30.8 million, primarily from proceeds of the 2030 Notes, offset by the repurchase of 80% of the 2026 Notes[148]. Debt Obligations - As of March 31, 2025, the company had $200.0 million outstanding under the Braidwell Term Loan, maturing on January 6, 2028, with an interest rate of Term SOFR plus 5.75%[149]. - The company had $405.0 million outstanding under the 2030 Notes, accruing interest at 0.75%, with a maturity date of March 2030[152]. - The remaining minimum purchase commitment under an inventory purchase agreement was $8.0 million as of March 31, 2025[154]. Future Outlook - The company anticipates future capital requirements will depend on revenue growth rates and the timing of new product introductions[144]. - The company is exposed to foreign currency exchange risk as its international business expands[142]. - The company has no material financial exposure to any single customer or country outside the U.S. that would significantly hinder liquidity[143].

Financial Data and Key Metrics Changes - The company reported a revenue of $169 million for Q1 2025, representing a 22% increase compared to the prior year [8][12] - Adjusted EBITDA for the quarter was $11 million, equating to a 6% margin, which is an improvement of over 800 basis points year over year [12][20] - Non-GAAP gross margin was 70%, down 50 basis points year over year but up 70 basis points sequentially [10][11] - Free cash use was $15 million, reflecting a $55 million improvement compared to Q1 2024 [14][15] Business Line Data and Key Metrics Changes - Surgical revenue was $152 million, growing 24% year over year, while EOS revenue was $17 million, up 8% [8][10] - Procedural volume growth was 17%, driven by an 18% increase in the number of surgeons utilizing ATEC procedures [9][10] - Average revenue per procedure grew by 6%, indicating effective capture of procedural revenue opportunities [9] Market Data and Key Metrics Changes - Same store sales grew 23% year over year, demonstrating significant growth in established markets [10][11] - The company experienced record order growth for EOS, with a 28% year over year increase in the order book [10] Company Strategy and Development Direction - The company is focused on creating clinical distinction through innovative procedural solutions that improve patient outcomes [22][24] - ATEC aims to minimize surgical variables through technology, expanding its sales force and enhancing field operations [24][26] - The strategy includes a strong commitment to informatics and automated alignment planning to improve surgical predictability [26][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving cash flow positivity for the full year 2025, with expectations of continued strong revenue growth [15][18] - The company anticipates revenue growth of 20% for the full year 2025, with surgical revenue growth of 21% [18][20] - Management noted that the current economic environment has not negatively impacted demand, with a robust backlog of procedures [100][101] Other Important Information - The company successfully refinanced its 2026 convertible note, extending maturity and maintaining a low coupon rate [15] - The company is committed to maintaining disciplined cost management while investing in growth drivers [11][12] Q&A Session Summary Question: Market size and competitive dynamics for the new Corpectomy system - Management indicated that they are the only company offering this procedure in the prone position, which provides unique advantages [39][40] Question: Tariff exposure in 2025 - The company expects low single-digit million impacts on cost of goods sold due to tariffs, primarily affecting EOS equipment [50][51] Question: Update on robot launch plan - The robot is in the alpha phase, with plans for an end-of-year launch, and integration with navigation systems is ongoing [55][92] Question: Trends in cash outlay and cash use - The company achieved cash use at the low end of the expected range and anticipates positive cash flow in the latter half of 2025 [61][63] Question: Competitive dynamics in the spine market - Management noted that the company is positioned as the largest pure play spine company, with a strong focus on improving the ecosystem for spine surgery [66][69] Question: Salesforce productivity and performance - The company reported a 23% growth in same store sales, indicating effective performance from newly recruited sales representatives [78][79] Question: EOS placements and portfolio pull-through - Most EOS placements are in new accounts, with significant growth expected in complex procedures [84][86] Question: Overall market volumes and ASC growth - The market is healthy, with good volume trends, and the company sees potential for growth in Ambulatory Surgery Centers (ASCs) over time [88][90] Question: International market expansion - The company remains bullish on international markets like Australia and Japan, focusing on profitable growth without a large infrastructure [105][107]

Financial Performance - Surgical revenue reached $152 million, a 24% increase[5] - Total revenue was $169 million, representing a 22% growth[5] - Adjusted EBITDA was $11 million, an increase of $14 million year-over-year[8] - Adjusted EBITDA as a percentage of sales improved by 840 basis points to 6%[8] - The company reduced Q1 free cash use by $55 million year-over-year[11] Outlook - The company anticipates surgical revenue of $658 million, a 21% increase for 2025[16] - EOS revenue is projected to be $76 million, a 13% increase for 2025[16] - Total revenue for 2025 is expected to be $734 million, a 20% increase[16] - The company is on track to deliver positive free cash flow for the full year 2025[3] Balance Sheet - Cash reserves stand at $153 million[11] - Available borrowing capacity is $60 million, resulting in total cash and available cash of $213 million[11]

Exhibit 99.1 ATEC Reports First Quarter 2025 Financial Results And Raises Full-Year Guidance Surgical revenue grew 24%; total revenue grew 22% Full-year revenue and profitability guidance increased Successfully refinanced convertible debt to 2030 maturity CARLSBAD, Calif., May 1, 2025 – Alphatec Holdings, Inc. (Nasdaq: ATEC), a provider of innovative solutions dedicated to revolutionizing the approach to spine surgery, today announced financial results for the quarter ended March 31, 2025, and recent corpor ...

Group 1 - The focus has shifted towards offshore drilling, supply industry, and shipping, including tankers, containers, and dry bulk [1] - The fuel cell industry is being monitored as it is still in its early stages of development [1] Group 2 - The individual has extensive experience in auditing with PricewaterhouseCoopers before transitioning to day trading nearly 20 years ago [2] - Successfully navigated significant market events such as the dotcom bubble, the aftermath of the World Trade Center attacks, and the subprime crisis [2]

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 was $177 million, representing a 28% increase year-over-year and a 17% sequential increase [13] - Full year 2024 total revenue reached $612 million, up 27% compared to the prior year [24] - Adjusted EBITDA for Q4 was $21 million, equating to a 12% margin, with over 1,000 basis points of improvement year-over-year [20] - Non-GAAP gross margin was 70%, flat compared to the previous year [16] - Free cash flow generated in Q4 was $9 million, marking the first cash flow since the transformation [23] Business Line Data and Key Metrics Changes - Surgical revenue for Q4 was $157 million, up 28% year-over-year, with procedural volume growth of 19% and average revenue per procedure growth of 7% [13][14] - EOS revenue for Q4 was $20 million, up 32% year-over-year, driven by robust demand and record order volume [15] - Surgical revenue for the full year was $545 million, a 29% increase compared to 2023 [24] Market Data and Key Metrics Changes - The company holds an 8% market share in the spine market, indicating significant growth potential [6] - Surgeon adoption grew by 19% on a five-year CAGR, with procedural volume growth at 25% [7] Company Strategy and Development Direction - The company aims to revolutionize spine surgery by improving procedural durability and predictability through informatics [40][41] - The focus is on leveraging unique technologies and clinical distinctions to capture market share in a disrupted environment [56][58] - Plans for 2025 include a revenue growth target of approximately $732 million, with surgical revenue growth of 21% [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver on financial commitments and translate revenue growth into profit and cash flow [21][34] - The company is optimistic about the growth potential in Japan, having conducted its first surgeries there [11][125] - Management highlighted the importance of operational discipline and efficiency improvements in driving profitability [19][78] Other Important Information - The company is positioned as the largest pure-play spine company, focusing exclusively on spine-related products and technologies [45] - The introduction of EOS Insight software is expected to enhance growth and adoption rates [102][106] Q&A Session Summary Question: Assurance on spending in 2025 amidst industry disruption - Management indicated that previous investments have been made and there are no plans for outsized expenses that could undermine financial goals [50] Question: Potential benefits from a competitor's sale of its spinal implants business - Management sees disruption as an opportunity and believes their informatics platform positions them favorably to attract talent from competitors [56][58] Question: International plans for 2025, particularly in Japan - Management emphasized a disciplined approach to entering the Japanese market, focusing on long-term growth rather than immediate gains [62] Question: Growth potential of PTP and LTP offerings - Management believes they are in the early stages of growth for PTP and LTP, with significant market opportunities ahead [70][72] Question: Efficiencies targeted in SG&A - Management discussed deliberate organizational reductions and improved operational efficiency, which are expected to continue benefiting the bottom line in 2025 [76][78] Question: Strategy for share capture and regional field team upgrades - Management noted ongoing improvements in sales force effectiveness and the need for further expansion in underrepresented geographies [83][86] Question: Competitive positioning with upcoming robotic technology - Management views robotics as part of a broader solution to surgical challenges, emphasizing the importance of systemic variables in surgical outcomes [91][92] Question: Opportunities in pediatric surgery - Management acknowledged being underpenetrated in pediatric surgery but sees potential for growth leveraging existing EOS technology [100][118] Question: Growth expectations for EOS - Management anticipates continued growth for EOS, with expectations for increased adoption and monetization through implant pull-through [102][106]

Financial Performance - Total revenue for 2024 was $611.6 million, an increase of $129.3 million or 27% compared to $482.3 million in 2023[14] - Total revenue for the year ended December 31, 2024, was $611,562,000, an increase of $129,300,000 or 27% compared to $482,262,000 in 2023[209] - Cost of sales increased by $15,241,000 or 9% to $187,300,000 in 2024 from $172,059,000 in 2023, primarily due to increased product volume[211] - Research and development expenses rose by $10,603,000 or 15% to $80,718,000 in 2024, driven by increased personnel and stock-based compensation[212] - Sales, general and administrative expenses increased by $76,119,000 or 20% to $450,199,000 in 2024 compared to $374,080,000 in 2023[212] - Total operating expenses for 2024 were $560,431,000, an increase of $76,833,000 or 16% from $483,598,000 in 2023[212] - Litigation-related expenses decreased by $12,488,000 or 56% to $9,799,000 in 2024 from $22,287,000 in 2023[212] - Amortization expense increased by $1,974,000 or 14% to $16,258,000 in 2024 compared to $14,284,000 in 2023[212] - Transaction-related expenses significantly decreased by $1,903,000 or 90% to $210,000 in 2024 from $2,113,000 in 2023[212] - The company has experienced a 40% compound annual growth rate in revenue since its transformation began in 2018[199] - The company does not anticipate paying any cash dividends in the foreseeable future, intending to retain all available funds for business operations and expansion[184] Product Development and Innovation - Surgical volume grew by 19% in 2024, while average revenue per surgery expanded by 8% compared to 2023[24] - The surgeon user base increased by 18% in 2024, driven by the "ATEC Experience" educational program[26] - The company launched EOS Insight™ in 2024, a software platform designed to enhance spine patient care from pre-operative planning to post-operative assessment[18] - The acquisition of SafeOp™ technology has integrated real-time information about nerve health into surgical procedures, enhancing predictability and reproducibility[16] - The AIX™ product platform includes EOS imaging and SafeOp systems, with significant development expected to bring new functionalities to market in 2025 and beyond[36] - The PTP approach, launched in 2020, allows for single-position surgery, minimizing patient repositioning and enhancing surgical efficiency[34] - Invictus is a next-generation spinal fixation solution designed for various pathologies, emphasizing intraoperative adaptability and surgical predictability[44] - The company offers a range of biologics for spinal fusion, including 3D ProFuse™ Osteoconductive Bioscaffold and AlphaGRAFT® products, enhancing handling and endplate contact[45] - The research and development team is focused on reducing the time from product conceptualization to market commercialization, aiming to enhance clinical outcomes across multiple spine pathologies[47] Market and Competitive Landscape - The spinal implant industry is highly competitive, with significant competitors including Medtronic, Johnson & Johnson, and Stryker, which have greater financial resources and established distribution networks[60] - Continued consolidation in the healthcare industry may lead to increased competition and pricing pressures, adversely affecting the company's market position and financial condition[120] - The company faces intense competition from well-established medical device companies, which may hinder its ability to compete effectively[107] Regulatory and Compliance - The company’s products are subject to extensive FDA regulation, requiring either 510(k) clearance or PMA for commercial distribution in the U.S.[65] - The average FDA review time for 510(k) submissions is approximately six months, although the goal is to complete reviews within 90 days[73] - The PMA process is more complex and costly than the 510(k) process, requiring extensive data to demonstrate safety and effectiveness, with a typical review period of 180 days, often taking longer in practice[77] - Clinical trials are generally required for PMA applications and may also be needed for 510(k) submissions, with strict adherence to FDA regulations and oversight by Institutional Review Boards[78] - Compliance with FDA regulations post-market includes registration, quality system regulations, labeling, and advertising requirements, with potential enforcement actions for non-compliance[79][81] - The company must adhere to various federal and state laws regarding healthcare fraud and abuse, with significant penalties for violations, including exclusion from government healthcare programs[84][85] - The federal Anti-Kickback Statute prohibits remuneration for referrals related to federal healthcare programs, with broad interpretations that could impact various business arrangements[85] - The number of qui tam actions under the federal False Claims Act has increased, leading to more healthcare companies facing legal challenges, with potential penalties of up to three times the actual damages[88] - HIPAA regulations govern the use and disclosure of protected health information (PHI), impacting the company's access for marketing and research purposes[91] - The ACA includes provisions for increased enforcement against fraud and abuse, requiring disclosures of payments to physicians and teaching hospitals, with risks of fines for non-compliance[90] Human Resources and Workforce - As of December 31, 2024, the company had 867 employees worldwide, with 681 located in the U.S. and 186 outside the U.S.[97] - The company has experienced a low undesired turnover rate of approximately 5% for 2024, indicating high employee satisfaction and engagement[99] - The company employs a robust recruiting program to attract and retain a diverse workforce, which is crucial for its innovation in the medical device market[98] - The company has never experienced a work stoppage due to labor difficulties and maintains good relations with its employees[100] Financial Risks and Liabilities - The company has an accumulated deficit of $1.3 billion as of December 31, 2024, and has historically incurred net losses since inception[141] - The company may need to raise additional funds in the future, but such funds may not be available on acceptable terms, which could adversely affect its ability to repay debt or develop products[138] - The company’s financial results are subject to significant fluctuations due to factors such as product acceptance, demand, pricing, and regulatory approvals[143] - The company relies on its subsidiaries for cash flow, and any inability of these subsidiaries to provide dividends could impact the company's financial obligations[133] - Economic downturns or volatility could materially impact the company’s revenues and cash flows, particularly due to fixed costs associated with operations[142] - The company carries product liability insurance, but coverage may be inadequate, potentially harming financial condition if claims exceed limits[152] - The company is exposed to product liability claims related to biologics products, which may lead to significant legal fees and reputational harm[153] Strategic Initiatives and Future Outlook - The company aims to continue creating clinically distinct procedures to improve surgical outcomes and increase market share in the U.S. spine market[22] - The strategic initiatives focus on creating clinical distinction, compelling surgeon adoption, and elevating distribution to drive growth[22] - The company plans to pursue acquisitions of complementary businesses and technologies, but successful integration remains uncertain and could disrupt ongoing operations[126] - The effectiveness of the company's operations relies on its senior management and key personnel, with potential adverse effects on business if there are significant changes in these teams[128] Cybersecurity and Operational Risks - The company is vulnerable to cybersecurity threats, which could lead to data breaches and significant costs, impacting its reputation and financial condition[130] - Operations are conducted in areas at risk of natural disasters, which could cause substantial delays and financial losses, with insurance coverage potentially inadequate[131] Intellectual Property - As of December 31, 2024, the company owned or exclusively licensed 180 issued U.S. patents and 250 foreign patents, indicating a strong intellectual property position[63] - The company’s ability to protect its intellectual property is crucial, as inadequate protection could result in loss of market share to competitors[146] - The company is subject to potential patent litigation, which could incur substantial costs and divert management's attention from core business operations[148] Stockholder and Corporate Governance - As of February 19, 2025, executive officers, directors, and principal stockholders beneficially own approximately 30% of the outstanding common stock, allowing them to significantly influence corporate decisions[158] - As of February 19, 2025, there are approximately 425 holders of record for a total of 144,149,232 outstanding shares of common stock[183]

Preliminary Financial Information - Alphatec Holdings, Inc. announced preliminary unaudited financial information for the year ended December 31, 2024 [11] - The financial information is subject to adjustments and risks due to the ongoing closing process [11] - The press release containing the preliminary financial information is attached as Exhibit 99.1 [5][12] Stock Market Information - The company's common stock is traded on the Nasdaq Global Select Market under the symbol ATEC [8] Executive Signatory - The report was signed by J. Todd Koning, Executive Vice President and Chief Financial Officer, on January 13, 2025 [7]