Executives from Alphatec (NASDAQ:ATEC) outlined their view of the spine surgery market, growth drivers, and recent financial progress during a conference discussion featuring Chief Financial Officer Todd Koning and Vice President of Finance and Head of Investor Relations Robert Judd.
The conversation touched on investor questions about whether the company can sustain its growth rates after what participants described as meaningful progress in 2025, including improvements in profitability and cash flow. Management emphasized confidence in its operating model and pointed to continued opportunities to gain share in a large spine market they view as still in need of better clinical outcomes.
Management sees share shifting toward “clinical distinction”
Against that backdrop, Koning described EOS and EOS Insight as important tools for understanding spinal alignment and determining “what it needs to be and how to get there.” He also emphasized a procedural approach to product development, arguing that surgeons focus on how they will treat a patient rather than selecting individual implants. The company’s aim, he said, is to develop integrated procedural solutions that support surgeon decision-making and adoption.
Management also cited industry disruption among larger and mid-sized competitors as supportive of its share-gain opportunity, referencing transactions and structural changes including Stryker exiting spine via a sale to private equity, Zimmer’s earlier move, Johnson & Johnson’s plans to spin out, and NuVasive being sold to Globus.
Adoption metrics: new surgeons and rising utilization
Judd said surgeon adoption and utilization are key measures the company tracks. He noted that new surgeon users have grown around 20% over the last eight quarters and were 23% in the fourth quarter. According to Judd, surgeons brought on board exiting a year tend to drive “mid-double-digit volume growth” the following year, and utilization continues to rise into years three, four, and five based on charts the company has shown historically.
He characterized this as the core “growth algorithm,” describing a combination of converting new surgeons and expanding the amount those surgeons use Alphatec’s products over time. Judd added that the company also expects modest improvement in case average selling price (ASP), citing full-year guidance calling for “low single digit case ASP,” which he tied to capturing more of the procedure as adoption expands.
Why case ASP can be “lumpy”
The discussion addressed why ASP can fluctuate even when overall growth is strong. Judd said total company case ASP was flat year-over-year in the fourth quarter, but noted that lateral and cervical procedures each posted about 6% case ASP growth year-over-year. At the total U.S. level, however, case ASP grew only about 1% to 1.5%, which he attributed primarily to mix effects.
Specifically, Judd said increased utilization in cervical procedures has weighed on total case ASP growth. He also said the company’s outside-the-U.S. business, which he described as nascent, carries a lower case ASP and had roughly a 100 basis point impact. Management suggested that while quarter-to-quarter metrics can move due to mix and the non-linear nature of share gains, annual trends are more indicative.
Sales reps: recruiting reflects the broader market
Management said sales representatives are ultimately in place to support surgeon adoption and that talent flows can be influenced by industry uncertainty. Koning described acquisitions, spinouts, and portfolio shifts as multi-year events that “lower the friction” for reps considering a change, rather than creating an immediate step-function in availability.
Asked whether Alphatec is sourcing reps disproportionately from specific competitors, Koning said the pattern “by and large” reflects overall market share and that the company is not meaningfully over-indexed to any single player, with outcomes depending on geography and surgeon dynamics.
He also described the economics of scaling new territories, comparing early-stage investments in instruments and inventory to rep productivity: efficiency is lower early, then improves as adoption increases and assets “turn” more often. As territories grow, he added, it becomes easier to add newer personnel to support cases under more experienced team members.
Valence robot positioned as a workflow-integrated platform
On enabling technology, Koning contrasted large-format spine robots—typically focused on pedicle screw placement—with Alphatec’s approach. He said utilization of large-format robots is “reasonably low,” in part because of higher price points and the need for institutions with large capital budgets or enough volume to justify the investment.
Koning said Alphatec’s Valence robot is priced in the “half a million dollar range,” which he argued supports placement not only in academic settings but also in community hospitals and ambulatory surgery centers. He described Valence as a robotic and navigation platform designed to be integrated with the company’s PTP workflow, with an initial focus on addressing adoption hurdles in lateral procedures.
He highlighted two challenges the company aims to reduce:
- Fluoroscopy exposure, which he said can be mitigated through navigation capabilities.
- Retractor placement, which he described as one of the more complicated aspects of lateral surgery, where navigation could improve confidence, efficiency, and predictability.
Koning said the platform can also be used for pedicle screw placement in other surgeries and offers freehand navigation as a flexible option, but emphasized the company’s intent to launch Valence in a procedurally integrated, workflow-friendly way.
Profitability and cash flow: drop-through and set deployment
In discussing the company’s financial trajectory, Koning said Alphatec delivered about 41% “drop-through” last year to reach approximately 12% adjusted EBITDA. He said the company exited the year at about 35% drop-through in the fourth quarter as it lapped prior-year cost rationalization actions. For the current year, he said guidance assumes about 32% drop-through, which he described as a “floor,” citing the Q4 exit rate as supportive.
On cash flow, Koning identified sets and inventory deployment as a major component, describing the company’s objective as getting back to “$0.75 on the growth dollar basis.” He said management plans investments by procedural “flavor,” assessing field assets, their efficiency, and the additional assets needed to support growth—an approach he said was validated by last year’s execution.
About Alphatec (NASDAQ:ATEC)
Alphatec Holdings, Inc (NASDAQ: ATEC) is a medical technology company focused on the design, development and commercialization of products for the surgical correction of degenerative spinal conditions. The company’s portfolio centers on interbody implants, biologics, fixation devices and surgical planning tools intended to improve patient outcomes in spinal fusion procedures. Alphatec’s flagship offerings include customizable interbody cages, bone graft materials and specialized instrumentation designed for minimally invasive and open spinal surgeries.
Founded as Alphatec Spine in 1985 and rebranded as Alphatec Holdings in 2018, the company has grown from a single-product organization into a multi-platform innovator in the spine market.
