Alphatec’s Earnings Call Highlights Strong 2025 Start

Alphatec ((ATEC)) has held its Q1 earnings call. Read on for the main highlights of the call.

Alphatec’s Earnings Call Reflects Strong Start to 2025 Amid Challenges

Alphatec (ATEC) kicked off 2025 on a high note, showcasing significant revenue growth and increased surgeon adoption, as revealed in their latest earnings call. The company reported a robust start with improved cash flow management, although challenges such as gross margin declines and tariff-related costs were noted. Strategic expansions in international markets and advancements in procedural solutions provide a promising outlook for the company.

Strong Revenue Growth

ATEC reported an impressive 22% revenue growth in the first quarter of 2025, reaching $169 million. This growth was primarily driven by a 24% year-over-year increase in surgical revenue, highlighting the company’s expanding market presence and successful strategic initiatives.

Surgeon Adoption Increase

The company saw an 18% increase in the number of surgeons utilizing ATEC procedures, contributing to a 17% growth in procedural volume. This uptick underscores the growing trust and reliance on ATEC’s innovative surgical solutions within the medical community.

Adjusted EBITDA Improvement

ATEC’s adjusted EBITDA reached $11 million, marking an 800 basis point improvement compared to the previous year. This achievement represents the second-best quarter in the company’s history, reflecting significant strides in profitability.

EOS Order Growth

Record EOS order volume led to a 28% year-over-year increase in the order book, indicating a strong demand for ATEC’s informatics solutions. This growth showcases the company’s ability to meet market needs and expand its technological footprint.

Cash Flow Management

The company improved its free cash use by $55 million over the first quarter of 2024, ending the quarter with $153 million in cash on hand. This improvement highlights ATEC’s effective cash flow management strategies.

International Expansion Success

ATEC is making notable progress in international markets, including Australia, New Zealand, and Japan, with significant adoption of their lateral procedures. This expansion underscores the company’s commitment to global growth and market diversification.

Gross Margin Decline

Despite the positive revenue growth, ATEC experienced a 50 basis point drop in non-GAAP gross margin compared to the previous year. This decline was attributed to changes in product mix, presenting a challenge for the company to address.

Tariff Exposure

The company anticipates incurring low single-digit millions of dollars in tariff-related costs in the second half of 2025, affecting EOS systems imported from France. This exposure presents a financial challenge that ATEC will need to navigate.

Working Capital Headwinds

ATEC faced modest and transient working capital headwinds that impacted cash flow performance. However, the company expects these metrics to improve over the year, indicating a positive outlook for financial stability.

Forward-Looking Guidance

Alphatec’s leadership expressed confidence in the company’s future, projecting a 20% full-year revenue growth to approximately $734 million and an adjusted EBITDA of $78 million, up from previous guidance of $75 million. This optimistic guidance reflects expectations of continued strong revenue growth, profitability, and cash flow, driven by surgical volume growth and strategic investments.

In summary, Alphatec’s earnings call painted a picture of a company on the rise, with strong revenue growth and increased surgeon adoption. While challenges such as gross margin declines and tariff-related costs exist, the company’s strategic international expansions and procedural advancements provide a positive outlook. Investors and stakeholders can look forward to continued growth and profitability as ATEC navigates the financial landscape of 2025.