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

Todd Koning: Yes. I mean I love it because, ultimately, it’s really such a reflection of the organic innovation machine we’ve built here that can ultimately address so much of the gaps that we had in front of us. And that’s ultimately why you see our commitment to invest the kind of R&D spend that we do.

David Saxon: Great. And if I could just have a follow-up for Todd. Just on EBITDA, I guess, just the path to $80 million and $25 million. I think at the Analyst Day, you kind of thought it would be more of a ramp, but I think you’re kind of outperforming EBITDA. So could it look more linear with ’24 being closer to 40%? Any thoughts there would be helpful. Thanks.

Todd Koning: Yes. Thanks, David, for the question. I guess what I’d tell you is I feel very good about how the leverage is manifesting itself. And I think one of the great comforts I have sitting in my seat is the fact that Pat and I were totally aligned on where the company is going. And the way our leadership team has built the company reflects the leverage that we’ve communicated. And so the investments reflect the priorities of the business. And as we grow, ultimately, we see that leverage. And so what I’d tell you is we feel good about the quarter. Happy that we can raise full-year guidance and be a little bit ahead of the game there and our ability to continue to march toward our long-term goals and objectives, is totally intact, and we feel great about it. And so I’m probably going to be short of giving you a hard number or a hard answer there, but I like our chances.

David Saxon: Yes. Great. That’s helpful. And congrats on the quarter. Thanks guys.

Operator: Our next question comes from Aaron Wukmir from Lake Street Capital Markets.

Aaron Wukmir : Hey good afternoon everyone. This is Aaron on the line for Brooks. Congrats on the strong quarter. You guys are doing a lot of good things, and we’re really excited about the growth going forward. So how sustainable do you believe that these elevated procedure volumes can continue in all — you mentioned this a little bit in the prepared remarks, but are you seeing other companies respond to the innovation with any moves to their own? How are they responding to innovations in lateral and with SafeOp and EOS?

Pat Miles: Yes, Aaron. Thanks much for the question and our best of books. But the interesting thing is that these things are very tough to pivot, meaning if there’s a competitive dynamic that is very well protected, it’s not the IP that protects it. It becomes the know-how that does. And that’s kind of why I gush about the neurophysiology piece. I think at this in terms of just within lateral, north of 20 years, 22 years. And so the reality is the one thing I know is that neurophysiology, automated neurophysiology is an absolute unequivocal requirement. And so when people show different things in lateral, but they don’t show an automated neurophysiology system that ultimately includes SSCP to understand retraction injury, then they’re not serious about participating.

So when I look at a procedure, and I see people copy our patient position or a copier retractor, what they can’t copy is the know-how that we have here with regard to neurophysiology. And so that’s going to be a very difficult thing to do. And so that’s going to take years to do and years of competency to create. And so that’s why I love our momentum, and I love the type of progress we’re making from a surgeon user perspective because these are unadulterated tools. And that’s where it’s like, I feel like we’re very well protected in the very area where we have committed expertise because there’s a very long level of experience and know-how. And so that my general view is we will continue to grow procedurally, and we will continue to really relish in the high ASP of the convoy sales, and that’s why we ultimately say, “Gosh, we’re creating a distinction that the sits driving adoption, the adoption is reflective of the convoy sales.