Alphatec's Q1 2025 Earnings Call: Contradictions on Tariffs, Cash Flow, and Market Expansion Strategies

Tariff exposure and sourcing, international expansion and market approach, cash flow performance and utilization, expansion into interventionalist call point, forecasted cash flow breakeven are the key contradictions discussed in Alphatec's latest 2025Q1 earnings call.



Revenue and Surgical Growth:
- ATEC reported Q1 2025 revenue of $169 million, with surgical revenue growth of 24%, outpacing the market growth of 4 times.
- This growth was driven by an 18% increase in the number of surgeons adopting ATEC procedures, indicating strong adoption and penetration in established territories.

EOS Order Growth and Infrastructure:
- EOS revenue increased by 8%, with a 28% year-over-year increase in the order book, reflecting strong demand for ATEC's end-to-end informatics solution.
- This is attributed to the demand for improved surgical planning and automation, positioning ATEC for future system installations and implant pull-through.

Profitability and Cash Flow:
- ATEC delivered $11 million in adjusted EBITDA, marking the second best quarter since the company transformation, and achieved a 900 basis point expansion in operating margin.
- This improvement was due to leveraging infrastructure scalability, VAR selling expense reduction, and consistent surgical volume growth.

Cash Flow and Financial Outlook:
- Cash use in Q1 was $15 million, at the low end of the expected range, with expectations to be positive in Q3 and Q4, resulting in a cash flow positive year.
- This is attributed to improved profitability, effective cost management, and a modest working capital headwind that is expected to reverse in the coming quarters.