Alphatec (ATEC) 2024 Wells Fargo Healthcare Conference summary

Cash flow and investment outlook

• 2024 free cash flow burn guidance increased to $125M–$135M, mainly due to higher days sales outstanding and excess inventory, particularly in cervical sets and static titanium interbodies.

• Inventory investments in 2023–2024 were intentional to support sales rep expansion and surgeon adoption; investment ratio peaked at $1.10–$1.20 per $1 of revenue growth.

• Inventory and set investments are expected to decline significantly in Q4 2024 and further in 2025, supporting a path to free cash flow break even in 2025.

• No additional capital raise is anticipated before reaching free cash flow break even, with a commitment to avoid shareholder dilution.

• Q3 2024 cash burn expected at $25M–$30M, with Q4 potentially generating $5M–$15M in cash.

Revenue growth and guidance

• 2024 revenue guidance is $602M, reflecting 25% organic growth, with mid-to-high teens volume growth and mid-to-high single digit revenue per surgery growth.

• Revenue per surgery is expected to remain stable in the second half of 2024.

• Long-range plan targets $1B in revenue by 2027, with $400M growth over three years, driven by increased surgeon adoption and utilization.

• International strategy focuses on direct operations in Australia, New Zealand, and Japan, aiming for $30M international surgical revenue by 2027.

• EOS is expected to contribute $65M in 2024, with $5M–$10M annual growth, and more meaningful acceleration after 2025 as clinical experience and research accumulate.

Sales force and market expansion

• Significant investments in sales distribution over the past year, expanding in key U.S. regions such as New York, New Jersey, Southern California, the Northwest, Chicago, and Missouri.

• Rep recruitment is strong and expected to remain robust, with interest driven by clinical distinction and surgeon adoption.

• Focus shifting from opening new territories to deepening penetration and efficiency in existing markets.

• Rep recruitment is expected to track closely with surgeon adoption rates, which grew 20% in the first half of 2024.

• Some large U.S. markets, such as Miami and parts of Georgia, remain underpenetrated, representing future growth opportunities.