Alphatec (ATEC) 31 Jul 242024 Q2 Earnings call transcript

Good afternoon, everyone, and welcome to the webcast of ATEC's second quarter financial results. We would like to remind everyone that participants on the call will make forward-looking statements. These statements are based on current expectations and are subject to uncertainties that could cause actual results to differ materially. These uncertainties are detailed in documents filed regularly with the SEC.

During this call, you may hear the company refer to non-GAAP or adjusted measures. to measures these of U.S. Reconciliations view found GAAP Pat today's included excluded call supplemental information Miles; management's tables will be and CFO, the today's can items useful press CEO, investors. Leading provide all and be in quantify release, financial and Todd this Chairman in which to why of ATEC's and is identify Koning.

turn call Miles. over Pat Now to the I will

interest Danica. in for engaging And call. the much, Thanks your thanks in everybody

And right to So say the growth. into I I highlights. in commitment would another XXXX the jump profitable step deliberate will it's QX sales fulfilling long-term

And class. XX% at percent XX% million growth finished in I which growth to growth, is total revenue in XX% XX%, of expect surgical revenue new speaks metrics, users, so $XXX expansion the say to quarter the was which surgical would total in total -- growth. best revenue. The volume I a be

kind continue convoyed that nonlinear is revenue think that the in average the That ramp that's per force. One sales of of our surgical case. we reflects speaks as I XX% upgrade growth to metric a elements the I love to of our strategy million. We training a to and the EBITDA is XXX there. which good. We had lot to footprint by expansion, procedural on profitability so an engagements going adjusted that, fueled inflected surgeon with our really buy-in $X.X there's

work really period. the growth. And it time. to our I a invested spend over time support a but and last forward, route launch for that really, expanding hundreds least, And think will a I'm so of relevance the is million explain the of and on proxy the people bunch thing the on going call $XX to then the confidence but this I that, not reflects just of Insight of footprint is think I during multi-year EOS

And EOS, I spine we the so exceedingly informatic. was of we've you, done into image most would coveted in it was acquired it. And and translate audacious, vision an it. our proud And when I'm tell to

create spine. So juggernaut. value committed And back, we I look strategy, of I long to focus, is And think the wanted to spine a spine back this ATEC creating to revenue that if And deliberate you reflection undeniable. it the walk. or we are think think, by advancing a to field we of came do

We have created clinical distinction.

ATEC and procedures, creates are think in informatic which architected really the we that this then So of and time core relevant We've distinguishing this And spine. products, technologically means. in is call. I year for really reflected it's of through on assembly concentrated X what predictability highly

thing do increasing and The been we've to improving second that able is surgery. by means users adoption, that compel surgeon just

is what be to distinction be, So talent network, is else expanded if is inspired demand. the distribution we high. And clinical required stuff clearly, the likelihood it with what to our elevated, distinction-driven is an to so and for attract doing our to use know somebody best surgeon

it And that and tell company. so love success our foundational to driving to are I the those because revisit them would you what's we

a in that will to is things been created about surgery. architecture, is have informatic we the that really And improve it growth is, a that steeped to integration. What enables creation you where means known prowess that wouldn't talk start you we to information and when I think ascension they the driver. What's piece know our surgeons when key about can of that's done is otherwise. in information history that lateral, So are procedural of variables clinical we value mitigate tell via there

concern is neurologic. about the when surgery anatomy you so And skin think and you most relevant go spine, lateral from to of

it deformity joke patient in got the hugely drives say so for latter our revision them. really likelihood is. There's hey, to a learned. example importantly, we've about serves I there's the you, informatics the what the is is information long we know that making. I is kinds kind as double-digit complex. a a you compared know proxy as information to kind thing both end-to-end to surgery. going spine. Most rates contemplating why And what in is yearning really ecosystem in care. learned spine, job health our I mitigates is better, of hope nerve when that orthopedic able improvement. provider make an of spine really the and that is, be needs And less to ones unacceptably thesis responsibility is high. what this, Because that does segment it'll oftentimes what we've tool other there's ones surgery. is create from and comprehensive, And surgical automated spine bad of that precludes that There's I or so the spine it where are done measurable short the It not this the the And say, in the don't surgery Spine's drive to to predictability, we've what last how I is, information, the prospective talks be to think that a is what want surgery, that our it about decision spine and the if future variables. know is nerve as to influences surgeon Spine for of be of a into X foundational And durable. improved fix have is, category. And tell I would and and information that integrated, investment in behind surgeons. predictability most intervention

so that a is how ability potential minimize delve creator. value And we our into to

using variables to how mitigate have furthers information demonstrated predictability. We

the by Insight at integrated tool post-op with spine of at focus on pre, ends beginning is we have experience. starts and and EOS EOS intra, We through is pre-op this the improves the just It done Insight a mean post-op. This what the that care. end-to-end. fully

the preoperative experience. really explanation around an with start Let's

that and it's a time long not most often reason imprecise. surgeons it is the takes onerous. So plan very surgery It do is

and with dealing imaging value. objective where other lot it challenges modalities little work undermine magnification short, and accuracy. In nonstandard precision for is a of You're

The beauty So alignment not a provides surgery. of long-term outcome, spinal alignment believe the to parameters. measures is the greatest assessment a requirement It this just or If a automated done that it's alignment is inform that Insight to of patient's AI it successful computer-generated a precisely surgical EOS plan. is often. measures correlative durability we be

a to task automates for highest plan XD restoration this illustrates custom age-related plan Insight provides with alignment what determined, XD the that the option likelihood achieve surgical So most and of maximizes a of alignment. optimal as Once EOS The normative model measures surgical spine contemplates Then the inform plan. that achievement. computer-generated a subsequently implants a EOS is contract Insight expected, precise applicable the this implant. plan are for

so And preoperative the is automated. sophistication it's efficient, expedient, it's

so is none. And work to little required the

I preoperative exceedingly of the part an so that that's attractive And effort. think

lateral Valence, and SafeOp, when assembled the intraoperative for So it you then surgery, move if start to you ecosystem to complete do to system, the where what you say, is nerve intraoperative navigation look enables the the health start robotic imported you is which calls plan once into nerve. which of will the is and to have phase, our the to is the experience, and plan the

integrated pieces kind that tools So it innovation. really, that's those assembles reflect And the technology. of start of of

into IOA. plan EOS So our Intraoperative Alignment operative is loaded System, the automatically EOS

to takes is And and It that the how the information system it reciprocal to enables And spine? does so operative I achieve change. I've understand measures what preoperative the prior images leaving it enables the surgical compared room. like them experience to intraoperative them operating Do effectuated plan.

informatics combine procedural-specific ultimately tools So these tools. with informatic best-in-class best-in-class

it selling are informatic price. selling are do ultimately is most surgery, increase And our specific assemble and what at you an included that integrated gosh, creates procedure? The say, so price, with predictability. A average did requirements has an tell assembled a growth complexity. the coveted in coincidence other system driver is in look tools a lateral ATEC. the procedural surgical so they And here of I of we of of And that you, would no at you in set the you to is tools understanding ultimately when requirements reflect reflection average

ecosystem more so availing to a believe you can realm surgery, surgeon really which deformity. drive we lead to to the our continue of complex will that more confidence, be driver and And key

ecosystem we've piece, reconciliation is robotics to created navigation the will what spinal must. done the surgical impact. cord and is assert of a is to relevant a in surgery, only intended so not surgery be intraoperative added And deformity that surgery, what's highly realignment restorative plan monitoring. If is a in MEPs driver we've provide for Deformity deformity key fulfillment a facilitated called

the phase, in like our adult AIS surgery, Our getting essence, and just de-rotation earliest tools, really positioners, and influence patient-specific both the on implants, of work adolescents, in is going. is in

we're automation of in extremely no mind, of Insight the that my ton a an data relevant requires special automated another in doing. I that would tailwind So from work collection just reflection activity. say data source of the element. the Collecting is EOS

it limited. work improve future is insights beauty that So provides again, the is requirement that very surgery. The

simple significant from predictive informed a through the surgery. is for data future the future ultimately We it collection, least, a insights Some automated practice patient very call to at aspect the Insight collection that in of value. EOS data analytics. speak, of improve to be surgery. driven tool But more variables way and Mitigating believe makes driver

ultimately the to scanned first a love them to Craig to introduced theoretically EOSedge. at you often would Dr. people They more the EOS plan practically. want first OrthoIndy. so patient we the And action. of in is And think Dr. they're quick the case shout and initial introduced than kind and McManus do to was I So Insight. And really Dave in what out of Schwartz show are things completed

automated So alignment measures. you see the

plan in automated scanned normative XD which patient rod. surgical patient-specific then opened plan. plan surgical AI then I specific the portal. in That and for as alignment generates alignment generated report, for is plan. the custom provides The patient-specific the So EOSedge, The the a an informed values informs said, automated the

pre-bent is So see at rod. you patient-specific the can bottom down a

a All done automated, highly preoperatively of efficient manner. is this in

take the do measures. and is planning we plan reconciliation the room. operating of it expedience the By import it the preoperative what is that point, importing to an the against port So we into that this intraoperative very it, enables strong. At we tool we

really understand real the to the of the preoperative exactly there's to then room. And is enables very a So phase, operating expedient plan the to that fulfillment extraordinarily coming are an to into this is objective we the that proud. on-time where all is are committed is The the moving opportunity eyes. the result launch the beauty or the takes is, the spine and surgeon the time before they effort clinical a for complexity right of Creating surgery is compare the in which our This forward. to and our fruition pre-op, the company this from of postoperative something in result. data integrates intra-op, to clinical exercise is of alignment vision distinction

And now becomes compelling more convert. effort the in so

that's so happening. And

you can it's As see, happening.

We investing We compelling surgeon adoption where training in momentum we long-term are building. adoption reflects surgeon had a QX. record-breaking in that are

XX% and surgeon surgeons, XXX had users. we as So stated, growth in

So relates that compelling I adoption. clearly progress we're as to it making think surgeon

I continues around element people right important from to think that demand. and highly perspective? our surgeon the field are industry-wide. think is is I meet ability friend Market the is, and to so disruption expands a the recruitment other our continues company be And we putting

to market disruption. continue will on capitalize that We

is believe, funnel and again, We we talent to multi-year have of tailwind. a upgrade experienced a disruption And expand sales our that the strong footprint.

nonlinear As expect, a it's you'd however, walk.

the the recruitment from of a able class a, lot is who of lot people created interesting of year-to-date class long they're however, many of period recruiting a growth. And think, confidence, of is the territory. a of of those efforts again, I to that confidence when here started time nothing has I activity think same. where monstrosity the do people that things It's at for been like of have XX% it's a you demographics join thing going our the gives family XXXX, look growth of it if established and us in they in another provides there's on. What the one

$X we're you commitments of EBITDA $XX adjusted how against billion well would we'll XXXX, continue flow million, expect, executing cash In long-term So of and walk margin are XX%, a revenue. of of the toward in $XXX million. free an excited as EBITDA adjusted and commitments our about our XXXX

many XXXX. I of have we And in things of a so we on That we cornerstone that is I'm a where heck at point of clinically. thrilled are think who so lot are as And the momentum. There this an are organization. with going

over So turn that, to with it I'll Todd.

you appreciate We with everyone. revenue. afternoon, good today. I'll us and joining Pat, on you, thank Well, call begin the

is and $XXX.X revenue of $XXX.X to the $XXX up million year EOS Second X% quarter The million total revenue of compared revenue. in growth and million in revenue prior sequentially. surgical XX% was reflecting $XX.X million, comprised

surgical the across the in increased compared prior lateral a quarter volume comparable growth shifted growth of metrics we Second procedure to year XX% per procedural XX% sales revenue due implants. We revenue Both growth Surgical prior to million are relative of and period. have of was against robust to XX% slightly executing. year-over-year of revenue in strong recent entire expandable $XXX and growth particularly additions XX% drove upgrades and force portfolio, that year. the meaningful trends, the

per That as procedural new related brand in with some Yet, sales the to and wind incumbent coverage down. territories surgeons increases procedure up, coverage are align average by existing thesis. revenue the who our ramps We to new ATEC upgrading territory. with the are reflect agencies strategically generally the more compelled volumes

As a as exceeded the recent dynamics XX%. quarter-to-quarter the specific in result, while revenue volume average Adjusting growth procedure would in have lumpiness second strong, per growth basis growth XXX may of this to higher the been territory quarter, trends. revenue volume upgraded points there be ramp. And underlying at was for quarter, not dynamic about growth the case as

that and Our transient growth in over upgraded in the additional our outgrew revenue was territories, more by expandable quarter well will dynamic. time one an growth The is with corresponds We implants. second surgeon to also this. Surgical adoption offerings supply one of contributing improvements the sustainable expectation the territory impacted QX biologics of long-term in grow revenues. of our XX% agencies

million, We revenue have $XX.X full to compared addressed supply have quarter X% in both year. constraints and now up available. EOS was last the second

I'll Next, results P&L. for turn remainder to the the of

by prior XX.X%, increase basis facility. EOS the and margin gross Second quarter year. improved to continues points Memphis XXX The distribution to volume-driven non-GAAP leverage year-over-year up compared driven gross our margin was be of

delivered XX million $XX.X XX.X% Second of period, quarter flat compared business. the and innovation, sales, We sequentially. Non-GAAP in prior sales R&D non-GAAP of to the basis the of future of of to points spending while XXX and to in was Non-GAAP in X% was million $XX.X and the leverage basis of continuing year. SG&A roughly Included approximately an improvement growth in R&D XX% R&D invest to was sales approximately instrument $XXX sets. is million the points. related compared second XX.X% sales purchase and million in $XX year of and depreciation quarter, the step-up in of the SG&A expected prior

about As XXX increased a sales, of percent basis points depreciation year-over-year.

positive XXX $XX SG&A approximately that amounted quarter, leverage, leverage. Total with to non-GAAP $X.X compared XX% second inflected XX% million operating improved to X/X is loss demonstrating and in points. expense a balance sales. to by the million sales EBITDA variable adjusted year-over-year. of sequentially. In X.X% driven sales we by and down Total period, of Excluding XXX will execute second selling leverage points expense commitments. $X.X fuels expansion expenses of that of and expand was in non-GAAP to leverage, are growth the and X% compared infrastructure continue impact, a as in followed of solidly by is the of XX%. was in This prior was basis million the XXX million long-range the future of plan our confidence of was of driven XXX expectations. $X adjusted and our operating of the year quarters million improvement adjusted quarter, points operating dollars XXX $XXX basis EBITDA basis year. of driven gives points basis in and strong R&D growth us consistent prior with EBITDA SG&A self-funded we sales improvement. Drop margin This improvement to aligning at of basis revenue basis leverage. The the XXX we of by points points year-over-year That to through driving that by gross margin profitability

proving was being Debt Turning the carrying at the million is instruments second those linear be and deployed distribution with and to in $XX support cash. deployed expansion of slightly $XXX quarter use inventory of sheet, balance the launches. Managing over into cash the we totaled footprint assets million. Free efficiency $XX million to that than value with $XXX product our million, anticipated. new ended less

needs elevated $XX $XXX been million. inventory sales higher more working million capital assumptions expected. will and conservative relates previously the working result ranging million a to than This to Approximately and forecasted. change is million than while the relates in balance $XX As million the inefficiencies. capital remaining the million the $XXX outstanding, Adopting we $XXX result, day an cash million use higher of expected $XX have initially year $XXX of for full-year between

cash $XX approximately communicated, with generation our million, we've a $XX QX for million sheet, $X with inflecting to cash QX the to is business. run revolver, expect drawn us in end fully we to year million on million. With approximately which, million We of $XXX the $XX use expect of cash sufficient to balance as

continue flow to XXXX. achieve break-even in to free cash We expect

the full to year Turning outlook updated for XXXX. our

As in future growth engagements Distinction were that quarter, Pat exceptional in new the second leading with field. surgeon the surgeon earning demand training mentioned, Both to testament the growth the surgeon is are and record indicators revenue of Clinical of ATEC adoption in XX%.

have high to expect single-digit surgical rate million teens upgrades the across million. revenue growth, $XXX business. of XX% the full expect growth surgical That Territory percent of quarter we basis the surgery, to a equates to revenue for we growth a we revenue in which my dollars, growth surgical fuel in growth XXXX growth implies an the increasing We million depicts the that the with to to approximately contribution rate drop from to close mentioned this be the substantial years. points XXX of expect leverage to to contributor the total $XXX X,XXX comments continues full EBITDA deliberate impact last sales, revenue I year. million now increased growth adjusted continue of and of over time, year-over-year our drive second revenue outperformance, increased of to compared of substantially $XX.X has And million. Calibrating a volume year greatest EOS adjusted chart that for demonstrated we loss per includes approximately acceleration a approximately also EBITDA XX% year. Sales expect of and XXXX. I'll that of high expansion revenue of $XX a profitability points drop million, upgrades full will This of growth basis for improvement. at XX% $X approximately territory Over That with X.X XX% now that through view. percent expansion. sales the and so significant of and through approximately X% fuel margin to XX% $XX in earlier, over

creation. we to confidence delivered, The of We do generation to crucial Importantly, that recognize along the our in are not which intended, us we left profitability progress commitments. There's and work cash value drivers with future to be a that a of that progress, lot we in and the done. are contributing lot give have way excited about.

we I'll months the with in back call usual, connecting are Pat. As you. With calendar to turn that, few looking next forward an and active IR have the to

the deliberate conclude game. spine of been a to Thanks would saying by much, Todd. saying, have just prior focus record long Q&A, this of a has And track execution. we I call

executing we're strategy. a And via so procedural

to just better inform have we surgery. launched we advancing think all it's of spine the most think And unique unquestionable in the that I spine are I field. ecosystem

And questions. with take that, we will so

with question Vik The comes Instructions] first Chopra [Operator Fargo. Wells from

burn, expecting. cash the higher than were on we obviously just So

you're cash $XXX wanted to million Is $XXX XXXX. now to right? burn I for just expecting So confirm, that million

correct. That's

to cash then ] flow just that, need so raise follow-up. to I turning And a follow-up XXXX? guess will again break-even had I [ you before in And cash to

Yes, Vik.

of if you street's I at the about and think revenue next the as we look you $XXX growth where I year-over-year at growth. think at, if it, million look that's year, take

get EBITDA of you XX% year-over-year. $XX in that, growth about about million take You of adjusted

adjusted working year needs for this exit $XX capital about $XX at million, year. you and that, needs get $XX.X our if million to growth cash That add of and ultimately EBITDA next our you next our funds million year. you So

the look we'll going And year million revolver flow a liquidity just into fully half about the very going our so through $XXX achieving think as where in Because drop next the with cash of burn, then I that year, year, existing break-even with dynamics good revenue thinking cash year-over-year drawn we ultimately, we're second laid I at terms our on of adjusted basis today. increased about next at our at growth. current with we that exit out into feel EBITDA

up, trends hiring recruitment? And follow you just for the cadence any about then competitive of and just of to some on color expected can talk XXXX the rep

you taken The our And that Vik, question. thanks dependent would been geographic needs we've robust. it's that the Yes. for the as are. I -- kind has approach tell as of

a but bit a And the color so J&J, NUVA, amount with little of try rest. fair shows you provide and from Globus, to just pie a also clearly that chart Medtronic,

so of and exercise, take are And to on you been available at it's desire. we want is that it's so as to -- like all sense question we what geographies appreciate, could they so as that got in a the makes we becomes We've The what the implants what to. these people sure significant happening it's process And them time? turning start the that rate investment. but as their as at business. could take make most instruments lumpy things I feel on many And

The Cronin Genuity. next with Caitlin caller is Canaccord

implementing where how territory in starting or with upgrade? to And you Just expect many upgrades, upgraded have territories these? the are you

question an just the it's interesting company. standpoint a as from where we of Yes, are

a the say the means less we're market shareholder. well of, X% about a a go. tell would I market And of I probably that just we're say, you having of X/X us so to at And as look XX% size than That sales Medtronic let's force.

X say, We years. next, for have the I'd opportunities

reps year what in by is is mistaken great And compelled are part they a think several And so, I again, disruption is technology. want tailwind. surgeons that sales new who exciting is that the marketplace and is want the the what

technology compel are And available operating is march with What their so us trying come company. by inspired spades. along sales opportunity to a reps to we're is toward our our to in surgeons to who do

so that opportune prioritizing methodical those way. in that for most territories expedient, what doing And are we're significant, profitable And is that very a doing means we're growth.

then that on number was competitive XX the just noting And I to the follow-up you the for last of But hires. the breakdown up-to-date the mentioned think hires, what's most the of thanks hires? reps.

Yes. We're not going a to share year the desire quarter-to-quarter hiring a to million a is $X practices. of toward cadence. And type get a our rep

probably to so you kind of math and to get heading. And you where could do the place we're well reasonably about a feel where

volumetric $X I, chart our of perspective, toward And pure are that tell people as And classes the that would had we reps the so sales just up run to of delivered. training continue billion. reflective from a that you will make we grow pie again, the I but volume

that XXX, at for think growth just I and very indicator future clearly again the second surgeon then in grew ultimately quarter's greatest at quarter, adoption a engagements the sales significant which Caitlin, was growth. XX% And becomes surgeon the the

as appropriate And clinically. apparent me, to we to feel coming can we're doing you're through. what dynamic. it's Yes. with if regard not is you like don't be is, a to great to XXX And would there's surgeons point, thoughtful who's engage training in to such interest and surgeon in I which just event just an I near one, which to Todd's add as trying get say your

And additions I of think that territory making. and we've been it's reflective the upgrades

Totally.

from question next Jennings Josh with Our TD Cowen. comes

gave but Josh. through do positive year. for use appreciate the see would if the the just what you that XQ, This XQ, through that great. of pathway? Was be then is just and Eric for hoping could a cash finer flip to into burn to on you I put through drivers expectations And cash the you end use color on around risks XQ in talk cash that point

Eric. Thank you,

talk a or use, about we're outstanding. the take That previous minute previous As day maybe $XX incremental $XX [ we relative the the of I'll at about to due really that look million due communications. second to sales to million just and experience half that to is assuming cash ] for

So QX days we was low if you year, this us exited think time. frankly, to was be in at We're in of in about different I the which than, high XXs, the point XXs. about last kind where expected X

about on, X new a that sales XX% ] times a of gets and business remaining and you of the days volume the $XX $X it. confluence that they to inventory million. The has $XX really bringing XX% need of do [ a need growing when day So million the year, what they to with ensuring at size million inefficiencies agencies have they

in that is of variables All a lot of experience. that

I been when at that expected. been we've growing, you're that than been variability rate there's growing so some And definitely a We've there. in less efficient

through get But end time that drivers And those now we Ultimately, we improve don't that over I improve this. the and we in of so year. I'm behind metrics. that's the think assuming the at

sets inflection when of and the through so year, part we're that the that to the as this here. Ultimately, the of dynamic And have significantly the we is you know. in going that's really first think inventory in cash, about invested part you

trend is ultimately downwards And the that half And inflect through generation. then a year. that cash second as so drives of obviously a the we profitability,

into rest that inflect cash all And flow cash sales really going here, growth really the those of profitability growth about it's cash burn directions and the is year, flowing really the I mean, in inflection you of generation. so future. this from into and opposite X the to variables

EOS, team as just thoughts believe systems just a some And the as software out out a then is with involved I software-based interest so or simple EOS, the get customers, technical that running? EOS and question hoping with your to that get is and And launch on adopters you that as something there upgrading was and it's field. on of up of play, pushing existing been up Insight the just to on more platform, required fielding the in in I to now now inbound have

Eric. Thanks, Yes.

guess reason and on significant straightforward It's I going the push like monumental software point, we push most work integrated -- will the it us at it image that on I into is will spine significant. type of it it solution. And first time the machine. into one the enable I to whole right out. all portfolio, think real on maybe reflection out think, be the is, our don't this the of the just spent SafeOp there's lateral of tool. is care, we an software first the kind much of is being to We all narrowness So informatic get very upgrade yet. so of And go now way -- There achievement. spine This software EOS in a our the is much upgrades of is coveted

play so time. And out it'll over

Probably show the best provided tools reflection a next of Insights. solution beginning have just of long the over a seek the I it's through great of the through play out the the around confidence are time. Right time We kind of when very faces EOS run. maybe is platform. it'll But now, software that surgeons for be they here visits come that if enthusiasm really could who

Our with next question from Stifel. Blackman comes Mathew

Can you hear okay? me

Matt. can, we Yes,

volume wanted I growth. XX% Todd, the to to So go back

the growth I sales sort updated Does So And you quarters something Maybe to was this It correctly, does as think it now timing there tricky bleed has baked of long about of you've sounds be question. a deployments. how way do you if into it as year. manifesting guide should can maybe some persist? why volume of that seem switch mean, versus that Is like, instrument territories work force guess, ago? the remainder in it? actual around. with we for dislocation it your set it be to of like how I dislocation I'm I hearing But couple guide, I sort potentially the of it about your your does then one have through. thinking for XXXX? is follow-up

territory want we ultimately, we most communicate agents territory where portfolio, we upgrading you for question where -- our really the distinct surgeon is sales which That a down. the This dislocation. interest. in that the is are Yes. a that surgeon phenomenon is sales existing thank portfolio. new And agency. in And unexpected I is added lateral have sales coverage, wind And don't I interest because sales to agents, ultimately, there

wind which So that's guys and bit come wound this down a was unexpected on. What always was the the time the pace guys at new down. when business They wind little their normal. existing up the

Now, the come has that business on lateral. ASP the that the of territories reality is in is

away average. procedural price. a What So $XX,XXX price. it's procedural $X,XXX our walked Xx $X,XXX to to $XX,XXX was That's

we portfolio, distinct tell expect most to than faster when And drive time. just existing attract would bit ultimately a procedure. And we that our you most I it always higher quarter. who of so do per ramp some little you in you this in surgeons happened level anticipated the at are point revenue interested down a business

so And went on. that's the dynamic that

I Obviously, does volume X or seem And remainder does the persist? the that quarters? would for a the for think you guidance. rep get quarter of that of of you're with improves, opposed do year you of productivity terms growth? in It persist as like expect it's to trajectory updated Does it it sort baking typical productivity growth that back or ASP but whether onto in surgeon when

high essentially growth now, teens mid-teens which At second we assuming volume we're guess we the quarter. of is second saw half, in what kind really here. I Yes. saw the in

you're in that bit up little second to half. starting a tick the see So

we the see little that recovery So in bit a second half, of Matt.

in there back of the the it kind of out. And high So is implied how kind digits. see revenue that gets single digits. that's implication to that QX, that's ultimately, mid-single playing we procedure QX, per it's

that's in the revenue effectively and volume. modeled the and between that price of gets year I remainder how So think

an sets, pretty would maybe look of second fact growth. uptick fact, that training maybe first should potentially that's 'XX, maybe and some of surgeon the particularly that maybe it the to doesn't, new would all these the particular, but if mean, picture in of bigger are, numbers we're quarter point Is it bringing first a I the that thinking reps year, to And given indication substantial. particularly at in we're here your yet seeing obviously counter I sort guess instrument dollars new point here comforted and in be, therefore, the but be And -- actual reps, by we not see in comes, in sort the of in it be investment distributors, hoping the just here, of new in surgeons. the amount we half in the are the

And that is about as we outlook real metric leaning the so that the fair? growth for we Is on here. be should think sort from of

look revenue, our at up a I million sequential And in the as Matt. the implies that's step point, that, think. I probably exactly you $X guide surgical think

the that, that growth you so have And confidence when that business forward. the we think reflects in the I looking of look at underlying

your is be Yes, top-line But put that But never at walk. every nonlinear is totally we'd apologizing it XX% And surgical questions. a thought for it understand turn. take growth. and a I

Apologies a perhaps Or going this else everyone guess their is sneak enhancements? XX% And maybe workhorse system more that that we're question. a it across pipeline here. EOS, question use for of the is there really point that But is now waiting of moves where I simple again, I'm just can near-term in to system sort imaging is, to, on to one a workhorse procedures? in at just the physician else a something all imaging with EOS the

I platform well identifying imprecise. the to would is opportunity informatic We're my just is to image -- care. tool has of again, down with different that surgical what standard way pull improves for what -- that communicate we tools, can to by into it's is evaded the cannot enthusiasm like been EOS to of translate derived magnification. an set years And it. of that's that inconsistent have in data a I've part different it workhorse more image automated things way. I problematic that these of how informed a in spine ability XX scale. with an It's require a imaging the grand patients It's whereby out Yes, surgery system clarity of that competitor. a have It's imaging a do no in are It's regard we diagnostic dynamic regard drive of provides what the say profoundly with more

phenomenal. be able kind to the to of of who it so of And support is architecture through part the be have this many luminary advised and to surgeons us

proof's the around to the going pudding. time. and be to an pudding, again, show exciting So the It's we're in

Our next question Stanley. comes from Drew Morgan Ranieri from

ask Just I'll maybe a that me couple together. from

So constraints Todd, called I some in you that you maybe now think expandables. resolved and supply biologics out

quarter. And to ask specifically you revenue upside when can as kind it second for well, Just that just spine if and the investor comes my names. you orthopedic have been environment how much here in of the potentially cost questioning maybe utilization we've might more curious just I'll getting quantify but inbound, overall

X% Pat So your specifically market, market and/or U.S. have you're hoping I with you -- maybe relationships the share Todd seeing seeing that and just perspective to surgeons X%, the in or what mean, get established what you're maybe for with. on Todd, longer in you're

take maybe the first one, the the take second I'll Pat on can one utilization.

not our that, it now We're Drew, million going as sequential to sequentially. think X be I say, million to outgrew all like suffice $XXX we surgical to expectation QX call items go to from in our our about really resolved. did Ultimately, but QX would revenue, constraints, out that's supply of we supply. $XXX I quantify to to think relative So where

third kind overall of that and dynamics for sizing the up a of So the level should our confidence we going impact you saw in and think I sense the give second quarter of into the quarter. quantifying

it's like pretty to it's I But wide se. utilization, per market been like a shareholder. there's just We're a have tough. a X% of like, it's on Like, proxy And typical. for been, say, don't visibility we're to because the regard nothing, I as always we really with always market would say

been we've exiting time. and at QX what so of QX, it's typical a through kind least relatively And seen

go We'll with Capital caller Markets. Lake the to O'Neil Brooks next Street

give Aaron market time I any in horizons or about Brooks. update on but thinking just long-term. you could and the appreciate in was Australia if could specific Japan that if wondering on penetration line is about This just you're that Zealand, you're I you short for have New thinking maybe an the and us either any timing-wise. existing how

is hey, we've lot A Japan of a about excited Japan. hope done We super the stuff coming in regulatory quarter. We at through. least the fourth surgery Yes. say, in to

for we And first an so our -- And on timetables. our commitments made. was experience. think, we a And commitment making who to that QX is so are much QX you And know, I 'XX I organization of, chances. said, if we as that like of

the we be time very of going that market Japan. will we're market to period necessary it to And going expect the a that a a expect of out to and We're of lot over so out give long time. tools that create

So about anyway, super excited Japan.

Needham. is caller next Our Saxon David with

change. wanted I follow-up Todd, just the to flow on cash free guidance

that specifically XXXX do get what DSOs worse? still follow-up. go one to quick have just confident guess, the the the up? target? in dynamics I DSOs So break-even And you causing have won't inventory is and I confidence How are And you

David. Thanks,

we that On the the expected improved say have to. extent not they to DSO, just I would them

So dynamics stepped some in I we QX. had there. year, to also were, that I do last up customer XXs think mid think, exiting out significantly like XX, with And to high like,

payments. we had think that different were saw significant it. there I saw and an a we seen or not customers from some just that cybersecurity of from hit we to QX, Ultimately, have QX improvement items as improvement delayed much

think be some of customer we're so just with And may that also general terms associated where of in mix our I growing. of some

going expectation my So we've exiting where last improve to not year. that is to we're been

so to as we And much up just We QX down stepped not expected to. fundamentally, I step saw as QX. QX, to a QX

on further front. no that expecting improvement I'm so And

the as much agent over go to ramp we're about rank, little here we're growing, has inventory, been the efficient, of sales they second a -- to Ultimately, think as XXX how needs on On this I each up. DI how at in quarter. or a just DOH the different the dynamic

at I effort no further so in a to We're and the don't lot we think it, just it. assuming see to improve putting assuming improvements. of I'm And and get those that improvements. as that at we've organization energy better we're looked

half first in did the we see not of year. through the activities to our the so we it's expected improvements And see that really,

don't So of half in assuming right? the is to I'm your second them follow-up the then we that that year. And see 'XX,

XXXX. Yes,

think top-line The growth the and expand belief The of function ultimately a our is cash cash the growth. expansion we've funds I belief flow said creates the so in profitability. as cash and us feeds top-line before, then in Yes, for profitability the to the of opportunity the the break-even flow.

on so year-over-year year. we next And $XX the million you XX% that, about at well, of million you consensus that's adjusted drop-through. growth of if can EBITDA $XXX $XXX look that, of think million, get

So get if $XX you we exit this add million, you year at $XX.X million. and million $XX

So and need next be and million you inventory $X essentially sets to year. that what in would invest

got we've needs ultimately ultimately, capital EBITDA working the in that funds of a the business adjusted XXXX. so of lot And

the the what the have we've confidence it's a my competitive the surgeon that of in is your as the you built and confidence meaning on and seeing the also so that achieving to year, such have. And it hiring and the we of way confidence and then founded And top-line knowing cash the to flow much My we've function revenue I growth, strong to. -- seeing. in I assets that's so in that meet adoption tailwind we're higher an those year is continue sales expand the predicated profitability way our demonstrated have buy confidence forward bit we is company which for that is a in walk my inventory, utilization target. reps get fact the don't we're in next in last also the ability to expected year you of that we've have we X know significantly invested with consistent it to the next And quarters, this happened in

here that's I XXXX. comfortable with feel ultimately, and how So sit

summarize. quickly So just if could I

cash guidance? even that that And is break-even was next of free kind XXXX, I walked year have And confidence So even of if still should profitability in but to be dynamics you talked confirm don't, light/early the just achievable. and good we Or you kind follow-up of million they that'll the of they you kind illustration? thinking these do, you $XX that which an that guys summary. a if drives flows as maybe for into then through my growth mean maybe looks top-line improve, just then don't drive

Yes.

can it's I understanding, I with I your and walked consistent So our long-range the expectations. think confirm through, math plan

that's those giving consensus numbers, on we've so. applying I framework at so million framework, reasonable like be. out the based and the I think laid like place think this to in logic, not but point, you're guidance $XX feel that a We're plan, I the is long-range and

ROTH Capital. Our question from next Wittes comes with Jason

on the congratulations after segment going lot else launch? So launch that curious EOS of with the you now. I in I'm EOS Insight. kind to go to And is Or launch? think assume -- business of deformity. right relevance the of we do what prepared that's And a expect as Insight where have from should you're your you deforming fully

very is as question. kind segment the when it's strategic Yes, of apparent segment as in surgery. things you deformity, you that's long alignment -- Clearly, and of think surgery. segment long of think one that well measures It's short the relevant are of

you somewhat, to tell I most reflects We've was in company place relevance something, Our just, there been immediate essence you go has influence, was that broken muted. to would nothing from that the a been create the surgery. you, that lateral when and

And that much driven We've was accommodate relatively the of say, -- bringing of kickoff kind deformity surgery ability to that of is a ultimately approach, apparent. to gosh, our That's of but apply candidly, of innovation ton growth. continue a tools been relevant the so complexity deformity? in segment lateral in there And package to hasn't deformity expand in short growth to of lateral terms in have opportunity very the we we a become participant how the also relative innovation do that of initial the used essence in kind company. the

and think deformity early I that our such deformity right so onset is into then And EOS the adult entree walk. our and an subsequently idiopathic as

automated have measures. right now so we kind of And the alignment

through same sprinting acquisition the we're QX at automated 'XX, alignment the a image measure quality as bone measures. year, Next

package us a will drive I in give so, think a surgery. that things And these again, very relevance that deformity relevant informatic

put a it general, in at in or the in some lacking point, have terms you you just field is offering to places? full do hardware of And out in think this

terms Yes. the a I and would of in offering. of have adult Really, phases stuff. in of the very say we're would some early stature say idiopathic, I great very, small we

So obviously what to for Because milestones looking for opportunity it's double you're seems deformity? be company. see revenue to going how a we should progressing with the pretty, it's like the

of is the kind we've what technological company the field. growth the Really, of requisite advancement modeled Yes. to of the

that it's growth. think number. the so think to that route in I And billion north $X contemplated XX% requires I of And that

there. this I real sort and a just to So start is really you're to numbers posted be now, I process I to launching starting of, guess is assume see, being multi-year mean, this

know the in prefaced or deformity X.X you've given is of X at current point, year X given outlook. much Does -- out this you've it? about state it's that I business? much a year Or So I kind of guess have that pretty all on

to EOS a Yes. long-term that And it. our I surgery anybody for evolve. It needs long-term of needs rates questions think clearly if reflection way spine deformity I interesting, think where is proxy The growing it's a in a revision I commitment. to think are high. go, commitment this clearly field, that it has But to too

and informatic through footprint. improves tools, our expand we as it'll so mitigate And it variables surgery

company. of contemplated growth what the that we've so the is And profile we've done through

is, the willing the is unique walk the space. resources, work commit to this we've innovating that to multi-year in opportunity so a us this an effort, And and and to because again, been

comes question from H.C. Wainwright. last Lee with Sean Our

deformity. for it's the surgeons with seen X do existing examples surgery? into you feel more getting Insight have doing or Is far? One quick and have [ deformity EOS more surgeons do your you the is -- if deformity ones. ] converting towards And just the latter, so yet I enrolled goal move deformity towards don't who company's any

say evolves. we're spine just experience, terms the in community of would early the way in I the that Yes. that

there's do to of of going surgeons a complex I who think most be assembly surgery. focal the deformity

coming out of that are focusing I we're think so on and savvy that programs. the are surgeons very deformity technology that technically And young

they to I you that evolving efforts been focus well -- the part that's as tell And historically of us pro deformity know hugely famous of acquiring committed would we're package. candidly, the a surgeons I think and because kind it extraordinarily always supportive as EOS. that So big of have the information they've been our

so the is and majority relevant be what's would the is ultimately that the of narrowing my happen volume And a there's focus that to presumption of surgeons I say on going efforts. be who deformity, and to will just take to those of going our people extraordinarily

there that on I a -- material your to of My overall that's second shortage you becoming wondering question biologics. questions. was whether biologics think Todd a my just of or contributors portfolio? a one-off trend all is event That's I with see do your a you was one mentioned supply more

Sean. Thanks,

think, know, us, biologics maybe I area of for growth -- the XX really months. certainly last months, an XX last over as you has been probably the last

rate, we a drive supply. and to our continued And higher outgrew attach so grow as just we've

And the addressed. it so day, at was which now end for the a us, of we've created situation demand

And but last, big that's months. se, to that growth so a us say I the trend has over been per certainly last XX wouldn't XX a driver for biologics clearly

remarks. the for back turn to I call will now over Pat Miles closing

we'll Greatly I a and that pride. enthusiasm one Danica. on look great the Insight support over launch. It Thanks, appreciate with EOS back whole is everybody's shared and significant hope one

I So catching to up. Thanks. appreciate anyway, forward interest. everybody's Look

joining. you for Ladies and today's gentlemen, call. that all concludes Thank

disconnect. now You may