Alphatec Holdings, Inc. · NASDAQ:ATEC
Alphatec — Q3 2024 Earnings Presentation
27 slides from Alphatec's earnings presentation, Oct 30, 2024
Slide 1: Q3 2024 Financial Results
Q3 2024 FINANCIAL RESULTS PAT MILES, CHAIRMAN & CEO | TODD KONING, EVP & CFO | OCTOBER 30, 2024
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: Q3 2024 Highlights
$151M 30% 20% Q3 2024 Total revenue; 27% growth Surgical revenue growth Surgical volume growth; 9% revenue / HIGHLIGHTS procedure growth 19% >200 EOS INSIGHT PROFITABLE GROWTH Growth in new surgeon users Surgeon training engagements Launching - record orders YTD $7.4M >50% +$50M Adjusted Sequential
Slide 4: Spine-Focused Value Creation
• 5+ years of growth at multiples of spine industry • 3 years organic growth >$100M* REVENUE SPINE- GROWTH • Procedural strategy driving industry-high ASP, 20% surgical volume, 19% new surgeon growth FOCUSED • Sales force continues to expand rapidly LEADERSHIP • Record EOS orders YTD laying foundati
Slide 5: Aligned & Focused on Achieving Long-Term Financial Commitments
ALIGNED & FOCUSED ON ACHIEVING LONG-TERM FINANCIAL COMMITMENTS 2023 2027 20% Revenue $482M $1B REVENUE CAGR Adjusted EBITDA* ($9M) $180M 2,000 BPS MARGIN EXPANSION Adjusted EBITDA Margin* (2%) 18% CASH FLOW BREAK-EVEN Free Cash Flow ($159M) $65M 2025 5
Slide 6: Financials
FINANCIALS
Slide 7: Q3'24 Revenue
Q3’24 REVENUE CONTINUED STRONG GROWTH FROM LATERAL + HALO EFFECT Q3 2024 YOY QOQ Surgical Revenue $135M 30% 4% 20% YoY surgical 9% YoY growth in avg EOS Revenue $15M 7% (1%) volume growth revenue/ case TOTAL REVENUE $151M 27% 4% 7
Slide 8: Non-GAAP P&L Highlights
NON-GAAP P&L HIGHLIGHTS REVENUE GROWTH FUELING SIGNIFICANT OPERATING LEVERAGE Q3 2024 YOY • GM% impacted by product mix Total Revenue $ $151M +27% • R&D reflects continuing innovation Gross margin % 69% (60) bps • SG&A levering as expected, offset by R&D % 9% (250) bps 180 bps of YoY depreciation re
Slide 9: Deliberate Progress on Profitability
DELIBERATE PROGRESS ON PROFITABILITY AEBITDA $M AEBITDA % $20 15% $15 10% $10 5% $5 0% $0 -5% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24E * -$5 -10% -$10 -15% -$15 -20% 9 | Reference non-GAAP reconciliation in appendix. *$17M AEBITDA in Q4’24 implied by full year guidanc
Slide 10: Balance Sheet
BALANCE SHEET LINEAR PATH TO CASH GENERATION IN 2024 CASH & DEBT Q3 2024 • Free cash use of $21M including $30M investment in revenue- Cash $81M 1 generating assets Debt (at face value) $538M • Continue to expect FY’24 cash use of $125 to $135M CASH USE Q3 2024 Inventory & capex $30M • Implies Q4’24
Slide 11: Strengthened Balance Sheet
STRENGTHENED • Applying proceeds to pay down revolver; net debt neutral BALANCE SHEET • ~$128M pro-forma cash at close1; exit 2024 with cash & liquidity of ~$145M2 • Terms same as existing facility UPSIZED TERM LOAN ENHANCES • Continued support from Braidwell and new partner, Pharmakon FLEXIBILITY A
Slide 12: Increased 2024 Guidance
INCREASED 2024 GUIDANCE STRONG SURGEON ADOPTION DRIVING GROWTH & OPERATING LEVERAGE FY 2024 FY 2024 YOY PREVIOUS UPDATED HIGH Surgical Revenue $537M $540M 28% TEENS % HSD% Surgical volume Rev / surgery growth growth EOS Revenue $65M $65M 9% TOTAL REVENUE $602M $605M 25% Growth fueling AEBITDA progre
Slide 13: Well-Positioned for 2025
WELL-POSITIONED FOR 2025 BRIDGE TO FCF BREAKEVEN 2025 INVESTMENT & INVENTORY WALK Growth investment $ Growth in surgical revenue 2024 2025 CHANGE AEBITDA $27M $75M2 $48M $150 ~120% RATIO $120 Capex & inventory $(140M) $(50M) $90M $90 ~$90M ~$140M ~40% Interest & other $(17M) $(25M) $(8M) $60 ~$50M $
Slide 14: Focused on Value-Creating, Long-Term Objectives
FOCUSED ON VALUE-CREATING, LONG-TERM OBJECTIVES 1 CREATE CLINICAL DISTINCTION 2 COMPEL SURGEON ADOPTION 3 EXPAND & ELEVATE SALES FORCE Distinguishing ATEC Earning surgeon Strengthening sales through procedures users by improving team and enhancing & informatics surgery operations 14
Slide 15: Thought Leadership in Lateral
THOUGHT LEADERSHIP IN LATERAL STANDING ROOM ONLY FOR FIRST PTP DEMO @ NASS SURGICAL STADIUM 15
Slide 16: Further Distancing ATEC Lateral
FURTHER DISTANCING ATEC LATERAL INTEGRATING INFORMATICS INCREASING COMPLEXITY Corpectomy Multi-level Deformity AIS Lateral surgery integration MEP integration 2025 release 2H’24 alpha release SOPHISTICATION 3-D printed implants Expandable implants Pre-bent rods Insight feature set launching now 16
Slide 17: Prospective Deformity Influence with AI-Informed EOS Insight
PROSPECTIVE DEFORMITY INFLUENCE WITH AI-INFORMED EOS INSIGHT SCOLIOSIS RESEARCH SOCIETY (SRS) 2024
Slide 18: Launching EOS Insight
LAUNCHING EOS INSIGHT POWERFUL IMAGING, AUTOMATION & AI INTEGRATED INTO SPINE O.R.’s PRE-OP INTRA-OP AI-AUTOMATED ALIGNMENT SURGICAL PLAN RECONCILIATION • Initially targeting EOS Edge base • Workflow and clinical benefits from degenerative to deformity • Monetization primarily via implant pull-throu
Slide 19: Compel Surgeon Adoption
COMPEL SURGEON ADOPTION DEMAND FOR ATEC CLINICAL DISTINCTION POWERS OUR >200 Surgeons trained in Q3 GROWTH LEADERSHIP Evolve training, improve targeting to maximize yield 19% Growth in surgeon users 19
Slide 20: Growth Leadership Will Perpetuate
GROWTH LEADERSHIP WILL PERPETUATE SALES TEAM & ASSET BASE POSITIONED TO CAPITALIZE ON GROWTH OPPORTUNITY 30% Lateral % of business for top 10 agencies vs ~13% U.S. lateral share • Robust growth in established territories at multiples of market growth; leading with lateral • Ramping in major new U.S.
Slide 21: Spine Needs ATEC
SPINE NEEDS ATEC APPLYING UNIQUE INFORMATICS EARNING MARKET SHARE TO SPINE’S GREATEST CHALLENGES % OF SURGERIES THAT REQUIRE REVISION* 25-30% LOW 10-15% >5% DOUBLE DIGIT % 3% >5% US MARKET SHARE US MARKET SHARE 1H’24^ 2027E^ TOTAL KNEE TOTAL HIP DEGENERATIVE ADULT DEFORMITY 5 years REPLACEMENT SURGE
Slide 22: Informed by Clinical Data
INFORMED BY CQ)N
Slide 23: Appendix
APPENDIX
Slide 24: Sources
SOURCES SLIDE 13 – ORTHOPEDIC REVISION RATES 1 .Bhandari M, et al. Clinical and economic burden of revision knee arthroplasty. Clin Med Insights Arthritis Musculoskelet Disord. 2012;5:89-94 2. Kandala N, et al. Setting benchmark revision rates for total hip replacement: analysis of registry evidence
Slide 25: Supplemental Financial Information
SUPPLEMENTAL FINANCIAL INFORMATION Access this file at https://investors.alphatecspine.com/quarterly-results/default.aspx
Slide 26: Supplemental Financial Information
SUPPLEMENTAL FINANCIAL INFORMATION Access this file at https://investors.alphatecspine.com /quarterly-results/default.aspx
Slide 27: Supplemental Financial Information
SUPPLEMENTAL FINANCIAL INFORMATION Access this file at https://investors.alphatecspine.com /quarterly-results/default.aspx