Alphatec Holdings, Inc. (NASDAQ:ATEC) Q2 2023 Earnings Call Transcript

Todd Koning: And Drew, in terms of our opportunity that Pat talked about and our willingness to invest, clearly, we’re willing to invest. I think we’ve demonstrated that. If you think about the growth that we’re seeing in our investment, we’re leaning into that growth to fuel it. As you think about the investment in our sales organization, there’s certainly a level of investment that’s baked into the underlying guide, and we feel very good about where that’s at kind of order of magnitude. It’s very similar to what we’ve seen in previous years. And so will, from quarter to quarter, that might change. We feel good about where we are relative to our ability to invest to drive growth.

Andrew Ranieri: Got it. Thank you. And maybe just one on robotics, but the initial experience is expected later this year, free hand in late ’24, full integration ’25 if I kind of heard that correctly earlier in the call. But as you are thinking about commercializing the robotics platform, I know we’re still a bit of ways but how are you thinking about placement trajectory or utilization trends? Is there anything that makes you feel better or worse when you kind of benchmark that to what some of the other couple of competitors have been able to do in the robotics space? Thanks for taking the questions.

Pat Miles: Yes. Thanks, Drew. I think it’s a great question. And the dynamic becomes what we love is a small footprint. And so when you have a small footprint, oftentimes, there’s a direct relation to the COGS, and when you have low COGS, high technology, it provides you flexibility. And so as I look to the future, and I look at what the capability of what the guys in Boulder are doing with regard to that rollout and that navigation piece, it’s going to provide us great flexibility to integrate it into the procedural workflow in a very elegant way. But that also means we get flexibility with regard to acquiring. Can you lease it? Can we integrate it with regard to some type of volume utility in the implant? So I think it gives us ultra-flexibility where we don’t have to back a bus up to bring the robot in. And so our enthusiasm is very high with regard to just kind of the foundational cost structure of the system.

Todd Koning: I think the only thing I’d add to that, Pat, is just given the fact that the cost and hence our price point being about $0.5 million relative to the total price, our core point being about $0.5 million, which is significantly lower than other market prices of other robots, our ability to do earn outs and those types of things and not needing five surgeons to sign up to the deal is totally eminent. And so that really opens up so many more opportunities for us to essentially commercialize this thing in the long run in a way that works for everybody.

Operator: Great. Thank you. Our next question comes from David Saxon with Needham & Co. Please go ahead.

David Saxon: Thanks for taking my question. I’ve been hopping between calls, but I apologize if any of my questions have been answered. But maybe first on the portfolio, I wanted to see how you’re thinking about the breadth of it. I think you’ve talked in the past about wanting to add some sort of motion-preservation product. Is that still a focus? And then are there any other gaps in the portfolio that might be priorities to address?

Pat Miles: Yes. The great part is, I think the navigation robotic thing filled a big gap. And so we’re totally enthusiastic with regard to where we sit from a portfolio breadth perspective today. If you look at the — in the high 90s kind of prevalence of pathology and can we address it? The answer is yes. I would say a whole clearly is cervical motion. We’ll fill that hole in the years to come. Who knows when or what presents itself? But I don’t see that as much of a detriment. We’re in the process — we’ll output some corpectomy things next year. I would say as we sit today, it’s irritating me, but it’s one of those that seems worse forthcoming, and we have a clear view. We have designs. We have one in the very early experience.

So we’re good there. But other than that, I love where we are. I think what you’re going to see is you’re going to see continued expansion within kind of the idiopathic deformity space for us not to translate rotational understanding in EOS to a system that ultimately addresses some of those things, to not utilize some of our learnings from patient positioning, to not utilize our motor potentials within our new physiology round. And so I think that we have a lot of opportunities to continue to expand our really kind of competencies across different pathologies and different patient types. But I feel great about where we are.