Alphatec Holdings, Inc. · NASDAQ:ATEC
Alphatec — Q3 2023 Earnings Presentation
28 slides from Alphatec's earnings presentation, Nov 6, 2023
Slide 1: Q3 2023 Financial Results
Q3 2023 FINANCIAL RESULTS PAT MILES, CHAIRMAN & CEO | TODD KONING, EVP & CFO NOVEMBER 6, 2023
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainty. Such statements are based on management's current expectations and are subject to a number of risks and un
Slide 3: Spine-Focused Momentum in Q3'23
SPINE-FOCUSED MOMENTUM IN Q3’23 $118M REVENUE 32% REVENUE GROWTH 32% SURGICAL REVENUE $2M AEBITDA GROWTH • Achieved 24% volume growth and 6% growth in revenue / procedure • Drove $14M in EOS revenue; growth of 30% HIGHLIGHTS • Launched Calibrate LTX, an expandable implant for lateral procedures • De
Slide 4: Our Commitments
OUR COMMITMENTS Earning share since 2018 by applying 100% spine focus 1 2 3 CREATE COMPEL ELEVATE CLINICAL SURGEON DISTRIBUTION DISTINCTION ADOPTION Revolutionizing spine Expanding procedural Levering investments surgery & extending our utilization and surgeon made to increase clinical information-b
Slide 5: Widgets Proceduralization
WIDGETS PROCEDURALIZATION Minimizing the clinical variables in spine POSITIONERS We design, develop and integrate technology to address BIOLOGICS ALPHA INFORMATIX the goals of spine surgery: • Decompression • Stabilization • Alignment ACCESS PRE-BENT RODS specific to each approach. FIXATION NAVIGATI
Slide 6: Halo Effect from Leading with Lateral
HALO EFFECT FROM LEADING WITH LATERAL LATERAL CONFIDENCE LATERAL CREATION EARNS SURGEON TRUST… …and expands ATEC product utilization in more conventional procedures PLIF/TLIF ACDF POSTERIOR FX ALIF PCF BIOLOGICS 6
Slide 7: Pursuit of Increased Predictability & Reproducibility Has Just Begun
PURSUIT OF INCREASED PREDICTABILITY & REPRODUCIBILITY HAS JUST BEGUN ATEC’s commitment to advancing spine surgery is palpable • Standardized imaging Workflow-integrated Lateral expandable implant • Quantified global navigation-enabled robot designed to enable precise alignment designed to enhance su
Slide 8: Expanding EOS Influence Mid-'24
EXPANDING EOS INFLUENCE MID-’24 CatalystTM will elevate spine’s most relevant informatics system LAUNCH EXPECTED MID 2024 DATA SOC 2 & HITRUST PRE-OP INTRA-OP POST-OP Bone Quality ✓ Assessment & follow-up Automated 3D models ✓ Automated Automated Intra-op Custom Predictive alignment reports surgical
Slide 9: Our End-to-End Ecosystem Will Advance Spine Surgery
OUR END-TO-END ECOSYSTEM WILL ADVANCE SPINE SURGERY PRE-OP <> INTRA-OP POST-OP Patient positioner PREOP PLANNINGROD PREOP PLANNING ROD Biologics INTRA-OP INFLUENCE Vea Access Mobile Alignment Bone Quality Standard Imaging; Pre-operative Machine Learning / planning Pre-bent Rods Intra-operative Predi
Slide 10: Distinction Compels Multifaceted Surgeon Adoption
DISTINCTION COMPELS MULTIFACETED SURGEON ADOPTION MORE SURGEON MORE OF EACH MORE PRODUCT CATEGORIES CUSTOMERS SURGEON’S CASES SOLD INTO EACH CASE >130 Surgeons trained Q3’23 Surgeon utilization Avg. product categories / case (Opportunity: 5 to 9) 2.4 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021
Slide 11: Our Best Is Yet to Come
OUR BEST IS EOS INFORMATICS Expanded deformity presence YET TO COME VALENCE Workflow-integrated robotic Long growth trajectory lies ahead navigation MARKET DYNAMICS Spine focus rewarded HOSPITAL ACCESS Increased INTERNATIONAL Narrow & Deep LATERAL INFLUENCE LATERAL EXPANSION + HALO EFFECT • New prod
Slide 12: Distinction Elevates Distribution
DISTINCTION ELEVATES DISTRIBUTION Leveraging surgeon demand + industry disruptions to enhance the ATEC footprint ~1/3 OF GEOGRAPHIES UN- / UNDER- PENETRATED1 EXPAND FOOTPRINT & INCREASE CONTRIBUTION OF EXISTING TEAM • Capitalize on market • Further penetrate adjacent <5% US MARKET uncertainties to i
Slide 13: Positioned to Capitalize on Industry Disruptions
POSITIONED TO CAPITALIZE ON INDUSTRY DISRUPTIONS 2024 + CONTINUE TO ELEVATE DISTRIBUTION OCT 2023 Add new territories, better penetrate existing markets, gradually increase SEPT 2023 productivity JAN 2023 REFLECTION OF DELIBERATE PROGRESS OFIX + SPNE GMED + NUVA OFIX Adding tenured sales professiona
Slide 14: Boldly Leaning into an Unprecedented Opportunity
BOLDLY LEANING INTO AN UNPRECEDENTED OPPORTUNITY Investing in sets & inventory to enable new sales teams to hit the ground running PAST INVESTMENT HAS BEEN GRADUAL THIS OPPORTUNITY IS DIFFERENT + + + + + + + + + ++… + INDUSTRY DISRUPTION TIME Linear sales talent on-boarding / Non-linear talent on-bo
Slide 15: Financials
ondec INFORMED BY E()N FINANCIALS
Slide 16: Revenue
REVENUE Growth driven by adoption of ATEC clinical distinction Q3 2023 YOY QOQ • Strong surgical revenue growth on 53% YoY growth comp Surgical Revenue $104M 32% 1% • Continued strong lateral performance EOS Revenue $14M 30% (1%) • Cervical procedural growth also a TOTAL REVENUE $118M 32% 1% driver
Slide 17: Non-GAAP P&L Highlights
NON-GAAP P&L HIGHLIGHTS * Revenue growth fueling significant operating leverage Q3 2023 YOY • GM% increase YoY due primarily to Total Revenue $ $118M +32% initiatives to improve EOS gross margin Gross margin % 72% +130 bps • R&D reflects continued investment in innovation + Valence development R&D %
Slide 18: Balance Sheet
BALANCE SHEET Cash and liquidity to support path to cash flow break-even CASH & DEBT Q3 2023 • Pro-forma cash of ~$264M including Cash $123M net proceeds from secondary 1 Debt (at face value) $523M • Operating cash use of $37M • Improving adjusted EBITDA benefits CASH USE Q3 2023 free cash flow Inve
Slide 19: 2023 Guidance
2023 GUIDANCE Continued market share expansion delivering operating leverage FY 2023 FY 2023 YOY Strength of surgical volume momentum PREVIOUS UPDATED drives confidence in sector-leading, full-year revenue growth Surgical Revenue $404M $414M 37% Strong interest in EOS technology EOS Revenue $58M $58
Slide 20: Surgical Revenue Drivers
SURGICAL REVENUE DRIVERS VOLUME GROWTH SURGEON TRAINING SURGEON UTILIZATION VOLUME + AVG CASES/ SURGEON MID 20s% 32, 400 >500 25,800 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 2021 2022 2023E AVG REVENUE / SURGERY GROWTH MIX SHIFT PRODUCT REVENUE / CASE + CATEGORIES / CASE HSD% • Lateral
Slide 21: Outperforming Against Profitability Commitments
OUTPERFORMING AGAINST PROFITABILTY COMMITMENTS Inflection to positive AEBITDA = increasingly well-defined path to cash flow break-even OPERATING LEVERAGE DRIVERS OF LRP OPERATING IN 2023 LEVERAGE FROM 2021 TO 2025 SG&A Infrastructure $3M adjusted EBITDA = ~1,200bps 860 bps of improvement Variable Se
Slide 22: $150M Investment in Revenue-Generating Assets
$150M INVESTMENT IN REVENUE-GENERATING ASSETS Supports sales footprint expansion with assets that deliver strong ROI CUMULATIVE RETURN ON $75M INVESTMENT PROFITABILITY COMMITMENTS INTACT AS WE IN INSTRUMENTS & INVENTORY INVEST TO EXPEDITE MARKET SHARE GAINS $200 3X FCF ✓ AEBITDA Break-Even in 2023 $
Slide 23: Long-Range Financial Plan Update
SAVE THE DATE LONG-RANGE FINANCIAL PLAN UPDATE MARCH 19, 2024 | NEW YORK, NY FURTHER DETAIL COMING SOON
Slide 24: Our Best Is Yet to Come!
100% spine focus is compelling surgeons and leading sales talent OUR BEST IS YET TO COME!
Slide 25: Appendix
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Slide 26: Access this file at https://investors.alphatecspine.com/quarterly-results.
26 Access this file at https://investors.alphatecspine.com/quarterly-results.
Slide 27: Access this file at https://investors.alphatecspine.com/quarterl y-results.
Access this file at https://investors.alphatecspine.com/quarterl y-results. 27
Slide 28: Access this file at https://investors.alphatecspine.com/quarterly-results.
Access this file at https://investors.alphatecspine.com/quarterly-results. 28